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Andrew Allentuck

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Can you feel the temperature rising?

Andrew Allentuck


There is no greater cause for alarm than global warming. The worry that burning of fossil fuels will increase atmospheric carbon dioxide and warm the earth has become not just a hypothesis, but a doomsday belief. The process is projected to melt icebergs, raise the level of oceans, turn the temperate prairies to jungles and jungles to deserts. The release in early February of a study by the United Nations’ Intergovernmental Panel on Climate Change put the stamp of the world’s uber-authority on the idea that people and not temperature cycles or other forces are the cause of the problem. It is worth noting that the UN study has the agreement of all its members - doubtless a unique event of itself - certifying climate change as the first great environmental pandemic the 21st century.

The scope of potential investment needed to cure man-caused global warming is gargantuan. If sea levels rise by the half metre the UN predicts will happen by 2100, there would be major civil engineering work required to preserve cities in the vast river deltas of southern China, Bangladesh and Egypt, the island states of the South Pacific, to raise the heights of cranes in container ports as ships float higher, and to elevate railways that were laid around the margins of the rivers and lakes of Europe and North America.

Re-engineering railroads and raising ports are the consequences of uncontrolled global warming. Those projects are conditional on the failure to control temperature pollution and they are likely distant. For now, there is a more urgent and perhaps more compelling case to be made for cutting global warming at its source: heat loss to the atmosphere by inefficient use of electric power and production of carbon dioxide by burning of fossil fuels.

Wind power has become the newest of power alternatives. It contributes no gases to the atmosphere, adds no heat save for the trivial friction of turbines, and needs little maintenance once installed. To date, Canada has installed 1,460 Megawatts of wind power generators, enough to power 440,000 homes, a few percent of the total number of dwellings in Canada, according to the Canadian Wind Energy Association (CWEA) in Ottawa.

The pitch for wind power is simple. “Wind power has no subsequent fuel cost,” says Robert Hornung, a spokesman for the CWEA. “But make no mistake about scale.

Wind power generators stand 100 metres tall. The blades that turn with the winds are 30 metres long. Each farm takes 9 to 12 months to build using massive cranes.”

Investing in wind power and electrical conservation is a problem of focus. For example, TransAlta, a huge electrical utility in Alberta, generates most of its power from thermal sources. It owns TransAlta Wind, which has 2006 revenues of $31.7 million, a drop in the bucket of TransAlta’s $2.8 billion total revenues for 2006. But a small company, Western Wind Energy Corporation, based in Coquitlam, B.C. (WND - TSX Venture Exchange), went public in 2002. It acquired two California wind farms with 503 turbines in 2006. On annualized basis, revenues for the year ended Jan. 31, 2007 should be $5.1-million (U.S). Two other projects in California are under construction; they will add 165 more turbines that will bring total production to 199 Mw. by early 2008. By then, revenues should rise to $40-million, says Jeffrey Chiachurski, the company’s CEO. “Our power will prevent emissions of over 500 tonnes of carbon dioxide per year.”

Solar power offers an alternative way of generating power with no increase in atmospheric gases. The field has recently expanded with many public companies pursuing developments, says Paul Mesburis, vice-president and portfolio manager with Mavrix Funds in Toronto. Among the players:

Sunpower Corp. (SPWR-NASDAQ), based in San Jose, California, a maker of solar cells. The company has offices in Europe and Asia, $236-million (U.S.) in revenues for the 12 months ended Dec. 31, 2006, active trading and has recently traded at $45.76.

Trina Solar Ltd. (TSL-NYSE) is a Changzhou, China makes of solar power cells.

With extensive sales in Europe and Asia, the company is a major player in the field. Shares, thinly traded, have appreciated from $20 (U.S.) in mid-January, 2007 to $35 in early February.

Canadian Solar Inc. (CSIQ - NASDAQ), which, in spite of the name, is based in Jiangsu, China. Since its U.S. initial public offering in November, 2006 at $15, trading has been thin and shares have fallen to $11.00.

JA Solar Holdings (JASO - NASDAQ) had its North American IPO on Feb. 7, 2007 at $15. The company, based in Ningin, China, reported $786 million (U.S.) in revenues for 2006, according to research services.

Other forms of renewable power include hydroelectric dams, which have their own unique environmental issues involving aboriginal rights and mercury released by inundated forests. Canadian Hydro Developers Inc. (KHD-TSX), based in Calgary, is a major operator of dams in Alberta, B.C. and Ontario. It is actively traded and recently closed at $6.23

No survey of non-fossil fuel source power is complete without a mention of Cameco Corp.(CCO-TSX) the Saskatoon-based uranium miner and owner-manager of substantial nuclear power plants in Ontario. Cameco shares, recently $43.91, have been hammered by a flood in Cameco’s Cigar Lake mine. The company has said it will be able to pump out the mine and resume production, though the date for completion of the job is uncertain.

Andrew Allentuck writes about investments for The Globe and Mail, and reviews books on finance for globefund.com and globeinvestor.com. He is also the author of several books.

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