Clean Energy Autos and Trucks: Industry Expert From Janney Montgomery Scott Outlines The Case For Natural Gas

• On 9:12 am EDT, Tuesday September 29, 2009

67 WALL STREET, New York - September 29, 2009 - The Wall Street Transcript has just published its Alternative Energy/Clean Energy/Power Generation/Utilities Report offering a timely review of the sector to serious investors and industry executives. This 83 page feature contains expert industry commentary through 23 in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Long Term Perspective on Alternative Energy Industry -- Leading Indicators for Alternative Energy Components Companies -- Mergers and Acquisitions in the Alternative Energy Industry -- Break Even Business Fundamentals for Carbon Free Energy Providers -- Development of Carbon Free Energy Production Infrastructure -- NAT GAS Act -- New Players in the Alternative Energy Industry -- Solar Power Cell Manufacturers Market Strategy -- Demand Response for Raw Materials for Solar Cell Production -- Alternative Energy Investment Opportunities -- Multiple Stock Winners in Carbon Free Production Industry -- Government Funding of Alternative Energy Power Providers -- Chinese Solar Energy Companies -- Alternative Energy Hedge Fund Investors -- Commodity Cycles -- Determinants of Market Valuations in the Alternative Energy Production Industry -- Carbon Emissions Statistics -- Energy Efficiency Statistics -- Innovations in Solar and Wind Power Generation -- Business Economics for Methane Based Power Generation -- Electric Vehicles Projections and Statistics-- Cap and Trade Projections and Statistics -- Development of Battery Technology -- Regulatory Environment Developments for Solar, Wind, and Alternative Energy -- Hybrid Vehicles Development and Sales Projections

Companies include: Tanfield (TAN.L); Smith Electric Vehicles U.S.; Valence (VLNC); Spire (SPIR); Newport (NEWP); MYR Group (MYRG); Primoris (PRIM); Tetra Tech (TTEK); EnerNOC (ENOC); Comverge (COMV); EnergyConnect (ECNG.OB); Calgon Carbon (CCC); and Ener1 (HEV); Westport Innovations (WPRT); Clean Energy Fuels (CLNE); Fuel Systems Solutions (FSYS); FuelCell Energy (FCEL); FEI Company (FEIC); Veeco (VECO); AT&T (ATT); Landi Renzo (LR.MI); Teleflex (TFX); Royal Dutch Shell (RDS.A); Wal-Mart (WMT); Pepsico (PEP); FuelMaker; Chevrolet; GM; Honda (HMC); Itron (ITRI); Siemens (SI); American Superconductor (AMSC); GE (GE); and ABB (ABB);

In the following brief excerpt from just one of the 23 interviews in the 83 page report, an industry expert discusses the outlook for the sector and for investors.

John Roy joined Janney Montgomery Scott LLC in 2008 as a Senior Research Analyst covering alternative energy and advanced materials. Prior to joining Janney, Mr. Roy covered alternative energy and nanotechnology at WR Hambrecht & Co., and IT hardware and technology strategy at Merrill Lynch. Previously, he worked in aerospace and software development for 12 years. Mr. Roy received his master's and Ph.D. in computer science from the University of California, Irvine. He also holds a master's degree in electrical engineering from the University of Southern California and a bachelor's degree in electrical engineering from the University of California, San Diego.

TWST: What are some of the most imminent regulatory or policy changes that could impact this space?

Mr. Roy: The pretty imminent one actually is the NAT GAS Act. It was introduced last year, but this year it has a chance to pass. Certainly the differences are - different climate in terms of what Congress wants to do this year versus last year, a different President, so there are some differences there. Right now, there is a $0.50-per-gallon subsidy for natural gas; it's the same subsidy that the corn ethanol guys get, and it's due to expire at the end of this year. So we think that's going to definitely get renewed. That's pretty much a done deal at some point this fall. The NAT GAS Act has basically three elements of that are important. One is it extends this $0.50-a-gallon subsidy more than one year. It extends it actually 17 years in the House version and 10 years in the Senate version. Ten or 17 is fine, either one is certainly fine, and that would make it a much less of a question in investors and in companies' minds as to how much that's going to be offset. So that's one. Two also is this idea of the amount of the subsidy for vehicle purchases, it's basically doubling it. Currently, you get between $5,000 and $32,000, depending on the size of the vehicle, and it needs to be a dedicated vehicle - I'll get to that in a minute. Basically, you are doubling that to $10,000 or to $64,000, again, depending on the size of the vehicle. Then the third element is that in the United States, they don't subsidize bi-fuel vehicles. The thinking has been, "Why should I give you a subsidy for a dual-fuel or bi-fuel vehicle that can take two fuels because you are just going to put unleaded in anyway? What kind of benefit is there? Am I hitting my objectives of cleaning up the air if you run it on unleaded?" The NAT GAS Act now has subsidies for bi-fuel vehicles. Example: Fuel Systems Solutions sells a kit that you could have an installer put on in your regular car and, all of a sudden, it will run unleaded all day, no problem. And then if you push a switch, it will now run on natural gas. You've got to have the natural gas tank, obviously. So now you've actually got longer range because you've got two tanks. So they are going to start giving subsidies for that type of vehicle. It's not as much as if you had a fully dedicated natural gas vehicle, but it is a subsidy of a certain level. That's something that is going to help Fuel Systems, and I actually also do think it makes sense to help with adoption, because it gets people through these infrastructure issues. We do think the NAT GAS Act is going to pass this year. I know the House and Senate versions, I know Senate Majority Leader Harry Reid has been talking about what he's going to do in the Senate and how that's going to go. We think it's going to go either standalone or maybe possibly attached to some, what we call "must-pass tax-extender bills" that have to pass; they know they have to pass. That's one. Let's switch now to the CAFE standards, the Corporate Average Fuel Economy standards. What those are - they have been standards for fleet efficiency. They are standards for fleets of how much you need, and they are extremely complicated, but essentially they target how much improvement in miles per gallon they want them to have. The EPA is now getting together with the transportation guys, and they are coming out with a next generation of that standard. It's due, I think, possibly mid next year is the initial version. It's going to take a little while for these to get implemented. But the idea that you are also going to not only have higher targets for the CAFE standard, you will also have one set for all the U.S. and new emission standards. It's like, you need to get so many miles per gallon and you need to get so few kilograms of carbon per mile, something like that. They are working through exactly how to do this. That will then stimulate the car manufacturers to say, "Okay, if we are going to have to hit these certain targets, how are we going to do that?" One of the ways certainly you can do that is you can use natural gas. There is only one natural gas car you can buy today in the United States from the OEM, and that's Honda's (HMC) Civic GX. They make about 2,000 of them, that's it. So they're kind of hard to find. If you contrast to the old GM - prior break-up GM - they had, I believe, the latest count was 18 different models of propane or natural gas vehicles. None of them sold in the United States. Zero. They sold them all internationally. There were 10 million vehicles internationally. Those guys know where they sell. It's international because of the pricing and the marketing, and the subsidies and infrastructure. So when those CAFE standards get in, you could possibly see those versions come into the United States as well. You could see regular OEMs starting to offer models in the United States. They will probably have a natural gas version you can get. There are different ways to achieve that. One interesting data point is that recently in Italy, 23% of all vehicles sold in July were either propane or natural gas - it's a big number.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 83 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

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