This piece was authored by Matthew Klippenstein, a Vancouver-based renewable energy consultant. Since 2013 Matthew has chronicled the Canadian electric vehicle sector for GreenCarReports.com; as time permits, he also co-hosts CleanTechnica.com’s monthly(ish) Cleantech Talk podcast.
I began working in cleantech in 1999, so I got to see the dotcom bubble inflate and then pop, from the inside. My stock options allowed me to pay off my student loan with a few thousand dollars left over, so I did what most overconfident young male professionals do when they suddenly come into money: lose it in the stock market. (You know how they say women are better investors than men? It’s true.) You could say that once I paid off my university tuition, I began paying “investing tuition”. Now, that’s the kind of tuition you want to pay in your 20s or 30s – those lessons get a lot more expensive in your 40s or 50s when you probably have more money to lose, and less time to recover.
So, a few years after the bubble, I found an investing book someone at work had purchased, then forgotten about. It was called Top 50 ethical stocks for Canadians and it was an eye-opener – the companies included AstroPower, my then-employer Ballard Power Systems, CanWest, Creo, Fannie Mae, JDS Uniphase, Nortel, Polaroid, and Westport, among others. Some of them went bankrupt; others got taken over at a discount, and the survivors trade at a few percent of their bubble levels. It was an important lesson that popular stocks aren’t always prudent investments. It’s one of the reasons I won’t invest in Tesla.
I won’t invest in clean energy stocks right now, but I will invest in clean energy projects.
I’m very, very optimistic about the future of the cleantech industry; one of the sector’s titans calls it the biggest wealth creation opportunity of the 21st century, and he’s right. The (very modest) RESP account we have for our kids is in a fossil-fuel free mutual portfolio. But I’m also non-committal about the near-term future, so we’ve left some money on the sidelines.
See, in the US, stock markets have gone up steadily since 2009 – the second-longest bull market since World War II. Nothing goes up in a straight line forever. If this was 2010, 2012, 2014, sure, I’d be buying. But 2017? At some point markets will drop – it’s statistically inevitable. If markets fall and all your money is in stocks, that would be discouraging, especially if you’re worrying about your own job. But if markets fall, your employment situation stays stable and you’ve got some cash handy, that’s exciting – who doesn’t like shopping at a discount?
I want investments that fit my ideals and aren’t correlated with stocks: Green Bonds fit the bill.
As long as the organization issuing them is stable, bonds can be a nice, predictable investment. The great thing about Green Bonds is that no matter what’s happening in the broader economy, efficiency measures will generally save people money. That makes it possible for companies like CoPower to sign contracts to pay the upfront cost of green projects in return for a slice of the savings generated over time. After company expenses are deducted, those cash flows go towards paying interest to investors. If set-up properly, and spread out between a variety of projects, these should be less risky than most corporate bonds.
It probably helps being an engineer in the clean energy industry, so I’m familiar with the technologies in the projects. People should never invest in anything they don’t understand, especially if they’re, ahem, overconfident young male professionals.
I should probably point out that I’m an aspirational idealist – I have trouble living up to my ideals. Our other investments are fossil-fuel free, but there’s mining in there, so they probably wouldn’t be “Sierra Club-approved.” The CoPower Green Bonds are our only green investment at the moment outside the kids’ RESP, but there’ll be more. It wouldn’t be prudent to put too much of our savings in them (or in any other single investment, for that matter) but they’re a solid addition to our portfolio and I’ll be looking for chances to purchase more over time.
Oh yeah, about Tesla…
Since I chronicle the electric car market, people sometimes ask me if I’ve invested in Tesla. I haven’t, and won’t, partly because I’ve learned that I’m terrible at picking stocks.
Tesla’s stock has shot up like a SpaceX rocket recently, but that’s when things are most dangerous; what goes up really fast tends to go down really fast, too. Even if Tesla was profitable (they aren’t) and as efficient as Toyota (nope) I’d stay away, because they’re a 100,000-car-per-year company being treated like they’ve already mastered the art of making millions. Anyone who thinks the other automakers are dinosaurs should realize that dinosaurs had an unbelievably good run, and kept the mammals down for a long, long time (185 million years, in fact).
In general, cleantech businesses are positioned to prosper as we shift from fossil fuels to renewable energy in the coming decades. It’s tough to fight economics, and the economics of renewable energy are damn good, and getting better every year as “learning curves” drive costs down in those industries. It’s not just hippies who are fighting “the man” now, it’s yuppies who are aspiring to dethrone older technologies to become the new “man”. A lot of them will fail, but some will succeed richly indeed.
As it stands, I’m comfortable waiting for the stock markets to drop a bit before gradually moving our investments into fossil free mutual or index funds. So when newspaper headlines scream “recession”, I’ll at least have that to look forward to. For now, Green Bonds check all my boxes, and if we have the luxury of being able to invest again when they’re next offered, we’ll strongly consider doing so.
This client testimonial was solicited by CoPower and may not be representative of the views of investors other than Matthew Klippenstein.