Alternative Energy Sources

Smart Profits Report:Issue #451
Wednesday, August 29, 2007

Alternative Energy Sources: How To Profit From The World’s Carbon Dioxide Dilemma
By Martin Denholm
Managing Editor, Mt. Vernon Research

“Can you boys stop breathing for a moment back there?” When I was a kid in the car with my mother, she used to jokingly say this to my brother and I whenever the windows got fogged up. I guess she thought we emitted a lot of hot air!

Or maybe she was just trying to help the planet. The average human cranks out between 35,000 and 50,000 parts of carbon dioxide per million molecules (ppm) in each breath. That’s a lot of CO2 floating around in front of you right now!

Consider these other facts: The amount of carbon dioxide in the atmosphere is higher than at any time in the past 160,000 years. Over the past 150 years alone, the concentration has risen from 280 ppm to 380 ppm - and is growing at 1.2 ppm each year. Increasing CO2 emissions account for 50-60% of overall global warming and scientists on the Intergovernmental Panel of Climate Change say the world needs to reduce those emissions by 60% just to stabilize concentrations.

So what should we do? Stop breathing? Plant more carbon dioxide-loving trees? Actually, some savvy companies are finding innovative ways to turn CO2 into alternative energy sources.

More Humans = More CO2… But Industry Is Helping To Churn It Back

Human activities account for just over one-fifth of the total amount of carbon dioxide concentration in the air. This obviously includes breathing, but also burning fossil fuels, deforestation, manufacturing and waste incineration. Already, the burning of fossil fuels accounts for about three-quarters of CO2 emissions, and U.S. power stations alone spew out 2.5 billion tons of carbon dioxide every year.

The trouble is, as the global population swells (up from 1.6 billion in 1900 to 6.5 billion today), so too does the amount of those “human activities” to keep up with demand - which is pumping more CO2 into the air. And levels are only set to increase, with the global population set to jump to 9 billion by 2025.

Bad news, right? Perhaps not. Some companies are finding novel ways to tackle the problem by using carbon dioxide to create more alternative energy sources - especially following some interesting U.S. Energy Department figures. It states that improved and expanded use of carbon dioxide in the oil industry could boost recoverable U.S. oil reserves from 22 billion barrels to 89 billion barrels.

Looking For Alternative Energy Sources… Cue EnCana

Based in oil-rich Alberta, Canada, EnCana (NYSE: ECA) is currently working with the Dakota Gasification Company’s Great Plains Synfuel plant to buy CO2 from the plant and inject it into its 50-year old Weyburn oil field.

OK, so what’s the big deal?

First of all, the CO2 injections have extended the life of the oilfield, because it helps clean oil trapped in rock and increases the recovery amount.

Second, the carbon dioxide used helps to reduce the thickness and (for lack of a better word) “gooeyness” of the oil, allowing EnCana to extract more oil.

In fact, the company says the CO2 injections have boosted output by 65% since 2000. What’s more, the International Energy Agency says that almost 100% of the CO2 injected will remain stored underground for at least 5,000 years. That means the Weyburn oilfield can store a projected 14 million tonnes of CO2.

But EnCana isn’t alone. America’s biggest coal consumer is getting in on the act…

America And France Unite! (Through Ammonia)

Ask anyone about France’s most famous exports and you’ll get the usual answers: Great cuisine. Even better wine. Stinky cheese. But you probably wouldn’t get many folks saying chilled ammonia.

But French engineering firm Alstom is putting it to good use in the alternative energy field. Alstom is a global leader in power generation and in the use of innovative technology to produce environmentally friendly alternative energy sources. The company has a unique system of using chilled ammonia to capture carbon dioxide in the air and among other gases, then using it to aid alternative energy production. The process is versatile, too, with the ability to capture CO2 from both coal and natural gas systems.

According to BusinessWeek, American Electric Power (NYSE: AEP) will install Alstom’s chilled ammonia system at a plant in West Virginia next year and pilot test it. If successful, AEP will expand commercially to a plant in Oklahoma in 2011.

With the global population rising rapidly, not only are more humans blowing more CO2 into the atmosphere, industry has to support them by burning more fossil fuels and increasing manufacturing. That places extra demands on an already struggling environment for more alternative energy sources to be found.

But while this is a growing trend, the number of companies aiming to alleviate the additional carbon dioxide emissions dilemma through innovative use of CO2 for alternate energy production is relatively small. But clearly, those able to succeed in this field, either through the sale and use of CO2 itself, or those that help ship the gas could be set to cash in. To be sure, investors looking to invest in alternative energy stocks should keep this sector in mind.

Best Regards,

Martin Denholm

Today’s Smart Profits Action Center

The world churns out 8 billion tons of carbon emissions each year. Of that amount, oceans take up 2.4 billion tons; forests absorb about 1.5 billion tons… and the remaining 3.3 billion tons shoots straight into the atmosphere.

It’s well-known that while humans and industry emit harmful carbon dioxide, trees offset the emissions by using it to live. And you can use trees to turn a profit. In fact, timber returns have not only beaten inflation by an average 3.3% each year over the past century, they’ve also beaten the overall stock market over the long-term. And while timber demand isn’t likely to dwindle any time soon, few investors consider it as a way to make money. Follow this link to find out how you can profit - plus 30 other wealth-building secrets, direct from some of the world’s most respected and successful investors.

Related Articles: