President Barack Obama and Green Technology Investment

4. Biofuels

Well, I don't believe that climate change is just an issue that's convenient to bring up during a campaign. I believe it's one of the greatest moral challenges of our generation.
- Barack Obama (2007)

If elected, Barack Obama will be the greenest president ever in the White House. His policies include:

1. Invest $150 billion over 10 years in clean energy.

2. Reduce carbon emissions 80 per cent by 2050.

3. Double energy research and development funding.

4. Create a Clean Technologies Venture Capital Fund, funded at $10 billion per year for five years.

5. Require that 25 per cent of electricity be from renewable sources by 2025.

Here, over several parts, is a brief guide to the investment implications for the cleantech sector.

Biofuels

Biofuels have become the elephant in the renewable energy room. They have been highly touted by many environmental experts, and the leading companies have attracted much stock market interest. But, more recently, they have been blamed for global food shortages. And it has been claimed that ethanol is not especially efficient as a source of renewable energy.

The Andersons is a leader in grain and fertilizer merchandising in the Eastern seaboard. From this base it has moved into ethanol production, and this has become its fastest-growing product.

Archer Daniels Midland Company is a major global food processor. It has moved into biofuels, and is the largest fuel ethanol producer in the US and a world leader in biodiesel.

China Clean Energy, based in the US, owns China-based Fujian Zhongde Technology, a specialty chemicals refiner that is moving strongly into biodiesel production, for the Chinese market.

Gushan Environmental Energy, listed on the NYSE, is China’s leading biodiesel producer, based mainly on vegetable oil offal and used cooking oil.

MGP Ingredients is a food processor and producer of ingredients and distillery products, with ethanol sales responsible for about 45 per cent of total revenues.

US BioEnergy is a leading and fast-growing ethanol producer, operating from four plants, with a further four under construction.

It is possible that the most promising stocks will be a group of companies engaged in researching and developing cellulosic ethanol production.

Cellulosic ethanol can be made from numerous kinds of plant material, including some plant waste and some plants that can be grown very cheaply. But it is thought that at least several more years will be needed before low-cost commercial production is viable. Stocks involved include Verenium Corporation and BlueFire Ethanol.

June 18th, 2008