It is good to see one of my old followings in the news this week. Sure, it has taken several years for the company to do anything remotely strategically oriented, but it is better now than never.

I first started tracking Rentech (AMEX:RTK) in 2005 during the first leg of the nation’s latest alternative-energy boom. As speculation about the company’s Fischer-Tropsch technology grew by the minute, shares of the tiny firm surged. The investors that timed it perfectly had a shot at gains of 400% or more.

Gains on speculation typically are not sustainable. Eventually the company has to produce results.  Rentech was far from successful in that department.

That is until Wednesday of this week when the company announced news that would send shares up by as much as 85%. For investors that had given up on the speculative penny stock, it was a sharp wake-up call.

The sudden surge in the company’s value comes from a breakthrough in the aviation industry. A committee at the standards-creating agency ASTM unanimously approved a measure that would allow commercial aviation jet fuel to contain up to 50% synthetic Fischer-Tropsch fuel.

The news means Rentech’s synthetic fuel, RenJet, now has a shot as a player in a very big industry.

If you are not familiar with the kind of technology Rentech is using, Fischer-Tropsch is a process that takes gas from coal, coke, even biomass and turns it into a liquid hydrocarbon product, like jet fuel, diesel or naptha.

It is old technology (the Nazis used it) that was historically too expensive to be considered profitable. But now with higher energy prices and lower input prices, Fischer-Tropsch is slowly making its way into the mainstream.

Succeeding where nobody else ever has

With the market wide open, Rentech chief focus must be to take its product from a demonstration stage to a production stage. The key variable, of course, is whether the company can do it with any sort of profit margin.

After shares soared earlier in the week, they have since dropped significantly. As I write, investors are buying shares at a 12% discount to yesterday’s closing price.

Folks interested in the company should focus on Rentech’s upcoming earnings figures on August 11. With liquidity a major variable going forward, you can bet the Street will focus on cash flows and balance-sheet improvements.

If word is positive from the company’s executives this week’s action could be a strong foreshadowing of good things to come. If done well, Fischer-Tropsch technology could be the transitive fuel source this country needs as it seeks its energy independence.

Source: Rentech: Getting Ready to Fuel an Industry

Shares in leading German solar stocks rose substantially on expectations that other big players, including oil groups, are on the prowl in a market that grew to €6.6bn last year and is forecast to top €18bn by 2020.

Germany is by far the world’s biggest solar energy market thanks to its “feed-in” tariffs, which pay a government-guaranteed premium of up to €0.47 a kilowatt hour for power produced by photovoltaic panels. It is expected to continue to grow despite government plans to cut subsidies by 8% or 9% in 2009 and 2010.

“The richest investment opportunities can be found in the fast-emerging alternative energy sector,” says Mike Burnick in The Offshore A-Letter.

“That’s where oilman T. Boone Pickens is putting his money – his company Mesa Power just placed an order for US$2 billion in wind turbines. And there’s much more profit potential in other parts of the alternative energy sector too – especially alternative fuel.

“The market for ALL alternative energy sources grew 40% last year alone to US$77.3 billion and will explode into a US$250 billion industry within 10 years.

“Bio-fuel grew to a US$25.4 billion market last with more than 15 billion gallons of ethanol and biodiesel produced globally – more than double the output of just four years ago. The worldwide Bio-fuel industry will continue to enjoy explosive growth for years to come – expanding into a US$81 billion business within the next 10-years!”

“The days of meeting an unchecked demand for energy through monolithic carbon intensive power stations are coming to an end. Increasingly the emphasis will be on energy efficiency, renewables, cleaned up fossil fuel plant and micro generation,” the company said in a statement accompanying its full-year results, according to Britain’s The Guardian newspaper.

SSE, which currently gets 15% of its energy from nuclear suppliers, said it believed “one more tranche of nuclear power stations will be necessary, but that the deployment of such power stations should be minimised through the maximum exploitation of renewable energy sources.”

“The richest investment opportunities can be found in the fast-emerging alternative energy sector,” says Mike Burnick in The Offshore A-Letter.

“That’s where oilman T. Boone Pickens is putting his money – his company Mesa Power just placed an order for US$2 billion in wind turbines. And there’s much more profit potential in other parts of the alternative energy sector too – especially alternative fuel.

“The market for ALL alternative energy sources grew 40% last year alone to US$77.3 billion and will explode into a US$250 billion industry within 10 years.

“Bio-fuel grew to a US$25.4 billion market last with more than 15 billion gallons of ethanol and biodiesel produced globally – more than double the output of just four years ago. The worldwide Bio-fuel industry will continue to enjoy explosive growth for years to come – expanding into a US$81 billion business within the next 10-years!”

Floyd Brown in Investment U looks at another alternative energy source: the Fischer-Tropsch process, used to create synthetic fuels.

“The process works like this: Coal is broken into its components by subjecting it to high temperature and pressure, using steam and measured amounts of oxygen. This leads to the production of synthetic gas.

“In the United States, a small firm provides technology to produce ultra-clean synthetic fuels and chemicals. It licenses its proprietary derivative process from the Fischer-Tropsch method.

“It converts synthesis gas derived from coal, petroleum coke, biomass, natural gas, or municipal solid waste into liquid hydrocarbon products. This includes ultra clean diesel fuel, jet fuel, naphtha, specialty chemicals and other fuel products. It also manufactures anhydrous ammonia, UAN, nitric acid, carbon dioxide and granular and liquid urea.”

Read on here to find out Floyd’s cashing in on this conventional energy alternative.

It now applies to a wide variety of similar processes for converting coal, biomass and other carbon intensive feed-stocks into usable products such as diesel and jet fuel.

These two scientists at the Kaiser Wilhelm Institute invented the process because of a petroleum shortage, increased demand and skyrocketing prices – similar to what the United States faces today. During World War II, Germany used the technology to keep Hitler’s war-machine running.

By 1944, Germany’s annual synthetic fuel production reached more than 124,000 barrels per day from 25 plants. After the war, captured German scientists continued to improve the process in the United States.

But the technology faded after the 1980s. That’s when Congress passed the Energy Security Act, which birthed the Synthetic Fuels Corp (SFC). SFC spent over $88 billion in government loans and incentives, with the goal of creating two million barrels a day of synthetic oil within seven years.

SFC was launched in 1980 and it folded in 1986 after spending billions without providing any fuel. In the grinding recession of the early 1980s, oil prices sunk from more than $39 a barrel to less than $8 a barrel. Synthetic oil became a financial bust.

Now the economics have changed…

With Oil Trading at $130 per barrel, Synthetic Fuel is a “No-Brainer”

The process works like this: Coal is broken into its components by subjecting it to high temperature and pressure, using steam and measured amounts of oxygen. This leads to the production of synthetic gas.

Because the United States has benefited from years of low price petroleum, the leader in synthetic gas grew up in South Africa. The global leader is Sasol (NYSE: SSL). Sasol uses coal and natural gas as a feedstock to produce a variety of synthetic petroleum products. Sasol produces most of South Africa’s diesel fuel using a modified Fischer-Tropsch process.

This process helped South Africa to meet energy needs during its economic isolation under Apartheid. Sasol’s process has received recent investor attention because they produce a low-sulfur diesel fuel, which minimizes the environmental impacts. As a result its stock has soared.

In the United States, a small firm named Rentech, Inc. (AMEX: RTK) provides technology to produce ultra-clean synthetic fuels and chemicals. It licenses its proprietary derivative process from the Fischer-Tropsch method.

It converts synthesis gas derived from coal, petroleum coke, biomass, natural gas, or municipal solid waste into liquid hydrocarbon products. This includes ultra clean diesel fuel, jet fuel, naphtha, specialty chemicals and other fuel products. Rentech also manufactures anhydrous ammonia, UAN, nitric acid, carbon dioxide and granular and liquid urea.

The US Air Force has been a leader in the utilization of these fuels. Most of the fleet is being certified to fly on a blend of synthetic and jet fuels. Recently, a B-1 Bomber became the first plane to break the sound barrier flying with a mixture that included synthetic jet fuel.

In addition, Rentech has a joint development agreement with Peabody Energy Corporation for the co-development of CTL projects that convert coal into ultra-clean transportation fuels using Rentech’s Process.

As with many companies focused on research and development of new technology, Rentech has yet to post a profit and its shares have traded in a small range for over a decade. RTK is still a highly speculative investment in one of the many potential solutions to our rising fuel costs.

So while the media hype is focused on solar, wind and even tidal power to solve our energy needs, the likely successor to petroleum will be refined from a black, sooty fuel that has been used since ancient times – coal.

I am happy to report that the United States has lots of coal, and companies operating in our free enterprise profit-incentive world are perfecting the technology to cleanly burn it in our planes, trains and automobiles.

Happy investing,

Floyd

Source: How These Two German Scientists Are Solving Our Energy Crisis

This from The Wall Street Journal:

With oil’s multi-year ascent showing no signs of stopping — crude futures set another record Tuesday, closing at $129.07 a barrel in New York trading — energy security has emerged as a major concern for the Pentagon.

The U.S. military consumes 340,000 barrels of oil a day, or 1.5% of all of the oil used in the country. The Defense Department’s overall energy bill was $13.6 billion in 2006, the latest figure available — almost 25% higher than the year before. The Air Force’s bill for jet fuel alone has tripled in the past four years. When the White House submitted its latest budget request for the wars in Iraq and Afghanistan, it tacked on a $2 billion surcharge for rising fuel costs.

Synthetic fuel, which can be made from coal or natural gas, is expensive now, but could cost far less than the current price of oil if it’s mass-produced.

The report also reveals that the Pentagon has embraced planning around peak oil theory:

Earlier this year, they brought Houston investment banker Matthew Simmons to the Pentagon for a presentation on peak oil; he warned that under the theory, “energy security becomes an oxymoron.”

“The U.S. will adopt liquid coal (also known as coal to liquid or CTL), because it has to do so,” says Byron King in his Energy and Oil blog.

“There are few other large-scale industrial alternatives. Windmills, biofuels, conservation and every other energy-saving and energy-extending idea will help. But the world we live in is built to run on oil, and nothing else will cut it for some things when it comes to running a fast-transforming economy. So stand by for liquid coal.”