Tuesday, March 19, 2013

Energy: Who will lead the charge?

Last week had President Obama talking about the United State’s energy plan going forward and left many analyzing how it would affect energy sector stocks in the near future. Meanwhile, China was dealing with even more news of environmental woes stemming largely from it’s currently heavy coal-based energy strategy. These two major, and perhaps more importantly competing, international economies are rushing to further develop their domestic energy. China is on it’s way to becoming the world’s biggest oil importer, rumors are spreading about the Keystone XL pipeline being approved in the next few months, and both countries are actively looking into more “green” sources to meet their energy needs.

China is surging in domestic auto sales but also blanketed in thicker and thicker air pollution, which has led to their government offering tax incentives and free license plates to people buying electric or hybrid cars. While this policy only applies to chinese-made electric cars, foreign businesses such as General Motors (GM) and Tesla Motors (TSLA), are hoping this will soon change as the Chevy Volt and the Tesla Roadster have been selling in Beijing. Meanwhile, their solar industry is hitting some road bumps with Suntech, once touted by China’s communist government as the world’s biggest solar panel manufacturer, defaulting on a $541 million dollar bond. How China develops it’s renewable energy industry this year will be noticed by potential investors around the world who will gauge the strength of similar renewable startups.

In America, electric cars are dealing with a metaphorical slow start. Hybrids and electric cars have been in the market for some time now and there is still very little consumer interest to show for it. While the up-and-coming business Tesla and it’s CEO Elon Musk have been generating a lot of hype, it won’t matter unless they can live up to their promises of announcing profit for the first quarter of 2013. If that happens, there is potential for investors to start following Musk’s more ambitious aspirations for a widespread solar grid. His own investment into SolarCity (SCTY) may help undo some of the pessimism caused by the major flop from last year with Solyndra.

Whether the major changes in energy come from oil, solar, or something else, both countries are looking to lead the charge. While the aggressive competition has lead to some missteps and will likely continue to do so, there is incredible potential for growth going forward in energy.

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