Global Warming: How to Profit From Greenhouse Gas Emission Restrictions & Incentives
by David Fessler, Energy and Infrastructure Expert
Friday, October 9, 2009: Issue #1112
It’s one of the fiercest debates in the world – both politically and economically.
That’s because it concerns the world itself – namely, how to protect it from harmful environmental emissions and global warming.
Many environmentalists say global warming not only exists, but is also the leading cause of damage to the Earth. They cite obvious factors like the Antarctic ice shelves breaking off, glaciers melting at unprecedented rates and the holes in the Earth’s ozone layer.
But a few scientists believe global warming is exaggerated, with warmer temperatures and melting ice the result of normal up-and-down cycles that occur every 10,000 years or so.
For the record, I believe global warming is real. But the big debate centers on the question of why it’s happening. Let’s examine the biggest offenders, the incentives being offered to reduce emissions and who stands to capitalize from new energy legislation…
Global Warming… Greenhouse Gas Emissions Are The Real Problem
No matter where you stand, you’ll likely know that the consensus is that greenhouse gas emissions are the cause of the problem.
The most prevalent of these gases is carbon dioxide (CO2). It’s the result of burning fossil fuels like coal, natural gas and petroleum, as well as from vehicle emissions. The chart below – courtesy of the Environmental Protection Agency – shows the breakdown of greenhouse gas emissions – and just how much of a factor CO2 is…
The greenhouse gas problem stems from this cycle…
- Gases rise up into the atmosphere, where they accumulate and create an “insulating” layer.
- This layer traps more of the sun’s heat within the Earth’s atmosphere instead of it radiating out into space.
- As a result, global temperatures rise. If left unchecked, within 100 years – or much sooner by some estimates – oceans will be 20 feet higher than today.
Obviously, rising ocean levels would have a devastating effect. Many low-lying coastal areas would be completely submerged, with millions having to move to higher ground. And some low-lying islands would disappear entirely.
Hurricanes and typhoons would be 10 times as damaging as they are now, and places previously thought to be immune from storm surges would find themselves in the middle of a New Orleans-like nightmare.
So it’s obvious that the easiest way to attack the greenhouse gas problem is to go after CO2, as it’s responsible for 55% of all greenhouse gas emissions. But that means targeting the sources…
Who’s the Biggest Global Warming Offender? Look in the Mirror…
While global warming – and, by extension, greenhouse gas emissions – are a worldwide problem, you can see from the chart below that the United States is by far the world’s biggest offender.
Since the beginning of the Industrial Revolution, we’ve pumped more than 6,000 million metric tons of carbon dioxide into the atmosphere. To put that in perspective, our emissions are equal to that of Europe and China combined. Russia is about half that of China.
While the United States is the largest greenhouse gas emitter, it’s the rate of growth that worries scientists and policymakers – particularly with other nations quickly establishing themselves as major players on the global stage.
For example, by 2015, emissions from developing countries like China, Russia, Brazil and others are expected to exceed those of developed countries.
So how are we tackling the problem?
Got Emissions? Bury Them…
While electric vehicles, like PHEVs, will eventually address CO2 emissions in that area, mass production and adoption is still a long way off.
At the moment, it’s more viable to tackle the millions of tons of CO2 that billow out of smokestacks at power plants. And that’s what scientists have explored over the past 10 years.
So far, the most promising and technically feasible idea is to capture the CO2, liquefy it, and pump it deep underground, beneath an impermeable layer of rock from which it can’t escape.
The technique is already being used in Canada on a few older oil and gas wells as a means of extending their productive life, with CO2 piped there from the United States. There’s no reason to believe it won’t work here, but there’s just one problem: cost.
Incentivizing the Offenders Through “Cap-and-Trade”
Of course, no plant owner is going to rush to spend the millions required to capture CO2… unless legislators make it illegal and painful for them not to.
The key is to make it worth their while via incentives.
And that’s happening in the form of a tax on carbon emissions – a so-called “cap-and-trade” system.
Simply put, the government sets the “cap” on the total amount of carbon emissions allowed. Emitters can then “trade” (buy and sell) permits, which allow them to emit CO2. The aim is that the overall limits gradually decline, thus forcing the price of the permits up, making it more economically attractive to actually stop emitting.
Unfortunately, though, the United States is noticeably behind the rest of the world in its implementation of such a system. And realizing that a change of this magnitude will take time, a cap-and-trade system is working its way through Congress in the form of the Waxman-Marley bill.
Naturally, with Washington involved, it won’t pass easily. However, it has become a political hot potato and Congress will eventually pass some form of the bill. And the good news for investors is that it will generate another new revenue stream in the energy sector.
The Company Leading the Way… So Far
A few coal-burning utilities aren’t waiting for the legislation to kick in. Alstom, SA (OTCBB: AOMFF), a French energy infrastructure manufacturer, has a CO2 injection pilot project with American Electric Power Company, Inc. (NYSE: AEP) – the largest coal-burning power utility in the United States – at one of AEP’s plants in West Virginia.
Using Alstom’s technology, AEP is capturing and liquefying about 1.5% of the annual CO2 output from the plant and injecting it deep underground. If successful, Alstom hopes it will be able to leverage its “early-in” success in West Virginia, other parts of the United States and elsewhere around the world.
Good investing,
David Fessler
P.S: As greenhouse emission restrictions and incentives kick in, you can bet that other companies will be forced to take action. I’ll be tracking the issue both here and in my “Hot Stacked” column in The Oxford Club’s newsletter, The Communiqué. You can find out more about that right here.
In addition, I’ll be covering the topic at the annual Investment U Conference in San Diego. This is one of the top investment conferences of the year, featuring a superb lineup of speakers like Alexander Green, Louis Basenese, Karim Rahemtulla and many more. So I invite you to join us at the Grand Del Mar Resort from March 17-20, 2010 to receive investment insights, forecasts for 2010, stock picks, and participate in workshops and educational sessions. We’re offering a $300 discount if you book by November 1. To reserve your spot, visit this link, or call: 800.926.6575 (ext. 105 or 106) or 561.243.6276.
- American Refiners Have a Problem… And the Government is Making it Worse
- When Freshwater Meets Seawater, Look Out!
- A Green Energy Investing Guideline
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19 Responses to “Global Warming: How to Profit From Greenhouse Gas Emission Restrictions & Incentives”
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October 9th, 2009 at 12:09 pm
I have previously stated I had no confidence in Fessler. This takes the cake. Global warming is a total scam and any change would certainly not be man made. Talk to Bonner. I had thought about going to San Diego but I will not now. If any of your “green” investments are profitable it will be because of government mandates. How long will they last when the dollar fails?
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October 9th, 2009 at 12:19 pm
From the article by Robert Williams in the October 9 IU issue 1112, it looks like ingenuity is alive and well. But, what concerns me is that fresh water is being consumed, and at the same time red flags are going up globally regarding the looming shortage of fresh water. Once the salt water is diluted, it seems to me that a counterbalancing desalination remedy to the water problem will cast doubts about the net efficiency of the two processes which may seem disconnected. But, one is a net consumer of fresh water and the other is a producer.
I am very impressed by the Cleantech power story. As familiar as I am with osmosis, I cannot imagine that I would have conceptualized it. It just shows that we need to look much closer at what is in front of us, and rethink how we can apply that knowledge to the development of new technologies. Thanks for bringing that great information to us.
Now if we could just find a way to collect the methane generated by all the termites and livestock in the world we could take a large wedge out of the pie chart presented by David Fessler in the same IU issue. Methane is more a damaging greenhouse gas than carbon dioxide. What would be great if we could advance algae aquaculture and enrich the water used with carbon dioxide rather than liquifying and injecting it. If we could find a specie of salt water alga that would thrive in the diluted brine, we could build algae farms near the osmosis power generators.
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admin Reply:
October 12th, 2009 at 1:11 pm
Charles,
My contacts are telling me that significant developments are being made on the alage front. That’s good fodder for a future article!
Thanks.
Robert Williams
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October 9th, 2009 at 12:24 pm
Your must be kidding, right? Do you honestly believe that cap and trade is good for America? It will not only cost consumers big time it will probably force many small businesses out of business. And for what. There is absolutely no concrete scientific evidence that CO2 is causing the world wide temps to rise. It just ain’t so.
The whole issue should be called crap and tax.
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October 9th, 2009 at 1:40 pm
Very interesting and well-written Dave. May I post it on http://www.ChecktheMarkets.com. Our readers will appreciate it. Thanks
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admin Reply:
October 9th, 2009 at 2:47 pm
From Investment U:
Sure Marc, post away!
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October 9th, 2009 at 2:36 pm
David,
The earth warms and cools on natural cycles which humankind has very little influence over. Do we control the sun, the wind, ocean currents, volcanoes? Of course not. The climate models are junk and have failed to account for the recent cooling. CO2 is a minor green house gas and you should know that. Scare tatics are being used when increased CO2 has benefits for crops and plant growth. Greenhouses pump in CO2 at rate 1000ppm, submarines allow up to 5000ppm before the srubbers are turned on. How does this compare with 350ppm in the envirnoment?
Science has been politicalized and scientists are afraid of losing funding.
I am a skeptic. If you want to learn more…educate yourself more fully check out
http://wattsupwiththat.com/
It’s a great blog that has a variety of people participating. It is open and allows comments from all [unlike other sites].
One can learn a great deal from the discussion and the lies being sold facts.
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October 9th, 2009 at 2:55 pm
The study of ice, remaining from the last big ice age and that from the little ice age, shows CO2 levels were many times higher than they are today. It was extremely cold then.
Presently, global temperatures are falling much faster that previously thought. In 2008, we had new record setting cold , especially in the norther half of the USA. Long lingering cold, that caused much of the corn growing farms, for 2009, not to be able to produce crops, because the soil temperatures were still to cold to plant at the proper time.
Long range global temperatures taken via satelite monitoring, show temperature mean average temperatures have been in a steady deline since 1990.
This rapid decline in teperature has caused many to rethink the concensus of the few, that higher CO2 levels are in fact causing rising temperatures.
Frost warnings began, this year, in Oregon, six weeks before the norm. Early snow has been much earlier than normal in most of Colorado, and other places this year.
The people who study sunspots, which occur in abundance while the sun is burning at super hot temperatures, began to decline after the high temperatues of 1990. Now in 2009 the sun is virtually free of sun spots and burning at much cooler temperatures. This of course supports the ongoing global satelite temperature scans that show cooler temperatures.
The planet Mars has also dropped from the extremely high tempreratures of the late 80’s up to 1990. Now the decline of Mars temperatures is following the decline of sunspots. CO2 levels on Mars, now appear to be increasing again, as the cooler temperatures become the norm.
N aturaly occuring cycles of the sun, seems to have much more to do with warming, than anything people are doing.
One erupting volcano can spew out more CO2 than mankind has produced in their entire exsistance.
Once again, those who study deep core ice from ancient ice ages, all show, the colder it was, the more CO2. Amazing.
Thanks for listening.
William
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tt Reply:
October 13th, 2009 at 3:43 pm
I concur William. Recent research is far more conclusive that solar and cosmic energy have the dominant effect on our atmospheric cloud cover, and that the data on reduced cloud cover, increasing the amount of direct sun energy on the earth’s surface, is very likely the primary cause of our current glogal warming.
Additionally, recent peer reviews of the tree ring evidence that was used in support the CO2 hypothesis exposed that many additional data samples within the same region were excluded from the research, and had they been included, the data would no longer support the CO2 hypothesis.
This still leaves us with other good reasons to
shift humanity to less risky and less damaging sources of energy.
In doing so, we need to choose wisely, and avoid wasting time and resources, lest we not head in the right directions while there still is some time and some resources to allocate.
Unfortunately we are gaining speed in the wrong directions. So as long as truth is so easily suppressed from broader audiences, there is little chance we will alter course.
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October 9th, 2009 at 4:50 pm
This global warming crap is just THAT!
China will build more coal plants in the next 3 years, than the US has operating today.
I bet they don’t have cap & Tax (trade) BS!
Some of the glaciers are actually geting thicker at the poles…but if some of the edges fall into the sea…that’s all that’s reported. The polar bear population is expanding…but we only see the bears that are caught on ice flows…SUCH HOOOEY..pay attention and don’t buy any of the BS about how high the sea level will be in 50 years..they can’t even tell you what the weather will be in 5 days!!
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October 9th, 2009 at 5:03 pm
This article is very supportive of my own thesis. To wit, mankind is unique in its ability to analyze all the facts and come to precisely the wrong conclusion.
That said, there are many misguided and power hungry individuals pushing the global warming, (excuse me, I mean climate change) thesis. From an investment and tax liability perspective, it is something to pay close attention to. It doesn’t matter if they are right. It only matters if they gain control.
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October 9th, 2009 at 7:36 pm
Is Mr. Fessler for real in making these statements? Plaaeese! His recommendations of companies that may be profitable investments due to their posture in relation to the debate on global warming is fine, but he appears to go far beyond that role and to join the chorus of people who believe there is global warming that is due to human activity and that humans can alter their behavior to reverse that warming and thereby prevent global disaster. Participants in this forum don’t need a repeat of that dribble.
The best scientific/mathematical models cannot even reliably and accurately predict the weather in a single city a few days ahead, yet you and other alarmists want me and others to believe you understand global warming, its causes and how to reverse it to the right global temperature level? Such is nonsense.
And even if global warming is real and is due to greenhouse gas emissions due to human activity, then taken to its logical end, the only truly effective solution is reduction/elimination of that activity, and the only totally reliable way to ensure that will occur is reduction of world population which means less demand for food, energy and other resources. Are you going to propose population control next? Thus, I view global warming alarmists much as I view Hitler, with much concern and fear.
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October 9th, 2009 at 9:21 pm
Man-made Global Warming/Climate Change is a (sad) hoax. I sorry you’ve bought into it. Read up on the subject. I’m dropping your newsletter.
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October 10th, 2009 at 2:32 am
Mr Fessler – please read this prepared as a minority report for the US Senate, identifying no less than 700 reputable scientists who no longer subscribe to the global warming scam. It is edifying, and should be required reading for all schoolchildren and politicians.
http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=83947f5d-d84a-4a84-ad5d-6e2d71db52d9&CFID=97184&CFTOKEN=48248935
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October 10th, 2009 at 4:20 pm
There is no detectable change in global average temperature that can be scientifically attributed to changes in levels of atmospheric greenhouse gases. Other factors explain a large enough proportion of the total variation that variation remaining to be attributed to greenhouse gases is only noise. The potential warming due to greenhouse gases is greatly overstated due to political motivations. Climate is ruled by solar activity variation and planetary motion variations. Most (if not all) of the variation attributed to greenhouse gases is due to other sources. This allows for an extrapolation to exaggerate the potential for warming by a factor of 10 to 100 times the amount that a rigorous scientific method would support. The bottom line is that if we are in a historically warm part of the natural climate cycle and if it does get significantly warmer it will not be due to human activity, nor will anything we are capable of doing have a significant impact on the future climate variations. There are many great reasons for reducing pollution and developing green energy technologies, but fear of global warming due to CO2 as a greenhouse gas is not a good or even a mediocre reason: it is a horrible reason.
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October 11th, 2009 at 10:54 am
Climate Change a/k/a global warming & global cooling have existed for thousands of years and occurs in cycles. Of the two climate change phenomenon, warming & cooling, warming is the less serious and less destructive Cooling has resulted in civilizations and cultures being disrupted and destroyed. No evidence or history of warming having the same effects.
Kessler is wrong on so many points that it would take pages to refute his allegations, so a couple of the most egregious need mentioning.
Water vapor, not CO2, is the most important and abundant greenhouse gas. The amount of CO2 in the atmosphere is so small that it is generally referred to as a “trace gas”. There is 100 times more water vapor in the atmosphere than CO2.
96% of atmospheric CO2 is from natrural, not “man made” sources.
CO2 is not a pollutant. It is a plant food and aerial fertilizer. Higher CO2 levels helps trees, crops and all green things grow faster and
larger, produce more fruit, use water more efficiently and resist stress from real air pollution. It also boosts the protein content of wheat, rice and legumes and the antioxidant content of citrus amd other fruit.
Atmospheric warming stopped in 1998 and has in reality been cooling for the last couple of years.
In the last 100 years the atmosphere has warmed 0.06 degrees Celsius. Hardly any cause for concern.
If Investment U is going to rely on individuals like Kessler to make investment recommendations, then I will cease to read it and take it seriously.
You gentlemen that produce Investment U are way to intelligent to fall for the “global warming” alarmism hoax.
Keep up the good advice but distance yourselves from alarmist whackos like Kessler.
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October 12th, 2009 at 4:12 am
Why pump CO2 into the ground?? There seems to be a way to make money on this. Simply by making fuel of the stuff, I once read an article about a company which uses a bio catalyst proces to convert CO2 into fuel, but I cannot find the companies name, for which I am sorry.
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October 12th, 2009 at 9:02 am
Global warming is a hoax set up to make some people like Al Gore rich trading carbon credits. Unfortunately, many people like you have bought into the idea and perpetuate the myth by agreeing with it. Check the facts! In the last decade CO2 emissions have increased while temperatures have gone down.
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October 12th, 2009 at 1:02 pm
The author appears oblivious to the cooling we’ve experienced over the past 10 years. And to publish a chart from the EPA is highly suspect as are all stats published by government agencies. And no mention of water vapor as the number one heat trapping gas? Sounds like a shill for Waxman-Markey to me.
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