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Unquestionably, the world is still heavily dependent on fossil fuels. In fact, according to the Energy Information Administration, over 80% of the energy supplied worldwide in 2005 came from the burning of these fuels.
Fossil Fuels
Fossil fuels are considered to be non-renewable resources because they are being consumed at a faster rate than they can be formed. This is one of many factors in recent years that have precipitated a global shift towards the development of renewable energy sources. Among the other factors are: a general rise in the price of energy, global warming, and multi-national security concerns over energy.
Wind, Geothermal, Biomass and Hydroelectric Energy Technologies
The ability to generate electricity from renewable energy sources has been around for quite some time. In some applications, wind, geothermal, biomass and hydroelectric energy technologies are already being utilized in an economically viable manner. Meanwhile, solar energy is expected by many experts to become cost-effective within several years.
Solar Energy Technology
Travis Bradford, head of the Prometheus Institute for Sustainable Development, believes that solar energy is already partially cost-effective. Bradford says that solar energy technology is currently handling part of the daytime electricity needs and that photovoltaics will eventually dominate the landscape by transforming the industrial-sized electricity grids into smaller, more efficient grids.
In the area of renewable substitutes for transportation fuels, biofuels are being mandated by many countries to account for at least 10% of overall fuel consumption. In fact, Brazil uses ethanol from sugar cane to satisfy over 30% of its automobile fuel demands.
Renewable Energy Investing and Socially Responsible Investing
Although there are many technological advances needed to fully transform the world’s energy production into renewable energies, the investment world has already taken notice. The New Alternatives Fund began operations in 1982 and markets itself as “the first mutual fund with a significant concentration in alternative energy.”
The New Alternatives Fund is an example of “socially responsible” investment, which is a mutual fund that focuses on companies who are believed to benefit the environment in some manner. Other companies who offer this type of product include: Calvert, Pax World, Parnassus Investments, Green Century Funds, and Winslow Management Company.
Despite being competitors, these companies do share several common beliefs. One is the awareness that, in the short-term, this type of investment can be very volatile. The other is an overwhelming optimism that the global shift towards renewable energy can potentially become a financial bonanza to long-term investors.
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