[Editor's note: This is the eighth part of our â? 2009a Outlook? Series looks at the global investment outlook the new year. ] Presidential candidate Barack Obama does not have a secret desire to jump-start the market for renewable energy made? Pledge $ 150000000000 to develop biofuels, solar and wind energy, alternative energies during his first term. But what could be a new government for the traditional means? and reliable â? Sources of energy? Oil is always the first source noted. But itâ? S hardly a solo act? Coal and nuclear are the remaining two-thirds of the Top Fuel Trio. Coal accounted for 50% of U.S. electricity supplies and nuclear power will further 20% on the table. The cold truth is that the demand for energy of all types â? and, in particular electricity â? Always on, at home and abroad. And the development of alternatives to coal and nuclear power will take time. For example, combining wind and solar power in the existing power grid is extremely expensive and probably raised a huge technical and engineering questions. In fact, according to the International Energy Agency, renewable energy isnâ? T appears to make a meaningful dent in meeting the world? S’s energy needs until 2030, if at all. And regardless of where the power of our appetite for electricity continues to soar. the whole planet is electricity consumption by 2030, more than doubled and rose to 17 trillion kilowatt hours. While the demand for electricity? Onlyâ? An increase of 50% in the U.S. market in 2030 is growing demand in China and 400%, six times in India. Our studies show that President Obama is very little flexibility in solving our energy problems in a short period of time, how good? S sworn in next month. Although he prefers to environmentally friendly alternatives, most of these replacements are not fully developed in a long time. Bottom line: Obamaâ? S clear preference for renewable energy from coal and nuclear power is fully developed and widely used, which means theyâ? LL remain the backbone of our energy sector in the new year? ? and in the coming years. However, itâ? S worth factoring in all kinds of players, as we explore the energy sector in Outlook â? and hence the potential benefits of playing one? The next 12 months.

When it comes to future energy profits for investors, coal and nuclear will continue to be the â??dream teamâ? for years to come. Coal will provide the answer to our short-term and intermediate energy needs. Itâ??s plentiful, itâ??s cheaper than other available alternatives, and a big percentage of the worldâ??s power plants burn it. Nuclear power offers a long-term solution to energy shortages and a clean solution to global warming, as well. Uranium-fueled nuclear plants are cheap to operate, can run for long periods without refueling, and cause little pollution. While there is widespread distaste for coal-fired power plants that spew billions of tons of carbon dioxide and other pollutants into the air, thereâ??s no doubt coal will continue to be the dominant player in the electricity game for some time to come. A full 50% of the electricity U. S. consumers use is generated by coal, and coal is king in the rest of the world, as well. According to the IEA, coal accounted for 42% of all worldwide electricity consumption in 2005. But get this â?? the agency predicts coal use will explode by 73% over the next 20 years. Thatâ??s the largest projected percentage increase of all energy sources. As you might suspect, China and India use 45% of worldâ??s coal and will be responsible for 80% of that increase. China, alone, uses more coal than the United States, Japan and Europe combined. China is utterly dependent on coal to run its factories and assembly plants, with coal supplying 80% of its electricity. The Red Dragon also is the worldâ??s top producer of steel, a process thatâ??s also a big burner of coal. But while China is coalâ??s largest consumer and producer, the United States controls 27% of the worldâ??s proven reserves, the biggest-single percentage on the planet. That puts this country front and center on the worldwide coal stage, and President-elect Obamaâ??s energy policy in the spotlight. The president plays a pivotal role in shaping the nationâ??s energy policy, naming top officials at the U. S. Environmental Protection Agency (EPA), the Office of Surface Mining Reclamation and Enforcement and the U. S. Army Corps of Engineers. Obama has proposed an economy-wide cap-and-trade system to reduce carbon emissions by 80% by 2050. His system â?? which would set an overall emissions limit, then require polluters to buy allowances at public auction â?? would increase electricity rates and discourage coal consumption in the U. S. market. President-elect Obama even has stated that any utilities building coal-fired plants could go bankrupt buying pollution allowances. And on Capitol Hill, newly emboldened Democrats recently tackled global warming and other environmental problems by choosing Sen. Henry Waxman, D-Calif. , to head the House of Representativeâ??s Energy and Commerce panel. Waxman has already signed onto legislation that would ban any new coal-fired power plants that arenâ??t built using new technologies that capture carbon dioxide and store it underground, a key part of the Obama energy plan. Luke Popovich, a spokesman for the National Mining Association, said he believes Obama will be pragmatic about the need to keep coal in the nationâ??s energy mix.

 

 

“He presumably would be sensitive to the impacts of energy policies given the perilous state of the economy,” Popovich said.

 

But while U. S. utilities may eventually be forced to tighten emissions rules and increase rates, Obamaâ??s renewable energy plans will have very little impact on U. S. coal producers in the near future.

 

The world needs coal. We agree with this. And wind turbines? Re the sale.

 

In the first half of 2008, U. S. coal exports increased by 13 million short tons, or 50%, over first-half 2007 shipments, according to the IEA. Strong global demand for coal, combined with supply disruptions in several key coal exporting countries (Australia, South Africa and China), were the primary factors behind the increase.

 

But lately, coal prices, along with the prices of other fossil fuels, have suffered from the global economic crisis, and from a resurgent U. S. dollar. An 80% decline in global shipping rates has also fostered competition from other exporters, like Australia, which can now ship farther and compete with U. S. exporters.

 

As a result, the price of Appalachian Coal on the New York Mercantile Exchange (CME) has fallen to less than $80 a ton from $143 in July.

 

This will have a negative impact on coal producers until the world economy is able to gather itself back up and build up a new head of steam.

 

But donâ??t expect the slump to last long. Chinaâ??s economy is getting a shot in the arm from a gigantic $586 billion stimulus package, cementing growth expectations for 2009. Expect U. S. exports to accelerate when that kicks in, probably in the second half of 2009.

 

Since the stock market usually leads economic indicators by six-to-nine months, right now is a good time to be looking at candidates for your investing dollar. But you should be cautious about pulling the trigger. Watch construction activity in China â?? especially steel demand in the late spring â?? for the first signs of a rebound in coal prices.

 

If you think things are ready, Peabody Energy Corp. (BTU) and Arch Coal Inc. (ACI) â? the largest American manufacturer â? Worth checking out. For those who want to play basketball Market Vectors Coal Exchange shares traded fund (Wed), ETF, or provide the required diversification. All three stocks trade discount of 80% increases in July and now trade in bargain times.

 

If you want a coal play that bets directly on China, Money Morning Investment Director Keith Fitz-Gerald likes Yanzhou Coal Mining Co. Ltd. (ADR: YZC), one of Chinaâ??s biggest coal suppliers. It produces lots of high-grade, low-sulfur coal, which burns cleaner and therefore fetches a premium price. The company boasts profit margins of 22%, when the industry averages half that. The company profits are up a blistering 364% in the yearâ??s first three quarters, compared with a year ago. The stock trades at only three times earnings and has a dividend yield of 4. 3%.

 

 

Nuclear power is attractive to the energy industry because it produces electricity on a predictable, 24-hour basis â?? earning it the industry sobriquet of â??base loadâ? power. Coal and hydroelectric plants are the only other power sources that also rate that label. Such alternatives as wind, solar or biofuels do not.

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During its term, the Bush administration tried to spark a â??renaissanceâ? in the construction of nuclear power plants. And during his presidential campaign, Sen. John McCain stood firmly behind the industryâ??s hopes of building 45 new reactors by 2030.

 

Interest in new types of reactors seemed to hint at least at the beginnings of a new start. But President-elect Obama has been lukewarm on nuclear. He acknowledges that nuclear is one of several viable components of the nationâ??s energy portfolio â?? the current 104-plant fleet provides 20% of Americaâ??s electricity â?? but has questioned its safety while emphasizing a need to diversify the nationâ??s energy mix with more wind, solar and other renewable sources.

 

“Thatâ??s sort of like my wife saying sheâ??d support divorce under certain situations,” says William Kovacs, the U. S. Chamber of Commerceâ??s vice president of environment, technology, and public affairs.

 

In fact, the Barack Obama/Joe Biden New Energy for America Plan, while recognizing that nukes provide 70% of our non-carbon-generated electricity, says that â??before an expansion of nuclear power is considered, key issues must be addressed including: security of nuclear fuel and waste, waste storage and proliferation. â? It goes on to say that the team of President-elect Obama and incoming Vice President Joe Biden â??do not believe that Yucca Mountain is a suitable site as a long-term repository for spent nuclear designed for long-term storage. In any case, the earliest the storage site could open would be 2017, and that was before Republicans lost control of the Senate.

 

With Senate Majority Leader Harry Reid, D-Nev. , firmly opposed to nuclear waste storage in his home state â?? and with the Obama administration ready to hold the industryâ??s feet to the regulatory fire â?? any plans to expand the nuclear industry in the United States now face a high hurdle.

 

But nuclear proponents are hardly impotent. The Nuclear Energy Institute, the industryâ??s most powerful lobbying group, helped craft the Energy Policy Act of 2005 with more than $12 billion in subsidies for nukes.

 

Maintaining nuclear energyâ??s current 20% share of generation would require building three reactors every two years starting in 2016, based on U. S. Department of Energy forecasts. Right now, some 17 companies and consortia are pursuing licenses for more than 30 nuclear power plants with the Nuclear Regulatory Commission.

 

But the last operating license for a nuclear plant in the United States was issued in 1978, and the approval process takes a minimum of 24 months after site approval, which can take years. Expect lots of public comment and infighting in Washington, as applications wind their way through the approval process at the NRC.

 

Meanwhile, the rest of the world is racing ahead with plans to up the ante in the nuclear power game. There are currently 440 nuclear reactors in 31 countries that generate about 16% of the worldâ??s electricity.

 

Uranium-fueled nuclear energy is rapidly gaining global acceptance as a clean, reliable alternative to such dirty-burning fossil fuels as coal and oil. In a twin bid to combat global warming and keep up with soaring demand for electricity, countries are rushing to build nuclear power plants. Under current projections, 630 reactors will be operating in 55 countries by 2030.

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Itâ??s the new technologies those reactors are designed around that are aimed at allaying the publicâ??s perception about the safety of nuclear power. Toshiba Plant & System Services, which has built 112 plants in the past 12 years (more than any other company), is working on a â??mininuke,â? according to Forbes magazine. Called the â??4Sâ? (short for Super-Safe, Small and Simple), it uses a bath of molten sodium to produce steam twice as hot as steam from water-cooled reactors. The 4S can crank out as much as 50 megawatts of power, easily enough to fire up a small factory, or to service an entire town thatâ??s located off the main power grid.

 

On top of that, the mininuke can go 30 years without refueling, as opposed to typical reactors, which must be fed every 18 months. And the 4S will be safer, because the reactor core is deep underground, well protected against a terrorist attack or earthquakes.

 

China and South Africa are working on so-called â??pebble-bed reactors,â? one version of which is filled with 100,000 billiard-ball-sized spheres of coated uranium that are cooled by helium. That eliminates the need for enormous pressurized water-cooling systems and million-dollar containment domes, making them virtually meltdown-proof.

 

U. S. firms are also on the trail of smaller and safer designs. A Santa Fe, NM company called Hyperion Power Generation Inc. , is working on a hot-tub sized design, which eliminates the need for the notoriously unstable uranium control rods. U. S. giant General Electric Co. (GE) is working on new, more efficient designs, as well.

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No matter how you slice it, the fuel for the reactors in those plants all depend on a scarce commodity â?? uranium. Flat out, thereâ??s just not enough â??yellow cakeâ? to go around. It takes seven to 10 years to transform a uranium discovery into a fully operational mine. With that kind of lag time, itâ??s clearly almost impossible for supply to keep up with demand.

 

Until recently, the market reflects the scarcity, rising as high as $ 137 per pound 2007th But lately, despite the global shortage, the price of uranium? A compassion for other raw materials prices? has nosedived.

 

Prices have fallen 40% this year, leading to a sharp decline in the share prices of mining companies, and eviscerating the financing for extraction projects. In the last month alone, six uranium mines in western Colorado and Utah were either put on hold or closed.

 

Some experts lay the blame for this current credit squeeze squarely at the feet of hedge funds â?? who they blame for buying up uranium â?? and banks no longer willing to lend money.

 

â??Hedge funds were selling off their uranium to raise cash, and the prices just plunged,â? said George E. L. Glasier, chief executive officer of Energy Fuels Inc. , a Canadian junior miner that recently put a Colorado mine project on hold as part of a â??capital preservationâ? strategy brought on by the credit crunch.

 

Uranium prices fell to $75 early this year, and fell as low as $44 this fall. The spot price now is $55.

 

With the worldwide growth in the industry â?? and a classic supply/demand imbalance in the making â?? someone is eventually going to have to pay the price. History shows when uranium prices move higher, uranium stocks almost always hitch a ride North. So when uranium prices advance â?? most likely to new highs â?? expect mining stocks to rise in virtual lock step.

 

However, despite the global economic growth â? now has at least one? Obamaâ? S Energy Plan and the closure of the mines, each set of long-term uranium play.

 

Besides Toshiba (PINK:TOSBF), the stocks to consider include Cameco Corp. (CCJ), the largest U. S. producer; and General Electric, which has a presence in the commercial nuclear power market here and overseas. Also, take a look at Rio Tinto PLC (RTP) and BHP Billiton Ltd. (BHP), huge international mining firms with large uranium deposits. Each of these firms would stand to reap substantial profits from a resurgent price in yellow cake.

 

 

However, regardless of what uranium does, coal is still the 800-pound gorilla in the energy world. In the United States, no matter how lofty our environmental intentions may be, itâ??s unlikely coal will be regulated out of existence anytime soon. Thatâ??s especially true overseas, where coal is playing a crucial role, fueling the transformation of such countries as China and India from â??emerging marketsâ? into first-order powerhouse economies. Given that, the world market simply canâ??t replace coal anytime soon, either.

 

As for nuclear power, safety improvements and other technological solutions make nuclear energy a viable energy source for the long term, eventually grabbing a bigger piece of the energy pie â?? especially overseas.

 

The bottom line: The economic outlook for both coal and nuclear power is upbeat. Investors might look at both energy plays when considering how to allocate their portfolio â?? for the New Year and beyond.

 

[Editor? S NOTE: Cash Morningâ? S a? 2009a Outlook? Economic Projections for the last line of thought the prospect of a new retail sales. Next up is South America. Check out recent stories, which emphasized that the uncertainty will continue for at least the first part of the slogan and the new year. No wonder, since the global financial crisis continues to whipsaw the U.S. financial markets in a way that Hasna? t seen since the Great Depression. ITA? S, almost enough to give up. But if you knew what to expect from early changes in the market? Then there? D is the driver? S Location of A? right? Youâ? D 't know what to expect, the craft would follow the winning strategy, and could then sit back, watch and wait ? and ultimately benefit? a market of events that you expect.

 

R. Shah Gilani â?? a retired hedge fund manager and a nationally known expert on the U. S. credit crisisâ?? has predicted five key financial crisis â??aftershocksâ? that he says will create substantial profit opportunities for investors who know just what these aftershocks are, and how to play them. In the Trigger Event Strategist, Gilani describes how investors can use these aftershocks, or â??trigger events,â? as gateways to massive profits. To find out all about these five financial-crisis aftershocks, and about the trigger-event profit strategy they feed into, check out our latest report. ]

 

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