Inside Obama's green plan for energy and the economy

Times staff writer Edward Silver posts this detailed look at Sen. Barack Obama's proposals on energy -- and which companies could benefit most from the candidate's blueprint if he wins the White House.

For Barack Obama, climate change is change we can believe in.

Speakers at the Democrats’ convention this week, by and large, have taken as dim a view of fossil fuels as the Iraq war. If you were quaffing your brew at each mention of "alternative energy" from the podium, you’d have a lot of recycling to do by now. The green theme climaxes tonight, with environmental hero Al Gore setting the stage for the candidate’s address.

Since he launched his campaign, Obama has offered remarkably detailed proposals and demonstrated fluency in the language of energy and carbon. He promises a broad agenda aimed at growing sustainable industries quickly. That means jobs, profits and a balm for the planet, but it’s a riddle when, or if, that growth would offset the financial costs of change.

If he takes the helm, Obama’s blueprint may be welcomed by an admiring Congress. Then comes the hard part: implementing it.

Like rival John McCain, Obama proposes a market in permits to emit greenhouse gases, commonly termed "cap and trade." His approach is stricter, however, and his final goal -- an 80% reduction from 1990 levels by 2050 -- more ambitious. Even though emissions limits are defined by the government, cap and trade is widely seen as a fair, market-driven way to, in Obama’s words, make "dirty energy expensive."

Coal generates half the country’s electricity, but with carbon costs imposed, new plants won't be built. Under Obama, investors may shun coal producers that only sell domestically while favoring those that feed booming demand overseas, such as Peabody Energy Corp. Meanwhile, firms that crack the engineering challenge of burying coal emissions underground would get more than a few contracts.

Assuming that a Congress renews key tax incentives, utilities would hurry to add renewables to their mix, playing into the hands of wind energy specialists such as Vestas and solar companies like Energy Conversion Devices Inc., Sunpower Corp. and private BrightSource Energy.

Obama is not a friend of nuclear power but urges the industry to solve its chronic waste storage and other problems. With coal in the doghouse, though, the pressure to go nuclear would build. That’s where natural gas comes in. In his energy factsheet, Obama makes special mention of the cleaner-burning fossil fuel, the No. 2 source of U.S. electricity. He promotes drilling in the Barnett shale in Texas, among other places. After all, the Illinois senator doesn’t see renewables contributing more than 10% of our power supply by 2012, and even that may be a reach.

If natgas is a fossil fuel even Democrats can love, politics may favor such players as Chesapeake Energy Corp., Devon Energy Corp. and T. Boone Pickens’ Clean Energy Fuels Corp. . . .

With Ford, patience would have been a virtue for Kerkorian

From Times Staff Writer Ken Bensinger, who covers the auto industry:

Is this how billionaires become millionaires?

With Ford Motor Co. shares today at their lowest level since the mid-1980s, billionaire L.A. investor Kirk Kerkorian’s decision to load up on the stock in the last few months now looks premature, at a minimum.

In late April, Ford reported a surprising first quarter profit, and confidence in the auto giant soared. Around that time, Kerkorian -- known for his, ahem, activist interest in more than one car company over the years -- announced that his Tracinda Corp. investment firm had acquired 100 million Ford shares, or a 4.7% stake, at an average price of $6.91.

On April 28, Kerkorian stepped up again, making a tender offer to buy an additional 20 million Ford shares for $8.50 each -- a 13% premium over the market price.

Wall Street was, briefly, jubilant. The Wall Street Journal, talking of revivals at privately held Chrysler as well as at Ford, wrote: "The turnaround efforts at both companies . . . still have a long way to go. But the bottom line is that Ford appears to have pulled ahead. Mr. Kerkorian's latest automotive investment is best viewed as proof of that."

Whoops. On May 22 Ford announced that its long-stated goal of profitability in 2009 had gone up in smoke. Instead, it was cutting production, idling shifts at plants and delaying delivery of its big 2009 model launch, the redesigned F-150 pickup.

The stock, already on a downswing after reaching $8.48 on May 1, sank to $7.16 on May 22, and kept sliding from there. By June 9 -- the day Kerkorian set to complete the tender offer -- the shares were trading for $6.36.

Nonetheless, Kerkorian made good on the offer for 20 million shares at $8.50 each, even though he had the option of pulling out because the market price had tumbled.

And still, he wanted more: On June 19 Kerkorian disclosed that he had purchased an additional 20.8 million shares of Ford on the open market at prices between $6.10 and $6.75, raising his stake to 6.5%. That week, the 91-year-old investor met with Ford leadership, including Chief Executive Alan Mulally, in L.A.

Which brings us to Ford’s report today on its June sales. They were dismal, off 28% from a year earlier. Worse than General Motors’ sales, even. Investors hammered Ford’s stock as low as $4.41. The shares ended at $4.71, off 10 cents for the day and the lowest since 1985.

All told, Kerkorian now has 140.8 million Ford shares worth $663 million. That means he’s down at least $325 million, or almost 33%, on his investment. (A Tracinda spokesperson couldn’t be reached for comment.)

But of course, it’s not a real loss unless you sell. And Kerkorian is nothing if not persistent when he gets involved with auto companies -- as he showed in his attempt to buy Chrysler in 1995 and his failed effort in 2005-06 to force GM into alliances with Renault and Nissan.

Photo: Kirk Kerkorian. Tim Shaffer / Reuters

GM's Maximum Bob: Don't tell me how to make an E-car

Times staff writer Ken Bensinger, who covers the auto industry, filed this post:

A living legend in the auto industry, Bob Lutz has worked for Ford, Chrysler, BMW and, since 2002, General Motors, where he heads product development. The Swiss born, fighter-jet-flying, bespoke-suit-wearing ex-Marine isn’t known to mince words. This spring, he famously referred to global warming as a "crock of sh**." When outcry ensued, Lutz, in his trademark raspy growl, told reporters that those were his personal opinions, not those of the General.

On Friday, Maximum Bob (as gearheads call him), showed he’s not afraid to mix it up with the rabble as well.

In response to a Times article on the multiple woes of GM and other automakers, a particularly vociferous reader -- known to call electric cars more important that "the so-called immigration issue, falling home values, and man-bites-dog stuff" -- copied Lutz in on a letter to the editor. The gist: GM, after losing $39 billion last year and with its stock at a three-decade low, could save itself by bringing back a 10-year old, two-seat electric car.

"There is one option GM has not considered, which would turn things around, both in image and in reality. GM could resume production of the 1999 EV1, using Panasonic lead-acid batteries," the reader asserted.

Furthermore, he wrote, GM’s plans to produce a four-seat extended-range electric car called the Volt, set for release in 2010, "depends on Lithium batteries which don't yet exist."

Maximum Bob was not about to let that backtalk from a green transportation activist go by without comment:

He shot back in an email: "The EV will not meet any current safety laws. Putting a version into production that meets regulations would put us out to ’11 or ’12. They cost us well over $80,000 to produce, and, being a two-seater, we could only sell 800 in four years. We lost over one billion dollars on that experiment."

As for the Volt, Lutz had choice words as well:

"I don't know why you insist that lithium-ion doesn't exist. We are getting packs from our suppliers, they test well in both hot and cold, they store the energy as claimed, we are fast-cycling them to make sure they last, we are doing high-temp, high-load testing with the cooling system shut down and are experiencing no thermal problems. Trust me, the battery will not delay the car."

As any outraged activist would, the reader quickly fired back a reply, copying four Times addresses, an additional GM employee and a contact at California’s Air Resources Board, calling for distribution to all members of the body.

Too early to tell if Lutz will call these revealing comments his own personal opinions as well.

Photos: Bob Lutz. Paul Sancya/Associated Press; a funeral for the EV1 in the movie "Who Killed the Electric Car."/Sony Pictures Classics