Archive for March, 2008

As posted on CleanTechBlog.com

Last week I visited Southeast Ohio at the request of the office of U.S. Sen. Sherrod Brown (D-OH) to take part in a roundtable discussion on how to promote cleantech and green energy innovation in a rural, coal-based area. There, I was pleased and fortunate to have met Neill Lane, president and CEO of Sunpower.

No, not the Sunpower you probably know – the $6 billion photovoltaics subsidiary of Cypress Semiconductor based in San Jose.

Rather, I’m talking about Sunpower, the privately held company based in Athens, Ohio, that specializes in Stirling engine technology. With much less fanfare than its same-named PV peer, Sunpower has gained a foothold in European residential micro-CHP (combined heat-and-power) markets and is now working on modifying its technology for concentrated solar power applications. Much of Sunpower’s technology development is done in partnership with NASA at its Glenn Research Center in Cleveland.

Sure, this Sunpower isn’t of the size and visibility of the other one. But the company is no hype-based start-up or virtual wanna-be, either, with more than 60 employees in a relatively remote college town of about 20,000 and a cash-flow-positive position after having been in business for more than 30 years. That’s a commercial success that I’d be very proud to have achieved.

Although green economy advocates mainly tout the megastars of the cleantech universe, they shouldn’t overlook the accomplishments of many smaller but no less innovative companies slaving away (and making money) underneath the radar screen. In rural America, there are probably many such enterprises playing important local roles in creating wealth and jobs, while addressing the global energy and environmental challenges we face. It would be nice if they could receive their due recognition, too, and I dedicate this posting to these unknown soldiers.

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Last week, Cleveland-based Progressive Insurance announced it was sponsoring the Progressive Automotive X Prize: $10 million to develop a market-ready automobile that would achieve fuel efficiency of 100 miles per gallon.

The Associated Press reports that 60 teams from nine countries have already signed up for the competition, which will take place in 2009 and 2010 and involve cross-country and urban driving tests. It will be interesting to see the technologies, designs and approaches employed to produce the required breakthroughs.

What would cause an insurance company to offer so much money to improve auto fuel efficiency? Clearly, Progressive has concluded that increasing gasoline prices – and perhaps increasing scarcity of oil products generally – are major threats to their auto insurance business. Unless auto efficiency improves significantly, auto ownership and mileage driven will decline, thus leading to lower insurance premiums paid to companies like Progressive. Evidently, Progressive estimates the net present value of this threat to their company at many millions of dollars.

It’s also quite telling that a major corporation in a highly competitive industry isn’t putting much faith in the auto/energy markets to drive manufacturers toward the desired energy efficiency improvements on their own. Perhaps Progressive sees what many free-market advocates haven’t – that the auto/energy markets are encumbered by so many barriers to competitive activity that the beneficial forces of Adam Smith’s “invisible hand” can’t and don’t operate effectively.

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In the wake of setbacks to new coal power plant construction in the face of likely carbon legislation, the coal industry has mounted a serious PR blitz, led by a group called Americans for Balanced Energy Choices (ABEC).

ABEC is a national nonprofit organization with a claimed membership of 150,000 whose acknowledged primary funding source is “America’s coal-based electricity providers” – including such big boys as American Electric Power, Duke Energy, First Energy and Southern Company. Not to mention large coal companies such as Arch Coal and CONSOL, and railroads such as Burlington Northern Sante Fe and CSX.

Quite aptly, Sourcewatch refers to ABEC amusingly as an “astroturf” support organization: “…apparently grassroots-based citizen groups or coalitions that are primarily conceived, created and/or funded by corporations, industry trade associations, political interests or public relations firms.”Given the corporate interests listed on the ABEC website, it is hard to call ABEC a true grassroots organization.

Here in Ohio, ABEC has launched a series of billboards and newspaper advertisements promoting coal implicitly at the expense of other energy alternatives. Particularly objectionable to me is the ad that illustrates (as if algebraically) “Coal = Ohio Jobs,” suggesting not so subtly that a shift to other non-coal forms of energy will cause a loss of jobs. I was compelled to write a response, which appeared last week as an editorial in the Plain Dealer.

In tandem with the Ohio media program, ABEC released a white paper written by “energy economist” Eugene Trisko – identified on the white paper as “Attorney at Law” but otherwise silent on his representation of the United Mine Workers of America (did someone say “coal?”) for more than 20 years – titled “The Rising Burden of Energy Costs on Ohio Families.”

Mr. Trisko points out correctly that Ohio’s manufacturing-based economy has suffered mightily in recent years, and he argues that “developing an energy supply strategy that maximizes the use of Ohio’s local [low-cost coal] resource could help to reduce the impact of future energy supply and price shocks.” In other words, Mr. Trisko stresses that Ohio should use more coal because it’s so cheap – that is, as long as carbon emissions aren’t taxed or stringent carbon controls aren’t required.

Further, Mr. Trisko neglects to mention that almost 90 percent of Ohio’s electricity generation comes from coal, and yet that hasn’t prevented dramatic economic deterioration in the state. Is it possible that the same mentality that led Ohio to put virtually all its energy eggs in the coal basket is the same type of thinking that has led to the pervasive economic stagnation in Ohio? Is more of the same – stay the course, keep betting on coal – the way to go for Ohio’s economic future?

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Originally posted to this blog: 3/10/08

Whereas diesel engines have made great strides in the European auto markets, here in the

U.S. gasoline still dominates. Apparently the prospect of much higher fuel mileage and lower CO2 emissions from diesels doesn’t overcome the objections of

U.S. environmental regulatory authorities concerned mainly about local air quality issues.

I suspect that even if (when?) these objections are overcome by continued refinement, diesels will still find it difficult to win market share in the

U.S., largely because of the wider availability of gasoline.

A possible win-win solution may be forthcoming. A California firm named Transonic Combustion is working on technology that would allow gasoline engines to work at high compression ratios, thus enabling much better energy conversion ratios comparable to what is achieved in the typical diesel engine. Sounds like a great idea to me, and I hope it works.

I wonder, though, if it will provide the throaty sound of those big-block V-8’s that Americans seem to love so much…

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Originally posted to this blog: 3/3/08

I have subscribed to Forbes magazine for more than a decade because, unlike many other popular business journals, it seems to have a genuine voice – even if I sometimes disagree with it.

On a plane flight from Cleveland to

L.A. last Thursday night, I read the March 10, 2008, issue, and was amazed at how pervasive cleantech has become, even in Forbes’ stoutly conservative pages:

Pages 4-5: an advertisement from General Electric touting its solar efforts

Page 24: an advertisement announcing the winners of the 2008 Eni Awards, sponsored by the Italian energy giant Eni, “aimed to promote research and technology innovation in the field of energy and its concersion, with particular focus on renewable sources”

Pages 38 and 40: an article on Duke Energy profiling its (relatively) progressive stance on carbon legislation

Page 39: an advertisement from BP illustrating its investments in domestic energy opportunities, especially highlighting biofuels and solar

Page 56: an advertisement by SKF, one of the largest suppliers of bearings for wind turbines

Page 71: an advertisement by XL Capital featuring an illustration of a solar farm and promoting its “strength to cover the world’s largest energy and environmental risks”

Page 85: an advertisement by Siemens depicting its offshore wind turbines

It was the SKF ad that really floored me, making me take notice just how ubiquitous cleantech is truly becoming. I’ve never seen SKF advertise anywhere before. Just which decision-makers is SKF trying to reach with this placement in a mass-market magazine?

Cleantech is seemingly everywhere. True, some of it may be “greenwash,” but a lot of it is real, and it is growing.

Then I went back to reading the magazine and realized we still have a ways to go. On page 19, Steve Forbes writes yet another editorial continuing to deny climate change. I laugh and shake my head: Some things never change.

Maybe Mr. Forbes should take better note of what the major corporations showing up in the pages of his magazine are actually doing to make money. After all, isn’t Forbes the paragon of capitalism? If companies are rushing to cleantech in droves, shouldn’t Forbes take heed of what the market is leading these companies to do to increase their profitable growth?

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Originally posted to this blog: 2/25/08

Recently, Virgin Atlantic Airways flew a passenger-less Boeing 747-400 partially fueled by a biofuel mixture of coconut oil and babassu oil from London’s

Heathrow Airport to Amsterdam’s

Schiphol Airport. (Read the USA Today story.)

The test flight, performed to evaluate comparative engine performance and emissions rates with standard jet fuel and biofuel mixtures, was conducted by Virgin along with partners Boeing, the engine-maker General Electric, and the biofuel company Imperium Renewables.

No matter the results of the experiment, and no matter your personal view on the fundmental utility of biofuels, this is yet another example of how a passionate entrepreneur - albeit one with billions of dollars on his personal balance sheet like Richard Branson - is exploring the cleantech frontiers of what is possible, what is economical, and what is environmentally beneficial.

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Originally posted to this blog: 2/18/08

The McKinsey Global Institute – the think-tank offshoot of my alma mater, the management consultancy McKinsey & Company – recently released a study claiming that annual global investment of $170 billion between now and 2020 would cut greenhouse gas emissions in half, while producing an internal rate of return on investment of about 17%.

Interestingly, none of this investment is in renewables or other forms of zero-carbon energy. Rather, all of it is in energy efficiency.

Actually, McKinsey uses the term “energy productivity.” That is, squeezing more economic output per unit of energy input. Maybe McKinsey is wise to be using the phrase “productivity” rather than “efficiency,” since it conjures up “more good stuff with less input.” As we all know, the concept of “energy efficiency” has hardly caught the world by storm, as it seemingly falls prey to the same challenge as the word “conservation,” evoking the unpleasant images of sacrifice, making do with less, and Jimmy Carter wearing the cardigan.

Whatever the semantics, I hope a study such as this one compels serious economic actors to deploy more capital to reduce energy consumption, and thereby reduce emissions. Per a quote from an article in the Financial Times by Diana Farrell (registration required), director of the McKinsey Global Institute, “it shows just how much deadweight loss there is in the economy in energy use.”

Sounds to me like a big opportunity for savvy capitalists.

As posted on CleanTechBlog.comOriginally posted on this blog: 2/12/08

Last week, three financial titans – Citigroup, J.P. Morgan Chase and Morgan Stanley – released “The Carbon Principles” to provide guidance to energy companies in managing carbon risks. Going forward, these big banks say they will only provide debt financing to new power projects if proponents can prove the proposed plants will remain economically viable under future climate change policies. Here is the Citigroup release on The Carbon Principles.Put another way, Wall Street sees federal carbon legislation as imminent, and it doesn’t want power sector executives to try and “sneak in” any last coal plants, the economics of which might be threatened in a carbon-constrained world. The banks’ interest is not necessarily environmentally motivated  – they simply don’t want to see any more loans go bad – but the effect of this announcement is likely to be positive.

The energy sector can’t claim it wasn’t at the table. The Principles were developed by the banks in consultation with a who’s who of power industry giants: American Electric Power, CMS Energy, DTE Energy, NRG Energy, PSEG, Sempra Energy, and Southern Company.But apparently the willingness of these utilities to participate in the process doesn’t mean everyone in the energy sector has yet read the writing on the wall regarding climate change. In the February 4 edition of the Wall Street Journal, reporter Jeffrey Ball quoted Jeffrey Holzschuh, vice chairman of institutional securities at Morgan Stanley, as saying, “We have to wake up some people who are asleep.”

If a remarkable July 2006 letter from Stanley Lewandowski, general manager of Intermountain Rural Electric Association in

Colorado, is any indication, it would seem there’s still a number of Rip Van Winkles out there in the electric utility world. Rise and shine! Climate change is a real phenomenon, and carbon legislation is coming. Let’s begin to deal with it!Given how Wall Street seemingly exercised no leadership whatsoever on the subprime mortgage debacles, it’s refreshing to see they’re actually out in front (at least a little bit) on the climate change issue.

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Originally posted on this blog: 2/4/08

One of the best things I’ve read recently is an oped in the Washington Post headlined “Going Green? Easy Doesn’t Do It” written by Michael Maniates, a professor of political science and environmental science at Allegheny College.

Maniates gets to the heart of something I sometimes hear from ardent proponents of the cleantech movement that bothers me - the sense that saving the world can be easily accomplished with a few minor changes in behavior, and that technological advancements will be coming to save the day at little incremental cost to all of us.

His punchline: “Never has so little been asked of so many at such a critical moment.”

I hope we’re wrong, but Maniates and I both believe that, if we’re going to seriously address our energy and environmental challenges, we’re going to be exposed to major economic and behavioral sacrifice, relative to our current standard of living. I don’t see how we can reduce greenhouse gas emissions by 80 percent from present levels without a fundamental shift in how we do things at every level of existence.

This takes courage and determination. As Maniates exposes, what we get instead from politicians, the media and, yes, many advocates is a mixture of hyperbole and half-truths that serve to relax the masses.

In a conversation I had about a year ago with David Orr, one of the true pioneers in environmental thinking at Oberlin College, I said we all needed to create and broadcast a story about energy and environment in the

U.S. that clearly induces urgency to action without inspiring panic and depression. I know I haven’t been able to craft such a well-balanced story. Has anyone out there?

As posted on CleanTechBlog.com

Originally posted on this blog: 1/28/08

“Powering the Planet” is the title of an extraordinary speech regularly given by Nate Lewis, professor of chemistry at the California Institute of Technology. It is a bit long and detailed but very much worth reading, as it elegantly frames the scale of the worldwide energy/environmental challenges to be faced in the coming decades.

The gist of the presentation is that aggressive pursuit of energy efficiency is critical, but we still need to supply the remaining human energy requirement in some carbon-free fashion, which leaves us relatively few viable options:

• Nuclear power, which concerns Lewis not for safety or security reasons but because of the inability to expand nuclear utilization quickly and sufficiently to meet the world’s needs.

• Carbon sequestration of fossil fuel burning, which Lewis says may not be available in time or at the volumes necessary to have significant beneficial impact on climate change.

• Hydro, geothermal, wind and ocean energy, which are all fine in Lewis’ view, but inadequate in scope to supply global energy demands.

• Bio-based energy, which Lewis finds to be highly inefficient and therefore unlikely to be able to provide more than a small fraction of worldwide energy requirements
  

That leaves solar energy, which Lewis concludes is the best hope for the planet - technologically known to work, scalable with no binding supply limitations, at potentially reasonable economics with continued advancement.

Then Lewis closes with the clincher: If we’re going to succeed with solar energy, our priorities need to change.

“In the United States, we spend $28 billion on health, but only about $28 million on basic solar research,” he says. “Currently, we spend more money buying gas at the pump in one hour than we spend funding basic solar research in our country over an entire year. Yet, in that same hour, more energy from the sun is hitting the Earth than all of the energy consumed on our planet in that year. The same cannot be said of any other energy source.”

‘Nuf sed.