Tuesday, August 04, 2009

Opportunity in Crisis

Last week the New York Society of Securities Analysts sponsored a mid-day event billed as Crisis of Opportunity: Carbon Trading and Green Energy. The featured speaker, Don Carli of SustainWorldComm, made a strong case for Life Cycle Thinking and Assessment as a valid approach to sustainability analysis - i.e. energy consumption or carbon emission - of just about any economic process from communications to manufacturing. Considering the fact that at the present rate of fossil fuel consumption we only have about forty-two years of oil supplies, it is probably a good idea to get out the flow chart and calculator and start crunching numbers.

What I found heartening about the presentation is that there are any number of novel, but highly workable solutions available that would both reduce fossil fuel consumption and carbon emissions. It is hard to argue with a two-for-one offer.

For example, Carli described the abandonment of paper mills in the U.S., largely due to escalating labor costs and the unwillingness to deal with ever more stringent environmental regulations. It turns out paper mills are a good place to co-locate biofuel or bioenergy plants of various types with high energy consumption facilities like data centers. Data centers, just so you know, use up as much energy as aluminum manufacturing plants. This could be why Google, Inc. (GOOG: Nasdaq) recently acquired a paper mill where it ostensibly plans to co-located a server center.

Carli also described innovations in electronic circuitry that eliminate the need to lay down silicon in those thick circuit boards. Indeed, conducting polymers can be printed on a very thin substrate much like printing on a piece of paper. The struggling printing industry is the big winner here as they seek to replace business from newspapers and magazines that have increasingly favored on-line delivery of publications. Chip manufacturers have already begun using conductive polymers. For example, Intel’s (INTC: Nasdaq) Desktop Board CPU VR uses conductive polymer capacitors providing, according to Intel, "outstanding frequency characteristics, as well as reliability and durability."

Underlying both of these two examples is a detailed chart of inputs in the form of energy and materials and outputs in the form of usable products and emissions. The objective, of course, is to turn out a net increase in usable products without a net increase in either energy use or emissions.

Therein lies the opportunity - an opportunity afforded by crisis - to look at the old with under a new lens to see new commercial enterprise. It gives investors strong incentive to look at old line companies for how they can evolve into sustainable enterprise.

The author of the Small Cap Strategist web log, has net long position in INTC.

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