Biopact reports that Salzburg AG has opened its first biomethane gas station, allowing owners of Compressed Natural Gas vehicles to use their blend of 20%.  This is the first retail station I have heard of selling a cellulosic-derived fuel to retail customers (are there others?)

Prospective Cellulosic Ethanol investors should take note... while cellulosic feedstocks are likely to supply much of our liquid fuels in the future (although not as much as we currently use), cellulosic ethanol is unlikely to have the field (so to speak) to itself.  Ethanol's low energy density and difficulty of transport will be continuing barriers to its adoption as the cellulosic fuel of choice.  Also, biogas from anaerobic digesters and landfills is already used to generate electricity and fed into pipelines.  There are other contenders to displace ethanol as the heir-apparent to gasoline as well, such as 2,5-dimethylfuran (DMF), and ETBE as a substitute fuel additive.

While conventional gas vehicles can easily be modified to accept ethanol, that advantage may be outweighed (at least in some areas) by the advantage that biogas (after purification) is chemically identical to natural gas, and so there is no difficulty in shipping it through the existing pipeline infrastructure.  A vehicle conversion to compressed natural gas (CNG) costs approximately $2,000 to $4,000, although Salzburg AG is offering it for less than $1000, at which price the lower running costs for CNG should give a payback of only a few years.

While the 10,000-15,000 passenger vehicle miles per acre quoted are lower than those expected from switchgrass derived ethanol and even ethanol from corn (see this link for great graphic comparison), the lack of inputs makes grass-derived biogas much more sustainable than ethanol from corn, and the established market and infrastructure for natural gas will make biogas producers much less vulnerable (but not immune) to local fuel gluts.

This article at After Gutenberg makes much more detailed examination of the benefits of Bio-CNG.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 08:10 PM | Permalink | Comments (0) | TrackBacks (0)

A Carbon Conundrum for Christmas

Do we have to choose between happy kids this Christmas, and a happy future for those kids?  Practically everything we buy has a negative environmental impact.  If green consumption is an oxymoron, so is green giving.  Are we left with only greener giving?  It often seems that the only way to be truly green is to be like the Grinch (before his heart-enlargement) and not give anyone anything.  And skip the tree while you're at it.

It's a hard decision, and while there are many Green Shopping Advisories telling us that we can buy and still feel we're doing something good for the planet, it usually ends up being "less bad" and the green claims are not always as strong as we would hope.

The Gift of a Bright Green Future

The sad truth is, as successful investors know,  we nearly always must choose between immediate gratification and long term gain.  The whole debate about Global Warming is basically a choice between long term well-being and instant gratification.  If you come down on the long term well-being side of the debate, prepare yourself for sighs and disappointed looks from the little ones, and give the gift of stock in a sustainable company that's working to make the place they live a better place to be.

Which stock to choose?  Here are a few criteria I think are important:

• Stability: We should probably stay away from companies aren't likely to be in business when the kids grow up.
• Greenness: As I noted last week, investing in green companies, like buying presents is often a compromise between greenness and practicality.  The profit motive can make a company less brown, but it is unlikely to make it very green (at least until we have stronger environmental regulation.)
• Educational: Most people give stocks to kids hoping to teach them about the market.  This will probably work better if the company they own also has a brand they'll see on a regular basis.

For the stocks I've picked below, I rate them on each of these factors on an A-F scale, to help you pick the one or ones you think will be best for your soon-to-be environmentally aware kid.

Top Five Stocks for a Green Christmas

#5. Cree, Inc. (Nasdaq: CREE),

Stability C, Greenness B, Educational C.

You may have never heard of Cree, but they are a world leader in making ultra-bright LED lights, as well as high current power controllers which can significantly increase the performance and efficiency of products that incorporate them.  I call LED's the Compact Fluorescent light bulb of the future (they're still too expensive for most residential uses,) but they are getting rapidly brighter and cheaper.  Although the company is profitable, they have been the subject of takeover rumors, and if they were bought for cash, it might be profitable for your little munchkin, but the lesson in green investing would probably be over.

On the other hand, if you also use energy efficient LED Christmas lights, you might just have the company's products on hand at the moment of gift-giving (if the LEDs involved happen to be made by another company, who is to know?)  Cree will also provide effects lighting for the Beijing Olympics.

#4. The ABB Group (NYSE: ABB)

Stability A, Greenness C, Educational C. 

ABB is a bit less fun than Cree, but they're in great shape in terms of long term profitability, and their expertise in efficient electricity transmission and distribution make them a good long term hold. While they don't have a lot of consumer awareness among us grownups, I bet your little one will have a lot of fun playing "Spot the ABB logo" in back alleys.  I bet you'll be surprised at how often you see it yourself (see my profile of ABB for details.)

#3. General Electric (NYSE: GE)

Stability A, Greenness D, Educational A.

It's hard to beat GE for consumer awareness, and the strong marketing push behind their EcoMagination initiative is sure to keep the company in the little one's mind, even if they missed an entire week of green programming on GE's NBC TV Network.  On the other hand, GE is so gigantic, they get less than 10% of their revenues from EcoMagination products (despite the apparent 90% of their marketing budget devoted to Green.)  Nevertheless, I believe that Jeffrey Immelt is serious about green, so green revenues are likely to grow quickly in the future.    

#2. Ormat (NYSE:ORA). 

Stability B, Greenness A, Educational F. 

I know, you've never heard of Ormat (unless you've been reading the recent spate of articles about Geothermal Power, including the one I wrote.)  Ormat is widely recognized as a leader in Geothermal, both in technology, and their ability to run plants well.  They are also just about as Pure-Green as any consistently profitable company I know of in the Renewable Energy space.  On the downside, you'll probably never see one of their power plants, although you can always take the kids on a trip to Yellowstone and talk about all the untapped geothermal potential there (long may it remain untapped.)

#1. Sharp (Pink Sheets ADR: SHCAY)

Stability A, Greenness C, Educational B. 

While you may not associate Sharp with Greenness, they are the world's largest manufacturer of photovoltaic panels.  The electronics they are more known for seem, from my unscientific sampling, to have a larger proportion of Energy Star qualified products than other manufacturers.  I give them the top slot here because photovoltaic solar panels are the first type of Renewable Energy most people think of, and while many of the pure-play PV manufacturers will survive, any particular one could go broke or be bought out in the near future.

Don't like these?  We at AltEnergyStocks.com would love to hear about your picks in the comments... We'll publish the top reader picks in a couple weeks... still in time for the Christmas Shopping shopping procrastinators.

DISCLOSURE: Tom Konrad and/or his clients have positions in all the stocks mentioned here: CREE, ABB, GE, ORA, SHCAY.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 06:20 PM | Permalink | Comments (7) | TrackBacks (0)

On Monday, Joe Carroll and Mario Parker at Bloomberg News argued that the current ethanol bust was making losers of Bush, Gates and D.E. Shaw. We are proud to say that at AltEnergyStocks.com, we have always been corn ethanol bears, even when many of these stocks were trending up. But beyond bragging about our foresight, which, by the way, was shared by several people, the current fiasco is a cautionary tale of the dangers of government trying to create a winner industry when that industry makes no sense on most levels. Things may change, but to date all that ethanol has managed to achieve is: cost American tax-payers millions of dollars, fill the coffers of already-millionaire farmers, destroy billions of dollars in shareholder value, deplete scarce water resources, inflate food prices, prevent an open global market for biofuels that would benefit nations with a true comparative advantage such as Brazil, and placate a handful of inefficient farmers who account for a fraction of the total US population. Might it be time to pull the plug and let this white elephant die off before it tramples anything else? Apparently not.

On Monday, Mark Gongloff at the WSJ's Energy Roundup discussed the difference between peak and plateau. Whether oil supply is currently peaking or plateauing, one thing is certain: demand is steadily growing. So if the debate really has shifted from whether supply is increasing to whether it is peaking or plateauing, basic microeconomics is quite clear about what the outcome will be on prices. The only question remaining, then - and this comes back to peak Vs. plateau - is "how fast will prices rise?"

On Thursday, Climate Progress reported what could, if true, be the story of the week. Well, I suppose that's open for debate, but I do agree with the author that this announcement should be taken with a grain of salt. Nevertheless, Chinese officials making these types of declarations in public is likely a signal that China is warming (no pun intended) to the idea of seriously negotiating on this issue. China is, after all, the world's largest source of CDM carbon credits, and regional players are betting that it may soon seek to formalize its position as a major environmental market.

On Thursday, James at Green Investments discussed India's cleantech - a huge opportunity for investors. As in other areas, India's cleantech potential is often overshadowed by China's. But India is no cleantech joke. I'm surprised the author omitted to discuss Suzlon and the REpower deal, which squarely put India on the global alternative energy map.

On Friday, Jennifer Kho at Greentech Media told us all about turning coal's CO2 into biomass. Coal is plentiful and cheap, and, despite the way many folks feel about it, it just ain't going away anytime soon. In terms of investment, I have discussed in the past opportunities related capturing greenhouse gases from power gen facilities. While very speculative and closer to pure tech plays than alternative energy, companies in this field could nonetheless one day be offering solutions in very high demand. I believe this is a space worth keeping an eye on.

The Week in Cleantech is a weekly roundup of our favorite cleantech and alt energy blog posts and stories from across the web. If you know of a good piece that you think should be included here, don't hesitate to let us know!

Posted by Charles Morand at 08:59 AM | Permalink | Comments (0)

This morning, I read an article in this week's Economist that summarized well what I've been hearing over the past few weeks: coal is back in fashion with power utilities. As pointed out in the article, on a BTU basis, coal remains the cheapest fuel for thermal generation, an the prospect of high carbon prices is not deterring even European power generators from investing in coal-fired assets.

A few months ago, Tom discussed his peak coal portfolio. The long-term perspective is of course critical to keep in mind, and that piece helps putting recent news around coal into perspective. Nevertheless, in the near term, coal is making a comeback.

Coal is dirty, very dirty. Besides greenhouse gases, which I believe will represent a material hurdle to economically burning coal in the long term (10 years and beyond) in most Western markets, coal creates significant localized pollution problems.

If estimates of the pace at which new coal capacity is currently being added in China and India are anywhere near accurate, both countries (and their populations) stand to suffer greatly from increased levels of air pollution. There is, however, evidence that China has begun taking pollution control seriously, especially in light of the fact that Beijing is currently too polluted to host Olympic Games.

A (Clean) Coal Stock

I'm no fan of coal for a number of reasons, but one play on cleaner coal caught my attention in late 2006: Fuel-Tech Inc. (NASDAQ:FTEK). Fuel-Tech makes pollution control technologies that could see significant uptake with tightening air quality standards. You may remember an interview with their CEO that we published back in March.

I followed the stock for while but always found it expensive on a PE basis. Then, in the spring, the stock took off with the rest of the market (but not the earnings) and I just stopped paying attention. Fuel Tech remains, however, a bit of a tech play and so it's been correcting heavily with the recent market slump.

According to Yahoo data, Fuel Tech is still trading at a whooping 12-month trailing PE of 166x. However, its forward PE (fy 08), arguably a much more important stat, is around 40x. While that is no Buffet stock, there are a number of investors out there who seem willing to pay up for a piece of Fuel Tech's future growth (keep in mind too that when the article linked to was written, the stock was staging a bit of a comeback).

While I'm not sure this is something I'm ready to jump on right now, both on an intrinsic basis and because I don't think the markets are currently likely to be gentile to this type of security, it is definitely back on my radar.

I don't like coal at all, but if I had to play it I would do it through Fuel Tech.

DISCLOSURE: The author does not have a position in this stock.

Posted by Charles Morand at 10:24 PM | Permalink | Comments (0)

The market has fallen sharply, and Solar stocks have fallen even more following rumors that Congress will pass the Energy Bill without the Production Tax Credit or Investment Tax Credit.   Given this volatility and Renewable Energy's reputation for profitless startups, now might seem like an excellent time for a risk adverse investor to abandon the sector altogether.  

Not so.  Even if all tax credits and other incentives for Renewable Energy were to be removed, the underlying drivers of Alternative Energy remain firmly in place: Rising energy prices and decreasing reserves, the need to reduce our Greenhouse gas emissions to avoid the worst effects of Global Warming, and the likelihood of continued nationalizations, or the more subtle nationalization by taxation/royalty increases practiced in more developed countries.

Defensive Alternative Energy Sectors

Without direct government support, the sectors likely to suffer the least are the ones which are already economic.  Top of the list is Energy Efficiency, which might actually gain from a cut in subsidies for renewable energy, as green House Gas production efforts shift away from Renewable.  Among renewable energy technologies, Geothermal, small Hydro, and Wind are already cost competitive with fossil competitors in the best locations.  Biomass and Biodiesel are also cost competitive when using waste as feedstock.

Most of the best companies in Energy Efficiency (especially when it comes to energy Efficient Buildings) tend to be systems integrators, large companies with strong energy efficiency arms.  These companies have an added advantage for a risk- adverse investor: built-in diversification.  This brings me back to a way even the most cautious stock market investor can participate in the Alternative energy Boom: By buying the companies in my Blue Chip Alternative Energy Portfolio: large, profitable companies that stand to gain from increasing energy prices and carbon regulation.

Charles and I have added a few to my original list since the original article.  Here is the updated list, along with links to articles describing why we like each of the stocks:

Investing, Like Life, is a Compromise

This portfolio is being heavily weighted towards engineering, industrial, and utility companies.  However, most of these companies have truly international operations, insulating them from a likely US recession and declining dollar.  They're also uniformly profitable, often with low price to earnings ratios, and relatively high dividend yields. 

Nor ate these as green as a company like Interface (IFSIA).  A diversified investor must make compromises.  Those compromises can be made at the portfolio level by mixing some dirty stocks in with the clean ones, or they can be made within the companies themselves.

Our choice is not between a diversified portfolio of green companies and a diversified portfolio of green-ish companies representing compromises of our green ideals.  In reality, our choice is between a risky portfolio of highly volatile green stocks, and a much better diversified portfolio of companies working to help the environment in many way, but nevertheless embodying real-world compromises of green ideals.

The Priuses of the Stockmarket

These Blue Chip stocks are the Hybrid cars of the stockmarket.  While they are a lot cleaner than a normal car, they still burn gasoline.  Eventually we may all be able to drive Electric Cars charged with Wind or Solar.  Until that day comes, we'd be a lot better off if most people drove hybrids or diesels.  Just as the cost of ownership and the environmental impact is lower with a high-mileage car, the environmental impact of these companies is lower than most, and I expect those benefits to translate into better returns for investors in the long run.

If we're lucky, we can use our profits to all buy Tesla Roadsters and charge them with Solar.

DISCLOSURE: Tom Konrad  and/or his clients have positions in these companies mentioned here: GE, SHCAY, JCI, WMI, AA, CAT, DD, FPL, ADM, DE, SI, OC, ABB, MGA, BGC, PWR, ITC, DOW, HON, TRN.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 07:55 PM | Permalink | Comments (5) | TrackBacks (0)

The December edition of Bloomberg Markets Magazine is devoted partly to the rise of carbon capitalism. An interesting series of articles on the budding carbon economy. While there are currently few ways for North American investors to play this, I continue to believe that this is an area the environmental investor must keep an eye on.

On Monday, Jim Kingsdale at Seeking Alpha discussed ethanol and biodiesel: two very different biofuels. This is an interesting piece with a bullish outlook for two biodiesel stocks. Biodiesel often lingers in the shadow of ethanol in North America, yet it is a very interesting way to play biofuels. On the conventional fuel side, it seems as though diesel has all it takes to make a comeback in North America.

On Tuesday, Rachel Oliver at EcoSolutions told us all about CSP. We've addressed in the past the fact that concentrating solar power (CSP) already makes economic sense, which cannot be said of PV. This article, however, points to a whole new world of CSP possibilities in a region where many of the basic requirements for successfully concentrating solar power are in place.

On Wednesday, Katie Fehrenbacher at earth2tech argued that we could save the planet with genomics. This is a very interesting endeavor, and I for one am a strong believer in the ability of genetic and biological engineering to help surmount many of the problems that currently plague biofuels.

On Wednesday, EERE News informed us that the AWEA had boosted wind power projections to 4,000 MW for 2007. The article discusses the fact that the current shortage in turbine components is leading manufacturers to add new capacity. The wind turbine manufacturing industry, led by the likes of Vestas (VWDRY.PK), GE (NYSE:GE), Siemens (NYSE:GI) and others, looks rock solid at the moment. However, look out for that extra capacity to eventually ease out the supply side of that attractive wind equation.

In a recent survey of executives, McKinsey found that, of all sociopolitical issues, the environment and climate change were believed to be the ones that would impact shareholder value the most over the next five to ten years (PDF document). Nothing groundbreaking here I suppose, but I take such results as a powerful sign that the current momentum in cleantech has legs. Make no mistake, this sector remains, as acknowledged by some of the main players, heavily depend on policy and regulatory incentives for its viability. Having business on side is therefore critical.

The Week in Cleantech is a weekly roundup of our favorite cleantech and alt energy blog posts and stories from across the web. If you know of a good piece that you think should be included here, don't hesitate to let us know!

Posted by Charles Morand at 05:16 PM | Permalink | Comments (0)

Most studies show that the greatest potential for reducing our carbon emissions comes from energy efficiency technologies.  And, unlike many renewable energy technologies, energy efficiency is almost always less expensive than developing new energy sources, so energy efficiency businesses can be profitable now, and still have a large potential upside which will come with regulatory efforts to reduce our carbon emissions and rising energy prices.

Unfortunately, the reason this free lunch exists is because selling and implementing energy efficiency technologies isn't easy.  It's also much more difficult to find companies that profit from energy efficiency than those that produce identifiable products such as wind turbines or solar panels.   Which is why I'll be attending the Energy Star Summit on December 3rd and 4th.  That, and they gave me a press pass.

Even if I don't see you there, you can look forward to an article on the companies helping to make our housing stock more efficient on December 9.

Posted by Tom Konrad at 08:10 PM | Permalink | Comments (0) | TrackBacks (0)

Since I first profiled Electro Energy Inc. (EEEI) on September 16, the stock first fell substantially to as low as 30 cents, and just recently has shot back up to the price it was when I wrote the article, a very cheap 50 cents. 

bipolar rebound

I have bought the stock for myself and clients repeatedly in the intervening dip, and I made another purchase at $.50 today because of two news items which dramatically improve the prospects for the company.

On October 29, they announced that they raised $750,000 bridge financing from KIT Financial, and yesterday they announced a $2 million research funding as part of a recent Department of Defense Funding bill.  Both of these are excellent news, and they go a long way towards easing the cash crunch which has put their continued solvency in doubt and depressed the share price to such a low level.

EEEI still needs to raise money, but future raises are also likely to be on better terms because of their stronger balance sheet, and the likelihood that they will commence high volume shipments of batteries from their Gainesville plant in early 2008.

DISCLOSURE: Tom Konrad  and/or his clients have positions in EEEI.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 06:26 PM | Permalink

In August, I argued that Biodiesel stocks could be in trouble from more efficient ways to turn the oils and fats they use as feedstock into fuel, and concluded the article by saying that the likely winners are suppliers of oils and fats, not the processors.  James Kingsdale, of Energy Investment Strategies has been thinking along the same lines.  Last week he wrote an excellent overview of the major biofuels industries, including some stock picks.  

One of those stock picks was the diamond in the rough I wish I had known about when I wrote Biodiesel's Nightmare: Renewable Diesel back in August. James writes:

 Darling International, Inc. (NYSE: DAR) ... is a renderer and a collector of waste greases. Renderers collect waste fat and bones from meat producers and turn them into products. Both waste greases and animal fats are potential high FFA biodiesel feedstocks, although Darling presently is not using them for that purpose...

While biodiesel from palm oil is causing deforestation, and the prices of vegetable oils rise because farmers are changing their crop rotations to produce more corn for ethanol, biodiesel (or renewable/green diesel) from waste vegetable oil has a positive environmental impact because it diverts something that would otherwise have to be disposed of to a useful purpose.  

Biodiesel from waste vegetable oil is the greenest biofuel available.  As a member of the Denver Biodiesel Coop, I use it in my car... now I can use it in my portfolio as well.

DISCLOSURE: Tom Konrad  and/or his clients do not have positions in any of the companies mentioned here.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 10:29 PM | Permalink | Comments (0) | TrackBacks (0)

The following is a Special Information Supplement from our Featured Company sponsor The Efficiency and Renewable Energy Summit

The Efficiency and Renewable Energy Summit is a Two-Day Strategic Event that will focus on the Best and Most Effective Trends in Efficiency and Renewable Energy for the energy and utilities industries.

As the nation works towards meeting the growing energy demands while maintaining security, energy independence and environmental protection, many industry participants are turning towards cleaner sources of energy. Some are looking at better ways of utilizing existing supplies of power producing material like coal and natural gas and others are embracing alternatives such as renewable energy technology. While the future landscape for the energy industry has yet to be determined it appears that a diversified portfolio of cleaner and safer means for the production of electricity is a realistic expectation.

But while representatives of utilities, industry and consumer groups all agree that tapping renewable energy is an important and necessary goal, questions remain over the best way of ensuring such power reaches businesses and consumers in a reliable and cost-efficient manner.

Many utilities understand that going green makes good business sense. Renewable energy can supplement their portfolio fuel mixes while allowing them to meet their contractual loads. Providing a valuable market service and better serving shareholders or stakeholders are compatible—something that about 200 utilities nationally of all types have discovered.

Topics to be covered include:

· Discovering new ways to implement renewable energy generation without disruption and increase efficiency

· How renewable energy certificates and policies are changing the energy industry

· Successful strategies for integrating hydroelectric power

· Project management, operations and strategic planning for energy efficiency

· Building the business case for buying renewable energy

· A practical approach to wind integration

· The potential role of biomass energy

· Maximizing performance and efficiency with Solar energy

· Strategies for Nuclear power use and their energy future

· Eco-labeling: how to continue the “buzz” for renewable energy

· Global Outlooks and markets for renewable energies

· Concrete steps and concepts in developing geothermal energy

· Utilities perspective on Ocean Power Projects

· Contribution of renewable energies to climate protection

· Evaluating the next wave of renewable energy concepts and technologies that will best serve your company and executing your strategy

· The latest renewable energy projects, developments and regulations

Reasons for Energy companies and professionals to attend:

- keep up-to-date with the latest technological developments

- network with suppliers, consumers, competitors and other key stakeholders within your industry

- find new opportunities across a global platform

- do your business deals by seeing the entire industry in one week and in one place - saving money, energy and carbon emissions

This conference offers you the opportunity to meet your potential clients as well as the chance to reinforce your relationships with existing customers. ACI have put together a range of packages to suit all budgets and requirements. These range from branding options, to full scale partner solutions and can be tailored to meet your objectives and budgets. With opportunities such as drinks reception sponsorship, exhibition spaces, and options to sponsor round table groups and panel discussions there is certainly something to meet your needs. We will be happy to talk to you about the opportunities available, and to work with you to create a strategic platform for your organization.

For more information please contact Elena Pitt at 312 780 0700 x208 or epitt@acius.net.

Posted by Featured Company at 04:49 PM | Permalink | Comments (0)

Last month, I wrote that investors concerned about peak oil should invest in suppliers of alternatives to driving.  One of the sectors I highlighted was public transit: busses and rail, although I did not provide any stock picks at the time.

Here, I will focus just on rail transit.  It's a bit tricky to invest in rail transit systems as they are operated by cities, not by private companies, so I took a step up the value chain and started looking for companies which supply transit operators.  I focused not on rail line operators, but suppliers, since these companies are most likely to participate in a boom in urban mass transit.

Here's what I found (in order of the strength of their exposure to mass transit.)

Rail Stock #4: A Speculative Hybrid Locomotive Stock

Charles first brought Railpower Technologies to your attention in January.  Railpower (RLPPF.pk, P.TO) is maker of hybrid diesel-electric yard-switching locomotives.  We like the technology, but the Railpower story is typical of a lot of cleantech stocks: they're having trouble turning cool technology into sales and profits.  

With a recent investment from one of Canada's largest pension funds, a two-bit stock price, and a recent order from Union Pacific (NYSE:UNP), Railpower's long stock price slide may be over, but despite the investment by Ontario's Teacher's Investment Plan, this is hardy a widows-and-orphans stock.

This company does not have direct exposure to rail transit, and its success or failure is more likely to be driven by company specific factors such as execution and the ability to enter into profitable contracts (their record has been poor in the past, but they have likely learned from painful mistakes.)  

Nevertheless, a growing concern about climate change and rising fuel prices create an environment which should make their products much easier to sell than in the past.  This is clear from the fact that both Union Pacific and the pension fund cited global warming in their decisions.

Rail Stock #3: Diversified Rail, with a Little Wind

Trinity Industries, Inc. (NYSE: TRN) is a conglomerate, with a strong presence in rail.  They also have an inland barge division, another form of highly efficient transport, and an arm which constructs (among other things) structural wind towers.  This closely held company has been seeing significant purchases by insiders, but has been recently downgraded by two of the seven analysts following the stock, despite higher 3rd quarter profits.  

The recent price drop following the downgrades has me watching for opportunities to buy this stock on the cheap.  I always hate it when this happens, but I find myself agreeing with Jim Cramer.

Rail Stock #2: Railway Maintenance

Portec Rail Products (NasdaqGM: PRPX) supplies rail joints, anchors and spikes; railway friction management products; railway wayside data collection and data management systems; and load securement systems.  Regular readers know that I love boring stocks, and railway maintenance fits the bill nicely.  Protec is solidly profitable, and the lone analyst following the stock has recently raised his estimate for future earnings.  Revenue is growing at 15% yoy, and they have no debt.  

Portec serves both railway and transit customers in North American, Canadian, and British markets, and are positioned to benefit not only from any industry growth, but also from a growing need for efficient operations, which should also increase the interest in good track maintenance. 

 Rail Stock #1: Global Diversification, Strong Mass Transit Exposure

Wabtec Corporation (NYSE:WAB) is a global rail services firm, with business on five continents.  The company has been growing both earnings and margins.  Of all these companies, Wabtec has the largest current exposure to mass transit, serving virtually every major intercity passenger transit system in North America.

However, insiders have been selling the stock, despite the fact that analysts have been raising their estimates of future earnings.  This one bears watching, but I trust insider actions more than analyst estimates, so I would not be surprised if we see some disappointing news in the next couple quarters.  If bad news does emerge, that may be a good time to get some excellent exposure to an industry poised to benefit from rising oil prices.

DISCLOSURE: Tom Konrad and/or his clients did not have positions in any of the stocks mentioned at the time of this writing.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 04:12 PM | Permalink | Comments (0) | TrackBacks (0)

On Monday, Richard Stuebi at Cleantech Blog highlighted the extent to which NBC is in the dark about energy efficiency. I couldn't agree more with Stuebi here - this idea is so painfully bad that it's a bit of a mystery why anyone in their right minds would agree to it. In the space of a few minutes, GE likely managed to undermine over two years of flashy press events and other publicity stunts aimed at convincing investors and the populace that "green is green." If Alt Energy Stocks awarded a prize for misplay of the week, this would certainly be it.

On Monday, James Kanter at The Business of Green wondered why oil majors were so keen on renewable energy. I'm not sure I agree with the thesis put forth in this article. It seems to me that, ceteris paribus (especially with regards to forex), scarcer oil means higher prices (at least in the short term), and that, given the inelasticity of demand for oil, this should drive up top line growth and share prices (and, by extension, option values). Regardless of the answer, the question is worth posing: do oil majors invest in alternative energy because they see a business case or are they doing it for reputational reasons. The jury is out.

On Wednesday, Tyler Hamilton at Clean Break argued that geothermal was flourishing under the shadow of solar. A few months ago, I had a chat with an investment banker who worked on a number of alternative energy deals, and he too was of the opinion that geothermal was a fundamentally great alternative energy play. Here's a list of geothermal stocks I recently came across.

On Wednesday, Scott Miller at BIOConversion Blog told us about the groundbreaking of the country's first commercial-scale cellulosic ethanol facility. This indeed should eventually usher in a new biofuel era for North America. Don't hold your breath, however, because cellulosic will continue to account for a small percentage of total ethanol production over the next couple of years. Nevertheless, this is where you want to be looking long-term, especially given cellulosic's new appeal with policy-makers. Al Gore, among others, also seems to like cellulosic ethanol.

On Friday, Xavier Navarro at Autoblog Green green discussed China's recent mission to the European Parliament to study CO2 regulations. China is already the single largest market for CDM carbon credits (PDF document), and there is no doubt it soon will be a major cleantech and alternative energy market. This should be good news for close China watchers.

On Friday, our very own Tom Konrad appeared on Consuelo Mack's WealthTrack. For the unfortunate few who missed it, you will soon be able catch the discussion here.

The Week in Cleantech is a weekly roundup of our favorite cleantech and alt energy blog posts and stories from across the web. If you know of a good piece that you think should be included here, don't hesitate to let us know!

Posted by Charles Morand at 04:39 PM | Permalink | Comments (3)

Is General Motors (NYSE: GM), with their plans for as many as 100,000 Volts in 2009, or Toyota (NYSE:TM), with their long term lead (and behind-the-scenes research) in hybrid technology, or some other carmaker going to win the race to bring consumers the first commercial Plug-In Hybrid Vehicle (PHEV)?  More importantly, will it matter?

The All-Electric Dark Horse

Ballard's (NASD:BLDP) recent confirmation that they are in talks with big automakers left many wondering if the Fuel Cell Vehicle is finally dead.  The consensus is now that the next generation of propulsion system will be the PHEV, which combines the range of liquid fuels with the efficiency of an electric vehicle.  One reason I thought hydrogen was a non-starter as a fuel was that it could not supply much range due to its low density (except at high pressure, which increases the cost of an already expensive hydrogen still further) leaving it to compete with pure electric vehicles on efficiency, a battle it was doomed to lose because of the inherent inefficiencies of producing hydrogen, and the high cost of Fuel Cells.

So is the road ahead clear for the triumph of the PHEV?  I doubt it.  I do expect many PHEVs to be built sold, but I think they are likely to be a gateway drug to real efficiency: the pure Electric Vehicle (EV.)  

The internal combustion engine (ICE) is a complex machine, with over a century of research and development designed into it.  This complexity makes it extremely difficult and expensive for new carmakers to break in to the market without substantial state support.  I'm not an expert on the car industry, but I have read constant news stories about countries massively subsidizing their carmakers, always with the goal (not always matched with success) of nurturing a national car maker.  

On the other hand, there are at least 22 Electric car startups (not counting aspiring makers of electric bikes, electric motorcycles, and stranger contraptions) today, each competing to break in as a new manufacturer.  I expect that some of them will succeed, and that the traditional car manufacturer who are currently pursuing the PHEV will be relctant to forsake their highly refined ICE technology.  Existing carmakers could thus fail to head off outside competition, leaving a niche open for EV-only manufacturers.

I'm not trying to say that the internal combustion engine is dead, long live the electric motor (although I wish I were), but I do expect that a growing proportion of the vehicle fleet will be all electric, even as Plug-In Hybrids are gaining ground.

Advantages of the EV

Along with the much lower complexity, the primary advantage of EVs is cost.  PHEV advocates say that 80% of all daily car use is less than 50 miles, which means that, most of the time, a PHEV will be operating as an electric vehicle.  Now suppose that Matt Simmons is right, and oil will soon hit $300 a barrel, along with $10 gas.  While people will be clamoring for public transport, many suburban dwellers will not have that option for a long time.  A time-tested American solution to most problems is to buy something, but money is likely to be tight (because of those same high gas prices.) 

Will that something be a PHEV or an EV?  Most people will already own a conventional car, which they can use when they need the range that energy-dense gasoline can provide, for the vast majority of trips.  The rest of the time, a true electric vehicle will suffice.  So why pay an extra $10,000 or so for a new ICE in your electric vehicle, when you already have one in the old car? (Estimated from the fact that the Zap Xebra MSRP is $10,500, while the cheapest hybrid today has a sticker price of $20,950.  The Xebra has a top speed of only 40 MPH, but the Prius I'm comparing it to is not a full PHEV, either.)  EVs may get a greater price advantage if the batteries are leased instead of owned.

In addition to the extra cost, an ICE and its fuel add weight to the vehicle, reducing the vehicle's efficiency.  In other words, PHEV buyers will not only be paying extra to add an ICE to their electric vehicle, they will be paying again in terms of lower performance and higher operating costs in all-electric mode.  This leads to an interesting thought: if the big automakers are confronted with EV upstarts cannibalizing their PHEV sales, might they just start selling cars in both PHEV and EV versions, perhaps with the engine and fuel tank of the PHEV replaced by more batteries?

Investing in Electric Vehicles

I think it's still too early to start trying to pick winners in electric vehicles.  This is a disruptive technology, which puts everything up for grabs.  I can say, however, that investing in traditional car-makers is probably more risky than most people Th!nk.

That said, here are the two public EV companies I know about (most are private.)  Zap (ZAAP.OB) and Zenn (ZNNMF.PK).  A much safer bet however, is an industry that's likely to be supercharged by the adoption of either EV and PHEV technology: Batteries.

DISCLOSURE: Tom Konrad and/or his clients did not have positions in any of the stocks mentioned at the time of this writing.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 11:36 PM | Permalink | Comments (3)

Alt Energy Stocks Analyst Tom Konrad will join a televised roundtable discussion with EnergyTechStocks' Managing Editor Bill Paul and Ardour Global Indexes' Joseph LaCorte this Friday. The discussion will center around the topic of investing in alternative energy. The program, entitled WealthTrack with Consuelo Mack, will air on PBS between November 9th and 12th, after which it will be available for online viewing here.  You can find a listing of stations carrying the show with airtimes at the end of this article.

Bill Paul may be familiar to our readers because of the series of articles he wrote following an interview with Tom in August. Topics ranged from utility scale batteries (currently getting a great deal of attention because of AES recent purchases), batteries for vehicles, Tom's ambivalence about biofuels and his enthusiasm for transmission, top picks in the energy efficiency space, why forestry companies are a good way to play cellulosic ethanol (because wood will be the feedstock of choice for cellulosic plants such as Range Fuels' in Georgia), and why Alcoa is green.

Joseph LaCorte, while perhaps less well known to our readers, is also a significant player in alternative energy investing sector. The Global Alternative Energy ETF (NYSE: GEX) is based on the index Mr. LaCorte manages, and is currently Tom's favorite Alternative energy ETF, at least for people not yet ready to manage an individual stock portfolio.

All and all, this promises to be a very insightful discussion and is a must-see for serious alternative energy investors.

Posted by Charles Morand at 07:39 PM | Permalink | Comments (0) | TrackBacks (0)

I recently got around to reading Deutsche Asset Management's (DeAM) note on investing in climate change (PDF document). There is very little original work in this paper. Most of the tables and figures are derived from existing studies by the likes of McKinsey, the IPCC and New Energy Finance, to name a few. The paper synthesizes publicly-available information on cleantech and climate change trends into a broad investment thesis.

DeAM sees investment opportunities as falling in two main categories: Adaptation (e.g. water management, disaster control, infrastructure) and Mitigation (renewable energy, clean power gen, energy efficiency). They identify four key drivers of growth in target sectors: (1) government policies and regulations; (2) carbon prices; (3) environmental action by corporations; and (4) low-carbon technologies and services. The authors do acknowledge the high degree of interrelatedness between these four components.

The report then goes on to outline the methodology employed to create a climate change-themed equity portfolio using the MSCI World as the underlying index. The list of potential constituents and their respective weights in the portfolio are, of course, not provided. It is also unclear who provided the research into companies' climate change risk/return profiles based on factors like positioning in the cleantech sector and regulatory exposure. Based on my own direct experience with this sort of work, I can almost guarantee that was not Deutsche's equity analysts.

This report comes a little late in the game. There have been plenty of good, free climate change investment reports released by the sell-side over the past two years, and there is very little substantive insight left to be provided through this route. As a marketing exercise, this is also of limited usefulness for the exact same reason.

Posted by Charles Morand at 10:06 PM | Permalink | Comments (0)

Priming the E85 Pump

This Sunday, I had dinner with my aunt, who lives in Chicago.  She recently bought an Impala LT (she's a loyal GM customer), and was surprised when she received a $1000 debit card with which to buy E-85, the 85% Ethanol, 15% gasoline blend used in flex-fuel vehicles.  

I was not able to find any web reference to this offer (including on the GM website), but Google still had a cached article from HowStuffWorks.com which explained: To help defray fuel costs, GM, as part of its "Live Green, Go Yellow" E85 ethanol campaign, gives buyers of its flex-fuel vehicles a $1000 debit card toward the purchase of E85 ethanol fuel. (As of November 2006, the offer was good only to buyers in the Chicago and Minneapolis areas.)

To me, this is a sign of desperation, both on the part of GM to sell a car rated 16 MPG city / 24 MPG highway as "green." If GM really wants to help defray fuel costs, might I suggest not fighting increased CAFE standards?

It's also quite possibly a sign of desperation on the part of Midwest ethanol producers, who are producing ethanol at a record pace despite rising corn prices, but have difficulty transporting it out of the region because the corrosive and water-absorbing nature of ethanol means that it must be transported by truck or rail rather than pipelines.  I speculate that Ethanol producers and distributors contributed to these debit cards as a way to make new Flex-Fuel vehicle owners aware that they could use E-85 and to give them the incentive to seek out and become familiar with the stations where E-85 is available.

For Investors

Is this good news for Ethanol investors?  Possibly.  It's a clever way to overcome some of the biggest barriers to E-85 use: lack of familiarity with the fuel, and lack of awareness among flex fuel vehicle owners.  Ethanol producers have taken a beating in the stock market, but if this campaign and others like it are successful, they may spur demand for ethanol in precisely the region where we have over-capacity.

Investors should not consider ethanol stocks to be particularly green, but ethanol does begin (in a small way) to address the problem posed by peak oil: how do we get liquid fuel from other sources which we can use in our current car fleet?  So an investor more concerned about peak oil than global warming might consider taking another look at ethanol stocks now that they're selling at much better prices than they were just a few months ago. However, I still prefer producers based outside the Midwest or ones that also own the corn they use.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

Posted by Tom Konrad at 03:51 PM | Permalink | Comments (2)

On Monday, Hybrid Cars told us that Honda was ready to embrace the hydrogen economy. I don't believe that there currently is anywhere near enough hydrogen refueling stations in North America to make this a viable project. Nevertheless, I am impressed that Honda is ready to move on this years before anyone predicted it would happen. I still believe that hybrids and plug-in hybrids offer the most attractive opportunities in the near and medium terms, and I doubt that this will usher in a renaissance for fuel cell stocks.

On Monday, Jim Fraser at The Energy Blog discussed a new start-up that will seek build the infrastructure necessary for the electric car market to grow. This does indeed seem very ambitious but the shear amount of money thrown at this project commands a high degree of respect. To be continued.

On Tuesday, Clean Technology Investor informed us that Duke Energy (NYSE:DUK) was shopping around for solar generation assets. As I've discussed before, a wave of consolidation is currently underway in the North American alternative energy sector. Independent entities with existing renewable generation capacity or even the rights to develop projects in certain areas will command increasingly higher premiums, thus presenting interesting opportunities for investors. The main problem for public market investors is that many of these assets and/or project pipelines in the US are held by private concerns. Nevertheless, this is a trend worth keeping an eye on.

On Wednesday, GreenBiz.com informed us that Citi had just released a new report on the impact of CAFE standards on automakers. This in an interesting take on this debate, and certainly seems to run counter to what is typically argued by automakers with regards to tighter fuel efficiency standards. One thing is certain: auto investors can no longer afford to ignore the environment. It has become too salient a consideration for policy-makers and cars are an easy target. You can access the report directly here (PDF document).

On Wednesday, Justin Moresco at Red Herring profiled the latest smart grid financing deal for us. I continue to believe that the energy efficiency and smart grid spaces are going to offer very attractive opportunities in the years ahead.

The Week in Cleantech is a weekly roundup of our favorite cleantech and alt energy blog posts and stories from across the web. If you know of a good piece that you think should be included here, don't hesitate to let us know!

Posted by Charles Morand at 10:39 PM | Permalink | Comments (2)