Hoboken, NJ (June 2008)âSure, youâd like to âgo greenâ in your investments. If you could find some financially sound options, why not? As environmental issues have heated up and gained more and more press, youâve embraced the concept of saving the planet. Youâve changed your light bulbs, strived to live the âreduce, reuse, and recycleâ mantra, and even traded in your gas-guzzling SUV for a hybrid. (Well, at least youâve considered it!) Problem is, you need to feel secure about your retirement yearsâand the concept of green investing just seems a little too, well, trendy for comfort.     Â
Jim Mellon and Al Chalabi say such fears are unfounded. In fact, the opposite is true. As our planetâs dwindling resources become ever more scarce, and the need to find alternate energy sources becomes more pressing, green investing will start paying off in a big way. Getting in the right markets now can help you create a prosperous futureâand in an age where traditional retirement avenues are failing, thatâs no small feat.
âAs baby boomers age and retire and modern medicine keeps us all alive longer, the pension plans set up by corporations and governments are becoming ever more strained,â says Mellon, coauthor along with Al Chalabi of the new book The Top 10 Investments for the Next 10 Years: BigIdeas, MoneyFountains and Your Path to Prosperity (Wiley, February 2008, ISBN: 978-1-84112-802-3, $29.95). âYou simply canât rely on those sources to keep you going when itâs time for you to retire. Thatâs why it is so important to be a savvy investor now. And going green with at least some of your investments is a sure moneymaker.â
The authors explain that, in investment terms, the biggest theme of all over the next ten years will be the broadly defined âgreenâ movement. New methods of generating power, conservation measures, and changing fiscal regimes in relation to the use of power will create some of the biggest global investment opportunities.
âSignificant amounts of capital in almost every part of the world are already being deployed to take advantage of these trends,â says Mellon. âNew plants are being built to manufacture photovoltaic cells for solar power projects. Hydrogen fuel cells are being developed at a rapid rate to a point near commercialization. And nuclear power stations are being planned or built in quantity. In addition, wind farms now dot many landscapes. The whole ârenewables and new energyâ industry is on the cusp of a breathtaking advance.â
Wondering how you can take advantage of these growing green opportunities? Here are just a few tips that could help you prosper:
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Put your money in renewables. Most developed nations are racing to figure out how to make the move to green energy. From wind farms to tidal and wave projects; from waste-to-heat projects to more extensive nuclear generation; with, of course, solar power coming up on the railsâthe race is on to transform the electrical energy generating landscape of the world.
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âPerhaps the most visible of these initiatives occurs in the form of wind power,â says Mellon. âAll across Europe, wind farms are sprouting like mushrooms. An industry once derided as a novelty is now a multi-billion euro/dollar sector all on its own. But beware: If you choose to invest in the wind farm sector, do your research first. This is a capital-intensive business, subject to a lot of government interference and scrutiny, and some sophisticated investors have already gotten there first and creamed off some of the good potential returns.â
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Invest in these conservation companies. Companies involved in conservation, wind power, and nuclear power are likely to see significant growth in coming years, and thatâs good news for the environment and their investors. One company worth looking into in those areas is Fuel Tech, a US company that is working to cut a substantial percentage of carbon emissions from fuel combustion units. Or check out Clean Air Power, which is a London-listed company working to get trucks to use natural gas. And, of course, there is nuclear. In this area investors might want to look at Niger Uranium, a London-listed company exploring for uranium in Africa.
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âLike any realm of investing, itâs one thing to know the options are out there, and a completely different story knowing exactly which companies to look into,â says Mellon. âThese are all great green options.â
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G is for Greenâ¦and Germany. Germany is the worldâs biggest consumer of PV cellsâwhich are used to make solar panelsâbecause of the favorable fiscal and monetary regime for solar power in that country. Today, the country accounts for half of all the solar PVs installed in the world. The reason that the German market is growing so fast is because of the so-called Feed-in-Tariff. This means that anyone connected to the grid (and that includes private homes) gets a guaranteed payment for putting green electricity into the grid of about four times the market rateâand that goes for solar PV, wind, or hydroelectricity.
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âGermany has been so aggressive in promoting solar power that several world-beating companies have grown up to satisfy the localâand subsidizedâdomestic demand,â says Mellon. âQ-Cells is one exampleâthe company started making PV cells in Germany in 2000 with 19 staff members. Today, it has over 1,500. It exports half of its product and is the worldâs second largest maker of PV cells, after Sharp of Japan. And if youâre looking to invest, the company might be good place to start.â
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Invest in the elements. Big money is in investing in the extractive industries, which mine the key components of solar panels. Gallium, indium, germanium, and other materials are vital to the PV story, and the companies that mine and extract these components are a great place to invest your money.
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âJellon Limited is doing it,â says Mellon. âOther promising options include: Recyclex, a French company producing gallium amongst other metals; New Jersey Mining Company, which produces gallium from mining operations in Idaho; Gold Canyon Resources, which has prospective gallium deposits in Nevada; Bluglass, an Australian producer of gallium; Dowa Mining, listed in Japan, it is the worldâs largest producer of Gallium; and AXT INC, a NASDAQ-listed maker of satellite solar panels, mainly producing semiconductor substrates for electronic and optoelectronic uses.â
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âCarbonâ trading in the European Union shows promise. Countries that are part of the Kyoto Protocol have been forced to figure out how to limit their carbon emissions without damaging the economies in their countries. One way many European countries are doing this is through an Emissions Trading Scheme in which each country can emit one ton of carbon dioxide. The country then assigns permits to their biggest emitters allowing them certain amounts of emissions. Any company not needing its whole allocation is then free to sell the surplus in the ETS market where the buyers are typically companies that need more than their allocations.
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âThe idea is that, because there is value to these permits, companies will be encouraged to invest in green technologies, especially as the âcapâ on total allowable emissions gets progressively lower, making fewer of the permits available in future years,â says Mellon. âThe ETS market is becoming a large and interesting one. Investors may wish to consider looking at funds that offer an entry to investing in such permitsâone such is Climate Change Capital, listed on the London Stock Exchange.â
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Learn more about camelina. Although most âbio fuelsââcrop-based fuelsâmake very little ecological or financial sense, there is one crop that would be worth investorsâ keeping an eye on. âThis crop is âcamelina,â which is an interesting low-cost feedstock for biodiesel,â says Mellon. âIt has high energy, is non-food (so that food production is being diverted into energy), uses marginal land that requires no irrigation, is sustainable, and has a very low cost per liter. There are no publicly available companies in this space as of yet, but if youâre interested, keep an eye out for some of them to pop up. Check out www.camelinacompany.com.â
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A move away from landfills will be profitable. Another area of potential interest is waste-to-energy systems. Here, the problems from using landfill sites in many industrialized countriesâincluding the space constraints and the by-production of dangerous methane gasâare opening the doors for a new industry to develop.
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âThe waste-to-energy industry is one that seeks to turn waste into energy by burning it, or by using the by-product methane gas, which results from disposal of any organic waste, to generate heat and electricity,â says Mellon. âCompanies involved in the waste industry worldwide include UK companies Shanks and Biffa, both listed on the London Stock Exchange. These companies are already involved in landfill site management, waste collection, recycling, and disposal. Another is the Japanese company Daiseki, which is that countryâs only nationwide industrial waste operator. Other promising opportunities are with Séché Environnement in France and Lasila Tikanoja of Finland, both involved in new recycling technologies.â
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Energy-saving will help you save in more ways than one. Within the next few years, energy-saving gadgets could be commonplace in all households. Already people are switching to low-energy lightbulbs, and other products are sure to follow. âImagine all the computers that are turned on in the world right now,â says Mellon. âHow much energy would be saved globally if each new PC sold came with a fan or cooling device that was just 5 percent more efficient? The same goes for TVs, fridges, heaters, air conditioners, etc. With energy-savings, itâs a numbers gameâhistorically, we havenât bothered to fine-tune energy consumption of devices because energy supply has not been an issue. But now there are just so many devices in every household that itâs really adding to the problem. Look for more companies to pop up that will provide energy-saving solutions for the household appliances we use every day.â
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Overwhelmed? Invest in an ETF. The sheer volume of opportunities in the green market can be overwhelming for any investor. Luckily, investors can take advantage of this market by investing in alternative energy in a more general sense through the Market Vectors Global Alternative Energy ETF, which trades in the US under the symbol GEX. The holdings of the fund range between 1 and 11 percent. Before the fund invests, companies must meet the following requirements: 1) Represent the 30 stocks in the Ardour Global IndexSM (composite) with the highest average trading volume and market capitalization, 2) Have a market cap exceeding $100 million, 3) Have a three-month trading price greater than $1.00, 4) Be involved in the business of the alternative energy industry (i.e., derive over 50 percent of total revenues from the industry).You can read more about this ETF by visiting www.vaneck.com.
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âIt is not for us to judge whether or not we may all be burnt to cinders by the sun in 30 years or so, unless these developments are successful,â says Mellon. âIt is enough for us to say only that these green opportunities are a gold rush at its very earliest stages, and itâs a gold rush that every serious investor should consider.
âThat said, investors should remember to always diversify their investments,â he continues. âThe green realm is full of promise, but having too many eggs in one basket always carries risks. There are other great opportunities out there with real estate, commodities, and more. To ensure your investments have made the most for you over the next ten years, youâll want to check those out as well.â
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About the Book:
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The Top 10 Investments for the Next 10 Years: BigIdeas, MoneyFountains and Your Path to Prosperity (Wiley, February 2008, ISBN: 978-1-84112-802-3, $29.95) is available at bookstores nationwide, from major online booksellers, and direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797.
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