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Progress on green investment, climate change talks

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There’s some heartening news on the green investment and GHG fronts.

While the stock market remains, shall we say, volatile at least it goes up and down rather than falling off another level of the cliff each day.

State of green investment

World-Wire reports that green investors, who had watched the portfolios drop even lower than the overall market, are benefiting from staying in the game. Unlike the mass of investors who sold at the bottom of the market, green investors are taking a long-term view.

Last year many green mutual funds, exchange traded funds (ETFs) and individual stocks fell 50-80 percent, while the Dow shed about 40 percent of its value. Green investors today can expect their portfolios to rise higher than the overall market as it recovers. Recently the Dow has gained 21 percent from its low in early March, while clean-tech indexes are up 30 percent. Green building stocks are up 11.6 percent in the past two weeks, exceeding the 7.9 percent increase registered by the S&P 500 and NASDAQ.

During a period of the most extreme withdrawals from U.S. mutual funds – 10 times the typical amounts – green mutual funds and ETFs have seen little outflow. “Investors have been holding and, since the beginning of the year, buying into these funds,” says the SustainableBusiness.com report on the State of Green Investing 2009.

“People I work with are more optimistic than I’ve seen in years,” says Sam Jones, portfolio manager of the New Power Portfolio. “The stimulus plan is a big piece of it – they finally feel they have backing. They’ve been swimming against the tide for a long time.”

Clean energy and efficiency comprise about 14 percent of the American Recovery & Reinvestment Act of 2009. “All the elements we advocated for are in the plan,” says Elena Foshay of the Apollo Alliance, a a group that was involved in developing the clean-tech provisions.

A survey of institutional investors representing more than $1 trillion in assets, conducted by New Energy Finance and DB Climate Change Advisors (Deutsche Bank’s climate change investment business) found that 49 percent are “more likely” or “much more likely” to increase their exposure to clean energy now than they were a year ago. Another 46 percent said their intentions haven’t changed, and just 5 percent said they’re “less likely” or “much less likely” to invest more in clean energy.

Progressive Investor, a monthly newsletter published by SustainableBusiness.com, has identified these green investment trends for 2009:

• Credit is already loosening up for clean energy projects in the US and Germany. Utility scale projects will likely drive growth beginning in the second quarter of 2009. Project financing hasn’t stopped, but has become less predictable, slower and more expensive.

• Green venture capital firms with a strong track record are able to raise funds, albeit more slowly. Those that raised funds before the crash have their pick of strong candidates at lower valuations.

• Worldwide, over $200 billion in incentives and spending for renewable energy, energy efficient buildings, smart grid and clean transportation is evident in stimulus bills across the world. Industry insiders expect the cleantech industry alone to create at least 2 million jobs in the U.S.

• The latest data from NASA shows unprecedented global warming in 2008 – 20 times that of recent annual warming, exceeding that of conservative climate model projections. 2000 scientists at a March conference in Copenhagen warned policy-makers to “vigorously” implement policies. Research shows that even the most stringent greenhouse gas reduction targets can benefit the economy, rather than hurt it.

• The big question for many years has been whether companies that make a commitment to sustainability outperform their peers. Last year, in the most difficult of economic periods, they did. In 16 out of 18 industries, companies with a commitment to sustainability outperformed industry averages by a significant 15%, representing $650 million in protected market capitalization per company, according to A.T. Kearney. Investing in sustainability for the long term will prove to be the best way to protect a company’s value through the months and years ahead.

Progressive Investor said the following leaders in each Green Stock category “should outperform” this year:

• Solar: First Solar (FSLR), SunPower (SPWR)
• Wind: Vestas (VWS.CO), Gamesa (GAM.MC)
• Geothermal: Ormat (ORA), WaterFurnace (WFI.TO)
• Smart Grid: IBM (IBM), Itron (ITRI), EnerNoc (ENOC)
• Energy Efficient Buildings: Owens Corning (OC), Baldor Electric (BEZ), ICF International (ICFI)
• Water: TetraTech (TTEK), Northwest Pipe (NWPX)

Click here to view SustainableBusiness.com’s excellent and comprehensive Green Stock Watch.

Slow progress on climate in Bonn

At least there’s progress. The latest round of U.N. talks on a treaty to reduce greenhouse gas emissions ended yesterday in Bonn. Officiasl said “important progress” was achieved, but there is still lots of work and more meetings ahead.

“Countries have narrowed gaps in many practical areas, for example on how to strengthen action for adapting to the impacts of climate change,” said Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change.

“This is important progress given the very limited time negotiators have to get to an agreed outcome in Copenhagen in December this year,” de Boer said.

Copenhagen, Denmark will be the site of the UN’s annual climate change conference at which countries are expected to adopt an agreement to succeed the Kyoto Protocol, whose first commitment period for reducing greenhouse gas emissions ends in 2012.

Negotiations on greenhouse gas emissions reductions to be achieved by industrialized countries after 2012 centered on issues related to the scale of the reductions, improvements to emissions trading and the Kyoto Protocol’s carbon offset mechanisms, as well as concerns relating to land-use change and forestry.

A friendly atmosphere is fine, but step up the pace, says the World Wildlife Fund.

“Friendly rhetoric certainly helps, but without serious commitment and binding targets to reduce carbon dioxide it simply isn’t good enough to protect a fragile planet from runaway climate change,” said Kim Carstensen, leader of WWF’s Global Climate Initiative.

“The atmosphere at the talks in Bonn may have improved, but the climate out there is still spinning out of control. We must turn nice words into aggressive action to tackle the giant threat that’s upon us,” he said.

“Stringent targets for emission cuts will be the heart of the new global deal, and finance for technology and adaptation is the lifeblood,” Carstensen continued. “But the heart is not beating and the blood is not flowing, as Bonn only managed to build a frame and some muscles, bringing parties closer to consensus on the overall structure and the mechanisms of the deal.”

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Written by William DiBenedetto

9 April, 2009 at 11:55 am

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