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Lindley Estes is a business writer for The Free Lance-Star and Fredericksburg.com. This blog is on Fredericksburg-area business. Send an e-mail to Lindley Estes.
Fluorescent bulbs, hybrids not enough
A GREEN revolution will provide plenty of opportunities for investors to make some serious greenbacks, Thomas Friedman argues in his excellent new book "Hot, Flat and Crowded."
The latest offering by the New York Times columnist covers what he calls the world’s greatest challenge–creating an energy system that can sustain a fast-growing global population.
Friedman argues that the world cannot continue along its current course of relying primarily on coal, oil and natural gas to power our cars, homes and businesses. As the world’s population grows and becomes more developed, the status quo will lead to a level of carbon dioxide emissions that will destroy Earth’s delicate balance.
Further, Friedman makes the case that many of America’s biggest international challenges–including terrorism–are direct results of our over-reliance on cheap and dirty fossil fuels.
He argues that many of the ways that we claim to be "going green"–using compact fluorescent bulbs, driving hybrid vehicles with better gas mileage, purchasing energy-efficient equipment–are good starts but a pittance of the overhaul that needs to occur.
Friedman paints the picture of a future of interconnected electric grids running on renewable energy, plug-in hybrid vehicles, toll roads to encourage telework and homes that use energy during non-peak hours.
He argues that the technology is nearly there for this vision, but the U.S. government must dedicate itself to policies that demand and reward progress toward those goals. The challenge is immense, but companies that design the systems toward this cleaner, more sustainable future will reap massive profits.
I have no way of proving this, but I think many of famed investor Warren Buffett’s recent purchases for Berkshire Hathaway were made with an eye on the kind of energy transformations that Friedman envisions. Buffett has said that he wants energy to complement insurance as his company’s two major businesses. Here’s a list of some of these buys:
Burlington Northern Santa Fe Railway: Berkshire owns almost 20 percent of this major railway. Railroads are far more fuel-efficient than trucks, reduce highway congestion and emit less greenhouse gas. Most of the coal BNSF hauls is low-sulfur, which is more environmentally friendly than most coal. It seems likely that railroads will continue to play a big role in the "greening" of America.
ConocoPhillips: Berkshire recently divulged a multi-billion dollar stake in this integrated energy company. Aside from its very low price-earnings ratio, ConocoPhillips is one of the leading producers of natural gas, which is the cleanest-burning fossil fuel.
Constellation Energy: Berkshire’s MidAmerican Energy Holdings Co. swooped in three months ago to pay $4.7 billion for this cash-crunched company, which has major nuclear holdings. Now a French power company is trying to sweeten the bid. Although nuclear energy is fraught with political controversy, it’s a powerful and clean way to generate electricity. Berkshire has also been investing in NRG Energy, which is also involved in nuclear power.
BYD Co.: Berkshire’s MidAmerican recently announced it paid $230 million for a 10 percent stake in this Chinese battery manufacturer, which plans to sell electric cars in the United States by 2010. It can also tap directly into the fast-growing Chinese market. The company also makes a battery that can store power from wind and solar.