Friday, September 28, 2007

Investing in Jatropha Stocks... Or Not

Well, my ongoing, pith-helmeted quest for the perfect stock investment in jatropha oil is really proving a fun challenge.

It seems the jatropha plant's potential to provide truly sustainable biofuel to the world is looking very, very real. However, the only companies that seem to be diving in head-first are tiny overseas outfits or national energy firms like PNOC (in the Phillipines).

Meanwhile, the sustainable investment world is facing the rather grim reality that, long term, corn might not be sustainable -- or realistic -- as the source of biofuel for an increasingly needy world.

The main drawbacks to corn are price (it's hitting new highs every day)... growing requirments (it takes fertilizer and lots of land and attention) and it has competition as a food crop (why grow corn for biofuel when the world needs to eat the stuff?).

Jatropha on the other hand is cheap... grows anywhere (including India's badlands and those of Africa)... produces golf-ball-sized fruit that tend to burst with easily convertible oil... and it doesn't compete with food crops because it grows where food crop cannot.

Right now, the governments and NGOs of India, Phillipines, South Africa, Great Britain and China are launching intensive campaigns to test the viability of jatropha as the true solution to our biofuel dilema (getting enough cheap oil from sensible sources to make a dent in our impact on crude oil).
The results so far are promising. Even the Wall Street Journal appears hot on jatropha: (

If anything, this terrific article makes a convincing argument for investing in jatropha... but... how?

So... How to Invest?

The big problem for us right now is that there are no reasonably safe ways to play jatropha at the moment.

Here's what we're looking at so far...

British Petroleum: BP just entered into an agreement to produce jatropha oil on African soil with another limey firm, D1 Oils Plc. This project is a test, not full-scale production. But it makes one think that BP could make a good play on jatropha.

And as a member of the Dow Jones Sustainability Index, which I mentioned in a recent post, BP is interesting. I'm shy on this stock right now for two reasons:

1. Crude oil's wildly cyclical, and so is this stock's performance... Oil's at $83 levels right now, and poised for a pullback soon, especially if we're looking at a slowdown in the global economy. This isn't the time to pile your money into an oil company like BP, whose share price would suffer if oil performs one of its famous swan dives.

2. It's a very indirect play on jatropha.

So we'll keep an eye on BP... monitor it's progress with the D1 Oils project... And if the stock price trades down to reasonable levels once oil cools off, we might pounce if BP's green investment creditials appear worthy.

Meanwhile, you could play D1 Oils directly, as it trades on the bulletin boards. The problem there is that the company hasn't turned in a profitable quarter since going public back in 2004. The fundamentals frankly suck.

I know we're wildcatting here on jatropha, but I'm not yet convinced that D1 will be the way to play it...

So... More to come on jatropha, and the potential here for stock investors to cash in. Meanwhile, good green unto you.



smaximus said...

Mexican president Felipe Calderon is now spearheading a drive for research and large-scale production in countries where jatropha can be grown.
Colombia and Mexico have committed $936,000 to a biodiesel processing facility in southern Mexico, mainly devoted to jatropha.

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