God’s Country

by Heather Rae

The whipping winds of central Spain and the sultry, slow-spinning blades of wind turbines play central roles in Pedro Almodovar’s most recent creation, “Volver.” One of Almodovar’s women sighs, “este maldito viento se vuelve loca la gente.” (“This hellish wind drives people crazy.”) To me, a student in Madrid the summer of 1982, the topography of central Spain was arid, harsh and unforgiving. To someone else, Spain is God’s country – as are Nantucket Sound, the ridges along the Appalachian Trail, the plains of eastern Wyoming and the shores of Denmark. They are all God’s country; they are all special places, giving spiritual and ecological sustenance to someone and something.

Opponents of the Reddington Pond Ridge, Maine wind farm, parroting opponents of the Nantucket Sound and the Spanish La Mancha wind projects, say the Reddington site is inappropriate…it’s special. On the local radio, opponents say, if this project is approved by the Land Use Regulation Commission, then the bar will be so low that all wind projects proposed in Maine will be approved. They say, those coal-plants out west should clean up their acts; that is a better way to address climate change, a better way to meet demand for electricity.

In the mid-90s my former mate, a wind developer, came home to the agricultural preserve of Montgomery County, Maryland where we had a farmhouse. He had been to Upstate New York walking ridges and talking to farmers and local governments, looking for a good site for a wind cluster of eight or so turbines. He told me that he had found a really good one, but a woman, recently relocated from Manhattan and a self-proclaimed environmentalist, opposed the project. My mate moved on.

I was pissed.

Down the road from our farmhouse, along the Potomac River, 40 miles outside Washington, DC were two electricity generators – one coal-fired, the other a trash burner. A good old boy in Poolesville, Maryland paying 50 cents on the dollar to farmer widows, sold the land to these industrial developers. It was relatively easy to locate these polluters in what was then a poor, agricultural, uneducated and politically-weak backwater. A local citizen’s association extracted as recompense an old barn, abandoned when the county purchased a farm for a commercial composting facility; the barn was renovated into headquarters from which to educate and to monitor shipments of coal and trash, plant emissions, the incessant and monotonous drone from the plants that ebbed and flowed over farm fields, and, potentially, accidental releases of anhydrous ammonia. The good old boys settled disagreements with shotguns, stalking and paintballs; they aligned with industrial polluters and government. They joked that one day they would leave the agricultural preserve for “real farmland” in Pennsylvania; they would take their money and move on to another special place.

Close to the Mason Dixon line, Montgomery County’s agricultural preserve is culturally rich (guns and good old boys and all). With its fecund soil and the sleepy Potomac, it is God’s country – as are Pueblo, Colorado and the Dinai Indian Reservation out west, homes to huge coal-fired plants that feed a ceaseless and increasing hunger for electricity.

This week Maine’s Land Use Regulation Commission rejected the proposed Reddington Pond Range and Black Nubble Mountain wind projects in western Maine, prompting the editors of the Maine Sunday Telegram to proclaim: LURC wind farm vote a lost opportunity.” The editorial page editor, John Porter, called the rejection “a fit of immaturity.” The Associated Press weighed in that same day with, “Town blows hot and cold on wind farm” referring to the newly erected Mars Hill Project. Another wind project in Maine, Kibby, is up for review.

From Spain to Maine, it’s all special; it’s all God’s country. Nobody can lay claim to ‘specialness’ as a reason to oppose wind projects.

Heather Rae, a contributor to cleantechblog.com, manages a ‘whole house’ home performance program in Maine. In 2006, she built a biobus and drove it from Colorado to Maine. In 2007, she begins renovation of an 1880 farmhouse using building science and green building principles.

Climate Tectonics

by Richard Stuebi

The climate changes only slightly faster than the continents shift. Climate policy changes only slightly faster than the climate is altered by greenhouse gas emissions. So, when one begins to see a few elements of U.S. climate policy moving, in a relatively short period of time, it’s hard not to take note and consider the implications.

In his State of the Union speech, President Bush (kinda-sorta) acknowledged climate change as an important policy aim, referring to it as a “serious challenge”. While there was no mention of a carbon tax or a cap-and-trade mechanism that would seriously address this serious challenge, at least Bush proposed an important mechanism to reduce greenhouse gas emissions that had been anethema for decades — to tighten the fuel economy standards of new vehicles. (Not to mention an increased push for renewable fuels to displace petroleum fuels.)

The new Congress is sticking its neck out further, not waiting long to take up legislation that more directly and forcefully combats climate change. (see article) At the most important annual gathering of world leaders, the World Economic Forum in Davos Switzerland, the Republican Senator John McCain — a likely candidate for the Presidency in 2008 — expressed his conviction that the U.S. will soon tackle climate change in a meaningful way. (see article) No doubt, it will take a while for a true policy change on climate change to emerge in the U.S., but the strong ramp-up in attention and activity is unambiguous.

It has become virtually impossible to think that climate change will not be addressed by more than merely political platitudes within any relevant forecasting horizon.

The corporate world can thus no longer afford to assume a continued stalemate that denies true action on climate change from being taken in the U.S. More foresightful companies — even major energy companies such as BP (NYSE: BP), FPL (NYSE: FPL), Duke (NYSE: DUK), and PG&E (NYSE: PCG) — have banded together to form the U.S. Climate Action Partnership, which is committed to reversing the trend of increasing carbon emissions in the U.S. (see article)

Even the most lingering latecomers of the U.S. corporate community are finally beginning to see the writing on the wall: that climate change is a real concern, and that actions will be taken in the near-future to reduce greenhouse gas emissions. For instance, unnoticed (by me at least) was some reportage from late 2006 that ExxonMobil (NYSE: XOM) has finally stopped funding the Competitive Enterprise Institute (CEI), a think-tank that is widely viewed to be spreading misinformation about climate change, so as to muddy the waters and delay anything meaningful being done to address it.

The pent-up forces pushing for action on climate change are starting to become unstuck. Major breakthroughs haven’t happened, yet, but shifting is occurring and the warning tremors are increasingly clear. I used to think that it would take until the next President after Bush for us to see a real U.S. policy dealing with climate change — but recent indicators suggest that we might not have to wait that long, after all.

Richard Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy.

REEF break for Australian wave power co.

Nick Bruse runs StrikeConsulting, a cleantech venture consultancy, and works with Clean Technology AustralAsia Pty Ltd; the organiser of the AustralAsian Cleantech Forums, and the leading advocate of Cleantech in Australia.

As the summer sun continues to blaze here in Australia, Climate change continues to feature strongly on the headlines on front pages of newspapers. Most of December’s headlines caught up in watching the megafiresbushfires spanning months and more than 1 million hectares (3,861 Sq miles). Most of January take up with continued talk of the worst drought in recorded history, real possibilities of cities running out of water and the federal government announcing a A$10 billion water package to deal with agricultural irrigation and water management.

Whilst many Australian’s are now back from their beach and surfing holidays – the green edge of Australia the only respite from a burnt or cracked dry bushland – Australian wave and ocean power company BioPower Systems has announced it has closed its latest round of funding.

CVC REEF is the cornerstone investor in this latest capital raising, which will be used to develop prototypes of BioPower Systems technology and plan for full scale ocean trials.

BioPower Systems bioWave and bioStream technologies have been designed using biomimicry of natural ocean organisms and their movement in wave and current systems. BioWave technology uses a tethered kelp analogy to generate electricity from wave movement across a broad range of wave frequency and power situations. BioStream technology uses a shark/tuna tail design operating in reverse deriving power at efficiently from tidal or current streams.

CEO Dr. Tim Finnigan states in BioPowers media release:

“The demand for renewable energy technologies that promise inexhaustible supplies of carbon-free electricity is currently high and is growing rapidly. With the prospects for wave and tidal current power now well established, global markets are eagerly awaiting commercially-viable technologies that can utilise these sources,” says Dr. Finnigan. Founded in March 2006, BioPower Systems Pty Ltd has a strategy for rapid development and is targeting 2009 for production of the first commercial units. “The upcoming funding rounds will support design and development of ocean-based pilots, leading in to production of commercial units.”

“The investment by CVC REEF concludes the first major phase of the company’s funding plan,” says Chief Executive Dr. Tim Finnigan. “The value added goes well beyond providing the necessary funds to test our ocean power systems. CVC REEF brings recognised experience to the company board and is committed to being actively involved in the growth of the company.”

BioPower Systems is developing the bioWAVE and bioSTREAM, which both borrow specific traits from highly evolved marine species to derive competitive advantages in converting the energy in ocean waves and tidal currents into grid-connected electricity. By adopting natural configurations and mechanisms, these systems maximise efficiency using minimal engineering structures. This allows streamlined low-cost designs to survive in the harsh marine environment. The cost advantages are the basis for BioPower’s commercial competitiveness in the looming global ocean energy market.”

Technology overviews and company contact information can be found for the bioWAVE and bioSTREAM technologies at the BioPower Systems website www.biopowersystems.com

AeroVironment IPO – Technology Developer Makes Good in Market

Aerovironment, Inc. (Nasdaq:AVAV) priced its $114 mm IPO this week, with Goldman Sachs as the lead underwriter. Shares popped up 54%.

From the prospectus “We design, develop, produce and support a technologically-advanced portfolio of small unmanned aircraft systems that we supply primarily to organizations within the U.S. Department of Defense, and fast charge systems for electric industrial vehicle batteries that we supply to commercial customers.”

I have always liked this company. Basically it’s an R&D company in power controls and aviation that has built its R&D practice into a provider of next generation solutions of UAVs to the US military.

On their small UAVs:

“Our small UAS are well positioned to support the transformational strategy of the U.S. Department of Defense, or DoD, the purpose of which is to convert the military into a smaller, more agile force that operates through a network of observation, communication and precision targeting technologies, and its efforts to prosecute the global war on terror, which have increased the need for real-time, visual information in new operational environments. . . .

We designed all of our small UAS to be man-portable, launchable by one person and operated through a hand-held control unit. Our small UAS are electrically powered, configured to carry electro-optical or infrared sensors, provide real-time situational awareness and intelligence, fly quietly at speeds reaching 50 miles per hour and travel up to 20 miles from their launch location on a modular, replaceable battery pack. These characteristics make them well suited for reconnaissance, surveillance, target acquisition and battle damage assessment operations. “

On their battery charger products:

“Our PosiCharge products and services are designed to improve productivity and safety for operators of electric industrial vehicles, such as forklifts and airport ground support equipment, by improving battery and fleet management. “

I love these products. My grandfather flew some of the predecessors to these UAVs in WWII. They were flying converted torpedo planes controlling TDR-1 radio controlled TV guided drones against Japanese installations in the South Pacific. It worked then, and the technology makes it hugely effective now for a much wider range of missions. And one of my former clients used to provide fuel cell technology to some of their earlier protoypes, so I’ve followed these guys for a while. This area of technology has tremendous military potential.

On the financial side, I’m a little torn.

On $140 mm in 2006 revenue, this kind of backlog is pretty impressive, and it’s clear they’ve been able to drive growth.

“As of October 28, 2006, our funded backlog was $69.5 million and unfunded backlog was $491.5 million. “

And margins have been good for a business of this type.

But I’ve got a lot of heartache over a defense contractor / aviation supplier trading at a 20+ P/E (defense contracts are three quarters of revenues,, almost all of its UAVs, total US government is over 80%). Especially when selling shareholders cashed out 1/3rd of the IPO proceeds. Ouch. The post IPO pop may have taken it higher than I’d be willing to go.

But maybe for this particular firm I can get over it.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

What has Changed in the Alternative Energy Investment Landscape

Is the time right to invest in alternative energy? We’ve seen a lot of this before in the 1970s and 1980s. Solar and biomass hot, big regulatory pushes, and then companies and investors lost a lot of money when things changed. We’re still a bit skeptical. We’re also all about not getting pulled in to each and every overpriced hype (read, the ethanol race) – but fundamentals are fundamentals. And they’re hard to ignore and pretty darn impressive. We think the real question today is not “are alternatives a good investment?”, but “which ones have legs and make a good investment bet?”

In four words – broad-based critical mass – Unlike alternative energy of yesteryear, this alternative energy explosion has been slowly building for 10 to 15 years, and is reaching critical mass in multiple markets. Take a couple of examples – the solar market is on pace for a $20 Billion per year number globally within 3 years (SolarBuzz.com), across several major jurisdictions (in the 1980s we were talking less than 5% of that). World ethanol production is on the order of $12 Billion/year. In the US wind capacity production has growing at 25%+ per year for the last 2 years wind generation capacity additions have been second only to gas-fired generation adds in the US mix.

“It’s the global economy, stupid” – Don’t forget, this is global now, and it wasn’t really like that 25 years ago. The US pioneered solar photovoltaics, but Japan and Germany (with China catching up) are the biggest markets today. The US pioneered large scale wind power (remember Altamont Pass?), but 3 of the top 4 wind turbine companies today are European. The US engineered cap and trade in carbon, but Kyoto is a European driven engine. Lots of examples of why it’s not just us anymore. For an investor worried about the legs of the industry, that’s a really big point.

In two words – cost structure – alternative energy is still more expensive than conventional energy – that’s why we call it “alternative”. But the cost curves for each and every alternative energy source have fundamentally changed for the better over the last 10 years (NREL), are moving into striking distance, and continue to improve. This trend is not going to reverse, so it’s just a matter of time.

In three words – carbon, carbon, carbon – The carbon credit trading market, driven by Kyoto protocol was $21.5 Billion in the first 3 quarters of last year (World Bank and IETA) – that’s up from virtually zero three years ago. Now we’re talking real numbers. The US has been left out of this so far, but not for long. California is committed, the Democrats are in control of Congress, and we will likely be seeing a strengthening of some sort of cap and trade system before long.

The bottom line – alternative energy is cool and the consumer cares. Of all this activity, it’s really high gas and electricity prices and climate change that have put alternative energy on the map in the consumers minds. And they care. And they vote. And they blog. And they are buying hybrids, uneconomic hybrids, lots of them. And as the battery technology continues to advance (think lithium ion overtaking nickel metal hydride), they’ll start buying HEVs and Plug-in HEVs in massive quantities. And they are buying green power. And little pieces of paper certifying their green power. In enough quantities for Toyota and Walmart and GE and Google to brand green as part of their core strategies. How’s all that for impact?

And finally, the regulations are here. Don’t kid yourself, alternative energy has ALWAYS been a regulatory driven market. But now the regulations are pretty widespread. Take electric power, for example – it’s not just the federal production tax credit anymore, or just the solar tax credit, or the state solar subsidy programs – 23 US states now have Renewable Portfolio Standards for electricity production (Pew Center) , including Texas, California, Pennsylvania, Arizona, Illinois, etc. That’s up from 1 in 1991. Put another way, if you could swing the electoral votes from just the RPS states, you’d have a landslide presidential victory.

Yes, it’s still possible that if oil and gas prices prices fall back to 1990s levels (we expect them to pull back somewhat, but are scared to make a precise prediction) and we have 5 or 6 normal, cool winters that make the climate change debate disintegrate, then a new political wave will come in (in 30 different western countries), and each and every major alternative energy regulatory program along with all the consumer demand will collapse – in a dozen major nations worldwide. But as the saying goes, that ain’t the way to bet it.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

Maine: a market for solar

Is there enough sunshine — and consumer drive — to sustain a solar market in Maine? You betcha.

EnergyWorks, LLC operates out of Liberty, Maine and is busily expanding. It recently opened a Portland office and is eyeing the business market in Waldo County, a stretch of Maine’s coastline. Maine Housing webstats show Waldo County resembles many other counties along the Maine coast. In Maine, the median house price increased 67.4% over the last five years, while over the same time period, median incomes increased 14.2%, making 62% of Waldo County’s housing stock unaffordable to the average Mainer.

Someone else (someone likely from Boston or New York) can afford these coastal homes and is driving up the housing market. If you’re going to market greentech, why not harness the sun and sell it to this upper income segment, creating jobs for Mainers along the way?

EnergyWorks has been successful doing just that.

Rebates through the Maine Public Utility Commission’s State Energy Program and support from Governor John Baldacci don’t hurt. Says Judy Perry of EnergyWorks, “We did a lot jobs because of the rebates. The incentives go a long way to making it happen in Maine.” (Funding for the solar PV rebates have been exhausted, but rebates remain for solar hot water systems.) “The State of Maine did some PR to support the rebates. It didn’t penetrate. The Maine State Energy Program website talks about the program. Few people knew about it. We’re about to run ads saying there are still state rebates.”

EnergyWorks will focus on the commercial market. It has completed some big commercial projects, and its commercial work has doubled over the last couple of years. It recently completed Maine’s largest installation of a solar PV array at Maple Hill Farm Bed & Breakfast in Hallowell, just south of Augusta, Maine’s capital.

Says Perry, “We’re trying to work close to home, trying to reduce travel. We’re focused on Maine’s MidCoast…Camden, Rockland, Belfast, Liberty. There’s a lot of money along the coast, and in Southern Maine, and that’s where the jobs are.”

Perry adds, “Everyone thinks it’s too cold here for solar thermal, but it’s not. Some of our customers have drastically reduced their energy bills. They reduce use first; then they do solar, and they’re coming up with really low bills, as low as $10.”

A PV system, says Perry, can run $18K, so they aren’t cheap. One of EnergyWorks’ clients expects a return on investment of under 10 years even without an electric rate increase. The equipment will last 30 years, more than the lifetime of the house. “You can do quite well in Maine. The technology of panels has improved; even without true south solar orientation, you can still produce quite a lot. And with solar thermal, the evacuation tubes are round, so there’s a slight increase in production because of the shape.”

I ask Perry why her customers are installing solar. “For our customers, it’s the green aspect; it’s the right thing to do. There are the ones who want to get off oil; they understand that connection. The core of our clients are those who are aware of the environment and want to get to independence. Some of these jobs are expensive; there are big systems on the roof. Clients can offset use, even though they’re not reducing use. We have plenty of clients who are off the grid completely, and there are no rebates for off-grid.”

Perry also sees a direct connection between the price of gasoline at the pump and the phone ringing at her shop. These consumers are worried about home heating, and then they think about getting off oil. They look at these issues, what’s going to happen when oil is over.

Says Perry, “We have interesting clients. They’ve thought through all of their choices. They think about the embodied energy in building materials, where the materials came from — where lots of people don’t think these things through. Our clients chart oil; they are engaged in systems and monitoring things. That’s the way their brains work. Something is going on with the math, science people. We did several projects for people teaching in those departments. I’d get an email; it would say the department name of a college. Campuses in Maine have sustainability departments, and some of those teachers are our clients.”

I ask Perry, do customers think about where there electricity comes from? If they see the oil-Iraq-solar thermal-gas pump connection, do they see the electricity connections, that electricity in Maine isn’t generated from oil? Perry says, “I bet most people don’t know where electricity comes from…nuke or coal or whatever. There’s a direct connection between Iraq and the gas tank, but not the other way, not for electricity.”

As for educating the public and marketing, Perry says, “We get it down to things like monthly budgets. That’s how we keep it simple. If there were easy financing, there would be more installation jobs. We need to leverage loans for solar. I’m dealing with people who know what solar can do. Other people think it’s out of reach, or it’s some hippy thing or it looks bad, or it can’t be done. Some people don’t understand the technology; they think that with solar, you’re sitting in the dark.”

Perry says PV can raise the value of a home and it can insulate customers from raising costs, but she wonders, does the general public understand? “People don’t see all of it. It’s complicated. For most people, when they pay more for electricity, that’s when they start to act. Climate change does not equate to action around PV and energy efficiency. Running out of oil is dicey. This is a progressive area, so they make the connection. Others aren’t making the connection that we are causing this problem [of climate change].

“It’s booming in ways. There’s lots of interest. But it’s not everyone.”

Heather Rae, a contributor to cleantechblog.com, manages a ‘whole house’ home performance program in Maine. In 2006, she built a biobus and drove it from Colorado to Maine. In 2007, she begins renovation of an 1880 farmhouse using building science and green building principles.

Oil Usage Drops in Developed Nations in 2006

By John Addison (1/23/07)

Thank you to the millions that used less oil in 2006. For the first time in 20 years, the International Energy Agency show oil consumption in the 30 member countries of the Organization for Economic Cooperation and Development fell 0.6% in 2006. The drop was slight, but most encouraging to all who seek energy independence, averting a climate crisis, and healing an economy “addicted to oil.”

Yes, global oil demand did grow in 2006, but only by 0.9% in 2006, compared to 3.9% growth in 2004 and 1.5% in 2005. Oil demand may be moderating for a number of reasons including these:

1. When oil prices rose, demand shifted to more energy efficiency.
2. Some vehicles have become more fuel efficient by reducing vehicle weight, air and road resistance, and by using hybrid technology.
3. Less heating oil was needed due to global warming.
4. The Kyoto Protocol is starting to work.
5. Biofuels are increasingly used to substitute for fuels refined from oil.
6. Clean distributed energy and more reliable grids reduced the usage of diesel generators, propane and butane.
7. The ratio of people living in cities increased relative to suburbs. Oil demand per person is less in cities due to effective public transit and closer proximity of home and work. The U.N. forecasts that 80% of people will live in cities by 2050.
8. More people are riding together with car pooling and public transit.
9. Trucks and buses are reducing the wasteful idling that keeps engines running up to 40% more than is necessary. Use of auxiliary power units are increasing.
10. People spend more time working and shopping at home, using broadband Internet services.

Neal Dikeman commented on the OECD drop, “That really is huge news. Supply and demand economics does work after all, despite what some people may think. Historically, new supply discoveries drove price declines (in the 1st half of the century). Since OPEC however, supply shocks and constraints have driven major price increases, and overestimated demand / negative demand shocks have driven declines.” Mr. Dikeman is a merchant banker, originally from Houston, Texas, and now a partner with Jane Capital.

Moderation of oil usage is timely. Next week, the first phase of the Intergovernmental Panel on Climate Change will be released. This will be a major update from the respected 2001 report that involved hundreds of leading scientists globally. “The smoking gun is definitely lying on the table as we speak,” said top U.S. climate scientist Jerry Mahlman, who reviewed all 1,600 pages of the first segment of a giant four-part report. “The evidence … is compelling.” CNN Report

As the oil reduction numbers are analyzed a picture may emerge about how to continue our path to a brighter future. To all of you who conserved – Thank You!

John Addison is the author of the upcoming book Save Gas, Save the Planet. This article is copyright John Addison with permission to reproduce. He publishes the Clean Fleet Report (www.cleanfleetreport.com) and is a popular speaker.

Ethanol, NAFTA, Tortillas and Walmart?

Quick, what do Ethanol, NAFTA, Mexican Tortillas and Walmart have in common? Don’t know? Well here’s the story.

I am fascinated by the discussion about ethanol feedstocks issues. There has been a lot of talk about corn production for ethanol either crowding out beef or food production, or driving up the price of food, or failing to supply the demand for ethanol.

I have stated before on Cleantech Blog and other sites that I believe corn is a lot more substitutable than the anti-ethanol and cellulosic ethanol advocates give it credit for. Our take: that the corn price rise from ethanol demand will not be as steep as the worst case, that the industry will find more acreage than expected for corn, and that costs will fall, in part because corn producers (and beef producers) are highly flexible and relatively global. Also that cellulosic processes are a lot harder and will take a lot longer to make economic than expected, and that the end result will be corn ethanol for a long time.

But the subject just keeps rolling – quoting an Inside Greentech interview with David Aslin of 3i:

“Leaving the issue of food substitution out for a moment, as your article pointed out, the sheer acreages that are going to be required are daunting.

There was a dramatic increase in 2006 in corn plantings over the prior year, and the industry forecasts an additional 10 million acres in 2007 in response to the need for fuel. How much of that is going to be available for food if all these ethanol plants being constructed actually come online, and at what price? (Heck, there’s way too much corn syrup in U.S. food industry products anyway, so if we take a bit of the excess sugar out of people’s food, that won’t be a bad thing for the nation’s health!)”

At the same time, we have also been saying that corn ethanol is inherently a high cost fuel ($1.50-$2.50/gallon direct cost on a btu basis compared to $0.50-0.60/gallon for gasoline on a direct cost basis – read our blog, and please don’t email me arguing the price of crude is over a $1/gallon, it’s the COST of finding and producing that crude, not the price the oil companies can sell it at, that matters), with lots of new supply coming on that is going to hurt the economics of US ethanol producers like VeraSun, Aventine, etc.

But this is a whole new angle – the political ramifications of our ethanol industry driving up prices for our neighbors food supply.

One of my friends, the CEO of a fuel cell startup who happens to read Cleantech Blog, emailed me an article today. Basic gist – the Mexican government is concerned that ethanol demand is driving up the price of tortillas! And is trying to decide what to do about it. As they describe the impact:

“Prices for white corn used to make tortillas have been hit the hardest. Although local corn prices are typically volatile around harvest time, which mostly falls in the second half of the year, traders say the farm gate price for white corn saw an unprecedented rise of up to 45 percent in 2006 compared with the year-ago levels in the Mexican market.

Grains traders have forecast tortilla prices to rise between 20 percent and 25 percent during the last quarter of 2006 and the first quarter of 2007. “

My friend’s commentary on the subject:

“Even more funny, in the story I heard on NPR, Wal-Mart Mexico is taking advantage of the tortilla price run up to undercut independent tortilla shops. But besides the humor, there may be something here. I think the Mexican government is just out in the lead. I’ve seen at least one piece predicting that additions to ethanol production have been under estimated and that significant corn feedstock shortages will occur in 2008.”

Now, nobody’s talking NAFTA yet, but one of the things free trade does is globalize commodities. I’m just waiting for the next reverse “giant sucking sound” attack on NAFTA to follow this corn price rise. Or worse, some blogs are bound to start complaining that corn ethanol is racist, and anti-Mexican. To an economist like me, this price rise is just a perfect example of how globalization can even out the impact of something like ethanol demand on corn prices by spreading the effect across multiple markets and multiple commodities (and drive a new energy commodity export business – see our recent blog) – an example of my point that corn ethanol has longer legs than the cellulosic guys would like. But I’m sure that’s not how it’ll get reported.

Though you do have to admit – our ethanol craze could make Mexican tortillas too expensive to eat? That’s kind of funny.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

EEStor and Zenn Motors – What’s the real story?

As reported in the Energy Blog and Clean Break, EEStor, a perenially stealthy Kleiner Perkins backed energy storage startup (KP invested $3 mm in EEStor according to the Zenn filings), is reportedly slated to deliver product to Canadian electric car maker Zenn (“Zero Emission No Noise”) formerly Feel Good Cars Inc, in 2007. Zenn’s business model is to buy diesel neighborhood vehicles (low speed vehicles) from Microcar, and integrate into them their all electric power system based on EEStor storage technology.

Previous reporting from Clean Break about delays at EEStor last year here. More detailed on EEStor technology claims on the Energy Blog as well. This story has been well covered, but always worth a little reading.

From a recent Zenn annual report (available at Sedar.com if you search for Feel Good Cars), EEStor’s ceramic ultracapacitor is supposed to deliver for a 52.2 kwh device of 300 lbs 4541 cubic inches, and 3-6 minute charge time (a comment from the Energy Blog link above, that it’s really the cost, not performance, that is the unique claim here. I haven’t dug through the old Zenn reports to see if I can find their supply agreement and any pricing information). Zenn has licensed the technology from EEStor for certain markets for $2.5 mm ($.75 mm already paid, the rest subject to milestones).

The Zenn site claims it sent its first production vehicles to dealers in November (unclear if this includes EEStor technology or not – but it does not appear so). And no mention of the number – so we shall have to wait for the next filing.

The bad news for KP and EEStor afficianados, though, is that Zenn is not exactly highly capitalized for a vehicle startup. At Jun 06 it had a US$2.8 mm/year burn, $2.2 mm in bank, which along with a subsequently raised $1.5 mm, would give them about 9 months of cash on hand today. Barring of course, the ramp needed to actually put a vehicle in production, or needing to pay almost all that cash to EEStor to make the license payments.

Not exactly the kind of stellar first customer you expect from a KP backed startup, but EEStor has apparently always been about the big bet, and likely there is some story with Zenn history here that I don’t know. As usual, it’s the EEStor mystery keeping the blog tongues wagging.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

Remembering Gerald Ford

With the recent passing of Gerald Ford, I am thrown to reminiscing about his tenure during the mid-1970’s. It’s hard to say that it’s a period of fond memories, either for me personally or for the U.S.

I remember Vietnam, Watergate, inflation, recession, bad Top-40 music on AM radio (no matter how hard I try, I can’t forget 10cc’s “Big Boys Don’t Cwy”), disco and leisure suits (which go hand-in-hand), long hair, Pet Rocks, mammoth American land-yachts that rusted prematurely…..

…and, of course, the OPEC oil embargo and what we then called “the Energy Crisis”. Thirty years ago, the U.S. was consumed by concern about energy, and we rapidly moved to smaller cars and lower thermostats in the winter. (Remember Jimmy Carter’s cardigan sweater?)

However, it took a recent Thomas Friedman oped in the New York Times to remind me that Gerald Ford was the first to coin and use the phrase that we are now hearing increasingly often yet again: “Energy Independence”. Before even Amory Lovins, Gerald Ford was an unsung pioneer in pushing alternative energy and energy efficiency to address our energy challenges.

He imposed a (gasp! horrors!) $3/barrel tariff on imported oil — back when oil was about $11/barrel — and signed the Energy Policy Conservation Act of 1975 that included major investments in alternative energy research (leading to today’s NREL), state-level energy conservation programs, and the creation of the CAFE standards to improve automobile fuel efficiency.

In today’s age, it seems incongruous, but remember that Ford was a Republican, and these were the types of policies that the Republican party used to promote.

Although he was considered mediocre in his day, it is increasingly clear through the rearview mirror of history that Gerald Ford was in fact a pretty darn respectable President — and particularly foresightful in energy. As Friedman notes, if we had only followed Ford’s path consistently for the past 30 years, we wouldn’t be in anywhere near as dire an economic and environmental situation as we are today. Alas, the 1980’s followed the 1970’s, Reagan followed Carter, energy prices collapsed, energy R&D budgets were radically shrunk, energy urgency dissipated, and “Don’t Worry, Be Happy” became the mass mantra (as well as one of those unforgettably weak Top 40 songs). Twenty years’ worth of gluttony ensued: big TVs and bass-boats, sprawl and SUV’s, McMansions and me-too-ism.

Friedman asks President Bush to honor Ford’s legacy by making the rest of his term dedicated to and organized around a renewed commitment to energy policies that will far better serve our long-term interests. Let’s hope Bush, or perhaps more plausibly the new 110th Congress, hear Friedman and follow through.

BP Chief John Browne Stepping Down

BP Chief Lord John Browne is stepping down in July. This suprise announcement is over a year earlier than previously expected. BP’s press release.

The change will be the end of an era for BP. Despite BP’s recent problems in 2006, it was under Browne’s leadership that BP helped initiate the age of the mega-mergers in oil companies, with the acquisitions of Arco and Amoco.

It was also under his leadership that BP pioneered the “open innovation” model of tehcnology development, funding massive amounts of research at university R&D centers instead of in internal R&D centers.

And for the cleantech world, it was under Browne’s leadership that BP virtually defined its technology strategy in terms of a “low-carbon” future.

Along with the recent leadership change at ExxonMobil, Browne’s departure marks the end of an era.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

You Say Climate Change, I Say Global Warming

Diane Dandaneau, Executive Director of the ConservEd Project and Colorado Interfaith Power & Light, is back from Nashville, Tennessee. She is one of the talented 1000, chosen to attend Al Gore’s training sessions on global warming.* “It was amazing!” she tells me this evening from Colorado.

Attending The Climate Project sessions are NASA scientists, biologists, pastors, musicians, psychologists, foresters and many others. Here in Maine, The Coastal Journal (“Proudly Serving Maine’s Midcoast Community Since 1969”) runs a front-page series, “Next Energy: Looking at Living with Less Oil.” A lead story recently, “Global Warming Messenger from Damariscotta,” describes the experience of Paul Kando, who, like Diane, went to Nashville. I spoke with Paul on the phone; like Diane, Paul is back in his home town, spreading the message.

In Nashville, Diane met a Microsoft sustainability expert, and she spoke at length with Gore’s “science guy.” Asking him of peak oil, he said, “there’s so much fossil fuel, it’s toast before we burn it all.” In other words, it’s not about peak oil; it’s about getting to zero.

* Terry Gross’s “Fresh Air” interview with Frank Luntz ran on NPR this week. Luntz says he advises the Republican Party to call ‘global warming,’ ‘climate change,’ because ‘climate change’ sounds more scientific, less polarizing and less radical…less like enviros who, according to Luntz, are extremists.
This is trippy stuff. In the recent past, I was told that ‘global warming’ was coined by the naysayers of the science, because ‘global warming’ sounded palatable and non-threatening (everyone loves warmth, right?) ‘Climate change’ in contrast, was the term to avoid, because ‘climate change’ smacked of science. And ‘change’? Nobody likes ‘change,’ so call it ‘global warming.’ Everyone will love it!
Quite possibly everybody did, but not as intended.
It’s quite possible that, like the term ‘politically correct,’ the term ‘global warming’ was created to fend off public outcry by those who opposed the science; it was then usurped by ‘the opposition’ and oozed out into the public consciousness, the opposite of its intended, manipulative meaning.
Quite possibly, Luntz fueled the PR machine with ‘global warming,’ found it usurped by the extremists (the enviros), and now is advocating ‘climate change.’
At this point, who the hell cares, except Luntz and his PR machinery…and his publisher?

Energy Independence? Not Interested

Energy Independence? Not interested. Why should I care about just getting us out of the oil import hole? Instead, I want to see the US back to being the energy export king of the world. Targeting energy independence in my mind is kind of a defeatist, reactive goal.

My personal feelings on what should be our primary energy policy goals

  • Cheap energy
  • Secure energy
  • Clean energy
  • Renewable energy

In that order.

But energy independence? Why not semiconductor independence? Or car independence? Or steel? We now also import a lot of those products into the US because we no longer have a comparative advantage in their manufacture. And they are both critical to the success of our economy.

The problem with targeting energy independence as a policy is that it doesn’t change the comparative advantage game. It also pushes both the environment and economics into the background of the discussion, leading us towards resources (like corn ethanol), that may or may not be cleaner, and have a comparative disadvantage to our imported energy sources.

Instead of targeting independent energy – let’s target cheap, secure, clean, renewable energy. And most importantly, let’s target resources and technologies that can change the comparative advantage game. Let’s target energy sources like clean coal and cellulosic ethanol, where the US has an economic comparative advantage in the resource, so that when we do figure out the technology – we can again be the energy export king, and this time, stay there.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

Climate Hero: Laurie David

If you’re reading this web site, chances are you want to stop global warming. So does Laurie David, one of the producers of Al Gore’s An Inconvenient Truth.

She and her fellow producers thought it would be a good idea to send free copies of the movie to educators. Seems like it would be a no-brainer: a documentary about one of the critical issues of our day, to show to today’s students, the future adults who will be inhabiting and inheriting the world we leave behind.

But no: the National Science Teachers Association NSTA) declined an offer of 50,000 free DVD’s. Why? According to an editorial written by Ms. David published in the Washington Post, the NSTA was concerned that the videos would place, in their words, “unnecessary risk upon the [NSTA] capital campaign, especially certain targeted supporters.” Who might that be? Well, the list of NSTA’s supporters includes ExxonMobil (who is well known to fund misinformation campaigns that disparage climate change) and the American Petroleum Institute (who stated in a leaked 1998 memo that “informing teachers/students about uncertainties in climate science will begin to erect barriers against further efforts to impose Kyoto-like measures in the future”).

Appalling stuff, this. Ms. David has launched a website, stopglobalwarming.org, to enroll a community of concerned citizens to mobilize against climate change. The site includes a host of useful information, but also contains two spoof videos — Will Ferrell as President George Bush and Martin Short as a climate change denier from the energy industry — that are hilarious, until you realize how close of an approximation they are to the truth. Fortunately, satire has through the ages been an effective force for reform, so maybe these will add to the pressure for change on the U.S. stance towards climate change.

To add your personal stamp to the climate change movement, sign up today at stopglobalwarming.org.

The Biggest Unheard Boom of 2006 in Cleantech, Smart Metering, and Energy

In one of the less talked about cleantech mergers and acquisitions of 2006 (but one I think will have a deep impact on alternative energy and the smart metering and AMI market for years to come), First Data recently acquired Peace Software, an early provider of IT, billing, and CRM software to the deregulated utility sector, in a bid to get into the energy market. First Data is one of preeminent transaction processing firms in the world, and by acquiring Peace, has made its first foray into energy.

We have felt for some time that the financial products surrounding payments can be a very major driver for technologies like AMI, BPL and smart metering, and products like green power marketing, RECs, and carbon trading. Bottom line, if you can’t measure and charge for it fast and cheap, you can’t make and sell innovative electric retailing products. And conversely, if they can, they will.

I think the hurdles to overcome to get adoption of next generation IT and smart metering in the electric utility sector are hugely underestimated. But by the same token, I think the windfalls both the companies and consumers will see long term from those platforms once they are in, are also hugely underestimated.

I want to welcome Dean Cooper, Vice President at the newly formed energy & utilities division, First Data Utilities, and get his take on the merger, smart metering and information technology in the energy and power sector, and the future trends in AMI.

Dean, please give us a bit of background on yourself, and First Data Utilities.
My role at FDU is Vice President – Asia Pacific, which means I am responsible for business in the APAC region. The majority of this is Australia/New Zealand at this point. Prior to that I was with a venture management firm where we had a portfolio of renewable energy and biotech businesses with the most notable being a lithium battery and power device product that was destined for the NASDAQ IPO market in the go-go nineties. The prior venture was with McKinsey & Co, looking at establishing a global forest products trading system out of New Zealand.

Your firm, Peace Software, was recently acquired by First Data to form First Data Utilities. What was the rationale for the acquisition?
First Data Corporation has been involved in outsourcing for 35 years predominantly in the financial services space and credit card processing. They had built a business of some 33,000 people and an $US11bn revenue line (before spinning off Western Union late 2006) and were looking for verticals that mapped to their expertise of high volume, complex transaction processing and settlements with an annuity revenue stream. The energy sector was acknowledged as being ripe for the outsourcing model and expertise that FDC offers as utilities worldwide recognise the criticality of reducing their cost to serve in deregulating markets.

For an interesting take, check out the FDU backed research project on hottest customer switching markets for electricity. According to this, right now it’s Great Britain and Victoria, at 20% per year.

So if you had to choose the top 2 synergies that First Data was looking for in the acquisition, what would they be?
The key synergies were to blend the utilities domain expertise of Peace Software with the outsourcing and transaction processing capability of First Data. Whereas Peace contributes the software intellectual property, First Data would add the hosting and application management capability. This is a new business model for the energy markets and moves away from the traditional model of a systems integrator installing and hosting the intellectual property of the software provider, to a model where the one entity (FDU) owns both the IP and the implementation and hosting expertise. This new model is anchored on delivering a lower cost structure for utility companies.

Not many people know that New Zealand, where Peace originated, was the first major electricity market to deregulate. What impact has that had on Peace’s history?
You’re right – the New Zealand market led the worldwide movement by government to deregulate energy markets to provide greater competition and lower costs for consumers. Our founder, Brian Peace, was a computer science lecturer at Auckland university at the time the New Zealand energy markets deregulated, which inspired his entrepreneurial crusade to build a software product specifically to service the deregulating energy markets worldwide. Resultingly the heritage of Peace was as a dereg software play for large and small utility (electricity, gas, water) companies initially in New Zealand and subsequently in Australia, Canada, USA, and Europe.

Adding to that, deregulation in some Australian states is now 10 years and running. How has the deregulation changed the investment behavior of the utilities?
Deregulation in Australia and beyond has altered utility behaviour from initially being dominated by engineers with a focus on the poles and wires (distribution) business to an entity focused more on the consumer, where reducing consumer costs and providing increased consumer choice is a key driver to energy retailer success in a competitive market.The larger utilities that had been operating in Australia since the mid 1800’s and then emerged as leaders in the deregulated market of Victoria in the late 1990s were and still are carrying a higher cost to serve than necessary, due to a legacy of disparate systems that come from M&A.

This provided a great incentive for “challenger brands” and new entrant retailers to enter the market in the last 3 years with a point of difference around low-cost, green energy, or tailored customer offers.

How have these entrants fared, and what role (if any) has cleantech information technology played in their bids for market share?
New entrant brands have appealed to many consumers by the nature of their fresh branding, tailored product offerings, and lower cost structure. In comparison it is more difficult for incumbent utilities to offer a new approach through the inertia of their operations. Information technology plays a key role in a new entrant solution offering a lower operational cost to customers. This begins from the time a customer is acquired through to its energy consumption, billing, and customer management activities. Traditional energy companies would have to integrate this information across a number of disparate systems, yet new entrant retailers are able to work with one technology company to provide a seamlessly integrated solution to manage their business. This has had a dramatic effect on costs and therefore appeal to consumers.

I’d love to get the FDU take on the future of demand response programs (in both deregulated and regulated markets). What is the state of the art now, both in the programs and the technologies powering them? How is this tying in with the rise of smart metering?
Demand response is proving to be a very trendy area globally in energy, with Australia being a leading market worldwide on this topic with legislation mandated in Victoria to implement a smart metering program as one means of managing demand response. There are many alternatives to demand response including price incentivisation through pricing monitors installed in households, peaking generation plants, time-based pricing mechanisms such as a smart metering program (such as the telco industry where we pay varying usage rates depending on the time of day – peak/off peak), and suchlike.

One of the major reasons for demand response is the growing age of electrification that we live in where households consume a lot more power due to home appliances, that the network assets were originally built to accommodate. It is very expensive to replace ageing network assets or build generation plants, (along with the debate over environmentally friendly generation assets) meaning a demand response program may be a better means to the consumption/generation imbalance by focusing more on the consumption part of this equation.

Can you give us some ideas of the technology changes that will need to happen? What’s going to get commoditized, and where are the key technology areas to watch?
The areas of commodisation are likely to be meter hardware, remote communication, data acquisition, and data management. Because we will be looking at an order of magnitude increase in data volume from smart metering programs you get a sense for the size of the technology challenge. In a situation today where we may have 3 million consumers who have their energy consumption measured on a bi-monthly or quarterly basis. With a smart metering program we would move to 30 minute measurements which would be approximately a 4,000 fold increase in data volumes.

Already players that are grabbing a foothold in this space include Bayard Capital, run by Cameron O’Reilly for meter hardware along with GE, the comms companies, and all IT vendors for the data component, which is where FDU also fits in.

Are we going to see the rise of major IT giants in the smart metering sector, like we did in supply chain IT in other areas?
Good point, we could very well see this happen as the smart metering sector emerges and grows worldwide – smart metering measures consumption on a more granular level (30 minute intervals vs monthly intervals). We are still in the early stages of market trials and legislation worldwide yet already a number of sizeable markets are embarking on smart metering programs such as Australia, New Zealand, Canada, parts of the US, Italy, and Scandinavia. As standards are established for communication, data acquisition, and reporting we will see solutions to these markets develop. As is typical of emerging markets, suppliers are cautious of over-investing until regulators confirm market standards.

All major energy sector IT giants are poised to invest in the smart metering sector and you will see the leaders emerge once standards are confirmed in the leading markets of Australia, New Zealand, and Canada.

Have any IT players started this move? I’ve noticed IBM’s name on some press releases in North America.
Many players are establishing “thought leadership” positions in smart metering. IBM certainly have a large pool of resources dedicated to this space so expect them to feature in most smart metering roll outs.The majority of IT players are also positioning themselves but refraining from significant investments until market standards are set.

Who are some of the market leaders in this game, and where do FDU’s products fit in?
In the meter hardware hardware frame Bayard Capital have amalgamated a strong set of assets and are the leader at the front end of the value chain. There is no clear leader in the remaining part of the value chain but FDU believes our business model and company heritage for large scale transaction processing globally puts us in good stead to make a compelling over to the market place.

FDU would therefore be able to continue its meter-to-cash outsourcing business model to include both basic and smart metering worldwide – with the scalability and complexity challenge involved there are not many competitors that would be able to make a similar claim.

“Meter-to-cash” – I like that phrase, can you elaborate on what that means?
Essentially it means the process whereby consumption data from the household meter is acquired, through to the billing and exception management process, and on to collections and credit checks. Effectively the engine room of an energy company’s customer management function.

Obviously, First Data is a financial services and transaction processing giant. Where (and when) do you see the convergence between financial services and areas in energy and electricity retailing like bill payment, smart metering, demand response? I would imagine that improving bill payment is one of the first areas. I know I can’t even use my debit card to pay my personal utility bill, because my electricity provider does not accept debit cards from the two major banks in my region – so I use online bill pay. What’s your take on what happens next?
Already the integration and convergence of these facets are underway and working in the market place today. Not being able to pay your electricity bill with a debit card is probably more a deficiency in the system capability of your utility than what the market (and FDU) can deliver on. End to end integration of energy services to consumers is part and parcel of a competitive deregulated marketplace, and part of the new behaviour of utilities in liberalised markets.

Modern systems and processes certainly can handle “mass customisation” of consumer needs and you will see significant positive change in utilities of the future as they become more consumer focused rather than solely on poles and wires.

If you had to pick the top 3 differences the consumer will see from all of this, what are they? And when do you see most of us as getting them?
Top 3? MY best Top 3 are probably:
1. Consolidated billing and convergence;
2. Responsiveness;
3. Targeted campaigning and messaging in the same manner cellular and telco’s have been operating.

Customers in the advanced Australian energy markets are getting these benefits already, so it won’t be long before all global energy markets are experiencing a greater level of service.

Dean, thanks for the time today. I am really excited about the IT moves in the energy sector, and I think the play FDU is making to combine CIS solutions and financial payments has been a long time in coming.

You can find more information on FDU at Peace.com.

Author Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is the founding contributor of Cleantech Blog, and a Contributing Editor to AltEnergyStocks.com.

@ventures Strikes Again – Cleantech VC Moves

@ventures continues its push into Cleantech.

The venture capital business of CMGI continues building its bench strength in cleantech with the addition of Rob Day, formerly with Expansion Capital, and the author of the popular Cleantech Investing blog.

Almost exactly a year ago, @ventures excecs Marc Poirier and Peter Mills had hired Matt Horton away from Garage Technology Ventures. @ventures’ cleantech portfolio is now invested in Advent Solar (which I have always liked) and H2Gen.

For those of you who don’t know Rob, he’s been part of the San Francisco office of Expansion Capital (he’s now headed to Boston for this gig), and his Cleantech Investing blog is the top read on my daily list.

Congratulations to both @ventures and Rob!

Coming Soon to a World Near You

Richard Stuebi wrote, astutely, of energy efficiency:

“What happened to efficiency? Renewable energy is wonderful and did well in the past year, but unfortunately, there were few significant developments on the energy efficiency front. Oh, sure, there were more LEED buildings, fluorescent light sales continued to increase, and hybrid cars are no longer a curiosity. But, there was really no defining moment for the demand-side arguing for an upcoming step-change. Pity, because we need this side of the energy equation to be far more robust — the opportunities here are enormous, and often more cost-effective than renewables.”

I am working on a ‘whole-house’ home performance program in partnership with the EPA. The task to raise and broaden awareness of home performance is huge. Home performance is all about a person’s living environment — health, comfort, safety and noise — not just about a utility bill. It’s about asset retention and durability of the home and longevity of the mechanical equipment in that home. Home performance goes way beyond energy: It’s about fixing homes so that they function well and make people happy. It’s about taking care of one’s home, just as one would a car or a boat or one’s own body. The home performance contractor is the doctor that sees the home as a whole system.

The EPA has a robust brand in Energy Star (an iteration of the Green Lights program). I just don’t know if it can get its arms around the marketing…that you get to the energy savings by marketing what people love and that is a healthy living environment — what people wake up to each day. You sell the energy efficiency inherent in home performance by NOT selling it on energy. It’s almost a shame that the program has energy in the name.

I’ll let you know how much this posting ticks off my friends at the EPA.

Other goings on this week:

David Schaller, a sustainable development coordinator in the EPA’s Denver office, distributes a regular round-up of “Sustainable Practices — Innovations, Technologies, and Products Coming Soon to a World Near You.” You may find this (pleasingly pithy) series of emails interesting, too. Sign up by contacting David at schaller.david@epa.gov.

I met Ken Wallace of Nova Scotia through WaveBerg (a wave energy startup) and thoroughly enjoyed his New Year’s wish, Sealevel Predictions for 2007:
– Global sanity on the increase.
– US abandons the cheap oil economy and gets back to basics.
– China grants independence for Tibet.
– Gross National Happiness measures adopted at UN.
– Renewable energy sector soars.
– Canada goes Green – Elizabeth May takes parliamentary seat.
– Blue Moon in June.

2006 in Review

It’s that time of year, when we look backwards over the past orbit of the sun, elevate above the mundane of the day-to-day, and take stock of long-term trends.

I’ll take my turn: in the world of clean energy, here’s what I’ll remember about 2006, Letterman-style (though, alas, not as wittily):

10. Oil addiction. In his January 2006 State of the Union speech, President Bush acknowledged what had long been largely ignored but what should really have been obvious to any sentient being: that “America is addicted to oil” to fuel our transportation, and thereby our economy and society. It was a useful slap in the face of the citizenry: in America, with our short attention spans and predilection for glossing over unpleasantries, we can never have enough wake-up calls. An admission of addiction, coming from a man who is linked in the public eye to the oil industry, was strong stuff to many.

9. Biofuel boom. It seemed like every day during 2006 I’d read about something new in the biofuel world. Either it was a big oil company like BP (NYSE: BP) or Chevron (NYSE: CVX) announcing a major research initiative, yet another business plan seeking capital for a biofuel refinery, some scientist in an academic setting working on a new way of converting feedstocks to fuel, or a capitalist like Vinod Khosla going hyperbolic about the future for ethanol. Everyone’s jumping — or jumped — onto the biofuel bandwagon, as a key means of reducing our oil addiction. The main catalyst was the alternative fuel requirements of the Energy Policy Act of 2005, which mandate 7.5 billions of gallons of new annual ethanol and biodiesel supply by 2012, and the current players are having trouble ramping up fast enough to meet demand.

8. Sizzling solar. With $60+ oil, retail investors were clamoring for alternative energy plays, and after biofuels they went straight to photovoltaics: solar energy is where people seem to instinctively look they think of alternative energy. Capitalizing on these robust (some would say, “frothy”) market conditions, we saw a number of sizable IPOs such as First Solar (NASDAQ: FSLR) and Renewable Energy Corp (OL: REC), and a corresponding resurgence of venture capital investment in PV (seeking to achieve an exit before the fickle financial fates close the window). The additional capital is being poured into innovative R&D and new production facilities — the former to achieve major economic/performance breakthroughs, the latter to debottleneck the recently-constrained industry and alleviate near-term shortages and upward price pressures. If the PV market/sector doesn’t make major strides in coming years, it won’t be because of capital starvation.

8. 20% from wind by 2030. Offhandedly, President Bush mused in a May 2006 speech on energy that “it’s worth trying to find out” if wind could provide 20% of the U.S. electricity requirements. This remark has sent the wind community into a tizzy. Taking Bush’s comment seriously, DOE and NREL are now developing a roadmap characterizing how the wind industry could supply 20% of the U.S. electricity requirement. This would imply hundreds of gigawatts of wind generating capacity across the U.S., which would require a new wind turbine to be installed every 15 minutes, every hour of the day, for many years. With this level of penetration, you wouldn’t be able to drive very far across our country without seeing a turbine, just like the case today in Germany, and I’d bet we’d see a lot of turbines out on the Great Lakes too. If we even get halfway to the pseudo-vision suggested by Bush, wind will become a really big player in the energy industry — “alternative” no longer.

7. 25 x ’25. Putting together these three renewable thrusts — biofuels, solar and wind — the common element is lots of land. Thus, the segment of interests that own muchs of the land in the U.S. — the agricultural community of ranchers and farmers — has put its weight behind the vision of “25 x ’25”: 25% of the U.S. energy supply from renewable sources by 2025. This initiative is less green than it is red-white-and-blue, as a means to reduce our reliance on imported energy. However, for the first time, this puts a large mainstream conservative force on the cleantech side, potentially a harbinger of an important realignment of interests in the energy debates. It’s one thing for Ms. Birkenstock Hippie from Berkeley to argue for renewable energy; another thing entirely when it’s Mr. Meat-and-Potatoes from Des Moines making the case.

6. What happened to efficiency? Renewable energy is wonderful and did well in the past year, but unfortunately, there were few significant developments on the energy efficiency front. Oh, sure, there were more LEED buildings, fluorescent light sales continued to increase, and hybrid cars are no longer a curiosity. But, there was really no defining moment for the demand-side arguing for an upcoming step-change. Pity, because we need this side of the energy equation to be far more robust — the opportunities here are enormous, and often more cost-effective than renewables.

5. Whither hydrogen? While fuel cells continue to attract substantial R&D dollars and attention, more and more the so-called “hydrogen economy” is fading into the future. An increasing body of observers are recognizing that the challenges of economically producing, transporting, storing, and utilizing hydrogen may well be too daunting. Thus, the fuel cell community is generally moving away from tackling the mass-market transportation application that would entail displacing petroleum-based fuels with hydrogen, and instead focusing on applications with narrower niches where fuel cell performance characteristics (small size, modularity, no emissions, low noise, etc.) are highly desired by customers — often, in military settings. Maybe someday hydrogen will be ubiquitous as a fuel, but fewer and fewer people are betting their careers on it.

4. The Stern report. The U.K. government commissioned a study by Sir Nicholas Stern to assess the economics of climate change. When issued in the fall of 2006, the report was a blockbuster, arguing that the costs of dealing with climate change now were small in comparison to the enormous economic consequences that would accrue later from not addressing climate change. With each ice shelf that slips into the ocean, and each inch of sea-level rise, the costs of do-nothing are getting more apparent every day.

3. Thomas Friedman. Long one of the most influential observers of the Middle East scene, the widely-read op-ed columnist in the New York Times and best-selling author (The World Is Flat, The Lexus and the Olive Tree, From Beirut to Jerusalem) is making energy and the environment the cornerstone of many of his recent essays. When Friedman says/writes something, many thought-leaders get it, some for the first time. The clean energy community could not have a better spokesman.

2. An Inconvenient Truth. Al Gore goes from inventing the Internet, and losing (somehow, ever-more-incredibly in retrospect) the Presidential race to George Bush in 2000, to becoming a movie star in a “talking head” role, educating viewers on one of the least-sexy and most-wonkish topics known to man: climate change. Yet, the movie drew an audience of millions, and perhaps more importantly, generated lots of ink and an increased throbbing in the public consciousness concerning the reality and severity of the threat. When you see sports media talking about climate change in a meaningful way, you know that awareness is improving and perceptions are changing: it’s not just the tree-huggers anymore. Bet on some more exposure come Oscar night in a few months.

1. A new political landscape. The citizens of the United States spoke loud and clear on November 7: pretty much a landslide victory for the Democrats, a trouncing of the Republicans. There’s lots of conjecture as to why this occurred: was it “Just Say No” to Bush and Iraq, or was it a more systemic shift to the left? However, there’s no doubt that, for the next few years at least, the new political scene is more conducive to more favorable clean energy policy of all sorts — not only at the Federal level, but in many states as well (such as here in Ohio). Best of all, Senator James Imhofe (R-OK) — who is on record as stating that “climate change is the greatest hoax ever perpetrated on the American people” — will be deposed from Chairing the Committee for Environment and Public Works, where he has been (in my view) an embarassment. I doubt we’ll get climate change legislation during the Bush Administration, but at least we’ll get less airing of bunk from fictional author Michael Crichton passing off as climate science.

All in all, 2006 was a step in the right direction for the clean energy arena — but definitely not far enough, not fast enough. Here’s hoping that we can make more progress — on technology R&D, on financing, on human capital, on policy — in 2007 than we did in 2006.