Is Alternative Energy the Next Boom Market?

[Ecacophonix]

I was reading a blog yesterday on the trends in the energy market, and was intrigued by the comparison made in the post between the telecom industry a decade or two decades ago and the energy industry today. There are a number of similarities. The telcos tried to maintain status quo inspite of a number of radical changes happening around them and were left in the lurch...a similar phenomenon is happening today with the oil companies all of which are trying to pay lip service to alternative energy sources while trying to make as much money as possible from their existing business...

I do a bit of work in the production of oil and biodiesel from algae, and it is exciting to see the dramatic growth of biofuels from being a very niche industry just a couple of years ago to being on everyone'e mind today...and biofuels is only one of the many alternative sources being explored

Energy is a much larger industry and will make IT and telecom industries look like pocket change, should there be dramatic growth in the industry...and with VCs already crowing about the clean energy tech segment, those watching the energy industry are in for interesting times...

NS @ Oilgae.com - Oil & Energy from Algae

[FRED]

Re: Is Alternative Energy the Next Boom Market?

I was reading a blog yesterday on the trends in the energy market, and was intrigued by the comparison made in the post between the telecom industry a decade or two decades ago and the energy industry today. There are a number of similarities. The telcos tried to maintain status quo inspite of a number of radical changes happening around them and were left in the lurch...a similar phenomenon is happening today with the oil companies all of which are trying to pay lip service to alternative energy sources while trying to make as much money as possible from their existing business...

I do a bit of work in the production of oil and biodiesel from algae, and it is exciting to see the dramatic growth of biofuels from being a very niche industry just a couple of years ago to being on everyone'e mind today...and biofuels is only one of the many alternative sources being explored

Energy is a much larger industry and will make IT and telecom industries look like pocket change, should there be dramatic growth in the industry...and with VCs already crowing about the clean energy tech segment, those watching the energy industry are in for interesting times...

NS @ Oilgae.com - Oil & Energy from Algae

EJ has identified Alt Energy as a Next Bubble, along with Infrastructure. Already happening in parts of Europe. Says the US government program will include a floating tariff on energy imports to maintain prices, increase tax revenues, and protect Alt Energy investors; got his BS degree in Resource Economics from UMass, Amherst where he's now a judge on the panel of Alt Energy companies that spin out of the university using IP developed there; works with VCs like Charles River Ventures that invest in Alt Energy, etc.

[bill]

Re: Is Alternative Energy the Next Boom Market?

EJ Says the US government program will include a floating tariff on energy imports to maintain prices, increase tax revenues, and protect Alt Energy investors; works with VCs like Charles River Ventures that invest in Alt Energy, etc.

I'm all ears,,,please post a detail regarding the same.

[Mega]

Re: Is Alternative Energy the Next Boom Market?

Me TOO......Can't miss this boat!
Mike

[bill]

Re: Is Alternative Energy the Next Boom Market?

On Bloomberg today they were pumping the Alternative Energy story. They interviewed http://www.oceanaenergy.com/ and http://www.verdantpower.com/.

A lot of eager capital seems to be positioning themselves for the next wave.

[Mega]

Re: Is Alternative Energy the Next Boom Market?

Er, so how do i jump on the ship?
Mike

[jimmygu3]

Re: Is Alternative Energy the Next Boom Market?

If you're looking for an equity mutual fund, I recently purchased Guinness Atkinson Alternative Energy Fund (GAAEX). It's one of Fidelity's "No Transaction Fee" funds. It's up 30% since Sept '06.

www.gafunds.com/gaaex.asp

[Mega]

Re: Is Alternative Energy the Next Boom Market?

Thanks JIM!
Mega

[bill]

Re: Is Alternative Energy the Next Boom Market?

CSIS
Alternative fuels and the impact on infrastructure.
A panel discussion regarding pipeline, barge, rail, hwy transport, and refinery capacity and movement of Alternative fuels.

http://www.csis.org/component/option...,view/id,1279/

[jk]

carbon trading

http://www.nytimes.com/2007/07/06/bu...l?ref=business

query: how to invest in the growth of the carbon trading market?

---

July 6, 2007
In London’s Financial World, Carbon Trading Is the New Big Thing

By JAMES KANTER
LONDON, July 5 — Seeking to match a desire to make money with his environmental instincts, Louis Redshaw, a former electricity trader, met with five investment banks in 2004 to propose the trading of carbon dioxide. Only one, Barclays Capital, was interested.
Three years later, the situation has turned, and carbon specialists like Mr. Redshaw, 34, are among the rising stars in the London financial district. Managing emissions has become one of the fastest-growing specialties in financial services, and companies are scrambling to find workers. Their goal is a slice of a market now worth about $30 billion and that could grow to $1 trillion within a decade.
“Carbon will be the world’s biggest commodity market, and it could become the world’s biggest market over all,” said Mr. Redshaw, the head of environmental markets at Barclays Capital.
If greed is suddenly good for the environment, then the seedbed for this financial experiment may be London. More carbon was traded here than in any other city, according to a study by International Financial Services London, a company promoting British-based financial business.
Carbon could become “one of the fasting-growing markets ever, with volumes comparable to credit derivatives inside of a decade,” said Chris Leeds, 38, who is the head of emissions trading at Merrill Lynch here and who plans to expand his team to five traders from two by the end of the year.
Investment banks like Goldman Sachs and Morgan Stanley have rapidly expanded their carbon businesses. Scattered among the hedge funds and private equity funds in the Mayfair district of London are recently arrived niche investment banks that generate one of the main currencies of this emerging sector: carbon emissions reductions.
The emergence of carbon finance in London — not only trading carbon allowances but investments in projects that help generate additional credits — is largely the result of a decision by European governments to start limiting the amounts that industries emit.
Factories that pollute too much are required to buy more allowances; those that become more efficient can sell allowances they no longer need. The system, started in 2005, is part of the terms of the Kyoto Protocol and bears the imprimatur of the United Nations. Even so, doubts remain as to whether carbon finance can deliver tangible emissions reductions, let alone the vast economic transformation needed to deal with climate change.
For now, green-minded graduates and an eclectic range of professionals from banks, consulting companies and aid organizations are pushing to join the new sector.
“We don’t have to advertise,” said Mark Woodall, 45, chief executive of Climate Change Capital, an investment company based in an elegant 18th-century townhouse in the heart of Mayfair. ”People feel quite good about working in an organization like this.”
Mr. Woodall has 120 employees with an average age around 30 and more than 10 full-time employees in China. He expects to hire 80 people in the next two years.
A former British Army officer, he started his first company 15 years ago, cleaning up waste and chemical spills.
The industry has not avoided criticism. One reason is that European governments handed out too many free allowances in preparing for the start of the program, rendering the system less effective than was hoped. The overallocation fueled volatility, and some traders reaped larger-than-expected profits.
Controversy has also dogged some projects promoted by the financiers to generate new credits.
But over all, prospects for the industry are good, especially if the United States joins the Europeans in establishing a trading system, said Imtiaz Ahmad, 34, senior carbon trader for Morgan Stanley in London. Mr. Ahmad has already lured a European Union environment official and a BP employee to join his three-member trading team, and he plans to hire more.
Human activity creates some 38 billion tons of carbon dioxide each year, and governments regulate only a fraction of that. But if more governments decide to cut billions more tons of emissions, as leaders of top industrial nations discussed recently in Germany, and if the existing system in Europe is enlarged to cover transportation, there will be many more credits available — and a lot more finance and trading.
Early in the decade, Wall Street firms like Cantor Fitzgerald, which calls its environmental subsidiary CantorCO2e, were successfully using markets to reduce industrial pollutants that caused acid rain in North America, and had begun investing in credit-generating projects. But New York lost its lead in carbon finance after President Bush refused to submit the Kyoto Protocol for ratification in 2001.
“Technically, U.S. companies had the expertise,” said Garth Edward, 37, trading manager for environmental products in London at Shell Trading, a unit of the oil company, who formerly worked in New York for Natsource, one of the first greenhouse gas brokerage firms. “Then the Europeans really delivered.”
Mr. Edward, a Scot who studied Chinese at Oxford and worked in Kenya for the United Nations Environment Program, was among those who headed for London, where interest in carbon finance was developing after the introduction of a voluntary market by the British government in 2002.
His team of five traders sits next to power and natural gas teams, buys and sells carbon for Shell and devises investment projects that generate additional credits. Across town at Barclays Capital, Mr. Redshaw’s team of three helps power companies and investors manage the costs of emissions from coal or natural gas plants now and in the future, when the cost of emitting could rise sharply.
Lionel Fretz, chief executive of Carbon Capital Markets, a trading and finance company also in Mayfair, is among those who are fiercely critical of projects to clean up refrigerants in China that generated hundreds of thousands of credits and large profits for investment companies like Climate Change Capital.
Mr. Fretz said those projects had done too little to alter other substandard environmental and labor practices and promote renewable energy.
“The moral issue is that we shouldn’t be providing a subsidy to a plant that operates at lower standards than our own,” he said.
He has concentrated his funds, worth 150 million euros, or $204 million, on projects to capture and burn methane, another greenhouse gas, that is emitted at landfills in countries like the Philippines. Those projects are a new source of electricity. They also produce some carbon dioxide, but in quantities far less harmful than the methane, earning carbon credits.
Even though Mr. Fretz’s projects are far more modest than some of those at Climate Change Capital, a company he helped found before he sold his stake in 2004, he also has no shortage of qualified applicants for jobs.
“We’re getting fantastic people,” said Mr. Fretz, who was a financial adviser on road and pipeline projects for PricewaterhouseCoopers before taking a year off in the late 1990s to sail and rethink his career. “Maybe it’s a generational thing, but there seem to be plenty of people from world-class companies who want to do something more meaningful with their lives.”

[bill]

Re: Is Alternative Energy the Next Boom Market?

MIT report: Assessment of U.S.

http://web.mit.edu/globalchange/www/...PGC_Rpt146.pdf

Conclusions on page 54


Cap-and-Trade or Carbon Tax?
http://www.nytimes.com/2007/07/07/wa.../07carbon.html

“I will be introducing in the next little bit a carbon tax bill, just to sort of see how people think about this,” he continued. “When you see the criticism I get, I think you’ll see the answer to your question.”

Why introduce the bill and set it up for failure? Looks like the Corporations want Cap-and-Trade.


http://www.carbontax.org/issues/carb...cap-and-trade/

http://blogs.wsj.com/energy/2007/06/...-a-carbon-tax/ video

[zoog]

Alternative Energy and Biotech

From Marketwatch

As the world gets hungrier for alternative fuels, industrial energy giants are scrambling to form partnerships with niche biotech companies. The race is on to create bioengineered enzymes that are at the heart of cost-effective ways of turning corn, sugar and even wood chips into a gasoline substitute called cellulosic ethanol.

According to a recent study by Burrill & Co., the market for such ethanol-producing enzymes is expected to reach $1.1 billion nearly a decade from now vs. about $100 million in 2007.

Billed as a next-generation form of alternative fuel, cellulosic ethanol can be derived from a wide range of organic sources known as feedstocks or biomass.

They include agricultural waste or crops grown specifically for fuel, such as sawgrass. In addition, most of a plant could be used, instead of just the easy-to-process grain portion, so an ear of corn's cob, stalk, husk and leaves are all thrown in.

Cambridge, Mass.-based Verenium, with a market cap of $245 million, was recently created through the merger of Celunol, an ethanol production company, and enzyme specialists Diversa Corp. It was just awarded a U.S. Energy Department contract, led by the Oak Ridge National Laboratory, to develop new biomass enzymes.

According to Riva, Verenium is building a 1.4 million gallon-a-year pilot plant that will be finished this year. Eventually the company wants to set up plants that can produce 25 million gallons a year around the country, with the help of some government guaranteed loans and equity investments from major agricultural companies that would supply the feedstock.

"Our plan is to build a fleet of these plants. I think there's enormous value to be extracted managing them as a fleet," Riva says.

Carr notes that enzymes to produce corn-based ethanol now run about 5 cents a gallon, while cellulosic enzymes cost about 20 cents a gallon. However, as the production techniques and efficiency of cellulosic enzymes advance, that cost should continue to fall.

Last February, Energy Department said it would fund $385 million for the construction of six cellulosic ethanol plants around the nation, with the industry putting up over $800 million. Award recipients included Iogen and Abengoa Bioenergy.

The article mentions some other small biotech companies besides Verenium, but the rest appear to be privately held.

[Guest]

How about petroleum as the next boom market?


Comment from the IEA’s economist

In an important interview for the French daily

Le Monde last week, Fatih Birol, the International Energy Agency’s chief economist, implied that peak oil is just around the corner. Birol said "if Iraqi production does not rise exponentially by 2015, we have a very big problem, even if Saudi Arabia fulfills all its promises. The numbers are very simple, there's no need to be an expert."

Speaking of Saudi Arabia he said, "I understand the Saudi government claims 230 billion barrels of reserves, and I have no official reason not to believe these numbers. Nevertheless, Saudi Arabia - as well as other producing countries and oil companies - should be more transparent in their numbers. Oil is a crucial good for all of us and we have the right to know how much oil, as per international standards, is left. "

This interview marks another major step in the IEA’s admission that world wide petroleum production is unlikely to grow as much as they have been forecasting in the recent past. By saying that he has no "official" reason to doubt Saudi claims that they will be able to increase production to 15 million b/d in the by 2015, Birol implies that there is room to doubt the claim. By emphasizing the importance of Iraq, he is recognizing that it is the only country with enough potential to substantially increase production in the next 5-10 years.


Without substantial increases in output from both these countries, the world in unlikely to reach the optimistic production goals forecast in the IEA’s official projections.

Energy Briefs

• 
  

Quote of the Week

"Contrary to public perceptions, renewable energy is not the silver bullet that will solve our problems." Shell’s chief warned that supplies of conventional oil and gas will struggle to keep pace with rising energy demand; he called for greater investment in energy efficiency. (implying all the alt-energy investment in the world won't make a significant dent in the existing petroleum-based global economy's supply / demand shortfall over the inital 15 - 20 year transition time span)

--- Jeroen van der Veer, CEO of Royal Dutch Shell, reported by

The Times.

James Mulva, CEO of Conoco-Phillips, said last week that he questioned whether the supply will be developed to meet the US Energy Information Administration’s demand expectations. He believes demand is going to be constrained by supply.

(Conoco issues a wake-up call).


U.S. House Speaker Pelosi Thursday outlined her "Energy Independence" package - crafted from nearly a dozen committee bills - that she says represents a consensus among lawmakers.

(Applause! We've got ethanol (good for farmers, bad for poor people's cost of food) we've got gobs of money from taxing "big oil" to tide us over (?), we can plant windmills over half our farmland (but not off Malibu or Nantucket please!), and we've got the indomitable American ingenuity and technology which will supercharge alternative energy to substantially fill the supply-demand petroleum gap! Human ingenuity will plug the gap - It always has! (Question: is it theology or science, inspiring this projection?).


The estimated costs of boosting Iraq's oil output to six million barrels per day has soared to as high as $75 billion. Constant sabotage attacks on the country's pipelines have left crude oil production stuck at around two million bpd since the 2003 invasion. A bomb exploded Friday under an oil pipeline south of Baghdad, spilling crude oil and sparking a huge fire.

(Everyone in the region wants American efforts to gain a stable political situation and petroleum industry to succeed - so that the IEA's Mr. Fatih Birol's requirement that Iraq's oil production increase exponentially to "save the global oil markets" has a reasonable chance of success - in present geopolitical context - er, UNLIKELY. - This is the IEA's critical requirement - it MUST happen. NOT if the Iran backed Shiites and Russia have a say in the matter).

Movement for the Emancipation of Niger Delta has threatened to resume hostilities in the Niger Delta should the Federal Government fail to give in to their demands on or before July 3. The group, among other things, had called on government to allow the region to control its resources.

(this is really promising stuff from one of the half dozen countries expected to pick up the production shortfall when Mexico, Indonesia, UK and other small producer's oil production winks out entirely in 6-8 years and they transition to 75% importers rather than exporting any oil )
Mexican President Felipe Calderon said on Friday he expected the country's crude oil exports to slip further this year and next. Mexico's oil exports slipped 1.3 percent in 2006 and have slid a further 4.4 percent from the 2006 average in the first five months of 2007.

Production at Cantarell, the world's third-largest oil field, declined 17 PERCENT in the first five months of 2007 from the same period a year ago, driving down Mexico's overall crude production to 3.15 million barrels. In May, production dropped to 3.11 million barrels per day, the lowest this year. (bye bye exports to the US - one primary source winks out real soon)


Petro-Canada, the third-largest oil company in Canada, and its partners will spend C$26.2 billion ($24.6 billion) to build a new oil-sands project in northern Alberta,. The Fort Hills project is to produce 280,000 barrels a day of synthetic crude by 2014, with output starting in the second quarter of 2012.

(Tar sands, contrary to widely accepted publicity about "reserves the size of Saudi Arabia" are a giant earth moving operation with severe logistic and environmental limitations on volume growth. Only half of Canada's petroleum exports to US are from sands, the other half being dwindling liquid petroleum rather than sands. US administration, despite armies of strategists, projects Canadian petroleum will (reads : MUST) "fill the gap" as other world suppliers dwindle ).


The president of OPEC said Tuesday that swelling oil inventories in the US meant there is no need for the group to meet ahead of its Sept. 11 policy talks to discuss injecting additional supplies into the market

(swelling oil inventories were due to lack of US refining capacity, not lack of gasoline demand which is approaching critically low reserves in US - due to NIMBY mindset on no new refineries - this begs the question - why are OPEC so reluctant to increase production when GLOBAL prices per barrel are nudging their all-time highs?).



Western Canada's crude exports to the US are expected to rise by about 94% between now and 2015, according to a study published by the Canadian Association of Petroleum Producers.

(As noted above, Mexico's exports to US will discontinue (that means END) within five to eight years as they use what's left internally in Mexico, and incremental Canadian sands supply growth will not even replace, at today's levels, the combination of it's declining non-sands oil exports plus Mexico's soon to be ended oil exports).


The total stock of cars globally is expected to rise from 700 million in 2005 to 1.2 billion by 2030, OPEC said, with a considerable amount of this forecast rise seen coming from developing countries.

(that represents a near doubling of the entire globe's stock of internal combustion vehicles in the next 23 years).

China National Petroleum Corp. secured rights to explore oil sands in Canada's Alberta province, a breakthrough by the largest Chinese oil company in Canada, said a statement Friday on the Chinese Ministry of Commerce website.

(subtracting from already strained incremental Canadian supply to the US?. Tar Sands is overhyped as the "swing producer" to step in upon conventional oil shortfalls. It's perhaps more viable than oil shale, which BP has just abandoned after 30 years of experimenting it's extraction. Tar sands as the US's "great white hope" proposes to be the world's largest EARTH MOVING operation, which is touted to produce some world-market-changing amount of oil energy after energy expended.

As entire nation's oil exports wink out (UK and Mexico in about 5-6 years!) oil sands are expected to be a significant source of replacement of Middle East oil for America. The mindset is "something MUST be there, because we don't have other options". There is perhaps a projection of needs onto reality at work in this view.

An All Party Parliamentary Group on Peak Oil and Gas has been formed in the British parliament, ensuring that the issue of declining global oil supplies will be much more prominent during the Gordon Brown era.

(With North Sea gone in six to seven years - this will be a cottage industry promoting "renewables" discussion - probably picks up some steam when North Sea production is about at 20% of it's former peak, maybe 6-7 years out from now? - then we can abruptly add one more sizeable EU country back to the world's list of oil importers.).

____________________

Commentary: What’s Up With Gas Prices?

By Randy Udall

Visiting a gas station these days is like going in for a root canal. First comes procrastination, followed by dread, and then "open wide." There’s no laughter at the pumps anymore. The Toot ‘n’ Moo is as somber as a morgue, full of glum motorists mourning the demise of cheap gasoline. Spending $75 used to be a penance reserved for truckers, but now everyone can tithe. Take your pick: Shell, Exxon, Chevron, they are all eager to drill your wallet.

I’ve been thinking about energy, trying to make sense of energy trends and energy appetites and the main conclusion I’ve reached is that energy is an IQ test that we Americans tend to fail.

Because our continent was a great piñata, stuffed with coal, oil, and natural gas, we’ve never developed an energy ethic. An English poet once wrote that energy was "eternal delight." But for an American to put "energy" and "ethic" into the same sentence seems revolutionary, the breaking of a taboo.
The value of land we have long understood. The value of energy we never have.

America invented the hot dog, baseball, and the national park. Yellowstone dates to 1872. Teddy Roosevelt got the national forests going a century ago. Aldo Leopold published Sand County Almanac in 1949, urging us to "think like a mountain." With the Endangered Species Act, we took Noah out of the Bible and put him into law. Some ranchers hate the ESA, but it was the first right-to-life act.

It is peak driving season, and Americans are on the move. (A typical motorist drives the distance to the Moon every 20 years.) With oil over $70, CNBC invited me to do an interview on a low-grade, high-ash proto-petroleum otherwise known as oil shale. This was one of those biz shows, with a crawling stock ticker, and traders drunk on high-octane currency flows.
The opening gambit hasn’t changed for a century: "There’s a trillion barrels of oil shale in Colorado, more oil than in all of Arabia, enough oil to run this country for the next 100 years, when are you redneck hayseeds going to unlock that prize?"

The only people more clueless about energy than politicians are reporters. "There’s more energy in a ton of Cap’n Crunch than in a ton of oil shale," I replied. "Oil shale provides just one ten-thousandth of world energy, far less than animal dung, and prospects for expansion are poor."

As the camera cut back to the trading pit, I tried to frame our dilemma in a way he might understand. "You’re selling dollars, yen, euros, and gold, but energy is the original currency." I could have been shouting down a well.

Later that day I got an email from a retired Saudi oil executive. There’s been a lot of blog speculation about declining production at Ghawar, the Kingdom’s largest field. I asked this oil man for the real scoop.

The Saudis have done Yankee bidding for a long time, but this guy offered only tough love. "There has been a paradigm shift in the energy world," he wrote. "Oil producers are no longer inclined to exhaust their resource for the sake of accelerating the misuse of a precious commodity."


This is what the pump price is trying to tell you. That twenty nations produce 85% of the world’s oil. That production in half of those countries is flat or declining. That Chavez in Venezuela and Putin in Russia have figured out that they can make more money by pumping less oil. Which is the flip side of the value proposition at your local Kum ‘n’ Go.

What remains is a bumper crop of clueless politicians. Wisconsin Senator Herb Kohl wants to sue the Organization of Petroleum Exporting Countries (for price gouging presumably). New Mexico Senator Pete Domenici, who has spent decades crusading against fuel efficiency standards, fatuously claims that "oil shale will rock the world," putting the fear of God into the Arabs.

For all the happy talk about energy independence, only eight states, including five in the Rockies, produce more energy than they consume. The others are as helpless as patients in intensive care. The risk is that these parasites will, over the coming decades, suck us dry, leaving our landscapes as eviscerated as Halloween pumpkins.

When it comes to energy, Americans resemble spoiled children who are used to always getting their way. Since the oil is in the Mideast, and its most avaricious consumers are here, it might be useful to run Phoenix or L.A. like Baghdad for a week or two. Close the pumps, turn the power off, let the taps run dry, and see what gives. We’d quickly relearn that civilization is a thin veneer, that energy invented comfort and wealth, and that decades of clueless policies have now put prosperity at risk.

The American land ethic is based on the common sense idea that they "aren’t making anymore." So too, it seems, with energy.

Randy Udall directs CORE, a non-profit energy office in Carbondale, Colorado. He’s also a co-founder of ASPO-USA.

[jk]

Re: Is Alternative Energy the Next Boom Market?

re verenium: what do you make of this chart??

[zoog]

Re: Is Alternative Energy the Next Boom Market?

If I had some extra cash lying around at the moment to invest, I'd be all excited and say looks like a reasonably good time to buy near a possible long-term low. But since I don't, I'd say it looks like they might be going nowhere fast.:p