The Greenest Locomotive


In this line of work, I encounter investors of all kinds. When it comes to taking environmental matters under consideration, I've seen some who will invest in a stock primarily on that basis, but more commonly I find that the environmental achievements of public companies tend to fall on deaf ears.

I believe a happy medium lies somewhere in the mix. Selecting a stock primarily on the basis of ecological karma or visions for a shrinking human carbon footprint can feel peachy... until harsh economic reality sets in. I do hope for a tomorrow where renewable energy drives a more sustainable way forward, but my own painful experience with a (former) pet solar stock serves as a constant reminder that hope does not typically form a solid foundation for an investment thesis. The following one-year chart depicts the recent performance of the PowerShares Wilderhill Clean Energy Portfolio (NYSE: PBW  ) and a well-known solar stock as a house of pain for many green investors.

Making sure that green makes you green
While illustrating how quickly green investing can put you in the red, the above chart also shows how a happy medium of combining an environmentally sensitive corporate ethos with powerful economic fundamentals can help ensure that going green makes you some green. I have touted Waste Management (NYSE: WM  ) as a compelling green investment choice over the years. In addition to the attractive dividend (currently yielding 3.8%) and cozy earnings profile, I get excited by the company's efficient recycling and repurposing of waste, not to mention those cool solar-powered trash compactors that are showing up on the sidewalks of my hometown.

And ever since railroad operator Norfolk Southern (NYSE: NSC  ) led the industry's charge toward hybrid locomotives back in 2009, I have taken notice of the iconic hauler's proactive and noteworthy efforts to reduce carbon emissions and pursue responsible environmental stewardship. This week, the company announced it will become the first freight railroad in the U.S. to run its fleet on renewable diesel fuel. Through private fuel supplier Mansfield Oil, Norfolk Southern will purchase renewable diesel produced by Dynamic Fuels LLC. Dynamic Fuels is a 50/50 joint venture between Tyson Foods (NYSE: TSN  ) and Syntroleum (Nasdaq: SYNM  ) . Syntroleum owns "the Bio-Synfining(R) technology for converting animal fat and vegetable oil feedstocks into middle distillate products such as renewable diesel and jet fuel." Syntroleum's stock surged more than 20% after the announcement of the roll-out into Norfolk Southern's fleet.

The greenest locomotive
All of the North American railroads have done a terrific job revolutionizing fuel efficiency and upgrading their respective fleets while defending profitability through a challenging economic cycle. I am in awe of their collective operational achievements. By leading the charge toward hybrid locomotives and now renewable diesel fuel -- and also through the company's effort to plant more than 6 million trees in the Mississippi Delta -- I believe Norfolk Southern has set the industry standard with respect to environmental stewardship while remaining an absolute stud of meaningful profitability. By selecting the greenest locomotive, I believe investors can keep their ethical priorities intact without sacrificing the other sort of green.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns no shares in the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 14, 2012, at 6:02 PM, Maui808Gal wrote:

    Just a big old "Thank you." Intersting article Mr. Barker. :)

  • Report this Comment On February 14, 2012, at 6:37 PM, GtownRJ wrote:

    Followed this for a while. It makes sense as they engines in the yard used for shunting are inactive much of the day, and the long haul diesels are really eclectic trains (old RR men still call them that) that using a diesel generator to run the electric engine, and they use the engine to break, changing the electricity to heat, so storing it in a battery to go up the hill they just broke down saving tons of fuel is a no brainer.

    BTW, the battery they are using is a PcB that is made by Axion Power (AXPW.OB) about $500,000 worth per train, their stock could be a 10 bagger!

  • Report this Comment On February 14, 2012, at 8:43 PM, ckpcpqq wrote:

    It would be nice if you did some homework before posting your messages. The "green" locomotives are NOT hybrids. They are nothing like hybrids. They are gensets, which are multiple engine locomotives that meet current EPA requirements. NS also has one all-battery locomotive with which they are experimenting. But they have no hybrids. To the best of my knowledge there is only one hybrid locomotive built by GE and is a purely experimental model that has not been sold to any railroad.

    How do you expect anyone to take you seriously when you literally don't know what you're talking about?

  • Report this Comment On February 14, 2012, at 10:37 PM, XMFSinchiruna wrote:

    ckpcpgg,

    Did you bother reading the article linked above at the reference to hybrids? I think not.

    As a matter of fact, Norfolk Southern Did launch its own prototype hybrid locomotive in 2009. I did not state that those hybrids were typical of the broader green fleet; but rather that NSC was leading the industry's charge in testing their viability.

    The burden of getting the facts right rests more heavily in the court of he levels the critique. I am well aware of the range of green locomotive technologies out there, and I encourage you to go back to the drawing board before calling me out in such a manner.

  • Report this Comment On February 15, 2012, at 10:04 AM, catoismymotor wrote:

    Sinchy,

    Thanks for the great article. NSC is one of my three favorites big RR companies. I am impressed with how well they are doing with maximizing the efficiency of their engines and the work they are doing to reduce the impact their business has on the environment.

    I am also impressed with how short line RR operator GWR is mirroring the big guys. Additionally they have retrofited a few of it's short line trains with GenSet technology that is reportedly 20% more efficient than their standard fleet can deliver. I'll provide a link below in case you or someone else would like to read more about it.

    - Cato

    http://www.gwrr.com/about_us/community_and_environment/gwi_g...

  • Report this Comment On February 15, 2012, at 10:11 AM, Jbay76 wrote:

    +1 rec for Sinch's reply to ckpcpgg, another for the article

  • Report this Comment On February 15, 2012, at 10:36 AM, pl2358 wrote:

    Motley Foolers,

    I can't say enough about how good I feel about NSC. Isn't it ironic that this company, with it's high revenue of hauling coal, notoriously a dirty fuel, is becoming a greener business every day?

    The greenest railroad in the country is actually a short-line railroad called Pacific Harbor Line, Inc. They are the port rail operator for the ports of LA and Long Beach. I wish they had stock to sell, because I'd buy it in a minute.

    Right now, they are testing the first Tier 4+ locomotive in the industry, made by Caterpillar. By the end of this year, they will have all Tier 4 or Tier 4+ locomotives. Considering the amount of intermodal and vehicle cargo that goes through those ports, that is a triumph.

    NSC has made great strides in making their fleet much greener, and less dependent on foreign oil. Once that locomotive that's being tested at PHL is brought on mainstream, I would expect all of the railroads will slowy replace their fleets with them. Couple that with the biofuels mentioned in this article requiring no engine modifications to be made when using the fuels, and you get a huge cost and environmental improvement over the old electric-diesel locomotive.

    Happy investing to all!

  • Report this Comment On February 15, 2012, at 11:28 AM, GtownRJ wrote:

    RE: hybrid locomotives.

    The Hybrid Train might be a better term, it is diesel locomotives with a battery pack electric one in line to store energy that would otherwise be wasted.

    No use getting mad over semantics, just clarify.

  • Report this Comment On February 15, 2012, at 11:57 AM, XMFSinchiruna wrote:

    GtownRJ,

    Good Grief! And anything else a Peanuts character might have exclaimed in similar frustration.

    I invite you to take up the semantic discussion with GE:

    http://www.ecomagination.com/portfolio/evolution-hybrid-loco...

  • Report this Comment On February 19, 2012, at 9:59 PM, neamakri wrote:

    Found that the chairman of NSC, Mr. Charles Wick Moorman is 60 years old and has been an officer since 1970. That would make him an officer of the railroad at the age of 19.

    Is that right?

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