Berkshire Hathaway Vice Chairman Charlie Munger said he believes fossil fuels and renewables both have an important role to play in the world. “I think we’re going to be using fossil fuels for a long time because we have to,” the 98-year-old investor said in an interview with the Australian Financial Review on Tuesday. “If you think about it, today’s world population couldn’t eat if we didn’t use natural gas to create nitrogen-fixing fertilizer,” Munger, a longtime business partner of Warren Buffett, told the newspaper. “We’re not going to get rid of fossil fuels, we’re just going to use less.” While Munger remains a strong supporter of fossil fuels, he is also optimistic about the future of renewable energy, noting that Berkshire is one of the biggest creators of renewable energy in the United States. The conglomerate has come under pressure from activists to detail the impact of climate change on its businesses. “I also think more of the world’s electricity generation will come from renewables. Both things are going to happen,” Munger said. “In Iowa, where we own most electric utilities, well over half of all electricity generation comes from renewables.” His comment on the future of energy highlighted Berkshire’s recent increase in its stake in Occidental as well as a big bet on Chevron. The conglomerate has steadily increased its Western stake in recent months. The latest purchases late last week were $112 million, giving Berkshire a 19.4% stake in Occidental worth about $10.9 billion. The bet is approaching a 20% threshold where he could book part of the oil company’s profits with his own, known as the equity method. Occidental has been the best performer among the S&P 500 this year thanks to soaring oil prices. The stock has more than doubled in 2022. Meanwhile, Berkshire also significantly upped its Chevron bet for a stake worth $25.9 billion at the end of March, making the energy stock one of of the main holdings of the conglomerate. Munger pointed out that Chevron has some massive projects in Australia, including the Wheatstone project in Western Australia, the North-West Shelf LNG operation and the Gorgon gas project. “Chevron is very good at this type of engineering and it was very desirable for Australia to have this wonderful natural gas,” Munger said. “But it took some patience on Chevron’s part. This thing was very expensive.” Munger had just taken a personal stake in a little-known Melbourne-based investment firm, Stonehouse Corporation, which he said was successfully emulating Berkshire’s conglomerate model, AFR reported on Tuesday. Berkshire Hathaway is betting on wind, solar and hydro power through its Iowa-based BHE Renewables unit and its global utility investing interest.
Charlie Munger thinks Berkshire’s investments in fossil fuels and renewables can work for both