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business newsTrendspotting: Investing in Renewable Energy
By
Carol Kopp
Jul 01, 2010 9:40 am
Is the commitment to move beyond oil real enough this time to spur the creation of viable new industries?
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Of course, it took a catastrophe of historic proportions in the Gulf Coast to focus their minds, and the minds of the general public, on the future of energy. That live video feed of gushing oil is a lot harder to dismiss than the science of global warming.
So now, while the time is ripe, Congress might slip through some incentives for research and development of renewable energy in the US, or at least disincentives for industries that don’t begin investing in clean-energy technologies.
The focus on both sides of the aisle, at least in public debate, will be on the cap-and-trade proposal (also known as “cap and tax” to Republicans), which is intended to make it less economical to pollute. Tougher safety standards for oil drilling are going to be in the spotlight as well.
But the Democratic majority is arguing that a comprehensive energy bill can unleash massive private investment in clean-energy technologies, including renewable alternatives, creating much needed jobs for Americans in the process. Given the current mood of the public, it’s possible that some package of carrot-and-stick measures that make renewable-energy development more viable will get passed.
The only thing certain at this point is that “Drill, Baby, Drill” is off the pop charts for the present.
But put aside your own politics and consider the situation as an investment opportunity. Is this a good time to consider investing in renewable-energy industries? For that matter, do such industries even exist yet, or will they exist in the near future if America gets serious about them?
Here are a few basic facts about renewable energy, and the possibilities for an individual investor.
Is It Real?
Right now, somewhere between 6% and 18% of the global energy supply, depending on which source you believe, comes from renewable sources -- sun, wind, water, geothermal, or biomass. So, it’s safe to say that the industry exists in the real world, but is in its infancy.
Other countries are way ahead of the US in this area. China is investing heavily in renewable energy and related manufacturing. European nations have actively supported their implementation with subsidies for years.
And there we have a problem. The European nations that have supported new energy technologies in recent years, including Germany, Italy, Spain, and the Eastern European countries, all are certain to cut back or eliminate subsidies as they struggle with their own debt crises.
Start-Ups
In retrospect, the silliest thing about the Internet stock bubble was that individual investors didn't have the common sense to look at the websites they were considering investing in to evaluate their content, as an actual consumer might. It didn’t take a media genius to see that most of them were comically bad.
No positions in stocks mentioned.
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