Thursday, May 7th, 2009...8:15 am
Clean, Rhymes with Green
- Following a rare “known known” in the climate change debate,
- A venture capitalist, a satellite engineer and a steel company exec walk into a bar,
- Trust nobody, question everything and be sure to offend someone…
Joel Bowman, reporting from Taipei, Taiwan…
Economists, climatologists, swine flu-ologists; on a long enough timeline, everyone gets their time in the sun. After all, we humans are pattern-seeking creatures, often preferring a crack-up theory to no theory at all.
As a species, we’ll listen to just about anyone prattle on about just about any subject. If they can manage to build a few letters around their name – say, Dr. or MBA or Rev. – we are trained to take their word as gospel. Daring to stray from the flock, to question the logic of the professing logician, is tantamount to treason, with punishments for the skeptic ranging from an innocuous look askance to social ostracism to eternal damnation of the soul.
Not all MBAs are idiots, of course, just as not all doctors are quacks or all reverends panhandling shysters. In fact, a handful of these men and women are doing admirable work each and every day…just don’t take their word for it, at least not as your only source.
We touch on the faith issue – faith in money, healthcare, omnipotence, etc. – only because today’s column wades none too carefully into the waters of a similarly controversial subject: climatology. Many of you will have taken it as an article of faith that the earth is warming and that mom’s computer and dad’s frequent flyer miles are to blame. Others point to solar flares, flatulent cows or temperamental volcanoes for the rising temperatures. And still others maintain that there is no global warming to speak of at all and that, in fact, the earth has been in a cooling phase since before the turn of the millennium.
Whatever your conviction, there is one aspect of the global warming debate that cannot be ignored: planetary temperature moderation is on the world government’s “to do” list, whether you are for or against it. From D.C. to Sydney, your elected (and non-elected) officials are pouring tax dollars into combating “global warming,” be it bona fide fact or junk science fiction.
Our (questionable) suggestion with regards to this issue is to simply concentrate on the only “known known;” in other words, to follow the money that is, as we type, funneling into the clean energy industry. In the column below, our resident energy and scarcity enthusiast, Byron King, sits down with three gentlemen who make knowing where the money is going their business.
Please enjoy and send any comments to the address at the bottom of this page…
—Byron King’s Energy & Scarcity Investor —
I’m seeking a few brave souls with the “stones” to become…
Do what I’m about to show you — before Friday, May 29 — and you could make so much money, you’ll demand I apologize for “spoiling” you with so much success.
Impossible? Don’t take my word for it. See For Yourself Right Here…
Clean, Rhymes with Green
By Byron King
There’s lots of money to be made in the “clean energy” sector…Maybe more so now than ever before. My confidence in the investment potential of renewable energy gained some interesting corroboration the other day.
I had lunch with a “brain trust,” of sorts. Participants included a retired executive from an aerospace company. This guy helped design and build many of the reconnaissance satellites that the U.S. has launched. There was a senior executive from a large steel company. There was a venture capitalist who made his first $500 million in the software industry, and who now has much of that wealth spread around in biotech and nanotech startups. And then there was me.
If you’re into lunches where you’d rather listen than eat, then this was the lunch for you.
According to the satellite builder, the dominant elements of the political and media culture are “completely in the tank” when it comes to believing in the dangers of “climate change.” It’s not as if climate change is demonstrably true, he pointed out. There are valid scientific data from both sides of the climate change issue, and many valid data points in between. But according to the satellite builder – some of whose satellites were built to track climate change — “For at least ten years, if you have not been promoting the dangers of climate change then you have not been receiving government grants. So the research community is following the money.”
Thus, the research literature is coming out strongly in favor of “doing something” about climate change. And policy-makers are using this research literature to justify doing something about climate change, even if the something that they are doing does not make any scientific or economic sense.
According to the steel executive, the climate change issue has spurred what amounts to “a pathological hatred” of carbon-based energy systems. “It doesn’t have to make practical sense,” says this source. “It doesn’t even have to work with economics. It just has to support a policy to utterly transform the nation’s energy system. The people making policy now have a crusader’s mentality. So the new policy makers want to promote radical change in energy policy. They’re going to jam it down the throat of the economy.”
According to the steel executive, the steel industry expects to see inflation-adjusted, baseline energy prices triple or quadruple within ten years. “Whether the government taxes carbon-based energy at the source, or whether they pass ‘cap-and-trade’ legislation, it’s going to cost us. So we’ll pay. Of course, we’ll pass along the new costs to the steel buyers. If demand goes down, we’ll close facilities. Then the TV cameras will show up at the plant gates to watch us shut the doors and click the padlocks. And we’ll get called bad names by the people who never much liked us in the first place.”
The venture capitalist chimed in with some thoughts. “If the feds are going to spend billions on stimulus, then they ought to direct some of that money to help fund promising research. How about some money to pay for every fossil-fuel power plant in the country to siphon off some of its CO2? Then run the CO2 through a facility to grow algae to make biofuels.”
“We’d be killing about four birds with one stone,” explained the venture capitalist. “We’d be taking down CO2 emissions. Not much, maybe, but some. We’d be helping an embryonic industry that can be competitive in coming years. Heck, turning algae into fuel is easy. The basic part is just high school chemistry. So we’d be creating a new supply source for the liquid fuels industry. And we’d be able to point to at least one success story where people can agree that we all did something right.”
Then the venture capitalist added that one of his startups is “working on coal-eating bugs.” He explained that “There’s a lot of coal buried so deep, or under other conditions that we can’t mine it. That coal will never get out. So why not put bugs down in the deep seams, and let them eat the coal? Then we can harvest the gases that come out the back end of the bugs, and use that as feedstock for other things.”
At one point, one of the lunch participants turned to the silent person at the table, who was busy taking it all in and making a few discrete notes. Then came the dreaded question, “Well Byron, what do YOU think?”
I focused my comments on geothermal development. I pointed out that for all the anti-carbon sentiment out there, the most under-appreciated, “clean and green” energy source is geothermal. There appears to be strong support for geothermal development via tax incentives and other, policy-based standards. Combine this with the growing social focus on clean, renewable energy sources.
Right now, 24 states have renewable portfolio standards (RPS) for electricity production. And Congress is leaning towards setting a national standard of 20% to 25% RPS power production by 2025. We’re at the point where a utility like California’s Pacific Gas and Electric is so desperate for “clean” energy that they’re contracting with a privately-owned company to build a satellite to harvest solar energy from space, and “beam” it back to earth.
Many of the geothermal companies that are out there now are in relatively advanced stages of development. But the problem during the past year or so has been lack of access to capital. In other words, lack of capital is the strongest headwind to progress.
I’ve recommended five geothermal companies to the subscribers of Energy and Scarcity…and I still like all five of these companies. They are all finding steam. They all have power purchase agreements in place. And they are all about to become players within the “clean green” energy space.
No matter what problems might still befall the U.S. economy, I would expect many geothermal companies to thrive. They are simply in the right place at right time.
Joel’s Note: As Byron mentions above, members of his Energy & Scarcity Investor are right now sitting atop a potential green energy goldmine. Obviously we can’t undercut Mr. King’s paid subscribers by giving these names away gratis, but we can offer you this report Byron whipped up for us, including a special offer to get your name on his mailing list. Interested parties can click here to learn more.
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[Rude Endnote: Woo hoo! Stress test results are back and only half the 19 banks don’t have enough money. Champagne, anyone?
Markets in the U.S. toasted the dubious results yesterday with the Dow and S&P 500 gaining 1.2 and 1.7% respectively.
Measures across Asia and Europe jumped aboard the rally train too overnight. Japan’s Nikkei 225 was about the best of them. The index, though still some 30,000 points below its all time high, added a hefty 4.55% overnight to the mid-9,000s. Hong Kong’s Hang Seng and the Aussie All Ordinaries finished strongly too, up 2.3 and 1.9% respectively by the close.
Over in Europe, optimism is spreading quicker than pig pandemic panic. Last we checked the poms were leading the charge with London’s FTSE was up 2.7%. France and Germany were not far behind, both up about 2%.
Over in the commodities pits, gold and crude both rocketed overnight. A barrel of the light sweet stuff goes for nearly $58 this morning, up another buck sixty overnight. Not to be outdone, an ounce of the heavy yellow stuff added another $13 and now goes for $923.
That’s all from us today. Remember to send any feisty comments to the address below and tune in again tomorrow for more Rude insights.
The Rude Awakening