by Jeff Siegel
Last Friday, I had a conversation with an old friend of mine who
now lives in China. A life-long environmentalist and diehard
capitalist, she has made a ton of dough working as a consultant on
alternative energy projects all over the world. From wind farms in
the UK to infrastructure development in Beijing, she has never made
it a secret that her most lucrative deals always come from places
where policy support for alternative energy is the strongest. And
those places are where the government welcomes alternative energy
funding, instead of chasing it away by providing limited or no
This is why she has spent very little time in the United States
over the past five years. But based on our conversation last week,
she's surprisingly optimistic about a potential return to her home
state of Ohio. Apparently, she sees some real potential in the
coming energy bill.
Unfortunately, I'm less enthusiastic. It's just hard for me to
believe that anything meaningful can happen this close to an
election. You know how politicians are... Few ever have the cojones
to take a stand and do what's right for the country - and not their
contributors - during non-election years. The level of complacency
and fake smiles just kicks into overdrive
an election year.
That being said, my refreshingly optimistic friend did make a
very good point that I want to share with you today. Because if
she's right, then the result of this bill will dictate where we
place our bets.
Just another energy tax?
The thorn in the side of this energy bill has always been the
issue of putting a price on emissions. Supporters say that it is
necessary to rein in those often ignored external costs that keep
coal-fired power artificially low. Opponents argue that putting a
price on emissions would cause the price of power to skyrocket and
hurt taxpayers. Although if we truly value a free market, then I
would argue that
costs related to power production must be figured into the
equation, and not externalized.
As well, tax payers are already getting fleeced on the coal
deal, since we've been subsidizing the stuff for decades. Why does
an industry that is established and profitable need continued
Nonetheless, the two sides of this debate are not likely to hold
hands anytime soon. But there's a lot of money sitting on the
sidelines right now; money that the utilities are ready to invest
into cleaner energy alternatives. And they can't move until
Washington gets off its complacent ass and actually implements some
kind of carbon limit legislation.
Look, whether you think climate change is real or not, at some
be limits on CO2 emissions. That's a fact, and any investor who
can't grasp this reality because he or she is too busy bashing Al
Gore or reciting Rush Limbaugh quotes is going to miss out on a lot
The utilities know that this is coming, and they're actually
eager to get moving on this very necessary transition.
Now we know that there's no chance of an economy-wide cap and
trade with this bill. It's just not going to happen.
But in an effort to get
passed, many are expecting to see a bill that calls for putting CO2
limits on utilities first, then moving on to other industries at a
later date. And quite a few utilities are actually supporting this
idea. In fact Duke Energy's (
) Jim Rogers said that they're willing to start early, as long as
an economy-wide limit is eventually integrated.
Not too much to ask, considering that the utilities actually
emit less than half (about 40 percent) of U.S. greenhouse gas
emissions. There are a number of other industries that make up the
other 60 percent.
If both sides of the aisle can actually come together on this
compromise, expect to see a flood of backed up capital flow into
solar, transmission and energy efficiency and conservation
technology... Because the utilities will finally have the green
light they need to move forward.
Some of the companies we see as being able to benefit
Of course, while my optimistic friend believes there's a pretty
good chance this compromise will lead to actual legislation, I'm
reminded every day by the dishonest rhetoric in the media that this
is far from a done deal...
Many politicians are still screaming about how this would be
nothing more than a national energy tax. Of course, they say
nothing about the current "national energy tax" that goes to
support the welfare scam that rewards King Coal and Big Oil with
fat subsidies while quietly swindling tax payers...
No - we don't hear about
because that would force the nation to re-evaluate the price we're
really paying for energy. I don't suspect anyone in Washington is
going to call attention to our already subsidized fossil fuel
machine. But I do believe that at some point, there will be a price
When that happens, the nation's utilities are going to ignite
some major movement for a handful of
stocks. And we'll be there to reap the rewards.
Oil Industry Disaster Response Plan: Promising, or