Nevertheless, Jim Stanton says alternative energy — and the wind-energy market in particular — has a big future. Wind energy is already the second largest source of new power generation in the US, and it now has the backing of the much-hyped Pickens Plan.

Jim says two clean-energy ETFs that look undervalued right now are PBW and GEX. He also recommends FAN for a more wind-specific ETF. 

This from the Smart Profits Report:

With the steady climb of oil prices over the past few years, it’s become apparent that higher prices are here to stay.

As a result, the market has spawned dozens of new alternative energy stocks – and subsequently, ETFs devoted to the sector.

However, with alternative energy technology developing rapidly and sub-sectors like wind, solar, geothermal, bio-fuels, and bio-mass all springing into the headlines, it can be tough to know which stocks or ETFs an investor should play.

Fortunately, ETFs give you broad exposure and diversity to certain markets, with less risk than owning individual stocks.

For example, the two most widely followed alternative energy ETFs are the PowerShares WilderHill Clean Energy ETF (AMEX: PBW), which is mostly made up of American companies, and the Market Vectors Global Alternative Energy ETF Trust (NYSE:GEX), which gives you international exposure to some of the largest companies dealing in wind power.

In 2007, these ETFs turned in outstanding performances, chalking up gains of 62% and 50% respectively. And GEX may have done even better, due to the fact that it did not begin trading until May 2007.

In 2008, however, the funds haven’t been able to sustain that performance. As of September 26, PBW is down about 40% for the year, while GEX has lost 25%.

“Springing” Back To PBW

Back in the spring (March 24, to be exact), I highlighted the performance of PBW in my “Sector Watch” piece. At the time, the stock was trading around $21 and had recently tested its January lows. With the chart pattern still bearish, I said it represented a good short-selling opportunity.

Before it rebounded last week, PBW had traded below $15. But as long as oil prices remain high, ETFs like PBW should come back into favor. Moreover, after the beating they’ve taken this year, they look like good value.

That said, I don’t like trying to pick bottoms, so let’s take a look at the daily chart of PBW for more clues…

As you can see, the downtrend line drawn from the highs last December currently sits at $18.95. As time goes by, this number will go lower, but a couple of closing prices above this downtrend line will signal a change in trend – and that the stock is probably worth buying.

Profits From Thin Air

Between PBW and GEX, though, I actually prefer GEX, due to its higher exposure to the wind power segment. This fast-growing area is gaining some serious momentum and greater investment, thanks to the publicity that T. Boone Pickens is bringing. Pickens is a very smart businessman, who is investing billions towards the largest “wind farm” in the U.S. And you can see why he’s on board…

Wind power is the second largest source of new power generation in the U.S., surpassed only by natural gas.

• In 2007, wind provided enough power to satisfy the residential electricity needs of 150 million people.
• Capacity increased by a record-breaking 20,000 megawatts, which puts the world total at 94,100 megawatts.
• According to the U.S. Department of Energy, since 1980, the cost of producing wind power has declined by as much as 90%.
• Electricity from new wind power projects will be cheaper than electricity from new conventional power plants by 2010.

If you’re a fan of wind power, there is a relatively new ETF that deals strictly with the field. It’s called First Trust ISE Global Wind Energy (NYSE: FAN) and it began trading in June 2008.

Having hit a high of $31.50 in June, FAN has sold off, along with the other alternative energy ETFs. Earlier this month, it traded as low as $20, so let’s take a look at the chart to see what the next move might be…

With only a few months of data to go on, projecting the stock’s next move is a little trickier, but we have enough information to draw a regression channel from the June highs. The upper band of the channel is currently around $24.15 and a couple of closes above that level should lead to higher prices for the stock. We’ll keep an eye on this one, as wind power continues to gain traction.

PS. Yesterday, Oxford Club’s David Fessler described how the quiet passing of an $18 billion clean energy bill could mean ‘big moves’ for FAN and two other clean energy ETFs.

Source: Forget Washington’s Hot Air… Here’s How to Really Profit from Wind

When the Pickens Plan was first announced, Dave expressed concerns in The Daily Reckoning’s Desidooru Saloon blog about its finer details.

The problem is the Pickens Plan isn’t quite as free market as it claims. Take the proposed $5-billion sale of general bond funds to help finance alternative energy schemes in California. This is more like a back-door subsidy for Pickens’ natural gas agenda. More from Dave below…

I’m rapidly losing faith in T. Boone Pickens and his mission to change the tenor of the idiotic debate over energy in this country.

I already expressed mild misgivings the week he unveiled the Pickens Plan.  But I gave him points for trying to get us out of the quagmire of a false choice between drilling on the one hand and conservation/alternative energy on the other.  Commenters responding to my post seemed jazzed by the idea that zero taxpayer dollars would be required.

Ah, but it’s not that simple.

From the Los Angeles Times, an opinion piece by Anthony Rubinstein appears to blow the no-public-dollars argument out of the water.  Now, Rubinstein appears to be a typical government-has-the-only-solutions kind of environmentalist, but his concerns can’t be dismissed out of hand.

It would seem Pickens is bankrolling the campaign for a referendum in California this year…

This measure would authorize the sale of $5 billion in general fund bonds to provide alternative energy rebates and incentives — but by the time the principal and the interest is paid off, it would squander at least $9.8 billion in taxpayer money on Pickens’ self-serving natural gas agenda.

The initiative deceptively reads like it’s supporting all alternative-fuel vehicles and renewable energy sources. But a closer read finds a laundry list of cash grabs — from $200 million for a liquefied natural gas terminal to $2.5 billion for rebates of up to $50,000 for each natural gas vehicle.

Much of the measure’s billions could benefit Pickens’ company to the exclusion of almost all other clean-vehicle fuels and technology.

I have no idea whether Rubinstein’s numbers add up.  But whatever the math, this sure looks like a huge back-door subsidy for the alt-energy industry in general, and Pickens in particular.

Bond issues are how cowardly state, county, and municipal politicians fund their favored schemes.  “This won’t be funded with a dime of taxpayer money,” they claim.  Except when it comes time to retire the debt, of course.  (Then they threaten to slash services if they don’t get a big tax increase.)  But the strategy can work equally as well for a private party seeking a place at the public trough when he or she can’t convince lawmakers put the line-items in the state budget.

So the free-market cachet of the Pickens Plan is already starting to look a little dicey.  And if the argument is that these alt-energy schemes can’t succeed otherwise, might I suggest slashing tax rates in general to put more money in the pockets of the entrepreneurs who can make things happen, rather than using government as a blunt instrument of social engineering to steer investment into certain sectors?

But I digress.  The real problem is there will likely be more of these devil-in-the-details revelations about the Pickens Plan in the weeks and months ahead — making Pickens an increasingly flawed spokesman for the cause of Peak Oil awareness. That’s the last thing we need.  It’ll give the politicians every excuse to carry on their insipid false-choice debate, evading the harsh reality facing us, well into next year and perhaps beyond, even as gas climbs toward $7 a gallon.

Source: Second Thoughts About the Pickens Plan

So what can be done, asks Greg Gunner Guenthner. Are there ways to make it cleaner? Carbon capture technology is a possibility, but it’s years away from being usable.

Oil is another massive polluter, and gets more expensive by the day. Looks like the only option is to invest in sustainable energy – the sooner the better.

By a wide margin, the United States has the largest coal reserves on the planet. The coal supplies in the U.S. account for 95% of its fossil fuel reserves and a whopping 60% of the fuel reserves in the world, according to the American Coal Foundation.

Yes, coal prices have continues to rise across the globe. But of course, this pales in comparison to the continued run-up in petroleum, which has virtually paralyzed the wallets of many oil-reliant Americans.

The idea of a coal shortage is virtually unthinkable. We have roughly 275 billion tons of recoverable coal, enough for us to burn for the next two and a half centuries if we needed it. So while the next generation might not have the oil to run their cars and trucks, the lights at the house will stay on thanks to coal power.

If this were the end of the story, coal would be sitting pretty. But the black rock is under attack from governments, scientists and ordinary citizens throughout the world. And with no end in sight, our main source of electricity is in serious jeopardy.

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The Ugly Truth About Carbon Dioxide Emissions

The prolific use of coal as a power generating fuel is causing massive damage to the planet in the form of carbon dioxide emissions. This is not a political statement – it’s been proven over and over again by scientists and accepted by governments and the United Nations.

Today, oil we burn in our vehicles and use for power generation is the number one source of CO2 emissions. However, half of the excess CO2 civilization has contributed to the air is from coal. And as you are aware, oil use will most likely decrease from this point forward due to supply and pricing constraints.

It is clear that coal is the dirty, cheap energy culprit the world needs to fix. President Bush and both major-party candidates in the White House race have advocated the development and use of new coal technology that would reduce CO2 emissions. And politicians on both sides of the isle have supported efforts to develop clean coal technology.

Unfortunately, a viable solution is decades away.

Take carbon capture technology, for instance. Carbon capture techniques are designed to take the CO2 emissions from power plants and inject them into the rocks or other geological formations. This process would keep the harmful CO2 emissions from entering the atmosphere.

The Clean Coal Boondoggle

While it looks good on paper, industry analysts believe this technology is at least 10 to 15 years away from commercial use. Others are questioning whether CCS will ever become viable. A New York Times article from earlier this year asks precisely that, describing the government yanking support from an Illinois site that was supposed to pioneer the technology.

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The article continues, citing utility projects in Florida, West Virginia, Ohio, Minnesota and Washington State that have been canceled or postponed. The piece continued with even more evidence that questions the program’s viability:

Coal is abundant and cheap, assuring that it will continue to be used. But the failure to start building, testing, tweaking and perfecting carbon capture and storage means that developing the technology may come too late to make coal compatible with limiting global warming.

“It’s a total mess,” said Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley.

A total mess? This doesn’t sound promising at all…

All Coal Is Not Created Equal

Two important conclusions must be drawn from this evidence. First, we see no reduction in the volume of coal used to generate power in the foreseeable future. It is also clear that a truly viable CO2 reducing solution needs to present itself ASAP. Green laws sprouting up across the European Union and the United States will require a change.

Electricity demand in western states continues to rise. Power distributors are desperate to keep up with demand. Add to the mix strict environmental laws and you’re looking at a world of hurt for the Western United States.

Source: Coal Keeps the Lights on in America — Can We Make It Cleaner?

Pickens’ new energy plan – the Pickens Plan – dovetails nicely, of course, with his plan to build a massive wind farm in Texas.

Everything in Pickens’ plan favors his own BP Capital Management, says Dave Gonigam in Desidooru Saloon.

Along with wind power, Pickens is promoting the use of compressed natural gas to power US cars and trucks – another area in which BP Capital Management has a significant stake.

The devil is in the detail, says Dave, and Pickens will have to address a number of issues before his vision for US energy dependence, and his own profits, become reality…

T. Boone Pickens says between now and Election Day we’re going to see his face on TV nearly as much as the presidential candidates. In the months to come he’ll draw on his considerable fortune for an ad campaign plumping his idea of how to cut U.S. dependence on foreign oil by 38% over the next decade.

The gist of it is this: Build a network of wind turbines stretching from Texas to the Dakotas to reduce the electrical grid’s dependence on natural gas, and instead use more natural gas (in compressed form) to power cars and trucks.

If Pickens is as serious about putting his mug on TV as he says, he will definitely influence the debate, and probably for the better. His input will be a vast improvement over the disingenuous and insipid “debate” we’ve seen so far from Washington — in which conservatives try to make the case that allowing drilling offshore and in the Arctic National Wildlife Refuge will somehow bring back $2 gas within weeks, and liberals insist “we can’t drill our way out of the problem” as if some magical government program will perfect solar-powered cars and jets before those offshore and Alaskan fields can be brought online.

At least Pickens might get people talking about the real issues. All to the good.

Of course, the devil is in the details. Aside from the obvious point that wind power and natural gas are two areas in which his BP Capital Management has a significant stake — and he’ll have to address that during every interview he does on this subject — there are two rather thorny issues to be dealt with.

The first is who pays for all the new transmission lines these turbines will have to feed? Pickens says he’ll put up the money himself for the property he’s set aside for turbines in the Texas panhandle, but what about elsewhere? And for that matter, who will buy the property where the turbines will be built? And no, existing federal lands won’t cut it. As much land as the federal government owns west of the 100th meridian, little of it [.pdf] is in the states where Pickens envisions this network of windmills.

And if that wasn’t a big enough problem, there’s issue number two: Like oil, natural gas is a resource in decline. U.S. production in particular has flat lined if not outright fallen during this decade, and Matt Simmons thinks there’s a good case to be made that world supply has peaked as well. U.S. usage during this decade has zoomed up as utilities found gas-fired power plants much easier to build (for a variety of reasons) than coal or nuclear. So whether gas is used for power generation or transportation fuel, we’re going to need more of it, and it’ll have to be imported, be it piped in from Canada or liquefied and shipped in from overseas. So much for reducing U.S. dependence on foreigners for our energy.

But hey, the Pickens plan is a start. It’s better than what the politicians are yakking about. And if it gets more folks thinking about the real issues when it comes to energy, it might be a net plus.

Source: Well, It’s a Start