Leading up to the Obama administration’s monumental $819-billion stimulus package, major news outlets have begun to run stories that challenge the viability of the alternative-energy component of the bill.

Alternative energy is certainly inevitability – whether or not it makes economic sense for American taxpayers and businesses. And eventually, maybe in our lifetime, renewable sources of energy as envisioned on the grand scale of President Obama and his followers will fulfill the promise of energy independence, environmental improvements and lower costs than fossil fuels.

In the meantime, however, the persistence of the White House to tout alternative energy as an instant fix that creates new jobs and energy sources to alleviate suffering among the unemployed amounts to nothing more than a cruel myth.

While we have been telling readers for months now that green won’t yield any near-term profits for reasons that are political, financial and technological, we see that Bloomberg and The New York Times have finally drawn a similar conclusion – perhaps starting a stampede away from the green monster.

On January 26th, Bloomberg ran a piece that said President Obama “may find it harder to increase renewable energy than his predecessor…”

The Bloomberg piece, in particular, cited the current credit crunch as a huge obstacle toward the construction of a widespread renewable-energy infrastructure. According to Bloomberg, “Obama’s goal to double U.S. renewable- energy by 2012 may take years longer because even fully funded projects take at least three years to develop.”

Further, the Obama folks set unrealistic goals strictly in terms of logistics, as many of these massive new energy projects can years to plan before the first hole is dug.

The New York Times, meanwhile, took a more political angle in their story of January 27th. The Times characterized the renewable energy struggle as geopolitical, with the service-orientated economies of the east coast mostly oblivious to the fossil-fuel mandate of manufacturing elsewhere in America.

This clash could pose some high hurdles for green-energy advocates to clear as they exert pressure from a lofty position of entitlement.

“There’s a bias in our Congress and government against manufacturing, or at least indifference to us, especially on the coasts,” the Times quoted Senator Sherrod Brown, Democrat of Ohio as saying. “It’s up to those of us in the Midwest to show how important manufacturing is. If we pass a climate bill the wrong way, it will hurt American jobs and the American economy, as more and more production jobs go to places like China, where it’s cheaper.”

Even Democrats from these so-called brown states could find themselves in a pickle as they try to balance the needs of their constituents against the partisanship of the new White House.

For decades, California has led the nation in environmental regulation, including the most sweeping effort to address global warming by imposing mandatory caps on greenhouse gas emissions starting in 2012.

As the Times reports: “But California and many East Coast States also differ sharply in the extent to which they depend on coal — a fossil fuel that is a major culprit in producing carbon emissions. California, for example, derived only 20.7 percent of its electricity from coal and 40 percent from hydroelectric power and renewable sources in 2005, while Ohio drew 86 percent of its electricity from coal that year, according to the Department of Energy. Other states of the Great Lakes and Plains are much more like Ohio than California in energy usage.”

Senator Debbie Stabenow, Democrat of Michigan, told the Times, “My message over all is that for us to support what needs to be done in addressing global warming we need to demonstrate that, in fact, jobs are created. It’s not a theoretical argument. We have to come up with a policy that makes sense, that is manageable on the cost end, that creates new technology — and that treats states equitably and addresses regional differences.”

With the Times, Bloomberg and other major media outlets getting wise to the big green lie, investors can easily find themselves in the position of waiting much longer for a profit than the hucksters and politicians would lead you to believe.

Long-suffering readers know that we’ve taken a contrarian position against hybrid and electric cars as evidence continues to mount against their short-term returns for investors. The flip side of our coin, however, is that we don’t know when these investments will start to show profits for shareholders.

Two data points popped up on our computers in recent days, further substantiating our gloomy view of battery-powered vehicles. The latest sales data on hybrid sales proved grim, while an article in the Wall Street Journal provides anecdotal evidence that the market uptake contradicts the market hype for electric cars.

Automobile Magazine recently reported that hybrid sales tumbled 9.9% in 2008. The consensus was that low fuel prices have deterred consumers shelling out the “hybrid premium,” in which these new fangled cars tend to cost more their gas-powered counterparts.

Even the segment-leading Toyota Prius suffered, with sales plunging nearly 30% in the second half of 2008.

The article quoted Andrew Brown Jr., chief technologist at Delphi Corp, as saying “People want the technology, but it’s got to be economical. That’s the challenge in the industry now: to get the cost of those components down.”

With fuel prices averaging around $1.62 nationwide in December 2008, it would take a Prius owner 70,000 miles to recoup the initial premium ($7000 base) over the similarly sized Corolla, according to the article.

One of the earliest causalities in this tough market is a Norwegian start-up Think Global AS. The Wall Street Journal described Think “as one of the front-runners” in the electric-car segment. Unfortunately, Think investors got caught in the squeeze between PR spin, no cash and cheap gas.

Just as Think was ready to ramp up manufacturing from 350 of its two-seater cars to 10,000, the bottom fell out of the market in every which way possible. The timing was horrible for Think. The worsening cash crunch forced creditors to demand faster payments. In the end, Think filed for bankruptcy protection.

Venture capitalists, the self-proclaimed smartest guys in the room, lost out on Think. The company’s demise came in the middle of venture drought as these super investors cut off cash infusions into green technology overall.

Now with significant incursions by the world biggest car makers into electric and hybrid vehicles, upstarts such as Think and others face more formidable obstacles to success. Still, regardless of how big the player, the economy and enduring low gas prices will continue to hammer green vehicles for investors.

Eventually, hybrid and electric vehicles will hit pay dirt. For the time being, you’re still better off putting your money into a bank CD.

This from Penny Sleuth:

Oil is all over the place. It’ll get crushed one day and then bounce right back into the $40s the next. And while the volatility in the oil market probably won’t change anytime soon, thanks to an uncertain economy, there is something distinctly different about the way we’re reacting to the comeback of cheap gas.

No, the green movement won’t just go away. Consumers continue to demand more earth-friendly products. A sense of urgency over climate change and OPEC’s stranglehold over our oil supply continues. We continue to seek alternatives. But alternative energy’s next wave needs to prove it can sustain once the hype dies down.

Take ethanol. At first glance, 2006 looked like a great year to be in the ethanol business. Shares of Pacific Ethanol were on fire, shattering the $20 mark by the end of March. By May, shares broke $40. Bill Gates’ millions helped jump-start the stock, and new government mandates all but ensured the success of the corn-to-fuel business.

As time would soon tell, the spring of 2006 proved to be a great time to sell your ethanol holdings. Pacific Ethanol’s light is not shining quite as brightly as it once was. The stock is more than 98% off its 2006 high, and Gates is steadily unwinding his stake in the company.

Pacific has been plagued with problems recently. The company’s most recent annual report is chock-full of problems, including violations of some debt covenants and other shenanigans involving the company’s line of credit.

But the bigger problem is that you can’t sell ethanol for more than it costs to make it. One would think that would kill this business off entirely. But thanks to inexplicable government support and backward-thinking energy legislation, ethanol production will most likely continue despite the tough lessons we’ve learned.

So the big question remains — can someone successfully develop an alternative energy source that will actually make money?

Do the Math: 20,000 > 28

When you look at the numbers, one particular alternative energy source makes a whole lot of sense: algae. One acre of corn gives you 28 gallons of oil in a year. An acre of algae can yield anywhere between 20,000-100,000 gallons of oil per year. No wonder the updated 2007 Energy Independence and Security Act supports extracting fuels from algae.

While the algae fuel field is not completely crowded, multiple players are developing, harvesting and extracting systems that could one day be industry-standard designs. In as little as three years, we could see a powerful new energy industry.

Chevron and Shell have started exploring the possibilities of algae. There are also a few small companies that are working on the technology. Below are three penny stocks in the algae fuel business. All of these stocks have a market cap under $2 million, a share price under 10 cents, and can be found on the Pink Sheets and Over-the-Counter Bulletin Board:

• GreenShift Corporation (OTC:GERS)
• Nanoforce Inc. (PINK:NNFC)
• PetroSun Inc. (PINK:PSUD)

With the coming transition to alternative fuels, early investors in algae oil stand to claim some huge gains if this technology takes off…

Source: Algae Oil Penny Stocks Set to Soar

Venture capitalists had infused $1.7 billion into the sector, the smallest amount in six quarters, according to Cleantech.

The implications of this reversal are truly profound.

Silicon Valley superstars have been touting green for the past two years. Boosters include Andy Grove, former CEO of Intel; Eric Schmidt, the CEO of Google; John Doerr, perhaps the leading venture capitalist in the world; and just about every other venture capitalist within spitting distance of the fabled Sand Hill Road.

Silicon Valley really hit the brakes hard after a frothy third quarter.

Venture capital investment in cleantech hit a record $4.6 billion in the first three quarters of 2008, according to Ernst & Young’s analysis of activity in the U.S., Europe, China and Israel. This is an increase of 82% compared with the same period in 2007 and represented 13% of all venture capital investment in the regions.

Now, despite President-elect Obama’s promise to spend $150 billion over the next decade to promote alternative energy, Silicon Valley is pulling the plug on green.

The move raises several important questions for investors looking to alternative energy for profits.

– Is this a temporary pull back due to the recession? If so, how long will it last?

– Why now, when President-elect Obama is promising to make the biggest government push into green in history?

– Or is alternative energy simply a bubble?

Our opinion is that Silicon Valley has come to realize that green energy is a decades-long proposition riddled with economic holes.

For example, large portions of the solar-energy market relied on subsidies from all levels of government. Today, governments are facing insolvency as a result of the recession.

The alternative-energy frenzy fed off the fear of $400 oil. Now oil is finally crawling toward $50.

And the hybrid-car craze is on the verge of fizzling as gas hits record low prices and consumers can’t afford the $5,000 premium tacked onto green automobiles.

Everywhere we turn these days, green seems to hemorrhage red for investors.

The putrid haze of Beijing that has engulfed China and greater Asia is reducing the amount of sunlight that actually reaches the ground, according to a new report from the United Nations Environment Program.

In addition to being responsible for millions of deaths and blighted crop yields, these so-called Atmospheric Brown Clouds (ABCs) have dimmed China’s skies to the extent that the country’s solar initiative, and its huge solar industry, could become DOA.

As it stands now, Chinese solar stocks are on life support — depleting the portfolios of investors who got in at the top of the China IPO solar bubble of 2006-2007.

The losses have been staggering…

Solarfun Power Holdings Co. (Nasdaq:SOLF) has a 52-week range of $4.20 – $40.19 – a drop of 89.5%

Trina Solar Ltd. (NYSE:TSL) fell from 56.50 to 8.51 over the past 52 weeks – for a loss of 84.9%.

Suntech Power Holdings (NYSE:STP) saw it’s 52-week price plunge to $9.53 from $90.00 – a loss of 89.4%

And JA Solar Holdings, Co., Ltd. (Nasdaq:JASO) fell from $27.00 to 2.01 over the past 52 weeks – a loss of 92.5%.

In a conference call to analysts on Nov. 12th, JA Solar CEO Samuel Yang said “At this moment the market reaction has been panic.”

Now it appears that China’s home market for solar products is facing a very dim future as well from decades of pollution.

ABCs reflect solar radiation back to space by absorbing heat in the atmosphere.

In China, ABCs can cut sunlight on the Earth’s surface in two ways. Fossil-fuel particles such as sulphates reflect and scatter rays back into space, while black carbon in soot, absorbs sunlight before it reaches the ground.

According to the report, smog blocks 10-25% of the sunlight that should be reaching terra firma in China.

This isn’t just a thin layer of pollution blocking out the sun. In some places, it can be a mile thick. It can stretch from the Arabian Peninsula to the Yellow Sea, sometimes drifting as far east as California.

The U.N report says “In China the observed dimming trend from the 1950s to the 1990s was about 3-4 per cent per decade, with the larger trends after the 1970s.”

What does this mean for investors?

Those of you who tend to be bottom feeders should stay away from China solar stocks at any price. As we all know, when it comes to stock markets nothing is permanent. But zero is the share price we could be looking at for some these fallen IPO stars.