Today’s cool charts come courtsey of GE. Now, its from GE so they have a vested interest, but today they released a powerpoint with some interesting datapoints regarding wind project impact on tax revenues and investment. GE claims subsized wind projects have a positive net return for the U.S. treasury over their lifetime. The argument is when you add up the various federal taxes associated with the economic activity of building a wind project and then operating that project over time, the Net Present Value (NPV) of that project with regard to taxes generated for the federal treasury is positive even after paying out a hefty federal tax subsidy up front.

There are no details on the NPV calculation so its hard to see exactly what assumptions go into this claim, i.e., what is the terminal value of the windfarm in year 10 (I assume its a 10 year DCF) given that the lifespan of a windfarm is well in excess of that. If true its the definition of a project that is revenue neutral from a tax standpoint.  Apparently, it doesn’t include local or state tax revenues in the projections either (or subsidies for that matter).

The second interesting chart is that was in the presentation was this one:

Which shows the …

Yet another reason why the government is currently failing consumers with its Strategic Petroleum Reserve policy, and why investors in green stocks should tread carefully at current prices. This Forbe’s article outlines how Opec’s president has made the argument that speculators are driving the current high prices for oil. And in all fairness he has a point.

Whether you look at year over year data, or at data since October when oil breached $70 there is little evidence to support the current spiraling of oil prices. U.S. consumption is down, global consumption is flat after spiking in the fall of last year, and OPEC and total world production is up 2MM barrels a day. Inventories are down, reflecting the non-US consumption spike in the fall. Assuming that the pre-October pricing was status quo (a big if) that would portend for lower prices sometime in the future (hard to say when though).

It also is a really good argument as to why the mismanagement of the Strategic Petroleum Reserve is a big deal. If the federal government wanted to take the air of the market and shut down the speculators it could do so easily by a.) suspending the stockpiling of oil for the SPR during this period of high marginal pressure on oil prices; b.) release a small portion of the oil into the market. Since the marginal price per barrel is so sensitive to supply and demand change right now these two simple steps would go a long …

Looks like solar power, oil, alternative energy and other green investors should expect continuing volitility in shares as congress (well… Republicans really) failed to renew two bills that would have impacted pretty much everything in the sector. First, they shot down a bill that would have imposed a windfall profit tax on Oil Companies and suspended oil production tax credits. I think its a classic example of legislative paralysis by amendment - something for everyone to hate (or at least every Republican). Too bad as it also had provisions to stop buying oil for the strategic petroleum reserve - which would have likely had a real near term impact on oil prices…

The second was to defeat the tax credits for renewables - which defies all logic. While I think that most expect that these credits will be renewed with a change in President (though I am not certain why as these aren’t even getting out of debate in the house) - the lack of action is going to whipsaw both the companies and wall street investors that own them over the short term because of the critical nature these subsidies play in making these renewable technologies affordable to consumers…

People talk a lot about alternative fuels being more viable with oil at such high prices. It also, however, makes other, more exotic, fossil fuel extraction techniques viable.  This piece in the UK’s Independent outlines how oil reserves are understated because certain known fields are too expensive to extract at this time - and therefore are excluded from oil reserve projections (an important point that I would wager that many investors don’t understand). 

The risk for green investors (and the environment for that matter) is that, if true, tapping oil reserves such as these could grow oil supply over current projections (even if its at these current high prices) - driving out the peak oil scenario longer than anticipated by Wall Street. (This is the kind of stuff investors and analysts miss all the time).

Cool Chart from Oil and Gas Journal Too…

See full size chart in new window 

A new Center for American Progress (CAP) report finds that in a study of 12 states, there are people that work in jobs that could be “green jobs”.  And collectively, accross the country this is over 14MM people, or nearly 10% of the U.S. work force.  Wow… that’s impressive…. 10% of Americans work in jobs that could be employed in green industries… could be…, hmmmm,… could be….  waaaaait a minute.  

That’s right folks - if you were hoping for some good data on green collar labor statistics you have come to the wrong place.  CAP just realeased a report that shows how many electiricians there are in Florida as a proxy for the green collar job potential for electricians in Florida (somebody needs to wire up all those solar panels - oh wait, Florida lacks tax subsidies, net metering and has ridiculously low power prices so solar penetration in Florida is negligible (oh the irony Sunshine State) - oh well…)  

Did you know if you drive a truck, you too could be part of the green revolution?  This silly report takes BLS numbers for certain industries (mostly construction or industrial related), totes them up and then pronounces that all these jobs “could be green” if we had the necessary resources and investment in that sector.

Of course, they all could be employed in the amusement park industry if there were enough resources and investment made in building a giant inter-city roller coaster…  

The saddest part - apparently some important people think this is useful information.  The best is from the American Association of Truckers - which …

This post over at The Big Picture got me thinking more about how far we are away from a rational market for green investment - public or private.  The problem - opacity - or the opposite of transparency for those of you in a negative mood.  Sure there are lots of alternative energy technologies that look great when oil is $135 a barrel - but its hard to make a rational case for investment - whether on Wall Street or Sand Hill Road when a market as fundemental as oil can be turned upside down by the actions (or inaction) of a few government officials or foreign oil ministers. 

For instance, after driving solar company stocks through the roof, investors have started to figure out that solar is primarily a demand driven business (one that is completely and utterly tied to tax credits)  - no federal tax credit - no solar market.  And, BTW why solar?  Why are we trusting the politicians to make decisions as to what are affordable renewable technologies and not?

 Oil - I did a back of envelope analysis of how much marginal pressure the government is putting on oil prices through its management of the strategic petroleum reserve here a few days ago.  So, by a.) not releasing oil from the SPR or b.) buying oil from the SRI - the government is driving marginal demand - speculators be damned.

What this underscores …

This is way cool.  Its not immediately clear from the post at Businessweek that Envision operates as a PPA (power purchase agreement) - where the property owner signs a long term purchase agreement for the power that is generated from the solar units - offsetting the capital costs of the company installing them and eventually generating profit.  Why a big real estate company, or any real estate company for that matter, wouldn’t do this themselves, however, is beyond me - its not like they pay some one to build the building for nothing and then lease it from the construction company for eternity…  The smart play for REITs and commercial building companies is to do this themselves - move a recurring expense to a more maneagable capital expense.

Buried within the 1000+ page Warner-Lieberman climate change act is a provision for something called “international reserve allowances” and what is quickly being dubbed a “Carbon Tariff.”  Essentially the provision applies a cross-border, per ton, carbon tax on imported goods that are manufactured in countries that do not have limits on carbon emissions.  If an item creates 2 tons of carbon dioxide in its manufacture and a 1 ton carbon credit trades for $30 - then the tariff would be $60 on that item.  I don’t know if the bill requires the government to use the revenues to purchase carbon offsets - though that or putting it into an environmental clean up fund would be sensible.

I think this is a very important, if not the most important, development in green economic policy that I have seen to date.  As Frank Zappa would say the Carbon Tariff, “gets to the crux of the biscuit”, regarding the challenge to success that renewable energy and other green technologies face - unwinding the entrenched subsidies and externalities, which are ecouraged or created by government policies, that traditional approaches enjoy as a barrier to competition from green alternatives. 

That this provision is in a cap and trade bill is exceptionally smart (and I really never thought I would say that about something coming out of congress).  The provision exists to level the competitive playing field for manufacturers that bear the cost of clean manufacturing under a cap and trade system with those that do not.  Carbon emissions, and pollution in general, is an perfect externality to …