Post by
no1coalking on Feb 11, 2008 11:22pm
EPA
EPA Rulings and UN Musings to Spur Profits
By Nick Hodge | Monday, February 11th, 2008
In the wake of the Environmental Protection Agency doing the exact inverse of what its name implies, some uplifting news has finally arisen that indicates the agency might actually have to do some protecting of the environment.
Last week, a federal appeals court struck down a Bush administration policy exempting power plants from certain environmental regulations, citing the policy as unlawful.
For some time now, several states--led by California--have been battling the EPA over the right to regulate pollution within their own territory. So far, the states have been handed defeat after defeat.
And while this recent story takes aim at a different issue, it could prove to have bearing on other active pollution-related cases as well.
This case, though, focuses on a rule that would exempt some coal- and oil-fired power plants from regulations requiring strict emissions control technology to help curb mercury emissions.
New Jersey and several other states challenged that EPA plan, and a three-judge panel from the U.S. Court of Appeals agreed, stating that the EPA did not have the power to exempt power plants. After all, they are supposed to be protecting the environment, not aiding in its demise.
According to the plaintiff's attorney, James S. Pew, "This means the EPA is going to have to go back and do a real job of regulating all the toxics coming out of these plants."
Of course, the EPA had no immediate comment.
We'll get to the investment opportunities resulting from this decision later. Right now, I'd like to build the case for why organizational leadership on climate change will present myriad opportunities for the cleantech sector as a whole.
The U.N. and Climate Change
Just two weeks after U.N. Secretary-General Ban Ki-moon declared solving the world wide water crisis a top priority, he's back to drumming up support for solving another serious issue--climate change.
According to Ban, global warming could cost the world upwards of $20 trillion over two decades "to place the world on a markedly different and sustainable energy trajectory."
Now, a third grader could tell that $20 trillion over 20 years means an average investment of $1 trillion per year. But current U.N. statistics indicate that the global energy industry invests only $300 billion annually in new plants, grid improvement and other new technologies.
Naturally, that leaves a $700 billion pair of shoes to fill every year for the next twenty.
For its part, the cleantech industry brought in over $117 billion in new investment last year, up 35% from the $86.5 billion in 2006.
But where are the additional monies going to come from?
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The Age of Green Economics
Well, for starters, we'll begin to see not only clean energy dollars, but also efficiency and retrofit dollars pouring into the sector. As outlined earlier, fossil fuel-burning plants are going to have to start blocking their emissions, and not by simply investing in other clean projects. All those dollars should be included in the tally.
Beyond that, Ban believes "We're now on the threshold of another (transformation) -- the age of green economics. Businesspeople in so many parts of the world are demanding clear and consistent policies on climate change--global policies for a global problem."
He continued, "With the right financial incentives and a global framework, we can steer economic growth in a low-carbon direction."
And he's right. Haven't you noticed what's going on around you? If you haven't, here's a sneak peak:
· Cleantech Group: North America and Europe produced stronger than expected growth in Q407, with total cleantech investment across the regions more than doubling year-over-year, from $676 million in Q406 to $1.38 billion in Q407. This brings the level of venture investment in NA and Europe for 2007 to $5.18 billion.
· The WilderHill clean energy index--an index of 48 large U.S. stocks in the renewable energy sector--rose over 58 percent for the year. That compared to an 8 percent gain in 2006 and an anemic 5 percent rise in 2005.
· Investment in clean energy worldwide rose by a third last year to $117 billion, boosted by widespread concerns over global warming, researchers New Energy Finance said on Wednesday--up 35 percent from $86.5 billion in 2006, said New Energy Finance.
· Growing IPOs--like Iberdrola spin-off Iberdrola Renovables IBR (MCE: IBR).
· Trade in the world greenhouse gas credits market rose 80 percent last year as emissions rules became a concern for more companies.
· Global carbon credit trade rose to US$60 billion in 2007, from US$33 billion the previous year, according Point Carbon.
· Installed wind capacity grew 45% in 2007.
· Countries are already claiming carbon neutral status. Even Hawaii said they'll be carbon neutral soon by shifting to solar.
· Philippines to ban incandescent bulbs.
· Cambridge Energy Research Associates: Study Suggests That, Unlike in the '70s, Energy Lessons Will Last.
· Financial Times: Alternative Energy Fuels Long-term Opportunity.
· By 2020, the European Union wants renewable energy to represent 20 per cent of the total energy mix.
· Allianz Global Investors: 71% of investors classify the environmental technology sector as a "buy". Nearly half (49%) say that they will invest in these types of companies within the next year.
Folks, those are just headlines from the past few weeks. As I've said before, the numbers are only going to get bigger as more projects and technologies are pursued. And all of those projects are going to create. . .
Green Collar Jobs
The energy bill signed into law last December authorized $125 million for green collar job training programs. And while that may be just a drop in the bucket, it shows where America's manufacturing jobs are headed.
According to Bob Baugh, Executive Director of the AFL-CIO Industrial Union Council, green collar jobs present "an opportunity to restore some of the 3 million jobs in manufacturing we've lost in the last seven years."
But green collar jobs are an article for another day. For now, let me reveal one the investment opportunities related to the aforementioned EPA ruling.
A company called Evergreen Energy, Inc. (NYSE: EE ), has developed a process, dubbed K-Fuel, that uses heat and pressure to physically and chemically transform high moisture and low-Btu coals, such as sub-bituminous coal and lignite, into lower-emission fuel.
It reduces emissions of mercury, sulfur dioxide, nitrous oxides and carbon dioxide. And a recent month-long test of the fuel produced a near 82% drop in mercury emissions form a western Pennsylvania coal plant.
Now, don't get me wrong. I'm not jumping on the coal bandwagon. But I believe it will be part of our energy future, so we might as well do everything we can to make it as clean as possible.
The western Pennsylvania plant burned 75% Ohio bituminous coal blended with 25% Wyoming coal treated with the K-Fuel proprietary process.
Those results came out February 7th. Take a look at what the stock was doing just a week before the announcement:
You can bet someone had a leg up on the results of the test. Nonetheless, I suspect this one will get a continued bounce as news of their test results spread and new orders start pouring in.
Until next time,
Nick