More Wall Street climate change research: Citigroup’s top stocks

Yesterday I mentioned that Lehman Brothers had released a 145-page research

note on climate change. In response, a friendly reader sent me a similar report

from Citigroup (120 pages, dated January 19), and said that UBS might have one

out as well. Interestingly, the Citigroup report came out of the New York office

– and although it’s similar in structure to the Lehman report, it’s more

optimistic about the list of 74 companies which it says "seem well positioned

to benefit" from climate change-related trends. It strikes me, however,

that those 74 stocks – which I’ve summarized after the jump – are

overwhelmingly in the energy sector, one way or the other, and I’m sure that

quite a few of them would be anathema to "green" investors.

So, what are the companies? Some of them, Citi admits, are not very environmentally

friendly at all. For instance, they write of RWE: "Despite emitting about

90 million tons of carbon dioxide, or about

10% of Germany’s total, this “dirty” utility has been enjoying

windfall profits in the EU Emissions Trading Scheme"; they also say that

TXU Corp, which is building lots of coal-fired power plants, is seeking to take

advantage of the fact that the US doesn’t have carbon emissions restrictions.

And most of the rest are based in one way or another on energy. Acciona and

Iberdrola have many clean technologies; there’s also Gamesa and Vestas in wind;

Conergy, Evergreen Solar, Q-Cells, Sharp, SolarWorld, Sunpower Corp, Suntech

Power, in solar; and Ormat Technologies in geothermal; and Allegheny Technologies,

Constellation Energy, Electricité de France, Entergy, Exelonin, Fortum

Oyj, FPL Group, Shaw Group, and Siemens in nuclear. Gas stocks are seen as doing

well too, so BG group, Centrica, Gaz de France, and Gazprom make the list.

Related are the ethanol and biodiesel plays: ADM, Bajaj Hindusthan and Balrampur

Chini Mills in India (ethanol from sugar), Brasil Ecodiesel, Bunge, Cosan, CropEnergies,

Deere, DSM, DuPont, Ebro Puleva, IJM Plantations, IOI Corp, KL Kepong, Monsanto,

Neste Oil, Noble Group, and Syngenta. Also listed are Potash Corp of Saskatchewan

and Terra Industries, which sell the nutrients which allow all these companies

to grow those crops.

There’s the carbon-trading plays: AIG, The Chicago Mercantile Exchange GFI

Group, and Swiss Re.

And there’s carbon-reduction companies, like BorgWarner and Magna International

in auto parts; Compagnie de St Gobain in insulation; Emerson, Itron, Johnson

Controls, Schneider Electric, and SIG PLC in energy; Philips in lighting; and

Honda, Peugot, Toyota in smaller, more energy-efficient cars,

Finally, Citi reckons that water in drought-hit countries will become more

valuable, so Aguas de Barcelona makes the list.

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