Buffett Bets on Green Technology.
Recently, Warren Buffett has gone all in on the greener side of making green backs.
Warren Buffett’s first wager is on railroads. He believes that they can deliver big earnings and are better for the environment.
Green is the appropriate color for rail.
Buffett’s $44 billion gamble on Burlington Northern and Santa Fe suggests he thinks three decades of de-regulation, consolidation and infrastructure investment in rail have built the engine for the next advancement in the growth of railroads. Since 2000, the U.S. railroad industry has invested billions of dollars expanding track, buying locomotives and building freight yards.
The nation needs an efficient and less energy intensive way to move everything from cars to clothes to corn. Railroads are more fuel-efficient than trucks. Railroads have greater shipping market share opportunities because as fuel prices go higher railroads become relatively cheaper. In terms of carbon footprint, they use a lot less fuel, so they have a lot less emissions and a lot less cost. Trains are more competitive for long hauls and they are also a more economical choice for bulk goods such as farm crops and chemicals.
In 2007, railroads handled about 15 percent of freight tonnage, compared with nearly 70 percent for trucks. However, going forward, fuel prices are likely to go up. The advantage of railroads is likely to get bigger and bigger. Rails are the most efficient method of shipping by a factor of about three when you look at the consumption of fuel. Highways are overloaded, and besides being less safe, trucks spew forth a lot of carbon into the air.
Rail has been taking an aggressive posture in public and holding itself out to be more fuel-efficient and more eco-friendly. That is and advantage at a time when Congress is considering legislation that could toughen federal regulation of the trucking industry.
Buffett has doubled down on Wal-Mart stock. Warren Buffett doubled his holdings of Wal-Mart during the quarter ended September 30, 2009. In filings, Berkshire Hathaway reported its stake in Wal-Mart rose to 37.8 million shares from the 19.9 million shares he reported holding at the end of June, according to Dow Jones.
One reason is that Wal-Mart is becoming increasingly green. In 2005 Wal-Mart made a top down decision to be more eco-friendly. The Board of Directors adopted a sustainability program to remake the entire company, from the materials used to build stores, to the light bulbs stocked on its shelves. The vote of the Board on the initiative was unanimous. Wal-Mart, the world’s largest retailer and biggest buyer of manufactured goods, went to the green side.
Today, the roughly 200 million customers who pass through Wal-Mart’s doors each year buy fluorescent light bulbs that use up to 75 percent less electricity than incandescent bulbs, concentrated laundry detergent that uses 50 percent less water, and prescription drugs that contain 50 percent less plastic packaging.
By leaning on its vendors, Wal-Mart eventually dragged much of corporate America along with it. With its monopoly powers it forced its leading large suppliers like General Electric and Procter and Gamble to transform their own businesses to be better for the environment.
Recommendation: What Wal-Mart found out is that going green can produce more profits. Duh! Reducing the use of energy will reduce your energy bills. Recycling materials provides more base commodities for every one. Greed is not good for all. Going green is the best for everyone.