as posted to CleanTechBlog.com

As pretty much everyone knows, it’s been a hot summer, here in the Northeastern U.S. and across the globe, as 2010 is shaping up to be the hottest year on record.  This weekend was brutally so, and to capitalize on it, the Plain Dealer here in Cleveland ran a couple of articles on air conditioning in yesterday’s paper.

The more interesting article (which obviously was syndicated nationally, as here is the version from the Los Angeles Times) was a piece by Stan Cox entitled “AC:  It’s Not as Cool as You Think.”Cox is promoting his new book, Losing Our Cool, which profiles the utterly pivotal role of air conditioning in shaping today’s world.

Cox points out some staggering numbers.  Only 50 years ago, just 12% of U.S. homes were air conditioned; today, that’s up to 85%.  Of course, AC enabled the massive migration from the U.S. Northeast to the South and the Southwest, which would be pretty uninhabitable without air conditioning, and the development of suburbs and commuting patterns that will prevail for a long time to come.  According to statistics cited by Cox, air conditioning in the U.S. is responsible for half a billion metric tons of carbon emissions annually — more than the total emissions of Australia, France, Brazil or Indonesia.

To the extent there’s good news here, it’s that substantial opportunities exist for improving air conditioning technologies.  For instance, geothermal heat pump systems have long been proven to be a far more efficient method of cooling buildings than conventional AC — if only more architects, engineers and building owners would become aware of this option and consider making a modest additional investment to reduce their future energy bills.  And, as noted in the article “Keeping Cool and Green”  in the July 17 issue of the Economist, a plethora of innovative approaches on the drawing board promise the potential for further reducing energy consumption requirements associated with air conditioning.

Given that about 40% of U.S. energy requirements are associated with buildings, and about 40% of building energy consumption is associated with climate control, it behooves us to get much more serious about getting cool.  Especially if climate change over the next few decades makes summers like this one seem mild.
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As posted to CleanTechBlog.com

Several months ago, I was asked by the Chagrin Foundation for Arts & Culture – in my lovely hometown of Chagrin Falls, Ohio – to speak on the topic of nuclear energy at their Chautauqua-at-Chagrin lecture series.

I agreed and proposed a talk titled “Nuclear Energy:  Threat or Opportunity?” I thought it would be kind of catchy, and that I could figure out something interesting to say under that heading.

Well, the talk is tomorrow (Tuesday, July 20), so this past weekend I forced myself to organize my thoughts on what to say. It was more challenging than I had anticipated.

This is because the title actually turned out to be truly apt: Nuclear energy is both a threat and opportunity. There are huge advantages and substantial risks associated with nuclear energy. It’s easy to see one side of the coin or the other, but it’s hard to see and accept both sides of the coin at the same time.

Among the points I intend to make in my lecture:

There is no easy, cheap, one-size-fits-all answer for powering our economy in a way that provides the standards of living we’re accustomed to, at the costs we’re accustomed to paying, in avoiding the bad future to which continued status quo will drive us. Nuclear energy can be a major part of the total solution, but only if we’re willing to accept the costs and risks.

Many people tend to think that nuclear powerplants are inherently dangerous, thinking of Chernobyl. Chernobyl was truly an aberration: All safety systems were intentionally disabled and the plant was pushed to limits as an experiment. (Hey, that’s a really good idea!) Three Mile Island was a more plausible worst-case scenario, and its environmental impact was/is small relative to the long-term impact of coal mining or burning, or petroleum extraction or refining. The BP Gulf oil spill is far worse of an ecological catastrophe than Three Mile Island, but no one’s talking about banning oil. Instead of environmental risks, the real risks of nuclear energy are about fuel security and fuel disposal.

The U.S. taxpayer has long heavily subsidized, and continues to subsidize, nuclear energy.  With maybe a hundred billion dollars of cumulative R&D funding over the decades, plus substantial tax credits and loan guarantees, the U.S. government has been and remains the biggest benefactor of the nuclear industry. Private industry sure isn’t. There hasn’t been an order for a new nuclear reactor in more than 30 years. When opponents discredit renewable energy because of subsidies (which they admittedly do receive), it’s pretty hypocritical:  Nuclear (and fossil) energy has gotten and still gets far more subsidy dollars than renewable energy has and does.

If we shut down all the nuclear powerplants in operation today, the risk associated with spent fuels would still exist, and emissions would likely go up, at least unless/until enormous amounts of new wind/solar installation were to backfill nuclear retirements. For the time being, the economics of new wind and solar energy – indeed, any new powerplants – are considerably higher than the costs of running existing nuclear plants, so electricity prices would go up if nuclear were to go away. So shutting down operating nuclear plants doesn’t seem like a promising strategy from either an economic or environmental perspective.

The costs of new nuclear are completely unknown. There hasn’t been a new nuke completed in the U.S. since the 1980s, and no new orders since the late 1970s. New designs are on the drawing board, but none have been implemented.  Including earning a fair return on investment in new plants, costs could be as low as 8 cents/kwh or as high as 15 cents/kwh.  The range is so wide because it could take 5 years or 15 years to complete a new plant, based upon uncertainties about licensing, approval, and permitting processes.  The cost of new nuclear is generally more than new wind, and while less than new solar today, the costs of new solar should become competitive with technological advancements in the coming years.  So, it would seem that this argues for massive wind and solar installation, rather than new nuclear (or new fossil powerplants).

But it’s not so easy. Wind and solar are not ” round-the-clock,” at least unless/until there’s cost-effective energy storage for the power grid (don’t hold your breath). And other options aren’t so appealing, either.

New gas-fired powerplants have fairly low emissions and can be approved and built quickly, but the price and supply of natural gas are uncertain and highly volatile. New coal powerplants would be an even riskier bet.

Using conventional technology and ignoring greenhouse gas emissions, the cost of energy from new coal powerplants is probably on the order of 6 to 8 cents/kwh. However, if the U.S. ever becomes serious about dealing with climate change via a carbon policy, then the economics of coal power will deteriorate significantly, either to capture carbon (a largely untested and expensive technology) or to pay for the costs of emissions. In a carbon-constrained world, it’s easy to project the costs of new coal power at >10 cents/kwh. So if we don’t care about climate change, coal is likely to be the dominant answer, and few new nukes will be built in the U.S.

On the other hand, if climate change matters, then there’s a potential role for new nuclear in the U.S. This role is amplified if we want to deal seriously with the other energy imperative we face, which is eliminating our reliance on petroleum for transportation.  Clearly, we won’t see nuclear-powered vehicles. But with improvements in battery technologies, we can (and likely will) see more electrification of transportation through plug-in hybrids and even pure-electric vehicles.

If and as that happens, we’ll need much more power generation capability, especially if a lot of old coal plants are retired in response to climate legislation. But where will that new power come from? If we want it to be from zero-carbon sources, and if we’ve already installed as much wind/solar as we plausibly can (assuming no effective grid storage technology), nuclear will be a very interesting option.

Summarizing, the more we try to deal with climate change and oil dependence, the more appealing nuclear becomes. Environmentalists are torn. Many oppose nuclear on philosophical grounds based on their perceived risks, while other thought leaders (e.g., James Lovelock) are nuclear proponents based on the practical realities. Which risks are more pressing:  climate change and energy insecurity, or radioactive wastes and weapons materials for terrorists?  Those are the tradeoffs upon which tilts the balance for nuclear energy.  Americans don’t seem to like that answer, though. They want no risk and low cost, and whine when they can’t get it.

On balance, I think the risks associated with climate and oil outweigh the nuclear waste and weapons risks. Accordingly, I tend to think that nuclear needs to be a bigger part of the energy toolkit of the future, at least until ocean-based power generation and/or grid-scale energy storage become economically viable. If nuclear is not to be part of the energy solution of the future, then there will be other costs and risks to bear, some of which could be very dramatic.

If we get it badly wrong, either way, the future of life on this planet may be seriously jeopardized.

As posted to CleanTechBlog.com

One of the fastest-growing “themes” of the cleantech sector is water. While clean energy gets the most attention, clean water is also becoming a high priority. According to Richard Smalley, the late Nobel laureate and nanotech pioneer from Rice University, water trailed only energy on the list of humanity’s top challenges over the coming decades.

Like all things cleantech, a major difficulty has been trying to earn good investment returns from innovations in the water sector. And so it is that the Water Innovations Alliance was formed to serve as an industry association to promote the emergence of a vibrant entrepreneurial sector in water technologies.

In May, the Alliance held its annual conference in Dayton. I attended and heard a number of good presentations providing some interesting tidbits on the water sector.

In his overview, Mark Modzelewski (executive director of the Alliance) gave some eye-opening statistics: Only 3 percent of the water on earth is fresh water, and little of that small sliver is accessible for human use, with 1.5 billion people globally not having access. By his measures, water is the third-largest industry on earth, representing $550 billion of revenues.

Modzelewski cited data indicating that 75 percent of U.S. water infrastructure will need to be replaced at a cost of “hundreds of billions of dollars.” Soberly, he noted that “the way we move, treat and filter water has changed little since the time of Julius Caesar: We move water through trenches and tubes, we force water through tiny holes to clean it, and we put poisons in water to kill other poisonous things.” Unfortunately, innovation is not happening at the required pace: Only $130 million in venture capital was placed in 33 water deals in 2009, with minimal corporate, academic, and public-sector resources and centers for water R&D.

Paul Gagligardo of American Water noted in his presentation the huge size of the water technology market: $172 billion of water-related capital expenditures in 2009, with $30 billion to $60 billion per year expected in North America over the next several years. Alas, he also noted how balkanized the demand side of the market is, with 52,000 community water systems and 155,000 non-community water systems in the U.S.

Notwithstanding the difficulties facing companies trying to profit from water technology innovation, a number of presentations from leading firms hinted at the opportunities.

Peter Williams, the CTO of Big Green Innovation at IBM, described IBM’s activities to parallel the smart grid in the water sector. In his presentation, Williams noted that 20 percent to 25 percent of all treated water is lost through leaks, and moving/treating water consumes 3 percent to 5 percent of all energy in the U.S, implying that smarter water management represents an enormous economic and energy opportunity area.

In his presentation, Ed Hackney of United Water, a subsidiary of Suez Environnement, took the smart water grid theme further, noting the need to push intelligence from already-sophisticated treatment centers through the relatively dumb network.

Probably the biggest splash made at the conference was by Veolia, a major sponsor with a significant presence, including several speakers. It’s clear that Veolia is trying to show itself as the leader in the water technology field. As profiled in a presentation made by Finn Nielsen, chairman of VWS (Veolia Water Systems) North America, Veolia has created the Veolia Innovation Accelerator to work closely with start-up companies on their water treatment technologies to speed up the pace of commercial adoption. This helps such companies validate/improve their technologies and introduces them more rapidly to the marketplace through Veolia’s vast channels in the water industry.

Other presentations from the conference are available and worth perusing to gain a better handle on this important but often-overlooked segment of the cleantech universe.

As posted to Huffington Post

As Jon Stewart so beautifully satired a couple of weeks ago, American political leaders have long said “enough is enough” about the lack of a coherent national strategy regarding oil.

In the wake of the BP oil spill in the Gulf, is this time different? Will the U.S. finally be able to change its stance on petroleum? Will the petroleum industry itself be irrevocably altered?

Though I don’t always agree with its perspectives, one of the better (i.e., more well-informed and reasoned) weekly energy newsletters I receive is “Musings from the Oil Patch,” written by Allen Brooks, managing director of the boutique investment banking firm of Parks Paton Hoepfl & Brown.

In the June 8 issue, Brooks provides an excellent analysis of the future of the petroleum sector titled “BP Oil Spill Pushes Industry Beyond Tipping Point.” The main conclusion of the essay is that the oil industry will never be the same – and all of the ways in which it will change should drive up the price of oil. His summary:

“Onshore oil and gas resources will become more valuable than offshore ones. Shallow-water petroleum resources may be worth more than deep-water ones. International markets will be more active and attractive for energy and oilfield service companies than the U.S. market. The domestic oil and gas industry will be less profitable in the future. New U.S. offshore drilling and operating procedures will become more onerous and expensive and likely require different, more capable equipment.”

One of the more interesting tangents of Brooks’ article is the discussion of the Obama Administration’s response to the BP spill.

Some news outlets are portraying the calamity in the Gulf as Obama’s Katrina, or perhaps more astutely as his Iranian hostage crisis, either of which would imply a dragging down of his presidency. Brooks instead sees the Obama Administration somewhat more sympathetically: as “family members outside a hospital operating room following a severe auto accident. While the surgeons work their magic on the victim with techniques beyond the understanding of ordinary people to fully comprehend the knowledge and skills being applied, the family members remain powerless to influence the outcome. Rather, they stand around praying or crying as emotions overwhelm them. Soon they become angry and demand immediate justice or retribution against those responsible for the accident.”

And of course, that’s what happened when President Obama determined “whose ass to kick” and exacted his pound of flesh from BP in securing their agreement for contributing $20 billion into a clean-up fund. This, in turn, raised vocal objections from Obama’s opponens (including those formerly arguing that Obama hadn’t done enough about the oil spill) about undue executive privilege. The infamous “apology” by Rep. Joe Barton to BP, and Barton’s subsequent apology about the apology, was the zenith/nadir of the political grandstanding about this spill from all sides.

The ineffective posturing and inane bickering in Washington has contributed nothing toward stemming the flow of oil from the sea bottom, nor to clean up the waters and the beaches in the Gulf of Mexico. But does the venom being spewed over the airwaves from all parts of the spectrum indicate that the petroleum industry is now approaching a tipping point?

In terms of energy policy, I think not. Call me a cynic, but when it comes to national energy policy, I will always take the under on what our federal leaders will accomplish to improve our long-term prospects.

Why am I so negative? Just like our economy is fueled by energy, our political system is fueled by money. And there is hardly anything in the economy as wealthy as the energy sector. The industry as a whole and its leading companies are both extremely cash-rich (certainly much more so than the principal advocates of change) and willing to spend money in Washington to support/defend their entrenched interests.

For the big oil companies, it’s not surprising that their primary objective is to protect the status quo, as opposed to making any transition. This point is well articulated by Deborah Gordon and Daniel Sperling in “Big Oil Can’t Get Beyond Petroleum” (a clever play on BP’s slogan “Beyond Petroleum”), as published June 13 in the Washington Post.

Kevin Leahy, managing director of climate policy at Duke Energy, recently gave a presentation in Columbus in which he opined that “moderates are the new endangered species in Washington,” adding that sane national energy policy requires tradeoffs and compromises that can only be achieved by crossing party lines, which is traitorous anethema in the current political environment.

No, I don’t think the politicians will have the courage anytime soon to lead us out of our energy challenges. As an economist, I think price signals may be the only way to move us in a different direction.

Absent any rules to change the dynamics of the market, energy prices will move (largely) as a function of supply and demand. I say “largely” because the petroleum market is a classic oligopoly, controlled by a swing monopolist (Saudi Arabia) with the greatest supply at the lowest costs, so pricing doesn’t follow pure supply/demand forces as they would in a totally free market. But close enough.

That’s where the peak oil theory comes in. There are innumerable postings on the Internet about peak oil (see, for instance, the Association for the Study of Peak Oil), so I won’t go into detail here. But suffice it to say: In a world of increasing demand for petroleum, especially from places like China where oil demand is growing at “astonishing” rates, and a finite planet with ancient organic matter (e.g., dinosaurs) converting to hydrocarbons not anywhere nearly as rapidly as hydrocarbons are being extracted, the long-term price trend can pretty much only be upward.

In the June 21 issue of ASPO’s weekly newsletter “Peak Oil Review,” editor Tom Whipple interviewed Jeff Rubin, formerly the chief economist of CIBC World Markets and author of “Why Your World Is About To Get A Whole Lot Smaller: Oil And The End of Globalization.” Below is a somewhat lengthy but nonetheless fascinating passage from that interview:

“Depletion does not have to be apocalyptic. It will only be apocalyptic if we continue to consume oil as we have in the past when it was cheap and abundant. Because I’m an economist and believe in the power of prices, I believe that we’re going to change. I believe that a global economy, when we move resources all around the world to be assembled by the cheapest labor force and then be shipped to the other end of the world, [is] not a rational way of doing business in a world of $150-a-barrel oil.

“What we’re going to see is a whole reengineering of our economy, and while we’re going to make a lot of sacrifices in terms of our past energy consumption, we’re going to find that our new smaller world has a lot of silver linings. And in a lot of ways it is going to be more livable and sustainable than the old oily world we’re leaving behind. Peak oil will be an agent of change, and much of that change will be positive, not negative. If we continue to commute 60 miles each way in SUVs, we’re going to get screwed. All of a sudden, peak oil will equal peak GDP. That’s not just an economic recession for a couple of quarters, that’s a world of no economic growth.

“The point of my book is that, while we can’t do anything about triple-digit oil prices, they don’t have to be so devastating as in the past. We have to reduce, in effect, oil per unit of GDP, and the way we do that is to go from a global economy back to a local economy because a global economy is an extremely oily way of doing business. And that switch isn’t something that the Federal Reserve Board or US Treasury or the Bank of Canada or the European Central Bank is going to put in place. That is going to be the aggregate result of all the micro-decisions that consumers make about what we eat, where we live and how we get around. I think triple-digit oil prices will lead us to make the right decisions on those fronts, and the result will be a very different economy than the economy we know.”

Whew.

I’ve said to many people that I’m one of a very small (and widely disliked) minority – and clearly Mr. Rubin is in this camp – that believes high energy prices are and will be a good thing, from an environmental perspective, an energy security perspective, and a technology innovation perspective. And if Mr. Rubin’s thesis bears out, high energy prices can also represent a force for reattracting much of the economic activity that has left the U.S. in recent decades to other parts of the world.

Globalization can continue for virtual things like ideas and communication, but for physical and material goods, an increasing oil price can only mean a reversion toward greater localization of economic activity.

A consistent re-migration of manufacturing back to the U.S. would really be a signal that a tipping point has been achieved. However, the big worry is summed up nicely in a quip by Mr. Leahy during his talk at the workshop “Opportunities for Ohio Businesses in a Clean Energy Economy“: “In his 2006 State of the Union speech, President Bush said that ‘America is addicted to oil.’ To which I say, ‘Unfortunately, every time America kicks the habit, the dealer drops the price.’”

While true in previous decades, price-cutting in the oil markets may not be so inevitble in the future. With the insatiable appetite for oil and the increasing challenges of supplying it from more difficult and remote resources, I don’t think even manipulative actions by OPEC to “keep America hooked” via lowered oil prices can or will work for very long in a future world of ever-tightening supply/demand balances for black gold.

What American politicians can’t do via the laws of man, the laws of petroleum engineering and the laws of economics can and will eventually do.

I doubt that there will ever be a discrete tipping point for the petroleum industry, but rather a gradual ebbing. Perhaps the ebbing has begun. If there is a tipping point, as noted petroleum analyst and banker Matthew Simmons likes to say, it will only be obvious in the rearview mirror.

As posted to CleanTechBlog.com

A few weeks ago, the American Energy Innovation Council released a report calling for a bipartisan commitment to increased governmental involvement in encouraging more research to spawn the new energy industry of the future.

The five key recommendations of the report are:

• Create an independent body to propose a national energy strategy
• Triple federal spending on energy research to $16 billion per year
• Create centers of excellence in energy research
• Fund ARPA-E at $1 billion per year
• Establish a New Energy Challenge Program to drive pilot project deployment

Members of the Council represent a who’s who of American business leadership, and they met with President Obama on the report’s release. Quotes from press coverage after the meeting were revealingly strong:

Jeff Immelt, CEO of General Electric: “We have a policy today. Our policy is uncertainty…I’d say status quo for this country is a losing hand.”

Ursula Burns, CEO and chairwoman of Xerox: “The incident in the Gulf just kind of intensified this discussion – that we have a fragile, brittle system.”

But it is the presence and statements of Bill Gates, the legendary founder and chairman of Microsoft, that are telling. Until now, Gates has been largely silent on energy and environmental matters. However, as you can see in a posted video, Gates is beginning to speak up on these issues.

Gates said in a news conference after the meeting with Obama that he and his fellow business leaders hoped “that any energy bill, particularly that’s raising revenue, should be heavily influenced by the Council’s report” to put more revenue into energy research.

To the humanitarian Gates, the world’s poor are “going to be the ones, when there are climate change effects, who suffer by far the most. And they need cheap energy. That’s actually something that unites the rich and poor.”

Note that Gates didn’t waffle by saying “if” about climate change. It’s a matter of when and where climate change will start biting.

Of course, the technoscenti don’t view Gates with the same esteem as, for instance, a Steve Jobs of Apple. While not as exalted as Jobs, as the second wealthiest person in the world (who pals around with the world’s third-wealthiest person, Warren Buffett), Gates ought to have a lot more impact with those who control the really big dollars, not just public but private and philanthropic.

So when someone like Gates starts making noises that our current approach to energy and environmental issues is untenable, perhaps it’s a sign of bigger changes afoot in the cleantech realm.

As posted to CleanTechBlog.com

One of the more promising stories to emerge from Cleveland in recent years is the formation of the Evergreen Cooperatives, a holding company to fund start-up companies that:

• Employ disadvantaged citizens from some of the most poverty-stricken neighborhoods in Cleveland
• Are founded on the principle of worker-owned cooperatives, enabling employees to participate in the wealth creation of the business
• Serve the needs of the local community, anchored by the market requirements of major enduring institutions such as the Cleveland Clinic, University Hospitals, and Case Western Reserve University
• Provide a product/service that is truly sustainable and consistent with the green economy of the future

Since Evergreen was formed and seed-funded in late 2009, the first three businesses launched have been the Evergreen Cooperative Laundry, Ohio Cooperative Solar, and GreenCity Growers Cooperative. With just a few months of operation, these green economy enterprises are now employing dozens of Clevelanders who otherwise would be challenged to find meaningful employment opportunities, affording true career tracks and wealth creation (as opposed to merely a meager wage).

Admittedly still in its early days, the long-term impact of Evergreen will only be known and felt years from now. But the prospects are promising. In the late 1950’s, the Mondragon region of Spain suffered from many of the same economic travails now besetting Cleveland, but the formation of the Mondragon Corporation (a similar network of cooperative businesses) has led to an economic powerhouse of more than 100 firms employing 120,000 people and annual revenues of more than $20 billion.

The world is taking notice of this social experiment: So far in 2010, Evergreen has been reported on in The Economist (subscribers only) and BusinessWeek, but perhaps the most thorough story on the is found in “The Cleveland Model,” an article appearing in a recent issue of The Nation. I urge you to read this article to learn more about a truly positive glimmer of hope in the revitalization of the industrial Midwest of the United States – and in the mainstreaming of cleantech throughout the American economy all the way into its inner cities.

There are too many heroes underlying the birth of Evergreen to list in one place, and I’m sure I don’t know them all, but I cannot complete this posting without special tips of the hat to: Lillian Kuri and India Pierce Lee of the Cleveland Foundation, Ted Howard of the Democracy Collaborative, Stephen Kiel of Ohio Cooperative Solar, Mary Ann Stropki of ShoreBank Enterprise, and the late and deeply missed John Logue of the Ohio Employee Ownership Center at Kent State University.

as posted to CleanTechBlog.com

I get a kick out of trite little lists that I can quickly report on and provoke some thinking and conversation.

And so it is that I recently came across the “Top Ten Energy Myths”, as suggested by Thomas Tanton, a fellow at the Pacific Research Institute.

As listed in the table of contents, the ten myths are:

1. Most of our energy comes from oil.
2. Most of our oil comes from the Middle East.
3. We have no choice but to import vast quantities of oil.
4. Offshore oil production imposes environmental risks.
5. Reducing our peroleum (sic) use through alternative energies like solar and wind will increase U.S. energy security
6. Energy companies will not invest in clean reliable energy.
7. Renewable energies will soon replace most conventional energy sources.
8. The U.S. consumes large amounts of energy and thus emits a disproportionate amount of the world’s greenhouse gases.
9. Federal mandates for higher-mileage cars means less energy consumption
10. Forcing drivers to use alternative fuels will help solve global warming.

As Taunton notes in the introduction, Mark Twain is attributed to have said that “it ain’t what you don’t know that gets you into trouble; it’s what you know that just ain’t so.”

And so it is: some facts are myths. But, then again, some facts are factual too, and some claimed facts are myths. For instance, at the conclusion of a brief commentary on these top 10 myths in the February issue of Power, Taunton presents as “fact” that “increased oil production can have green results,” with the supporting claim that “new drilling technology, developed by private energy companies, has greatly reduced the risk of oil spills.”

Uhhhh…..

I guess the moral of the story here is that readers have to be pretty discerning when considering the writings of thought-shapers, to not accept commentary as absolute, definitive and permanently correct, but rather to look between the lines in identifying biases and competencies that underlie their arguments.  And, if a writer is neither competent to discuss the topic, nor unconflicted in discussing the topic, readers are well-advised to not put a lot of trust in the writer’s opinions.
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As posted to CleanTechBlog.com

On behalf of Cleveland Foundation President Ronn Richard, I was privileged recently to attend an all-day bull session on energy innovation hosted by the White House. With support from the Kauffman Foundation, the White House convened this meeting to spur brainstorming among people who participate across the cleantech spectrum, presumably to uncover actions that can dramatically increase the velocity and success of energy innovation.

Alas, I can’t say I saw evidence of any concrete next steps, but I did hear a number of interesting comments from the morning sessions at the meeting:

Diana Farrell, deputy director of the National Economic Council: “Throughout U.S. history, major acts can actually spawn and renew markets, rather than thwart them. We are at that point today with energy: Energy and environmental debates have grown stale and a new policy paradigm is necessary to cut through them. Oil price spikes have preceded 10 of the last 11 U.S. recessions, so we need to eliminate this vulnerability. The history of great nations shows an ability to anticipate crises before they become too critical. But as important as policy reforms are, it is not enough for economic robustness. Entrepreneurs and innovation are essential.”

Dan Reicher, director of Climate Change and Energy Initiatives at Google: “Google is working on all three critical dimensions of cleantech: capital, technology, and policy. While Google’s actions on capital and technology for cleantech are well-known, their work on policy is aimed at accumulating and providing more and better information for policymakers to set better policies.”

Desh Deshpande, serial entrepreneur, including chairman of A123 Systems: “In cleantech, the center of gravity for innovation is not at the national laboratories and is reverting away from the private sector, instead focusing in the universities. The big challenge is not so much inadequate amount of funding on cleantech innovation, but rather inefficient commercial capture of the innovation that actually happens.”

Carl Schramm, president of the Kauffman Foundation: “Lots of challenges ahead for cleantech entrepreneurship. Angel investors as well as venture firms stand to be severely punished by proposed regulations aiming to ‘reform’ hedge funds. Businesses of all sizes are becoming too reliant on the government, blunting their intimacy with actual market needs. The link between university and commercialization is broken and needs to be reset, as the rate of new business spinouts from universities is plummeting. To help combat these challenges, Kauffman is sponsoring an Energy Innovation Network, which aims to help ‘connect the dots’ in faciliating entrepreneurship in the cleantech sector.”

Tom Baruch, managing director at CMEA: “Universities (not corporations) will be the center of innovation for the foreseeable future. Successful cleantech business models will need to be much more capital-efficient than many of the most prominent cases to date. Cleantech entrepreneurs cannot assume any ‘green premium.’ Their products/services must stand on their own to deliver real economic value to paying customers.”

Dr. Michael Crow, president of Arizona State University: “Universities can no longer afford to suffer from the delusion that being smarter is sufficient to be the best. University excellence in the future will be defined by five mantras: local relevance, speed, connectivity both within the university and to the outside, entrepreneurship, and intellectual innovation.”

Dr. Yet-Ming Chiang, founder of A123 Systems and professor of materials science and engineering at MIT: “True freedom to innovate at a university only occurs after professors gain tenure. To dramatically increase innovation, universities must restructure how they evaluate professors for tenure. At MIT, new products and services are now part of the review, but jobs created should also be a criterion. Fast-tracking of green cards for promising talent is also critical. Over the past five years, 86 percent of foreign graduate students at MIT indicated a desire to stay in the U.S., but only 56 percent have stayed. And the 44 percent that left departed mainly because of an inability to stay, not because they didn’t want to stay in the U.S.”

As interesting as these comments from the morning discussions were, the workshop in the afternoon got bogged down in very wonky policy topics that frankly bored me.

And also interesting was who was NOT at the workshop: little or no representation from big energy companies (petroleum or utilities). Is the White House (along with Kauffman) saying that incumbent energy players are not viewed as part of the cleantech solution?

As posted to Cleantechblog.com

The concept of an “audit” is something that is inherently, well, unsettling. The word itself implies that you might have done something wrong, and someone is coming to catch you and punish you. For sure, no one wants to face the prospect of an IRS audit.Of course, that’s not the sole or even main reason that I’ve never undertaken an energy audit for my house. It’s not an excuse, but an explanation to say that I’ve simply been too preoccupied with other matters to go through the effort of finding a qualified firm to perform an energy audit. And frankly, I had no idea whether an audit would cost $100 (easily acceptable) or $1,000 (too much!).

So it was with a bit of relief actually when a firm called GreenStreet Solutions sent me a mailer offering an energy audit for $199. No longer burdened with finding a firm to do the work, and knowing that the price was one I could afford, I gave them a call to schedule a visit.

I was very pleased. A two-man team from GreenStreet came to my 1978-era house for a three-hour tour (sing along: “a three-hour tour”), and they found some pretty interesting results. I wasn’t surprised to discover that certain of the walls and ceilings were underinsulated. However, I was shocked to see that the biggest source of thermal leakage was out of my basement, through the front stoop.

Armed with a host of data collected from the building envelope, thermal images from scanning, and my prior year’s gas and electric bills, the GreenStreet team went off to prepare an assessment. A couple weeks later, the lead analyst returned for an evening debrief with me and my wife, handing us a bound report summarizing the findings and suggesting measures to implement.

The results: at 50 Pascals of pressure, 5,135 cubic feet of air per minute was leaking through the building shell of my home, relative to a target of 2,299 for a reference home of comparable size. To combat this, GreenStreet proposed three packages of solutions – bronze, silver, and gold – to reduce the leaks. To my wife and me, the Silver package looked the best (the most bang for the buck), entailing $9,738 of outlays to save an estimated $2,288 annual heating costs, for a projected average payback of 4.3 years. Surprisingly, savings on air conditioning expenses are not calculated.

In addition, GreenStreet provided a bag full of goodies to further help reduce energy. For instance, we were given a Kill-A-Watt meter to measure appliance consumption rates and phantom loads. Though I haven’t yet gone around the house to develop a list, it sounds like a pretty fun project some rainy afternoon.

Also, GreenStreet gave us a bunch of thermal insulating gaskets for outlets and light switches. I installed these the other day, and in removing the covers, it’s really amazing to see how much thermal leakage is likely to occur through these huge uninsulated gaps. Parents: Installing these gaskets would be an excellent project to give to your teenager to undertake.

As for implementing the audit results, we were prepared to authorize a go-ahead until the GreenStreet salesperson noted that a bill was winding its way through Congress to reimburse up to $8,000 (with no ceiling on income levels) for weatherization efforts. And since the bill wouldn’t be retroactive, we would be better off waiting for the bill to pass, which is expected this summer. We thanked him for divulging this important opportunity and asked him to have GreenStreet call us when the bill passed.

He further noted that a bill was moving through the Ohio legislature to reimburse the $199 we paid for the energy audit, too, and informed us that we would be notified if this were to pass as well.

I was really impressed with the audit by GreenStreet: very professional and not pushy. The GreenStreet agent noted that their parent company was Vectren, a gas and electric utility based in Southern Indiana, which leads me to wonder if all energy audits should be performed by companies that have a corporate parent that is a utility possessing sufficient financial wherewithal and expertise on energy-related issues.

However, unless the utility has revenue-/profit-decoupling mechanisms in place, it’s clear in my mind that an audit can’t effectively be done by the local utility, which may be subject to conflicts of interest by threatening to cannibalize their core business by reducing energy consumption.

In all respects, my wife and I actually enjoyed this audit, and we recommend a similar type of audit for anyone who wants to make their personal contribution to the cleantech challenge.

As posted to CleanTechBlog.com

While it is increasingly recognized that subsidies for corn-based ethanol are bad policy, a nod must be given to C. Ford Runge, a professor at the University of Minnesota, for his pithy and merciless analysis in his note “Biofuel Backlash,” published in the May/June issue of Technology Review.

In the space of just a few short paragraphs, Prof. Runge cites the work of Earth Track (a firm dedicated to exposing subsidies detrimental to the environment) projecting $400 billion of U.S. subsidies to ethanol from 2008 to 2022, notes a recent estimate by the Earth Policy Institute that the 2008 U.S. corn crop diverted for ethanol production would have been sufficient to feed 330 million people for a year, and provides a reference to modelling that indicates a near doubling of greenhouse gas emissions because of changes in land-use patterns associated with corn-for-ethanol production.

It’s amazing that such awful policies, which are so adverse on so many dimensions, can survive. But in the gameboard that is U.S. energy, environmental, and agricultural policy, only grand compromises supported by the big boys can get enacted. These are then extremely difficult to overturn when they are seen to be nothing more than gifts to their well-positioned and deep-pocketed sponsors and supporters.

Reiterating a point I’ve made before: I have nothing against ethanol, per se. Cellulosic ethanol, if it can be accomplished cost effectively, is a promising prospect for reducing greenhouse gases and reliance on Middle East petroleum without chewing up valuable foodstuffs. But corn-based ethanol plainly sucks.  And the notion of using corn-based ethanol as a bridge to cellulosic ethanol is dubious, at best.

The old adage says that a camel is a horse designed by committee. Were it that U.S. biofuels policies were as lovely as a camel.