Higher energy prices alone could be the driver that moves these companies into the mainstream economy, but a number of legislative or regulatory actions could jump-start this sector and ignite rapid expansion and job creation.new energy economy, green investment, green legislation, energy investment, clean tech investment, clean-tech investment, Tennessee, Wunderlich Securities, Andrew Geshwiler

Andrew Geshwiler

English

Research Papers in Economics

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nother summer of scorching temperatures 
and soaring utility bills is quickly coming 
to a close. For Tennesseans shoveling their 
disposable income into the cranked-up air con-
ditioner, it really doesn’t matter if this is a short-
term weather pattern or a longer-term change of 
climate. What really matters is the question of 
how long we can we keep this up. Can we con-
tinue to shovel on a little more coal to keep the 
AC chugging? In this difﬁ  cult economy, can we 
afford to keep paying ever-rising energy bills? 
Can our environment keep up with the demands 
that our ever-increasing energy appetite requires 
of it?
At Wunderlich Securities we see a long-term 
path that places greater and greater emphasis on 
energy efﬁ  ciency and non-carbon based sources 
of energy. This trend will play out over time in 
the open marketplace as emerging green tech-
nologies become increasingly price competitive. 
Two key factors are at play here:  
■   the increasing global demand placed upon 
existing, conventional energy resources; and 
■   efﬁ  ciencies and economies of scale that will 
be realized as green technologies mature.
Wunderlich Securities initiated equity research 
for new energy economy investments in 2009. We 
follow companies involved in waste-to-energy, 
alternative energy, clean tech, smart grid, solar, 
wind, and energy storage. We seek to identify 
those companies that have superior technologies, 
solid ﬁ  nancials, and a history of solid execution. 
We feel that it is important that investors seeking 
to participate in this market sector be mindful of 
some important facts:
■   Investing in new energy economy stocks is 
not the same as ethical or socially responsible 
investing.  
■   Government spending on the new energy 
economy will be important as this sector 
ﬁ  ghts to achieve cost parity.
■   Companies don’t invest in green technology 
just to make a statement—they do it to enhance 
proﬁ  ts. Every single Fortune 500 company is 
currently undertaking some program to increase 
their efﬁ  cient use of energy or materials.
■   This is not a fad. The wind industry now em-
ploys more Americans than the coal industry. 
This is a market measured in billions, and it 
will only grow.
■   New energy economy stocks are highly cor-
related to traditional energy shares. If you 
already invest in traditional energy names, 
new energy economy stocks will not help you 
achieve greater diversiﬁ  cation. New energy 
or clean-tech portfolio exposure is statisti-
cally equivalent to overall energy exposure.
Energy is the world’s largest market by revenue, 
and it is a wonderful, magical thing. With the 
ﬂ  ick of a switch, a light comes on. Gas tanks 
can be ﬁ  lled on almost every corner anytime day 
or night. It is available almost without thought. 
But there is a great deal that goes on behind that 
light switch and that gas pump. Most consum-
ers don’t realize that Tennessee Valley Author-
ity (TVA) generates nearly 70% of its electricity 
from coal. We see all those dams and think that 
surely much of our electricity comes from hy-
dropower. Nope — a mere 6%.
  
Most folks ﬁ  lling their car at the pump don’t 
know the source of that oil. It comes from that 
most volatile place, the Middle East, right? 
Actually, it doesn’t. Most of our imported oil 
comes from Canada and Mexico. Saudi Arabia 
is number three. That oil is getting increasingly 
difﬁ  cult and expensive to ﬁ  nd, drill, and process.
The western world used to drive the energy mar-
kets. Not anymore. It is now a global marketplace
for energy. Emerging markets throughout the 
world are struggling to their feet, eager to partici-
Higher energy prices alone could be the driver that moves these companies 
into the mainstream economy, but a number of legislative or regulatory 
actions could jump-start this sector and ignite rapid expansion 
and job creation. 
GREEN INVESTMENT AND LEGISLATION
by Andrew Geshwiler
Tennessee’s Business Vol. 19, No. 3     October 2010
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EOctober 2010     Tennessee’s Business Vol. 19, No. 3
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continued from page 5
Andrew Geshwiler is a vice 
president with Wunderlich 
Securities in Franklin and a 
member of Tennessee Business 
Leaders for a Clean Energy 
Economy.
pate in the global economy. The fastest-growing 
car market is in China. In India, car sales grew 
38%, year over year, for July 2010. Millions of 
Chinese and Indians are purchasing their ﬁ  rst au-
tomobile and, at the same time, increasing global 
demand for gasoline. Every successful, growing 
economy, ours included, is built upon the steady 
supply of affordable energy. Every day American 
consumers are competing with consumers from 
China, India, and Indonesia to set the price on 
that last drop of oil, that last lump of coal, that 
last vapor of natural gas.
What if there’s a better way? What if we re-
fuse to be hidebound to conventional think-
ing? What if we could maintain our lifestyles, 
our air conditioners, and our personal trans-
portation? What if we could take back our 
economic and energy security from foreign 
states and chaotic markets? What if we could 
do all that while improving our environment?
We can, and the companies involved in the 
new energy economy will be the leaders in 
this economic transformation. Higher energy 
prices alone could be the driver that moves 
these companies into the mainstream economy. 
However, there are a number of legislative or 
regulatory actions that could jump-start this sec-
tor and ignite rapid expansion and job creation.
As we all know, political divisions in the Sen-
ate have delayed efforts at comprehensive en-
ergy and climate legislation that puts a price on 
carbon. However, as we’ve seen demonstrat-
ed at the state level, it is possible to establish 
standards for renewable energy and energy ef-
ﬁ  ciency for residential and commercial build-
ings. The efforts of our forward-thinking states 
are laudable, but they have created a patchwork 
quilt of varying standards and regulations. Uni-
form national standards for renewable energy 
and energy efﬁ  ciency for residential and com-
mercial buildings would create a stable regu-
latory foundation that would provide the con-
ﬁ   dence needed for investors and businesses 
alike to make sizable, long-term investments.
According to a recent study by Georgia Tech 
and Duke University, the aggressive adoption 
of energy-efﬁ  ciency programs would lower util-
ity bills by $1.6 billion and create 15,600 new 
jobs by 2020 in Tennessee alone. Imagine the 
economic impact if that were done nationwide. 
Renewable energy standards would be just as 
impactful, creating an additional 20,000 jobs 
in Tennessee and increasing real gross domes-
tic product by $900 million. These are real jobs, 
real economic beneﬁ   ts, real revenues. They 
will come. Putting a price tag on carbon and 
establishing national standards for renewable 
energy and commercial and residential build-
ing energy efﬁ  ciency will speed their arrival.
Andrew Geshwiler, a vice president with Wun-
derlich Securities in Franklin and a member of 
Tennessee Business Leaders for a Clean Energy 
Economy, can be reached at 615-567-2093.

Green Investment and Legislation: Creating Jobs and Revenue

http://frank.mtsu.edu/~berc/tnbiz/green/geshwiler.pdf

Green Investment and Legislation: Creating Jobs and Revenue

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