PROFESSIONAL INVESTOR: Save the world - and make money
January 26th, 2008 by moniesThe Invesco Perpetual UK Smaller Companies Fund and the Invesco English & International Trust, which I run, are exposed to the renewable energy market through a collection of companies, from producers of biodiesel to developers of fuel cell technologies.
The Government has set a target of 10 per cent of electricity having to come from renewable sources by 2010, rising to 20 per cent by 2020. Undoubtedly, this will fuel rapid growth in a developing sector.
Many companies utilise existing technologies to harness natural energy sources, and many more are in the process of developing exciting new technologies to extract this energy more efficiently. Ocean Power Technology is a company in which we have invested. It implements wave power technologies, using an ocean-going buoy to capture and convert wave energy. The company has signed agreements to develop wave power stations off the coasts of France, Spain and the US.
As with other renewable energies, wave power benefits from the predictability of its source and its availability close to many of the world’s most populated areas. It also has favourable environmental advantages, as it produces no noise, is not unsightly, and poses no threat to marine life.
Increasing concerns over global warming and the decline of traditional mineral fuel supplies are also driving the growth of biofuels as substitutes for petrol and diesel. Biodiesel is a biodegradable, environment-friendly fuel which can be used in existing diesel engines without modification or blended with petroleum diesel
We have invested in D1 Oils, which is establishing plantations of Jatropha curcas trees, the seeds of which can be used to produce a sustainable, low-cost biodiesel. D1 Oils recently signed an agreement to cultivate a plantation in Saudi Arabia, and operates widely in Africa and Asia.
We have also invested in companies involved with the development and manufacture of fuel cells. Voller Energy manufactures portable fuel cell systems for use as battery-chargers and mobile generators.
Fuel cells are electrochemical devices that produce electricity and heat from fuel and oxygen. Unlike a conventional engine, a fuel cell does this without burning the fuel and can be cleaner, quieter and more efficient.
Elsewhere, we have invested in companies that are involved in the collection and trading of carbon credits. Emission trading schemes have been developed to help meet commitments agreed under the Kyoto Protocol. Organisations that are unable to meet their emissions obligations can purchase carbon credits from more energy-efficient companies with surplus emissions.
The price of carbon emissions is certainly strong at the moment and, consequently, companies that are involved with the trading of carbon credits are performing well.
We have invested in Agcert, which collects carbon credits by reducing greenhouse gas emissions through the operation of methane- capturing systems on huge livestock farms in South America.
Over the past few months, we have been able to find many attractive investment opportunities in the renewable energy sector. However, most of these companies are small and emerging ” which makes it difficult for large company funds to invest.
Andy Crossley manages the Invesco Perpetual UK Smaller Companies Growth.
Sean O’Grady is away.
Author: Andy Crossley
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