A Money Coach in Canada

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Massive DISCLAIMER – see masthead – I am not a financial planner.  I want to post a wee bit in the coming days on the topic of ethical investing.  But these posts should in no way be construed as advice or recommendations.  Do your own homework, or contact a licensed financial advisor/planner.  These posts are simply my thoughts as a citizen who is hoping to invest ethically and make money at it.

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In an earlier post, I mused about general expectations I have for ethical investments.   In short, I’m not looking for perfect purity.  I’m looking for things which are better than the current status quo.  And things I can influence as a shareholder.

Over the next couple years, I’ll be scanning for green energy businesses. It’s a bit iffy, I know, and does not conform to my usual investment principle of looking for companies that have been money makers for several years already.  But I’m pretty convinced that Green Energy remains the Next Big Thing.

Here’s why.

My hunch is that indeed we’ve reached peak oil – ie., we’ve maxed out how much can be produced, and from now on production is going to decline.

BP’s Review of World Energy states: The amount of proven oil reserves awaiting to be exploited fell last year for the first time in a decade. The amount of crude left in the ground was 1.258trn barrels – 3bn less than last year.    Speaking of Canada specifically (the 2nd largest producer in the world), according to the National Energy Board (NEB), gas production in Canada peaked at 17.5 billion cubic feet per day (bcf/d) in 2001, and has been decreasing since then. 

While this may be contested, the uncertainty is of grave concern to business – how can you do business when you don’t know what price you’ll be paying any given year for your energy?  Even the US Military, the biggest consumer of energy in the world, has clearly indicated they want out of traditional energy sources and want green alternatives.  Not only is it a price concern, it is also a death concern – fuel convoys are popular targets and account for half the American deaths.

So if there’s business incentive to move off of traditional energy, and military interest as well, I’m guessing I will live to see a fundamental shift in energy sources.

Please God, let it be towards energy sources that mitigate climate change!  (as opposed to euphemistically named ‘unconventional gas‘ – or, as I like to call it ‘I know!  Let’s do the same old, same old, but worse!’)

So.

I’ll be exploring:

Which companies build wind turbines?

Which companies build solar cells?

Who builds geo thermal heat pumps?


Readers:   any companies you recommend I investigate?

About the Author


Imagine if Canadians were known for being all over their money. Engaged. Proactive. Getting out of debt. Savvy. Saving. Generous. Nancy wants to help. Nancy started her own journey with money over 15 years ago, and formed her company “Your Money by Design” in 2004 to help others along the same path. It’s not the usual financial advising/investment stuff. It’s about taking control of day-to-day finances –managing monthly cashflow effectively, spending appropriately, getting out of debt, saving. If you're ready to take control over your finances, pop by her business site, YourMoneybyDesign.com

5 Comments

  1. brad

    Carmanah Technologies in Victoria could be one to watch for solar: I’ve had quite a bit of experience trying to do business with providers of solar photovoltaic equipment, and these people were the most competent ouf of the dozen or so firms I’ve dealt with in the US, Canada, and Europe. My overall impression of the solar industry is that it’s highly unstable.

    Wind is a much more mature and economical technology, and it seems to have a reasonably bright future. Guess who leads North America in terms of the greatest number of wind-turbine installations? Texas! Wind power is cost-competitive now with fossil-fuel-generated power. The main issues are that they are perceived to be an eyesore (nobody wants a wind farm in their backyard, just as nobody wants a nuclear power plant in their back yard) and the problem of bird and bat mortality.

    Geothermal heat pumps still rely on fossil fuels (unless your electricity is generated by hydro or other renewable sources), but they’re highly efficient. That’s a good market for new homes, but the expense and hassle involved in installing a geothermal system in an existing home is usually seen as a barrier.

    Another few things to consider: super-efficient gas turbines and hydrogen power. About 10 years ago I saw a guy from the US Department of Energy give a talk where he held up a shoe-box-sized gas turbine that could provide all the heat, hot water, and electricity for a four-bedroom home. As oil and gas become more scarce and expensive, these “bridging” technologies that will allow us to use fossil fuels more efficiently while renewable energy technologies are being developed will probably become highly desirable. Hydrogen is another example. There’s been a lot of speculation about a future hydrogen economy; I don’t see any strong momentum building for it, but that could change in the next decade. There are companies today that use hydrogen fuel cells to provide all their electricity — one example I can think of is a credit card processing facility in the Midwest US that generates all of its power with fuel cells because it can’t afford even 10 seconds of down time due to a power interruption. Currently hydrogen is produced from fossil fuels (without burning them), but in future it could be produced by solar-powered or wind-powered energy.

    [Reply]

    nancyzimmerman Reply:

    Brad. What a valuable comment. Thanks so much! When I make some money (ha! years down the road?) in this area, I am SO buying you a beer!

    [Reply]

    Nov 15, 2009
  2. I would start by certainly contesting anything BP has to say because they have a hugely vested interest to reflate the price of oil. Canada even though they have the second largest oil reserve, they fall to fifth or sixth in global production. At current rates it would take 150 years to fully deplete Canada’s reserves.

    That being said it’s not a matter of IF Green Energy will grow its a matter of WHEN it will skyrocket and in WHICH sub sector. At this point I am a skeptic that it will grow any time soon because I thought $150 oil (pre recession with lots of credit and VC laying around) would have been enough to shoot this sector into dot-com territory.

    The green sector at the moment has too much uncertainty for my risk tolerance, but if I were wanting to invest with the intention to make money I would start looking at secondary companies that support the Green Energy sector.

    I would be curious to see if your research comes up with some examples. Off the top of my head I would think there would be a list of generic solar cell manufacturers, turbine maintenance companies or perhaps hydro/green engineering firms? Find the ‘chip makers’ of the green sector.

    Green supporting companies shouldn’t be as volatile as say a small start-up trying to reduce costs to become profitable, because they take the time factor out of investing. They would also allow you to spread the risk across a whole green segment. If you see solar taking off you invest in their suppliers. Same goes for wind, hydro, wave technology, or whatever discovery channel is touting this week. I would wait till the industry is more established till I get in.

    I think you need to stick to your investment principle, finding green companies that are money makers over several years. Dodging your key principles puts you at risk of throwing your money away.

    My ethical investments are in the form of charities and political contributions – not only do I think they have more power in influencing the world to become a better place – they give a great tax rebate.

    [Reply]

    Nov 17, 2009
  3. brad

    I totally agree with Brad P’s assessment, and I’d say his advice is more valuable in practical terms than mine 😉

    The “chip maker” analogy is perfect. Most of the solar power firms I’ve dealt with were in various stages of reorganization, redirection, or simple chaos, and I really would avoid investing in individual firms that supply PV systems. The components, on the other hand, are a different story. Companies that make photovoltaic cells and inverters could be worth investing in; same goes for companies that make components for wind generators, etc.

    [Reply]

    Nov 18, 2009
  4. I’m extremely skeptical of hydrogen — it’s main advantage is energy density and end-product cleanliness, but for most applications (e.g., automotive) it’s better/cheaper/more efficient to just use what you would use to make the hydrogen (electricity or natural gas) to move the vehicle in the first place. There are exceptions, but those are not going to amount to a “hydrogen economy”.

    Inverters is a good idea, I have no idea who makes those (I suspect some industrial giant like GE).

    I haven’t had a chance to fully read into them, so I can’t necessarily make a recommendation, but Innergex (IEF.UN) is a utility income trust with a decent distribution and a fair number of green power projects.

    I just did a brief post on First Solar (FSLR) — I do own a small amount. I like the fact that they’re profitable, but they have a number of large risk factors (their main competitive advantage is price, and the cost of the inputs for their competitors has come way down with the recession; they are also dependent on a small number of major customers, who are in turn dependent on government subsidies for their solar installations).

    [Reply]

    Nov 23, 2009

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