Investing in Green Energy: A Great Way to Lose Your Money

Last year, the environmentalist lobbying group, Greenpeace, issued its "The Silent Energy Revolution" study which crowed:

The bright future for renewable energy is already underway. This new analysis of the global power plant market shows that since the late 1990s, wind and solar installations grew faster than any other power plant technology across the world….

To get some idea of just how well renewable energy "revolution" is doing in the marketplace let's take a look at how cleantech stocks have been performing on average. Over at the Washington Times, climate catastrophe skeptic Steve Goreham, executive director of the Climate Science Coalition of America, asks, "So, how is your green energy stock doing?" His answer is not at all well. His conclusion is based on the 7-year trends identified by the Renixx Index of the 30 biggest renewable energy companies. Since Goreham doesn't want anyone reprinting his article, I've put a couple of illuminating stock trends charts below. The first one is the Renixx Index for the past five years - dropping 90 percent in value since 2009.

The next chart shows the price trend in the the First Trust ISE Global Wind Energy Fund:

And see also the popular WilderHill Clean Energy Index below. It has fallen about 90 percent from its high in 2007:

The Greenpeace report favorably cites another that noted:

"Policy and regulation continue to be central to ensuring the long term stability of projects from a revenue and operation perspective. It is imperative that both regulation and policy be clear, of a long duration, and legally based in order to deliver growing volumes of private funds into the [renewable energy] sector."

As Greenpeace makes clear "policy and regulation" nets out to subsidies for wind and solar and tightening restrictions on all other energy sources. But surely any reasonable definition of "sustainabilty" should include "financial sustainabilty." If an activity requires government subsidies that means it is not sustainabie.

Comments

[Hyperion]

Investing in Green Energy: A Great Way to Lose Your Money

But, green energy makes you feel good, and it's green!!! All you Anarchists around here care about is dirty old money.

[Episiarch]

Correct. So?

[Hyperion]

So says Episiarch, greediest of all capitalists, hater of fairness, and Sea Chicken fan.

[$park?]

Fairness is for chumps who don't get their way on everything.

[albo]

I think there is an Iron Rule of Government Investing:

"When government has to subsidize a thing because private investors won't, that thing is most probably a really stupid invesment."

[Hyperion]

Look, without certain subsidies, women and children would die in the streets and minorities returned to slavery. Geez, you rethuglitards don't understand anything about fairness.

[Dr. Frankenstein]

So is what you're saying is that women, children and minorities are bad investments?

[HazelMeade]

Beat me to it.

[some guy]

But the government subsidizes damn near everything to some extent. What would be left to invest in if I listened to your iron rule? Pretty much only black market goods... Hm.

[Hyperion]

And, phirstest!

[R C Dean]

I'll be fascinated to hear shreek's demented musings on why green energy has been such a bust despite government support in this booming bull market that he loves to point to as proof of Obama's success.

[Episiarch]

You'll be fascinated to have a sockpupet blow smoke up your ass? To each their own, I guess.

[R C Dean]

It's amusing, OK?

[some guy]

When someone paints themselves into a corner it's always funny to watch them try to get out while saving face.

[Cavpitalist]

"You'll be fascinated to have a sockpupet blow smoke up your ass?"

Depends on the smoke in question, I reckon.

[John]

Policy and regulation continue to be central to ensuring the long term stability of projects from a revenue and operation perspective. It is imperative that both regulation and policy be clear, of a long duration, and legally based in order to deliver growing volumes of private funds into the [renewable energy] sector."

In other words "the ability to use government force to steal from others remains essential to the green energy movement.

[Hyperion]

So, if you were president, you would just sit idle and let big oil steamroll over the little people and rape the planet? I guess we see why Obama was the best choice.

[BarryD]

Green -- the color of horseshit!

[R C Dean]

I've fried a few greenie prog synapses by pointing out that an enterprise that is not profitable is by definition not "sustainable."

[LTC(ret) John]

Sustainable - with their own term, tormented. Nice.

[Killazontherun]

They stole it from economics, particularly schools of thought that pine on third world development. I smelt propaganda the first time I heard the word used in relation to the Greens.

[Hyperion]

We will fix that by banning profits and insuring fairness for all. /proglodyte

[$park?]

Fairness insurance? Definitely has a progressive ring to it.

[Hyperion]

ensuring, GDit! But even I have to admit, that was pretty good.

[BakedPenguin]

It's what the Obama team will be calling the 90% tax rates they'll be shilling for in a year or two.

[Copernicus]

"Fairness insurance? Definitely has a progressive ring to it."

I assume Progressive will be given a monopoly on the type of insurance.

[BakedPenguin]

I've done this, only talking about government spending.

[BakedPenguin]

And specifically, the deficit.

[HazelMeade]

It's sustainable along as you can keep getting government to shovel subsidies into it!

[some guy]

I love to point that out too. They always try to wriggle out by saying that "It will be profitable in the long run because blah blah blah" or "It's only unprofitable because you aren't counting the externalities!".

[HazelMeade]

This in spite of (or maybe because of) all the green energy subsidies directed at the industry by Obama.

You might think that official government backing would be a boon to an industry. But dependence on subsidies is pretty much another way of signalling to the market that you're never ever going to turn a profit.

[Canman]

Who is Al Gore?

Have all the green energy tycoons taken their wisdom and resources and retreated to Gore's Gulch?

Al Shrugged.

[Hyperion]

You jest? The great Goracle, savior of our planet, who invented the internet and created the most greatest and popular TV program of all time, Current TV?

[Romulus Augustus]

So is Al Gore now penniless? Someone is always staying one step ahead of the bankruptcy court.

[John]

I just got an email soliciting my support for making animal abusers register like sex offenders. I kid you not.

[$park?]

So how much did you donate to the cause?

[John]

Somewhere approaching your total net worth as a human being sparky.

[$park?]

Yeah right, you couldn't possibly have more money than the current debt.

[Bobarian]

That wasn't a solicitation, it was a warning...

Leave those sheep alone.

[GILMORE]

John| 12.10.12 @ 2:22PM |#

I just got an email soliciting my support for making animal abusers register like sex offenders. I kid you not

They invented the double-registration "Animal-Sex-Offender" for Warty years ago.

[B.P.]

Related: Here's an hilarious guest op-ed in today's Denver Post by some guy who started a nonprofit to pimp renewable energy and hassle others. He thinks all that dirty money used on political campaigns should be dumped into nonprofit start-ups.

http://www.denverpost.com/opin.....-6-billion

[John]

You have to admire his balls. He is basically saying straight out the world would be a better place if everyone would just give him their money.

[db]

Nonprofits are such a scam. What better way to pay oneself a massive salary and benefits while paying one's employees complete peanuts because they're willing to forego wages for altruistic motives and get adulation from the press and respect from politicians?

[sarcasmic]

But surely any reasonable definition of "sustainabilty" should include "financial sustainabilty."

You're kidding, right? The whole reason the environmentalists abandoned natural gas was because it became a cheap and abundant source of energy.
They liked it when it was financially unsustainable and needed subsidies.

The surest indication that a technology is bad is that it can stand up without subsidies. That means that The People are no longer in control. It leads to wealth creation and wealth disparity, which is immoral.

Only ventures financed with money obtained by coercion are moral because they involved The People. I mean, The People is all of us! We're all in this together! Everyone benefits, instead of a select few rich people.

[JW]

The economic ignorance that you have shove aside, to make a salient point, is almost insurmountable sometimes.

A member of my immediate family is convinced that once a job is eliminated, say, a cashier by a self-checkout lane, that's it, it's gone. The business then takes that money, dumps it in the vault and goes swimming in it. [shakes fist at Walt Disney] Evidently, that person can't be retrained or work anywhere else.

That a business then takes those savings and reinvests it in the business is just a wacky theory.

[Brett L]

What's the best way to become a green energy millionaire?

Start with a billion dollars...

[db]

See it sounds bad until you realize that the billion dollars is government grants and guaranteed loans, and you get to pay yourself a fat salary and bonuses as an exec while the company's operations grind the billion down to nothing.

[some guy]

Step one: Lobby Congress.
Step two:
Step three: Profit.

This is literally the only way leaving step two blank makes sense.

[Russell]

You can use the money you save to offset Viscount Monckton's trillion dollar carbon tax

http://vvattsupwiththat.blogsp.....g-tax.html

[Mallet Diction]

And yet, profitable companies like Walmart, Google, GE and others are investing in renewable energy in a big way. Walmart in particular has been very aggressive about reducing their energy costs using green-tech solutions.

Not sure how you would account for this in an analysis, but I don't think the one here gives a full picture.

[Killazontherun]

If you don't know why GE pushes the Green agenda, you are one clueless motherfucker.

[Mallet Diction]

Are you saying that GE investing their own money in other companies and other companies' products is some sneaky bid to make money? /sarcasm.

The fact that GE is positioning themselves to be a leader in green-energy is hardly an argument that green energy is a bad investment. They may be making a huge miscalculation, but they have a pretty good long term track record.

[HazelMeade]

Solar cells are being dumped below cost by the Chinese. That makes it worthwhile to buy them at current market prices. It doesn't necessarily make it a good idea to sell them. And if market prices rose to the point that solar panel makers could turn a profit, it might cease to be economic to buy them.

[Mallet Diction]

???

Did you read what you wrote?

If demand pushed market prices to rise to a point where solar panels were profitable demand for them would drop?

Does that summarize your point?

[HazelMeade]

No.

People are buying solar panels because the price of solar panels has fallen due to Chinese dumping, not because they are that desperate for electricity.

If China stopped dumping solar panels and the price rose, fewer people would buy them.

[Mallet Diction]

That is not what you said. But, okay.

[Mallet Diction]

People are buying solar panels because the price of solar panels has fallen due to Chinese dumping, not because they are that desperate for electricity.

I think there is a confluence of two factors here. People want solar panels, and the Chinese are dumping them, so people are snatching them up with the snatching is good. You would be wrong to say that people don't want the product.

I am an independent musician, so I am very aware of the fact that price is not what drives sales. People buy what they want. They will look for the lowest price, but "buying solar panels so we can start generating out own electricy" does not swap so easily with "finding a cheaper source of electricity" for there to be any sense that these companies are not actually interested in changing their way of doing business long-term.

[some guy]

This is primarily a PR move. They know they are throwing away the marginal difference in energy costs. They don't care because they get much more value than that back in good PR. Also, aren't their efforts focused in states that heavily subsidize renewable energy development?

[Mallet Diction]

Nah. Walmart is all over green energy in order to reduce costs. Their primary method of going "green" is through efficiency. The PR ain't bad, but they started moving in this direction well before they started to let anyone know about it. Companies aren't stupid. Most "green energy" comes from reduced waste. Companies like reduced waste.

[GILMORE]

some guy| 12.10.12 @ 4:14PM |#

This is primarily a PR move. They know they are throwing away the marginal difference in energy costs. They don't care because they get much more value than that back in good PR.

This is how "feelgood" marketing has worked since the beginning of time.

In the mid-late 90s I recall shoe companies all starting to package their sneakers in brown cardboard boxes with green, "Made from Recycled Materials!" certifications all over them.

The shoes, by contrast, were made almost entirely from petroleum byproducts and polymers in giant, carbon-emitting factories... in Malaysia.

I remember a did a quick poll of people in a room once to name the last "Environmental" commercial they'd seen on TV. Most said, "BP"

[Death Rock and Skull]

GE survives purely on direct subsidies from the federal government, and mandates that create artificial demand for their products when other companies are forced to purchase them for compliance.

Companies like Walmart and Google benefit from tax credits and tax breaks, not to mention the huge benefit of appeasing politicians by buying in to paternalist crap.

[Mallet Diction]

But surely any reasonable definition of "sustainabilty" should include "financial sustainabilty." If an activity requires government subsidies that means it is not sustainabie.

In the long run, very little is sustainable. After all, we will run out of solar energy eventually. But the idea that an activity needs subsidies (whether private or public) in the short term does not mean it is not sustainable in the longer term is just not accurate. This means that even if you require "financial sustainability" to mean "eventually will run free of government subsidies" there is no evidence from current public subsidies that a venture isn't sustainable (i.e., able to be sustained over the long term). The arguments for public subsidies, in fact, are premised on the fact that there will be a period of time when these subsidies are needed. That, despite the ventures having higher risk, and longer payback timescales, it is worth getting the industry up and running. The government taking this risk is likely to crowd out private investors as private investors wait until the risk/reward profile is a bit stronger. Other than providing a report on how this expected outcome is playing out, I am not sure what this article's point is.

[HazelMeade]

But reliance on subsidies may actually be counter-productive to getting the industry up and running.

If "up and running" means "turning a profit without subsidies", then you have to get to a point where you are efficient enough to attract customers at unsubsidized prices. But reliance on subsidies discourages efficiency, since your "market" isn't actually the consumer, but the government. If you're sucess is determined by how good at lobbying you are rather than by satisfying consumers, then you're going to put your efforts into lobbying for subsidies instead of satisfying consumer demands.

You might think you can decouple these things and have the government just funnel money to green energy, but you really can't. Nobody gets a subsidy without engaging in a lobbying effort. These things aren't handed out on the basis of some abstract empirical criterion about which companies are the most qualified, disconnected from political considerations. They are inevitably handed out based on political connections and lobbying efforts. Moreover, "creating jobs" becomes a major determining factor in whoe gets funded, and the less efficient you are the more jobs you "create".

Essentially, the engagement of the government in the process destroys the normal market incentives that allow private enterprise to become more efficient and eventually financially sustainable, and replaces them with incentives that make them continue to be dependent on government aid.

[scareduck]

^^^ THIS ^^^

[T o n y]

There is nothing "normal" about the incentives in energy production industries.

We don't need a market signal to know whether we need reliable electricity, and there is no market signal to be discerned for some of the costs of certain forms of energy production like pollution and the warming of the planet.

If you truly wanted to have an energy sector based on pure market signals, then you'd need to invent a time machine and go back and undo all the favors given to carbon energy, including an economy and infrastructure set up to run on them. Libertarians always make the error of implicitly assuming that the status quo is the freest of possible markets, and that any deliberate alteration of it is to spoil it. Surely you admit there is no pure market in the energy sector, and maybe even that the status quo industries are buttressed by a long history of lobbying and political favoritism.

[iggy]

Yeah, Tony, but there is a market signal as to where this energy comes from. Just because we know we need energy hardly means that we need subsidies for specific types of energy.

I also have no idea what you're talking about in regards to the system being 'set up' for carbon energy. Oil and gas have been used in some form for hundreds of years. The system wasn't set up for them through government subsidy, it was set up for them because they were the only game in town. And they're still far more reliable than any sort of green energy, regardless of whether the infrastructure was set up for them or not.

[Calidissident]

We all know new innovated can never supplant the established goods in a market. Would never happen

[T o n y]

We need innovations to supplant the established order, and we need it to happen a lot faster than the "market" is making it happen. It doesn't really matter why either, since the most important point is that the status quo is destroying the environment.

We don't need to pray to the market gods to ask them if we should try to prevent widespread environmental harm. They won't even understand the question.

[iggy]

We need it to happen a lot faster than the market is making it happen? Which market is that? In what way is the energy market a free market? It's one of the most heavily regulated in the world.

What are you willing to sacrifice for green energy Tony? The job losses, cost, and corruption inherent in every single government financed green energy venture will cause major nationwide economic damage. For someone who supposedly loves poor people, you sure are trying your damnedest to drive up energy costs and make crony capitalists happy.

[Death Rock and Skull]

"If you truly wanted to have an energy sector based on pure market signals, then you'd need to invent a time machine and go back and undo all the favors given to carbon energy"

Sunk costs. Repeating the same bullshit will not unskew the market, it will make it worse. Removing market interference by the government will at least slowly force the established businesses to face more competition.

[R C Dean]

undo all the favors given to carbon energy

Like what? Its a big, rich, powerful biz, so I'm sure there are some, but what are they, exactly?

[Death Rock and Skull]

That's T o n y you want to respond to, dickhead.

[HazelMeade]

You're never going to correct for past interventions by adding more perverse incentives to the economy. The market will sort itself out if you remove the distortions.

A carbon tax would help internalize the costs of pollution. I'd also call fair game on coastal landowners suing the coal industry.

[Mallet Diction]

All fair enough points, I suppose. Most environmentalists argue that it is this reality, in fact, that skews the market towards the established industries which have a lobbying infrastructures in place. The push to get green energy a place at the feeding trough is seen as balancing the unfair advantage (some analyses put the current ratio at about 7 to 1 in favor of subsidies for oil over green).

My mind goes to the history of the telecommunications industry and the way that the electrical grid remains a hybrid of government and private investment in almost all cases. How these inform the discussion will certainly depend upon your point of view, of course, but the telephone industry managed to get (mostly) off of subsidies...while the power-grid seems largely sustainable with the hybrid of public and private investment.

[iggy]

Some analyses put the current ration at 7 to 1 in favor of oil subsidies over green? Really? Would you care to post where these 'analyses' are from?

http://money.cnn.com/2012/03/0...../index.htm

According to CNN, green energy got twice the federal money that oil and gas got. CNN is hardly some right wing source. Admittedly, the highest subsidy was given to ethanol rather than wind or solar, but I haven't seen any evidence that oil and gas receive the sort of subsidy advantage that you're claiming.

[Mallet Diction]

Here's one:

http://www.businessweek.com/ne.....rles-kenny

That is based on 2010 numbers, but I haven't seen anything to say they would be radically different today. These kinds of estimates are always slippery, of course, as people argue over what counts as a subsidy.

[Calidissident]

Even assuming your numbers don't count things as subsidies when they shouldn't, they're global, not national

[Mallet Diction]

I know.

Seems more appropriate to the discussion don't ya think?

[iggy]

That article uses some very sketchy definitions of 'subsidy.' They use things like noncompetitive auctions on coal mines as their definition of a subsidy.

Also, that article argues that photovoltaic modules have reached grid parity. Okay, then why do they need government subsidies? It seems to me that if renewable energy becomes more reliable and reaches parity with oil, they should be able to find investors outside government.

We should end oil subsidies and things like noncompetitive auctions, but we also shouldn't have subsidies for green. May the best energy win.

[Mallet Diction]

You seem to be moving the goal posts here. First you have a problem with it being global. Now it is due to the nature of their definition of subsidy. I already said any estimate like this should be taken with a grain of salt. It is not my analysis, but information like this is part of the discussion. Deciding what "counts" as a subsidy is part of the discussion, in fact.

Can't end subsidies until we can agree on what they are.

[iggy]

I'm not moving the goalposts. I never said I had a problem with it being global. That was Cali. A global analysis is fine by me. It's not like libertarians are some cult group where everyone thinks alike.

Most analyses that try and claim there are more subsidies for oil than green energy make similar mistakes. First they use things like noncompetitive auctions as an example of a subsidy. The problem is, if we decided to build giant wind farms or solar panel systems, I guarantee you there would be noncompetitive auctions for the land on which those things are built. Unfortunately, it's the nature of crony capitalism.

Secondly, some of these 'look at all the oil subsidies!' type articles claim that tax deductions are subsidies. Here's the problem with that argument: Oil companies are far larger than renewable or green energy companies. Of course oil companies will have far larger tax deductions because they are so much larger and pay far more tax money. It's also not really an oil subsidy if it's a tax deduction because a lot of those deductions are not specific to oil, but can be taken advantage of by all businesses.

There's also one other difference. Without any subsidies of any kind, oil is still clearly economically feasible. The same has not been proven for renewable energy. If renewable energy cannot exist without being propped up by the government, then it clearly is not yet a legitimate energy source.

[Mallet Diction]

re: goalpost moving- somehow I didn't track who was responding. Mea Culpa.

If renewable energy cannot exist without being propped up by the government, then it clearly is not yet a legitimate energy source.

Not yet, being the operative term in the discussion, it seems.

[iggy]

Okay, but what incentive does someone making bank off the government dole have to start legitimately serving consumers? You can't say 'well it just doesn't work yet!' and use that as an argument in favor of billion dollar giveaways to government cronies.

[Mallet Diction]

I am not making that argument. I am saying that you can't equate "currently needs subsidies (private or public)" with "not financially sustainable" which is what the article tries to do.

[HazelMeade]

A tax deduction isn't necessarily a subsidy if the deduction is for expenswes that are in keeping with the standards of the rest of the business tax code.
It can count as a subsidy if the deduction applies ONLY to the oil industry.

[GILMORE]

I haven't seen any evidence that oil and gas receive the sort of subsidy advantage that you're claiming

The standard progressive claims of how oil is so subsidized range from "we don't tax gasoline as highly as Europeans!", to various incentives states put in place to attract resource-developers...

Its generally a head-fake. The fact is it distracts the conversation from the realities of how things like Oil, etc are far more economically efficient regardless of how you compare subsidy levels.

[Mallet Diction]

Seems like the 'head fakes' go both ways.

But I don't think any argument that starts out with "these currently less economically efficient methods need support now so that they can scale up and increase efficiency" is designed to distract from the fact that oil is currently more economically efficient. The real question is why the more efficient industry still gets subsidies in any form.

[GILMORE]

But I don't think any argument that starts out with "these currently less economically efficient methods need support now so that they can scale up and increase efficiency"

The 'argument' never starts with that. Because any real examination of how 'renewable energy' scales reveals how wasteful and inefficient it fundamentally is.

Even with forecast eventual improvements in the energy outputs of Wind, solar, Hydro, etc., the output/cost ratio still utterly stinks. Then one gets into the losses caused by transmission and it becomes a laughingstock.

Why oil/coal etc. still gets subsidies? Ask your local congresspeople who constantly get yelled at by constituents to make their Fuel Pump bills cheaper and reduce their utility costs.

[Mallet Diction]

Because any real examination of how 'renewable energy' scales reveals how wasteful and inefficient it fundamentally is.

You seem to be using the terms 'any' and 'real' in unusual ways here. They seem to mean "any examination that disagrees with my preferred viewpoint." There are certainly issues involved in most of these technologies. But there are plenty of "real analyses" that reveal something other than "how wasteful and inefficient" all possible renewable energy is.

[iggy]

Then why can't it exist without subsidies? Oil companies would still make massive sums of money without subsidies. Subsidies for oil are a fraction of their total earnings. On the other hand, most renewable energy earnings are government financed. If it isn't inefficient, why can it not compete?

[GILMORE]

But there are plenty of "real analyses" that reveal something other than "how wasteful and inefficient" all possible renewable energy is

that is fascinating.

So were you going to tell us what these wonderful things are, or just allude to them.

I assume "cost per kilowatt" is not the key focus.

[iggy]

She also uses the biggest fucking weasel word I've ever heard. See if you can spot it.

"But there are plenty of 'real analyses' that reveal something other than 'how wasteful and inefficient' all POSSIBLE renewable energy is."

So it is possible that, in theory, there could be some renewable energy at some point that is economically competitive. Therefore, we should have the government give them lots of money now, even though no current green energy initiative can produce as efficiently as fossil fuels. Because, you know, they might be able to compete someday.

[Mallet Diction]

sorry iggy, the "weasel word' comes from Gilmore's assertion. He includes all "possible" renewables in his assertion. Any "real" list of renewable energy sources would cite increased efficiency and waste energy recapture...two sources that certainly are not "wasteful and inefficient."

Nice try though.

[GILMORE]

Any "real" list of renewable energy sources would cite increased efficiency and waste energy recapture..

...which, considered in isolation of cost per kilwatt, seasonal capacity fluctuation, and transmissions costs/losses, is completely meaningless as noted

besides, if any such obvious improvements/efficiencies did in fact exist, we wouldnt be having this debates because people would be piling into these investments like wildfire - traditional energy companies chief among them.

as noted = people are running from alternative energy because its a shitty investment

[HazelMeade]

I just don't see the value in turning the government in to a battle over who gets the bigger share of the loot. That can not lead to any good.

Let's have a simple, minimal, uniform set of rules, and enforce them equally. That's why libertarians have always been against adding loophole and deductions to the tax code. There should be any subsidies, directly or indirectly, for anyone. There shouldn't be any targetted tax breaks or special deductions. The laws should be uniform for everyone.

Stop whining about how the other guy is getting a bigger share of the loot and start working to create a genuinely level playing field.

[HazelMeade]

How about we get rid of the "feeding trough" altogether?

It's not in the national interest for the government to be a "feeding trough" for anyone, any it's certainly a bad idea to decide that everyone deserves an equal share of it.

[Mallet Diction]

But the idea that, BECAUSE an activity needs subsidies (whether private or public) in the short term does not mean, it is not sustainable in the longer term is just not accurate.

ack. preview is your friend.

[iggy]

I also meant 'ratio' above, not ration. Happens to the best of us.

[GILMORE]

Here's a consolidated chart of all the highest-cap 'clean energy' ETFs(solar, wind, clean-tech providers, etc)

http://finance.yahoo.com/echar.....undefined;

Notable is a) they are as a collective group down 80%+ from 2008, and b) they are highly correlated despite being composed of mostly very different underlying investments.

in other words - they dont trade on growth of earnings of companies in the sector (or even *potential* for future earnings) so much as current sentiment...

Investments like this are usually classified as 'speculative' (i.e. there is a total disconnect between prices and actual earnings - if any)

Financial advisors are required by SEC law to discourage individual investors from using 'speculative' investments in any long-term investment strategy.

However, it is notable that many state pension funds (like the $250bn CALPERS) *advertise* their heavy investment in 'Clean Energy' as part of their 'Socially Responsible Investments'.

Dwell on the irony of this. = i could go to jail flogging Clean Energy funds to an individual client.

Whereas = the State goes and takes billions of Public Employees retirement funds, and stuffs it into a highly-speculative industry sector which swiftly loses 80% of its value.

And they have the gall to describe that as "socially responsible investing".

[Stormy Dragon]

Except that Clean Energy index has tracked the performance of the commodities in general:

http://finance.yahoo.com/q/bc?.....PCRAX&ql=1

Does Steve Goreham think we should abandon all mining and petroleum extraction as well because they're been a terrible investment over the last four years?

[OldMexican]

Re: Stormy Dragon,

Does Steve Goreham think we should abandon all mining and petroleum extraction as well because they're been a terrible investment over the last four years?

As long as your consideration is for YOUR OWN fucking money, you can commit to whatever strikes your fancy.

[Stormy Dragon]

I'm not saying the government should be subsidizing them, but that really has nothing to do with how well they perform; I'm arguing Goreham's hypothesis that the decline since 2008 is mostly due to green energy itself, rather than a reflection of the market all comodotiy producers have faced due to globally weak demand the past four years.

[GILMORE]

What do commodity markets have to do with companies converting sunlight and wind to energy again?

[GILMORE]

PCRAX (PIMCO Commodity Total Return) does not "track" the commodity index

It uses leveraged commodity options *against* the commodity index to create a "high yield" total return fund. (i.e. they are commodity *linked*, butt he investment strategy is to return cash flow to investors)

PCRAX yields 13.5% (used to spit out 20%+) A commodity price index yields 0% by contrast.

Compare here with GCC, which *is* a blended equal-weight commodity index

http://finance.yahoo.com/echar.....undefined;

So, either you were trying to be misleading, or just dont have the first clue about what you're talking about.

In addition = why would you compare commodity *prices* with Energy company earnings? It doesnt even make sense.

"Traditional Energy" has certainly whipped Alts by a mile as an investment; to wit

http://finance.yahoo.com/echar.....undefined;

So, you still think 40+ growth over 4 years, compared to -30% losses, *is bad*?

[Stormy Dragon]

If you look at the GCC prospectus, they're also trading in derivatives. The difference between the two is that PCRAX is market weighted and GCC is equal weighted, which means PCRAX is more exposed in the much larger energy markets and GCC is more exposed in the argicultural markets.

[GILMORE]

dear fool who does not understand PIMCOs fund

explain why - if it is 'index linked', the fund has returned 7%+ YTD while the 'price' has fallen about the same?

discussing how one chooses to weight a commodity index still has nothing to do with your point, which speciously tried to draw some connection with commodity prices and renewable energy company earnings... which doesnt even make sense on the face of it, despite the fact you didnt even compare the companies to any actual 'index'

you are out of your element, donnie

[GILMORE]

If you look at the GCC prospectus, they're also trading in derivatives.

sweet merciful jesus, what the fuck is wrong with you? you *are* aware that all commodities are *derivatives traded* (aka futures contracts)... my point (which you either ignore or fail to understand) is that the PIMCO fund is a complex Real Return fund which takes on leverage and invests in a variety of debt and collateralized instruments *against* the commodities index. IT IS NOT AN INDEX FND NUMBNUTS

[GILMORE]

derp "FUND"
ranting on an iphone is teh hard

[OldMexican]

Re: Tony,

We don't need a market signal to know whether we need reliable electricity,

The electricity producers do need it, you dolt.

and there is no market signal to be discerned for some of the costs of certain forms of energy production like pollution and the warming of the planet.

... discernable by YOU, you mean. Most people that accept the air in Los Angeles pondered the alternative of living like 15th-Century burghers or peasants, with slightly cleaner air, against having a washer/dryer, air conditioning and TVs with more polluted air. THAT'S a market signal. You already know what people (i.e. THE MARKET) dediced.

You just want to believe that economics is just about money. It ISN'T - it is about people's ACTIONS and DECISIONS, and people decided they prefer the convenience of electrical power to living like shepperds. The fact that YOU don't like this tells more about your neurosis than about anything wrong with the market.

If you truly wanted to have an energy sector based on pure market signals, then you'd need to invent a time machine and go back and undo all the favors given to carbon energy,

And you think that would mean Solar and Wind would win? Despite the Laws of Physics, setting aside the Laws of Economics?

The naive and stupid are strong with this one...

[Wackalectic]

Ronald Bailey... Are you drunk or something? What do you call the hundreds of billions in taxpayer subsidies to the oil industry (while they record record profits)? Are they really profitable? Really? What is the cost of the damage that industry does to the planet? ... to our health? When you add it all up - is it profitable? No way in hell. You know that. Everyone knows that. Everyone also knows that these are FINITE resources and investing in finite resources is about as stupid a decision a species could make. By your own definition above - the oil industry is not sustainable. Understanding the fact that the resource is finite means we know it's not going to be available much longer. So why are we investing in it? What kind of idiot invests in non-sustainable finite resources that destroy the planet and harm our health?