Sectors & Stock Weightings
Sectors & Stock Weightings: WilderHill Progressive Energy Index (WHPRO) for start of Q4 2015. 45 stocks.
Each stock freely moves according to its share price after the rebalance;
*Banded stocks are those under $400 million in size and weighted at 0.5%.
Alternative Fuel – 19% Sector Weight (8 stocks @2.37% each
Andersons, ANDE. Ethanol producer, corn-based; rail group is in fuel transport.
Chesapeake Energy, CHK. Natural gas, one of larger U.S. independent producers.
Clean Energy Fuels, CLNE. Natural gas fuel integration; for use in fleet vehicles.
Cosan, CZZ. Biofuels, Brazil-based using sugarcane feedstock, ethanol exporter.
Green Plains Renewable Energy, GPRE. Biofuel, ethanol; domestic corn feedstock.
Methanex, MEOH. Methanol, liquid fuel can be derived from fossil fuels or organics.
Range Resources, RRC. Natural gas, produces in Appalachian & Gulf Coast regions.
Southwestern Energy, SWN. Natural gas, U.S. producer, also midstream services.
Conversion & Storage – 20% Sector weight (8 stocks @2.43% each; +1 *banded)
Altra Holdings, AIMC. Mechanical power transmission, electromechanical conversion.
Chart Industries, GTLS. Natural gas, LNG; liquefied gas storage/transport, efficiency.
Chicago Bridge & Iron, CBI. Engineering, natural gas, next-gen nuclear designs.
Covanta Holding, CVA. Incineration, converts waste to energy (WtE); conglomerate.
EnerSys, ENS. Battery maker, for telecommunications, utilities, motive power.
Golar LNG, GLNG. LNG, major independent carrier, gas transport, regasification.
MasTec, MTZ. Engineering & construction, distribution of electricity, natural gas.
Wabco, WBC. Mechatronics, better vehicle mechanical/energy/braking controllers.
*Westport Innovations, WPRT. Enabling vehicle use of natural gas, gaseous fuels.
Better Efficiency – 23% Sector Weight (10 stocks @2.30% each)
Acuity Brands, AYI. LED lights, OLEDs, and controls for indoor & outdoor lighting.
A.O. Smith, AOS. Energy efficiency, innovations for water heating & monitoring.
Apogee, APOG. Advanced glass, for better efficiency, green building designs.
Emerson Electric, EMR. Broad work in energy efficiency, storage, lately biofuels.
Esco Technologies, ESE. Power grid, advances 2-way metering & communications.
General Cable, BGC. Power grid, high voltage transmission cable and wire products.
Koninklijke Philips Electronics NV, PHG. Efficient LEDs, advanced industrial lighting.
LSB Industries, LXU. Greater energy efficiency, building end-use, heating, cooling.
Regal Beloit, RBC. Energy efficient motors, in commercial, industrial, homes etc.
Woodward, WWD. Energy controllers, optimization, industrial turbines in generation.
New Energy Activity – 12% Sector weight (5 stocks @2.40% each).
Eaton, ETN. Hybrids, better electric and fluid power in truck & auto applications.
Hannon Armstrong, HASI. Capital, Infrastructure & finance for energy efficiency.
Johnson Controls, JCI. Building controls, also advanced hybrid vehicle systems.
Owens Corning, OC. Materials lightening, building insulation composite materials.
Veeco Instruments, VECO. Design, manufactures equipment for LED production.
Emission Reduction – 14% Sector Weight (5 stocks @2.50% each +3 *banded)
Corning, GLW. Diverse, activity includes emissions reduction, filters, and catalysts.
*Kandi Technologies, KNDI. Small urban all-electric cars plus truck development.
*Luxfer Holdings PLC, LXFR. Advanced materials, reduced emissions, gaseous storage.
McDermott, MDR. Infrastructure, reduces coal emissions, constructs WtE facilities.
*Power Solutions, PSIX. Flex-fuel low-emission engines, nat. gas, biogas, hybrid etc.
Sasol Ltd, SSL. Syngas to synthetic fuel, potential CO2 capture/sequestration (CCS).
Tata Motors, TTM. Smaller & ‘nano’ vehicles, India-based with worldwide sales.
Tenneco, TEN. Automotive end-of-pipe emissions controls, catalytic converters.
Utility – 12% Sector weight (5 stocks @2.40% each)
Abengoa SA, ABGB. Energy engineering & infrastructure, worldwide; sustainability.
Abengoa Yield, ABY. Yieldco, conventional power & transmission, some renewables.
Calpine, CPN. Geothermal, major North American producer, low-carbon assets.
Companhia Energetica de Minas Cemig, CIG. Brazilian Utility, large hydroelectric.
NRG Yield, NYLD. Contracted power generation and thermal, also some renewables.
Alternative Fuel: These are alternative fuels broadly conceived such as innovative use of fossil fuels, gas-to-liquids, syngas, methanol, hydrogen as energy carrier, as well as the use of lower-carbon natural gas itself. Besides finite hydrocarbon-based fuels, the mainly carbon-neutral yet renewable biofuels such as corn-based ethanol, biomass, and diverse fuels from carbohydrates may be included despite currently ambiguous net carbon benefits. Nuclear fuel may be included here. Other alternative fuels that might offer sparser near-term pollution reduction can be included if they could provide potential carbon capture, or may contribute to future improvements, or to later decarbonization such as by a safe means of biological or geological sequestration.
Better Efficiency: Includes energy efficiency for improving the use of traditional fuels, better power management, demand-side reduction, and technology for conservation. Generally involves substituting in cleverness for energy; to waste less energy is often the most preferable, least expensive and the quickest path to improve use of fossil fuels.
Emissions Reduction: Examples here include end-of-pipe pollution control technologies, waste reduction, and approaches for reducing contaminants from dirty coal, oil, natural gas, waste to energy, or biomass etc. Includes reducing a single key contaminant like CO2 or significant greenhouse gas, mercury, particulates, sulfur dioxide, NOx, heavy metal etc. Biological or geological sequestration if it can be done safely, may be included.
New Energy Activity: Includes diverse innovations in materials, goods or services that improve production, transport, use of fossil fuels, biofuels, etc. Examples include better combustion of fossil fuels, new techniques for energy production, carbon trading, special financial services, waste to energy, lighter materials, uses of nanotechnology, etc. This includes too efforts that are a bridge to smart energy-use such as in appliances, motors, hybrid automobiles, or transport. Work of large conglomerates with interests outside energy but that are developing smart new energy-related activities may be included. Wide-ranging companies with just some renewable exposure (as in wind or solar power) may be in WHPRO — if that is scalable as a near-term bridge technology – and if they remain a non-pure-play company.
Utilities: Includes Utilities, progressive technologies or innovations that reflect the aim of lower greenhouse gas emissions - such as by hydropower, better efficiency, or that are encouraging end-use reductions in energy demand. Improving transmission & distribution or new models like YieldCos can be included. There are however many examples of ‘good but not good enough’ approaches within this sector; for example the same large hydroelectric dams that may lower carbon emissions also have heavy biodiversity costs and cause deforestation. Likewise the Sector can include some exposure to nuclear power where the Utility is otherwise strong for having zero-carbon wind power or solar power that notably otherwise generally are not included in this Index.
Conversion and Storage: Includes advanced batteries, storage of gaseous, liquid, or solid fuels; or devices to better convert an energy carrier to desired power including gas to liquids processes, synfuels conversion, etc. May include integrated gasification combined cycle (IGCC) to better decarbonize coal in the future. Also the means for potential carbon capture and sequestration (CCS) through innovative technologies. Storage, conversion or disposal of waste products may be considered.
Energy Sources: Brief Commentary Viewpoints
WilderHill Progressive Energy Index (WHPRO) was notably the first Index for capturing and tracking the opportunities found in responding to climate change, for decarbonizing the U.S. energy portrait and improving use of fossil fuels: we aim to remain the leader in this field. This also is now a third Index carrying the WilderHill® name; we’re quite proud of the original Clean Energy Index® (ECO) that was the first-ever for clean energy stocks, and of the WilderHill New Energy Global Innovation Index (NEX) as the first Index for these new energy stocks globally and mainly on exchanges outside the U.S.; they’ve each arguably become benchmarks in their respective fields.
There are compelling reasons for this third and latest WilderHill Index, and they flow from reducing the pollution from inherently dirty coal, oil, and natural gas. The cause arguably is starkly clear from how U.S. electricity is still generated in the early 21st century:
Very roughly speaking for making electric power (and these 2005 figures show how little matters have advanced the past few years), a recent baseline has been that about:
50% comes from coal;
20% comes from natural gas;
20% comes from nuclear generation;
7% is from large hydropower (renewable & non-thermal, but it presents other harms);
1% is from oil (negligible as fuel for electricity—but is the dominant transport fuel);
only around 3% is from a clean zero-carbon renewable like solar, wind power etc.
Look globally, and data are just as compelling. Coal now supplies around 64% (most) of the world’s electrical power; large hydroelectric dams supply about 17%; and nuclear is another 17%. Although wind power is very rapidly growing and is a zero-carbon renewable, it still (much like in the U.S.) supplies only about 2% of electricity, with solar power <1%. Hence an escalating interest in zero-carbon wind, solar etc obscures the fact they’re growing rapidly but still start from a very small base compared to traditional sources.
It may be wise to escalate future-oriented clean energy options that are desirable in their own right but start largely from scratch (tracked by ECO Index & NEX Index). And yet at the same time we believe it also is wise to pay considerable attention to transition technologies emphasized here that notably in the short term reduce tremendous harms from inherently dirty coal, oil and natural gas. These are the methods that can enhance energy efficiency and make better use of energy sources that are still dominant today.
Put simply these are ‘no regrets’ approaches in WHPRO that make sense in their own right in reducing pollution now. Plus, should issues of climate change gain importance, then it’s logical as well to take action to profoundly reduce greenhouse emissions from the sources supplying around 80% of electricity today. By starting from the inherently dirty fossil fuels, this Index is not based on truly “clean energy”; even the more effective Index technologies here are thorny for being mainly incremental, or they typically are ‘good but not good enough’ as answers. Yet we’d emphasize whether those other zero-carbon future clean solutions (in ECO, NEX) will have risen up to the fore in the early 22nd century, or not, it’s still advantageous in the meantime to reduce impacts from fossil fuels over the coming 100 years via ‘bridge’ technologies along the way. The place to start then is with polluting fossil fuels, which means first paying attention to doing better with coal.
Coal: if one considers how pervasive are ecological harms of oil, then the fact coal is the dirtiest fuel is saying rather a lot. The starting penalty for coal is that it’s carbon-laden; a coal plant combusts about twice as much carbon as a natural gas plant to make the same amount of power. Note too that what we do in the U.S. is just a part of the coal picture.
Over the next 25 years, the U.S. is expected to expand even dirty coal-fired plants rapidly and it may construct an equivalent to 250 large, 500 megawatt coal plants. But China is building an equivalent to one large new coal-fired plant per week. Over the 60 years that they’ll operate, those new coal plants working in 2030 may together put out as much CO2 as was released by all the coal burned since the start of the industrial revolution.
While roughly 40% of worldwide CO2 emissions today from fossil fuels stem from coal, that figure may increase sizably. In part that growth would be due to an abundance of domestic coal that provides much better energy security (as compared to mostly imported oil) for a growing U.S., China, India. That coal can be mined internally, cheaply, and easily projected operating costs for power plants that buy coal are still relatively low and stable — some plants are even built at the mouth of a mine and dedicated to it. Unlike a ‘peak oil’ thesis, coal reserves are surely greater. Absent carbon, mercury or pollution constraints, a business as usual model shows significant (recarbonizing) growth for coal.
On the other hand, it’s clear the costs of coal surely should include mining burdens at the outset such as mountaintop removal, slurry, ANFO explosive, tremendous water needs, polluting streams, groundwater, medical problems etc. For that reason coal that is being burned today isn’t ‘clean’: we regard the marketing term “clean coal” as not scientifically accurate and so do not use it. While pollutants from modern plants can be reduced when compared to standard pulverized coal combustion, the extraction issues persist and render coal far from clean. Plus sequestered CO2 ‘emissions’ may vex long into the future, causing the real leakage concerns there to be a lingering issue for future generations.
So emissions from coal today are still very substantial and growing on any business as usual path. Potential constraints on growth include costing CO2 that’s now vented freely and not regarded a pollutant, the mercury, as well as sulfur dioxide, nitrogen dioxide, and heavy-metal coal ash. Very importantly should CO2 be regulated as a pollutant in the next few years, which many in the industry now expect, then relatively much lower costs of coal-fired electricity may become a thing of the past. At such time newer IGCC plants for instance may be promoted; the difference between an IGCC and a regular coal plant has been likened to comparing a Toyota Prius to a large SUV. Coal can also be converted into forms that are less polluting, or be better cleaned end-of-pipe, or even made into syngas harvested for hydrogen as an energy carrier. In sum there’s diverse pathways to reducing pollution from coal, and so likely to be many potential candidate technologies for WHPRO.
Oil: Notably oil accounts for around 40% of total global emissions of the carbon dioxide coming from all fossil fuels. As observed above, oil is a negligible fuel for stationary power plants making electricity; instead this energy-dense liquid is a dominant fuel in transport. Given this, some of the most important ways to improve use of oil are in transportation.
Here useful concepts include improving transportation efficiency in the near-term: lighter materials in vehicles, better propulsion systems, smarter fuels, better combustion, even pollution controls. Other arenas include substituting in lower-carbon natural gas in place of oil (or especially replacing coal) to progressively decarbonize systems. This is preferable generally to the coal to liquids that instead recarbonizes by adding in coal.
In broader context the analogy between a Toyota Prius and heavy SUV is a useful one: the Index (WHPRO) generally emphasizes the Prius-like technologies that are more efficient, pollute less, go farther on a gallon of gas or are more sensible compared to ‘business as usual’ (large SUV). Our Prius analogy is a way to view matters: a Prius may represent the better way in the near term, but it still relies on fossil fuels and it’s only somewhat less polluting or more efficient (although very measurably so). Compared say to a futuristic strong plug-in hybrid electric vehicle that runs on solar/wind power (ECO technologies), the Prius today is a compromise but arguably much better than business as usual.
Natural Gas: Substituting cleverness for energy to reduce past demand for oil and especially for coal, while replacing where viable the coal or oil fuels with natural gas is one effective was to ratchet down CO2 emissions. Combined cycle gas plants or even distributed gas-fired cogeneration and tri-generation are included here. Natural gas has grown more costly lately and its price likely may remain dear but given even minor carbon constraints ahead, gas could displace coal-fired plants to considerable extent while it can often substitute for oil and add heating benefits. Look much farther out and substituting in hydrogen ‘fuel’ as an energy carrier at first by steam-reforming natural gas, could lend greater efficiency when using fuel cells as the energy conversion devices.
Nuclear Power: This is likely the most controversial energy source today, and for good reason of singularly catastrophic risks that nuclear undoubtedly presents. There are many and widely diverging issues of risk that remain undeniable; the proliferation, terrorism, accident, enormous capital costs, utter reliance on subsidies, and the waste-risk issues, have each and surely together saddled current-generation nuclear with uniquely terrible implications. Unlike any other energy source, a single accident could turn billions of dollars of generating-capital assets today, into all smoldering liabilities tomorrow.
There’s also a carbon question; for scientific accuracy we don’t use a term “clean coal” as noted above. Likewise we generally don’t consider nuclear power as carbon free or clean because of the large CO2 emissions from mining and refining uranium, plus for instance in storing for very long periods the radioactive wastes. Storing the V2 through V4 container wastes entails a significant carbon penalty. A closed fuel cycle does not avoid this problem; while less fuel is then mined, the proliferation and other risks are greater.
We recognize that outside of the U.S. there is new nuclear capacity coming online in Asia and elsewhere: more than 20,000 megawatts of capacity have come online since 2000. In those places issues of very high initial capital costs and the uncertainty of waste disposal etc have not proven to be insurmountable. Here, it has been estimated that the power from a new light water reactor might cost some 6.7 cents/kilowatt-hour, but that’s unfavorable in a market-driven comparison with for instance distributed natural gas cogeneration, or perhaps even IGCC coal with theoretically safe sequestration – or even wind power that’s in ECO. Plus nuclear has a long history of exceeding cost estimates.
On the other hand, very significant subsidies for nuclear were put in the Energy Policy Act of 2005 and those gave powerful incentives to build reactors that may begin operating here as soon as the next decade. Still, we believe comparing generation II or III reactors to alternatives (such as distributed gas-fired cogeneration) in a robust market-driven analysis indicates nuclear is not economically competitive today – unless it’s both heavily subsidized and benefits from heavy carbon taxation. Even then unlike in clean energy (ECO, NEX) where costs are based on costs of technology (like wind turbines), and those costs are dropping significantly, nuclear is hampered as by persistently rising costs of plant construction, waste disposal etc in addition to proliferation etc risks noted above.
Presently most operating nuclear plants are based on now-older generation II designs. Mainly evolutionary (not revolutionary) changes are incorporated into Generation III and III+ reactors in an attempt to lower their still very high capital costs, and to address some operational safety handicaps. However all new generation designs still carry tremendous risks. We maintain an open mind as to whether future next-generation IV such as PBMR can be significantly safer, but current nuclear is not a priority for the Index (WHPRO).
Our position here notably is in purposeful contrast to the original WilderHill Clean Energy Index (ECO) that strictly excludes nuclear power. But for this WilderHill Progressive Energy Index (WHPRO) we generally neither reject a company from, nor place it into the WHPRO Index solely because of its exposure to (risk-laden) current-generation reactors for producing power: those moving newer reactors or production towards better, next-generation safer technologies may be included. Apart from a low priority given to current-generation reactors, nuclear fuel suppliers can be included in the Alternative Fuel sector; preference may be given those with some advantage in how that fuel is derived. Companies improving the storage or disposal of spent fuel may be included too.
One result is that thorny questions like a Utility with strong wind power assets (but nuclear exposure) that’s strictly excluded from ECO over nuclear, could be included in the Progressive Energy Index (WHPRO). Also a non-pure-play company only partly in wind and so excluded from ECO (having some exposure to wind but also operating in other fields) may be included in WHPRO given that wind power has scalability capability that can also make it a transitional bridge. WHPRO aims not to include purer-play companies such as in solar or wind: as noted where clean renewables are especially well represented in a company with some nuclear aspects (and so rejected from ECO), it might however be included in WHPRO; similarly, wide-ranging conglomerates with just partial exposure to scalable wind (or solar) technologies may be allowed in WHPRO — where not pure-plays in this field of new energy solutions.
Our Logo for the WilderHill Progressive Energy Index is intended to be representative of the approach we take here for WHPRO. Its brown (not green) coloring is emblematic of the technologies that mainly reduce harms from dominant fossil fuels in the near term. The six blades in ‘a turbine’ reflect our six Index sectors, each aimed at decarbonizing traditional energies ahead. Put another way they can be regarded as stabilization wedges, each of which is significant in halting growth of carbon emissions in the 21st century.
Lastly the WHPRO website has some brown color too since this Index is for primarily reducing harms from fossil fuels and traditional energy in the near term. The original WilderHill Clean Energy Index website (ECO) has a green color to reflect its focus on the clean no-carbon renewables of the future and on preventing pollution, while WilderHill New Energy Global Innovation Index (NEX) is blue to reflect the hue of our planet.