With the financial markets in turmoil, and a major renewable energy initiative being undertaken by the new Obama administration, major attention is being focused towards developing and implementing a comprehensive energy production and carbon emissions strategy for the United States.
This major paradigm shift is leading the politicians in Washington and the capital markets to attempt to develop and implement a credible energy plan for the United States. Unfortunately, all efforts to date have been flawed and billions of dollars in taxpayer capital is being wasted.
As a senior energy industry executive who has deregulated many energy products and markets in the United States, Europe and Asia, Mr. Miller has increasingly expressed his concern for the misguided direction that the Obama administration and the Democratic leadership has been taking evidenced by the cap-and-trade bill, called the American Clean Energy and Security Act recently passed by the Congress and other multi-billion dollar handouts for a renewable energy industry not equipped to manage nor deliver the promised results.
Mr. Miller who has a long history of implementing bipartisan and free market views in the energy industry believes the multi billion dollar Obama stimulus and cap-and-trade bill will be wasted with no meaningful change to the reliability and re-powering and re-fueling of US power generation industry and developing sustainable efficient energy production.
The only true proven method of changing energy production is through market driven technology in fuels and efficiency gains. This must be driven by venture and risk capital to finance and judge the winners and losers.
Mr. Miller and other disciplined investors do not intend to invest in the renewable energy sector following the short-term investment drive expected to be created by flawed policies created under the current Obama Administration.
Seasoned investors like Mr. Miller will continue to wait on the sidelines during the short-term boom period and will look to step in and buy failed renewable energy assets at substantial discounts to original cost when the renewable sector flounders in the very near future.
Mr. Miller believes that market will, in a short period of time, become littered with uneconomical renewable energy projects, similar to the illiquid and toxic real estate assets currently held by large banks and hedge funds.
Mr. Miller was one of the first senior energy executives to call the ethanol and bio diesel boom and bust three years ago and was quoted saying at the time, "It is a clear demonstration that government handouts simply do not work, and billions of dollars of investor capital were lost."
Seasoned and disciplined energy executives have begun securing development sites and options for gas and coal plants currently on the wayside in preparation for the next build and re-power cycle which is eminent. Venture capitalist should be taking the risky bets on new power generation technology and other renewable ventures, not the US government.
Who wins with the government renewable energy hand outs embedded in the stimulus package and the cap and trade bill? As always, the investment bankers have all geared up for the hand outs by expanding their respective renewable energy practices and started peddling their wares including project finance services, arrangement of IPO's for new renewable companies (most of which will fail shortly after being taken public) and carbon emission trading and hedging businesses, among other services.
The tag along corporate law firms have done the same and well as all of the major consulting firms. These financial institutions, law firms, and consulting firms will be the short term financial winners as service providers for fees.
The losers will be, as always the pension, insurance, endowment, and retail investors who directly or indirectly invest in the renewable energy sector during the boom period and then get stuck "holding the bag" when the bust comes, especially when the financial sponsor firms dump their renewable energy deals that they sponsored and financed.
Finally the biggest long term winners will be the vulture and distressed investors like Mr. Miller and other disciplined investors, who will be waiting on the sidelines during the short term boom period and will look to step in and buy assets for pennies on the dollar when the renewable bust comes in a few years. Thus the biggest winners will ultimately be the distressed investors, much like the current US real estate crisis, which the US Government is financing.
The Government will do the same in the Renewable energy sector when the bust comes as they will have no choice but to bail out the renewable energy sector.
SOURCE VBCC
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