Why Oil & Shipping Firm A.P. Moller-Maersk and Steelmaker POSCO Are 'Green' Investments
by Bill Paul
There's no such thing as an "experienced" alternative energy investor. The sector simply is too new. Also, like an iceberg, most of it lies hidden beneath the surface.
To succeed in these uncharted waters, I believe that alternative energy investors (a group that eventually will include all investors) need to follow a particular set of guidelines that I've started identifying in recent articles. The first guideline is that you must be a long-term investor with a time horizon of at least three to five years. Otherwise, you'll miss out on most of the incredible financial payoff that is to come as the world continues to slowly but surely accept the need to ratchet down greenhouse gas output in ways that don't undermine economic growth.
The second guideline is that to find the best green energy investment prospects, you've got to scour the world, because while Washington continues to waste time fighting over whether climate change is real, the rest of the world is developing the technologies that will become the backbone of a carbon-constrained economy that will continue to deliver solid global growth.
Now here's my third: many of the best long-term green energy prospects are companies whose current operations are "dirty." Two cases in point: Danish shipping and oil group A.P. Moller-Maersk (Symbol AMKAF) and South Korean steelmaker POSCO (Symbol PKX).
The foolish people at the U.S. Chamber of Commerce who think they're helping their constituency by fighting against climate change legislation need to rethink their position, because Maersk and POSCO show how foreign firms that compete with CoC members intend to grow by going green, beating out their U.S. rivals on new multi-billion-dollar business opportunities.
For Maersk, the future involves transporting carbon dioxide gas in specially-built tanker ships from coal-fired power plants where the CO2 is generated to offshore oil drilling platforms where it will be used for enhanced oil recovery (EOR). Maersk recently announced a deal with Finnish power producers that a Maersk official said will be "the first step for us to develop CCS (carbon capture and sequestration) as a business." The executive said that Maersk plans to build a fleet of specially-designed CO2-carrying tankers that will deliver CO2 to oil producers throughout the world.
POSCO, the world's fourth largest steelmaker, is also thinking really big. The company recently said it plans to invest about $6 billion over the next eight years on a variety of green energy technologies. POSCO reportedly believes its $6 billion investment will generate roughly $9 billion in new revenue during the same stretch.
POSCO is investing in wind power, fuel cells, the smart grid, synthetic natural gas and nuclear power. It sees its investment further paying off in a 30% reduction in its own greenhouse gas emissions, which could wind up generating additional revenue by enabling POSCO to sell emission "credits" to other companies.
Who will be buying POSCO's credits? A lot may wind up getting bought by U.S. firms that were led astray by the U.S. Chamber of Commerce.
DISCLOSURE: No position.
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Bill Paul is Managing Editor of EnergyTechStocks.com.