BioFuels: Is There Room For Organic Growth In Your Portfolio?
With the increasing global population over the coming decades, it makes sense that discussions around more efficient fuels are taking place. I recently came across an article showing that India has embarked on the journey with the first launch of the passenger carrying train that will be powered by biofuels. As India represents a commonly cited high growth market, I felt biofuels would a topic of interest to delve into a little more.
So what are biofuels?
Biofuels represent an energy product that is harnessed from crops and other plants. There are also a lot of perks that come using other renewable source fuel transportation that can translate into saving money. There are estimates that by the year 2050 biofuels could make up to 30 % of fuel. My thoughts on this are that alternative fuels whether bio based or electrical are going to become more common place over time. As a world, it is human desire to increase the output and efficiency of our actions. The outcome of this is evident in the tremendous progress from horse and buggy, to modern day attempts for commercial space travel as efficiency in how we travel expanded.
If the use of biofuels in mass transportation shows promise and is effective in bringing about more fuel efficiency to countries like India and China, it will gain traction in other areas of the world as well. There are various pros and cons to this form of fuel
One obvious benefit of using biofuels is that they are renewable. This allows for sustainability that is beneficial on multiple fronts. First it expands the output of yields by farmers, second it allows for broader access in lower resource regions, and thirdly as a whole it produces less pollution.
The cost of production currently still needs to be improved. The use of fertilizers may result in ground water pollution and other environmental factors. The release of emissions is mainly from the manufacturing process.
While some consider their use "carbon neutral," the machinery required to farm the plants for biofuels does create carbon emissions, this machinery is also typically not powered by biofuels. Research suggests despite this fact, that biofuels help to reduce carbon emissions by 50-60% -UMN
The alternative energy sector has drawn a lot of attention from investors over the years for good reason, and it may be time to consider the role of alternative energy as a potential viable space to consider in your overall portfolio.
*MSF is not a financial adviser and statements are opinion. We recommend consulting your financial advisor for matters relating to your particular investment and financial plan. MSF has no financial relation with companies mentioned in this article.
The Future of Renewable Energy
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