Clean Money E-Book

John Rubino

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 380

Veröffentlichungsjahr: 2008

Beschreibung

In Clean Money, John Rubino, Editor of GreenStockInvesting.com, introduces you to the world of clean tech (also known as green tech) and its wealth creation potential. Throughout the book, he explores a variety of clean energy sources-from solar power to biofuels-and shows how these renewable resources will spawn successful companies and rising share prices. Page by page, you'll discover the technologies that will drive this boom and become familiar with the state of their markets, their growth prospects, and the companies that are best positioned to become tomorrow's success stories.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Epigraph

Acknowledgements

Introduction

Clean Money Terms

What Is and Is Not Green?

A Few Other Things

Extraordinary Upside Potential

PART I - OVERVIEW

CHAPTER 1 - Clean Tech THIS TIME IT’S FOR REAL

Third Time’s the Charm

Capital Loves a Winner

Why Are You Reading This?

Improving Your Odds

CHAPTER 2 - We Came, We Saw, We Trashed the Place

The Anasazi

Easter Island

The Mayans

The Roman Empire

Could This Happen Today?

PART II - CLEAN ENERGY

CHAPTER 3 - Fossil Fuels Fiasco

Peak Oil: Soaring Prices

Hubbert’s Peak

Less Oil from OPEC

Hungry Dragon, Thirsty Tiger

Geopolitical Complications

Climate Change

CHAPTER 4 - Solar Power SEIZE THE DAY(LIGHT)

Photovoltaics

Solar Thermal: Replacing Smoke with Mirrors

Solar’s Growth Prospects

CHAPTER 5 - Wind NO BREAKTHROUGHS NEEDED

How Wind Power Works

State of the Market

Fixing Wind’s Flaws

Wind Power’s Growth Prospects

CHAPTER 6 - Geothermal THE HEAT BENEATH OUR FEET

How Geothermal Works

Advantages of Geothermal

State of the Market

Geothermal’s Growth Prospects

CHAPTER 7 - Transportation GREEN MACHINES

Traditional Hybrids

Plug-In Hybrids

Electric Cars

Clean Diesel

State of the Market

Green Vehicles’ Growth Prospects

CHAPTER 8 - Energy Storage THE KEY TO A CLEAN-TECH TAKEOVER

Mobile Storage

Stationary Storage

State of the Market

Energy Storage’s Growth Prospects

CHAPTER 9 - Biofuels MILES PER ACRE

Returning to Our Roots

Corn Ethanol: Farm Subsidy in Drag?

Cellulosic Ethanol: Not Food

Biofuel Salad Bar

Biodiesel: Again, Not Food

Biomass: Just Burn It

State of the Market

Biofuel’s Growth Prospects

CHAPTER 10 - The Hydrogen Economy A DREAM DEFERRED

Hydrogen ICE and Fuel Cells

The Hydrogen Road Map

Alas, It’s Not to Be

Stationary Power: This Decade’s Fuel Cell Story

Stationary Fuel Cell Growth Prospects

CHAPTER 11 - Emissions Trading CLIMATE CHANGE CAPITALISM

A Little History

State of the Market

Private-Sector Players

Emissions Trading’s Growth Prospects

CHAPTER 12 - Smart Grid THE NEW WIRED WORLD

Smart Metering and Demand Response

State of the Market

Smart Grid’s Growth Prospects

PART III - OTHER CLEAN TECHNOLOGIES

CHAPTER 13 - Water LIQUID GOLD

Meat Eating, Beer Swilling

A Global Water Shortage

Desalination

State of the Desalination Market

Water Management

State of the Water Management Market

Desalination and Water Management’s Growth Prospects

CHAPTER 14 - Green Building SUNNY AND COOL

Defining Green Building

Windows and Bulbs

Other Green Building Technologies

State of the Market

Green Building’s Growth Prospects

CHAPTER 15 - Agriculture EIGHT BILLION MOUTHS TO FEED

Genetically Modified Plants

Vertical Farms

Aquaculture: Blue Revolution

Lab-Grown Meat

CHAPTER 16 - Green Materials LIGHTER, STRONGER, CLEANER

Carbon Fiber

Bioplastics

Ceramics

Composites and Laminates

Nanomaterials

Green Materials’ Growth Prospects

CHAPTER 17 - Pollution Control TRASH IS A TERRIBLE THING TO WASTE

Waste Is Energy

Waste-to-Energy’s Growth Prospects

PART IV - INVESTING IN A GREEN BOOM

CHAPTER 18 - Bubbles and Bear Markets

Bear Market of 2008?

Rise and Fall of Paper Currency

Blowing Bubbles

Deep Financial Trouble

Which Strategy Is Right for You?

CHAPTER 19 - Green Mutual Funds

Many Shades of Green

Green Exchange Traded Funds

CHAPTER 20 - Clean Tech in Bite-Sized Pieces

Green Utilities

Meanwhile, Across the Pond . . .

Clean-Tech Leaders

Clean-Tech Conglomerates

Pick and Shovel Makers

Systems Integrators

Snowbelt Real Estate

Divide and Study

CHAPTER 21 - Short Candidates WHO LOSES WHEN CLEAN TECH WINS?

A Different Mind-Set

Long/Short Clean-Tech Combinations

CHAPTER 22 - How to Trade Foreign Stocks

Welcome to the Rest of the World

More Choices All the Time

CHAPTER 23 - Breakthroughs TOMORROW’S GAME CHANGERS

Eternal Vigilance

CHAPTER 24 - Creating a Research Program

Background Reading: The Problems

Background Reading: The Solutions

Key Web Sites

About the Author

Index

Copyright © 2009 by John Rubino. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:Rubino, John A. Clean money : picking winners in the green tech boom / John Rubino. p. cm. Includes index.

eISBN : 978-0-470-46624-7

1. Clean energy industries—Economic aspects. 2. Green technology—Economic aspects. 3. Investments—Environmental aspects. I. Title. HD9502.5.C542R83 2009 332.6—dc22 2008022837

For Jamie and Alex, whose kids will grow up in a rich, clean world.

If the second half of the last century was about the world rewiring its nervous system, the first half of this century is going to be about the world reworking its musculature, how it makes things, moves things around. The paradox is that all of our energy systems were designed with the assumption of cheap and endless energy. So now all those systems have to be redesigned with the reality of expensive and limited energy. We see this tsunami of innovation that’s gonna change it all.

—Michael Potts, CEO, Rocky Mountain Institute

Acknowledgments

This book has benefited from the insights of many clean-tech insiders. Especially knowledgeable and/or patient were Robert Bogden, Clark Wieman, Travis Bradford, Peter Schiff, Michael Potts, Jan van Dokkum, David Shoenwald, Oliver Peoples, Andrew Ertel, Reinhard Seiser, Chris Manning, and Andrew Wilkinson. Thanks also to my development editor, Kelly O’Connor, for bringing order to a chaotic first draft. And as always, thanks to my agent, Faith Hamlin, for her understanding of the marketplace and ability to open doors.

Introduction

Welcome to the next great bull market. It might take a while to really get going, for reasons this book will explain, but eventually it’s going to be bigger and longer-lived than the tech-stock and housing booms combined. I’m referring, of course, to “clean tech” (also known as green tech and envirotech), a broad range of technologies and business practices designed to fix many of the things humanity has broken. Various clean technologies aim to eliminate pollution, replace fossil fuels, slow down and eventually stop global warming, and keep the food and water flowing. Most will fail to live up to their now soaring hype, but some will succeed beyond even their current fans’ wildest dreams.

As this realization begins to dawn, everyone wants a piece of the action: Companies are going green, both for public relations and business reasons. Governments are passing environmental mandates and tax breaks as fast as legislators can dream them up. And the financial world is pouring capital into all manner of green projects and start-up companies.

Clean Money will explain:

• Why clean tech will be the investment opportunity of our lifetimes

• Why the hottest green sectors are also the most complex and risky

• How to approach this market wisely by identifying both investment opportunities and risks

• How to build a clean-tech portfolio that fits your temperament and circumstances.

Clean Money Terms

First, a few notes on the structure and content of this book. Because several concepts and technical terms pop up repeatedly in any discussion of clean tech, it will be helpful to get familiar with them at the outset.

Nanotech

Spend an hour researching solar power or next-generation batteries or pretty much any other clean technology, and you’ll find numerous references to nanotechnology. These will mostly be along the lines of “Using a patented nanotech process XYZ Corp has created a [insert green device name here] that is 50 percent more efficient and significantly less expensive than conventional versions . . .” This explains little but sounds quite impressive. You’ll also see lots of words with “nano” prefixes, as in “nanoparticles” and “nanofabrication.” Here’s what they’re referring to.

Nanotech is the manipulation of particles, fibers, films, and coatings (along with less easily categorized things like buckyballs, carbon nanotubes, and “amorphous diamond nanostructures”) that are between 1 and 100 nanometers in size. A nanometer is one-billionth of a meter, so 100 nanometers is smaller than the average bacterium. Being this tiny gives nanomaterials some unique capabilities. They can penetrate where bigger particles can’t or combine into structures that have greater strength or conductivity or less weight. Substances made from them can be woven into fabrics or painted onto surfaces. Once you start working with that kind of flexibility, the possibilities become endless.

Right now, nanofabrication (i.e., making nanomaterials and turning them into useful products) is expensive and hard to scale up commercially. But it’s getting easier and more powerful at an accelerating rate as new tools and processes are developed. In 2007, researchers announced some dramatic results that are both interesting in and of themselves and important as signs of things to come. For example, recently developed nanotech materials and processes appear to increase the speed at which batteries can be charged, while other nanoparticles capture more of the light spectrum, increasing solar cell efficiency and making cells lighter, more flexible, and cheaper. And far more radical departures are coming. A nanotech called thermionics appears to convert heat directly into electricity; silicon nanowires (which are, as the name implies, really thin silicon wires) reportedly produce a tenfold improvement in energy storage capacity over today’s batteries; and harmless viruses can now be coaxed to fabricate nanomaterials. And that’s just 2007. By 2012, we’ll be deep in the realm of science fiction.

Energy Terms

Because renewable energy is such a big part of the clean-tech story—and because there are a lot of different energy sources out there—certain terms recur frequently:

• Watt is a measure of the strength of an electric current flowing from a power source.

• Watt hour is the amount of energy in 1 watt of electricity flowing for an hour.

• Kilowatt (kW) is 1,000 watts.

• Kilowatt-hour (kWh) is the energy of one kilowatt flowing for an hour. This is the unit by which utilities charge for electricity, analogous to a gallon of gas at the pump. A typical home central air conditioning system, for instance, draws about 3.5 kilowatts, so in an hour it uses 3.5 kWh. A 100-watt lightbulb uses 0.1 kW, so it takes 10 hours to use one kWh. If a utility charges $0.10 per kWh, then it costs a dime to leave the light on for 10 hours. Electricity’s price varies widely, from upward of $0.20 per kWh in Japan to $0.05 in some parts of the United States. The factors that determine price include how the power is generated (coal is cheap, solar is expensive, and nuclear in-between), the condition of the grid and the cost of its maintenance, and government tax and rebate policies.

• Megawatt (MW) is 1 million watts, or 1,000 kilowatts. Most power plants operate in the megawatt range, as measured by their peak generating capacity. A 50-megawatt plant is capable of delivering that amount of power continuously when running flat out. One megawatt is enough power for 250 to 300 typical American homes (and maybe 500 European homes), so a 50-megawatt plant will power 13,000 or so U.S. homes.

• Gigawatt (GW) is a billion watts, or a thousand megawatts, enough to power a quarter-million homes. This is the scale on which the today’s largest power plants operate.

• Cost per watt is how much a watt of generating capacity costs to build, and it’s one of the most common yardsticks for comparing various energy sources. As you’ll see in coming chapters, a coal-fired power plant might cost $3 per watt, while solar has fallen from $100 a watt in the 1970s to around $5 per watt today. Some energy sources are also quoted in cost per installed watt, which is the fabrication cost of, say, a solar panel, plus the cost of installation.

• Load factor (or capacity factor) is the percentage of time that a power plant is actually producing electricity. The higher the better. A coal plant might have a load factor of 75 percent, meaning that it’s up and running that portion of the time and down the rest for maintenance and repairs. A wind turbine, meanwhile—because wind only blows for part of the day—might have a capacity factor of only 30 percent to 40 percent. To arrive at a value for a given power source, analysts look at the cost per watt, the load factor, and the cost of the fuel, among other things.

• Baseline power is electricity that comes from a source with a very high load factor which can thus be counted on almost continuously. Plants that use inexpensive fuels like coal and uranium are the main current sources.

• Peak power comes from plants that run only at times of high electricity demand, like a hot summer afternoon. Because such plants only run for part of certain days, their capital cost is spread over relatively little production, making this the most expensive kind of electricity.

• A turbine is a rotary engine that extracts energy from a flowing gas or liquid. The name comes from turbo, the Latin word for vortex, and the simplest turbines consist of a shaft with blades attached. Moving gas or fluid causes the blades to spin, which imparts energy to an electric motor. Lots of different green energy sources involve fluids or steam-running turbines to generate electricity.

What Is and Is Not Green?

Many technologies are sold as solutions to one environmental problem or another. Not all of them really do what their fans claim, and some do as much harm as good. So for the purposes of this book, “green” tech is defined as those that do far more good than harm. Here are three that don’t qualify:

1. Nuclear. Nuclear power doesn’t produce greenhouse gases, and to the extent that France and Japan have shifted to this power source, the air is a bit cleaner. It’s also true that next-generation nuclear plants are far less likely to melt down than their predecessors. But nuclear energy has two downsides. First, it produces radioactive waste that currently can’t be eliminated and so must be stored in places that are made radioactive for decades. Second, nuclear power produces materials that can be used to make nuclear weapons and dirty bombs, both of which are capable of rendering Lower Manhattan or central London uninhabitable. It’s hard enough to keep track of today’s radioactive waste. In a world with hundreds more nuclear plants, it would be impossible to keep it all away from people who would use it to do harm.

2. Clean Coal. In theory (but not yet in practice), it’s possible to treat coal in ways that make it less polluting—or to capture the pollution at the source, rendering the resulting electricity nonpolluting. And because it’s a domestic resource, the money we spend on it stays here rather than flowing to OPEC dictators. Fair enough. But no one is proposing changes in how we get coal, which right now involves (1) blowing the tops off of Appalachian mountains, which destroys sometimes unique ecosystems and pollutes everything for miles around, and (2) digging vast underground mines in which miners either spend their lives breathing coal dust or die in cave-ins.

3. Traditional Hydropower. The damming of rivers produces some of the world’s cleanest, cheapest power. But its future potential is limited because we’ve already dammed the most suitable rivers. And it carries other costs, including the destruction of fish populations that used to travel from river to sea and the drowning of unique valley ecosystems to make reservoirs.

A Few Other Things

The following might require a bit of explanation:

Chapter 2. I’ve included a chapter that recounts a few notable ecological disasters of the past. They’re small potatoes compared to the havoc that today’s global economy is capable of wreaking, but the similarities to much of what’s happening today are still eerie. This chapter can be skipped without sacrificing an understanding of the clean-tech investment thesis. But to paraphrase Mark Twain, while history doesn’t repeat, it does rhyme, and seeing ecological degradation as a recurring theme will help when the accusations and proposed solutions really start flying.

Object Lessons. There are several general rules that, based on the history of other bull markets and my own sometimes painful experience, clean-tech investors should understand. Since these rules are best illustrated with real-world examples, I’ve turned them into “object lessons” and placed them in appropriate chapters. Their purpose is to help you avoid the mistakes (of both action and inaction) that often keep investors from fully enjoying bull markets.

Weights and Measures. Because this is the U.S. edition, it presents measurements of distance, weight, and temperature in miles, pounds, and degrees Fahrenheit rather than the globally more common metric system. Foreign-language editions will be rewritten accordingly.

Foreign Stocks. Because clean tech is a global market, some of the leading companies are headquartered in Europe and Asia, and their shares are frequently not listed on U.S. exchanges. The stock lists in this book present these companies with their home exchange ticker symbols. Don’t let this throw you—Chapter 22 explains how to buy such stocks at favorable prices both in the United States and abroad.

Time. You’ll notice that phrases like “as of early 2008” appear frequently here. That’s because things are changing so quickly in clean tech that whatever this book says about specific technologies, companies, or market situations may be out of date by the time you read it. So understand that what you see here is a snapshot taken of a fast-moving game, not an eternal truth. What is eternal, or at least long-lived, is the amount of brainpower and energy that will be devoted to cleaning up the world—and to making you a great deal of money, if you play the game well.

Extraordinary Upside Potential

Clean Money is an introduction to the world of clean tech and its investment possibilities, aimed at readers who know their way around the market but may not be clear on how, for instance, solar panels or wind turbines work or how to profit from them. The explanations are in plain English (apologies to the technologists out there for the occasional lack of precision). And the chapters covering individual technologies follow a more or less standardized script, explaining how a given technology works, discussing the state of its market and its growth prospects, and listing the main publicly traded companies in each field. The final section of this book presents a series of investment strategies that can serve as guides or templates for building your own portfolio of clean tech stocks while, crucially, avoiding the pitfalls that always accompany markets with extraordinary upside potential.

PART I

OVERVIEW

CHAPTER 1

Clean Tech THIS TIME IT’S FOR REAL

It was nice while it lasted. More than nice. The age of cheap energy, free water, and abundant food was the smoothest stretch of highway that humanity has ever traveled. But now that road has developed some very big potholes. Oil, at the time of this writing in mid-2008, is more than $140 a barrel. Fresh water has become scarce or poisonous in many places. Food prices are soaring at double-digit rates. Sea levels are rising while deserts are spreading. Commercial fish stocks are collapsing. International tensions are growing over the remaining cheap oil, and civil wars are being fought over water. And industrial chemicals are saturating our kids’ bodies. Whew!