June 01, 2007
Global Warming Investment Opportunity
Apparently rising concern about global warming -- embraced finally yesterday by President Bush, even if in half-hearted fashion -- is good news for the electric utility industry. The Dow Jones Utilities Average, which tracks the stock prices of leading electricity and natural gas companies, is up nearly 15 percent on the year, double the increase of the S&P 500 average, which hit another record high yesterday.
You'd think the prospect of increased emissions regulations would dampen interest in the stocks that used to be considered investments for cautious grandmas. And nothing I learned yesterday by attending a forum at the Center for American Progress on the prospects for carbon capture and storage systems for electric power plants would have changed that outlook. Indeed, if anything, you'd think the prospects of having to make billions of dollars of investment to build Integrated Gasification Combined Cycle plants that allow carbon capture, and billions more to drill deep wells for underground storage, would send investors fleeing the sector like the plague.
One possibility is that investors are taking the typical short-term view. Energy prices are rising and caps on prices that accompanied ill-conceived deregulatory schemes in the late 1990s are coming off. My own bills here in Maryland are up 50 percent from a year ago, and today, June 1, are scheduled to take another leaps upwards. Who cares about global warming regulations that are still years -- if ever -- in the future.
But there's another possibility. Perhaps investors understand that global warming is a great investment opportunity. If regulatory certainty is guaranteed (i.e., if utilities know that carbon emission rules put in place today won't be repealed tomorrow or ten years from now), then electricity generating plants that meet those rules are going to be a pretty safe place to put your money.
David Hawkins, the former EPA official who now heads the air office of the Natural Resources Defense Counsel, was sanguine about impact tough new carbon rules would have on prices. If spread across all utility payers, it would generate just a 2 percent increase in prices, he claimed.
But I think he underestimates the impact that the interplay of deregulated markets -- a legacy of the Clinton years -- and tougher carbon rules -- one probable legacy of the next administration, whether its Democratic or Republican -- will have on individual consumers, especially those that are poor or in the bottom half of the middle class.
Who should pay for the global warming fix? Unless progressives come up with something better than "don't worry it will only be 2 percent" for the people whose bills are going through the roof, those folks may warm to politicians who claim that we don't really have to worry about rising temperatures. The scientific debate may be over. But the political debate has only just begun.
If the head of NASA can say we really don't have to worry about it, then there will be no shortage of politicians willing to say the same thing, especially when the choice for their constituents is between keeping the lights turned on or dealing with a problem whose impact is far down the road.
Posted by gooznews at June 1, 2007 08:20 AMWe at Connecticut Real Estate and Construction have not the time to waste while the G8 deliberate picayune details about what sorts and how much of greenhouse gasses are allowable, and who was going to conform or not.
One might ask, what is the hurry? The hurry is: we humans are in the process of destroying our planet. Global warming is the single most significant environmental crisis the world community has ever seen. The 2007 G8 Summit in Germany will focus on the reversal of global warming. President Bush, of course opposes this proposal. Like his strategy in the Middle East, he has a better idea, and he wants to convince the world of something they already know is untrue. This time it’s not that there are weapons of mass destruction in Iraq, but that global warming is not that dire an issue.
Our Nero-like President fiddles, but we cannot allow our Rome to go up in flames. This isn’t a city’s destruction we speak of. It is the end of all of us, of history, of every thought and feeling humankind ever produced. Our present federal government is not going to do anything about this crisis.
Connecticut Real Estate and Construction will do something about it, because Connecticut needs GREEN workforce housing in significant number for very important reasons. Suburban sprawl is killing the environment. When we continually clear off two acres per household to put up large houses, we cut down trees which produce oxygen, we deplete the filtering system for our water, and we make houses which leave a carbon footprint which further opens a hole in the ozone. If we instead build multiple units together and build them with solar photovoltaic cell panels and with geothermal heating and cooling, we leave virtually no carbon footprint, we leave sufficient greenery to filter water run-off, and we provide our workforce with housing that allows them to stay in the state and not flee to the South and Southwest as has been the recent trend. As a result, those businesses (and their tax revenues) which require those workers need not flee with the workforce, a trend we have seen throughout the Northeast region of the country.
Additionally, we will build elderly housing. The Boomer Generation is aging. They are retiring at record rates and require specific housing that does not exist in sufficient number. We will build it. We will build commercial buildings and office space to go along with the elderly and workforce housing. We need cooperation from local governments to achieve our goals, and we need that cooperation quickly. As we move forward, we will build with town tax rolls in mind. We are aware that the workforce housing will require significant services and expenses, most notably educational expenses. This is why mixing the elderly housing with the workforce balances the ledger, for the elderly pay taxes without sending children to schools. Further, the commercial and office buildings will bring in significant tax revenues without pulling out revenues from the local municipality. This formula is referred to as “Smart Growth” and is to be part of our plans
While proposing “caution” and “care” is rarely foolhardy advice, studies on these issues have already been done and “smart growth” is necessary throughout the state and the country. We cannot wait. The cost is too dear for all of us to sit idly by and fiddle away time as the planet goes up in flames.