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Open Letter to the Next President

A few thoughts for our next President and Congress, whoever may win.

  1. You should run our country like we do our own households, live within your means.
  2. Spend what you have, not what you’d like to have. When in doubt, just say no.
  3. Just because the benefits of a policy are good, does not mean they outweigh the costs.
  4. Just because the credit crisis is real, does not mean we need more regulation. Different, yes, more, no. As with most things, less is generally more.
  5. You do not create jobs. We create jobs. But you do have the power to destroy jobs. Don’t forget that.
  6. When it comes to taxes, the more you take, the less we make. In all senses of the phrase.
  7. Energy is life. Our country has been built for 100 years on plentiful energy resources. We need cheap energy. Clean energy. And safe energy. All three, not just one or two.
  8. Climate change and our environment are a problem. This is an area you owe it to your constituents to deal with.
  9. Free trade is a good thing. Whether you understand it or not. If you don’t believe me, two words: Smoot Hawley.
  10. Change is sometimes good. But considered change. Not change just for the sake of change.
  11. Sometimes the best policies are the ones we did not do.
  12. Making promises to win an election is all well and good, but in policy, compromise always wins. But please make sure that compromise does not mean pork. You work for all of us.
  13. My generation faces a looming crisis in social security and medicare entitlement costs. Don’t make it worse.
  14. Those who seek power are generally the last people who ought to be granted that power. Make sure, when your time is done, that you do not remind us of this axiom.
  15. We really do live in the greatest nation the world has ever seen. We set all time world records every year. So when you are trying to “fix” our economy and foreign policies, don’t throw the baby out with the bath water. Ask why things have worked so well before you complain about what’s not working. And certainly ask that before you tell me that another country is doing it better than we are.
  16. What makes us different than all other countries? A profound respect for property rights. The rule of law. The Constitution. The Bill of Rights. The belief that each of us has the power to change ourselves, and our world. Faith in God. Each of these, and all of these.
  17. And finally, Who is John Galt?

-Neal Dikeman

TheFreakOut: Button It Up, A Confession

by Heather Rae

Here in Maine, politicos making hay of rising (and now dipping fuel) costs are calling for troops of weatherization crews to be unleashed into the homes of the state’s neediest residents. This initiative is not “low-income weatherization” which services the poorest, but an attempt to button up the homes of the next economic tier. These troops of state-trained energy auditors will be armed with state-subsidized air infiltration measurement devices (“blower-doors”) and infrared cameras.

Political jockeying of a prominent state financing organization over the training and oversight of these troops — and angling for the monies made available via RGGI, forward capacity markets, Federal “green jobs” funding and a proposed, but rejected, request for bond funding — is evidence that there’s something at stake here, something significant enough for the governor himself to broadcast tips on weatherization via satellite link-ups. I hope it’s not just money, power and turf, but I’m not convinced.

The State has no energy office; it was dissolved years ago. There is no authority under which these home energy improvement initiatives and programs, those that serve the general public, comfortably fit. A governor’s task force plan, released this past summer, did not call for establishment of such an authority. That’s a shame. The State is mired in political gamesmanship, as homeowners FreakOut over the costs of staying warm against the cold weather that is already upon us. I’ve stoked the wood stove many times in the last week.

For two years, the Maine Home Performance with ENERGY STAR program, with funding from various state and federal resources, has aimed to raise the bar for energy improvements, to build awareness of the economic benefits of buttoning up a home and to train people who understand the complexities of interacting building systems, indoor air quality, ventilation, and combustion safety (that is, entry of toxic gases into the home from combustion appliances). I am the project manager of this program. We have aimed to transform the market. We have aimed to uphold nationally-recognized standards for energy renovations for a new profession that still has no recognized name. We have aimed to build a sustainable “whole house” industry, aka, jobs.

This week I am at a conference in Massachusetts for specialists in the whole house/home performance field. I can say that in two years, despite enormous obstacles and a fast-changing landscape, this little program has made enormous strides, not by the criteria of a program that must demonstrate kWh and therm savings, but in elevating the standards of home energy audits and improvements in the State, and in moving this “whole house” industry forward.

Weatherization (or winterization as is the case in Maine) is a catch-all word; there is much more to to it than a tube of caulk and bundles of pink asbestos batts. Not too many years ago, just after a layoff from an electric and gas utility (where one might presume employees would gain a clue or two about home weatherization…I never even heard the term while there), I launched into an energy improvement of my own home. At the time, I also sat on the energy committee of a local Sierra Club where a fellow member was an energy auditor. I’d seen pictures of that “blower door” thing. To me, it was geeky, strange, incomprehensible.

Unsurprisingly, I royally botched my home energy improvement. I had no understanding of thermal boundaries, air infiltration, carbon monoxide backdrafting, or energy savings to investment ratios of the improvements. I purchased $600 of pink asbestos batts from a big box store (which provided no instructions about proper installation…no guidance on air sealing prior to installation…no description of which way the barrier should face, or if I needed one at all, for the application.) I had no measure of the leakiness of the house prior to my big pink batt project, and I had no way to verify whether or not I had actually made an improvement. (I can take an educated guess, now, that in removing from the attic floor the blown in cellulose and its perpetual plumes of dust, that the pink batts made the home less energy efficient.) I took no steps to ensure that the beastly gravity furnace was safe, though I knew it was energy inefficient. I liked it because it was silent. When I sold the house, it was determined to have a crack in the heat exchanger and was replaced. (It wasn’t safe.) I had placed a carbon monoxide detector in the outlet at the floor of the house, not in the upper part of the room where the carbon monoxide would have been.

Call me stupid. I was, and I offer this confession as a caution: my ignorance is prevalent.

A few things I did do right such as the storm windows and the pleated thermal blinds to block the blazing southern Colorodo sun. Those are the sorts of Do-It-Yourself improvements that politicians love to impress upon their constituents. The rest of it, the building science and the physics of the building’s systems, I have been told by politicians, are too complicated, too much for people to grasp. We all recognize that home improvements can be very expensive and many homeowners cannot afford them…so I am asked to give them the Do-It-Yourself talk and to leave out the bits about thermal boundaries and all that science stuff.

I can’t. If weatherization crews — as opposed to fully trained “whole house” professionals held to energy renovation standards — are unleashed, there is the risk of damaging a home and the health of its occupants…to the point of killing someone with toxic gases. If the only solution politicians want to hear is DIY without the geeky science, there is the same risk. A political solution to the FreakOut that eschews professional guidance is dangerous and irresponsible.

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.

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.”

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.

Solar posts big gain (week ending 8/22/08)

Author: Mark Henwood

Emerging markets, EAFA, and the US market (S&P 500) were little changed on the week, commodities (DJP) rose 2.8%. Sustainable energy stocks created some excitement but overall were mixed:


Solar raced ahead for the week rising 9.5% driven by a variety of positive developments. Three of the index components China Sunergy (CSUN), Suntech Power Holdings (STP), and Rensola (SOLA.L) all rose over 25% for the week..

On the cost side silicon supplies are expected to increase in 2009 resulting, according to Suntech Power Holdings (STP), in a potential price drop of up to 20%. This may allow margins to increase while lowering the cost of the final product.

Demand continues to be strong with expectations that Italy, Germany, and other countries will offset any reduction in the Spanish market. Demand seems to also be growing for larger scale plants with announcements for a 10MW plant by Yingli (YGE) and an 800 MW project by Pacfic Gas and Electric in Calornia. Note that this one project is larger than the annual production capacity of most solar companies. Solar companies are also executing well with China Sunergy (CSUN) leading the way with an earnings suprise this week of 125% which drove its 29.%5 increase for the week. The triple play of expected lowering of costs, strong demand, and good financial execution created over USD 9 billion in increased market cap.

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

Solar and LED-Lighting rise sharply, BioFuel Energy highlights risk and drags Biofuels down (week ending 8/15)

Author: Mark Henwood

Emerging markets, EAFA, and commodities (DJP) fell while the US market (S&P 500) was flat.
While Biofuels is the forth largest strategy behind Renewable Electricity, Solar, and LED-Lighting it highlighted an all too familiar risk for energy producers. Many energy producers seek to reduce their risk associated with volatility in commodity prices by entering into hedging strategies. The key point of these actives is to reduce risk, not profit from speculative positions. After all, the largest, professionally managed financial institutions are proof even the pros get burned by speculation and I certainly don’t want any sustainable energy companies I invest in engaging in speculative positions.

Apparently, even engaging in hedging involves a certain amount of skill. If management doesn’t get it right the hedging strategy can wipe out the value of a company faster than the worst operational decisions. BioFuel Energy (BIOF) is a case in point. On Tuesday the company opened at USD 2.60/share. After reporting at 12:46 pm that it had insufficient current liquidity to cover USD 46 million in hedging losses on corn contracts, roughly equal to its market value, the stock started plunging 64% to close at USD 0.94/share. While the stock rebounded some late in the week, shareholders lost 38.5% of their value for the week. Coming after Aventine’s (AVR) February problems with the not-so-safe auction rate securities, I hope management of biofuel companies devote enough attention to their financial dealings to avoid crises.

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

Intersolar 2008

Joining us on this week’s blog, is our guest writer Nathan Polland. CleantechBlog is proud to present Mr. Polland’s research from InterSolar 2008:

InterSolar 2008

I attended the Intersolar 2008 conference on July 14-16. While this was the first conference of its kind in the United States, Intersolar already has a huge presence in Germany, with 50,000 attendees at the last conference in Munich. The San Francisco Conference was part of Semicon West, a big semiconductor trade show. While the conference itself was not focused strictly on solar energy, I was and that is what I am writing about today.

The solar area took up the third floor of Moscone West. Representatives from over 200 different solar companies had booths. Of those, I targeted around 120 of which I talked to about 90 and was able to acquire useful information from 75 of them. As it would unrealistic to interview all 200+ people, I singled out the 120 whose fields of research seemed more exciting and the fact that they were PV companies (for the most part). Not everyone wanted to talk to an intern, but there were many friendly reps who offered me little gifts, such as a pen or ruler, and invited me into their booth to sit down with them. Boy, it’s always nice so sit down after walking around in dress shoes for hours! Many booths also had jars of hard candies! While I hungrily gazed upon the sweet treats, attempting to fight the temptation (and losing pitifully), I noticed a very interesting thing: when someone took a candy, they would tend to do it when the representative of the booth was not looking, even though the candies were meant for us, and yet everyone felt ashamed to take one (myself included). And I thought only kids go for candies!

This was my first conference, so before I started to talk to the companies, I took a little while to look around. The first thing that stuck me was the presence of Applied Materials. Not only did they have a huge booth on the third floor of Moscone West, but they also had their own floor in the Sony Metreon across the street, not to mention their ads everywhere. Besides this, there was also an army of Applied employees roaming the third floor of Moscone West looking for prey: Once a potential partnership or investment opportunity (or whatever they were looking for, I couldn’t tell you for sure) was found, a few other employees would swoop in and help finish off the representatives. But wait, there’s more; not only were there Applied employees everywhere, there always seemed to be a large mass of people congregating around the Applied booth (it wasn’t even a booth really, more like a small house) as well, making it quite a daunting task to enter the area and attempt to find someone there to answer my questions.

Beyond the presence of Applied Materials, the next thing that struck me was the disproportionate number of Germans. There seemed to be at least one at every booth.

I talked to about 75 companies. So what did I find out? Exactly what I expected: the solar industry is currently booming, with most companies growing by 50+%. There are also many new entrants to the solar world, which means a lot of smaller companies. As the boom in the industry is also a relatively recent occurrence, this means that most companies are still quite small, though there are many larger, older companies who have more recently invested in solar (like Applied Materials).

The first chart shows the number of companies per size category (small, medium and large):

The second shows the founding date of the companies:

And the last one shows the growth rate of companies:

Most companies are growing quite rapidly by head count, with many growing more than 50% a year. The lower growth companies (in the 0% to 10% range) tended to be the larger companies who have already established themselves and thus have a steadier but lower growth rate.

I compiled these graphs from the data I collected at the conference, if you would like to view the raw data, click here (pdf, xls). There is a lot about the solar energy industry that can be learned in a short time!

I attended the Intersolar 2008 Conference as part of my internship with Jane Capital Partners, where I am the ‘Solar Intern’ for 5 weeks. My project was to research and write about this conference. This internship was part of the Coro Exploring Leadership Program – a 10 month program that begins the summer before junior year of high school run by the Coro, a non-profit dedicated to teaching leadership skills and public service. If you would like to learn more about Coro, click here.

If you or anyone you know wishes to learn more about solar power, here are a few helpful articles I used in my research:

http://www.energy.gov/energysources/solar.htm
http://www.nrel.gov/learning/re_photovoltaics.html
http://www.nrel.gov/learning/re_solar.html
http://www.eia.doe.gov/kids/energyfacts/sources/renewable/solar.html
http://www.ases.org/aboutre/ed_resources.htm
http://www.fsec.ucf.edu/en/
http://www.ucsusa.org/clean_energy/renewable_energy_basics/how-solar-energy-works.html
http://www.solarenergy.com/info_history.html
http://www1.eere.energy.gov/solar/
http://en.wikipedia.org/wiki/Solar_energy
http://www.renewableenergyworld.com/rea/tech/solarenergy
http://www.ises.org/
http://www.solarbuzz.com/Applications.htm

"Is that a banana in your pocket…?" Yes – my new journal!

My favorite green product of the week:
Organic Tree Free Banana Paper Journal

What is it?

Using agro-industrial waste (tree scraps, left over fruits like bananas, lemons, and mangoes) and post-consumer paper fiber, the ingenious folks at Costa Rica Natural Paper create beautiful journals and other paper goods.

Why is it better?

Anytime you’re taking products that would otherwise be completely discarded and making use of them, I’m all for it. The process harkens back to ancient cultures when absolutely no part of a slaughtered animal could be wasted. Similarly, the agro-industrial waste of the massive fruit industry in Costa Rica is being put to good use here. Also, Costa Rica Natural/EcoPaper.com promotes social responsibility on top of conservation – they’re currently donating 3% of their proceeds to an orphanage in Costa Rica called Hospicia de Hueranos. Doing good while doing well.

Where can you find it?

I get mine through the website – EcoPaper.com and have seen them on other websites, but not yet in stores to my knowledge. Keep an eye out!

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 Risk Managment

I recently wrote an article for Utilipoint on “Carbon Risk Management” software applications on an enterprise level. Little did I realize how much activity was out there. I have been inundated with requests to see those applications. Tomorrow, I am visiting Ron Dembo who founded Algorthymics and now the zerofootprint.net. He called me to tell that he has that enterprise level carbon application, and I will see for myself tomorrow. The point is that carbon world is full of data sets. These data must be aggregated, scrubbed and verified if if it going to fully accepted on the enterprise level. That means data for reducing a company’s carbon footprint but also for trading.

The emergence of global carbon markets will not only uncover value and liabilities for corporations, but will also require active carbon asset management on an enterprise level. Ron Dembo, founder of Algorithmics, has recently raised this issue, and he is correct that the time to think of carbon on an enterprise level is now. This is particularly true when you consider the cross commodity dimension of carbon with not only energy assets, but also with both agricultural and metals exposures. These are all volatile markets. We expect the same volatility in carbon trading and finance.

To broaden this issue further, one can start looking at the basic business exposures of carbon globally. There are going to be price inefficiencies—even within one multinational company falling under multiple carbon regimes in different regulatory jurisdictions. I have been asked many times if there will be one price for carbon and the answer is: absolutely not. In effect, there are going to be regional and international differences, even within multinational companies. The prices on the futures screens are for standardized contract which may capture 20 to 25 percent of the carbon market. But, much more trading will be bilateral and over-the-counter (OTC).

The first step in carbon asset management is measuring the carbon exposure. This is business unit by business unit analysis, and is affected by fuel mix, mobile vs. stationery sources, cross commodity exposures, weather exposure and basic global economic forces, to name a few of the risk exposures. The bottom line is that the decarbonization of the global economy, which is really the goal of all greenhouse gas legislation, is to create protocols that are ubiquitous and will be implemented to change business behavior. The process is only beginning. The actuality is that the global carbon footprint continues to increase each year primarily from the burning of fossil fuels (It has been up 3.1 percent per year globally since 2000 due to increased global usage of fossil fuels).

Regarding trading, we now have 2 viable carbon exchanges in the US. The well known Chicago Climate Exchange and the new comer, the Green Exchange. Check out wwwgreenfutures.com. the Green Exchange is supported by environmental brokers such as Evolution Markets, TFS Energy and ICAP, the New York and European investment banks, hedge funds, and energy companies that will provide liquidity on the trading platform. The true value of an Internet-based exchange today is not only daily trading in futures contracts but more importantly the ability to clear bilateral contracts where most carbon trading occurs. With all the ruckus in DC on energy trading, it is important that trades post on exchanges. Watch the Green Exchange. It only launched on March 17th and is starting to gain traction. This will be the subject of a longer post.

Peter Fusaro, Chairman, Global Change Associates

Solar and commodities rise, broad markets retreat (week ending 6/20)

Author: Mark Henwood

Emerging Markets, EAFA, and S&P500 all fell more than 2% this week. With the exception of Solar, all Camino’s PurePlay followed the markets downward.

Solar’s stong showing came on a variety of positive news for the sector. We learned of potential involvement of large player (IBM and INTC), supply deals (ESLR) and potential production expansions in thin film. There was no negative news on the regulatory front. All of this translated into a 4.5% advance narrowing its YTD loss to 20.2%

After writing this column for 15 weeks I’m starting to better understand the key price drivers for the strategies. In Solar I see investors driving prices down on potential reductions in governmental support and concerns on silicon supply. Orders and realized growth drive prices up. In Renewable Electricity power solicitations and resulting equipment orders drive stocks up, project problems drive prices down. In Biofuels prices reacti to the fuel margin, as measured by futures contract prices, and actual earnings. In Fuel Cells its progress against business plans with any slippage driving prices down.

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks and has positions in Renewable Electricity. Mark will be traveling in Africa so the next column will be for the week ending July 11.

Cleantech Blog Looking for Bloggers

Bloggers wanted. I have been blessed with leading a great group of bloggers on Cleantech Blog for nearly three years now, including people like Richard Stuebi (renewable energy and policy), Heather Rae (green marketing and home), John Addison (transportation), with recent additions Mark Henwood (stocks) and Cristina Foung (green consumer products), and support over the years from like industry gurus like Joel Makower and Felix Kramer. But the sector is outgrowing even us. So we want more! And of course I am reaching out to our readership to find them.

We are looking to add one or two more bloggers. No previous blog experience needed (though happy to do a “blog merger” if you wanted to). We would love someone in solar, carbon trading and climate change, and biofuels. Excellent writing skills needed, of course. Good opinions. Expert on or working in the field you are writing about.

Keep in mind, Cleantech Blog does not do all the news all the time. We rely on our friends at CNET, Cleantech Media, Greentech Media, GreenBiz.com, and Earth2Tech to take care of that. Each blogger does a weekly column on opinions, analysis and discussion of the issues and news that matters. Basically, I’m looking for the next Rob Day or Jim Fraser (thanks to them for the years worth of insights – some of you know I started Cleantech Blog with inspiration from Jim’s Energy Blog and Rob’s Cleantech Investing). If you think you can out blog Rob or Jim, drop me an email to ndikeman@gmail.com, with writing samples or links to your blog, what you want to blog about, and why you know it well. If you don’t know Rob or Jim, they’re on our blog roll, or find them at http://cleantechinvesting.greentechmedia.com/ and http://thefraserdomain.typepad.com/energy/.

Thanks,

Neal

Fuel Cells buck stock trends and rise, commodities rise again 0.9% (week ending 6/13)

Author: Mark Henwood

Emerging Markets and EAFA fell, S&P500 traded even this week. With the exception of Fuel Cells, all Camino’s PurePlay Indices followed the international markets downward.

Fuel Cells came off their 52 week low with a 1.9% increase driven by big increases in two stocks. Ceres Power (CWR.L) rose 37.4%. After checking the news and discussing the increase with our advisors, we can’t explain the sharp increase on Friday. Maybe we’ll learn next week what drove the trading starting at about 10:15 AM Friday. ITM Power (ITM.L) also rose an impressive 32.5% after one of the analysts covering the stock reiterated their buy rating (whileincreasing their estimated losses for the company). While the company has GBP 25 million in cash providng some breathing room, I’ve commented previously that the company’s short range PEM fuel cell car doesn’t seem compelling.

Biofuel was the real story this week falling 6.9% with two of the US based ethanol producers suffering big decreases. Biofuel (BIOF) was off 34.2% and Pacific Ethanol (PEIX) was off 26.4%. Driving these and other declines was a continued deterioration in the basic economics of US corn based ethanol production. With September corn closing on the CBOT at USD 7.456/bushel and December ethanol closing at USD 2.78/gallon the “corn crush” margin has fallen to a slim USD 0.2/gallon. Other revenues from selling feed and subsidies just don’t provide enough margin.
Last week I commented that with more capacity coming on line it was hard to see how economics for ethanol producers was going to improve. With concerns about the corn supply being affected by mid-west flooding, apparently some of the producers have reached similar conclusions and Citi reported on Friday that 5 small to mid-sized plants have been shut-in. With new plants scheduled I’m looking for more similar announcements particularly involving less efficient plants. So even in the one sustainable sector whose product directly benefits from high petroleum prices the companies are down 36.9% for the year.

LED-Lighting continued its sharp sell-off dropping 9.5% for the week. Arima (6289.TW), Neo-Neon (1868.HK), and Zhgiang Yankon (600261.SS) were all down over 15% for the week and are at their 52 week lows. While this is certainly a very promising area with the potential for game changing breakthroughs, investors are not currently being rewarded for future potential.
Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks and has positions in Renewable Electricity.

Blogroll Review: Beer and Design

by Frank Ling

Green Beer

It looks like you no longer need to wait until St. Patrick’s to get green beer. Soon, Adnams of the UK will be selling carbon-neutral beer.

Called East Green, this new beer is not only made with higher energy efficiency, the manufacturing and distributions processes are also optimized for ecological friendliness.

Jaymi Heimbuch writes in EcoGeek:

“It is made with local, high yielding, naturally aphid-resistant hops, decreasing the use of pesticides and transportation of goods. It is processed, bottled, and distributed from their already in-place eco-friendly systems. These factors shrink CO2 emissions down from 583g per bottle to 432g per bottle. They offset this amount through Climate Care, a highly transparent carbon offset project.”

The product is so highly regarded that the Carbon Trust is allowing their logo to be used on Adnams’ packaging.

Now, if only beer can also cure cancer! 🙂

Design Reboot

Corporations are starting to embrace the notion of green products through their design processes, up and down their supply chains.

In a report released by IDEO and Businesses for Social Responsibility, an A-B-C-D approach to environmentally friendly design.

Joel Makower writes in his blog how the strategy can be summarizing as:

” * Assessing material impacts of projects and design capacity in an organization

* Bridging functions and people to make valuable, tractable product redesigns

* Creating generative internal and external learning projects

* Diffusing lessons and accountability mechanisms that build literacy and affect better decision making around the organization”

What is most inspiring about this article is that Makower concludes that in meeting sustainability goals, a company may have to redesign itself.

Frank Ling is a postdoctoral fellow at the Renewable and Appropriate Energy Laboratory (RAEL) at UC Berkeley. He is also a producer of the Berkeley Groks Science Show.

All Sustainable Energy Indices fall, commodities rise 4.9% (week ending 6/6)

Author: Mark Henwood

Broad market indices (Emerging Markets, EAFA, S&P500) all fell this week. Camino’s PurePlay Indices followed the broad markets and all indices fell. Commodities (DJP) rose 4.9%.


Solar fell 1.9% even after the 63.3% premium Robert Bosch GmbH is paying for control of ErSol. Without this transaction, the Solar index would have been down 3.3% for the week. The commentators that continue to try to link solar stock performance to oil had to be disappointed this week with the two moving strongly in opposite directions. This week’s movement knocked the 30 day correlation of Solar and the OIL ETN from .39 down to .20.

Renewable Electricity, despite its low beta (.18 over the last 100 days), followed the broader markets lower. Nothing has changed for the companies in this sector due to the broader economic concerns and I expect the index will continue its YTD out performance of Camino’s other indices. EarthFirst Canada (EF.TO) had the largest decline of any company in Camino’s indices falling 19.1%. With not reported events to drive this change, the company’s low daily trading volumes probably were a factor in the big drop.

Biofuel ethanol producers Verasun (VSE), Pacific Ethanol (PEIX), and Aventine (AVR) all had declines greater than 10% this week. Verasun led the way down declining every day of the week after it announced Monday it had closed a USD 125 million credit facility to be used for “general corporate purposes”. This followed Pacific’s financing last week, Bill Gates reducing his holding in Pacific, rising corn prices, and volatile ethanol prices. For the year the sector is down 32.2% and obviously hasn’t been helped by high oil prices. With more capacity coming on line this year it’s hard for me to see how the economics for the sector can improve much without some basic change.
Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks and has positions in Renewable Electricity. He has a position in EF.TO

Blogroll Review: VW, Food, and $100 Billion

by Frank Ling

The People’s Car

With the price of gas exceeding $4 per gallon in the US, there is surging interest in vehicles with higher mileage. It may not be until we see $5 or $6 per gallon that we see mainstream transition to hybrids and plug-in electric vehicles.

Several efforts at high mileage have already made the news. Here is another one. This one coming from our friends in Germany.

Volkswagen plans to introduce a 230 mpg car by 2010. It is described as a cross between a VW Bug and a bobsled.

Hank Green at EcoGeek writes:

The car’s technology comes from it’s unique shape and it’s ultra-light body. The frame is actually made of magnesium, an extremely light metal, and the outer skin is reinforced with carbon fiber. The one cylinder engine is made of aluminum and sits on top of the rear axle. The car is only a bit more than three feet high and weighs less than 700 lbs.

Volkswagen says the design has been around since 2002 but because of it’s design and perceptions over its safety, they have not marketed it. With such a low weight, it is thought that the car would lose out in a crash with a heavier vehicle.

Finish Your Dinner

In the UK, a new report says that by reducing food wastage, the country could prevent 18 million ton equivalents of CO2 emissions each year or nearly the amount emitted by one in the five cars.

David Erhlich at the Cleantech Group says:

According to the study, $2 billion worth of wasted food is still “in date.” The group said it costs local authorities $2 billion to collect and dispose of all of the wasted food.

But there are answers, and WRAP said of the 6.7 million tonnes of food per year that’s wasted, 4.1 million tonnes is avoidable.

UN: Renewable Investment Hits $100 Billion

In what is a financial milestone, the UN reports that global investment in renewable energy has exceeded $100 billion for the first time last year.

From Greentech Media:

“The finance community has been investing at levels that imply disruptive change is now inevitable in the energy sector,” says Eric Usher, Head of the Energy Finance Unit at the UN. Usher said the UN’s “report puts full stop to the idea of renewable energy being a fringe interest of environmentalists. It is now a mainstream commercial interest to investors and bankers alike.”

Frank Ling is a postdoctoral fellow at the Renewable and Appropriate Energy Laboratory (RAEL) at UC Berkeley. He is also a producer of the Berkeley Groks Science Show.

Only Renewables Gain Again (Week Ending 5/2)

Author: Mark Henwood

Broad market indices (Emerging Markets, EAFA, S&P500) all rose this week. Camino’s PurePlay™ indices were mixed.

The Solar index, comprised of 34 companies, followed last week’s 0.2% loss with a 2.0% decline. 15 stocks increased and 19 stocks declined. In contrast to most weeks, no stock increased or declined by over 20% and nothing caught our attention to report here. The solar ETFs both declined, 3.5% in one case and 2.2% in the other. With a 74% overlap I suspect this much difference is more random than a sustained trend


The Renewable Electricity index managed a 0.4% increase with 8 stocks climbing and 15 retreating. Most notable on the increasing side was Energy Developments (ENE.AX) advancing 11.8%, continuing to recover from the 30% sell-off on April 14th. I discussed this sell-off in the Week Ending 4/18 summary and noted that some traders, myself included, saw the 30% move as a significant over-correction.


Biofuels followed last week’s loss with a 0.4% loss. There were 5 advancing stocks to 10 stocks falling. On the plus side Aventine (AVR) posted an impressive 22.0% increase for the week as a result of its first quarter results. In my view some of the key factors cited by Aventine for its improved operating performance included (1) wider spreads (fuel revenue – corn cost), (2) decreased conversion costs, and (3) benefits of the wet milling process on by-product production.


On the negative side the company reported a significant USD 21.6 million mark-down for its student loan ARS position. Considering that the company engages in significant long and short derivative transactions to hedge its physical and contract positions, I trust management is focusing sufficient attention on crucial risk management controls. I hope there are no similarities between investing in ARS student loan notes and commodity derivatives.

In contrast, Pacific Ethanol (PEIX) had a rough week in the market declining 11.7% despite an appearance by the CEO on Fast Money on the 25th and the start-up of the 60 million gallon per year Burley, Idaho plant. In defense of corn based ethanol Mr. Koehler noted that ethanol is the only significant alternative to petroleum based transportation fuels. More on this below.

Fuel Cells posted a smaller 0.7% decline this week with 4 stocks advancing and 3 stocks declining. YTD the index is down 31.3% for the year. This technology continues to struggle with product, fuel source, and profitability issues. Another view of the fuel cell industry discusses the sector in more detail.

Ethanol’s significance: How significant are the ethanol companies? Let’s take a look at Aventine. In their 1st quarter release the company reported producing 47.7 million gallons of ethanol. That’s roughly equivalent to 12,000 barrels of oil per day. In 2006 that would have ranked Aventine as the 50th largest oil producer in the US (EIA 2006 Annual Report). Granted, while that’s only 2% of the production of the largest US crude oil producer, it’s still pretty significant.

Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. All index computations and constituent changes cited above are available at Camino. He also is an investor in sustainable energy stocks. Mark has a position in ENE.AX

Toyota’s Hybrid Recall News – Set Back for Cleantech

Toyota today announced it was recalling and repairing 75,000 Prius cars due to engine stalling. I think that is on the order of half of their total fleet.

It doesn’t sound like a big fix is required, but certainly a massive PR setback for the most popular hybrid our there.

I’ve personally been waiting for the Ford Fusion hybrid to come out in 2007. Has anyone heard much about that one?

Recall Article