April 2010 will mark the 40th anniversary of the first Earth Day. In the first installment of this column in June 2008, I wrote about participating in events that day as a freshman in high school. From an environmental perspective many of the most obvious problems from that era, including acid rain and polluted waterways–epitomized by Cleveland’s Cuyahoga River catching fire in 1969 and recorded for posterity in the Randy Newman song, “Burn On”–have been addressed and conditions have improved dramatically on many fronts. Environmentalists will say there are still many problems that need solving and they’re right, but this milestone anniversary is also a good time to take stock of where we stand in terms of the environment and all things green and what the future might hold for advisors and their clients with a desire to make green investments.

As has often been stated in this column, one of the biggest challenges facing the global economy is finding sustainable and affordable sources of energy. The problem of meeting the planet’s energy needs is inseparable from the problems facing the environment. Even those who pooh-pooh the idea of climate change caused to some degree by man-made carbon emissions can get behind the idea of cheap and clean energy. Some of that will likely come from further development of wind and solar power, but there are also tremendous opportunities afforded by applying new thinking and new technologies to energy sources we already have.

Yes Nukes

There’s no doubt that as a society we face challenges, some of which seem insurmountable, but the optimist in me says the same has been true in every age and some of my recent reading gives me cause for some optimism about our energy future. Let’s start with nuclear power, which is finding a renewed acceptance in the U.S.

In February the Obama Administration announced $8.3 billion in loan guarantees to build two new nuclear reactors in Georgia. The 2011 Obama budget would triple–to $54.5 billion–the amount available for loan guarantees for nuclear construction. In announcing the loans, President Obama noted that the new reactors would reduce carbon pollution by 16 million tons a year, compared with a similar coal-powered plant.

The biggest problem with nuclear power has always been the radioactive waste it produces. New technology has been developed for nuclear waste recycling in France (which never abandoned its nuclear programs and generates more than 75% of its electricity from nuclear power) reportedly offering the potential for getting more energy out of the same nuclear material, thereby producing less waste.

All this sounds promising, but it was an article by Richard Martin in the January 2010 issue of Wired (“The New Nuke” ) that really got me excited.

It seems that in 2000 an engineer at NASA’s Marshall Space Flight Center, Kirk Sorensen, who was researching nuclear-powered propulsion, discovered some research conducted in the 1950s by the Atomic Energy Commission on producing nuclear power using the element thorium, rather than uranium. Sorensen became convinced that thorium could solve most of the nuclear industry’s biggest problems.

Unlike uranium, thorium produces tiny amounts of waste material and that material is dangerous for only a few hundred, rather than a few hundred thousand, years. Martin writes that, “Because so plentiful in nature, it’s virtually inexhaustible. It’s also one of the few substances that acts as a thermal breeder, in theory creating enough new fuel as it breaks down to sustain a high-temperature chain reaction indefinitely.”

If you’re wondering why our nuclear program opted to use uranium rather than continue to investigate and develop thorium as a fuel source, think back to the 1950s. The U.S. and the Soviet Union were engaged in a massive buildup of nuclear weapons and weapons-grade plutonium is a byproduct of uranium-fueled nuclear reactions. Thorium, on the other hand, does not produce byproducts that can likely be turned into weapons by terrorists or anyone else.

Eliminating CO2 From Coal

Another energy solution that depends on additional research is what has been dubbed “clean coal.” There has been some progress made on reducing the emissions from coal-fired power plants through coal washing to remove impurities before burning and wet scrubbers to remove sulfur dioxide from emissions, but for the most part clean coal is still more of a concept than it is an energy option.

The concept of clean coal, however, brings me to another important article I came across recently–”Dreaming the Possible Dream,” by Thomas Friedman in the March 7, 2010, issue of The New York Times, where he talked about a couple of innovative Indian-Americans who are working to solve the energy crisis.

One of the individuals Friedman profiled is Vinod Khosla, who co-founded and served as the first CEO and Chairman of Sun Microsystems in the 1980s before embarking on a career as a venture capitalist. For the last several years he has been funding energy startups. One of these is a company called Calera, started by Brent Constantz, a professor at Stanford University, for which Khosla provided the initial investment.

Constantz had been studying “how corals use CO2 to produce their calcium carbonate bones” and came up with an outstanding idea.

The process as Friedman explains it seems kind of simple. Combine carbon dioxide with seawater and you get calcium carbonate (CaCo3). “At its demonstration plant near Santa Cruz, California, Calera has developed a process that takes CO2 emissions from a coal- or gas-fired power plant and sprays seawater into it, and naturally converts most of the CO2 into calcium carbonate, which is then spray-dried into cement or shaped into little pellets that can be used as concrete aggregates for building walls or highways–instead of letting the CO2 emissions go into the atmosphere and produce climate change.”

While the idea is still in development, in December Bechtel Renewables and New Technology announced a strategic alliance with Calera to develop and construct facilities using this carbon capture technology. Another potential positive development cited by Friedman was the investment of coal mining giant Peabody Energy Corporation in Calera, which Friedman indicated would be announced before the end of March.

If the concept does in fact prove workable it would not only make clean coal a reality, it could totally eliminate power plant CO2 emissions and produce a new product at the same time, not to mention provide an array of investment opportunities.

My descriptions of the articles by Richard Martin and Thomas Friedman really only cover the topics in the most general of terms. I strongly recommend that if these subjects also excite you that you find the originals. You can also look up this article at InvestmentAdvisor.com for a list of other recent articles that address some of today’s ideas that are likely to be tomorrow’s investments.


Managing Editor Robert F. Keane can be reached at bkeane@investmentadvisor.com.