When the credit crunch really kicked in last year and sales of organic boxes started to collapse, we wondered here if everything green wind farm investment and the like might go the same way. It hasn't. Instead renewable/alternative energy has been one of the few beneficiaries of financial implosion.
Indeed, pretty much every stimulus package so far has included huge incentives for the industry. Obama's stimulus plan shovels $300bn in, something its fans say all but guarantees double-digit growth for the sector for years to come. Even the Chinese are apparently set to announce new renewable targets of 15% by 2020 and 40% by 2040. It seems that instead of backing out of their commitments to renewables, governments have been using the recession to bump them up. It's crowd-pleasing stuff.
It probably won't work. It's hard to see how all these wonderful-sounding targets can be met in the allotted time. From an investor's point of view, this doesn't matter. What matters is that governments keep pretending they can be met and chuck more subsidies and tax breaks at them. Given that it looks like they will, and given our long-term positive view on energy prices (the other big driver of the industry), it makes sense to have a reasonable long-term holding in new energy. I'm tempted to do so via the Blackrock New Energy Investment Trust (LSE: BRNE).
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I like the fact it's run by a woman, Poppy Allonby (with co-manager Robin Batchelor). I don't suppose her sex has any bearing on the fund's performance, but it makes a nice change. Plus she's a physicist, which should give her a head start over most of us when it comes to understanding how fuel cells and superconductors actually work.
The fund steers clear of investing in too much early-stage technology (no wave farms, for example); one thing Allonby says she's learnt in the last decade is that new technology always costs more in money and time than its creators ever imagine. It's also heavily weighted to large caps and to what she calls "government-mandated growth". Finally, it is absolutely "not an environmental or socially responsible fund", just one aiming to make money out of the currently very supportive environment for alternatives.
Finally, a note on New Labour. We have worried for many years that a large chunk of the money spent by the government has been wasted. Now we have confirmation: a report from the Office of National Statistics shows public sector productivity has fallen an average of 0.3% a year since 1997. This should make us all very angry. On the plus side, it should remind us that productivity can be improved from here that it is possible, as most of us have long suspected, for our money to be spent better. Now all we need is a government capable of admitting that and getting on with it.
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