Why China has already overtaken the U.S. in cleantech

It’s been fashionable to debate whether China will some day surpass the U.S. in clean technology. Yet, after reviewing some of the metrics that really matter, one could conclude that it already has.

At least this was my thesis in moderating a recent Haas School of Business event at U.C. Berkeley in California that explored whether China would become a green economy leader.

China has already surpassed the U.S., I argued (as reported elsewhere), and pointed to the following:

  1. IPOs: According to data we collected at the Cleantech Group, in 2009 (the last full year for which data was available as of this writing), China accounted for almost three quarters of all cleantech IPO proceeds worldwide, well ahead of the U.S., which had only 26%; and to date in 2010, the top three cleantech IPOs of the year have all been Chinese companies
  2. M&As: The top region for cleantech M&A activity in 2009 was Asia (35% of total), followed by Europe (31%) and North America (26%), according to our same research above
  3. Solar: 7 of the 10 largest solar manufacturers in the world by production volume are now Asian, #2 being China’s Suntech Power, which in 2009 surpassed even Japan’s Sharp, the longtime leader. This according to a roundup by respected photovoltaic trade pub Photon International (subscribers only; order the back issue here.)
  4. REEs: China holds a monopoly on rare earth elements (REEs), critical raw materials for wind turbines and electric motors such as those used in electric vehicles like the Tesla and hybrids like the Prius. It controls 97 percent of commercially available rare earth element supplies, and has recently begun to reduce the amount it exports (at Cleantech Group, we produced the authoritative report on the subject, précis here.)
  5. Stimulus: The amount of stimulus funding China has allocated to clean technologies, including water, waste and other non-energy cleantech infrastructure, is 4 times that of the U.S. (221 billion vs. ~60 billion)
  6. R&D: There’s been a doubling of private R&D in China in recent years; China could soon surpass the U.S. in R&D spending, according to Lund University in Sweden
  7. Speed: China is making decisions quickly, and isn’t encumbered by democratic process. This January, China announced intentions to build a 2 GW $5B concentrating solar thermal plant. In the words of Bill Gross of eSolar (by way of Tom Friedman), the company whose technology was selected, “in less time than it took the U.S. DOE to do stage 1 of an application review for a 92 MW project in New Mexico, China approved, signed and is ready to begin construction this year on a 20 times bigger project.”
  8. Nukes: If you don’t already consider nuclear a clean energy technology, you should. China is expecting to build some 50 new nuclear reactors by 2020, and is already hard at work on half of them; the rest of the world combined might build 15
  9. Investment: A recent report by Breakthrough Institute called Rising Tigers, Sleeping Giant claims China, South Korea and Japan have already collectively passed the United States in the production of virtually all clean energy technologies, and over the next few years, these countries will be expected to out-invest the United States.

If this trajectory holds, the majority of cleantech-related jobs, tax revenues and cleantech commercialization bragging rights will go to Asian, mostly Chinese, companies. The interesting question for us at Kachan & Co. is what commercial opportunities will this eventuality ultimately create for others elsewhere? How can the U.S. and other jurisdictions leverage the Chinese cleantech juggernaut?

Obviously, some companies will benefit from the establishment of joint ventures with Asian companies. And there WILL be local manufacturing jobs, especially when the rising cost of oil makes overseas shipping from Asia less cost-effective—one of the reasons China’s Suntech is setting up local U.S. manufacturing in Arizona, for example. But where are the less obvious opportunities?

We have thoughts. Contact us to discuss.

A former managing director of the Cleantech Group, Dallas Kachan is now managing partner of Kachan & Co., a cleantech research and advisory firm that does business worldwide from offices in San Francisco, Toronto and Vancouver. Its staff have been covering, publishing about and helping propel clean technology since 2006. Kachan & Co. offers cleantech research reports, consulting and other services that help accelerate its clients’ success. Details at

Cleantech Connect

I just agreed to judge this contest. I wanted to see what you guys thought of contests like this. It seems like an amazing way for entrepreneurs to get recognition and differentiation.

Cleantech Connect features the hottest and fastest growing Cleantech companies in Europe. For the second year running GP Bullhound, with premium sponsors Schroders Private Banking and Choate Hall & Stewart LLP and sponsors RUSTON wheb and NESTA, publishes a list of the fastest growing Cleantech companies.

From this list the most outstanding companies are nominated to present to the high profile judging panel from within the Cleantech industry.

The companies will be ranked by their annual revenue growth rate between financial year end 2007-2009.

Cleantech Connect is an invitation-only awards ceremony held for industry leaders and the CEOs of those companies listed in Cleantech Connect. The 2010 awards ceremony will be held in London on the 17 November.

BP and the Obama Administration – I Blame You for Ruining My Gulf

To start off with, I have to say like many people I’m deeply concerned with the oil spill at Horizon in the Gulf of Mexico. It is a generational environmental hit that cannot be overstated. Perhaps BP deserves more credit than it’s getting for responding fast with a massive amount of resource, no finger pointing, and for putting its whole company on the line, but this is a BP caused problem, so we ought to expect that. However, we should not ignore the role our government had in this debacle.

I’m not a happy camper. We’ve been doing drilling offshore with a very, very good environmental track record for decades. The laws, systems and technologies in place to prevent exactly these problems are known, tried and tested. When this is over we are likely to find that it wasn’t the laws and prevention technology that failed, it was not giving them the proper respect. Or put another way – “operator error” at BP and our government.

BP has been dinged for a number of years now for the dark underbelly of the John Browne era. When John Browne took over, he really turned the entire industry upside down, opening an era of super M&A, and out wheeling and dealing the other oil companies including the acquisitions of Amoco and Arco, pushing the Beyond Petroleum concept leading the way in solar, renewable, and carbon. His and BP’s contributions should not be understated. But industry people will generally tell you that the BP of that generation also built a culture of short term thinking, make your numbers and milestones, cutting maintenance and safety corners if need be, and leave the problems for the next guy. This is the same picture that has been emerging in the media, administration and congressional inquiries into what happened at Horizon just before the explosion, systemically ignoring best practice to save economics on a challenging well. It makes me cringe. I hope it’s not true.

Once it happened, we exposed a bigger systemic problem. BP is throwing everything known at this thing, and making up new technologies every hour racing for a solution. It’s a company defining event and they know it. The systemic problem is that a catastrophe like this in deepwater is new and challenging. The fixit tools just don’t exist. Handling the same situation if the rig had stayed up, or if we were onshore, would likely have seen many of the remediation techniques already work. But no one has EVER dealt with problems like this at depths like these before. The oil drilling and spill containment technology arsenal we’ve built up over the years has never been tried (and maybe really not even planned) to operate subsea in deep water. These are part technology issues and part planning issues. Neither of which are things you want to be trying out for the first time the day the crisis hits. Both industry and government should have seen this one coming.

The US government has culpability here, too. The US government is the landowner here, collects big checks from BP and others from drilling, and was just as culpable in disregarding the risks and just as unprepared for the results. The deepwater risk plans were filed by the oil companies as asked, and apparently never challenged by the regulator. When Congressmen berate ExxonMobil for cookie cutter risk plans almost word for word the same as BP’s that talk about walruses in the Gulf of Mexico, I want to know why the regulator never caught this when it could have mattered. The same regulator who negotiates the deals and collects the checks?   Mr. Congressman, Mr. President, oversight of that is YOUR fault, not BPs.  The are the oversightee, you are the oversightor.

If my pit bull bites a child because I can’t control it, the dog gets put down, but I pay the piper. There’s a saying that there are no bad dogs, just bad owners. If my tenant is breaking laws and someone gets hurt, and I hadn’t spoken up or enforced my own lease, don’t I have some responsibility to the victim? Does the term negligence come to mind?

The US government had zero capability of its own in place to deal with a spill of this magnitude, meaning all of the technical heavy lifting was squarely on BP’s shoulders, and to believe the media reports coming out now, the Federal government moved fast but was highly unorganized on its own side failing to coordinate Federal, state and local response (remember the old sarcastic, “Hi, I’m from the government, I’m here to help” line). That’s about like leasing out my building, telling the tenant they’re liability is capped, and then hoping they happen to decide to get insurance for me anyway.

And the government’s reaction seems very political, when I want to see more work. Just shut up and do it.  The moratorium on offshore drilling smacks of egregious kneejerk politics, did nothing for the crisis at hand, and hurt the very communities under economic strain. A recent WSJ article even quoted a number of the technical experts the administration had cited as the justification for the moratorium who publicly slammed the administration for misrepresenting their analysis once they saw the “final, final” report, not the “final” one they signed off on.

Perhaps worse, the Obama administration’s shakedown of BP, like it’s previous shakedown’s of Chrysler to force a firesale and riskless windfall for Fiat, is very, very disturbing. We have the best court system in the world for just this sort of thing, and it makes me shudder to see what we are doing to the rule of law, crisis or no crisis. What, you think a Southern trial lawyer can’t hold his own with BP? Get real. Mississippi by itself mints trial lawyers faster than BP pumps oil. Item number 1, BP should not be able to use Congress and the administration as a shield to try and cap its liabilities (we apparently did that ourselves at a paltry $75 mm), and second, the administration should not be blatantly strong arming a private company to agree to payments above and beyond our own legislated cap, without going through the courts we set up. Hugo Chavez does that. America does not.

We don’t need “down with BP polemics” and finger pointing. We don’t need to wreck the rule of law to CYA the government’s errors. We may not even need new laws. We do need our regulators to actually do their job. We do need BP to pull out all the stops to plug the leak, and to pay the price for its recklessness, and we do need the industry to start working on planning and technology ahead of time when it can do the most good.

Credit where credit is due: I applaud the administration for moving fast, and I applaud BP for not finger pointing and putting their money where their mouth is, now. I apologize to everyone for the long rant, I’m almost done. But I grew up in Houston, and the Gulf of Mexico is home to the beaches, and the wildlife, and the sea food, and the industry, that defined my home town. It’s sickening that part of me is a tiny bit relieved the oil slick is moving East not West. Frankly, I’m not sure whether the Obama Administration or BP deserves to survive this debacle. The Gulf of Mexico and 40 years of track record in the offshore drilling industry deserve better.

Neal Dikeman is a partner at Jane Capital Partners, a cleantech merchant bank. He is the Chairman of Carbonflow, and, and is Texas Aggie.

Looking to the Future

I am watching the Chris Matthews show. There was a comment about American’s being nostalgic for their childhood when families stayed together and there were no global problems.

The problem with that point of view is that it is not true today, it may never have been true. We are in a situation now where the weak economy feeds this nostalgia. We have to move as fast as possible away from the solutions of the past which bind us to a weak economy. Coal, Oil, and Gas do not create jobs, they spend the savings on our balance sheet — exploit our natural resources for short term gain. Do we need to continue to do this to tie us over, absolutely. But real job growth and wealth creation comes from innovation. Alternative energy, efficient cars, advanced agriculture, zero-energy buildings, next generation radar systems, and much more will create millions of jobs which reducing the impact on our planet — borrowing from our balance sheet as necessary but not consuming from it like a drunken sailor.
I am optimistic about the future. We can do this, but we have to start with leaving our nostalgia behind.

Climate Leadership Cuts Across Generations

A couple weeks ago, I took the liberty on this blog to write a open letter in support of my good friend, Christiana Figueres to be the next Executive Secretary of the UNFCCC.

While that selection process is ongoing for another couple weeks it appears, it’s been inspiring in its own right to see the grass roots Facebook upwelling for this truly remarkable woman. When everybody from market profiteers to left of left civil society to diplomats and bureaucrats trying to do implausible jobs in impossible situations are all consistently singing your praises, it has to mean something.

In any event, I was recently passed along a note from one of the creators of that testimonial FB page. I’m taking some liberties and copying it below because its quite inspiring in its own right. Eugene, I look forward to our paths crossing at some point soon – you have a great head on your shoulders.

Eugene Jinyoung Nho

I’m a college student who, like many others, has long felt passionate about tackling the climate change problem. To that end, I have been learning about climate change policy at school and involved myself in various sustainability initiatives. Last December at COP15, however, amid much frustration, I realized that as much as my small contribution might be valuable in the long run, what we needed the most at this moment to have a realistic shot at solving the climate crisis was a strong and effective leadership in the UNFCCC that could bring nations together.

I chose to start the campaign to reach out to youth and civil society in support of Chirstiana because I have been truly inspired by her. There is no question about her incredible professional achievement and qualifications, but what really inspired me was the genuine care she showed for youth and civil society. I met Christiana as a youth delegate at COP15. In the midst of the craziness of the COP second week, she still spent an hour with students to help us understand the issues and hear our thoughts. She is the kind of person who replies to a random student’s email asking about the Clean Development Mechanism with loads of helpful information and guidance faster than the student himself. It was after talking with my friends who received help from her similarly that I realized my case was not an isolated incident. How far she went to help each of us was incredible, and I believe it shows her dedication to youth development and her belief in the significance of a sound civil society.

The Facebook group in support of Christiana has attracted almost 2,500 members within a month since its start in mid March. Hundreds of people have left messages of support, encouragement and endorsement on the page. As the creator of the page, it was extraordinary to watch the group grow—reaching out to people from all walks of life from all corners of the world. Students from the U.S. and Latin America joined the group at first, but since then, students, youth activists and civil society members from all around the world have joined in.

One particular quote I found inspiring was from a student at Norwalk Community College. He said, “Christiana’s inspiring talk to over 400 students energized and mobilized our campus in a way that had seemed impossible before… At every step of their struggle to make the building green, Christiana was there offering astute advice and support.” This is exactly how my friends and I felt about her enduring help and support in our research endeavors. It takes true passion and dedication in the cause of fighting climate change to help people you barely know on a daily basis, and that is why I find Christiana simply inspiring.

The most incredible aspect has been the way this movement reached out to people around the world like a wild fire. People say the best innovations don’t need any additional effort to make them work because those innovations have a way of getting work done themselves. The youth/civil society movement to support Christiana happened in a similar way. The way it spread through different social networks and across different continents—with little effort from the center—has been truly remarkable, and I believe it is the testimony to the respect and hope people have for Christiana.

Last week, I had a chance to speak with Dr. Nafis Sadik, whose work in organizing Cairo Conference in 1994 marked a milestone in the empowerment of women and championing of family planning. I was curious how she was able to bring nations together to support this cause despite the existence of strong conservative lobbying forces, and she replied in one word “civil society.” Having civil society present in negotiations and recognizing their role in the process, she said, kept negotiations on track and moving forward. Having witnessed the frustration at COP15 in person, I sincerely hope to see the UNFCCC that recognizes the important role of civil society, and hope that the civil society’s support for Christiana is heard at the highest ranks within the UN.

If you would like to take a look at the Christiana Figueres Facebook group, please visit and join

Eugene Jinyoung Nho

Stanford University, Class of 2010 (senior), major in Economics, minor
in Environmental Engineering. Study focus on climate change and energy

Co-founder & Co-executive director of IDEAS, an environmental
non-profit working with college students in the developing world to
tackle environmental/sustainability problems in their communities.

Born and raised in Korea.

Robert Bryce’s 5 Myths shows Ignorance

First Sarah Palin, now Robert Bryce taking pot shots around things they barely understand:

1) Solar and Wind take up too much land: If you just focus on rooftop solar and buffer land at airports, brownfields, wastewater treatment facilities, and military bases you could power the US almost 2 times over with just solar power. Wind turbines on the top of light posts are being tested by Wal-mart and that market alone could power 10% of the country. Everyone wants to extrapolate from today’s large scale projects instead of using their brain — Bryce is no different:

2) Going green will reduce our dependence on imports from unsavory regimes: this is true that there are some elements from copper to rare earth metals that we will have to import. But the dirty secret Robert won’t tell you is that business as usual also uses rare earth metals so we are not worse off than we would be otherwise.
Plus we save gargantuan amounts of water, over 1 gallon per kWh of fossil fuels offset.

3) A green American economy will create green American jobs: In this case, Robert goes off the deep end again. First, he shows that he doesn’t actually understand how jobs are created in our country. What the green economy does is create mostly short-term service jobs (some manufacturing). But more importantly, it takes money away from inefficient job creators like utility companies and shifts that money to the general marketplace where it can be used to buy new iphones, kitchen remodeling, or new cars for that matter. It doesn’t matter. The point is that we need to take money away from low growth industries like utilities and shift that money to the innovative parts of our economy — green technologies do that in electricity, water, natural gas, etc.

4) Electric cars will substantially reduce demand for oil: His argument here is that he just doesn’t think that anyone will buy electric cars. So you are a downer, I get that but make a real argument. Not just that you don’t believe in global innovation — from the Manhattan Institute of all places. BTW, it may not be electric cars, it might be electric bicycles and mopeds. It will certainly take 20 years to replace existing vehicles, but Robert wants instant gratification. This is infrastructure, 20 years is a short period of time.

5) The United States lags behind other rich countries in going green: Here is the one place I agree with you. America doesn’t get credit for what it has accomplished and the extraordinary growth trajectory it is on in these areas. Maybe I like Robert afterall :)

For the record, I don’t know Robert and he is I am sure a brilliant senior fellow, but I needed a foil. Happy Earth Day!

Jigar Shah
Carbon War Room

Me and the Cleantech House: Part 1

So, with recent changes in my professional life, my family and I made the decision to relocate to the Bay Area. There were a lot of reasons, but the main one is my general perception that my world (carbon trading) and their world (cleantech and information technology) rarely meet. Indeed, the maestro of this blog, Neal Dikeman, is one of the only folks I’ve met who keeps a foot firmly planted in both camps. And despite the slap yourself in the forehead, Homer Simpson “Doh” sensation that cleantech and carbon should not only converse they should be actually be singing harmonies together, there is utterly no doubt that the two camps ogle each other over the picket fence with a mixture of curiosity and bewilderment. So, to make a long story short, I’m hoping to advance a few pawns a couple squares.

But enough about macro issues. Let’s talk real life. Like buying a house. Given the circumstances that we found ourselves in (having spun the wheel of capitalism and, somewhat to our surprise, won), we were in the privileged position to actually be able to afford Bay Area real estate. And, to be blunt, a fair bit of Bay Area real estate at that. One thing led to another and we made a rapid fire bid on a house that reminded me of a better version of the battered 1890’s New Jersey quasi Tudor my parents plunked $50,000 down for in 1970 and I grew up in. And, lo and behold, we own it. It’s utterly lovely, but certainly planted in the larger end of the US housing spectrum. To borrow Warren Buffet’s reference to the Berkshire Hathaway corporate jet, it’s Indefensible. But you only live once and with Treasuries paying a nice solid 20 basis points, well – you gotta put it somewhere.

Now, considering myself an environmentalist (market variety) I want to make it as green as possible. I knew it needed a lot of work in that direction – though inspections showed the house was actually in very good shape and I could observe niceties like double glazed windows, I also know what I don’t know. The sheer armada of AC units along the back of the garage gave me pause. And after experiencing PG&E’s first billing cycle while still uninhabited, I can honestly say I was a motivated participant in that greening process– tiered energy pricing to $0.45/kwh truly does grab your attention.

Solar is the default greening step in California – it’s ground zero of the million solar roofs initiative and there are piles of federal and state incentives to plop them up there. Unfortunately, a cursory examination showed it was not a particularly viable option – the roof is mainly angled to the Northwest and is comprised of a bunch of steep, fragmented gables and windows. Moreover, it’s real slate tiles and – to be frank – stunningly gorgeous. The idea of slapping down a couple hundred square feet of First Solar’s finest seemed aesthetically criminal. The next idea – a geothermal heat pump – also went by the wayside pretty quickly, when I came to the conclusion that setting up a drilling rig in the Oakland hills for a couple weeks was not the way to endear our family unit to our exceedingly close neighbors.

Which left us with a final intriguing option on the energy production side – a fuel cell. And yes, my eyes got that addictive glint of the early adopter that is usually reserved for talismans that emanate from Steve Jobs skunk works. So I bought one of the suckers – the ClearEdge 5kw version. And future updates of this blog will talk about that – installing it has been a fascinating process and one that deserves some attention.

But at the outset, I’m going to focus on the first – and doubtless more relevant– part of my energy project . Making the house it the most efficient it can be, given its overall inherent footprint. To start off, I brought in a crew of energy efficiency gurus to give it their best once over. 60 man hours on-site, a 70 page report, two CD-ROMs and a whole lot of data later, I know a heck of a lot more about my living quarters. To say it was illuminating to get a holistic view of the space we’ll inhabit the next decade or so is an understatement.

Which brings me to a broader theme I’ve been spending a lot of time thinking about the last few months– the interface between technology, expertise and execution. And the tendency we tend to have to think that use – or even simply creation – of the former can blithely substitute for the latter. I fall into the trap myself all the time – I buy stuff with features that I never really use because I cannot seem to be bothered to learn how to operate them.

What I’m in the process of doing on my house feels like a microcosm of that balance between technology and capability. Extrapolate that to the multi-trillion dollar global effort to decarbonize the global economy through accelerated deployment of a raft of both new and old technologies and you can see the potential gaps. Or gapes is probably more accurate. Capability doesn’t scale as logarithmically as technology – but it’s an equal part of the overall equation. So, while I truly appreciate the tidal wave of forthcoming cleantech widgets, I worry that without with right kind of execution platforms – on the front end and throughout productive lifespan – we’ll end up with lots of stranded assets that over promise and under deliver.

My idea for these next couple contributions to Cleantechblog over the coming weeks is to try to explore that interface in my real life situation and try to do some hypothesizing on how cleantech delivery is going to work across key markets. It may or may not work, but hope you enjoy it.

Marc Stuart was one of the founders of EcoSecurities, where he worked for 13 years prior to its integration into JP Morgan in early 2010. His new firm, Allotrope Ventures, seeks out early stage private equity opportunities in technology and execution platforms that are positioned to thrive in the transition to the low carbon economy.


Kansas Power Plant Overbudget

Just saw this article:

Comparing the cost of the upfront capital in this plant to technologies have have free fuel costs are just inaccurate. Technologies like wind, solar, energy efficiency and others act like Nuclear power did in the 1970s. They have high upfront costs but reduce electric utility rates over time as their capital costs are paid off. This is why old coal and nuclear is cheap and NEW coal, nuclear, and natural gas is so expensive. Further, the 20th century technologies have volatile fuel prices. Natural Gas and coal are cheaper now, but were 2-3 times more expensive in 2008. The challenge here is that the utilities and the public service commission are using bad data to make decisions. I can’t believe they are deliberately cheating rate payers, but they seem to not know any better. The sad thing is that David Springe can do something about it, and is instead just trying to win a bet.

Jigar Shah
Carbon War Room

Start-Ups, Not Bailouts

This op-ed says it all.

I am not usually a huge Tom Friedman fan (although I like him), mainly because I find that while he is an amazing communicator, I am not usually spurred to action. This time I am. The data here is well known to me because I follow the Kaufmann Foundation, but the bigger question for this group is, “what can we do to get the Obama administration to care?”
The bottom line is that outside of R&D, helping entrepreneurs is tough. It requires focusing on the Presidential Climate Action Project: and removing other barriers that are not too sexy but pave the way for risk taking.
I like the climate bill in Washington, but I like removing common sense barriers better. By removing these barriers we can help entrepreneurs take the step to start a Climate Change Solutions business.
Jigar Shah
CEO, Carbon War Room

The Right Way to do Solar Manufacturing in the US

I was reading with sadness about the decision by BP Solar to shut down the Frederick, MD manufacturing facility. As many of you may know, I worked for BP Solar and this facility was the first real large scale solar mfg facility in the United States. Solarex (bought by BP) perfected the use of polycrystalline silicon (vs. mono) and pioneered it at this facility. More importantly, BP Solar will keep the R&D staff and function — this is important because they are some of the best in the world.

I was asked by the Obama Administration back in February 2009 to, “help bring solar manufacturing to Michigan”. My response was:
  1. Solar is practically illegal in Michigan (see solar bill of rights here)
  2. US hasn’t had a manufacturing policy in years and I wouldn’t imagine why anyone with half a brain would mfg in the US when you can achieve such a low cost of mfg in Germany, China, Malaysia, etc
  3. US has to invest some time in this space to help elected officials understand the drivers of our cost cycle. In fact, labor is not the dominant COGS for solar PV (although it is not insignificant). The biggest drivers that the government could help with are:

  • Fully automated plants (crystalline) costs about $2.5/Wdc or $2.5B for a 1,000 MW plant. So the government needs to match the 50% capex subsidy other governments provide as they have for battery mfg
  • Property taxes can be a killer that local governments can help with
  • Electricity prices. With our rising electricity prices, other governments offer $0.04/kWh
  • Tax abatements. The Obama adminstration must be out of its mind when it suggested raising taxes on Corporations. We are one of the highest tax places in the World. Raise taxes on the rich and everyone else but for heaven sake we have to reduce corporate taxes by at least half in this country. Malaysia and others offer a 10 year tax holiday for new mfg.

The reason manufacturing matters is that the US is huge and uses alot of stuff. To take the approach the UK has done and just become a service economy won’t work. Further manufacturing has a much larger multiplier of other jobs that support each plant from suppliers to logistics, to local services.
We squandered Billions of stimulus money on consumption for new solar and wind projects. Instead we should have spent that money on Solar and Wind manufacturing. On the projects side all we need is for the Federal government to use the bully pulpit to embarrass State public utilities commissions who keep approving higher cost electricity projects from new Coal, Nuclear, and Natural Gas compared to much lower cost distributed generation from solar, fuel cells, energy efficiency, targeted smart grid, and targeted storage.
By the way the Obama administration has done some great things like working on reducing health care costs for small businesses. Now it is time to get them to focus on this issue.
Jigar Shah
CEO, Carbon War Room
Founder SunEdison LLC

Missouri Solar taking off

Since 2000, electricity rates have gone up by about 4.5% annually. Even in this downturn, electric utility have little shame in raising rates to invest in infrastructure that depends on 20th century approaches. In 2008, Missouri voters decided to pass a 300 MW solar program within a bold RPS plan. The plan requires a rebate for solar at $2/Watt for projects up to 100kW. In the meantime, solar PV prices have plumented and 100kW solar systems can be installed now for less than $3.90/Watt. With matching federal incentives solar is now cheaper than rates in Missouri, especially after AmerenUE decided to raise rate again. These utilities really have no ability to look out more than a few years. As AmerenUE decides to keep raising rates they are driving electricity customers to keep look for alternatives. These don’t just include solar. They now include geothermal, cogeneration, fuel cells, and other technologies.

Jigar Shah
Carbon War Room

From Japan: Makower, Wallpaper, and Strawberries


One of our favorite cleantech insider Joel Makower has come back from Japan with very interesting observations. It seems that the US is not the only country where the government does not have a strong mandate to create strong policies for climate. Political gridlock pervades here as well.
There was much discussion about how to achieve the green vision of Hatoyama, the first prime minister who seems to “get it,” when it comes to the economic potential of cleantech and a green economy, but whose vision is thwarted by the legislature.
Makower also observes that Japanese business leaders struggle with motivating their employees to engage in greener practices and express frustration in Japanese consumers’ willingness to buy green products.”
Wall papers

One of the best examples of sustainable consumption through clean technologies I’ve seen is recycling milk cartons into wallpaper. The folks at EcoTwaza bring us Mr. Matsuzaki who developed this procedure:
As a result of long hours of research, he came up with a material that uses nothing other than plant starch (methylcellulose), recycled pulp, food preservatives, color-providing earth, and water. And the pulp is all hand-made by the residents at the institution for the disabled.
It is quite inspiring to see how sustainable technologies can also support jobs and increase social value. I had a chance to touch the sample wallpaper and it feels very durable.

I always thought that strawberries were a summer fruit but they happen to be in season these days. The folks at JFS report on new, energy efficient to grow this treat:
The new system utilizes clean energies such as underground water or exhaust heat from air-conditioners to keep the temperature surrounding the strawberry crowns between 15 and 23 degrees Celsius. The system contributes to reduced carbon dioxide emissions.

Ford Transit Connect Electric Test Drive

By John Addison (3/8/10)

Before I got behind the wheel of the Transit Connect Electric, I asked myself, “Who is going to buy a battery-electric van of this size?” Fleet managers of electric utilities, universities, and city delivery all came to mind. Electric utilities have plenty of off-peak electricity for charging vehicles. For a utility with 5,000 vehicles in its fleet, hundreds could be replaced with the Transit Connect Electric. Many universities have hundreds of light electric vehicles for maintenance and on-campus delivery. The Transit Connect Electric would greatly increase the range and cargo for these applications. Many city delivery applications do not require much range and space, but value fitting in a tight parking spot.

The Transit Connect Electric looks identical to its gasoline cousin that was awarded 2010 North American Truck of the Year. The Transit Connect Electric has over 6 feet of cargo length that can be accessed through two sliding side doors, and two swinging rear doors. By keeping the cargo space to this size, the Ford has an 80-mile range on a charge of its 28kWh of lithium-ion batteries. The cargo space is perfect for many delivery, maintenance, and contractor needs, but not for all. Many fleet applications need the 290 cubic feet available in the Ford E Series vans or the 547 cubic feet of the Mercedes Sprinter.

As I get behind the wheel, I notice that the Transit Connect Electric is still ¾ fully charged, even though Ford has been giving journalists test drives for a couple of hours. The dash is simple in comparison to the Fusion Hybrid. No fancy telematics, GPS, or back-up camera. The rear view mirror won’t help me because of the high cabinets in this particular vehicle’s cargo space. I use the side mirrors to back-up. The vehicle is easy to maneuver out of the tight parking space.
As I turn and accelerate on the busy city street, the vehicle is silent. I cannot even hear the electric motor. Zero to 60 in 11 seconds is nothing to brag about, but the acceleration was adequate on the level street. Initial acceleration felt slow, when I accelerated on a 6 percent grade from a stopped position.

I asked Ford if I could get off their two-mile loop and go up a 20 percent grade. They declined because too many journalists were waiting for their turn to make a test drive. I was assured that the Transit Connect Electric is speced for a 25 percent grade.

After of few more blocks, I looped back to our starting point. With electric power steering, the vehicle was easy to drive. The electric drive system was always quiet and smooth. When I parked the Ford the charge was still ¾ full.

Ford has not yet establishing the pricing for the Transit Connect Electric, but with 28kWh of expensive lithium batteries, it will cost more than the $21,500 gasoline version of the Transit Connect and more than the natural gas version. The 2011 Transit Connect Electric uses a Force Drive electric powertrain manufactured and integrated by Azure Dynamics who has built electric delivery truck drive systems for the U.S. Post Office, Purolator Courier, and Fed Ex. In addition to the Transit Connect Electric, Ford will sell the Focus Electric in 2011 and Plug-in Hybrid 2012.

Transit Connect Electric is well-suited for fleets that travel predictable, short-range routes with frequent stop-and-go driving in cities and have a central location for daily recharging. The electric vehicle will have a top speed of 75 mph and a targeted range of up to 80 miles on a full electric charge. At 240V, the 28kWh Johnson Controls-Saft (JCS) lithium-ion battery back can be recharged in 6 to 8 hours. The battery pack is liquid cooled. An onboard charger with J1772 communications converts the AC power from the electric grid to DC power to charge the battery pack. JCS has supplied Ford for many years. JCS will supply the 8 to 13 kWh lithium battery cells for the 2012 Ford Plug-in Hybrid, but Ford will make the actual pack.

With an 80-mile charge range, the Transit Connect Electric will be used in fleet applications of less than 20,000 miles per year. The lithium batteries have been tested at many electric utilities. The Johnson Controls li-ion battery modules on bench testing at utility giant SCE accumulated the equivalent of 180,000 road miles before losing more than 5 percent of the original charge capacity. This Ford van with its JCS batteries is designed for years of use.
By partnering with Azure and JCS, Ford will be one of the first to delivery commercial freeway-speed electric vehicles in the United States. The Transit Connect Electric is part of a growing family of Ford hybrids, plug-in hybrids, and electric vehicles.

John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

State of the California Feed-in Tariff

David Niebauer

A new, innovative feed-in tariff for small-scale solar development is coming to California. Rather than setting a fixed price in an environment in which technology costs appear to be dropping, the California Public Utilities Commission (CPUC) has proposed a market-based approach, allowing developers to bid the lowest prices at which they would be willing to develop projects. This approach focuses on adding capacity to meet California’s aggressive renewable portfolio standard (RPS), and appears to avoid the pitfall of setting a price that is too high or too low. Time will tell if the approach is effective, but the outline of the program released by the CPUC looks promising.


Feed-in tariffs have been employed around the world for a number of years as a policy mechanism designed to encourage the adoption of renewable energy sources. Because non-renewable energy sources (e.g., fossil fuel combustion) cost significantly less to develop in a pure unregulated market environment, renewables require subsidies to make them competitive. Of course, the reason for the disparity is that we already subsidize non-renewable energy development by not assessing the full cost of the resource extraction activities, but that’s a topic for another article.

One approach to the cost disparity problem would be for governments to start taxing non-renewable energy generation, assessing the full cost to society and the environment for those activities. A more politically realistic solution is to provide an incentive to those developing renewable energy resources. The feed-in tariff is an innovative incentive program that is designed to provide a level playing field for renewable energy project development.

A feed-in tariff typically includes three key provisions: 1) guaranteed grid access, 2) long-term contracts for the electricity produced, and 3) purchase prices that are based on the cost of renewable energy generation. Under feed-in tariff regulation, utilities are required to buy renewable electricity from all eligible participants, effectively leveling the market for electricity generation.

Feed-in tariffs have been successfully employed in many countries over the last few years, most notably in Germany and Spain. The goal is described as “grid parity”: the point at which renewable electricity is equal to or cheaper than (non-renewable) grid power.

The California Approach

California regulators, guided by the CPUC, have flirted with a feed-in tariff for a number of years. Standard Offer Contracts for renewable power development were first introduced in California in the early 1980s in response to the state’s investor-owned utilities (IOUs) perceived discrimination against small power producers. The CPUC ordered the utilities to offer standardized contracts and to offer one such contract, Standard Offer No.4 (SO4) with fixed prices. By the mid-1980s, private power producers had installed a significant amount of wind capacity in California, much of which is still in service today. Solar technologies had not matured to a level sufficient to take advantage of SO4.

California’s renewable portfolio standard (RPS) implemented in 2002 significantly raised the stakes for solar development. The California RPS program requires electric corporations to increase procurement from eligible renewable energy resources by at least 1% of their retail sales annually, until they reach 20% by 2010. On September 15, 2009, Governor Schwarzenegger signed an Executive Order directing the California Air Resources Board (CARB) to adopt regulations increasing California’s Renewable Portfolio Standard (RPS) to 33 percent by 2020. As currently designed, RPS projects tend to be large and located in remote areas with abundant available land, but little transmission access or capacity. These larger projects take several years, at a minimum, to develop, due to the generation and transmission permitting processes, as well as the construction time required.

In early 2008, and as a means to promote smaller scale renewable projects, CPUC adopted a feed-in tariff that directs IOUs to offer a standard contract at the so-called market price referent (MPR) to all renewable technologies up to 1.5 megawatts (MW). However, this program has been generally ineffective because the price is not high enough to attract solar development: the MPR is based on the cost of generating electricity with a combined cycle gas turbine facility.

Renewable Auction Mechanism (RAM)

In August 2009, the CPUC issued a new proposal designed to significantly increase the amount of solar energy installed in the state from smaller producers. It has moved away from using MPR to set the price and instead proposes to implement an innovative bid mechanism. The program would first expand the current feed-in tariff to 10 MW (to cover projects in the 1 – 10 MW size). Rather than setting the price at MPR, the CPUC proposes to allow developers to bid out projects through market-based pricing in what is termed a renewable auction mechanism (RAM). Under this system, developers would bid the lowest prices at which they would be willing to develop renewable energy projects and IOUs would be required to accept eligible projects starting at the lowest bid. As stated in the CPUC proposal: “This mechanism would also allow the state to pay developers a price that is sufficient to bring projects online but that does not provide surplus profits at ratepayers’ expense.”

Solicitations would be staggered for each IOU throughout the year using standard long-term power purchase agreements whose terms would not be negotiable. The program would be capped in each year and IOUs would be required to accept contracts up to the maximum amount of the cap. The program as currently envisioned totals 1 GW over 4 years, although industry observers believe that once implemented it could be easily expanded.

Next Steps

An Administrative Law Judge is currently reviewing certain jurisdictional objections raised by Southern California Edison after the initial CPUC proposal. The issue is whether the state commission can set wholesale prices or whether such an action can only be mandated by the Federal Energy Regulatory Commission (FERC). The RAM approach adopted by the CPUC appears to moot any such jurisdictional challenge. A decision is expected shortly. Once the decision is rendered, the content and mechanism for roll-out of the program will come up for deliberation and vote at an upcoming meeting of the CPUC.

David Niebauer is a corporate and transaction attorney, located in San Francisco, and a founding partner of Energy Counsel Partners, LLP ( David’s practice is focused on renewable energy project development and environmental technologies.

Cap and Trade vs Carbon Tax – 6 Myths Busted

In the midst of the debate over exactly what commitments will come out of the Copenhagen Accord follow-up discussions, and how a cap and trade system to incorporate those might work, we asked long time carbon trader Olivia Fussell, the CEO of Carbon Credit Capital in New York, to opine a bit on myths on cap and trade v carbon tax for the layman.  Cleantech Blog has written lots on this topic, but it always needs more. 

Myth 1: A Carbon tax provides much greater price stability than emission trading under a cap and trade system.

This argument is valid only when an emission trading system is designed without banking and borrowing options which allow firms to smooth emissions over time. This in turn contributes to leveling of the price of allowances and creates certainty in the market and thus spurs investment.

Moreover, tax regimes can easily be changed by legislative bodies which in turn can also introduce instability.

Myth 2: A carbon tax is a preferable option because the revenues from taxation can be used to invest in low carbon technology and/or used to offset potential regressive effects of carbon taxes on poorer households.

This argument is valid only with the assumption that allowances are grandfathered in an emission trading scheme. One solution to this potential problem is the auctioning of allowances which can potentially generate the same revenues as a tax.

In addition, governmental funding tends to “pick a winning” technology, whereas technological innovation is needed in many areas (renewable energy, energy efficiency, energy storage, etc). A cap and trade system provides an important incentive for the development of these technologies by providing a price signal that enables firms to capture the value of new technologies. Because cap and trade is not technology specific, it can encourage and accommodate any emerging GHG control technologies or practices.

Myth 3: The introduction of a carbon tax is simpler than an emission trading scheme under cap and trade.

True, an emission trading scheme is much more complicated than taxation. The introduction of a new tax does not require setting up a new system with additional administrative costs attached to it. However, having an international agreement on a global tax is highly unlikely if not impossible. This statement is supported by an example of the unsuccessful attempt to impose carbon tax in the 1990s within its multi-national European Union’s structure. Also the Clinton administration unsuccessfully tried to introduce an energy tax in the mid 1990s but encountered strong opposition in Congress.

Myth 4: A Cap and trade system creates market and environmental uncertainty.

Not true, a tax does not set a quantitative, legally enforceable limit on emissions. On the other hand, a cap and trade system measures, monitors, and achieves a specific environmental objective.

Myth 5: Cap and trade doesn’t work because the European Union Emissions Trading (EU ETS) Scheme did not prove that significant emissions reductions were achieved.

The fact that Phase I of the EU ETS achieved only small reductions in emissions was not due to the embedded flaw in the cap and trade but because the emission cap was set too high. In addition, the EU over allocated allowances. This was mainly due to many countries lacking reliable data monitoring and information standards of GHG emissions when the scheme was first introduced. Since then the EU has solved the problem of monitoring and reporting and tightened the cap for Phase II.

Myth 6: A Cap and trade system allows for ‘windfall profits’ for regulated firms.

It is true that implementation of the trading scheme in the EU led to the increase in retail electricity prices. However, this situation can occur under any type of regulation and it’s not cap and trade specific. The determining factor is not the type of regulation but the ability of a company to pass through the costs to consumers. Based on the EU ETS example, electricity generators were able to make profits because they were able to reflect the value of allowances in prices of electricity, even though they received the allowances for free (‘grandfathering’). This problem can be addressed through the mechanism of allocating allowances and more specifically through auctioning. Regulators would require companies to purchase allowances, and this could ensure that the companies incur direct costs, thus reducing their profit margin. However, this does not solve the problem of passing costs onto consumers. One can solve this by passing the revenues from the auctioning of allowances back to the consumers.

You can reach Olivia for comment at

Vermont Yankee to be Shut Down

“Vermonters sent a message to President Obama and the nuclear industry today,” said Greenpeace’s Nuclear Policy Analyst Jim Riccio. “The nuclear renaissance is dead on arrival. We can retire old, decrepit and leaking reactors like Vermont Yankee and help usher in the energy revolution that America needs.”

“When American’s have the choice about the kind of energy they want in their communities, they don’t want nuclear. Vermont has shut down the myth of the so-called nuclear renaissance. Greenpeace is calling on Vermonter legislators to vote against relicensing in the house as well so that the message to America registers loud and clear.”

This decision is an interesting one. Like Sacramento many years before it, Vermont decided to proactively shut down their Nuclear plant. In this case, Vermont was choosing this pathway even though the variable costs of the plant were less than $0.03/kWh.

For new Nuclear we have a slightly different case. The recently $8.3B in loan guarantees for Southern Company’s nuclear plant is on a total bill of $14.4B for just 2,200MW of nuclear. At the same time, McKinsey claims that over over 85% of the 17 gigatons of carbon reduction we need globally by 2020 could be achieved by efficiency alone. Further, that for $14.4B, Southern company could perform such deep energy efficiency retrofits that they would create 10 times the number of construction jobs than the Nuclear plant.

I am not anti-nuclear, but some of these large Nuclear plants plans need to rethought towards more manageable strategies. Companies like Hyperion are creating small reactors that can be sited and financed more easily than the large Nuclear power plants.

Nuclear power holds the promise to be a big player in our effort to decarbonize the electricity grid, but their lack of common sense around how to handle public relations seems to be their Achilles heel.

Jigar Shah
CEO, Carbon War Room
Founder, SunEdison

Gators Go for World Championship With Record Prices for Solar Power

by Tom Rooney

Something’s gotten into those Gators.

First, they won back to back championships in college basketball. Then they added a national football title to the mix, along with a Heisman trophy.

Now the city surrounding the University of Florida is doing something of even greater national import. Something that just might be remembered in 100 years as the place where America began its march to world energy leadership:

The Gainseville city leaders became the first in the country to set a competitive price for people who create renewable energy with their solar panels or wind farms or whatever, and who sell it back to the local utility.

They call it a feed-in tariff, if you must know the technical term. But it is simply the price you receive for generating your own power then selling it back to the utility.

Many solar leaders regard it as the key to the next step in the growth of solar in America — both the use and manufacture.

Which is also the key to creating energy independence and reducing carbon.

Which of course we are not doing enough of.

On a recent trip to China, I visited several large factories where they make solar panels.

I wish everyone who wishes America to be an energy super power could have seen what I saw. These factories are world-class models of efficiency and skill. Their managers, many of whom are trained in the United States are very good and getting better.

Many of the panels they make are going to places where local utilities pay premium prices for solar power generated on rooftops; there is no doubt that wherever solar owners receive higher prices, more solar power exists.

In Germany and Spain and France and Italy, the feed-in tariff is as high as 72 cents per kilowatt hour. In German it is the highest, that is why they have more solar than anyone anywhere.

And most of this they did ten years ago.

In Gainseville, they recently set their price at 32 cents per kilowatt hour. Interest in solar in this college town is exploding far beyond what an economist might expect from the financial incentives alone.

Which tells us that people have important economic and non-economic reasons for using renewable energy.

If only they get the chance.

A competitive feed in tariff is just the beginning. The bigger the local market for solar, the greater the chance for local manufacturers to compete.

And that is what is missing in America so far. Missing from the plans of those who hope for tens of thousands of green jobs; Missing from the folks who crave energy independence. Missing from those who say solar is the cure for carbon.

But not missing in Gainseville — where their 32 cent per kilowatt hour is a message to the rest of the country that this is what people do who are serious about energy independence and carbon reduction.

Compare that with California, the most solar friendly place in America, where solar power owners are lucky to get 1/3 of that.

There’s always a reason why we are not going whole hog on solar. The grid is not ready. The price is too high. We have more and better energy in — fill in the blank — that all we have to do to get it is — fill in the blank.

But the blanks are always years and and years and trilions of dollars away. Meanwhile, Asian suppliers and European competitors are racing ahead.

Today our national leaders correctly say that America can and should be a world power in renewable energy. But business leaders in Asia feel America will not get there.

If we are going to compete — let alone win – for this world energy championship, we are going to have to acting like winners. And we can begin by acting the way they do in the hometown of the national championship Gators.

Tom Rooney is the President and CEO of SPG Solar. He can be reached at

Big Oil Fights Big Ag

By John Addison (2/9/10)

Americans are Spending 20 percent of their income on transportation. In the average two-car household it is often higher. Big Oil and Big Ag are fighting for their share of that money
Petroleum use has started to drop in the United States as we have fewer cars and more fuel efficient cars. The U.S. Department of Energy continues to report drops in refinery utilization due to weak demand for gasoline and diesel.

Ethanol and biodiesel further cut into oil profits. Big Oil is maneuvering to slow Big Ag from selling more biofuels. Big Oil giants include Exxon (XOM), Chevron (CVX), and Shell (RDS.A). Big Ag giants include ADM, Bunge (BG), and Cargill.

Industry leaders are trying to sound high-minded, not crude. No food fights. No fighting in the war room.

The latest EPA Renewable Fuels Standard will cause over 8 percent of our car and truck fuel to come from food crops in 2010. That lowers Big Oil’s sale of gasoline and diesel by 8 percent. That’s real money. Billions. The EPA does not require that the biofuel come from food, that’s just our only volume choice in 2010. Cellulosic and waste production is still at the expensive pilot stage. EPA talked tough in developing the new RFS, but in the end, gave the industry ways to qualify by making corn ethanol.

We need fuel from wood and waste, not food and haste. Big Oil may actually win the fight to stop using food crops with low-yields per acre, and help the transition to high-yield low carbon emission sources. The industry has invested over a billion dollars in advanced biofuels, algal fuel, and biotech ventures.

Exxon Mobil’s CEO Rex Tillerson famously referred to ethanol as “moonshine.” Now Exxon is investing $300 million in Craig Ventor’s Synthetic Genomics with plans to produce fuel from algae. BP Biofuels was voted 2009 Biofuels Corporation of the Year by the World Refining Association at its 4th annual Biofuels Conference. BP has poured hundreds of millions into basic biofuel research and into a variety of partnerships including biobutanol with DuPont and Virgin Fuels, and energy cane in the U.S. with Verenium. Shell has established a $12 billion sugarcane ethanol joint venture with Brazil’s Cosan (CZZ).

In the future, if biotech can deliver low-cost liquid hydrocarbons from biomass that can be profitably blended at the refinery, then Big Oil may partner with industrial agriculture. Valero (VLO), the largest refiner in the U.S. bought a number of ethanol plants at deep discounts from bankrupt VeraSun.

For now, both the petroleum producers and industrial agriculture want to control EPA regulation, federal tax breaks, and billions of federal funds. They also want greenhouse gas emissions measured their way. If growing more corn for ethanol and soy for biodiesel leads to rainforests being destroyed, then Big Oil favors that being included in biofuel emission lifecycle analysis. Big Ag is against such land-use analysisArgonne Lifecycle Presentation California Lifecycle with Land-use Studies
Renewable Fuels Standard.

EPA has finalized a rule implementing the long-term renewable fuels mandate of 36 billion gallons by 2022 established by Congress. The Renewable Fuels Standard requires biofuels production to grow from last year’s 11.1 billion gallons to 36 billion gallons in 2022, with 21 billion gallons to come from advanced biofuels. Increasing renewable fuels will reduce dependence on oil by more than 328 million barrels a year and reduce greenhouse gas emissions more than 138 million metric tons a year when fully phased in by 2022. For the first time, some renewable fuels must achieve greenhouse gas emission reductions – compared to the gasoline and diesel fuels they displace – in order to be counted towards compliance with volume standards.

Biomass Crop Assistance Program. USDA has proposed a rule for Biomass Crop Assistance Program (BCAP) to convert biomass to bioenergy and bio-based products. USDA provides grants and loans and other financial support to help biofuels and renewable energy commercialization. BCAP has already begun to provide matching payments to folks delivering biomass for the collection, harvest, storage, and transportation of biomass to eligible biomass conversion facilities.

Biofuels Working Group. In May, President Obama established the Biofuels Interagency Working Group – co-chaired by USDA, DOE, and EPA, and with input from many others – to develop a comprehensive approach to accelerating the investment in and production of American biofuels and reducing our dependence on fossil fuels. Today the Working Group released its first report: Growing America’s Fuel – a new U.S. Government strategy for meeting or beating the country’s biofuel targets. The report is focused on short term support for the existing biofuels industry, as well as accelerating the commercial establishment of advanced biofuels and a viable long-term market by transforming how the U.S. Government does business across Departments and using strategic public-private partnerships.

Frank Maisano, an energy specialist based in Washington D.C. at Bracewell & Giuliani, a law firm that represents refiners and cellulosic ethanol makers, gives this perspective: “The long-suffering lifecycle Greenhouse gas rule was released last week with great fanfare, including a call with Energy Secretary Chu, EPA Administrator Jackson, Interior Secretary Salazar and USDA Secretary Vilsack. It followed a meeting with the White House and highlighted several biofuels task force recommendations. Beyond confusing most reporters about EPA’s authority to go beyond the 2007 Energy law requirements for ethanol, the two takeaways seem to be EPA was giving in some (at least enough to placate Vilsack) on indirect land-use regulation of biofuels, and that the US is WAY behind its biofuels requirements in the same 2007 Energy law. Certainly, the coalition of enviro advocates, food groups, small engine groups and refiners were annoyed with the first point while ethanol supporters reluctantly said they could live with the EPA position. Ethanol emissions expert Tim Searchinger of Princeton may have said it best: “the numbers are inconsistent with the great bulk of analyses by others, which consistently find that emissions from indirect land use change for crops grown on productive land cancel out the bulk or all of the greenhouse gas reductions.” EPA’s Jackson said they weren’t messing with the equation to get to a specific result.”

Frank Maisano also summarized the following: “House Legislation to Limit EPA Authority, GHG Lifecycle Analysis –Last week, House Ag Chair Colin Peterson introduced legislation to prevent EPA from regulating GHGs, but added a twist: a provision blocking its land-use biofuels rule as well. This makes for an interesting dilemma should the two remain together, especially for members such as oil-patch Democrats that may want to block EPA authority on GHG regulation, but toughen land-use provisions to ethanol’s measuring stick. We shall see how this plays out. On the Senate side, Sen. Murkowski said she is likely to petition the Senate Environment and Public Works Committee by the end of February to force the release of her proposal to block the EPA from regulating greenhouse gas emissions. Murkowski now has 41 votes, including her own, supporting the resolution (S.J. Res. 26).”

Regulation that helps Big Oil and Big Ag is billions of tax breaks for exploration and for not growing crops. EPActs encourage government buying of flex fuel vehicles. No automaker, including the primary beneficiaries of the regulation GM and Ford, offer a flex fuel vehicle in the U.S. that can deliver 20 mpg (EPA combined) running on E85. No U.S. sold flex fuel vehicle does much better on gasoline. As the 4 million vehicles in federal, state, and local government fleets continue to add flex fuel vehicles, more gasoline and more ethanol must be purchased to deal with the poor mileage. In the end, it’s more taxpayer dollars going to Big Oil and Big Ag.

By John Addison. John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

Momentum Building for REDD+ Global Market for Forest Carbon

By David Niebauer

Whatever else happened or didn’t happen as a result of the recent Conference of the Parties in Copenhagen, the Global community did take action on slowing the destruction of the world’s tropical forests. Certainly one can argue that we are not doing enough, but getting the “global community” to agree on anything is always a daunting prospect. Consensus does appear to have crystallized around the UNFCCC’s REDD program (Reduced Emissions from the Destruction and Deforestation of the world’s tropical forests). Now termed REDD+, with the addition of sustainable forest management and afforestation/reforestation, momentum continues to build for the use of market mechanisms to slow the destruction of the world’s rainforests.

When a global market for carbon finally emerges, tropical forest offsets will be part of the mix. There are many many details still to be worked out, but the barriers no longer seem insurmountable. As methodologies are refined through use and stakeholder action, I believe forest offsets will come to be accepted carbon reduction instruments, as beneficial for the planet as offsets generated from other sources, such as conversions to renewable energy or less carbon-intensive industrial practices. At the end of the day, it is about living sustainably on the planet. And without the “lungs of the planet”, as the world’s tropical forests are often called, that goal will never be achieved.

A few examples of the positive momentum, as I see it:

CAR Addresses Permanence

Regardless of how fast or how slow the federal government is going to move on creating a US market for carbon, California is moving forward on implementation of AB 32 and the Western States Initiative. The California Climate Action Registry was originally a non-profit entity formed by the State for the purpose of (a) establishing protocols for calculating the carbon emissions of California industries, and (b) being a clearing house for those industries to voluntarily register their baseline emissions in a public database. This entity has evolved into the Climate Action Reserve (CAR), a quasi-governmental agency for establishing methodologies and registering carbon emission offsets (called Climate Reserve Tons, or CRTs) throughout North America.

Offsets from avoided forest destruction and improved forest management in North America are very much a part of the AB 32 initiative. Currently offsets generated from forests in the United States are eligible as CRTs and soon Canada and Mexico will be added. I believe tropical forests will some day come under the ambit of CAR, although the official CAR position, as stated on its website is “as of yet there are no plans to expand to other countries beyond Mexico and Canada…”

CAR has published the third version of its Forest Project Protocol as it continues to address issues raised by stakeholders. Notably in the new v3.1), CAR has taken great strides in addressing the issue of permanence. When credits are generated from avoided deforestation, those credits become meaningless if the forest that was preserved is destroyed at any time in the future (called a “reversal”). This is true whether the reversal is avoidable (such as intentional deforestation for purposes of development or agricultural use) or unavoidable, such as a natural disaster like forest fire. CAR has addressed the permanence issue in two important ways. First it has implemented a system of “buffering” credits to provide a kind of insurance against future loss. In this system, a forest owner is required to set aside a certain percentage of the credits generated from the forest conservation activities. These buffered credits would be used in the future in the event of a reversal. Second, CAR will require forest owners to enter into a Project Implementation Agreement (PIA), with a term of 100 years, pursuant to which forest owners will be legally bound to preserve the forest and insure against reversals. Importantly, the PIA is attached to the land (and not just the owner of title to the property) and would require subordination of any future property interest (such as a mortgage or partial sale).

As the international community takes on developing effective REDD methodologies, the pioneering activities of CAR will no doubt be instructive.

Jane Goodall Institute Begins Developing REDD Credits

Some good news came out of Copenhagen for the Jane Goodall Institute (“JGI”) and its efforts to preserve the Masito-Ugalla Ecosystem in Tanzania, one of the most undeveloped tropical forests in Africa). JGI was awarded a three-year, $2.7 million (USD) grant from the Royal Norwegian Embassy in Tanzania to continue its conservation efforts and, importantly, to begin the process of applying REDD methodologies to ultimately generate and sell tropical forest carbon offsets. From its experience in implementing one of the world’s first REDD projects, JGI intends to assist other NGOs and indigenous groups in protecting tropical forests by marketing REDD credits to generate necessary funds.

As the project is described on the JGI website:

The project will conserve about 70,000 hectares in one of the last large expanses of intact forest in Tanzania, enhancing biodiversity and ecosystem functions such as provision of habitat for chimpanzees. Communities will be eligible to earn credits for the carbon stored in their protected forest areas. The income will help fund future forest management and improve community living conditions. The project will also support secondary use of forest products such as wild honey or medicinal plants.

The JGI-Tanzania project appears to be a model for successful REDD development. Such projects require participation from governmental as well as non-governmental organizations, plus an active role for private finance in the form of REDD credit offtake/purchase arrangements.

Tropical Rainforest Fund

More evidence of this public/private cooperation can be seen in the announcement at Copenhagen that the US and five other countries have pledged $3.5 billion (USD) over the next three years to a program aimed at protecting rainforests. The other countries are Australia, France, Japan, Norway and Britain. The US portion is $1 billion (USD). The money will be available for developing countries that produce ambitious plans to slow and eventually reverse deforestation.

While the creation of this multi-national fund highlights the issue of government vs. private project financing, which still needs to be resolved (and will be the subject of a future blog), the funding commitment is significant.


Destruction of the world’s tropical rainforests accounts for a huge proportion of global greenhouse gas emissions. REDD+ is an international, public/private initiative that is attempting to assist in the preservation and conservation of the remaining rainforests of the world. Momentum has picked up in establishing protocols and developing models that will be employed in an eventual world market for tropical forest carbon. We predict that the momentum will continue to build until (and well after) the market is finally established.

David Niebauer is a corporate and transaction attorney, located in San Francisco, whose practice is focused on clean energy and environmental technologies.

Is Solar Cheaper than Nuclear?

by Jigar Shah, Founder SunEdison and CEO of the Carbon War Room
This is an interesting article from Greentech Media. It basically is saying that if we are aiming to decarbonize our electricity grid we cannot do it without Nuclear energy. 
I like to break this down into bite size chunks so that I can understand it better. The Florida public utilities commission recently slowed down the Nuclear plant from Progress Energy so that serves as a useful example: WSJ article here.
The plant seems to cost about $20B for a 2,237 MW plant. So the question is, “For the same $20B over 10 years what could you get?”
– Nuclear: 2,300MWs and 18,000 GWhs of electricity for $20B in ratebase
– Solar: 14,000 MWs and 18,000 GWhs for less than $10B in incentives (with my cost curves the number is actually only $2B, but . . . )
– Energy Efficiency: 6,000 MW and 18,000 GWhs for less than $5B in incentives (structural energy efficiency like HVAC, windows, building automation, etc)
– Ice Storage: shifting peak to off peak to load level the grid could be done for less than $5B.
Whether you agree with my modeling or not, the numbers are in the right ballpark. The challenge here is that the utility industry is not set up to embrace customer empowering technologies because neither they nor their investors understand how these technologies fits with their mode of profit making.
The next stage of this is national security. As has been shown time and time again, distributed, customer empowering solutions are more robust because they are spreadout. Our traditional infrastructure is susceptible to terrorist attacks (or tree branches in the case of Ohio).
Lastly, we have to look at economic security. If the grid goes down with theses central station plants, as happened in Florida in 2008, there are economic losses.
Nuclear power is a wonderful power source that has been serving us ably for many decades. But that isn’t a reason for bypassing the tough economic analysis required for a decision on this magnitude.