Related tickers: Exelon Corporation (NYSE:EXC), Duke Energy Corp (NYSE:DUK), Heckmann Corporation (NYSE:HEK), First Solar, Inc. (NASDAQ:FSLR), General Electric Company (NYSE:GE)
Sometimes, investing in the energy space can be an internal battle between doing what’s best for your wallet and what’s best for the environment. While many of us may want to get in on the ground floor of the next great alternative-energy idea, it’s hard to pass up the financial stability of a high dividend-yielding oil or coal company.
Fortunately, there are some investment strategies that can bridge the gap between these two competing ideals. Let’s look at three ways you can invest in the energy sector and still get a decent night’s rest.
It’s OK to invest in natural gas
Yes, natural gas is a fossil fuel. And yes, it does emit carbon dioxide. But when you compare it with the other fossil fuels we burn, it is much, much better. When compared with a coal plant, a natural gas-fired plant will emit half the carbon dioxide, one-third the nitrogen oxides, 1% of the sulfur dioxides, and almost no mercury. Consider that since 2007, the U.S. has reduced its total carbon dioxide levels to where they were in 1994, thanks mostly to a shift from coal-fired generation to gas generation.
Want to know the best part about this shift? It’s happened almost exclusively because of the price advantage that natural gas has over coal. The surge in U.S. gas production in the past couple of years sent gas prices to 12-year lows last year. Although the price has climbed since then, it’s still cheap enough that many utility companies are still using it in place of coal. Exelon Corporation (NYSE:EXC) CEO Christopher Crane has said that U.S. utilities will shut down 19 gigawatts’ worth of coal plants between now and 2015, and former coal-heavy generator Duke Energy Corp (NYSE:DUK) has plans to bring 2.8 gigawatts of new natural gas-powered plants online by the end of this year.
Natural gas isn’t the perfect solution, but in terms of environmental impact, it’s definitely a better solution than coal. If we can reduce carbon emissions in a way that’s less expensive than the way we are doing it right now, that’s a win for all parties involved.
Scared of hydraulic fracturing? Pick the names that will clean up afterward.
Many people have voiced their concerns over the fluids used in hydraulic fracturing and the risks they may pose. Certainly, it would be a problem if these fluids were simply dumped, but the EPA mandates that fracking water disposed of either on the surface or in underground injection wells must meet the same requirements as municipal wastewater under the Safe Drinking Water Act. According to Chesapeake Energy Corporation (NYSE:CHK), it requires on average 5.6 million gallons of water to complete a well, and so the cost to use fresh water and dispose of it for every new well would be extremely cost-prohibitive. That’s why you’re seeing more and more exploration and production companies moving toward reusing fracking fluids and treating them for safe disposal.
