I am retired and take educated guesses on all things financial.

March 16, 2007

March 17, 2007: Alternative energy, part duex


This portion of the post deals with my opinions on different types of alternative fuels, and the "best bet".

The thirty stocks listed yesterday represent the "world's best" thirty alternative fuel selections. Many of these are out of reach of American investors, but we do have a multi-national readership here, which needs to be catered to now and then.

Here is my opinion of each alternative fuel:

NUCLEAR: Nuclear capacity should increase by as much as 60% over the next fifteen years. Alstrom (ALSO.PA), ABB Ltd. (ABB.ST) and Shanghai Electric Group (600021.SS) have the best exposure. Uranium is a beneficiary. Cameco (CCJ) is the stock to own.

SOLAR: At present, this is a high cost alternative, but R&D is exploding in this field and a better extraction technology is sure to come forth. China has announced it will have 2,000MW of solar power by 2020 vs. 60MW today. Beneficiaries include Q-Cells (QCEG.DE), SunPower (SPWR) and Tokuyama (4043.T).

WIND: This is economical power with oil at $70/barrel. EDF Energy Nouvelles (EEN.PA)
and Iberdrola (IBE.MC) are best.

BIOFUEL: This is not economical in Europe and most of North America at present.It is more suited to tropical areas Cosan SA Industria e Commericio (CSAN3.SA) producing ethanol in Brazil, is competitive at $35/barrel. Palm Oil plays are under-reported by analysts. Two companies with impressive palm oil plays are IOI Corporation (IOIB.KL) and Golden Hope Plantation (GHOP.KL). With bio fuels, agricultural productivity will need to rise, and the best situated companies are Deere (DE) and Kubota (6326.T)

and the best:

SAVE THE ENERGY ON SITE! The IEA estimates that 80% of the reduction in emissions will come from demand-side efficiencies. More efficient light bulbs, air conditioning,jet engines, cars, electricity transmission and distributive systems are a few of many themes. Boeing (BA), BorgWarner (BWA), Continental (CONG.DE), Johnson Controls (JCI) and Schneider (SCHN.S) offer exposure here.

The rest:

Gas-to-Liquids/Coal to Liquids known as GTL and CTL are older technologies that throw off a lot of CO2. If a conversion plant is located close to the mouth of the source, it is reasonably cost competitive. Liquid gas terminals are being built in the SE US in anticipation of this source. Cheniere (LNG) is a pure play. Odds are it may never reach full potential.

Geothermal: Outside of Iceland and parts of California, it is not a feasible energy source for any larger size population. No investment recommended here.

Biomass: Industrial and agricultural waste products has a certain allure, but the technology emits large quantities of CO2 at present. One interesting play is Smithfield Foods (SFD) which seems determined to use all, and I mean ALL, of the hog.

Wave: This technology may hold future promise, but wave power is still very much in the R&d Phase and no stocks are recommended at this time.

I have lengthened this posting to three parts. The third and final part will be an extensive roster of North American companies that are in harmony with the theme and are more easily accessed by American investors.

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