What’s Wrong With Green Investments?

Everyone’s "going green." Should you? Green investments are supposed to provide you with returns and a clear conscience. They represent sustainable energy and "moral" profits. What more could …

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Everyone’s "going green." Should you? Green investments are supposed to provide you with returns and a clear conscience. They represent sustainable energy and "moral" profits. What more could you want? How about more money without a false government prop.

Ecology’s Roots In America

Green investments are rooted in an ideology called ecology. In 1962, Rachel Carson’s book, Silent Spring, resurrected some very old, and dusty, ideas from 19th Century Germany. What were those ideas? Essentially, that technology is bad, human beings are arrogant by nature, and that the Earth needs to be protected from Capitalism and greed.

Those ideas gave birth to government organizations like the Environmental Protection Agency, whose job is to "police" America and protect the environment from human beings. We have extremist and environmental terrorist organizations like Earth First! who openly admit to using acts of violence to accomplish their goals (a throwback to an old German idea of "ecology by force").

Philosopher Paul Taylor in Respect for Nature: A Theory of Environmental Ethics, writes:

The ending of the human epoch on Earth would most likely be greeted with a hearty ‘Good riddance!

In a review of Bill McKibben’s The End of Nature, biologist David M. Graber writes (Los Angeles Times, October 29, 1989):

Human happiness [is] not as important as a wild and healthy planet. . . Until such time as Homo sapiens should decide to rejoin nature, some of us can only hope for the right virus to come along.

Are humans really a threat to themselves? Are they a threat to the Earth? Should we even care? The December 2007 issue of the International Journal of Climatology finds that:

We examine tropospheric temperature trends of 67 runs from 22 ‘Climate of the 20th Century’ model simulations and try to reconcile them with the best available updated observations (in the tropics during the satellite era). Model results and observed temperature trends are in disagreement in most of the tropical troposphere, being separated by more than twice the uncertainty of the model mean. In layers near 5 km, the modelled trend is 100 to 300% higher than observed, and, above 8 km, modelled and observed trends have opposite signs. These conclusions contrast strongly with those of recent publications based on essentially the same data.

This squares with what Dr. Fred S. Singer, co-author of the Climate Change Report, found in 2001:

The current warming trend is simply part of a natural cycle of climate warming and cooling that has been seen in ice cores, deep-sea sediments, stalagmites, etc., and published in hundreds of papers in peer-reviewed journals. The mechanism for producing such cyclical climate changes is still under discussion; but they are most likely caused by variations in the solar wind and associated magnetic fields that affect the flux of cosmic rays incident on the earth’s atmosphere. In turn, such cosmic rays are believed to influence cloudiness and thereby control the amount of sunlight reaching the earth’s surface¬ and thus the climate. Our research demonstrates that the ongoin g rise of atmospheric CO2 has only a minor influence on climate change. We must conclude, therefore, that attempts to control CO2 emissions are ineffective and pointless — but very costly.

Environmental extremists have hypnotized many investors with pseudo-science and threats of imminent disaster. With that said, most individuals who believe in environmentalism are not extremists, they don’t explicitly hate human life, but they do support an evil ideology. They support an ideology that believes that the Earth must come before the interests of man. That the interests of the individual must be subordinated to the interests of the group.

That ideology has infected investors and given birth to a new method for investing that promotes the sacrifice of the individual to the group. The result has been a wellspring of mismanaged companies propped up by government subsidies and providing investments focused on charitable giving, environmental sustainability, maximization of social utility, and "fairness." These investments are focused on anything and everything except profits. This is bad for you if you’re an investor who wants to maximize profits.

Since these "green" companies put profit maximization in the back seat and focus more on "social responsibility," you could do quite well without the premium of "going green." In fact, the most profitable companies don’t worry about "social responsibility" (or only give it lip service) and instead focus on maximizing long-term profits to shareholders.

Consider the 2011 bankruptcy of Solyndra, a "green" company that was focused on solar power. In 2009, the company received $535 million dollars from the U.S. Government in the form of a guaranteed loan. Despite all of this funding, the company still failed.

In response to Solyndra’s bankruptcy, Tyson Slocum, director of the energy program at Public Citizen, is quoted as saying "You can’t end loan subsidies for renewable energy. That would be a disaster." Indeed it would be a disaster — for renewable energy companies. They just can’t survive without your tax dollars.

The list of failures in renewable energy is long and includes:

  • Evergreen Solar
  • SpectraWatt
  • Beacon Power
  • SunPower
  • First Solar
  • Nevada Geothermal
  • Babcock and Brown
  • Amonix
  • EnerDel’s subsidiary Ener1
  • Fisker Automotive
  • Abound Solar
  • A123 Systems
  • GreenVolts
  • Vestas
  • Nordic Windpower
  • Navistar
  • Satcon
  • Konarka Technologies Inc.
  • Mascoma Corp.
  • Azure Dynamics
  • Stirling Energy Systems
  • Thompson River Power
  • Range Fuels
  • Mountain Plaza Inc.
  • Energy Conversion Devices
  • Raser Technologies
  • ECOtality
  • Johnson Controls
  • Willard and Kelsey Solar Group

…and many others.

Compare this failure against the backdrop of oil companies that are able to exist without any government subsidies (they receive massive tax breaks, but those tax breaks are not unlike tax deductions given to all businesses and are not actual subsidies) and that succeed, year after year, while maximizing profits for shareholders.

Exxon Mobile, for example, has seen its stock price rocket upwards for the last 30 years – hovering around $4 per share in the early 1980s and now sitting at nearly $90 per share. The same cannot be said of any green energy company. 

In your search for the perfect investment strategy, adopt a rational approach to investing. You may not win any awards, but you will be investing in companies that work for your benefit, and are motivated by money to become more and more efficient and thus more and more profitable. The best part? You’ll make green without having to go green. 

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