How Much Will Obama Have for Alternative Energy?

Here’s what’s so tragic about the bailout of Fannie and Freddie, AIG, Citi and – coming soon – the auto industry: an article in today’s Boston Globe makes reference to a University of Massachusetts study last fall that said a $100 billion investment in clean technology could create two million new jobs over two years. That’s $50 billion less than what Barack Obama included in his energy plan during this fall’s presidential campaign.

Of course things have changed a bit. Credit is said to be flowing like a trickle from major banks, far too little to finance the expansion and even payroll plans of corporations. But then many of them have pulled in their spending for expansion plans and even current payrolls, as they react to what is being forecast as a coming recession to rival the Great Depression.

Fortunately Obama is still talking about investing in clean tech and the alternative sector as part of an economic stimulus package. The big question is whether or not he’ll have the money to do the job. If he does, perhaps we’re looking at a “Green New Deal” that puts people to work while boosting our energy infrastructure.

What does that mean for investors? Alternative energy mutual funds have had a miserable year, even by 2008 standards. According to data from Morningstar, they occupy the bottom eight performers among Morningstar’s socially responsible investing group.

But a couple of alternative energy fund portfolio managers whom I spoke with recently believe there are good reasons for long term optimism in this sector. One is energy security. Weaning the U.S. off of its dependence of foreign oil imports will make the country more secure. It’s really a common sense argument. We’re at war in the Middle East and the bulk of our oil imports come from that region of the country.

The second reason for the optimism is the building momentum to reduce carbon emissions and our use of fossil fuels to combat the global climate crisis. Public and private money is being invested in solar energy, hydro power and wind power, in addition to other sustainable energy alternatives and services.

Obama has yet to estimate how much his stimulus package will be when he finally takes office January 20. Green investors are hoping he’ll have enough for their sector.