Growing up in the 80s and 90s in Canada, I experienced first hand how environmental consciousness was starting to catch on. We saw our first blue boxes (curb side recycling bins) in the late 80s. The schools were also really focused on education about the ozone layer, acid rain, and global warming. I even did a project on hydrogen as a fuel for cars. Environmental consciousness was really engrained into our minds.

For my current job, I typically travel a few times a year to the US,  Solar Companies and I find it really surprisingly that most cafeterias don’t have recycling bins or curbside recycling is almost non-existent south of the border. Most of my customers I speak with are embarrassed by this lack of initiative by their governments and it was then that i realized that without some form of legislation, it would be very difficult for any country to adopt a more environmentally conscious mindset. For example, you would think Germany would not be a very good country for solar energy generation. However, if you ever fly over some cities in Germany, you would see rooftops upon rooftops of solar panels. It’s because the German government has provided subsidies for solar panel installations.

After watching Al Gore’s Inconvenient Truth (I recommend the movie to anyone! ), it became apparent to me that there’s a real urgency in the matter. We are definitely on the path of destruction if we (the world) continue to use fossil fuels the way we do today. Recall my first post on the concept of stewardship (see link below). The lord has granted us this world in its entirety for our benefit, but we also need to care for it. The earth is not ours, but the Lord’s, and we are not the owners, but merely stewards. Therefore, it is our responsibility to sustain the earth.

Sustainable Investing

As an investor, how can i help sustain the earth? I call it sustainable investing. It is simply investing in companies whose products or services promote the sustainability of the planet. Companies providing technology for renewable energy is a perfect example. In particular, I will talk about solar companies in this post.

The biggest growth in the renewable energy sector could arguably be photovoltaics (PV or solar panels). A large number of public solar companies have or are in the process of ramping up their production significantly. For example, First Solar had a revenue of $134 million in 2006. For 2008, that number increased to $1. 25 billion, growing almost tenfold! This type of growth rate is not unique to First Solar, but is similar across the board.

As production ramps up, the cost of each solar panel will decrease. We are at a point where solar panels will soon become cost effective even without government subsidies. With Obama’s push to pass the environmental bill, the cap-and-trade system will greatly benefit companies like First Solar. What exactly is a cap-and-trade system? To put it in simple terms, the government places a limit (a cap) on the amount of greenhouse gases that can be emitted in the country. Companies and institutions are given a certain number of emission credits. If the company emits less than the credits it has in its possession, it is free to sell them (trade) to other companies that emit more than their credits allow.

The cap-and-trade system is technology neutral. It means the laws of economics will allow for various renewable energy technologies to flourish. The ones that are most successful will eventually replace the ones that are not, purely based on economics, and not whether the government decides to provide subsidies. This system encourages creative development of new technologies.

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