Guest blog by S. A. Shelley: If the world wants to move quickly to a lot of renewable energy, then maybe money laundering is the key to getting it done.
It's been well known for some time that money laundering is a significant driver in real estate ( see theweek.com and boingboing.net) Such shenanigans with real estate began way back in the 1980s in Florida, with cocaine cowboys literally knocking on home-owners' doors and offering cash for homes at above market value. From there, it moved to California, Hong Kong and Dubai, Vancouver, and of course London...until a large chunk of high-end real estate was infected somewhat by illicit money. There are of course other means to launder money. Cash flow businesses such as restaurants or car washes have also been havens, i.e., anything that can provide a large, difficult to trace production output and revenues versus costs and volumes of input: Was that 1lb of pasta used to make 5 dishes or 6?
Unfortunately financial regulators and the law are getting better at stopping traditional means of money laundering. For a while it looked like crypto-currency, being beyond the control of nation-states, was going to save money laundering, but crypto-currencies have their drawbacks too, including fluctuating values and, of course, limited means to pass through the large volumes of money, around $10 trillion per year, that sustain the illicit economies in the world. Furthermore, as some governments begin moving towards digital currencies themselves, and removing large denomination bills from circulation, money laundering will have additional challenges in the near future. After real estates, there are diamonds, gold and high value art or collectibles, but those, too, are coming under increasing scrutiny, and there are only so many Picassos or Rembrandts to go around.
So where can ill-gotten gains be laundered? What industry is there that offers huge production volumes with some variant transparency? Renewable energy. That's right, I’m proposing that renewable energy is a great way for elites of dubious background to transform money, makes even more money and at the same time help the earth.
Consider a 1 GW solar plant. Did it produce or 1.0 GW that day or was it 1.05 GW? Or an EV battery: did it discharge 10 MWH or 11? Those variable margins are a great place for money launderers to sneak in and clean up while helping the earth clean up its emissions mess. It's not quite that simple, but it's appealing and probably best to get into the business at the outset, when regulations and laws are still poorly defined. Get in very early in the development phase and there are probably government incentives that are also available to guarantee a certain cash flow, payback or tax credit for a time. The argument for laundering through real estate is that people need a roof over their heads and will pay dearly to have it. The same argument can be applied to energy in that people need to stay warm and need to be able to move about to their job and such, and thus will always pay for some form of energy.
Investing in renewables at the outset also avoids the problem of investing in legacy coal or oil industries, namely any forthcoming liabilities for past externalities.
Years and years ago, I had an interesting chat with a business professor about investing. He candidly suggested to follow the Mob. "The Mob hires the best and brightest from Harvard, Stanford and the like. Invest in what the Mob invests." It remains to be seen whether Harvard and Stanford whizzes are encouraging investments in renewables. I'm all for this, because at this time, if it takes a deal with the devil to save the earth, then let's worry about the details later.
Vive l'Alberta Libre!