Future Energy eNews May 4, 2004

  1. The Politics of Electric Power - insightful book on the privatization of electricity
  2. China's Oil Demand - oil demand growth continues to surpass expectations
  3. Ocean Energy - Tidal Power - Marine Current Turbines - UK-based company
  4. Solid Electrolyte Fuel Cell - just add salt water - conductive plastic is the electrolyte - good tutorial included below by GreenVOLT
  5. Battery Charging in 30 Seconds - organic radical battery by NEC - same level of power as that stored in nickel-hydrogen cells
  6. Green Tech is Attractive - Socially responsible investment funds can redirect growth - imbedded links provided in article below


1) The politics of electrical power

By Joanne Laurier, 7 April 2004, http://www.wsws.org/articles/2004/apr2004/elec-a07.shtml

Power Play: The Fight to Control the World's Electricity by Sharon
Beder; 400 pages; New York: The New Press, 2003

Electricity is an essential feature of modern life. One need only
consider the consequences of a relatively short power outage: factories,
offices and stores close down, many telephones and computers go dead,
traffic slows to a crawl, food rots in freezers and refrigerators, homes
are lit by candles, to see our utter dependence on electrical power.

Electricity, its generation and distribution, is also, however, a source
or potential source of profit. The relatively stable conditions under
which power was provided for decades, conditions that of course, in the
final analysis, benefited or enriched the wealthy elites, have now broken
down. In a crisis-ridden capitalist system, the reliability and
affordability of electrical power are increasingly at risk, even within
the advanced capitalist world.

The inability of private utility companies, under intense pressure from
investors and speculators, and public utilities, facing the threat of
privatization or budget cuts, to properly maintain facilities endangers
the very functioning of a modern society, as the August 2003 power
blackout in the US Midwest and Northeast demonstrated. The parasitic
activities of firms like Enron, which buy and sell in the global energy
market, have qualitatively worsened the situation. The anarchy,
wastefulness and irrationality of the profit system have few clearer
illustrations than the current state of electrical power generation and
distribution.

In her new book, Power Play: The Fight to Control the World's
Electricity
, Sharon Beder, a professor at the University of Wollongong
in Australia, provides a detailed and valuable account of global
electricity deregulation and its ruinous consequences. Beder notes
justly on the opening page of her book, "The privatisation of
electricity is not something that citizens have demanded or wanted."

The volume details the struggle for control over this basic form of
energy, ranging from the early days in the United States, when Thomas
Edison first conceived of the idea of selling electricity, to the
post-World War II era of the International Monetary Fund's "free market"
restructuring. It features the rise and demise of power broker Enron and
its role in the massive California energy crisis, as well as the
electricity privatization calamities in Asia and Latin America.

First countries to privatize electricity

It is not accidental that the privatization and deregulation of various
national and regional electrical systems became a feature of modern life
in the last three decades, with the end of the postwar economic boom and
increasing pressure on profit rates.

After the US-sponsored military coup in 1973, the Chilean dictatorship,
influenced by the theories of American economist Milton Friedman, became
the first country to break up its electricity authority and sell off its
component parts. This was followed in the advanced capitalist world by
Britain in 1990 and then the US, with California being the first state
to deregulate. The "liberalization" of electricity opened new frontiers
for the accumulation of profit, not through the construction of
generating facilities and the delivery of energy supplies, but by the
buying and selling of energy in the global market.

Power Play painstakingly documents the impact on electricity of what
become known in the 1970s as "neoliberalism" in Europe,
"neoconservatism" in the US, and "economic rationalism" or "economic
fundamentalism" in Australia.

Electricity has characteristics that set it apart from commodities "that
have been more traditionally found in the marketplace," Beder points
out. The variability of demand (e.g., weather, time of day), the
inability of electricity to be stored and the interdependence of an
electrical system that covers massive distances are some of the elements
that make planning and oversight essential. "In a market there is no
central planner choosing which plants to call on according to logic and
marginal costs." Therefore, costs for system coordination are higher in
a market model than in one "dominated by an integrated monopoly."

Price fluctuations inherent in the market are exacerbated by the
manipulation of private companies that can use market power to create
artificial shortages and gouge prices. "Electricity markets bring a
disjuncture between price and the cost of production. Whenever
deregulation has been introduced, wholesale electricity prices have
spiked at hundreds of times the cost of production."

Electricity's particular need for planning and integration arise from
the fact that, as a system, it "is more than the sum of its parts."
Beder's book provides a valuable historic overview of this fundamental
dimension of modern society.

She writes, "From the outset, private electricity companies in the US
competed with municipal electricity suppliers by promoting the belief
that public ownership of resources and essential services threatened the
American way of life."

By 1888, some 53 cities and towns in the US had municipal electrical
systems. Between 1895 and 1906, more than 700 public systems were
created, and by 1912 a third of the power companies in the US were
publicly owned. The private companies fought back with vicious
propaganda campaigns, equating legislation such as the Water and Power
Act of 1921 as "socialistic" and "Bolshevistic."

The activities of private power holding companies were credited with
contributing to the onset of the Great Depression, and by 1935 some 90
electric and gas companies had gone under. During that time, the banks
stepped in to assume control of many holding companies, and the issue of
electricity featured prominently in the 1932 presidential election.

In a major defeat for the power companies and their allies, President
Franklin D. Roosevelt set up the Tennessee Valley Authority (TVA) in
1933, a public entity for the development of electricity. The federal
Public Utility Holding Company Act (PUHCA) was passed in 1935, whose aim
was to break up the power trusts. Ratepayers saw their electricity bills
drop by 14 percent between 1938 and 1951. Beder argues that the power
companies once again became resurgent during the Eisenhower presidency
(1953-61).

She quotes the president of the Montana Power Company in 1959:
"Government ownership of utilities has always been the first goal of the
socialists and communists. Because of this, the future of the American
system of government is dependent on the electric business continuing in
the hands of investor-owned, tax-paying companies.... Our problem is not
only to save our industry, but to save the American system of
government."

This blood-curdling rhetoric aside, and despite their excesses and
waste, private electric utilities were able to provide decently priced
electricity for several decades after the introduction of
state-regulated monopolies. Technological advances and economies of
scale kept prices low in the 1950s and 1960s.

This period ended with the oil crisis of 1973, prompting the utilities
to lean toward building capital-intensive nuclear power plants, leading
to disasters such as Three Mile Island in 1979. In the late 1970s,
electricity prices soared due to the cost of building nuclear power
plants, rising interest rates under the Democratic Carter administration
and the escalating cost of oil.

The election of Reagan inaugurated a period of deregulation in the 1980s
that hit upon the airline industry, natural gas, oil, financial
services, telecommunications and transportation. (Reagan himself had
been employed for 10 years at General Electric as a media relations
opponent of public power
.) This set the stage for electricity
deregulation in the 1990s, which transformed one of the largest
industries in the US, valued at $200 billion, "into one with minimal
public safeguards, wildly fluctuating prices, and multiple opportunities
for profits and losses."

In 1992, the Energy Policy Act required regulated utilities to allow
other companies to use their transmission lines so that electricity
could be traded across the country. It "encouraged adoption of
market-based principles as a way to increase the availability and
efficient use of energy supplies." In 1996, the Federal Energy
Regulatory Commission (FERC) further deregulated the wholesale market,
with California being one of the first states to take advantage of the
new rules. That same year, the deregulation bill, AB1890, was passed
with bipartisan support in both houses of the California state
legislature.

The Foundation for Taxpayer and Consumer Rights (FTCR) asserted in
January 2002: "In total, the deregulation law, enacted with the
unanimous support of politicians in 1996, will cost Californians
approximately $71 billion, or $2,100 for every man, woman and child in
the state." Beder states that this figure includes "$23.6 billion in
stranded costs, $10 billion in expected bailout costs for the utilities,
$22 billion in inflated long-term contracts and $16 billion in excessive
prices paid during 2001."

Enron

Not surprisingly, Beder devotes a considerable portion of her book to
the Enron experience. Following deregulation, she writes, "Enron
explored the lengths to which the commodification of energy could
go...an icon of deregulation and the epitome of the free markets."

Enron CEO Jeff Skilling hinted at the company's philosophy when he
suggested that energy companies needed to cut cost by 50 to 60 percent
and get rid of employees because "they gum up the works." Making light
of the California plight in 2001, he asked a business audience that year
what the difference was between the state of California and the Titanic.
He answered: "At least when the Titanic went down, the lights were on."

An article in Fortune written in 2001 summarized Enron's essence as a
parasitical entity: "Enron operated under the belief that it could
commoditize and monetize anything, from electrons to advertising space.
By the end of the decade, Enron, which had once made its money from hard
assets like pipelines, generated more than 80 per cent of its earnings
from a vaguer business known as wholesale energy operations and
services. From 1998 to 2000, Enron's revenues shot from $31 billion to
more than $100 billion."

It was not until Enron went bankrupt that documents surfaced proving
that power companies had been manipulating California electricity prices
through a number of different strategies. In 2000, when price caps were
imposed, Enron sold electricity to another party outside the state and
resold it back to California for prices far above the price caps. (Price
caps applied only to electricity bought and generated inside the state.)
Enron called this strategy "Ricochet," or "megawatt-laundering."
Sometimes Enron bought electricity in California at the capped price of
$250 per MWh and sold it for up to $1,200 in other states--this was
called "Fat Boy."

Enron was not the only beneficiary. The profits of the California
electricity companies also soared in 2000 and 2001. Most of the nation's
leading power traders, including Reliant, Duke Energy and Southern
Company, were spin-offs from the original, regulated utilities.

The utilities, PG&E and SoCalEd, benefited from deregulation. The huge
losses claimed by the utilities for which they demanded a $12 billion
bailout from Democratic Governor Gray Davis were parlayed into gains by
their parent companies, each making $3 billion from selling off
generating plants plus another $3 billion selling power from the
remaining California generating plants at high prices. According to
consumer advocates, the $12 billion could have bought all the power
plants in California!

Since California's deregulation experience, 42 other states have begun
steps toward the same process. A Department of Energy report in 1999
found that "[t]he overall effect has been that the infrastructure for
reliability has been considerably eroded." Because there is no incentive
in a deregulated system to upgrade equipment or assign accountability
for equipment failure, blackouts have occurred so far in New York City,
Chicago, Long Island, New Jersey, New England and Texas.

International privatization

In Britain, the Thatcher government embarked on privatization in the
1980s, shifting the country from having the highest level of government
ownership of industry among the OECD (Organization for Economic
Cooperation and Development) countries to being the "most liberal"
energy sector in the world. Australia followed, and by 1999 it was the
worldwide leader in both announced and completed privatizations.

In the less developed, debt-laden countries, the World Bank and the
International Monetary Fund (IMF) pushed for the opening up of public
services, including electricity, to foreign investment. The proportion
of World Bank "structural adjustment" loans made conditional on specific
targets for deregulation rose from 13 percent in 1986 to 59 percent in
1992. Privatization was included in 70 percent of the World Bank's
structural-adjustment loans in 2000. As a result, the rate of
privatization quadrupled in Latin America and tripled in Asia. By the
mid-1990s, 42 African countries had undertaken some measure of
privatization.

During the 1990s, some $187 billion flowed into the energy sectors of 76
developing countries with disastrous results. For example, in Soweto,
South Africa, 61 percent of the residents had their electricity cut off
because they could no longer afford the rates. Brazil, which at one time
had an abundance of cheap electricity, faced an acute shortage in 2001
when it was in the hands of foreign private investors. Following
privatization in Rio de Janeiro, prices shot up 400 percent. "Forty
percent of electricity workers lost their jobs, and the lights went
out."

Confidence trick or objective economic process?

"Electricity privatization, more than any other privatizations, has been
borne along on the intellectual and ideological trajectory of the New
Right to the point at which privatization and competition appear to have
achieved the near-total eclipse of the case for retaining public
ownership," quotes Beder from a 1996 book by John Surrey, entitled The
British Electricity Experiment.

However, the author of Power Play: The Fight to Control the World's
Electricity
does not grasp the objective roots of this development.
Beder concludes her investigation by stating that the claims put forth
by the deregulators and privatizers about the "historical inevitability"
of the "worldwide trend that individual countries can't go against" are
false. Her contention is that deregulation/privatization is "more like a
confidence trick than a rational evolution of electricity
systems...whose deception is becoming more difficult to sustain."

While there is an element of the con, deregulation is bound up with an
enormous increase in the pressure of big investors and financial
institutions, a pressure exerted through the stock market, for the highest
possible short-term returns on their investments. This type of market
operation is not peripheral to but at the heart of the world capitalist
economy. For the last two decades, some 75 percent of total return on
investments has resulted from capital gains derived from the
appreciation of market values and not from profits and interest. This
parasitical and speculative mode of accumulation that begets an
increasingly criminal ruling elite is not an aberration but the dominant
tendency within modern capitalism.

Power Play clearly demonstrates that the forces of privatization are
transnational, but preaches that they can be controlled or regulated on
a national level if sufficient protest is generated.

This is an illusion. Electrical production has run aground, in part, on
the most fundamental contradiction of capitalism: the global character
of production, in which millions of people vitally depend on reliable
energy, and the constraints of national boundaries. The subservience of
the energy system to blind market forces has created, and will continue
to create, social catastrophes.

The power blackouts in various parts of the globe, the California crisis
and the collapse of Enron reveal how the conditions of everyday life for
masses of people are entirely subordinated to the process of frenzied
profit accumulation by a thoroughly outmoded ruling elite. This is an
objective historical process, not the result merely of greed, fraud and
subjective policy-making.

Although Bederís political outlook is that of the anti-globalization
protest movement, the logic of Power Play: The Fight to Control the
Worldís Electricity
tends to argue in an opposite direction: for a
globally planned solution to a global problem, possible only after the
socialist reorganization of society. On the whole, Beder's work is a
meticulous and serious contribution to an understanding of what plagues
the production and distribution of one of society's most elemental
necessities.

See Also:
The North American blackout: deregulation, profit and the decay of the
social infrastructure [23 August 2003]
Massive power blackout hits millions in Canada and the US [15 August
2003]
Enron defrauded California out of billions during energy crisis [10 May
2002]
Blackouts hit California as energy crisis deepens [18 January 2001]


2) China oil demand growth beats forecasts again-IEA

http://www.forbes.com/newswire/2004/04/09/rtr1328333.html

By Richard Mably and Jonathan Leff, Reuters, April 9, 2004 (excerpt)

LONDON, April 9 (Reuters) - Chinese oil demand growth continues to surpass expectations, inflaming world crude prices now close to 13-year highs, the International Energy Agency said on Friday.

In its monthly Oil Market Report the Paris-based agency revised up its estimate of incremental Chinese oil demand in the first quarter by 180,000 bpd to a record 6.14 million bpd, an 18 percent increase from the same period last year.

"China's economy just keeps rolling and there is no imminent sign that it's going to stop," said Klaus Rehaag, head of the IEA's oil market division.

"There's a question over whether the infrastructure is there to handle these high levels of demand growth but if recent history provides any lessons there should be cautious optimism that it can continue," said Rehaag.

China's breakneck economic growth, fuelling record oil imports, is the main factor behind this year's surge in world crude prices.

Benchmark U.S. crude on Thursday closed up 99 cents at $37.13 a barrel, not far from a recent 13-year closing high on the New York Mercantile Exchange of $38.18.

Now the world's second biggest oil consumer, China competes with the United States and other major importers for a pool of available exports.

China's imports from West Africa, a key area of consumer country competition have risen sharply this year. Chinese imports rocketed to a record 3.16 million bpd in February, up 280,000 bpd from January, the IEA said.

Crude and petroleum product imports combined averaged 3.02 million bpd in the first two months of this year, compared to 2.11 million bpd on average for all of 2003 and 1.61 million bpd in 2002.

North American oil demand is also rising strongly, led by gains in motor fuels. Consumption is expected to rise 300,000 bpd this year to 24.94 million bpd, the IEA said. ...


3) Tides Turn for Ocean-based Renewable Energy

http://www.solaraccess.com/news/story?storyid=6448

UK-based Marine Current Turbines has successfully raised 3.0 million (US$5.4 million) in an equity funding round, that will help propel a program to develop a successor to the company's 'Seaflow' Project, the world's first 300 kW offshore tidal turbine. ...


4) GreenVOLT Announces Affordable Fuel Cells for Home or Business

Thomas Faul, GreenVOLT Power Corp., http://www.greenvolt.com/index_2.html

Like conventional batteries, fuel cells generate electricity directly from reduction/oxidation reactions (primarily hydrogen and oxygen) at the catalytic electrodes of the cells. Unlike conventional batteries, the reacting chemicals are continuously replaced as "fuel" within the space bordered by the catalytic electrodes. Thus, the fuel cells are capable of providing continuous electric power for as long as the fuel lasts and the electrodes remain in good operating condition. Furthermore, where the reacting chemicals are hydrogen and oxygen, pure water, electrical energy and heat are the only reaction products. In addition, the quiet operation, high thermodynamic efficiency, and simplicity (in principle) of fuel cells all contribute to the current drive to achieve commercially practical implementation on both large and small scale at a price that is affordable and competitive.

Types of Fuel Cells

Design variations between fuel cell types include electrode composition, construction, and configuration, electrolyte composition, and operating temperature. Five basic types of fuel cells are under current development at different establishments:

  1. Proton exchange membrane (PEM) fuel cells that operate at 60-80 C.
  2. Alkaline fuel cells (AFC's) that use potassium or sodium hydroxide-in-water solution as the electrolyte and operate between -40 C to 60 C.
  3. Solid oxide fuel cells (SOFC's) that operate at 600-1000 C, i.e., at plasma temperatures.
  4. Phosphoric acid fuel cells (PAFC's) that use phosphoric acid as the electrolyte and operate at about 200 C.
  5. Molten carbonate fuel cells (MCFC's) that use fused/melted carbonate salts are the electrolyte at about 800 C.
  6. Solid Polymer (SPFC) fuel cells that operate at 60-80 C and use a conductive plastic as the electrolyte

Why Solid Polymer Fuel Cells (SPFCs)?

SPFCs are very rugged and long lasting. They contain no corrosive electrolytes and are not subject to the degradation of catalytic substances that can be caused by traces of CO, CO2, SO, SO2, NOx and other trace gasses. Their additional advantage is their ability to be arranged in forward or reverse operating fuel cells. This feature is employed by GreenVOLT™ in its HY-Cat™ Electrolyzer/Fuel-Cell System for powering remote sites with electricity and heat in an off-grid manner, using solar and/or wind power for the splitting of water and gas storage for later power generation.

The principal advantages are:

  • High system efficiency of 72-80% in each stage with overall system efficiency of 50-64%
  • Output delivers simultaneous thermal and electrical energy at approx. 3.5t / 4.5e relative ratio
  • Zero fuelling material purchase (capital amortization is the only cost)
  • Absence of internal or external corrosion of fuel cell system
  • Simplicity of on-site fuelling by sole use of distilled water that is recirculated
  • No poisoning of catalytic materials by trace gasses
  • No possibility of carbon sediment precipitation that could choke internal passages
  • Long life between refit/maintenance (8 years +)
  • Rugged construction
  • Absence of hydrogen-oxygen mixing eliminating the danger of an explosion
  • Massive energy storage capability of gasses in pressure vessels
  • Production of compressed hydrogen and oxygen without gas compressors
  • Silent operation
  • Zero environmental pollution
  • Elimination of Carbon Dioxide due to absence of hydro-carbon fuelling
  • Modular Approach

    For both stationary and motive applications, it has been determined that fuel cell modules of various production size modules can be combined to achieve a wide range of power delivery requirements. Therefore, the technical and business development plans are based upon the volume production of two or three basic size modules.

    a) Stationary power applications:

      1. 1002,500 Watt portable power generators
      2. 5-10kw - domestic (household) electrical power with simultaneous 3.5 7 kW heat supply
      3. 0.34 -10 kW telecommunications power supply
      4. 2.5 kW - power supply for relay stations
      5. 0.34 2.5 kW UPS (uninterrupted power supply) for computer data systems
      6. 10-150 kW - hospital auxiliary and emergency backup power
      7. 100-250 kW independent community central power station, including hot water supply

    Major Clients include:

    bulletOerlikon Machine Tools (Switzerland)

    bulletAUDI (Germany)

    bulletSkoda (Czechoslovakia)

    bulletNestler Corporation (Germany)

    bulletCARVER YACHT (USA)

    bulletCENTURY BOAT (USA)

    bulletDominion Auto Accessories (Canada)

    bulletOTACO Seating (Canada)

    ... and many others.



    5) NEC Develops Fastest Rechargeable Battery

    http://neasia.nikkeibp.com/wcs/leaf?CID=onair/asabt/news/299678

    April 2, 2004 (TOKYO) -- NEC Corp has developed a battery that can be
    recharged only in 30 seconds, company sources said. Called an organic
    radical battery, it can be recharged to the same level of power as that
    stored in nickel-hydrogen cells, which are widely used in digital cameras,
    portable MD players and other electronic devices.

    It takes only about 30 seconds to recharge the battery enough to allow 80
    hours of continuous operation of an MD player, compared with around an hour
    needed by conventional rechargeables, the company claims.

    Because of its ability to recharge faster, the new battery, which stores
    power in a special resin, is expected to make radio-controlled toy cars,
    shavers and other products much more convenient to use.

    The battery can also discharge power in a short time, making it useful in
    applications requiring a large amount of power.

    NEC believes the battery can be used as an emergency power source for
    computers in case of blackouts as well as in hybrid cars driven by a
    gasoline engine and electric motor.

    The company plans to convert existing production facilities into ones able
    to manufacture the new product. The company expects the price of the new
    battery to be about the same as nickel-hydrogen cells when mass production
    starts, since it does not contain any expensive materials.

    NEC is also developing a recharger for the battery that can be used at home
    as well as working on a way to prevent excessive discharge of power from the
    cell.

    The company will initially try to commercialize the technology for using the
    battery as an emergency power source for computers, according to sources at
    NEC.


    6) Investing in 'Green' Funds Holds Appeal

    By THE ASSOCIATED PRESS, NY Times, April 20, 2004

    NEW YORK (AP) -- Robert Topham recycles everything, drives a fuel-efficient car and supports environmental charities. Last summer he took his activism to another level, opening an account with a ``green'' mutual fund.

    The 36-year-old dermatologist doesn't think his investment in the Sierra Club Balanced Fund will save the world. But by directing part of his portfolio to a fund that invests only in environmentally responsible companies, he hopes to do some good, and perhaps collect some guilt-free returns while sending a message to big business.

    ``I know it's a small voice, I'm just a small part of it,'' said Topham, of Salt Lake City. ``But maybe every little bit does help.''

    Socially responsible investment funds, like the two launched by the Sierra Club last year, are aimed at people who want their portfolios to mirror their principles. But because they're only a tiny fraction of the industry, about 1 percent of funds tracked by Morningstar Inc., it may be difficult to construct a truly diverse portfolio with SRI funds alone.

    SRI funds screen companies for a variety of factors, from their environmental record and treatment of employees to their honesty in advertising or reflection of certain religious values. Since ``socially responsible'' can mean different things to different people, the assets held by these funds vary significantly.

    For example, the Sierra Club screens out most tobacco companies because of what it calls dirty agricultural practices, but has no prohibition on investing in alcohol and gambling stocks. Many other SRI funds would exclude all three industries because of the negative impact they have on society.

    The vast majority of SRI funds conduct some level of environmental screening, but funds specifically focused on green investing may have more rigorous requirements. Advocates argue that companies operating in an environmentally responsible way are more forward-thinking, more efficient and less vulnerable to costly litigation related to pollution or labor disputes. Such virtues will ultimately be reflected in the bottom line, they say.

    ``Any management team that has been thoughtful about the impact they're having on the environment has also been thoughtful about how they structure their business, recruit and train employees and produce investor returns,'' said Matthew Patsky, portfolio manager of the Winslow Green Growth fund. ``Absolutely, it's connected.''

    From a style perspective, SRI funds often lean toward growth, because companies in traditional value sectors, such as industrial materials, energy and utilities, are often excluded for pollution issues. That makes for a limited number of value offerings. The options for small-cap and international funds are even leaner, said William Rocco, senior analyst with Morningstar.

    ``You have fewer choices in certain parts of the market ... so you could look for nonscreened funds that are close, but that might require some compromises for you,'' Rocco said. ``It's a value question. It depends on how important your beliefs are versus how badly you want to get maximum returns.''

    Some funds will bend rules to get broader sector exposure by investing in companies that have made positive strides in traditionally problematic industries. One of the Winslow fund's biggest holdings is banana producer Chiquita Brands International, which Patsky praised for dramatically reducing its use of herbicides and pesticides and improving labor conditions.

    Other funds are more strict. The Sierra Club limits its portfolio to companies it finds to be outstanding environmental citizens. Its top holdings include Dell Inc., which eliminated the use of hazardous glue by snapping its computer chips together; Estee Lauder, which shuns animal testing; and Bank of America Corp., which has developed environmental policies and remained in compliance with a long list of criteria.

    As part of its screening process, the fund excludes mining and timber operations, any company that produces hazardous waste or emissions, all oil concerns and car makers and any business that uses genetically modified foods.

    This leaves out some notable names: Coca-Cola Co., because it uses genetically modified corn syrup, Citigroup and Morgan Stanley, because they were involved in funding a controversial project to dam a large river in China, and Merck & Co., which faces liabilities related to the cleanup of several polluted sites around the country.

    ``There's no question we limit some of these really profitable companies,'' said Garvin Jabusch, director of research for the Sierra Club Funds. ``But they're companies that may pose the biggest risks and that are more likely to have adverse bottom line consequences as a result of their behavior than green companies.''

    Expenses are another concern for investors considering SRI funds, Rocco said. Because they tend to be offered by smaller shops and have lower asset levels, SRI funds often bear higher management fees.

    SRI funds from larger families include the TIAA-CREF Social Choice Equity fund, the Vanguard Calvert Social Index -- the product of a partnership between index giant Vanguard Group and Calvert, the SRI industry's biggest asset manager -- and the Neuberger Berman Socially Responsible Investor fund. All three have lower expenses and broad sector exposure, making them decent core options for socially conscious investors, Rocco said.

    The Pax World Balanced fund is another offering with a longer track record and low expenses. Other well-known SRI shops include Citizens, Domini and Ariel.

    www.morningstar.com


    Courtesy of http://www.integrityresearchinstitute.org Back to top