Economics: Enviro biz: Hedging against weather-change disaster, Big Oil ramps up green programmes as investor-savy move

MarketWatch carried superb commentary by its editor-chief, David Callaway, "Are alternative-energy stocks the new tech? -- Scandal, growing pains ensured as industry matures" (May16,2k7).

New York -- Are alternative-energy stocks the new tech stocks, or are they simply socially responsible stocks and funds in disguise? That's the question investors need to ask themselves before they cast their hard-earned savings into the widening flood of assets flowing into anything bearing the name "green" or "alternative energy."

Interestingly, a lot of assumptions are packed into Callaway's Q and A. "New tech stocks" are perhaps best understood in terms outlined by reformational economic theorist Bob Goudzwaard in his longterm-influential book, Capitalism and Progress regarding the entire capitalist system being interwoven from three h+ly differentiated but distinct threads: investment-based enterprises, science, and technics (I reserve the term "technology" for the philosophy, modal science, and positive sciences of technics, not for technical phenomena themselves--hence, technics). Both science and technical phenoms cost money and thus have their own economic elements, and more largely their modally-optimatic embedded phenoms in non-economically-qualified societal spheres and institutions (Hendrik Hart, Understanding Our World) in our h+ly differentiated society where capitalism does indeed hold sway--alth not the entire story. But enterprises with owners (there are several forms of ownership of businesses; for focus here, however, I'm narrowing the scope to those with boards of directors, whether self-continuing, or investor-approved publically-listed, or appointed by govt as in the case of Canada's Crown Corporations like PetroCanada).

In this conceptual fraemwork, Calloway's "new tech stocks" that launch green-related innovations and outcomes industrially thru specific corporations which adopt those innovations, belong conceptually first to the various industries where they do actually constitute new innovations, alongside all those others for which the preceding (set of) technique(s) had previously been developed. Thus, I would not speak of a green industry, but of green technics within any given industry and of inter-industry green technics, even inter-sector green technics. Yet, we can speak of green businesses, green corporations--from a microbiz like mom-'n-pops to a small biz (under 100 employees, let's say) to the top size-tier on which we're focussing here. Greening and green-house gas (GHG) emmision reductions can occur all across the spectrum, industry by industry, biz size by biz size. Green innovation can occur within all sorts of businesses of all sizes, industries, and sectors; there is no such thing as a green industry in this conceptual framework, contrary to Callaway's rhetorical usage.

That said, we can then better conceptualize simultaneously the fact that corporations (within a given industry) adopting new green technical innovations are most directly competing with the other corporations active in that same particular industry (its non-greening corporations vs. its greening corporations); and, thus, also that industry's pace within a particular sector of the economy.

Certainly, as the MarketWatch special "The Heat Is On" series has been describing this week, an industry (sic! -- I would say > a pan-industries technical-industrial green movement - EM) is already growing around the issue of climate change and pollution fighting, despite the fact that the debate over global warming [and cooling] continues to rage in political and academic circles.

But that means, speaking analogically in regard to a "debate," a new wave of innovations is entering many industries as specific companies within each industry struggle to innovate-greenly ahead of the other companies in the same industry who are not greening, while these non-greeners try to sell their existing investors on the idea that such expensive greenward technical innovation is not necessary and undermines the investors' profits (this is where non-anological actual debates do take place in companies, sometimes...the other locales of actual debates are and will be boards of directors of corporations, together with corporate bureaucracies like engineering depts, Research and Development depts, and strategic planning staffs).

Economy > Green Technical-Industrial Movement

But whether the [pan] industr[ial green movement] can produce the type of technological breakthrus and innovations that a young Microsoft, Apple or even Google produced -- and the profits and stock run-ups that followed -- remains an open question.

But IT (internet technics) became a new full-fledged electro digitally-based industry (spininng out of the earlier non-digital "business machines industry"), by our set of definitions. Thus, one's argument and technological reasoning should become nuanced for each additional industry into which the green technical-industrial movement enters, and in these cases the technical phenoms are each embedded in specific biz/corporation institutions of the economically-qualified societal sphere (now gone global with the rise of an international economic order), an enterprise in an industry of co-competitor enterprises, industries which themselves in turn funciton as members of one or more larger sector(s) of the local/ regional/ national/ global economy.

In short, will this [green technical-industrial movement in the international economic order] change the world, with all the benefits to investors -- not to mention to the world -- that would bring? Or will it just be another in a long line of Wall Street fads, dreamed up to pitch to gullible investors looking to make money and feel good at the same time.

Everybody remembers the socially responsible funds, which attempted to invest only in companies that steered clear of such practices as working with dictatorships and human-rights violators, or producing products -- such as cigarettes or alcohol -- deemed harmful to society.

Many of [the socially responsible investment funds] produced tidy little returns. But none compared with the power of shares of Philip Morris Cos. over the last three decades. Even after changing its name to Altria Group Inc., in an attempt to change society's perception of it as a purveyor of cancer, the shares have continued to soar over the past several years.

Let's face it: When it comes to investing, feeling good is nice, but profits are what drive stocks. And most investors are not shy about going where the profits are, even if they don't smoke, drink, gamble or support drilling for oil in global hot spots.
What sets the alternative-energy stocks and other makers of clean [techniques] apart is that in this case it is typically the big energy companies that are at the forefront of these issues, anyway. Exxon Mobil Corp., Chevron, and the rest, affectionately known as Big Oil, are behind some of the most dramatic innovations in alternative energy, if only as a hedge against the potential loss of their main businesses in the decades to come.

And while the markets for carbon trading, weather futures and other forms of global-warming-focused investing are booming, they are, like any new markets, bound to suffer growing pains in the form of scandals over the next several years, as investors get duped by too-good-to-be-true ideas and technologies.

Callaway's moral realism about the coming new technical wave in the economic order, an intra-industry technical-industrial movement within many industries is quite important. He acknowleges, from an investment-economics viewpoint, the dark side of the coming economic activity around the wave of technical innnovations and pseudo-innovations that will bewilder investors, consumers, and governments and the courts. The legal system will have to develop internally to accomodate the pile-on of coming green scams.

The scars suffered by the energy-trading industry after Enron Corp.'s collapse have largely healed and been forgotten, at least by rank-and-file investors and certainly by Wall Street. But the potential for abuse of these young markets is still very much alive.

So the lesson for investors is to keep history in mind when jumping onto the bandwagon of alternative energy, clean technology or any other environmentally led investment play. Out of all these companies, both new and old, rushing to make a name for themselves in this league, undoubtedly a few will emerge to actually change the world for the better.

Whether you can make money on them, however, is a whole different issue.

This article is an outstanding overview of the move to green by major companies, irrespective of shareholders factions trying to determine who gets on the boards of directors of large corporations, and why.