Investing in a Green Future

Joe Osha '80

By Scott Butterworth

For more than 2,000 years, the method to create mechanical energy has been simple – just add fire.

What was true for the aeolipile in ancient times is equally true for the jet engines of today. The easiest, cheapest way to create power still involves burning something. What has changed, though, is our awareness that this traditional power generation comes at a high cost: Burning creates carbon emissions, the driving factor behind climate change. About a third of the greenhouse-gas emissions that cause global warming come from the energy sector.

The surest way to reduce climate impacts, then, is to minimize carbon emissions in the creation of energy – to “decarbonize” by using technologies such as solar, wind, and hydro power.

The challenge of decarbonization at scale has piqued the interest of entrepreneurs, and hundreds of companies now offer energy-generation solutions of various types, sizes, and budgets.

Discerning the future winners from also-rans in this competition is where Joe Osha ’80 comes in. As one who has been both a shoot-for-the-moon startup executive and a clear-eyed Wall Street analyst, Joe brings broad experience to analyzing which companies have the best chance of commercial success, and thereby of helping to improve the health of the planet.

A managing director for Guggenheim Securities, Joe examines companies that aim to reduce the environmental footprint of energy production and industrial processes – whether those firms are publicly traded or privately held. On a day-to-day basis, he says, power and energy companies get most of his attention, since “that’s where the transition is furthest along.”

Joe has focused on for-profit sustainability for more than a decade, ever since an assignment with Merrill Lynch in Hong Kong introduced him to what was then an emerging area of commercial interest. He helped some solar companies become publicly traded in what would be the leading edge of a wave of industry IPOs.

He reflects, “It was really interesting, but there wasn’t quite enough going on to feed a managing director.”

So Joe left Merrill, where he’d been a securities analyst for nearly 20 years, to become the chief financial officer for a hydropower startup. That led to a similar role with a geothermal-energy startup.

Again, both positions were intellectually stimulating, but Joe’s personal bottom line was that working for startups and having no money was tough to swallow. So he returned to investment banking and joined the West Coast boutique firm JMP Securities in 2016. This time, his brief as managing director dealt entirely with sustainability companies, informed by the takeaways he’d gleaned from the private sector.

“I think working with startups, being on the other side and having to make something work, gives you some perspective, and maybe a little respect for how hard it is to make a company grow,” Joe says.

In 2021, the larger Guggenheim Securities recruited him to do the same job as at JMP. He even remains based in California for the New York-headquartered firm.

He reflects, “What has been great here is that the interest in what I do runs to the very top of the firm. [Guggenheim’s Executive Chairman] Alan Schwartz spends a lot of time looking at and talking about decarbonization issues. The size of the firm is one thing, but more than that, it’s organizational commitment.”

Joe’s role with Guggenheim takes him around the world to meet with business managers and discuss their plans, goals, and needs. The insights he collects assist Guggenheim’s clients in deciding which companies fit well with their investment goals.

The research also helps Joe assess where the green-energy business is headed in the next few years – which new technologies will soon make a real difference. These days, one area drawing a lot of his attention is energy storage.

“The industry has figured out how to put up wind and solar pretty cheaply,” he says. But integrating those power-generation systems with the existing electrical system remains a challenge, “and that challenge doesn’t rise linearly, it rises exponentially.” When customers unexpectedly demand more power – say, to make their air conditioners run during an extended heat wave – where will that green energy come from?

Efficient battery technology offers a solution, storing the power for usage spikes or times when the sun doesn’t shine or the wind doesn’t blow. But, Joe says, utilities require “a massive amount of storage – I mean, energy storage at a level that is orders of magnitude bigger than what we have so far.”

He adds, “Myself, I think environmentalists have to learn to get comfortable with nuclear” as an additional energy resource. “It’s simply not practical to power the grid with wind and solar, and then backstop it with batteries. The numbers don’t work.”

The question of scale also emerges in Joe’s analysis of sustainable transportation. The national conversation these days seems focused on the benefits of electric passenger vehicles and coast-to-coast charging stations. But electrifying commercial transport – especially the armies of short-trip vehicles around the country – would offer a much bigger climate payoff, he argues.

“At your average port, you’ve got lines of trucks sitting there with their diesels spinning, waiting to pick up a container and pull it, in most cases, maybe 50 miles or less. There’s no earthly reason that those trucks can’t be electric,” Joe says.

“The same goes for all of the Class 4 to 6 FedEx, UPS, and Amazon trucks. Those things never go more than 120 miles a day without returning to their base. School buses, the same thing.

“The thing about commercial vehicles is, those fleets turn over a lot more quickly than the passenger vehicle market does, and they spend a lot more time running. So there’s a lot of opportunity that is closer and more economically viable than trying to convince people to make the transition with passenger vehicles,” Joe concludes.

The big challenge with passenger vehicles, he says, is not persuading drivers to trade in their gas guzzlers but, rather, something more prosaic: How does one “fuel” these rides?

Right now, consumers are pinning their hopes on the fast chargers that are popping up in suburban parking lots. But those hopes rest on a misconception, Joe warns.

“As a result of how most of us are used to driving cars, we imagine pulling into a gas station or a charging station and plugging into a Level 3 fast charger that charges our cars in 20 minutes or whatever. That’s really challenging from a variety of standpoints.

“For starters, it’s still 20 minutes; that’s a material wait for a lot of people,” Joe says. “Also, the DC fast chargers really stress the grid. You’re talking multiple hundreds of kilowatts. Using one is the equivalent of switching on all the lights in seven or eight houses at the same time. I’ve not seen anyone say anything practical about how to deploy vast numbers of those fast chargers without creating significant grid stability problems.”

Not to mention, the fast chargers are expensive, and proprietary technology means that a particular charging station may not work with one’s specific vehicle. That’s a tough pill to swallow when your miles-to-empty readout is quickly approaching zero.

What drivers will need to accept, Joe asserts, is the idea of charging their vehicle over several hours at home or work: “When you’ve got longer dwell times, you don’t have this horrendous, spiky load to manage.”

And don’t even get him started on the idea of electric cars going long distances – say, for a family on the traditional American summer road trip. The simple fact, Joe says, is that the nation’s charging infrastructure is not up to the task.

“I’m not too impressed when I hear the feds talk about putting a charging station every 50 miles in the middle of the desert. You’re spending a lot of money, and you’re not actually solving much, since it’s going to take a long time to convince that group of drivers to go electric.”

For a man who has spent nearly all his professional life working with Wall Street, the irony is that Joe kind of fell into his career after completing a double-master’s program at the University of Michigan. “I did an MBA and got a degree in Japanese, a combination that was popular at the time,” he says.

His resume then drew the attention of Baring Securities, which hired him as an equity analyst for its Tokyo office. “I landed in this job in 1992, not knowing what a stock analyst did. It was just a chance to go to Tokyo,” Joe admits. “And I was like, ‘Hey, that’s fine. I’ll do that.’”

In 1995, still in Tokyo, Joe began working for Merrill Lynch. He says, “I’ve basically been in the business of learning about companies and technologies, and writing and communicating with people about these topics, ever since. I find that I’m very well suited to it by temperament.”

In fact, Joe gives a lot of credit to Potomac for teaching him how to communicate and tell a story – something that informs not only his written analyses but also his guest appearances on television news programs.

Joe says, “One of the interesting things about this job is that I sit at the nexus of various groups. I interact with management teams a lot. I interact with investors a lot. And that positions me to give feedback to management teams about what’s interesting to financial markets and what’s not – advising on how they should position themselves, how they should tell their story.”

The companies that heed such advice will be better able to tap into capital markets, bring their solutions to the fore, and ultimately, help strengthen the fight against global warming.

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