Where To Look For World’s Best Green Energy Investments

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01:28:28 pm on April 24, 2009

By Sam Hopkins
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The global clean energy puzzle has more than one piece. . .

So today, let’s take a look at the pivotal pros and cons of renewable energy investing in different regions of the world.

As we check out the challenges as well as the opportunities in each place, we gain a more integrated view, and our investment choices can be honed.

North America

Pro: Political will is now more heavily in favor of renewable energy development as part of economic recovery than perhaps ever before. As the world’s top energy consumer, any significant movement in American energy attitudes spells massive investment in alternative generation methods and stocks. Mexico, an important non-OPEC oil producer, has seen production at its biggest historical producer, the Cantarell offshore field, decline by over 34% in the past year. Washington’s pivotal role in determining international energy trends can also be overwhelming and distract from ongoing R&D.

Con: Entrenched political interests, especially in agriculture (corn), have largely determined the approach Washington takes to national renewable energy development, even though solutions vary wildly from coast to coast and north to south. The North American Free Trade Agreement could also have the unfortunate effect of making Canadian and Mexican energy consumers subject to Uncle Sam’s whims, despite each country having a different array of needs and resources.

Europe

Pro: The European Union has integrated more and more former Soviet satellite states in recent years, bringing big "dirty" energy consumers into a post-coal movement. Places like the former East German state of Saxony have a low-cost, high-tech industrial base left over from Communist-era production, and energy companies are using that to chip away at high unemployment.

There is now a binding EU "20×20" target, making each of the EU’s 27 countries derive 20% of their energy consumption from renewable fuels by 2020.
As 2020 approaches, cleantech competition across national boundaries will feed into a continental network in which everyone can take advantage and share progress.
Con: The recession will increase resistance to government spending on subsidies for clean energy, especially in the EU’s east. EU-wide targets will be strained and nations with deeper pockets will hesitate to spend on their neighbors’ energy needs when home takes priority.

Asia-Pacific

Pro: China is the world’s most populous country today; India is projected to take that title by 2050. With consumption rising by leaps and bounds, and little infrastructure currently in place throughout many rural areas, both countries can "leapfrog" fossil-fuel power as they develop. China is also moving up the value chain in exports, establishing a slew of international renewable energy listings like Yingli Green Energy (NYSE:YGE) and Solarfun (NASDAQ:SOLF). China’s "Green GDP" initiative focuses on accounting for environmental damage and getting to realistic, clean economic targets that create jobs.

Australia, one of the world’s top net energy exporters, is having to bring in more oil by the year. China is also more competitive now when it comes to coal, Australia’s top energy export. Panax Geothermal (ASX:PAX) just announced it is developing what may be the first grid-connected geothermal demo plant in the country, launching the country’s native "hot rocks" clean energy resource in earnest.

Con: Asia’s energy cycle is still heavily reliant on coal (China is still building two new coal-fired plants a week, according to the journal Science). The region will be weaning itself off the sooty stuff for a long time to come, even as renewable energy usage rates soar.

Middle East

Pro: Israel has the most NASDAQ-listed companies of any country outside the U.S. The Persian Gulf monarchies are flush with oil wealth and finally starting to produce initiatives like Abu Dhabi’s Masdar which acknowledge the fact that fossil fuel’s waning years are upon them.

This April, Arab League Secretary General Amr Moussa endorsed the United Arab Emirates’ bid to permanently house the new International Renewable Energy Agency (IRENA).

Con: Gulf states do a hushed oil trade with Israel, but open technology sharing is out of the question politically, for now. In Jordan and Egypt, which have nowhere near the energy wealth of their cousins the emirs, cooperation with Israel on energy issues is greater. Iran’s growing influence in the region and increasing oil production are also a worry and obstacle to regional clean energy efforts.

Africa
Pro: Some cynically say that Africa is "always the market of the future," since the progress we hope for never seems to arrive. But if China and India’s rural millions can leapfrog city-dwellers and overseas oil addicts with smart-grid projects and local generation schemes, Africa is an energy leapfrog’s dream.
Africa’s variety of climates and terrain mean everything from sugar cane ethanol to geothermal energy can be produced in abundance. Decentralization can also be an asset, as everything from telecommunications to household fuel builds from small nuclei of connection to larger geographic areas.

Con: Africa’s variety of corrupt regimes, border guards, and, yes, pirates, mean a continental clean energy effort is difficult to bring about. The best hope Africa has as a whole is the proposed Mediterranean renewable energy grid called TREC, which would tie North African solar and wind energy to the European grid and bring EU companies like ABB (NYSE:ABB) into more African nations.

Latin America and the Caribbean

Pro: Latin American countries are already pursuing a range of localized options in biofuel (sugar ethanol, palm oil, and jatropha biodiesel). Solar energy can be produced cheaply throughout the region due to high sunshine. . . The Inter-American Development Bank says solar energy below $3 per installed watt brings poorer areas into the market for grid-connected and even off-grid solar. IDB expects an energy demand increase of 75% by 2030, and national leaders know poverty will only intensify if energy cost burdens are not lessened.

Con: Over 2/3 of the world’s ethanol-consuming markets are encircled by protective tariffs. That includes the U.S., which Brazilian sugar ethanol producers would certainly count as a top customer. Venezuela’s Hugo Chavez, and his Bolivarian Alternative movement, is also locked to oil — Chavez’s political capital peaked along with crude’s price per barrel in 2008.

Perhaps the biggest lesson from this global overview of clean energy progress is that politics is paramount. In Brazil, political isolation and a dearth of energy options led to today’s leadership in sugar ethanol. I’ll be down in Rio in just a few days, talking with investors and company heads from all over Latin America. Of course, the political echelon will be represented too, and Brazil’s own national government is out front in leading continental renewable energy progress.

Out of all the regions we’ve looked at today, I’m most bullish on Latin America.

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Comments  

Green is the new Red. Green house gas is a pure methane myth.

 

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