As Financial Markets Circle the Drain, What Happens to Clean Energy?

by Richard T. Stuebi

as seen at Huffington Post

An investment banker was quoted in Sunday’s Financial Times as stating that the global financial market “changed more in the past 10 days than it had in the previous 70 years.”

Given such a profound shattering of the status quo, I am skeptical that anyone can yet provide clear perspective or accurate clairvoyance stemming from the unprecedented meltdown still underway. Far be it from me to assume that I’m especially well-positioned to develop a superior synthesis – especially since so many of the pieces are still moving.

Even so, it is my professional responsibility – both to myself and to those I serve – to begin speculating how the current crisis may affect the realm of clean energy. I cannot claim much insight yet, but the following represents a few disparate thoughts that I offer to my colleagues across the physical and virtual worlds to advance the discourse.

Lower growth in demand. For virtually all goods and services for customers in the developed world, it is hard to escape the conclusion that demand will abate. (Whether the economy falls into a severe recession, or deepens into a full depression, is anyone’s guess.) In turn, this means that energy demand will also see a softening. In the past year, demand has already declined measurably for gasoline, as customers have responded to higher prices by driving fewer miles and beginning to buy more efficient vehicles. Demand destruction will now be amplified by the effect of decreasing corporate and personal incomes.

Weaker dollar. In the wake of the calamities of the past few weeks, it is also hard to envision that the dollar can do anything but fall. If true, imported goods into the U.S. will become dearer (thereby further discouraging demands), though it will create new opportunities for exporters, such as those developing and manufacturing clean energy products and services in the U.S. In addition, foreign direct investment in the U.S. will become more attractive.

Less debt, costlier debt. With even lending between banks at a standstill, it seems pretty clear that credit markets will be much tighter and debt will be much more expensive for a long time to come. Marginal credit risks – such as ventures in high-growth mode, or projects entailing new technologies – are much less likely to be approved for loans. Even if approved, debt coverage ratios will increase. This means….

More need for equity. With less debt to fund expansion, companies and projects alike will require more equity in their balance sheets to achieve growth. Assuming an unchanged supply of equity (perhaps an optimistic assumption), higher demand will drive up the cost of equity alongside the rising cost of debt. A higher cost of capital (both debt and equity) in turn means….

Declining company/project valuations and increased investment hurdles. Higher discount rates (corresponding to an increased cost of capital) means relatively more value associated with current results and less value ascribed to future possibilities. Certainty and stability become more prized, and potentialities with limited near-term returns are punished. Fewer transactions/projects occur – and those that do occur will happen at lower valuations.

Glut of financial professionals, illiquidity in carbon markets. As the financial institutions get swallowed up, shut down or shrink, lots of bankers and traders will be looking for work. Many of these people were likely to have worked in companies that were the leading players in the still-nascent carbon markets, so it is quite possible that those markets (and monetization of carbon reductions) will dry up.

Increased oil price volatility. With weakening economic conditions, there will be declining demand for oil from the developed economies, from which one might expect prices to generally decline. However, it is eminently possible that demand growth from the developing economies (especially the still-booming China and India) will more than take up the slack. Furthermore, the declining dollar will also put upward pressure on world oil markets, which are supplied mainly from overseas and increasingly denominated in Euros. Lastly, investment in new oil infrastructure or projects may be depressed by the adverse climate. All told, it’s hard to have much conviction about the future direction of oil prices – other than they will continue to fluctuate, perhaps even more severely than of late.

Risks to climate legislation. Though both the McCain and Obama candidacies have stated support to enact cap-and-trade legislation that would drive reductions in U.S. carbon emissions, the dramatically worsened economic conditions might cause either President-elect – and even more importantly, the new Congress – to be more wary of imposing a new set of environmental requirements that would entail a net cost to the economy. On the other hand….

Reduced appetite for laissez-faire capitalism. A wide variety of observers are clamoring that the current financial crisis is rooted in many years of lax regulatory oversight and excesses of unbridled capitalism. Whatever the merits of this logic, to the extent that such thinking takes hold of the public and political imagination, it could imply a general trend towards more interventionist policies and regulations in the energy sphere (and in other aspects of society). In the extreme….

Possibility of nationalization of energy activities in the U.S. I never thought I would write this, but the recent actions to essentially nationalize large parts of a financial industry formerly in private ownership provides a precedent for a not-too-distant U.S. government to take control of a similarly fundamental and strategically-critical industry being besieged by crisis. Given the daunting challenges likely to be faced by the energy industry in decades to come, it’s not out of the question to see the same game played out in the energy sector.

Buying opportunities? Short of the U.S. stepping in, many companies and assets will be available to purchase. Savvy players with strong positions will be able to make some really good buys on the cheap. Potential case in point: the Mid-American Energy arm of Berkshire Hathaway (NYSE: BRK.A, BRK.B) announced that is snapping up Constellation Energy Group (NYSE: CEG) whose trading desk was essentially pushed to the brink by the lack of liquidity in the credit markets. By adding Constellation, the Warren Buffett investment vehicle is slowly but surely becoming an energy behemoth.

End of American financial hegemony. With the recent convulsions, I think it’s becoming clear that the era of undisputed U.S. pre-eminence is coming to a close, if not already having closed. The 21st Century will belong not to the U.S. but to other powers – primarily China, but also India and (unless we move off of oil sometime soon) the OPEC economies. This means that U.S. interests cannot afford to think and behave as parochially as we have through most of our history. As I argued in a recent editorial in The Plain-Dealer, and in a recent post in CleanTechBlog.com, many of the best opportunities for many U.S. players will lie in China. The U.S. will simply be unable to afford to consider itself the only, or even the most, important market on the planet.

In the coming weeks, as the outline of our society’s next-generation financial system becomes clearer, perhaps I will become more confident to offer more definitive speculations about the future of the clean energy world. Maybe some stronger causes for optimism will emerge. Until then, like everyone else, I too must resort to buckling up and watching events unfold further. Meanwhile, the storm rages on, and I expect more dominoes may fall.

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

Inspired Windspire

by Cristina Foung
(writing from West Coast Green)

My favorite green product of the week: the Mariah Power Windspire

What is it?
The Mariah Power Windspire is a vertical axis “plug-n-produce wind power appliance.” It’s only 30 feet tall, with a two foot radius. It’s rated for winds up to 100 MPH and (based on initial testing) should produce about 2,000 kilowatt hours of electricity per year in 12 MPH average winds.

Why is it better?
One of the coolest things about the Windspire is how quiet it is. Unlike horizontal axis turbines, the Windspire spins at only two or three times the speed of the wind. Mariah Power estimates that the Windspire has a maximum noise level of about 45 dB (compared with 65 to 100 dB levels of other turbines). To put that in context, 40 dB is like a quiet library.

It’s also really easy to install. The Windspire is on what they call a hinged monopole. All you need to do to get it up and running is pour the concrete base, assemble the unit, and pull the poll up vertically (apparently it’s been done with just a standard pick-up truck). This design saves you from having to use cranes…and that means you save money big time.

You do have to make sure that your Windspire is perfectly upright in order to achieve maximum efficiency and they don’t recommend roof mounting as the unit is heavy and does produce some vibration. But all in all, it sounds like a solid unit for residential application. Thus far, they’ve installed 30 to 40 units and are looking to ramp up production next month to 100 units and hopefully come November, they’ll be rolling 500 off the line every month.

Where can you find it?
You can reserve a Windspire for $4,995 from Mariah Power. Or if you’re interested in learning more (and you’re in the San Francisco Bay Area), stop by their booth at West Coast Green tomorrow to check out some videos and a fun little model.

Besides her green products column on Cleantech Blog, Cristina is a passionate advocate for green living at the Green Home Huddle at Huddler.com, which focuses on electric cars, energy efficient appliances, and other green products.

Carbon Offsetting Trends Survey 2008

EcoSecurities and ClimateBiz have just released their survey on carbon offsetting. For those who are members on our sister site CleanTech.Org, we are proud to have supported this project. Thank you to those of you who participated in this survey.

The Executive Summary is as follows:

The voluntary carbon markets continue to welcome new participants on both the supply and demand sides. Companies that previously committed to become carbon neutral appear to be continuing with their offset initiatives in 2008. In Europe, the emergence of the Gold Standard and Voluntary Carbon Standard (VCS) as the market leading standards is a notable development. The former is facing some minor supply issues which have in our view pushed up its issued price whilst the latter is working with several parties to establish central registries by year end for transfer of ownership and guaranteed retirement.

The primary markets on the development side are very active with new projects coming on line around the world to meet an increase in real demand for VERs and the expected increase in corporate’s looking to balance their unavoidable emissions. In the US, the rapid expansion in demand appears to favour US-located emission reductions, and this same force is shaping the types of offsets most in demand. Forestry remains a standalone sector, which has a real mix in sentiment from buyers. You either love it or you hate it. Whether the projects are reforestation or avoided deforestation, they appear to have mixed feedback in part owing to the lingering questions about effectiveness, immediacy and risk in investing in said projects. Conversely, the types of projects most favoured by this survey’s respondents are well-known projects which have an immediate impact, projects of the ‘charismatic carbon” variety: energy efficiency and wind power. Landfill and agricultural methane collection projects also scored highly in this study.

Reputation is pushing demand not only in types of offset projects in which companies most want to invest, but also in whom they purchase offsets from. When seeking out carbon brokers or retailers, experience and reputation were the top-rated factors, while project types, locations and price rounded out the top five requirements for offset projects.

Interestingly, despite the growth in project development the market has witnessed increases in primary market prices. On the other hand, global economic difficulties do seem to be pushing secondary market prices downwards, thus squeezing the difference between primary and secondary pricing. This perhaps reflects the reduced risk of developing projects as the markets grow and also an increased confidence among larger organizations in originating their own offset projects in the primary markets, a result that surprised us from our survey responses.

Chrysler to Make Plug-in SUV, Minivan and New EVs

By John Addison (9/24/08). Chrysler builds on the success of its 38,000 GEM EVs that are currently on the road in the U.S. with new battery-electric vehicle and plug-in hybrid announcements. Any time I visit university towns, corporate and government fleets, I see these GEM electric vehicles being used for practical transportation and hauling. Often, they are powered by solar roofs and carports.

The new GEM Peapod will be available for purchase in 2009, with more models to come. Eco-friendliness gets a fresh face with the GEM Peapod. The GEM Peapod brings beautiful aerodynamic style to a gas-free, emission-free vehicle. This light electric vehicle has a maximum speed of 25 miles per hour and a range of 30 miles before requiring at least 6 hours for an adequate recharge of its lead-acid batteries. Peapod Specs

Three freeway-speed vehicle electric vehicle announcements were also made this September 24 by Chrysler’s ENVI – Dodge EV, Jeep EV and Chrysler EV. The development of Chrysler’s Electric Vehicles and Range-extended Electric Vehicles is led by ENVI – representing the first four letters of “environmental” – the Company’s in-house organization that was formed to focus on electric-drive production vehicles and related advanced technologies. Discussions are taking place with several lithium battery suppliers including A123.

The Jeep EV is a plug-in hybrid Jeep Wrangler SUV with an estimated 40 mile range in electric mode, before a small gasoline engine is engaged. The vehicle may give record fuel efficiency for customers that want SUVs, from families hauling kids and trailers to fleets. The Jeep EV will compete with the plug-in hybrid offering from Saturn VEU.

The Jeep EV uses an electric motor, an advanced lithium-ion battery system, and a small gasoline engine with an integrated electric generator to produce additional energy to power the electric-drive system when needed. The 200 kW (268 horsepower) electric motor generates 400 N•m (295 lb.-ft.) of torque. With approximately eight gallons of gasoline, the Jeep EV has a range of 400 miles, including 40 miles of zero fuel-consumption, zero-emissions, all-electric operation.

Minivan drivers have been longing for better mileage as the shuttle vans full of people and stuff. The new Chrysler Town and Country will use the same plug-in hybrid drive system as the Jeep EV.

Chrysler’s announcement should increase pressure on Toyota to announce a hybrid mini-van and for Honda to announce a more fuel efficient van using diesel.

For sports car enthusiasts, Tesla has new competition in the form of the Dodge EV, a hot two-seater with a body designed by Lotus. This battery-electric will have a range of 150 to 200 miles between charges – more miles, when driven with a feather touch; much less, with a lead-foot.

The electric-drive system consists of three primary components: a 200 kW (268 horsepower) electric motor, an advanced lithium-ion battery and an integrated power controller. The 200 kW electric-drive motor generates 650 N•m (480 lb.-ft.) of torque. The instant high torque of the electric-drive motor delivers outstanding performance, accelerating the Dodge EV to 60 mph in less than five seconds. The Dodge EV has a top speed of more than 120 mph.

Chrysler plans to have 100 of the new ENVI vehicles in fleets in 2009 and to start taking production consumer orders in 2010.

Three weeks ago, I had the chance to talk with Chrysler President Jim Press, an executive who is famous for staying in close touch with customer and dealer interests and issues. He knows how to make hybrid vehicles a success. He was President and COO of Toyota USA when Toyota made the Prius a best seller and when Toyota grew to global market leadership. After 37 years at Toyota, Mr. Press could have coasted into retirement. Instead he joined Chrysler as President and Vice Chairman, where he will be integral to building a new company.

In his travels, he notes a strong interest in EVs among younger people – he refers to this market segment as Millennials. Should Chrysler win with the new generation, they could be customers for decades. Look for Chrysler to extend the development of advanced, production-intent electric vehicles, and that it will apply electric-drive technology to its front-wheel-drive, rear-wheel-drive and body-on-frame four-wheel-drive platforms in the next several years.

Jim Press, when talking recently with the Western Automotive Journalist, stated, “We need a new business model based on one word – Reality.” The new management team inherited a 4 million car per year overhead with sales falling to one million per year in the new era of high gasoline prices. Mr. Press is cutting unprofitable sales such as rental car fleets. He is focusing on a future of vehicles that give customers a visceral emotional connection with their car, while using electric drive systems to address fuel economy and environmental concerns.

Jim Press continues to move aggressively. After talking into the evening with California journalists, he took off for a red-eye flight back to Detroit. He wants to see Chrysler moving at the speed of their new vehicles.

John Addison publishes the Clean Fleet Report

Counting the Cost of Water

I was contacted last week by a journalist doing a story on ‘the future of water’. When I asked what the publication was, I was told it was for Esquire. Needless to say I was only too glad to help, – it’s not often I have the opportunity to have my name in print alongside the Jolie-Pitts of the world!

Some of the questions I was asked were: ‘Where is our water going to come from?”Is it going to be from desalination?’, ‘How much growth can we expect to see in desalination, and what breakthroughs if any in this area are we on the verge of?’

There was a very good session on water at the Always On Going Green Conference in San Francisco last week chaired by Christopher Gasson of Global Water Intelligence (GWI). I am going to borrow a little bit here from that session and from the GWI report “Desalination Markets 2007: A Global Industry Perspective’.

Desalination is a rapidly growing industry and there is no shortage of the raw material required. The Global Desalination industry is predicted to grow from 39.9 million m3/d at the beginning of 2006 to 64.3 million m3/d in 2010, and to 97.5 million m3/d in 2015. This represents a 61% increase in capacity over a five-year period, and a 140% increase in capacity over a ten-year period.

Beyond 2015, the rate of growth in the industry is expected to accelerate, as large markets such as the US, China and India will by then have established the financial and political models to pursue large-scale desalination projects. The rate at which the installed capacity increases is expected to move into double figures, and the annual increment to capacity is expected to increase by an average of more than 15% between 2015 and 2020.

To understand why desalination is so important, you first have to understand just how little of the world’s water is actually fresh water. If all the water on Earth were compressed to a single gallon, only four ounces would be fresh water. Only two drops would be readily accessible and human beings already use one of those drops. But about 92 percent of that single drop is used by agriculture and industry; just 8 percent goes to cities, towns, and municipalities. So for every gallon of water on the planet, only 8 percent of one drop is available for drinking, bathing, and other personal consumption.

A number of other factors compound this scarcity:
· Political & economic instability
· Uneven freshwater distribution
· Population growth in areas of limited natural resources
China has only 8 percent of the world’s fresh water to meet the needs of 22 percent of the world’s population, while Canada has 30 times more water and only 0.5 percent of the world’s population. While Global warming has no predictable impact on overall scarcity it is believed to increase the risk of both floods and droughts.

The good news is that costs for desalination have been dropping dramatically. Forty years ago the cost was $10 per m3. Now it’s down to $0.50/m3 (GWI). However 50% of the current costs are associated with energy use, and energy costs are only going one way. Given the huge impact that energy has on the cost of desalinating water, it is difficult to see how the industry can continue to deliver further significant reductions in desalination costs.

So what’s the next big thing going to be in desal membranes? Some say nanotechnology. Oak Venture Partners and Khosla Ventures clearly think so as they have just invested $15M into the UCLA spin-out company, NanoH20 to help them commercialize their Thin‐Film Nanocomposite (TFN) membrane system.
What NanoH2O are doing is very clever, they are nano-engineering the characteristics of the membrane so that it ‘wants’ to let water through’ and ‘wants’ to repel other contaminants. Its almost Taoist in principle, as opposed to trying to push water through a very small aperture with brute force, you are engineering that aperture so that its natural tendency is to let water pass through it and to repel other contaminants.

If desalination continues to increase, the water produced will have to be metered. Smart metering technology with remote on-line data collection is an area to watch.

Paul O’Callaghan is the founding CEO of the Clean Tech development consultancy O2 Environmental . He lectures on Environmental Protection technology at Kwantlen University College is a Director with Ionic Water Technologies and an industry expert reviewer for Sustainable Development Technology Canada.

Getting Content Into Sustainability Wikis

by Marguerite Manteau-Rao

(This post originally appeared on La Marguerite blog)

Sustainability wikis such as Wikia Green or Appropedia have an important role to play, in the gathering of solutions for a sustainable future. The big challenge of course, is how to engage contributors into volunteering free content. As a content creator in the sustainability field, with hundreds of articles to my credit, all on blogs, I yet have to contribute to a collaborative platform. I started sharing some of my reasons in previous posts, here and here. In a nutshell:

  • I am comfortable with blogging. It is what I know, and past the initial hurdle of setting up a blog, which by the way is very low, it’s been smooth sailing ever since.
  • I like the feeling of being in control, and of having all my stuff in one place.
  • When I contribute to other blogs, it is usually a boost for my recognition and helps enlarge my audience.
  • Contributing to other blogs is a no brainer; hardly any setup is required, and I usually do a slight rewrite to address issue of duplicate content.
  • I love the creative freedom of writing whatever I want whenever I want.
  • My blog is also a social place to meet cyberfriends I have made along the way, and who keep coming back for more discussions.
  • I get tremendous satisfaction from direct feedback from readers, particularly when something they read on my blog, either from me or other readers, is making an impact on their thinking or behaviors.
  • There is lots of reciprocity going on amongst bloggers, thanks to linking, trackbacks, and pingbacks. As a result, the give and take feels very fair.
  • Although I am very familiar with wikis, have consulted for wiki startups, and have started several private wikis of my own, I find making the move from blogging to contributing to public wiki platforms a huge step.
  • First, there is the issue of time. If I could somehow export content that’s already on my blog, automatically, I would consider it.
  • Second, is the problem of attribution, and ownership of content. Although, I am not one to hang on to my creative product with steel claws, it is very important to me that I be given credit for it.
  • Third, is the issue of duplicate content, and how that might affect ranking of original content with search engines. If content is going to be exported automatically, and frequently, I would not have the time to do rewrites to avoid duplicate content problem.
  • My blog is not my only source of content either. There are quite a few projects I have been working on, that are sitting either in some files on my desktop, or in Google groups discussions, and that I wouldn’t mind sharing, if I could just turn those over with one click.

The bottom line is, if you want my content, make it super easy for me, and make sure I get credit for it.

There is a huge pool of potential content providers like myself, scattered all over the Internet, and elsewhere, who could share their knowledge, under the right conditions:

I will end by sharing my dream of the perfect sustainability wiki. Imagine a place where you can find nearly all that has been published about sustainable solutions all over the world. Imagine that contributors would not have to worry about adapting their content to the specific wiki requirements. Wiki editors would take care of that chore. Imagine that contributors could get credited each time, with ample linkage back to their original websites. Imagine a widget that would allow contributors to send their content automatically to the wiki in one click. Imagine that getting my content on the wiki would be all benefit for me, in addition to the reward from helping the greater community. Imagine . . .

Maybe this discussion can be continued at the upcoming Open Sustainability Network Camp that will take place in October, in San Francisco?

Marguerite Manteau-Rao is a green blogger and marketing consultant on sustainability and social media. Her green blog, La Marguerite, focuses on behavioral solutions to climate change and other global sustainability issues. Marguerite is a regular contributor to The Huffington Post. Since Sarah Palin’s VP nomination, she has also been impersonating Ms. Palin at What’s Sarah Thinking? blog

Where Country Music and CleanTech Collide

by Richard T. Stuebi

Great blog post last week by David Roberts in the Huffington Post profiling a new country tune entitled “Drill Here, Drill Now”, written by a Nashville artist named Aaron Tippin.

For those who want to skip the music, here are the lyrics:

Hello … Is anybody out there listenin’ in Washington D.C.
This is the suffering voice of America crying out for relief
Now I don’t know what a gallon of gas costs up on Capitol Hill
But we sure know what it costs down here in Realityville
And the damage already done has been a mighty heavy toll
And if we’re gonna fix it we gotta start right here at home

CHORUS:
Drill here, drill now
How ’bout some oil from our own soil that belongs to us anyhow
No more debatin’ we’re tired of waitin’ everybody shout out loud
Drill here, drill now

Every time a foreign tanker pulls up to our shore
They got us over a barrel while they bleed us a little more
And think how much it costs just to bring it all that way
And how many American jobs that’d make if we were drillin’ in the USA
Oh and God forbid if our oily friends should decide to cut us off
We’d be standin’ around with our britches down now listen to me ya’ll

REPEAT CHORUS

Well the winds of change are blowin’
Yes and we recognize that need
But tractors, trucks, cars and planes can’t run on tomorrow’s dreams
So while we’re workin’ on the future we can’t ignore today
Cuz who knows how much time the alternative might take
Somethin’s gotta be done right now cuz friends it won’t be long
Before this great big country comes grinding to a halt

REPEAT CHORUS

I’m not anyone to critique music, or poetry for that matter. But in a recent post, I have previously dismembered the absurd notions offered by Mr. Tippin in his song that drilling for more oil in the U.S. is going to solve all our economic problems.

Rather than thoughtful humility and purposeful action towards real solutions for our energy challenges, the U.S. gets instead yet another example of beat-my-chest patriotism, overly proud and completely without substance.

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

Broad markets rise, sustainable energy mixed (week ending 9/19)

Author: Mark Henwood

Capping a crazy week, broad markets end up, while commodities retreated slightly.

Camino’s indices ended the week mixed amid highly volitile trading.

In Biofuels, we again saw the potential for huge losses driven by poor risk management practices applied to hedging strategies. Read more here. Veresun (VSE) dragged the Biofuels strategy down for the week with a 67 % decline. This is after a a 50% bounce the stock received following it’s announcement it was reviewing “strategic alternatives” in the wake of its hedging loss.

On the up side LED-Lighting’s Cree (CREE) capped its strong week with an upgrade. Oppenheimer’s analyst apparently thinks light-emitting diodes are being adopted as a mainstream lighting product. This is a continuing demonstation of the influence of analysts.

I like LEDs. They last a long time (5x a CFL), they have a cool form factor, they don’t use mercury, they are rugged, they are dimmable, and they produce very nice light. Unfortunately, commercial LED products are no more efficient then CFLs and currently cost 20 times as much. Their long life doesn’t yet offset this high cost. Given time I expect them to penetrate more lighting applications but we are not there just yet for mainstream use. I’ll get excited when their cost start to fall significantly and approach no more the 5x the cost of a CFL.

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks.

FedEx Improves Fuel Efficiency

By John Addison (9/18/08). FedEx is sometimes referred to as a bellwether for the U.S. economy. The bellwether appears to be doing OK, based on the quarterly financials which FedEx released today.

Revenues increased, but earnings decreased 22% over a year ago. For fiscal year 2009, FedEx expects to earn $4.75 to $5.25 per share, up from $3.64 for fiscal year 2008. Daily volume in FedEx’s Express and Ground segments increased 1%, helped by growth in ground, FedEx SmartPost and international domestic express shipments. U.S. domestic package volume fell 5%. FedEx Statistics

The key to FedEx’s future is continued improvements in efficiency. Customers look to FedEx to handle shipment, logistics and delivery better than competitive alternatives. One challenge for FedEx is controlling fuel costs including jet fuel, diesel and gasoline. All these fuels are refined from oil. So when oil prices again increase, FedEx must minimize the impact.

In fiscal year 2008, FedEx consumed 1,227,290,000 gallons of jet fuel – yes, over one billion gallons – delivering 7.5 million packages daily by air and ground. In Q1 08, jet fuel cost $2.295/gal; in the latest quarter, cost $4.058/gal. FedEx’s total jet fuel cost increased 76% over the same quarter of the previous fiscal year. By being more efficient, however, FedEx reduced gallons of jet fuel used from 310,794,000 in Q1 08 to 294,724,000 in Q1 09, a five percent reduction. FedEx is beginning to upgrade its air fleet by replacing Boeing 727 planes with 757 that reduces fuel consumption 36 percent while providing 20 percent more capacity.

During my recent visit to the FedEx Express Super Hub in Oakland, I witnessed efficiency in reducing jet fuel and many other improvements in operations. Through this hub, 250,000 packages are received, sorted, and then put on planes or trucks moving them towards their delivery destinations. Packages of every shape and size moved through conveyors of the massive center, being routed left and right, up and down, based on bar code information. A small package with a Teddy Bear for Alicia is routed left continues its journey to Atlanta. A thousand pound container of just-in-time electronic components from Taiwan continues its journey to the manufacturer in San Jose.

Robin Van Galder, Managing Director of the Oakland Operations, took me on a tour of the 60 acre facility that might handle 50 planes and 200 trucks on a given day. With 1,400 employees, I was surprised that he was greeting everyone by name. This hub is part of FedEx’s growth including Asia Pacific, as more goods move to and from Asia, by plane including Oakland and San Francisco and by the ships in major West Coast ports such as Los Angeles, Long Beach and Oakland. Everything is in motion, as large containers are unloaded, packages routed, containers reloaded, planes and long-haul trucks filled.

In the future, more packages will be automatically sorted with less human oversight needed as containers embed RFID chips containing more information than bar code. RFID readers were present and sometimes used during my tour.

Each day some 50 planes land, unload, reload, and then depart the FedEx hub which is located within the Oakland International Airport complex. More efficient Boeing 727-200s have replaced 727-100s. Larger MD11s also use the hub. This July, FedEx flew its first 757. Between 2010 and 2012, fifteen Boeing 777 will be added to FedEx’s fleet, further improving fuel efficiency and plane cargo capacity.

As soon as planes dock for unloading and loading, their engines are shut off to save fuel. Auxiliary power is handled with auxiliary electric power provided by hubs such as Oakland. This approach at multiple facilities saves FedEx one million gallons of jet fuel per month. Commercial airlines would do well to follow this example.

The facility uses a few light-electric vehicles. Tugs, now running on diesel or propane, may eventually be replaced with electric tugs. Forklifts now running on propane, my eventually be replaced with electric forklifts.

904 kW of electricity is provided by the solar panels covering the roof. Solar and hybrid delivery trucks are important parts of FedEx’s increased efficiency. Solar is used at this and two other facilities. Geothermal power in Geneva.

When I talked with Mitch Jackson, director of Environmental Affairs and Sustainability at FedEx, he explained that FedEx now has 172 hybrid delivery trucks. The hybrid trucks improve fuel economy 42 percent, reduce greenhouse gas emissions approximately 30 percent and cut particulate pollution 96 percent. FedEx Cleaner Vehicles

FedEx constant works at deploying the right sized vehicle for the appropriate application. Larger vans make sense in cities with 50 to 100 deliveries within a few miles. Lighter vans which use less fuel per mile, such as Sprinter, are used when there are lots of miles spread over suburban and rural routes.

The FedEx Hub also demonstrated FedEx’s growing relationship with the U.S. Postal Service. At Oakland, 15,000 bags of U.S. mail are sorted and continued on their way. FedEx SmartPost is one of the growing parts of FedEx’s business. It helps businesses control cost and speed delivery by handling pickup, sorting and staging, with delivery to the most efficient points in the postal system for final delivery to homes and businesses.

Should fuel costs continue to rise, FedEx might explore a strategic relationship with rail carriers which can move bulk goods less expensively and with less fuel, but with days added to final delivery. Currently, FedEx Trade Networks North American Transportation services can handle a wide range of end-to-end logistics for a customer including intermodal services that include rail.

Beyond its own operations, FedEx states that fuel savings “starts with a holistic examination of a customer’s supply chain. FedEx frequently works with customers to analyze and reconfigure their supply chains to enhance efficiencies and reduce customers’ overall environmental footprint.”

To keep transportation cost and fuel use under control, continued efficiency improvements will be strategic for FedEx and its customers.

John Addison publishes the Clean Fleet Report.

A lightning bolt Chevy Volt

by Cristina Foung

My favorite green product of the week: the Chevy Volt extended-range electric vehicle

What is it?
The Chevy Volt is being called an “extended-range electric vehicle.” And while the wheels are turned directly by electricity, there is a small gasoline engine which will kick in to generate said electricity. In any case, now that that’s clear, the Chevy Volt has a lithium-ion battery, a range of 40 miles without kicking on the gasoline engine (although some say it’s probably closer to 32 miles), a range of maybe 360 miles with the ICE going, and a top speed of 120 MPH.

Why is it better?
Well, it’s no Tesla Roadster (which I was fortunate to take a little spin in two weekends ago), but it’s a pretty nice looking car. Its 4-door sedan body is definitely more practical for most folks looking for a cleaner vehicle that can get them (and their stuff) from point A to point B.

As far as efficiency goes, some estimates say the Volt will get about 100 MPG. When it comes to saving the world (think global warming and polar bears), the Volt is a step in the right direction for sure. Of course, there’s some debate over whether or not the Volt should be considered a plug-in hybrid or an electric vehicle, but in either case, it’s a technology worth exploring. And given that the Volt has a production date of 2010, that should give utilities some time to figure out how to deal with more vehicles plugging into the grid.

Where can you find it?

Come 2010, keep your fingers crossed that you’ll find the Chevy Volt at your local Chevrolet for somewhere between $30 and $48k. In the meantime, feel free to sign yourself up on the unofficial wait list.

Besides her green products column on Cleantech Blog, Cristina is a passionate advocate for green living at the Green Home Huddle at Huddler.com, which focuses on electric cars, energy efficient appliances, and other green products.

Big Energy Follows Big Pharma

With high energy prices, one would think that energy companies would awash with cash and would be investing in their future. But that doesn’t seem to be the case. The US energy industry in particular is only spending $ 4 billion on research and development while making record tens of billions in profits. So, what’s wrong with this equation? As far as I know, only Chevron Texaco, Shell, BP and Conoco Phillips have active venture arms.
Since this question has puzzled me for the past 5 years, I have sought answers. One is that energy companies did not believe that energy prices would remain high for so long as they were burned with price collapses in 1986 and 1998. Well, that one is now off the table. The second is that it takes time for large companies to change. Well, it’s five years later.
Times have changed but the answer seems to be fairly simple. The major energy companies will not be creating much of the new technology that they need but will be buying it. They will be buying the oilfield services, cleantech and renewable technology that venture capital funds. They are following the Big Pharma model. Big pharmaceutical companies today are not creating much of the new drugs but are acquiring the companies that do. This makes sense to me as I do not see the scale needed in research and development by the energy companies but I do see the beginning of a massive shift into cleantech and renewables. So, the future of the energy industry is going to be increasingly dependent on small entrepreneurial companies that provide scalable solutions across the board in renewable energy, clean energy, information technology, energy storage and the like.

What will still be needed is large scale investment and scale. I see that coming from private equity groups not hedge funds or venture capital. We recently have seen both KKR and Blackstone start to make initial inroads into infrastructure and renewables. I have been told that there are over 4,000 private equity funds in America, and I know that they have soft circled cleantech and renewables. The investment will begin on a large scale when the US has developed climate change cap and trade legislation. That day is coming soon!

TheFreakOut

by Heather Rae

Installment 1: Fuel Switching

Mounds of firewood dot the backroads of Maine, like warts on a toad. This old house will make use of the large maple that fell on my husband’s land; it’s mostly cut into mis-shapen hunks that will fit into the old leaky Home Atlantic wood stove that commands center stage of a front room.

Last year, the price of a full seasoned cord of wood in my area was $200. In July of this year, the firewood guy, Nate, told me the price had reached to $280, delivered; in the southern part of the State, it’s even higher. (Nate is young with a quiet, slow, gentle demeanor; he has lumberjack muscles on a large frame, a Boxer named Gus, and a big truck…and he attends to conversations with focused interest; that is, he’s sexy, which is why a close friend in her 40s, on vacation in her home state of Maine, eagerly asked Nate more about the burn qualities of ash, oak (etc) than she ever knew she cared when we ran into Nate one summer night at the local pub.)

A firewood delivery from Nate is about the only sexy aspect of heating a home through one of Maine’s long, cold winters. With the rise and dip of fuel prices, Mainers want to talk fuel switching. Politicians frantically cobble together ideas for weatherization and fuel assistance and homeowner loans. (As if these ideas are new. They are not; my colleague who worked with the State’s energy office decades ago retrieved his files from storage…same issues, same solutions. All put into the deep freeze for decades.)

In the frenzy that’s built up over the last several weeks, I wonder, ‘what was the price point where homeowners and politicos began to freak out?’ Was it when gas at the pump reached $2.49 or was it $3.99? Was the ‘tipping point’ when fuel merchants like the one in my small rural town started to post the price of gas at the 1/2 gallon (like a luxurious cheese priced at the 1/4 pound)? Was it when the merchants resorted to writing in the $4 before the decimals, because they lacked enough “4s”? Was it when homeowners got the shocking news that the pre-pay price for #2 heating oil, the primary heating source for Mainers, might be $5.50?

Here in Maine, the price of heating fuel is top of mind. Fuel trucks rumble past my house ever day. The price of heating oil is posted nearly everywhere one turns. A portion of the State in the south can receive distributed natural gas, but for the majority of us, it’s a smorgasbord of fuel options, and Mainers do get creative. When it comes to heating, Yankee independence, individualism and ingenuity kick in.

But when it comes to fuel switching, I wonder, do they really think they can beat the fuel markets, and by extension save money over the long haul, by purchasing and installing new heating appliances that run on different fuels? There’s lots of talk about pellet stoves, to make use of the domestic biomass prevalent in Maine: wood…the price of which I’ve already noted has increased significantly, apparently tracking increases in oil.

Around the time we ran into Nate this summer, the State which publishes a round-up of the price of heating oil (usually only in cold months, but now in the summer because of, you know, TheFreakOut), the price of #2 heating oil hovered around $4.70. The price of #2 heating oil, as of the State’s August 8 round-up, had dropped to $4.00 (down $.42 from the week prior).

There are ample reasons to avoid burning fossil fuels (climate change for one, a concern which has been drowned out by TheFreakOut). Beholden to wood, pellet or mis-shapen logs, oil from domestic or foreign drilling, we’re still at the mercy of the global markets. There are rumors that the State’s solar incentives (rebates for PV and thermal) will receive an infusion of funding (they were left to languish, depleted early in the year). The sun comes up. The sun goes down. Every day in Maine. And it’s a fuel that’s free. Funny, that.

8 Lessons From Twitter Energy Monitoring

by Marguerite Manteau-Rao

Two weeks and 77 tweets later, the Twitter “green_watch” project has come to an end. Lots of insights, problems raised, and beginning of answers.

The goal was to use Twitter as a real time, online reporting tool for my personal energy consumption, round the clock.


Lessons learned from the project:

#1. The more engaged we are in flow-like activities, the less our propensity to consume energy and buy things that depend on energy for their production:

Adults and children should be encouraged to develop capacity to engage in activities that are deeply satisfying by themselves, eg, hobbies, work, physical activities. Early education could play an important role in that respect. Children’s creativity should be encouraged more, including the ability to do much with little.

#2. Energy vampires, although well known by now, continue to do their silent work of sucking up electricity unnecessarily, and with no added benefit for the end user.

Smart meters, power strips, are available. But how many people use them? How many know much they could save? The effort required is still too great for the mainstream.

#3. There are no readily available monitoring system to alert us when we are consuming energy, and how much, and in ways that talk to us.

I understand $, comparisons, savings, cute pictures, and sensorial signals such as bells and changing colors. Forget kWhs, tables, and graphs. Lots of work is currently being done in this field. But it still has a long way to go, and is still in pilot stage.

#4. The switch from car to alternative low energy mode of transportation requires that people experience first hand the superior benefits of those alternatives.

From riding my bike a few times, I realized that biking was better for my health, took no more time than driving, avoided traffic jam and parking problem, was a lot of fun, and cost me nothing. Same with taking the train, and realizing that I could use time riding productively, working on my laptop, or reading, plus I did not have to find parking. This shows the importance of jumpstarting the conversion process by eliminating barriers to trial of other mode of transportations.

#5. We are addicted to convenience, even more than to things. Rather than fighting that addiction, we should focus on sustainable alternatives that are as, if not more convenient that current solutions.

The bike example also applies here. If we can convince people that biking is as fast, and less hassle than driving, at least for short distances, then we will have an easier sell. Trying to go against that cultural reality of our Western world, is likely to be met with great resistance, and be counterproductive.

#6. There is a huge fuzzy area in collective energy consumption, and indirect energy use. How does one establish the share between individual and institutional responsibility?

At home, and in my car, I am in charge. What happens when I consume electricity from lighting on the freeways, or university campuses? Or when I buy processed food, without any knowledge of the energy that went into producing it? Information becomes critical, as in food carbon labeling, or public display of energy consumption, for let’s say a public pool. Although not a mainstream reality yet, such information would empower individuals to make informed decisions about their use of such collective services.

#7. Green-ness is a privilege of the rich. People with money to spend on home solar installations, hybrid cars, and carbon offsets for air traveling, can lower their carbon footprint, a lot more easily than their less well-off fellow citizens.

That is a fact. In the absence of significant government subsidies and investments, the average person needs to work a lot harder to decrease his or her carbon footprint

#8. Energy efficiency and conservation, the two low hanging fruits of climate change remediation, have not yet entered the public consciousness.

I am dreaming smart homes, smart transportation, smart consumption. No fancy new technologies required. Only a shift in mindsets, and the pulling together of existing technologies.

Any ideas how to make this happen? I am asking you . . .

Marguerite Manteau-Rao is a green blogger and marketing consultant on sustainability and social media. Her green blog, La Marguerite, focuses on behavioral solutions to climate change and other global sustainability issues. Marguerite is a regular contributor to The Huffington Post. Since Sarah Palin’s VP nomination, she has also been impersonating Ms. Palin at What’s Sarah Thinking? blog

First Impressions of China

by Richard T. Stuebi

I just returned from my first trip to China – a whirlwind ten-day tour spanning the cities of Beijing, Shanghai, Guangzhou, Xiamen and Wenling – involving a number of private meetings (some with senior public officials) as well as public presentations at PennWell’s China Power Oil & Gas conference and at a cleantech symposium hosted by the American Chamber of Commerce in Shanghai (AmCham Shanghai) at the annual China International Fair for Investment and Trade.

It is impossible in a brief blog post to give a detailed report on my visit, or to more broadly comment meaningfully about the profound issues confronting the whole world as a result of China’s rise and arrival to world pre-eminence. With this note, I will only attempt to offer some immediately apparent observations related to cleantech issues and opportunities in China that emerged for me from my visit.

Pollution. It is well-known that China is experiencing tremendous environmental challenges, with almost a million Chinese estimated to die each year prematurely from health issues stemming from poor environmental quality. Air visibility can sometimes be less than a mile on what would otherwise be an ordinary hazy humid summer day, although frankly, I was expecting the air pollution to be worse than it was. On the other hand, the water situation shocked me. China’s Ministry of Environmental Protection (formerly known as the State Environmental Protection Adminstration) is said to admit that 60% of the country’s rivers are polluted to the extent that they can’t be used for drinking, and I have heard claims from American sources that a majority of Chinese rivers are so bad that the U.S. EPA would deem their waters to be unacceptable for industrial purposes (much less for drinking). Even at the finest hotels, guests are warned not to drink the tap water, and bottled water is generally provided as part of the room rate. (In case any of you are eating while reading this, I won’t bring up the public toilets.) The other major surprise for me was how much worse the pollution situation was in the countryside than in the cities. Bad air, disgusting water and (especially) litter are much more starkly obvious in the poorer rural areas – a powerful indication of the positive correlation between income/wealth and environmental quality. This reinforced to me how important it is to promote (rather than to retard) economic growth in China, so as to facilitate environmental improvement both for the sake of the Chinese and for the world.

Electricity sector. Although I haven’t investigated in any detail, what I heard suggests to me that the electricity industry in China is on the verge of a financial breakdown, analogous in some ways to the California fiasco of the early 2000’s. Retail electricity prices are subsidized (heavily for large industrial customers), and allowed wholesale prices to generators are fixed. However, coal prices are on the rise, because the mining industry is sufficiently fragmented and privatized that government attempts to set the prices are ineffective. Since the vast majority of the electricity in China is produced from burning coal, the combined effect of increasing coal prices and steady electricity prices is putting a financial squeeze on many generators – so much so that in some cases generator firms are reducing output from their plants. It is unclear how long this can go on before electricity supply inadequacy (already a problem) becomes acute. The financial health of China’s electricity sector ought to be important to the cleantech industry, because a collapse of some type might jeopardize the attainment of the government’s ambitious clean energy aspirations that have been set forth in its Renewable Energy Law.

Manufacturing. In some parts of the U.S. (such as here in Ohio), we like to think we are a manufacturing powerhouse, but China makes us look like pikers. The ascendancy of Chinese manufacturing is nowhere near its peak: with several hundred million people still living in desperate poverty (pre-industrial conditions) in the hinterlands, the prospect of earning US$1000 per year by moving to the city to work in a factory represents a five- or ten-fold increase in income and quality of life. In other words, unless/until fuel prices make transportation of goods prohibitively expensive, stringent emission reduction programs become binding in China to double or triple electricity prices, and/or the yuan-dollar relationship alters dramatically, its huge labor cost advantages can only enable China to further strengthen its already dominant position in global manufacturing – excepting certain niches of production (items with very high shipping costs such as wind turbines, items with limited labor input due to capital-intensive production processes, items still in low-volume early production runs). Outside China, we will generally be relegated to being the technology innovators, the product designers and system integrators, the sellers and distributors, the installers and the service people. Rather than rue that position, let’s embrace it. Because of their production orientation, my speculation is that the Chinese are not so strong in innovation, leaving it to others to be the technology pioneers. After being bombarded by souvenir hawkers and market barterers who make undifferentiated “me-too” offers and compete almost solely on price (or on aggressiveness or loudness), I also conclude that these Chinese will not be the leaders in identifying customer needs as they emerge and evolve, nor in delivering high-value (not price-based) solutions to meet those needs. Those games are for us to play, so let’s go after them.

Capital. It is abundantly clear to any observer on the street that China is awash in money. In Beijing and Shanghai, designer consumer goods and high-end automobiles are not ubiquitous, but they are evident. (In Xiamen, I saw an Audi A8L – a $120,000 vehicle in the U.S. – with police lights on top of the roof. Nice cop car! Does your town have a municipal budget that would support a fleet including one?) I met venture capitalists looking for deals in China, as well as a bevy of consultants who facilitate technology transfer and commercialization into China. However, I didn’t see much evidence of interest in foreign investment by Chinese parties. For the cleantech revolution to be amped up, we need to make the case that this Chinese capital is well-served being deployed outside China – not only for good financial returns, but to generate more future opportunities for Chinese domestic investment.

Inefficiencies. Centrally-planned economies (e.g., the former Soviet Union) are legendary for begetting ridiculous systemic inefficiencies. The Chinese economy is quite a bit different – the central government indeed establishes absolute policies, but only at a very general level, providing minimal specific guidance and instead allowing individual actors almost complete autonomy to comply within the bounds of what’s permitted – but the inefficiencies are nevertheless astounding. I speculate that the inefficiencies are driven more by the explosive growth of the economy – averaging a mind-boggling 9.9% per year for a 30 year period since 1978 – which propels businesses and individuals to act quickly, with much replication and little reflection or innovation. A vivid illustration of this is the abundance of highly inefficient mini air conditioning units (rather than more efficient central air conditioning systems) in relatively new high-rise buildings, presumably because they’re cheap and quick and easy to replicate. The resulting inefficiencies also reach into the social realm: schedules are set late, remain fluid and dynamic up until the event, and tardiness is common. The Chinese way of doing things thus requires some acclimation for those of us accustomed to considerable structure and discipline.

Urban mobility. Reflecting the economic explosion, people are constantly trying to get somewhere. Even though the big cities (especially Shanghai and Beijing) have reasonably well-developed public transportation systems (including modern subway systems), and even though the per capita level of car ownership in China is only less than 10% of what it is in the U.S. (reflecting the amazing fact that private auto ownership was forbidden in China until the mid-1990’s), traffic is truly chaotic in urban areas. It is said that there used to be bicycles everywhere in China, and while many still remain (often abiding by well-designed separated bicycle lanes), many bicycles appear to have been replaced and superseded by electric scooters that are clean and silent. (By the way, the silence isn’t always a good thing, as any aimless and unattentive walker is under a constant threat of being steamrolled by an aggressively-driven scooter stealthily zooming in from behind.) It appears to me that “rules of the road” is an oxymoronic concept in China, as vehicles undertake passes in the most imprudent circumstances and drive on the left or on the right almost on discretion. (Of note, traffic lights are world-class: many have timers indicating the number of seconds remaining for a green light or red light.) Taxis are about as ubiquitous as two-wheeled vehicles and are unbelievably cheap – an hour ride of perhaps 30 miles might cost the equivalent of US$20 – but you’ll never complain about a Manhattan cab ride again. As a consequence, drivers and pedestrians alike must be vigilant to protect their lives. And, it is a good thing for all concerned that foreigners are not allowed to drive; when you rent a car in China, you also get a Chinese driver, who is well-accustomed to seeing driving behaviors evidenced in the U.S. only at race tracks and demolition derbies.

Air service. Air travel in the U.S. has nothing on China. I was impressed with the very new and modern airport terminals in all of the cities I visited. The primary domestic airlines (Air China (LSE: AIRC), China Southern (NYSE: ZNH), etc.) have thoroughly modern Boeing (NYSE: BA) and Airbus fleets – no Soviet-era Tupolevs here anymore, no reason to worry about making it alive to your destination. Fares are reasonable – and they still serve meals (though Chinese airline food is no better than the U.S. airline food of days past).

Language. I am no linguistic expert. I struggle with English, and my high school experience in studying French convinced me that I do not possess the language gene. But, since it doesn’t use an alphabet and is incredibly reliant in verbal communication upon imperceptible shifts of tone, Chinese (Mandarin) is a whole ‘nother level of challenge. I am not raising this issue as an interesting or amusing tangent, but rather because the language barrier (and overcoming it more satisfactorily) will be truly fundamental in determining the future success of Chinese-American relations. As the work of Maturana and Varela shows compellingly, humans live in language: that is, they make assessments of the world and create new possibilities only through language. Without sharing a language, it is simply not possible to come to agreement on the current situation or to invent directions for beneficial action. In my time in China, I experienced a deficit of good translators – more properly termed, interpreters – who were strong in both Mandarin and English, and who were also knowledgeable enough about the subject matter to convey the fully nuanced intentions of the speaker. (To illustrate, I would hear a Chinese speaker utter 60 seconds of Mandarin, and the English translation would hesitantly be passed on, usually some banal statement like: “China uses a lot of energy”. Come on — I know in his minute of talking he must have said something more insightful and detailed that that!) If we’re going to enable massive/rapid cleantech transfer into and adoption within China, there’s going to have to be an order of magnitude expansion of cleantech-knowledgeable people that also possess high degrees of English-Mandarin fluency.

As Mark Twain once was alleged to have said (though in actuality the maxim was coined by the French philosopher Blaise Pascal), “I have made this letter longer than usual, only because I have not had time to make it shorter.” I apologize for my rambling incoherence. I’m still digesting what I observed from my first visit to China, with an aim towards developing and executing an approach to work more systematically with/in China on cleantech opportunities. The above is merely my first transcription of my emerging thoughts. I don’t know what it all means yet, but I do know that there’s something pretty important in here somewhere.

One final anecdote to wrap up: during my trip, I had the pleasure of being able to connect personally with the U.S. Assistant Secretary of Commerce David Bohigan, as he happened to coincidentally be leading a group of U.S. business people on a clean energy trade mission to China and India. As Mr. Bohigan noted to me, the relationship with China and the need for clean energy will be the two most dominant forces shaping the U.S. economy in the 21st Century.

So, at least one bit of clarity has so far pierced the fog in my mind: it is incumbent upon the U.S. cleantech community to engage meaningfully with/in China, as it is there that the largest opportunities both for wealth creation and for environmental improvement lie.

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

Climate Change Policy Thoughts, McCain, Palin, Obama, Et al

Those of you that know me know that fighting climate change is an issue near and dear to my heart – and day to day life, since I am currently involved with a start up working on helping to deliver even better transparency and environmental integrity to carbon credits.

So as a small government, energy focused, environmentally conscious, social liberal, fiscal conservative, who has worked in both oil & gas and alternative energy, I had a lot to like about the McCain-Palin ticket. And I’ve stated that and my reasons for it, and gotten ripped for it for an audience on this blog that is commendably and passionately progressive when it comes to these issues, but unfortunately doesn’t always read to the end of the blog articles or do their research before ripping me for being Republican. But one key area I struggled on was where Palin came down on climate change. Luckily for the 182 small government, energy focused, environmentally conscious, social liberal, fiscal conservatives like me left in America, John McCain’s climate change position has apparently rubbed off on her. Like her or not, this is a very good sign for progressives. It means we as a nation are joining the climate change fight no matter who wins the election fight.

To those of you who say we should have signed Kyoto, don’t forget, Obama, GW Bush, Hillary Clinton, and John McCain all agree on this one, multilateral climate change legislation has to include China and India committing to something. (Hillary actually flopped on this topic). And China and India haven’t agreed. The Senate voted something like 98 to 0 during the Clinton years saying no to Kyoto if China didn’t agree to caps.

The main difference between US politicians has been the willingness of every one on this list except Bush to work to push through some sort of cap and trade in the US – independent of a multilateral framework like Kyoto. McCain has been pretty lock step with the Democrats on this one. And then smaller differences emerge in their approach to tough the caps should be, and whether the profits from trading ought to go into the government coffers as a new (Iraq war size massive) tax, or back to industry to fund future abatements. Of those, Obama talks the toughest game, but McCain is the only one who has ever tried.

The problem with a unilateral approach to cap and trade is that it’s about like going into Iraq unilaterally – it’s a bad a idea. Carbon is a global problem, and lots of separate policies aren’t likely to solve it without significant economic collateral damage. And worse, with cap and trade or taxes, if we try to have separate markets or tax schemes, it means we likely get a different price of carbon in California than in Texas than in China, than in Europe. And if there is no way to equalize the price by trading credits in linked markets, the only route left for industry is to shift production out of the country with the highest price, or lose out to competitors from those markets with lower prices. If the markets aren’t linked (which Obama supports in small amounts and McCain in medium amounts), we will definitely see these geographical price differentials. Then industry will respond by shifting production to China and India, whether it’s overt or not, they won’t have a choice. The power of the consumer dollar will force it to some degree. And the tighter the US carbon legislation is compared to the Kyoto, the bigger incentive to shift production overseas. Hence Obama’s position on 80% auctions for very rapidly implemented, very tight caps results in a large tax windfall to the US government, and a correspondingly large effective price differential on the price of carbon from the US to Europe even, let alone the US to China which still has caps. Where as McCain-Lieberman’s slower and lighter (but still much faster and tighter than Kyoto) plan with explicit links to Kyoto markets, would result in more moderate price differentials. If the markets are linked (meaning you can buy Chinese credits to meet California demands), but the local carbon regulations are tighter, industry has less of a need to shift production ourseas, but can instead cans sometimes shift it’s carbon purchases overseas instead of labor or other materials, but instead we would still see an increased trade imbalance as dollars flow to China to pay for the carbon.

Basically, if the US cap and trade is tighter than foreign cap and trade, either manufacturing has to go off shore, or if the markets are linked and you can buy carbon offshore, then either dollars could go offshore for carbon to keep jobs and production home. That’s why the big push for multilateral climate change, carbon trading markets, and environmental regulation that moves in lockstep with our biggest trading partners.

Hey wait, does that mean that the Democratic position on climate change will actually exacerbate outsourcing to Asia and trade imbalances even MORE than the Republican position this time? ‘Fraid so. The thing I like about McCain on climate change, is that despite getting a bad rap on economics, he’s the only candidate who’s bothered to include the impact on you and I into the complex calculus of climate change legislation.

It’s a catch-22 with no real way out, and a lot of bad options. The worst option however, is doing nothing. Luckily, with Palin now toeing McCain’s line on climate change. That option may finally be off the table.

Be a TREE Hugger

by Cristina Foung

My favorite green product of the week: the Tendril Residential Energy Ecosystem (TREE)

What is it?
TREE is an end-to-end residential energy management system. In a nut shell, the system allows you to monitor your home’s energy consumption. It gives you real-time consumption details, can predict your next bill, and help you compare your usage to homes around you. It comes with some hardware (like a home display monitor) and software.

Why is it better?
There are quite a few different energy monitoring systems in the world. TREE seems to be one of the most comprehensive. It basically lets you figure out where you’re consuming energy within your home, where you can reduce your energy consumption (which obviously then reduces your ecological footprint), when peak hours are in your area (which lets you see when energy prices are lower and can therefore help you save money), and can be programmed to power down appliances reducing vampire power (also helping you save money and the environment). TREE connects your home to utilities’ back-office systems, resulting in a much more interactive, empowered experience for the consumer. Not too shabby, I think.

For more about TREE, check out this interview with Tendril CEO Adrian Tuck.

Where can you find it?
Tendril offers a few different products, but their basic set up is the Tendril Insight. Come the middle of next year, you might be able to get hardware directly from Tendril for $30-$50.

Besides her green products column on Cleantech Blog, Cristina is a passionate advocate for green living at the Green Home Huddle at Huddler.com, which focuses on electric cars, organic food, and other green products.

Staying Warm, One Radio Show at a Time

Strategies for Staying Warm This Winter,
A Call-in Program on Maine Public Broadcasting Network Radio

“On Friday, August 29th, MPBN News & Public Affairs Director Keith Shortall spoke with two energy experts, Dan Thayer and Heather Rae, about home heating issues and tips. They took calls from listeners with questions and concerns about home heating issues.

Dan Thayer, a licensed professional engineer, is a 28-year veteran in the heating industry and the president of Thayer Corporation of Auburn; Heather Rae is a cleantech energy consultant and contributor to cleantechblog.com.

To hear the recorded session, to read the transcript, visit the MPBN’s website, Staying Warm, A Plan of Action.”

Real Security after 9/11

Op-Ed by John Addison (9/11/08). My ninth trip to teach a workshop at Two World Trade Center never happened because of the great tragedy 9/11. For years Sun Microsystems, my former employer, had invited me to conduct a series of workshops about technology and strategy. Much of the Wall Street ran on Sun servers, Java applications, and Sun network technology. Reliability, performance, and the ability to recover from disaster were reasons that New York continued to run after the disaster. Sun’s tagline was reality – “The Network is the Computer.”

On September 11, 2001, thanks to heroes like Avel Villanueva the hundreds of people working for Sun Microsystems in Two World Trade Center all quickly evacuated the building and survived. When Avel saw the damage and fire at One World Trade Center, he paged everyone at Sun to leave Two World Trade Center as quickly, “Please, with calmness, go to the nearest exit. This is not a drill. Get out.” He repeated this from the reception area several times. Only after several pages and inspecting the vast 25th and 26th floors did Avel personally leave. Three minutes later the second plane hit Two World Trade Center.

Although it must have been difficult to continue working after such a tragedy, the people at Sun understood that New York depended on their ability to keep working. Within 24 hours almost all Sun employees were doing their jobs at other Sun locations, homes, even nearby cafes. Sun effectively used its own networking technology with an iWork program that enables employees to work at home, at an office near their home, or be highly productive anywhere with a mobile device and wireless network connection.

Flexwork is one way that we are now more secure. The vital work of millions can continue even if a building cannot be accessed or part of a city is closed. Wireless and Web 2 enable collaboration, communication, and knowledge work to continue anytime and anywhere. People are most effective working some days at one location, other times at home, others at a customer or supplier location. We can take advantage of the new flexible workplace solutions to annually save millions of wasted hours and billions of dollars of fuel. Flexible Work Article

Every time that we go through an airport, we are aware that important steps have been created to make U.S. entry and travel more secure. Yes, despite the hassle and loss of some privacy, Homeland Security has been valuable in keeping terrorism at bay.

As our current president reminds us, “We are addicted to oil.” As we continue to spend billions for oil for countries hostile to our way of life, we continue in the words of Thomas Friedman to “finance both sides of the war on terror.” In his new book, Hot, Flat, and Crowded, the Pulitzer Prize winning author shows us how to be free of this addiction.

Americans are not waiting ten years to replace a fraction of our foreign oil with new oil from Alaska. Americans are reducing our oil use now. Confronted with high prices at the pump, U.S. citizens drove 12 billion fewer miles in one month. People are taking advantage of flexwork, public transit, car pooling, sharing rides and sharing vehicles. Two car households are buying fuel efficient cars and increasingly keeping their gas guzzlers parked. 40,000 Americans now drive electric vehicles that do not use a drop of oil. In ten years, we will be driving millions of electric vehicles. EV Reports

Twenty-three percent of our increased supply of electricity in 2007 was from renewable energy. We have enough wind to power the nation including transportation. We have enough solar. Scientific American Article Yes, it will take time, money, high-voltage lines to major markets, and added jobs. Green is producing green. While many areas of our economy are currently suffering, renewable energy and energy efficiency are growing rapidly creating jobs and corporate profits. Global Trends in Sustainable Energy Investment 2008

Real security requires more than airport checks, less foreign oil, and cleaner transportation. Real security starts with the commitment to give our children a better world. Future generations deserve nourishing food, clean water, and protection from disease. Global warming has now put over one billion at risk of not getting enough water and food. Glaciers are disappearing. Water systems are stressed as oceans rise and water tables deplete. Hurricanes attack our coastal cities with increased intensity. Draughts weaken our ability to grow food at affordable prices.

Yes, there are those in Congress who are chanting “drill, drill, drill,” but we cannot end our addiction to oil with more oil. Elected to represent their people, not special interests, these legislators threaten to stop funding renewable energy unless Big Oil can drill anywhere it pleases. Others want to undermine states rights, removing their ability to regulate greenhouse gas emissions within their state.

Fortunately there are wise leaders in both parties committed to put a limit on our greenhouse gas emissions, encourage conservation, put us on a path to a sustainable future that is more secure for our children.

In Mr. Friedman’s new book he recalls a Chinese proverb, “When the wind changes direction, there are those who build walls and those who build windmills.” America can renew its world leadership with innovative solutions to an emerging climate crisis. We can lead in wind power, solar, geothermal, building efficiency, materials that are lighter and stronger, zero emission cars and zero emission cities. From information technology to clean technology, from flexwork to sustainable communities, let’s build windmills not walls.

We can be inspired by heroes like Avel Villanueva who got everyone to safety. We can also celebrate the millions of ordinary heroes who are building a more secure future for our children by living a more sustainable life today.

Copyright 2008 © John Addison. Permission to reproduce on the web with preservation of this notice. Portions of this article will be included in John Addison’s upcoming book.

Geothermal Heat Pumps: The Forgotten One

by Richard T. Stuebi

Before I was introduced to EnLink Geoenergy Services in 2000, I had never heard of geothermal heat pumps (GHPs), even though I had been in the energy industry for almost 15 years then, and even though GHP systems had been in successful operational service for over 50 years by that time.

The GHP concept is pretty straightforward: use conventional heat exchanger technologies to utilize the soil underneath the surface as a heat sink in summer and to exploit the soil’s absorbed warmth in the winter. Thermodynamically, this is much more efficient than using the hot summer air as a heat sink when in air conditioning mode. As a result, the use of GHP systems can reduce a building’s energy consumption associated with space heating and cooling by up to 70% relative to traditional HVAC systems.

Given that buildings are responsible for a large portion of the economy’s overall energy requirements, and that heating/cooling requirements represent one of the largest energy loads for a building, GHP systems thus represent a technology that could potentially take an enormous bite out of current energy demands.

GHP systems are not new and unproven: hundreds of thousands of systems are installed across the U.S., some dating back to the late 1940’s. Way back in 1993, the U.S. Environmental Protection Agency released a report called Space Conditioning: The Next Frontier, which declared that GHP systems “are the most energy-efficient, environmentally clean, and cost-effective space conditioning systems available” — a statement that’s probably still accurate in most cases.

Even with all of this substantiation, GHP still represents only a very tiny segment (no more than 1%) of the U.S. HVAC industry.

Why should such a promising technology area be so overlooked?

There are several reasons why GHP systems are not widely adopted yet. Certainly, there are economic factors at play. Simple GHP systems have historically had higher up-front costs than conventional HVAC systems (particularly cheap, inefficient ones), and this up-front cost premium is no doubt an important decision factor in many instances.

We all know that many customers often make irrational economic decisions, selecting the lowest first-cost option for capital purchases, even when other options offers superior life-cycle economics.

In the context of heating and cooling options, such short-term thinking is likely to come back to haunt customers. Rising energy prices and climate change concerns should increasingly drive more customers to undertake more thoughtful analysis when making HVAC decisions.

Most simply considered, the “payback” from the energy savings relative to the incremental additional outlay for a GHP system is often reasonable — less than five years for many buildings in many locations. If more sophisticated financial approaches (such as a discounted cash flow analysis over the life of the system) are conducted and all future costs the customer is likely to face — including maintenance and replacement costs, likely price increases for electricity and heating fuels, and the economic impact of probable greenhouse gas policies — are considered, the financial case for GHP over conventional HVAC becomes even more compelling.

A more fundamental challenge than economics for the GHP sector is that very few decision-makers have ever heard of GHP systems, and therefore don’t even know to consider them when evaluating HVAC alternatives.

This is the case even in California, which prides itself on energy efficiency innovation and progressivism. Look in all of the issuances from the California Energy Commission, the California Air Resources Board and the California Public Utilities Commission — all of whom are desperately looking for good energy efficiency approaches as critical answers for meeting the ambitious carbon emission reduction requirements of AB 32 — and you’ll find hardly a mention of GHP systems as an attractive approach for building HVAC.

Although there are not just one but rather two relevant trade associations — the Geothermal Heat Pump Consortium (GHPC) and the International Ground Source Heat Pump Association (IGSHPA) — the GHP industry has clearly been ineffective in promoting the compelling benefits of GHP systems to the masses of building owners and professionals. In general, the architect and engineering community has been especially remiss in failing to learn more about an attractive heating/cooling alternative for their clients — and one would think that continuing this neglect would not serve their profession’s long-term interests well.

The unfortunate result from all of these forces at work is that GHP systems are rarely even considered (much less selected) when an HVAC decision must be made for a new building being constructed or an old building being renovated.

At long last, the rise of GHP systems may finally be beginning in earnest. Last month, the New York Times published a prominent article on the GHP sector, in which a number of sources in the U.S. GHP marketplace are cited to highlight the industry’s rapid growth. For instance, Climate Master — the largest U.S. manufacturer of in-building heat pumps for GHP systems — reported that revenues increased by 200% between 2005 and 2007.

As the article reports, the bottlenecks to continued increases in GHP adoption include equipment and component supply, and probably more importantly, a lack of adequate capability around the country to install GHP systems — particularly the underground component of the system entailing a series of plastic pipes buried underground.

Leveraging drilling techniques and other mechanical equipment long used in the oil/gas sector, my long-time client EnLink has consistently focused solely on developing new technologies and approaches to improve the economics and speed of installing the underground “loop field” for GHP systems.

With such innovation, it will become more feasible to expand a base of experienced GHP installation capabilities to scale across the U.S. As this occurs, the costs and time required for GHP installation will become lower (and less variable) for building owners and professionals in more regions of the country — at which point, GHP systems will become increasingly compelling as the preferred HVAC approach.

Although they have long provided subsidies and incentives for other renewable and efficiency technologies to accelerate their adoption, the Feds have consistently ignored GHP for similar treatment — at least so far, though this too may be changing. Three bills are currently under consideration in Washington, most notably the Geothermal Heat Pump Development Act (S. 2314) sponsored by Senator Ken Salazar (D-CO), which would make GHP systems eligible for tax credits already afforded to other clean energy technologies.

The GHP market is a sector rapidly in the making. Perhaps GHP systems won’t long remain the forgotten one in the cleantech universe.

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

All sustainable energy stocks clobbered (week ending 9/5)

Author: Mark Henwood

Emerging markets (EEM -7.7%),EAFA (EFA -6.5%),and commodities (DJP -5.8%) drop sharply also.
With only 3 of the 87 companies in Camino’s indices rising, this week ranks as the worst one week period since we started our commentary.

And the underlying news, for instance in Solar stocks, wasn’t too bad:

  • LDK Solar (LDK) inks contract with Japanese company (9/5)
  • Suntech (STP) selected for 1 MW solar system (9/4)
  • Yingli (YGE) inks contract with Fire Energy (9/4)
  • Canadian Solar (SCIQ) inks supply contracts with GCL (9/3)

Solar stocks, and other strategies, are being swept up in broader market trends, including declines in oil prices. While generally exhibiting moderate correlation with oil (.22 price correlation over the last 365 days), in the last two weeks Solar has move closer with oil (.47 correlation).

For the year investors in sustainable stocks are now under deep water:

With the sector’s high volatily and negative returns I wouldn’t be surprised to see funds in ETFs and mutuals start to decline. That said, bargin hunting should start to pick-up, particularly for companies where sales aren’t linked tightly to overall market conditions.

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks.