A Green Mortgage

Looking at buying a home? Even the banks can see the benefits of going green and are happy to reward you for it.

In March of 2011, the Bank of Montreal (BMO) began offering a mortgage plan that provides a relatively low lending rate to homeowners whose homes are 'green'. Provided your home meets the necessary criteria -- primarily having ENERGY STAR rated products and several other high efficiency units -- you can receive a lending rate several points lower than the typical mortgage. For example, the current rate on a low five year fixed mortgage from BMO is 4.14%, while the green mortgage comes in at 3.89%, which could save homeowners thousands of dollars over the five year period.

BMO isn't the only Canadian bank in on this. TD also has a similar discounted rate, while RBC and CIBC offer rebates from certain home inspections and energy upgrades.

It's nice to see the private sector starting to pick up some of the slack left behind by the federal government -- ahem, the Harper Government. After years as a success under Liberal and Conservative governments, the ecoEnergy home retrofit program (formerly EnerGuide) was discontinued in March, 2011. The programs had provided Canadian home and business owners with significant rebates for energy-related upgrades, upwards of $10,000 when paired with matching provincial rebates. Given the Conservative environmental platform, its vow to cut the deficit and its new majority government, it seems highly unlikely that any similar program will return anytime soon.

Home retrofits are some of the most economical changes people can make to decrease their environmental impact on the world. Things like weather stripping, insulation and new furnaces can often pay for themselves in energy savings in less than five years. Unfortunately, the high upfront cost can prohibit a lot of homeowners from making such investments, so every little bit helps.

Of course, given the current state of the Canadian economy and the hit the mortgage market took in the last few years, it has become increasingly difficult to get your hands on a mortgage. And given the strict criteria for the plan, this will likely benefit the affluent before the poor. But hey, you have to start somewhere.

Imagine cars as an investment...

When you buy a new car, it is said that it loses half of its value as soon as you drive off the lot. Unless you collect rare cars, vehicles are one of the poorest economic investments anyone can make.

Sure, they provide drivers with the independence to go where they want, when they want and with the comforts of heat, shelter, music and most importantly, cupholders. And yes, some might argue there is value in the opportunities a car can give you, such as being able to get to a job. But when you pay for that car, the value consistently falls over time, especially as you dump money into repairs. And at the end of its life, you can sell it for a much lower value or just scrap it altogether.

But imagine this: What if you could use your vehicle as its own source of revenue, enough so that it could pay for itself? This is a possibility being brought forth by electric cars.

It would work quite simply. When you charge your electric car, you can do so at the low-peak hours (i.e. throughout the night while you sleep while electricity will be cheaper) and then any amount that was unused or regenerated can be sold back to the electricity grid at peak hours (i.e. weekday evenings when everyone gets home from work). The vehicle acts as a storage for electricity that can be sold back for a profit while also levelling out the peak demand on the electricity system.

That, in conjunction with the up to $10,000 the Ontario government has proposed, could make vehicles profitable and, over time, pay for themselves.

For those of you familiar with this futuristic view of our electricity system, the benefits of electric cars might be well known already. However, I had never come across the idea that the cars could pay for themselves and be their own source of revenue.

What an exciting plethora of possibilities we have for the future...

Making a buck from the environment (in a good way)...

People have been making a profit from the environment for centuries. Unfortunately, the environment has gotten the short end of the stick as (some) people pocket the cash and the environment is left severely degraded. This is not news to anyone.

But for those of you thinking a nice, long-term investment might be in order in the next few years, consider something I've been wheeling around my head for a little while. Consider investing in renewable energy.

The trend is a simple one. As climate change draws ever closer to the forefront of people's minds, the realization that unsustainable energy sources can not keep the world going will come to fruition. This, along with the fact that oil resources will eventually (if they have not already) begin to dwindle, will create significant demand for renewable energy resources. Technologies like wind, solar, geothermal, hydro, biomass and tidal will become very popular.

What is very important to realize is that we have not reached this point yet. In fact, we're not even close. Despite all the talk and news coverage about renewable energy, we're not about the hit the point where we can shut down the world's oil refineries. The likelihood that such a point will come within my lifetime (judge your estimated lifetime accordingly) is far greater. The David Suzuki fantasy of self-sufficient everythings could very well be a reality.

But it won't happen tomorrow. It won't happen next year. And when it does happen, it won't happen overnight. The transition to a clean energy world will take decades. That is why those of us in the younger generations might stand to make a killing from it.

Imagine a time when the world's biggest renewable energy firms (ex. Vestas in Denmark or First Solar in the USA) replace the world's big oil firms as the leading energy companies. While they might not be quite as profitable -- you can't own the wind the same way you can unrefined petroleum -- they might still be massive. Imagine when Vestas wind turbines are scattered throughout the world as plentifully as barrels of good ol' Exxon-Mobil crude.

This will happen. We just don't know when. As young people, several of us have the benefit of time. While a significant investment into a specific company or industry might not necessarily pay huge amounts in the short term, the long term growth of renewables will be tremendous. The shares you pay for today might be worth a whole lot more in the years to come.

Indeed, some people have invested a lot of money in the renewables industry hoping that the current 'boom' will pay off huge. But as we have seen, this is not necessarily the case. The economic or political climate has not yet reached the point where renewables can be seen as anything more than 'alternative'. Those looking for a quick buck might not find it here. But those looking to make a secure, long-term investment probably will make a nice chunk of change.

In terms of where to actually invest that money, I don't know. I'm not a financial planner. My guess would be the big companies like Vestas and First Solar, but renewables are still in their infancy and other, much smaller companies could very well grow much larger. Other options would include Index-funds, which would invest in an entire sector, such as solar, wind or even 'clean tech' to cover every renewable company around.

You won't make lots of money right away. But you might very well set yourself up nicely in the future. And hey, you probably won't hurt the environment all that much, either.