Obama’s Clean Energy Challenge

by | published January 28th, 2011

In Tuesday’s State of the Union address, President Obama challenged the U.S. to be producing 80% of our electricity from clean energy sources by 2035 (from around 11.5% today).

As with any game-changing direction – landing a man on the moon in a decade, bringing an end to the Cold War, curing cancer, or weaning our economy off of crude oil and coal – the leaders provide the enticement… but the market has to figure out how to get it done.

I see three initial questions arising from throwing down such a gauntlet.

Question No. 1: Is this a good idea?

On balance, most people think so. After all, renewable and alternative energy sources would allow us to emphasize what the U.S. does best – innovation and new departures in technology.

It does create some dislocation in those economic sectors that depend upon crude oil and coal – the primary targets of such a move (although clean coal technology is already becoming an alternative discussed at length in Pennsylvania, West Virginia, Ohio, and other states where King Coal still holds considerable sway).

Nonetheless – and this will be the focus of debate on this initial question – the move to a preponderance of clean energy sources will create economic problems in areas where oil and coal are produced.

The social and policy calculus can hardly leave that out of the mix.

In short, there will be considerable politics played here, for the overriding reason I drum into my graduate students at the beginning of their education:

There are no public decisions made that do not hurt somebody.

That is what the balancing of interests inside the Beltway or in the corridors of a statehouse are all about. The great Speaker of the House Sam Rayburn said it most colorfully: “It all depends on whose ox is getting gored.”

First off, therefore, if the folks in Washington are serious (a big “if”), this will become a protracted political fight, a firestorm of debate and disagreement. There will need to be a clear national will here – one that obliges all concerned to transcend the regionalism and invective.

But let us say that such a will does emerge, we accept and support moving our power base to “clean” fuels, adopt new standards encouraging electric cars, and put a premium on renewables and “green” technology.

That leads to the second question.

Question No. 2: Is it attainable?

Today, if one combines solar, geothermal, wind power, biofuels, hydropower, and biomass (yes, I put algae into this category), along with niche ideas like tides or even rain power, about 18% of the world’s electricity generation is included; for the U.S. it comes to about 11.5%.

The goal is to get 80% of our electricity coming from clean energy sources. And the time span is only 25 years. Can we pull it off?

And then there is the other matter – what do we include in “clean” energy?

If we include nuclear power in the calculations, the figures would rise to about 27% worldwide and 29% in the U.S.

There are countries relying much more on specific non-fossil fuel sources. Iceland, for example, provides 100% of its power needs from geothermal energy (the advantage of having active volcanoes close at hand), while France receives 70% of its electricity from nuclear reactors.

Yet in the U.S., it looks like we have a long way to go before that 80% figure is even on the horizon.

Increasing incentives would bring some high-end research into play, and that could improve the picture. But we need to understand up front that, while government grants can fund R&D, they are far less effective in providing the funds to revise much of the power infrastructure or delivery systems, and largely cannot bring new technology to market.

Some public decisions can set the stage in certain areas.

For example, Houston is embarking on a new grid of power stations to improve the usage of electric cars in the metro area, while decisions in San Diego (buses) and New York City (taxis) are providing alternatives to oil-fueled transport.

But the primary problems remain – what power can be used and where; who is going to pay for the infrastructure changes; and how the new technology essential for this transition will make it to market.

These elements of the challenge are where the real expenses are going to hit.

Make no mistake; government holds the key to a low-carbon world, but the private sector will have to lead the charge here.

Now the entrepreneurial spirit remains alive and well in America. That is a good thing, because we will need the bulk of it if this energy initiative has any chance of succeeding.

That spirit is also a nice segue into my third overall question about this “bold new clean energy world.”

Question No. 3: How can investors make money from it?

Most of the new approaches fueling the spirit necessary to develop clean energy power sources, connect them to grids, provide a realistic market choice among alternatives, keep prices manageable, and improve distribution and energy use will be start-ups and low capitalized companies – many of them private.

That is of little help to the average investor, since these are not publically traded entities.

Nonetheless, there is developing a cadre of companies that combine sufficient market penetration with technological innovations likely to benefit from the initiative.

Some of these we have talked about here before: Nevada Geothermal Power Inc. (TSX.V:NGP; OTC:NGLPF); Rentech Inc. (AMEX:RTK) in biofuel development; OriginOil Inc. (OTC:OOIL) in biomass; and new developments in clean coal technology, such as the new GE Co. (NYSE:GE) technology I discussed in “New Technology Turns Coal Into Clean High-Powered Gas” (November 19, 2009), to name but a few.

The main interests in green renewables, however, remain solar and wind power.

On the solar front, I have addressed some major developments in previous issues of Oil & Energy Investor, like “Major Solar Projects Get OK” (October 8, 2010), “The Sahara Sun Could Power Europe” (September 13, 2010), and “Can We Turn Solar Energy into Chemical Fuel?” (August 9, 2010).

Wind power carries some great potential in certain regions in the U.S. but also finds its front-end leaders in the breakthrough approaches only in the small, micro-cap, private companies.

The exceptions are GE (with its major role in developing new generations of wind turbines) and foreign leaders such as Danish Vestas – look into it through Vestas Wind Systems AS (OTC:VWSYF), Siemens AG (NYSE:SI), or Spanish Gamesa (OTC:GCTAF).

[Editor’s Note: For access to Kent’s No. 1 publicly traded stocks in these segments of the market, get his Energy Advantage here.]

One thing is certain: As companies take up the challenge, this is going to be a rapidly changing sector.

So there is one other way of tracking developments.

I would suggest following two exchange-traded funds: the Market Vectors Global Alternative Energy ETF (NYSEArca:GEX) and the Powershares Cleantech ETF (NYSEArca:PZD). The tradable shares of the up-and-coming solvent companies will be showing up on the listings of shares followed by ETFs like these two.

But remember: Rome wasn’t built in a day. And neither will the new age of U.S. energy.



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  1. Farok Ardesher
    January 28th, 2011 at 12:21 | #1

    The Best form of Energy which gives the most power per Unit at the lowest cost and IS THE CLEANEST is Nuclear Energy.India is bulding 5 Plants each with over 1000MW, China is also building at least a dozen.We in the USA are still mired in the 3 mile island mindset.I will invest in Nuclear energy, Oil and Gas, everything else is fluff ( and Expensive)

  2. January 28th, 2011 at 12:33 | #2

    How in the name of all that’s sane can you call nuclear “clean”?! It may provide some respite from the traditional dirty ways of generating power, but really, to ignore the problem of nuclear waste, not to mention possible terrorism is a blinkered view.

    Let’s just keep building reactors until something terrible happens, and then deal with it, if there are any survivors? Pleeease!

  3. graham vance
    January 28th, 2011 at 12:36 | #3

    Each of us who have put our total retirement funds with Dr. Moors will understand our choice better when we see our first energy gain anticipating our plud 25% gain in 13 months

  4. January 28th, 2011 at 12:49 | #4

    Here we go again as with everything else that comes down the pike are the same old people saying “Hey, what’s in it for me?”
    Isn’t it wonderful to be an American? Any other country would take you out and shoot you at Dawn.
    I don’t think we can win against the Chinese with the current mindset. We have to come up with another approach that might give us a better edge, but instead we have all these “Ham&Eggers” out there saying what’s in it for me?
    Well when we lose what we have we might look back and say”At least I get eggrolls.”

  5. Robert Page
    January 28th, 2011 at 12:57 | #5

    “Clean energy’ is a fraud based on the proven AGW hoax. If the world were serious about renewable energy, it would be building nuclear power plants by the thousands. Wind and solar panels will be unimagianble boondoggles where every square inch of the planet will be littered with unsightly wind mills and glass panels. The unintended consequences of this folly will be staggering. I will not invest a cent into clean energy.

  6. Michael Susko
    January 28th, 2011 at 13:30 | #6

    It is interesting—no comment as yet.

  7. Robert Page
    January 28th, 2011 at 13:50 | #7

    Dear Dr. Moors,

    What happened to my previous comment? Please don’t tell me it was deleted because it was “controversial”.

  8. Ken trzecki
    January 28th, 2011 at 14:48 | #8

    I’m surprised that you find favor with a company like Rentech (RTK) and not Syntroleum, a direct competitor that has partnered with Tyson Foods and already has an up and running plant, certification by the Air Force for bio jet fuel and is selling product. What goes into analysis when one compares companies such as these?

  9. William VanderWerff
    January 28th, 2011 at 14:50 | #9

    When someone can hand me an energy source that is as safe to handle and as portable as a 1 gallon can of diesel, which can hurl a 10,000 lb vehicle 15 miles down the highway at 60 mph, I will listen. Its difficult to listen to the proposals of political ideologues who have more hope than understanding. They offer such ill considered plans for the future of our nation, all without the consent of the governed.

    The single most liberating technology in the last 150 years has been the discovery and development of OIL. We use it for its energy, and synthetics to numerous to list. All the other stuff just complements and takes advantage of oil. If we were to cut off the use of oil completely mankind would be thrust back into the middle ages again. No computers, cell phones, televisions, washers, dryers, cheap clothing, sneakers, etc. All without the luxury of carriages, wagons and the animals to draw them with. Once the carriage and wagon industry revived along with a tremendous increase in the horse trade, we would have jobs for horse shoeing,and poop scoopers. The world would starve, our cities would collapses.

    Our only choice is to use the energy resources (Oil, Coal and Natural Gas) responsibly until the time we discover the magic energy nirvana. Until we do, we had better continue to use the resources God has given us.

  10. January 28th, 2011 at 15:10 | #10

    Please research Thorium rectors. They are safer.

  11. January 28th, 2011 at 15:28 | #11

    Dr. Moors,

    The discussion of energy in the US (and the world) has become dominated by the scientifically flawed assumptions of the global warming crowd. You have alluded to that in your discussion by saying that considerable and extended discussion will go on with regard to the use of oil and coal. Later in your monologue you referred to technologies that obviously involve hydro carbon compounds as though their use would reduce carbon dioxide emissions. If I were addressing a global warming partisan my words would be attacked as heresy because the use of bio fuels uses carbon that has recently been extracted from the earth’s atmosphere.

    The problem with that distinction is that there are slash and burn assumptions by environmentalists that demand the eventual elimination of the fuel in torque out configuration of power conversion in transportation. It does not require a rocket scientist to understand that the well (fuel source, whatever that is) to wheel conversion efficiency will suffer as a result. It is assumed that ‘off peak’ power produced from (?) will be super efficient and virtually free, will compensate for the conversion losses assumed in electric vehicle battery charging.

    Well to wheel efficiencies have come up over the years and even vehicles carrying heavy batteries have produced cars that have high miles per gallon performance.

    The real discussion should be “well to wheel” efficiency. If we are intent on obtaining energy from bio fuels we need to understand the costs both thermodynamically and monetarily to do it. Bio fuels currently have very high conventional fuel content. The plant to wheel conversion efficiency is very low.

    I realize that what I am fixing to say next is of little interest in terms of making a lot of money for me, you or your subscribers. Not now at least.

    The thing that is needed is a motor system that is able to achieve higher efficiencies than current internal combustion systems and do so without having to tune the characteristics of the fuel while ensuring that stringent emission standards are achieved. Such a motor system would ideally need to operate on virtually any fuel or even the waste heat from solar collectors or industrial processes. Suitable fuel for this motor system would include ‘raw’ bio fuels that would destroy the highly refined fuel systems of modern engines.

    Such a motor system has been developed and the suite of necessary patents to make it a practical reality have been awarded. You can read about it at: Their ticker is CYPW. They are a penny stock. I currently hold a very minor position with them.

    This is old/new technology. I have stated a little of their story but their web site does a better job. This is some of that innovation you talked about that is poised to reach a tipping point fairly soon.

    I realize that this is a different side of things than you usually deal with. The thing is if good environmentally sound use (at the consumer level) could be made out of crude that had received only subtle processing, that would, eventually, have quite a major effect on how crude was processed and used world wide.

    The very real problem these guys have is that introduction of this technology suite would breath new life into the current way to doing transportation that is anathema to the ‘green’ community.

    Anyway, I would appreciate you or some other of your fellowship investment advisors taking a serious look at these people and be ready to react when sound investment considerations take this stock to $100+ a share!

  12. Lynne Sieverling
    January 28th, 2011 at 15:32 | #12

    I will echo Ken trzecki’s comments above regarding SYNM. I believe it would be worthwhile for you to take a serious look at them. They appear to be the leading company at the moment in production of bio fuels and they are financially strong with Tyson as a partner.

  13. Charles
    January 28th, 2011 at 15:46 | #13

    At first, I didn’t know whether I had confidence in Kent, and all the publishers hype their tease so much that the copy writers should be considered for a coveted award in writing “Bull.” But, as with all that Kent writes, this writing so thoroughly analyzes the topic like I have never seen it covered before, including potential collateral damage.

    While I respect Bill’s right to his opinion, I should like to point out the fundamentals that made our country so successful. When there is a need there are great innovators that require capital to develop and bring their ideas or products online. This capital, in my opinion, should not come from the government because the government simply confiscates from us, which requires everyone (well, the 50% who pay taxes) to participate whether they believe in the idea or not. It should come from people who believe that the idea has a reasonable chance to solve a problem and become a profitable venture. The emerging companies who think they can contribute to the technology, and place a portion of their wealth on the ideas they support. The reward for taking this risk on a public company comes in the form of capital gain, and dividends, which we have reason to expect. This is capitalism at work. Government support is socialist doctrine. A government guru, types in a few billion dollars, and creates fiat currency by pressing ENTER. The currency is fully guaranteed by solely the the good faith and credit of the country that operates this way, and I say that any country that does this is not acting in good faith. At present, most countries are operating this way, so good faith is on the back burner.

    So, I disagree with Bill, because I have confidence in capitalism and abhor socialism. If change to clean energy is going to happen, let citizens take a part of what they have earned and saved and put it at risk of total loss – putting their money where their mouth is, to use an old expression. With Kent’s insight, I have the confidence to consider investments so that I can grow my wealth enough to care for myself rather than have to depend on the government pay my bills at a nursing home when the end is near (read MEDICAID.)

    On another note as a follow up to Alan, the U.S. scientists and engineers developed the breeder reactor, almost precisely coincident with the U.S. placing a moratorium on nuclear energy plants due to public outcry following incidents with the older reactors. There is little waste because the end product can be efficiently, and economically refined to produce fuel pellets for the reactor (thus the name breeder), and the end products cannot be refined into weapons grade nuclear material. Although, I have to recognize that Alan has a point, and it is relative to security of nuclear facilities. Otherwise, I consider nuclear plants to be at least quasi clean.

    I hope this dissent is taken as a friendly opposite view based on my education, career experience, and understanding of both economics and nuclear chemistry/physics, as well as engineering. I am really a friendly great-grandpa, and mean no offense, but offer insight that might not have been considered.

  14. Robert Locke
    January 28th, 2011 at 16:31 | #14

    “CLEAN ENERGY” just another attempt to foist onto the public under disguise CAP and Trade!!

  15. Martha Beals
    January 28th, 2011 at 17:23 | #15

    We have an abundance of natural gas which we can use to bridge to the use of more “green” energy forms. The price is very low and there are so many ways we can use more of it. Here in CO. we’re planning to replace a number of old coal power plants to natural gas. If Obama and his administration would go ahead with using govt. trucks/vans powered by nat gas, maybe more private companies would follow. If the Congress passed the Natural Gas Act of 2010 we could get more business in producing trucks/vans to transport goods across this nation and make nat gas fueling stations, etc. I keep reading about the possibility of this all taking off and it’s like wading through quicksand. We have this resource let’s use it to its potential. Now.

  16. Dennis
    January 28th, 2011 at 18:10 | #16

    I recall natgas was included in the statement, this is his way out.
    If only electricity and not transportation is the plan, then this can be done in less than 5 years.

  17. steve
    January 28th, 2011 at 20:30 | #17

    William VanderWerff :

    Our only choice is to use the energy resources (Oil, Coal and Natural Gas) responsibly until the time we discover the magic energy nirvana. Until we do, we had better continue to use the resources God has given us.

    I don’t think there was any mention about stopping to use what conventional resources we have, only to stop giving them an unfair advantage with huge and wasteful subsidies which most don’t need—level that end of the playing field—and finally get serious about doing some goal setting and action for when those resources become so expensive due to dwindling reserves that we are forced to go back to horse and buggy since nothing was done to avoid it.

  18. January 28th, 2011 at 22:26 | #18

    Why would a country with ample fossil fuel supplies which are relatively inexpensive to use want to do such a thing? The only conclusion I have reached is that the Greens and some of the political class want control of the economy. If you control energy you control the economy. Pay attention to how energy will be taxed and regulated and what energy sources will be politically correct. Control will be more important than environmental impact. Climate change will be used to sell this agenda.

  19. Dave K
    January 29th, 2011 at 10:07 | #19

    @Martha Beals
    100% agree. What is the federal govt. waiting for? To declare that all govt. civilian vehicles be natural gas powered capable seems like a no-brainer. But maybe that’s part of the problem, the brain part… Don’t
    know what kind of lobbying might be done against this either.

  20. January 29th, 2011 at 14:54 | #20

    I have confidence in in dr. Kent Moors

  21. waterlilly
    January 29th, 2011 at 22:20 | #21

    There are countelss inventors who have created everything from oil-free hydraulics to engines that run on water. The only limit to technological possibility is ones imagination and top dog politics. We have employed both to supress innovations so seemingly fantastic, that if we only knew what is really going on, few of us would be able to sleep at night. I sincerely hope with time all things are healed, and the desparate death-grip of the status quo yield to the enlightened heart and clear mind of ego free existence (which requires body-mind clarity and egoic transcendence into conscious enlightenment).

  22. waterlilly
    January 29th, 2011 at 22:49 | #22

    One more thing… beware how this rally is played and the ensuing word games. Clean energy is clean energy, and nuclear is the farthest from that no mater what new nuclear looks like – it’s still the nuclear principle. There is a push to re-institute nuclear power plant construction and activation. This continues the centralization of power (concentration of money). What is possible right now, is a washing machine-sized over unity power plant in everyone’s home that does away with the need for centralized systems altogether (heat, power and water provisioning). Our current economy is far from Capitalism. And the markets are the furthest imaginable from free. Things are so grossly manipulated that it if you aren’t aware of it, why bother. The truth always comes out, even if it takes a long time, it does come to the surface like the largest nut in the jar of peanuts. Hopefully sooner than later.

  23. January 29th, 2011 at 23:03 | #23

    A new name in the game Balqon Corporation now being backed by Winston Chung Chairman of Winston Battery Hong Kong a division of Thunder Sky a 5 Billion market cap company. Balqon just named exclusive distributor of Winston’s lithium ion batteries in North and South America.Any opinion about Winston Battery?

  24. waterlilly
    January 29th, 2011 at 23:04 | #24

    @Farok Ardesher

    Anytime anyone states an absolute, question it. Anytime anyone tells you “there is only one answer”, question it. Anytime anyone says “it’s this or nothing”, question it. These are all responses from the mind of the ego. The ego has only one answer and it is always the only one that is right, and it must do anything and everything to maintain its existence of separation from the whole to which it has forgotten it is married to. From the egoic mind no solutions arise, only more complications and self referenced defenses vying for the continuation of its existence, separate from the whole. This is why this entire volley is pointless, because our perception is intrinsically flawed, thus our ability to appropriately Respond is incapacitated.

  25. Dirk Vossenaar
    January 30th, 2011 at 22:36 | #25

    I red your comments on President’s Obama enery plans, but am dissapointed not to find any recommendations from your end.

    A new subscriber.

  26. Lauren Gilbert
    February 1st, 2011 at 12:19 | #26

    Thank you for summarizing what I was going to post to challenge the NukePhobes… Please! if people are going to write about Nuclear, do not present Cold War nonsense about nuclear waste. The state of the art modern nuclear power generators, like the one developed by Terra Power (backed by Bill Gates), actually are self contained and use all of the fuel placed within the reactor. We could develop the units here in the USA and export the technology to other locations around the world (imagine that! Being a leader in a high tech energy source once again- and getting paid for it!)
    Unfortunately, Terra Power will likely build outside the USA because of the phobia created by the “anti-nuke” crowd – Misinformation spread by folks who should be asking to replace existing facilities with new technology rather than being alarmists.

  27. Sharon
    February 22nd, 2011 at 14:48 | #27

    @Wes Evans
    The pioneering theorist on global warming is Guenther Schwab, an Autrain Nazi who, in 1958, wrote a fictional novel called Dance with the Devil. He first assumed that the planet has only 100 yrs. remaining. He worried that the continuing rise of carbon dioxide would trap the natural warmth of the earth. He said “this will cause the climate to become milder and the Polar ice will begin to thaw. As a result, there will be a rise in the level of the ocean and whole continents will be flooded.” Do you think Al Gore gave Schwab credit for this theory? Source: American Thinker, Febraury 16, 2011. The Nazi Origins of Apocalyptic Global Warming Theory, by Mark Musser

  28. Roger Nelson
    February 26th, 2011 at 16:25 | #28

    Look into pebble bed nuclear technology.

  29. John Lechleiter
    February 28th, 2011 at 13:12 | #29

    @Robert Page
    you are going to die along with all the old cole power plants we don’t need to change anything because we will be gone in 30 years screw our kids thay can worry about it while reading by candlelight.

  30. like it is
    April 18th, 2011 at 18:20 | #30

    most people know nothing of the energy biz. u invest in others 2 make u $. it is not bout green, or clean, or global warming, FACT is, the overpopulated world is demanding more of a resource which we blatantly waste, and it is now harder and more expensive to produce. stop the waste, slow the demand, most problems averted 4 now.

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