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Harris Roen, Editor
Roen Financial Report
February 1, 2012

Free to Our Readers

As a thank-you to our readers, we have published a free copy of the latest edition of the Roen Financial Report. The February issue features an exciting debut, a new section on Alternative Energy Mutual Funds, along with other informative articles. Click here to download your free issue!

Newsletter Features

The new Alternative Energy Mutual Funds section ranks mutual funds that invest in the alternative energy industry. Two different types of funds are evaluated, open end mutual funds, and exchange traded funds (ETFs). Funds are rigorously examined using many measures, including past returns, expenses and valuations of underlying securities in the funds. Funds are then ranked so that subscribers can know which alternative energy funds are the best value today.

Other articles in the February issue include:

• Shining a Light on Solar Stocks, a segment which examines what happened to solar stocks last year, and where the best opportunities are now.




• A profile of EMC Corp. (EMC), a high-quality company in the business of data management that is set to profit with the build out of the smart grid.




• Reporting on the surge in value of stocks in the Paradigm Portfolio since the start of 2012.

Thank you and we hope you enjoy your free issue of the Roen Financial Report.

Below is a reprint of an article in the Burlington Free Press where I  ask Mayoral candidates environmental questions affecting Vermont’s beloved city.

Photo credit: JOEL BANNER BAIRD, Burlington Free Press

Burlington is full of dichotomies when it comes to environmental issues. Being the largest city in Vermont, there is not a lot of the natural world left to provide habitat for animals and respite for people.

It is also, however, on the shores of Lake Champlain, which is one of the most important aquatic resources in the Northeast. The Burlington waterfront offers a unique and precious location for locals and visitors to enjoy a world-class waterfront park experience.

Burlington is looked at as a growth center, and rightly so. It is wholly appropriate to focus residential and commercial development to maintain a vital downtown, which at the same time avoids the suburban sprawl that could occur from similar developments in other areas.

But living in this urban environment requires an adequate number of local parks, open spaces and natural areas, which are crucial to the quality of life we all enjoy here. Since Burlington is the urban core of Vermont, it is also critical for the city to try to reduce its environmental impact on the lake, ground and atmosphere. Burlington has done much in these regards, including creating a Climate Action Plan, passing a comprehensive stormwater ordinance and implementing efficiency programs through Burlington Electric.

There remains, however, much to be done.

For Burlington, as in many places, the goal is to strike a balance between growing the downtown, continuing to offer a high quality of life and reducing our carbon footprint.

I polled people active in the environmental community (particularly the Burlington Conservation Board) to help create a list of questions for the candidates to address in the current mayoral campaign:

• In an effort to reduce fossil-fuel consumption, what would your administration do to:

a) Encourage pedestrian and bicycle transportation?

b) Increase the use of public transportation?

• In a related question, what would you do to reduce the amount of cars on the road, which would not only decrease pollution but would ease traffic congestion and reduce parking needs? Specifically, how would you address:

a) Reduction of single occupancy vehicles?

b) Establishment and utilization of park and rides and/or capture lots?

• Burlington has a fantastic park system managed by a hardworking staff. Some questions, though, remain:

a) How would you work to ensure that adequate land for parks, trails and natural areas will be provided for as Burlington grows?

b) How would you balance budgeting for a high-cost skate park with the other park priorities that need to be met?

c) In general, what would you do to create a better input and oversight process for large-ticket capital improvement is our parks?

d) Burlington City Arts is creating a new master plan for the future of City Hall Park. What is your vision for this important urban park? Would you like to see it become more of a public square, with lots of events and activities, or create more of a green oasis as a respite for the bustle of downtown?

• Considering the current Downtown & Waterfront Plan that is being written, what is the right level of density (housing and related businesses) that should be built in downtown Burlington in order to reduce transportation costs and curtail sprawl in other areas?

• Considering this plan, what is your vision of the Burlington waterfront?

a) Do you believe preserving the park-like character is desirable for the waterfront area, or would you like to see it more developed?

b) What would you do to create a process to determine future uses of the waterfront? How would you include key players in the community in this discussion, including park users, nearby residents, city departments, boaters and others?

c) Considering the expected increase of development on the waterfront due to the Moran Plant redevelopment, are you willing start to start a dialog of uses for the “North 40?”

Other questions that came up include:

• What is the best way to continue to manage and utilize the $1.3 million in American Recovery and Reinvestment Act funding the Department of Public Works received for stormwater improvements?

• As mayor, what strategies would you focus on in the Climate Action Plan, which has the goal reducing greenhouse gases to 20 percent below 2007 levels by 2020, and 80 percent below 2007 levels by 2050?

• What can Burlington do to weatherize more homes?

• Driveway sealants that use coal tar have been proved to contain 100 times more in toxic PAH’s (poly-aromatic hydrocarbons) than asphalt-based sealants. What would you do to limit coal-tar-based driveway sealants?

I look forward to an interesting and lively debate on these and other issues important to Burlington.

Harris Roen is a member of the Burlington Planning Commission. He publishes the Roen Financial Report and RoenReport.com, a financial newsletter/website that focuses on investments in alternative energy companies. He also is a consulting forester, working with private landowners throughout northern Vermont to manage their woodlands.

As unlikely as it sounds, the U.S. military may be the group that turns the tide on America’s dependence on foreign oil. Military planners are realizing that traditional fossil fuel based operations increase on-the-ground risks, while at the same time benefiting economies that are not necessarily friendly to U.S. interests. Because of the military’s huge purchasing power, alternative fuel producers would have an enormous market to supply. According to Navy Secretary Ray Mabus:

“America’s long-term national security depends upon a commercially viable domestic biofuels market that will benefit taxpayers while simultaneously giving Sailors and Marines tactical and strategic advantages.”

Military strategists may not be out to save the planet, though that would be a lovely side effect.

The Navy spends $4 billion a year on petroleum based fuels. The Air Force spends $8 billion. Total petroleum expenditures for the entire Department of Defense are between $16 and $18 billion. That’s more money than Maine, New Hampshire and Vermont spend on oil combined! With an oil bill that big, the military needs options. The Air Force, for example, will have all its aircraft certified to use biofuels in just two years. The trick, then, will be to help advance market forces until biofuels are cost competitive with fossil fuels. This is not easy, since biofuels refineries can cost hundreds of millions of dollars to get up and running.

To address this, President Obama recently announced that the Navy, the Department of Agriculture and the Department of Energy will invest over half a billion dollars over the next three years to help such an effort. The goal is to construct new biofuel plants, or retrofit older refineries to become biofuel producers.

As highlighted in the October issue of the Roen Financial Report, Honeywell International (HON) is a leader in alternative fuel research and development. Honeywell has plans to license its refining technique to Valero Energy Corporation (VLO) and Darling International Inc. (DAR), who are building a $368 million biofuels plant in Louisiana (Honeywell is one of the Paradigm Portfolio companies of the Roen Financial Report).

Biofuels are not the only form of renewable energy being aggressively pursued by the military. Anything that can reduce the number of fuel convoys—and the real risks associated with transporting them—is a plus for field operations. Having biofuels be the focus of military planners, however, could be the leverage needed to tip the scales and make biofuels more cost competitive with oil.

Despite fears of a recession and an economic slowdown, investment activity in alternative energy companies is on the rise.

A recent report from the Cleantech Group confirms that venture capital investments in renewable energy for the third quarter of 2011 were up 12% from this previous three months. Total investments were $1.98 billion, which was fully 23% higher than that of the same quarter last year.

North America had by far the largest representation, making up over three quarters of the venture capital invested. The Asia/Pacific region invested 14%, and Europe/Israel accounted for 10%.

What I find most interesting is that Solar was displaced as the largest area of alternative energy investment. Instead, Energy Storage topped the list of investment sectors, garnering $514 million, or 42% of venture capital spent (see chart below).

42% of venture capital investment was in Energy Storage.

This is a significant change, pointing to a broader interest in development of the smart grid and electric vehicles. Readers of the Roen Financial Report can find good opportunities for publicly traded stocks in these areas, including General Electric (GE) and Fuel Systems Solutions Inc (FSYS).

You can read a more detailed analysis of venture capital investment by alternative energy companies in the Cleantech press release.

I get very excited when I picture the clean-energy contribution of offshore wind. According to the U.S. Department of Energy, the generating potential of offshore wind equals the entire generating capacity of the current U.S. electric system! And that’s just in areas with less than 100 feet of water. If you include all of the potential offshore wind capacity, it increases to four times the current U.S. electrical generation!.

Offshore wind turbines of the shores of Denmark

The upside of offshore wind is that it has a much smaller environmental footprint, so it is hard for locals to justify opposition to these projects. The downside offshore wind is it is more expensive to develop than onshore. But if it’s possible to build offshore oil rigs that drill in a mile of water, then surely technologies for offshore wind will continue to improve.

It is no wonder, then, that in September the U.S. Department of Energy awarded $43 million to stimulate development offshore wind development. It funded 41 projects in 20 states in areas that will advance offshore wind technologies and remove market barriers. For example, $6.7 million is going toward improving modeling and analysis tools specific to marine environments in order to improve design and cost estimates.

I also read with interest about the sale of a privately held German company, BARD Holding. BARD is one of the biggest players in offshore wind. This could be a huge addition to any company’s portfolio, as there is no doubt that offshore wind will be a growth industry. Bloomberg reports that General Electric (GE) may be interested in BARD, or another large buyer in Asia or Europe.

Either way, offshore wind offers an exciting growth opportunity in alternative energy.