Filed under: Hybrid, Hydrogen, Santa Monica Alt Car Expo

The annual Alt Car Expo is coming up this weekend at the Santa Monica Civic Auditorium and Vision Industries will be on hand to display its Tyrano semi tractor. This is no typical smoke-belching, diesel-powered semi. In fact, the only thing emitted by this hauler is water vapor.

The Tyrano is a plug-in hybrid with a hydrogen fuel cell. The truck uses 33 kg of compressed hydrogen for a 340-mile range. It’s not known at this point how far the battery can propel the truck on a charge. The Tyrano is being built as part of a program to replace 16,800 diesel-powered trucks in the port of Los Angeles over the next several years. The first production units are expected in the first quarter of 2010.

[Source: Vision Motor Corp]

Continue reading AltCar 2009: Vision Industries to display fuel cell truck at Santa Monica

AltCar 2009: Vision Industries to display fuel cell truck at Santa Monica originally appeared on Autoblog Green on Wed, 30 Sep 2009 13:04:00 EST. Please see our terms for use of feeds.

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Turning water into wine is said to be a miracle, but how about turning wine (or at least wine waste) into hydrogen? Penn State University’s Dr. Bruce Logan is working with a Napa Valley winery (the Napa Wine Company) to turn their wine pulp and waste water in hydrogen.

According to Dr. Logan, a single Napa winery can use 10,000 to 12,000 gallons of water a year at a cost of $100,000 in water to process wine waste. So, in an effort to help wineries become more sustainable, Dr. Logan has set up a small scale organic matter hydrolysis plant onsite.

Bacteria that grow along some special brushes placed in the wastewater create electrical current. Hydrogen gas is also created as a byproduct of this bacterial process and can be used to run the wine waste water system via fuel cell.

Dr. Logan says that it would take 1/10th of the energy in the waste water pond to run the equipment that powers the treatment. The extra hydrogen could be used to power farm equipment, industrial equipment, the winery’s facilities or even be sold for use in hydrogen cars and other H2 vehicles.

Now, I’ve heard of solar wineries before as a way to help the winemakers become more green and sustainable. Adding hydrogen power to the green energy mix would be another additional step that wineries could take to reduce their carbon footprint, be sustainable and produce environmentally friendly wine start to finish.

Turing water into wine may still be a miracle, but turning wine waste water into hydrogen on a large scale is just a few years away.

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The United States Senate possesses the key to address the most critical national security issue that the country presently faces. Will the Senate act decisively and without delay to protect our vital national interests or will it dither as Iran builds a nuclear bomb and further destabilizes the world?

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U.S. Senators John Kerry (D-MA), Chairman of the Foreign Relations Committee, and Barbara Boxer (D-CA), Chairman of the Committee on Environment and Public Works, today introduced the Kerry-Boxer legislation to create clean energy jobs, reduce pollution, and protect American security by enhancing domestic energy production and combating global climate change.

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Images: Zipcar

Car-Sharing Goes High-Tech
Car-sharing is a great way to have most of the benefits or owning a car without most of the downsides. Zipcar, one of the heavy-hitters of the car-sharing world, has released a new iPhone and iPod Touch free app that will make interacting with the company’s reservation service and vehicles better than ever, and that’s good news because the more attractive and convenient car-sharing becomes, the more cars we can take off our roads…. Read the full story on TreeHugger

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Photo via Engadget

So Kindle seems to be bombing out among university students as a replacement for textbooks, at least in one trial run. But we mention that the Tablet from Apple could be a better solution since it is more interactive, and more familiar to anyone currently using an iPhone. And word on the street is that’s just where Apple is headed with the new device, along with revolutionizing newspapers and magazines. … Read the full story on TreeHugger

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Photo credit NASA via Discovery News

Of all the strange ideas I’ve heard, this tops the list. The amount of catalogued space debris within our planet’s orbit increased by nearly 50% since 2007, so DARPA wants to gather ideas for how to clear space junk from Earth’s orbit. James Hollopeter of GIT Satellite lends one idea – launch rockets full of water out to space. … Read the full story on TreeHugger

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An EAR on the reef in Kimbe Bay. Credit: Mark Eakin, NOAA via Nature Conservancy

Putting EARs in the water among the bustling life of coral reefs could help us monitor the health of coral reefs around the worlds. EAR is an Ecological Acoustic Recorder, a device developed by NOAA and the University of Hawaii, listens in on the sounds of coral reefs and helps determine the overall health and changing status of reefs. It looks to be a promising technology, and the first one to be… Read the full story on TreeHugger

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Tom Konrad, Ph.D., CFA

My Quick Clean
Energy Tracking Portfolio has produced unexpected out-performance. 
Is it because of high beta (β) in a rising market?

I recently asked why two portfolios which I had designed to track green
energy mutual funds ended
up out-performing them by a wide margin.  

This is the first of a short series of articles looking into possible
causes.  Could the portfolios be outperforming because the stocks they
contain rise more when the market rises (and fall more when the market falls)
than do the mutual funds they were designed to track?  In other words, are
they out-performing because of high beta (β) in a rising market?

A Beta Definition

From Wikipedia,

In finance,
the beta (β) of a stock
or portfolio
is a number describing the relation of its returns with that of the financial
market as a whole.^[1]

An asset with a beta of 0 means that its price is not at all correlated
with the market; that asset is independent. A positive beta means that the
asset generally follows the market. A negative beta shows that the asset
inversely follows the market; the asset generally decreases in value if the
market goes up and vice versa.^[2]

That’s a basic definition.  It’s worthwhile to note that β changes
for any stock or portfolio over time (usually slowly, but sometimes quickly in
times of market turmoil.)  Measured β will also vary depending on the
time increment used (are we interested in daily, weekly, monthly, or even hourly
changes of a stock with respect to the market,) and it will also vary depending
on which market index is used as a proxy for the market as a whole.  In my
recent article on hedging
using beta, I showed a graph with three measures of beta for my portfolio
against various market indexes.

Mathematically, if S is a stock (or portfolio) and M is the market index,
then

β = correlation(S,M) x
std.dev(S) / std.dev(M)

or

β = covariance(S,M)
/ variance(M).

Either formula can be calculated with standard spreadsheet functions.  I
gave an example using the first formula in my hedging
article, and a spreadsheet
using the latter formula is available here.  In both cases, the change in S will be β times the change in M, plus an error term
which is uncorrelated to the change in M.

Why High Beta Would Explain Out-Performance

I created my tracking portfolios at the end of February, which was,
co-incidentally, right before the stock market began its recent rise. 
From this graph,

you can see that both tracking portfolios have out-performed nearly every
possible benchmark.  In the first article in this series, I attributed the
difference between the two tracking portfolios to "winner-loser"
effects (hence the names of the portfolios.)  In theory, without these
effects, those portfolios should have produced returns approximately equal to
the average of the two.

Since the S&P 500 (my proxy for the market) gained 43% over the period in
question, while the mutual funds gained 56% on average, and the tracking
portfolios gained 80% on average, if β were the sole reason for the
out-performance, we would expect that the average mutual fund β would be
about 1.3 (=56%/43%) while the average tracking portfolio β would be about
1.9 (=80%/43%.)  There will be significant errors in these calculations
(recall the random error term and other caveats from the definition of β),
but we should at least expect that the β of the tracking portfolios is
higher than the β of the mutual funds.

In fact, I do not expect that the out-performance of the mutual funds over the
S&P500 will all be due to β.  In April, I argued that clean
energy in general was outperforming the market due to the greater political
support shown by the Obama administration compared to previous administrations,
something I dubbed the "Obama Effect."  If this is true, then
the β for the mutual fund portfolio will be less than 1.3, but β could
still explain the out-performance of the tracking portfolios if their β is
approximately 0.6 greater than the β for the mutual fund portfolio.

Calculating β

β for a portfolio is the weighted average of the β’s of the
portfolio’s components.  Furthermore, Yahoo! Finance provides some
pre-calculated β’s (from Capital IQ,
a  division of Standard & Poors), but not for all securities in my
portfolios.  Furthermore, I was unable to determine the market index used
to calculate the Yahoo! β’s.

I used the last 200 trading days of stock market data for the securities in
question, and the formula above to calculate β with respect to my market
proxy, the S&P 500, using an Excel spreadsheet.  Here are the results:

A Partial Explanation

The average β of the tracking portfolios is 0.3 more than the mutual
fund portfolio β, but we needed a difference of about twice that to explain
all the out-performance.  We also see the Obama effect here, which accounts
for the 13% out-performance of the mutual funds over the S&P 500.

My calculated β’s, plus the Obama effect on green stocks and funds, can
explain an average performance of the tracking portfolios of about 70% over the
time period in question, leaving about 10% of the out-performance
unexplained. 

As I hypothesized in the previous article, this out-performance could also
arise from the way I chose the stocks, which created a bias towards some Cleantech
sectors (mostly efficiency
stocks  and smart
grid stocks) when compared to the mutual funds.  It could also be the
mutual fund managers’ skill.  In either case, however, an out-performance
of 10% during seven months which have been as volatile as these last seven would
not be enough for me to reach any firm conclusions.  10% is small enough to
be a bias in my β calculations (recall that β depends on the choice of
index as well as the frequency of the data used, and it also changes over
time.)  10% could also be just luck.  

Since I won’t be able to show that any out-performance which remains is not
just luck, I see no need to continue this investigation.

An Inadvertent Discovery

It’s interesting to note that the β for the "Losers" is higher
than that for the "Winners."  In other words, I was wrong to
attribute the out-performance of the "Losers" portfolio to
winner-loser effects.  "Loser" out-performance is also explained
by β.  Why do the "Losers" have higher β than the
"Winners"?  Because the "Losers" were the
worst-performing of a group of stocks from 2/27/2006 to 2/27/2009, over which
period the S&P 500 fell 43%.  Since high-β stocks are likely 
to fall more than low-β stocks when the market as a whole is falling, my
"Losers" portfolio was biased towards high-β stocks.

None of this explains why the "Winners" portfolio also has higher
β than the mutual funds.  While the "Losers" were selected
with a high-β bias, the "Winners" were selected with a bias
towards low-β stocks.  We would therefore expect that the
"Winners" portfolio would have a β lower than the mutual funds
from which they were drawn.  

Here are some reasons that the mutual fund β’s are lower than the β’s
of their top holdings.

1. Mutual funds need to maintain a cash reserve in order to meet
   redemptions.  Cash has a β of 0, and so an allocation to cash will
   lower the funds’ β overall. For instance, the Calvert fund holds about
   4% cash.  Without the cash, the Calvert fund’s β would be 0.954
   rather than 0.916.  However, the funds would have to be holding about
   20% cash for this to be a full explanation.
2. The greater emphasis of my portfolios on energy efficiency and smart grid
   technologies does not account for the bias.  The average β
   for these companies in my portfolios was about the same as the portfolios as
   a whole.
3. The funds own a good number of diversified companies with exposure to
   green energy, but they do not own enough of many of these to put them in the
   top holdings of the funds.  One example would be Applied
   Materials (AMAT), a semiconductor firm with growing interests in
   solar.  Such firms will generally have lower β than pure-play
   firms, which is why I suggested readers invest
   in AMAT and nine
   other large companies with green energy exposure in the spring of 2008:
   I was concerned about a market decline (not that I had any clue how bad it
   would be) and low-β stocks are likely to fall less during declines.

Implication: More Bang For Your Buck

The discovery that the top holdings have higher β than the funds has some
implications for tracking portfolio creation.  In order to better match the
gains and losses of the mutual funds, we will need to invest less money. 
By holding some cash, β can be lowered.  Alternatively, by investing
the same amount, an investor can get more exposure to the positive
trends affecting green energy, such as peak oil and the advent of carbon
regulation.  

That’s why we’re here, isn’t it?

DISCLOSURE: Tom Konrad and/or his clients own AMAT, LXU, ELON, and
AMSC. The Guinness Atkinson Fund is an advertiser on his website, AltEnergyStocks.com

DISCLAIMER: The information and trades provided here and in the comments are for
informational purposes only and are not a solicitation to buy or sell any of
these securities. Investing involves substantial risk and you should evaluate
your own risk levels before you make any investment. Past results are not an
indication of future performance. Please take the time to read the full
disclaimer here.

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I heard this is a little old, but it fits into GreenOptimistic’s subjects, and, there sure are people who haven’t seen it.

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