I just had a very interesting call with a private equity company that I thought I’d share, as it illustrates what we’re up against when it comes to energy.
When I asked about the firm’s energy practice, he said, “We trade coal; we set up deals between mines and utilities around the world.”
“All right,” I replied. “Any interest in going beyond that, perhaps into biomass? I would think that there are pressures on the coal industry that will eventually have an effect.”
“You mean shale gas?” he asked. “The low cost of gas is making this tough, for sure.”
“I was thinking more along the lines of sustainability and the environment – that kind of thing. I don’t want to sound preachy, but coal’s not good for the health of the planet.”
“Oh, that’s an extremely minor factor; that won’t put a dent in coal. Now, the Europeans have a slight interest in biomass, especially wood pellets. But in the U.S., there is almost zero interest. You really can’t touch trees whether they’re living or dead, and you can’t take waste wood across state lines. There’s a list of regulations against biomass here are as long as your arm. If you can prove that you’re using pure saw dust that came exclusively as a result of the manufacturing of lumber, that’s fine. Everything else is a hassle beyond your wildest dreams.”
Wow, you have to hand it to those coal guys; they’ve done a really impressive job in cementing in their position in the U.S. energy world, and it really will take some work to get them out of here.
I’m rolling up my sleeves.