An Investing Lesson From Richard Branson

An Investing Lesson From Richard Branson
Motley Fool UK - UK
... Meanwhile, China Biodiesel (LSE: CBI) turns waste oil into biodiesel. The waste oil, which includes spent corn oil and animal fats ...
Green is now the new black. Politicians want to be seen to be green, car makers are making a special effort to promote their environmental side, and shopkeepers are trying to out-organic each other.

Business tycoon Richard Branson is keen to underline his green credentials, too. He has pledged that all future profits from his airlines and train company, which are estimated to be around £1.5b, will be invested in developing energy sources that will contribute less to global warming.

But how can we, like Branson, climb aboard the green bandwagon?

Green issues have been making their way into the UK stock market quite some time, and there are plenty of companies for investors to choose from. Take Alkane Energy (LSE: ALK) which captures methane from man-made sources to generate electricity. Recently, the company posted an 83% rise in half-year sales though operating losses widened because of higher costs at its German business Pro2.

AgCert International (LSE: AGC) is another company involved with methane. It maintains and operates animal waste systems called biodigesters located at livestock farms. By harnessing the methane produced, AgCert can generate millions of carbon permits that it can subsequently sell through the market.

Meanwhile, China Biodiesel (LSE: CBI) turns waste oil into biodiesel. The waste oil, which includes spent corn oil and animal fats, is collected by suppliers and turned into biodiesel. In September, China Biodiesel reported an interim pre-tax profit of £1.2m, and its house broker reckons that annual profits may come in at £2.6m.

Elsewhere, Renova Energy (LSE: RVA), which operates in the USA, produces bio ethanol from corn. The fuel from the company, which is already profitable, is mixed with petrol to reduce the country's reliance on traditional sources of energy. The company points out that in addition to reducing harmful exhaust emission, the raw materials are completely renewable.

Other companies involved in alternative energy include D1 Oils (LSE: DOO) and Biofuels (LSE: BFC), which is the largest producer of biodiesel in the UK. Interestingly, Biofuels reckons that it plant in Teesside alone will produce enough biodiesel to meet a quarter of the UK's current Road Transport Fuel Obligation (RTFO) target for diesel by 2010.

Significantly, it is the Government's emphasis on RTFO that may be the main driver for alternative fuels. This directive requires fuel companies to add 5% biofuel to all petrol and diesel sold on their forecourts by 2010.

However, there may be a sting in the tail. Renewable energy companies are exposed to sharp falls in world oil and gas prices in addition to fluctuations in agricultural prices. And as crude prices retreat from their all-time high, and palm oil touch a two-year high, investors need to be aware of the risks of green fuels.

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