Thursday, June 30, 2011

Solar Energy Progress in Spite of Political Clout of Fossil Fuel Industry

Despite the backward policies in the U.S. that continue to subsidize and promote fossil fuels from the 19th century at the expense of human health and the environment, solar power continues to become more competitive.

According to the global research director for General Electric, solar power may be cheaper than electricity generated by fossil fuels and nuclear reactors within three to five years because of innovations.  GE recently announced that it had boosted the efficiency of thin-film solar panels to a record 12.8%.  Improvements in efficiency, or the amount of sunlight converted to electricity, reduce costs.  GE plans to open a plant in 2013 to manufacture thin-film solar panels. 

Cheaper solar panels and thin film make solar power increasingly viable without subsidies.  The cost of solar cells has fallen 21% so far this year, and the cost of solar power is comparable to the rate utilities charge for conventional power in the sunniest parts of California, Italy, and Turkey, according to Bloomberg New Energy Finance.

According to the Energy Information Agency, in 2009 the average U.S.  retail rate per kilowatt-hour for electricity ranges from 6.1 cents in Wyoming to 18.1 cents in Connecticut.

Solar-panel sales now total $28 billion worldwide.  Most solar panels use silicon-based photovoltaic cells to transform sunlight into electricity, according to Bloomberg News.  The thin-film versions are made of glass or other materials coated with cadmium telluride or copper indium gallium selenide alloys.

Steve Lehman

Tuesday, June 28, 2011

Nuclear Power Trouble Closer to Home

The disaster at the Fukushima nuclear plant in Japan was a jolt to many nuclear power proponents, including some environmentalists who reluctantly backed the power source as a way to ameliorate the crisis of global climate change.  Officials of the U.S. nuclear industry were quick to offer assurances that U.S. nuclear plants did not face the potential circumstances that caused the crisis in Japan.

But today's news about a Nebraska nuclear plant that is threatened by flooding of the Missouri River raises new--and most likely previously unimagined--concerns about the safety of nuclear power plants in this country.   Aside from potential flood damage to nuclear plants, the lack of a reliable means to permanently dispose of spent fuel has long troubled me.  Spent fuel is commonly stored "temporarily" (read:  indefinitely) on site at most U.S. nuclear plants--many of which are "bulging at the seams."

I realize that there is not yet a fuel source on a large scale that is a panacea, but I wonder why energy conservation seems to be anathema to many Americans, and especially elected officials on the right.  An urgent program of energy conservation should be the first step in solving this country's energy crisis.  Conservation is the cheapest form of energy, and at a time of ongoing economic challenges, saving money by using less energy helps businesses and households.  And then let's push for dirty fossil fuels to reflect their true costs to society.  People respond to incentives, and having the right energy incentives could make a big difference and put this country in a better position to compete with the rest of the world, which has gained a big lead in sustainable energy and economic policies.

Steve Lehman

Monday, June 27, 2011

SAP Shows There Is “Green” in Going Green

SAP, the world’s largest maker of business management software, aims to dominate the $11 billion market for products that help companies increase productivity while limiting the effect on the environment.

SAP sustainability software is one of its fastest growing segments.  The software lets businesses monitor and manage, for example, their carbon footprints.  SAP has sold its sustainability software to, among others, Baker Hughes (oilfield services), Deere (farm equipment), and De Beers (diamonds).

SAP’s chief sustainability officer sees great potential, saying “We’ve just started.  This is a young discipline.”  Chief competitor IBM’s also sees an opportunity with its Smarter Planet service, which combines software and hardware solutions.

These leading companies and their customers know that to be globally competitive, they need to recognize the reality of climate change and adopt progressive policies irrespective of  the political climate in the U.S. if they want to stay competitive and even viable versus foreign competitors and their more progressive governmental policies.

Steve Lehman

Tuesday, June 14, 2011

Short-Term Bounce, and Then?

The recent weakness in stock prices and relatively depressed sentiment measures left the market likely for a bounce.  The American Association of Individual Investors latest survey, for example, showed twice as many bearish investors as bullish.

Beyond a short-term bounce, however, there is an area of potential vulnerability that has implications for all risk assets--China.  China’s booming economic growth and voracious demand for all manner of “stuff” have driven commodity prices sharply higher, and has fostered—along with the Fed’s Ben Bernanke’s clear focus on spurring higher stock prices—an environment of widespread speculation.  A setback in China’s rampant growth would have a big impact on the speculative environment.  Such a setback could well occur.  Despite recent curbs on bank lending, there already are large concealed losses in China’s banking system. 

Furthermore, fixed investment now accounts for nearly 50% of Chinese GDP.  Historically, when a country’s fixed investment comprises 30-40% of GDP, the result is usually substantial excess capacity that is followed by sharp production cutbacks.  With China now the world’s second-largest economy and the U.S., U.K., and Japan struggling, a break in China could make the “risk trade” seem less like a sure thing and further increase the appeal of large-capitalization stocks that have strong cash flows and above-average dividend yields.   Keeping some cash on hand for better buying opportunities seems advisable.

Steve Lehman

S & P 500:  1288

Friday, June 3, 2011

Bad Guy(s) Finish First

Massey Energy and its CEO, Don Blankenship, were among the worst of the “bad actors” in corporate America.  For years, the company systematically ignored safety regulations to increase coal production.  Instead of changing its ways and focusing on worker safety, the company and its outspoken CEO stonewalled federal regulators through legal obstructionism.   Blankenship showed extraordinary arrogance and contempt for Federal oversight, even for a CEO.

These practices culminated in the April, 2010 explosion that killed 29 workers.  A State of West Virginia investigation concluded on May 19th that the company “operated its mines in a profoundly reckless manner.”

Yet, the CEO who showed such contempt for those outside the company who tried to protect the workers stepped down last December with a $45 MILLION retirement package.  Then, as pressure on the company heated up as investigations revealed systemic unethical and illegal practices, the board of directors sold the company to Alpha Natural Resources for $7 billion.  So the company head and its investors ended up making millions and millions of dollars.  This week the takeover withstood legal challenges and was completed.

This outcome is sickening to ethical investors and should be to citizens as well.  Let’s hope that we don’t see another story like this for a long time.

Steve Lehman