Investing in California Renewable Energy

California.

It’s like kryptonite to those of us who believe taxation is theft.

Golden State residents are forced to pay the highest income tax rate in the nation.

They also pay a 7.5% sales tax on their gluten-free muffins and protein shakes, and depending upon one’s tax bracket, some have to pay a capital gains rate as high as 33% when combined with the federal capital gains rate.

Don’t get me wrong.

I do love California.

It’s a beautiful state with lots of wonderful and wacky people.

It’s the only place in the world where I can enjoy a healthy organic breakfast while spotting Hollywood A-listers, porn stars, and hung-over society types in the time it takes me to devour an acai bowl with hemp granola.

I also love California because it keeps making me rich!

Happy to Profit

As one of the earliest investors in the renewable energy space, I’ve made a fortune by capitalizing on California’s very strict renewable energy laws.

You see, in 2002, the state of California established a Renewable Portfolio Standard (RPS) that required the state’s electricity mix to include at least 20% renewable energy.

Now, while I’m no fan of government meddling in the energy game, I’d be lying if I said I wasn’t happy to profit from it. And that’s what I’ve been doing since 2005.

From early wind farms in the Tehachapi region to geothermal power plants in the Mayacamas Mountains, members of my Green Chip Stocks investment community have built small fortunes from California’s RPS. And it’s about to get even better.

Getting rich, whether you like it or not

Last week, Senate Bill 32 landed on Governor Jerry Brown’s desk.

SB 32 is undoubtedly one of the most aggressive greenhouse gas emission reduction bills ever to make it to a governor.

Under the terms of this bill, California will be required to cut its greenhouse gas emissions by 40% below 1990 levels by 2020, regardless of population and economic growth. This is a huge task and will require a major transition of the state’s energy economy.

As analyst Paul Rogers wrote in the Mercury News, some of the efforts that could be used to achieve this goal include rules requiring automakers to make hundreds of thousands of electric cars and penalties for people who buy gasoline-powered cars. I’m assuming those penalties would take the form of hefty fines or additional taxes.

New tax credits and incentives for solar farms and wind power are also possibilities, as well as tighter building-efficiency standards on windows and heating and water systems in homes and businesses.

Even supermarkets may have to provide labels that show the carbon footprint of each product.

Landfills may be required to capture natural gas and use it to heat homes, and there could be a very big push for home battery storage.

And in addition to all this, California already has an updated RPS in place which requires utilities to produce 50% of their power from renewables by 2030.

Being that California is the eighth-largest economy in the world, not only could this have a massive impact on clean energy development within the state, but it’ll actually help speed up the rate of adoption elsewhere, as these moves will help further reduce renewable energy production costs.

Like it or not, the state of California’s desire to regulate the hell out of everything is going to make renewable energy investors a lot of money.

In the near term, I suspect the biggest winners will be the electric car industry, solar, and wind.

Companies like Vivint Solar (NYSE: VSLR), GE (NYSE: GE), and Tesla (NASDAQ: TSLA) will benefit handsomely. Companies that provide materials for the electric car industry will also do quite well, especially the lithium providers that are now working with both electric car manufacturers and solar manufacturers that are integrating storage into their systems. 

And of course, aside from those of us who will be exploiting these new rules for profits, I’m sure the good folks of California will be more than happy to see anything in place that will help clean up that toxic air that makes it nearly impossible to walk through Los Angeles without coughing up a lung — even if they do have to shell out even more money to make it possible.

Look, I don’t make the rules. I just profit from them.

And make no mistake; California’s new greenhouse gas reduction rules will result in huge profits if you play it right.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.