The world is getting hotter. Global warming has now been verified by about every legitimate scientific body in the world. And, most believe that man made carbon emissions into the atmosphere is the major contributor to this serious global problem.
But, concerned, action-oriented people see problems as opportunities. And the investment industry is based on finding opportunities to put money to work with the hope of earning good returns. In a free enterprise system, capital will always be drawn to the most promising solutions to the most pressing demands of the day.
Biodiesel is a renewable fuel made from any vegetable oil or animal fat, and can be blended with diesel fuel, usually at a blend of 20 percent or lower. Biodiesel significantly reduces emissions, including carbon monoxide, particulate matter and life cycle carbon dioxide. Studies show that biodiesel outperforms gasoline, ethanol, and conventional diesel in reducing climate-altering carbon dioxide emissions and in overall fuel efficiency.
There are now 148 operating biodiesel plants throughout the U.S. The average plant capacity is currently about 9.5 million gallons per year. And, biodiesel production promotes economic development. A recent study showed that the industry will create almost 40,000 jobs and add $24 billion to the overall U.S. economy over the next 10 years. This is big business.
Solar power is booming as well. The proper term for solar-cell systems that produce electricity is photovoltaics, or, “PV.” The silicon-based solar cells directly convert the sun’s energy into electric current. The PV solar-cell technology has been advancing rapidly, and it is becoming more efficient and less costly.
In April, MMA Renewable Ventures and a subsidiary of SunPower Corp. began construction on what will be the largest PV system ever built in North America at Nellis Air Force Base in Nevada. The system will generate in excess of 25 million kilowatt-hours of clean electricity annually and provide 25% of the power used at the base. This is big business and may turn into big profits for companies who can compete effectively in this business.
There are similar advances and opportunities for sustainability-oriented businesses in wind, tidal power – energy from the sea, biomass – harnessing methane gas for electricity production, hydroelectric – using the force of flowing water, and geothermal energy – using the earth’s own heat held in rocks deep underground.
So how can regular investors take advantage of the burgeoning opportunities in renewable energy businesses? Many of these companies are publicly traded and their stock may be purchased through about any brokerage firm. But, this involves much research and possibly the help of an advisor with long experience in this area.
There is a growing list of mutual funds specializing in renewable and alternative energy. The Guinness Atkinson Alternative Energy Fund is a no-load mutual fund investing in US and foreign alternative energy and energy technology companies. There are exciting new exchange traded mutual funds (ETF’s) such as the Market Vectors Global Alternative Energy Fund, the Wilderhill Clean Energy Fund, and the First Trust Clean Edge Fund.*
Most investors with serious financial goals will want a diversified portfolio with investments in many different industries. But, investments in renewable energy may help to supplement their overall strategy and help support this growing industry at a critical juncture in its history. With this strategy, investors can help in the fight against global warming and invest for their future at the same time.
* This is not a recommendation to buy these or any securities. Please speak with your financial advisor to see whether these investments are right for you. The author owns shares in the Guinness Atkinson Alternative Energy Fund, First Trust Clean Edge Fund and MMA Renewable Ventures’ parent company MuniMae.
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