Fast-growing industry and a reliance on coal-fired power plants turned China into the world’s largest emitter of greenhouse gas a few years ago. Clouds of smog far thicker than that of Los Angeles hang over many of its cities and much of the water is densely polluted. But that’s something the central government aims to change.

China plans to reduce energy consumption per unit of its gross domestic product (GDP) by 20% of 2005 levels by the end of next year. It’s more immediate goal is to reduce reliance on coal-fired plants to 60% of its energy production from 70%, and replace with renewable energy sources like wind and solar.

Since 2007, about 54 gigawatts – about 7% of the nation’s electricity-generating capacity – of coal and oil-fired power plants have been closed down as part of the effort to reduce carbon emissions.

Alternative energy sources, including wind, solar, and hydropower, are in line to replace fossil fuels. China’s market for green technology could reach $1 trillion annually, or about 15% of the country’s forecast 2013 GDP, according to a report released last week by the China Greentech Initiative and the American Chamber of Commerce.

“Climate change brings a range of new risks and challenges for business, but it is also creating huge opportunities, particularly in the greentech sectors,” Richard Gledhill, global leader on climate change and carbon market services for consultancy PricewaterhouseCoopers, told the People’s Daily. “The International Energy Agency predicts that we will have to spend an additional $9 trillion over the next 20 years to deliver a stabilization scenario of two degrees Celsius.”

Already solar companies in China are benefiting from the government’s push for clean technology.  China plans to install more than 500 megawatts of solar pilot projects in two to three years.

“Given the nascent nature of China’s solar domestic market, this 500 mW program, though not huge, sends a strong signal that China is serious about developing its domestic solar market, and will undoubtedly stimulate more activity in domestic deployment by enterprises outside of the subsidy program,” Julian Wong, a senior policy analyst with the Center for American Progress, told the People’s Daily.

The central government could raise its 2020 solar power generation target more than fivefold to at least 10 gigawatts, the paper reported. Analysts expect that more than two gigawatts of new solar capacity will be installed by 2011, up from about 100 megawatts in 2008.

To help the country meet its goal, the central government in July said it would subsidize 50% of investment for solar projects as well as transmission and distribution systems that connect to grid networks. The subsidy rises to 70% for independent photovoltaic power generating systems in remote regions of the country that have no power supply.

However, Chinese solar companies aren’t just benefiting from the growing market of the mainland. Many are now building factories in the United States to bypass protectionist legislation. They’re also encouraging executives to join industry trade groups to squelch any anti-Chinese sentiment.

One such company is Suntech Power Holdings Co. (NYSE ADR: STP), which earlier this year said it plans to build a factory in the Southwest United States. The company said it is exploring opportunities in several states as it seeks to expand its presence in the U.S. solar market.

“It’ll be to facilitate sales — ‘buy American’ and things like that,” Steven Chan, Suntech’s head of global sales and marketing told The New York Times.

However, Suntech Chief Executive Officer Shi Zhengrong told The Times in an interview that 90% of the workers at the $30 million factory will be blue-collar laborers welding together panels from solar wafers made in China. And because of the generous subsidies it receives from Beijing, Suntech can sell solar panels on the U.S. market for less than the cost of the materials, assembly and shipping.

Yingli Green Energy Holding Co. (NYSE ADR: YGE), another large Chinese manufacturer, announced last week that it also had a “preliminary plan” to build solar panels in the United States, The Times reported.

Suntech is on track to pass Germany’s Q-Cells SE as the world’s No. 2 supplier of photovoltaic cells. After losing $69 million before interest and tax in the first half of the year, Q-Cells said it would cut 500 jobs – nearly a fifth of its workforce. Two other German solar companies – Conergy and Solarworld – also reported steep losses and are fighting for survival.

“A large part of the German solar cell and solar module manufacturers will not survive,” UBS AG analyst Patrick Hummel told the Financial Times Germany newspaper.

Both Conergy and Solarworld have accused Chinese manufacturers of dumping and called on Western governments to protect the solar industry with import tariffs on Chinese products. But so far there has been no action on the part of U.S. and European governments.

“It’s absolutely disgraceful that [U.S. President Barack] Obama is going around the world saying we will not resort to protectionist measures against China when they’re stealing the solar-panel business out from under us,” Peter Morici, an economist at the University of Maryland and former chief economist of the U.S. International Trade Commission, told The San Diego Union-Tribune.

Morici noted that China’s protectionist measures include a requirement that 75% of the content of government-purchased solar panels be Chinese-made. The United States has no such requirement.

In response to critics, Suntech’s Shi insists that his firm is helping the solar industry by making the technology more affordable.

“Western countries worry about the dramatic price reduction and talk about dumping. That shows a protectionist attitude. That’s wrong,” Shi told the United Kingdom’s Guardian. “We must work together to promote and utilise each other’s strengths.”

China recently  took a big step toward enhancing cooperation with Western solar companies by signing a deal with the Phoenix-based First Solar (Nasdaq: FSLR) to build the world’s largest solar plant.

The 2,000 megawatt complex will be built in Ordos City in Inner Mongolia by 2019. At that size, it would be about 30 times larger than any existing solar power stations in Europe.

“There are a few existing solar projects of about 50 to 60 megawatts, but this would be the biggest by a country mile,” Charles Yonts, an analyst specializing in alternative energy at CLSA Ltd. in Hong Kong, told Bloomberg. “China is suggesting the solar market will be up to 20,000 megawatts by 2020, but the scale of this project suggests these estimates are far too conservative.”

First Solar will consider solar module and manufacturing sites in Ordos City as part of the agreement.

The deal raised the eyebrows of many industry leaders who were skeptical about China’s willingness to work with Western companies.

“If you announce that we have such a huge need for solar panels that we are even going to put First Solar panels into China, all of a sudden we’ve gone from this massive threat to maybe we saw it the wrong way around,” Stephan Dolezalek, managing director of Silicon Valley-based venture capital firm VantagePoint Venture Partners, told Reuters.

“Maybe we should see the size of the Chinese market as this enormous upside potential, and maybe all of solar should be seeing it much more positively.”

BrightSource Energy Chief Executive Officer John Woolward said his company is moving “slowly and deliberately” to find a partner in China, while Tom Werner, chief executive of the California-based SunPower Corp. (Nasdaq: SPWRA) said the deal “clearly makes use more bullish on China.”

“We hope that that will result in us being able to penetrate that market as well,” he added.

Source: Solar Energy’s Future Shines Brightest in China

This from the editors at Investment U:

In the news this morning, Trina Solar (NYSE: TSL) announced that fourth quarter revenues would beat expectations.

It’s an unexpected bit of data when many were starting to count the solar sector out – and not for good reason. After our last energy crisis, many alternative energy producers, like solar, were simply forgotten about when gas prices came back down.

With the average price per gallon at around $1.96, who could blame them if they expected the same thing to happen? But the interesting thing is that it hasn’t.

Trinity Solar follows news from Suntech Power (NYSE: STP), the world’s largest solar module producer, that it expects production to increase – almost 60%. That’s quite the opposite of a drop-off.

Granted, there are just as many solar losers, as winners. Canadian Solar (Nasdaq: CSIQ) reported negative numbers along with a number of others, from Applied Materials (Nasdaq: AMAT), JA Solar Holdings (Nasdaq: JASO) and GT Solar International (Nasdaq: SOLR).

But the fact that we are seeing resilience form the solar sector and companies holding their own, means that this time around might be a little different than last. And that’s a good signal for us to keep our eyes on solar.

Because any strength in this market is impressive, regardless of where it is.

Source: Sun Still Shines on Trina Solar (TSL)

But until that happens, the ride could be bumpy. Thankfully, we have a tree-hugging President that will do anything in his power to make sure that alternative energies – like solar – remain in the forefront of US energy production.

I’m not making this stuff up. This is common knowledge– you can already see the stock of one solar producer Suntech Power Holdings (NYSE:STP) behaving exactly how you would expect…

The first thing you’ll notice is exactly how far STP has fallen since August of last year. This isn’t unique to this company – virtually every stock in the market shows this fall. More interesting, is the potential bottom forming.

You can tell something good is brewing because…

1.    The RSI is showing a strengthening trend over the past three months. The bottoms are higher.

2.    A bullish cross of the 20 and 50-day moving averages. Even though the stock’s price is lower, the bullish cross remains.

3.    The Slow Stochastic is Oversold. This signals that conditions are ripe for buyers to flood the market and take STP much higher. At this point, a 50% spike isn’t out of the question. And the possibility for a double is very real.

It appears that the chart of this solar company is showing really great signs of a potential bottom. Considering the billions Obama will flow into this sector over the upcoming ten years, we might be seeing the cheapest price we’ll ever see for this company.

Positioning yourself today for the long-term could enrich you immensely in the years ahead.

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.

• Influenced by online retail giant Amazon.com Inc. (AMZN), web-based auction site eBay Inc. (EBAY) announced it would be reducing listing fees for sellers who choose the set-price “Buy it now” option. It’s a huge shift for eBay, but management hopes the changes will increase inventory and attract more buyers seeking the ease of “one-click” shopping, BusinessWeek reported.

• The Mortgage Bankers Association announced the level of mortgage applications is at its lowest point in eight years, as lending standards remain tight despite the drop in housing prices. The decline was due in part to the lack of new construction the nationwide association said, the Tampa Bay Business Journal reported.

• The Federal Deposit Insurance Corp. yesterday (Wednesday) announced plans to modify loan terms for IndyMac Bancorp Inc. (OTC: IDMC) customers in an effort to keep people in their homes and avoid foreclosure, CNNMoney.com reported. The FDIC has targeted 25,000 customers who are most delinquent on their loans and will begin working with them to provide more affordable payments and reduce investor losses.

• U.S. crude oil for September delivery settled 45 cents higher at $114.98 a barrel yesterday (Wednesday) after a day of volatile trading in which prices swung from between $112.61 and $117.03. The decline in gas stockpiles pushed prices higher, while the surge in oil supplies pulled oil lower, according to Neal Dingmann, director of equity research at Dahlman Rose, CNNMoney.com reported.

• Shares of Suntech Power Holdings Co. Ltd. (ADR: STP) shot up over 12% yesterday (Wednesday) with a gain of $4.62 to close at $41.75. The China-based solar energy company reported expectation-beating second quarter earnings and raised its guidance for the rest of the year, Forbes reported.

• Warehouse retailer BJ’s Wholesale Club Inc. (BJ) yesterday (Wednesday) reported fiscal second-quarter earnings increased to $36.5 million, or 61 cents a share, from $36.3 million, or 55 cents a share, for the same period the year prior. Earnings per share included a 5-cent boost from non-sales related cost cuts, Bloomberg News reported, and shares dropped almost $3 to close at $37.71.

• Hewlett-Packard Co. (HPQ) reported fiscal third-quarter 14% jump in profit that thrashed Wall Street expectations. HP said it earned $2.03 billion, or 80 cents per share, in the latest period, up from $1.78 billion, or 66 cents per share, a year earlier. Excluding one-time charges, HP’s profit was 86 cents per share, three cents higher than the average estimate of analysts polled by Thomson Reuters.

• The Tennessee Valley Authority yesterday (Wednesday) approved an electric rate increase of 20% — the hike largest in 34 years The Associated Press reported. The TVA cited sky-high fuel costs and a three-year drought that has sharply reduced its ability to generate cheap hydroelectric power. Most of the rate hike is a temporary fuel adjustment charge that varies quarterly, though TVA officials predicted the charges would continue to grow through smaller increases in the future.

Source: Global Investing Roundups Thursday, August 21st, 2008

Mining: the latest “wisdom” from Wall Street is that commodities have or are in the process of peaking. Don’t believe it. The 95 percent increase in iron ore prices negotiated between China and Rio Tinto a couple of weeks ago shows how ridiculous that line of thinking is. (My favorite mining-related company: Bucyrus (BUCY)).                 

Energy: with energy prices this high, there has to be some good investments out there and there are, but it’s not in Big Oil. I like a medium sized oil company from South Africa called Sasol (SSL).

Fertilizers: This sector is a little more volatile than I would ideally like. And fertilizer companies have gone up a great deal already. Potash Corp. (POT) seems to be the favorite among analysts, but I like Terra Industries (TRA) better.

Oil support/transport: Some analysts like the pipelines. I like the rig companies better. Helmerich & Payne (HP) is an outstanding one.

Health care: Following the Boomer into their old age can’t be a bad strategy. Medical Properties (MPW) is a real interesting health care REIT with loads of upside.

Alt Energy: Solar rocks. Now that China has had their 50 percent correction, I’m liking Suntech Power (STP) all over again.

Precious metals. Gold and silver are going up, baby. The ETF GLD rises with the price of gold. That’s sounds good to me.

Everyone should have a recessionary handbook in their back pocket. This is mine.

Source:  The “Seven Up” Recessionary Handbook 

Suntech Power Holdings (STP: NYSE) has taken us on a wild ride since we added it in January 2007. Its stock price more than doubled toward the end of 2007. Then the stock dropped steeply with the market meltdown in early 2008. The stock is up about 15% overall in the past 16 months or so.Long term, I think that Suntech is a good investment with great potential. The world is building out its solar infrastructures, especially in Asia, where Suntech focuses its solar business.

It’s no secret that fossil fuels are scarce and expensive. This has been good for the likes of CONSOL Energy (CNX: NYSE) and Foundation Coal Holdings (FCL: NYSE).

But the environmental issues for coal and other hydrocarbons are profound. People are getting worried about carbon dioxide (CO2) buildup in the atmosphere. Just based on current emission trends, the earth’s atmosphere is reverting to a CO2 content not seen in over 35 million years, since late in Eocene time.

So in the space of a couple of generations, mankind is reversing tens of millions of years of atmospheric evolution. Is this a serious problem? Or is it nothing much to worry about? Well, no one knows or understands the consequences one way or the other. And don’t let anyone tell you that they do.

In the U.S., both major presidential candidates are talking favorably about a “cap and trade” system for CO2. So solar, as well as wind and geothermal [Kaydon Corp. (KDN: NYSE) and Ormat (ORA: NYSE)], are all positioned well for future advances.

I just added KHD Humboldt Wedag (KHD: NYSE) to the portfolio. It’s literally a “picks and shovels” play on the worldwide cement industry. KHD supplies the machinery and equipment that go into cement kilns.

There is just no way that the developing world can continue to develop without large amounts of cement. So KHD is another great stock for the future.

As for whether I would invest in Suntech or KHD? Well, I’d invest in both. But I think that your question is along the lines of where to invest if you only have limited funds and don’t want to spread them too thin. Fair enough.

KHD strikes me as a safer, long-term growth story. You probably will not see some big, fast run-up in KHD stock. The company is not all that sexy and has a limited following. Still, KHD should earn great profits over the next few years. People will have to buy into the story as the good news comes out. It’s like the old saying, “Slow and steady wins the race.”

On the other hand, Suntech is in the cross hairs of investors as a solar play. With the right news story in a large publication or an endorsement from a major brokerage house, Suntech could soar on short order. But a rapid rise might also be the precursor to a rapid fall. That’s the history with Suntech. A lot of people are “smash and grab” investors.

Long term, Suntech is certainly a good company. But if you’re skirting volatility, KHD wins. KHD is just a boring cement plant builder that traces its roots to the beginning of the Industrial Revolution in the dark forests of Germany.

Cement and Silver

While I am discussing the needs of developing countries, let me mention one other thing that people want besides cement: silver. We can’t stop using it, whether in the form of consumer electronics or as jewelry or as a store of value over time. In the developing world, silver is still the “poor man’s gold.”

Annually, the world uses about 40% more silver than it mines. The difference of “missing” silver comes from recycling, plus stockpiles. But the stockpiles are near the end. And new mine production is unable to meet demand.

So my screaming buy right now is Hecla Mining Co. (HL: NYSE). This great old silver miner’s stock is down from our entry price. But that’s OK, because you can use the opportunity to pick up more shares. Hecla holds great silver reserve and resource positions from Alaska to Central America. Hecla will be mining silver and minting money for many years to come.

That’s all for now. Until we meet again…

Byron W. King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Source: Energy Q&A Part IV: Investing In Energy Stocks and More…