Seven cleantech companies Silicon Valley just learned about

As a reporter and analyst, I wrote about hundreds of cleantech companies. As a managing director of the Cleantech Group, I spent years listening to hundreds of pitches, coached companies on presenting to institutional investors and helped facilitate cleantech deals around the world. Just last month, I served on a committee at the request of the Canadian consulate in San Francisco to evaluate companies to present at a cleantech investor event.

So I’ve seen a lot of cleantech companies pitch well, and some not so well.

Last week, I had the privilege to help present seven strong cleantech companies actively seeking capital to investors in Palo Alto. And the two-dozen institutional cleantech investment firms in the room liked what they saw.

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The Internal Combustion Engine: "I’m Not Dead Yet"

by Richard T. Stuebi

The August 16 edition of The Economist contains an interesting article summarizing many of the advancements being made by various companies to improve the good-old internal combustion engine.

For instance, Daimler (NYSE: DAI) is working on an engine design called the DiesOtto, which attempts to forge a cross between a diesel and a gasoline engine, with the aim of providing the torque and economy of the former along with the flexibility and horsepower of the latter.

Meanwhile, Fiat (BIT: F) is experimenting with a sophisticated valve-control approach called Multiair that they believe will reduce fuel consumption by 20%.

And, it’s not just the big automakers at work. The article profiles Antonov Automotive Technologies (AIM: ATV) in their efforts to develop a new-fangled supercharger, and Ricardo (LSE: RCDO) in their pursuit of an engine that can switch between 2-stroke and 4-stroke operation.

It’s worth noting that none of the companies mentioned in the article are based in the U.S. Will the American automakers be left behind in the innovation race again? Is General Motors (NYSE: GM) putting all of its eggs in the basket of the plug-in hybrid Chevy Volt? And where are Ford (NYSE: F) and Chrysler in this game?

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

Turbo Diesels Take on Hybrids

By John Addison (6/17/08). Last week, I test drove of the new Volkswagen Jetta TDI Diesel. It accelerated on to the freeway faster than my Toyota Prius. Driving freeways and stop-go city, I wondered which would be the bigger seller, the new European turbodiesels or the Japanese Hybrids.

For Detroit, May was the cruelest month, as they were outsold by Asia for the first time. Fuel economy is in; gas guzzling is being punished. General Motors, Ford Motor and Chrysler combined for a record low market share of 44.4 percent, compared with 48.1 percent for 10 Asian brands, according to the Autodata Corporation, the industry statistics firm. Toyota and Honda continued to gain market share. In the months ahead, Detroit will also lose share to the new fuel efficient diesels from Europe where diesel vehicles outsell gasoline alternatives.

The VW Jetta TDI Diesel has an EPA rated mileage on 41 mpg highway and 30 city with a 6-speed stick; 40/29 with an automatic. With 140 horsepower, the Jetta has plenty of performance. The diesel Jetta has a combined EPA rating of 33, compared with 25 for its gasoline cousin. In other words, diesel delivers over 30 percent better mileage, making a real difference to the pocket book even with diesel fuel’s higher prices, and to reduced greenhouse gas emissions.

Over 1.5 million Toyota Priuses are now on the road. The 2008 Priuses has an EPA rated mileage of 48 city and 45 highway. Notice that this hybrid with regenerative braking actually gets better mileage in stop and go than on freeways where there is added wind resistance. The Prius computer automatically disengages the engine most of the time when stopped and going slowly, making it more quiet than diesels. The Prius has a bit more passenger room than the Jetta. Both have the same trunk space.

Using both an electric motor and an engine, the Prius has always delivered more performance than I’ve needed, whether accelerating on a freeway or climbing a steep and icy mountain road. With its powerful electric motor, the Prius has plenty of torque and good acceleration.

Honda is not happy with Toyota’s success in selling four hybrids for everyone that Honda has sold. In John Murphy’s interview with Honda about their green image, Honda CEO Mr. Fukui stated that “Honda’s image was better but has evened out with [Toyota] because of the strong image of one single model, the Prius, which Honda feels is a problem. Next year, we will come up with a dedicated hybrid vehicle. We feel this model will have to overwhelm and overtake Prius.” It is rumored that the new Honda hybrid will be priced well under $20,000 and reach a broader market. Wall Street Journal Interview

In the next two years, Honda is also likely to bring diesels to the U.S. including the Acura, the Odyssey minivan, and the CR-V SUV,.

In the USA, many prefer SUVs to sedans. SUVs have more cargo space. Some can seat more than five people, but not the more fuel efficient SUVs. They ride higher. Some drivers feel safer, although sedans like the Prius and Jetta score better than some SUVs in front and rear collisions and are loaded with air bags and advanced vehicle controls.

The Ford Escape Hybrid is the most fuel efficient SUV on the market with an EPA rating of 34 mpg highway and 30 city. The VW Tiguan is a somewhat comparable compact SUV, but less fuel efficient with 26 mpg highway and 19 city using a six-speed shift; and only 24/18 with an automatic. The Tiguan is a light-duty vehicle that is roomy with 95 cubic feet for passengers and 24 for cargo. Drop the back seat and you have 56 for cargo.

The new VW Jetta Sportswagen offers many SUV lovers with an appealing alternative. It achieves the same mileage as the Jetta sedan of 41 mpg highway and 30 city with a 6-speed stick; 40/29 with an automatic. With 33 cargo cubic feet, it beats SUVs like the Escape and Tiguan. Drop the back seat and you have 67 cubic feet. Watch VW take market share from SUVs that get half the miles per gallon of this new turbo diesel.

The Prius, Jetta, Jetta Sportswagen, Tiguan and Escape all seat five people. All have ways to accommodate a fair amount of cargo when the back seat is dropped. The four-door sedans offer much better fuel economy. In the new era of $4 per gallon gas prices, sedans are gaining market share at the expense of SUVs and light trucks, like the once best selling Ford F150.

For those who enjoy both performance and luxury, Mercedes and BMW have new turbo diesel cars with about 30% better fuel economy than their gasoline counterparts. Last summer when I was treated to test drives of the Mercedes E320 Bluetec and the BMW 535D. I was impressed with the quiet, smooth, performance of these larger sedans and with the roomy luxurious experience. Mercedes and BMW are also bringing concept hybrid diesels to auto shows.

The new turbo diesels are not your diesels of the past. They are quiet. I could smell no emissions. Emissions are far lower than those of the previous decade, meeting the tough new 50 state requirements including using ultra-low sulfur diesel.

Forget putting B100 biodiesel in these new engines with common rail and very high pressure injection. Don’t think about home brewed vegetable oil or recycled restaurant grease. Even B20 voids the warranty in the U.S., although not in Europe where biodiesel quality is better. B5 is the limit in the U.S. Biodiesel’s Future

For the moment gasoline hybrids give most people better fuel economy than the new turbo diesels in the U.S. The diesel hybrids being developed by VW, Audi, Mercedes, and BMW could change the game. Most significant are diesel plug-in hybrids. The VW Golf TDI Hybrid concept is demonstrating 69 mpg. The full-hybrid supports an all-electric mode.

Volkswagen is serious about hybrids and electric drive systems. In announcing a new lithium-ion venture with Sanyo, Prof. Martin Winterkorn, CEO of the Volkswagen Group stated that VW’s future “will be directed more strongly at making electrically powered automobiles alongside ones driven by more efficient combustion engines.” Volkswagen’s Audi is also demonstrating a plug-in hybrid concept Quattro.

Toyota is well aware of the success of diesel in Europe. Toyota is developing an advanced diesel engine in both the Tundra and Sequoia. Toyota plans to expand its use of hybrids in a wide-range of vehicles. Currently Toyota is constrained by trying to increase battery manufacturing enough to meet its current exploding demand for hybrids. Toyota also plans a plug-in hybrid by the end of 2010.

General Motors does not intend to watch Asia and European rivals take all its market share. In late 2010, it plans to offer both gasoline and diesel plug-in hybrids that will give the average driver over 100 miles per gallon. In the USA it will introduce the Chevy Volt gasoline plug-in hybrid. In Europe, GM will sell a diesel plug-in hybrid under the Opel brand.

Are there other offerings of hybrids, diesels, and other fuel efficient alternatives? Yes. A good starting point to compare vehicles is at the EPA’s Fuel Economy site.

Different people need different types of vehicles. Hybrids benefit everyone who spends part of their driving in cities and/or stop-go traffic. The new turbo diesels tend to get thirty percent better performance than their gasoline counterparts. Two long-term trends are converging – the expanded use of more fuel-efficient diesel engines and the expanded use of electric drive systems for hybrids, plug-in hybrids and for electric vehicles.

Cleaner vehicles, however, are not the whole solution. When gasoline hit $4 per gallon, Marcia and Christian convinced a car dealer to take their two vehicles as trade-in, including a large SUV, for one more fuel efficient SUV. Living and working in a city, only one vehicle was needed because both could use public transportation and car pool with friends. They save over $5,000 per year by sharing one vehicle. Now that is a real solution to save at the pump and help all of us by saving emissions.

John Addison publishes the Clean Fleet Report.

Transonic: The Best of Both Diesel and Gasoline?

by Richard T. Stuebi

Whereas diesel engines have made great strides in the European auto markets, here in the U.S., gasoline still dominates. Apparently, the prospect of much higher fuel mileage and lower CO2 emissions from diesels doesn’t overcome the objections of U.S. environmental regulatory authorities concerned mainly about local air quality issues. I suspect that, even if (when?) these objections are overcome by continued refinement, diesels will still find it difficult to win market share in the U.S., largely because of the wider availability of gasoline.

A possible win-win solution may be forthcoming. A California firm named Transonic Combustion is working on technology that would allow gasoline engines to work at high compression ratios, thus enabling much better energy conversion ratios comparable to what is achieved in the typical diesel engine. Sounds like a great idea to me; hope it works. I wonder, though, if it will provide the throaty sound of those big-block V-8’s that Americans seem to love so much…

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

FedEx’s Absolutely, Positively, Cleaner Fleet

By John Addison (3/4/08). When something must absolutely, positively, arrive the next day, people increasingly turn to FedEx. Shipped is everything from million dollar loan documents to birthday presents. FedEx is also integral to the just-in-time supply chain that allows businesses to grow, even as they shrink inventory. FedEx generates over $35 billion annually.

FedEx uses 48,000 vehicles global to deliver our goods. Fed Ex probably utilizes another 30,000 vehicles at its airport operations. At the heart of FedEx operations is a hub-spoke private fleet of jets. Fed Ex has made Memphis, Tennessee, the busiest freight airport in the world.

I valued talking with FedEx Chief Engineer of Hybrid & Alt-Fuel Fleet, Sam Snyder, after he presented at the WestStart Clean Heavy-Duty Vehicle Conference. He discussed a number of areas of fuel savings. The volume and weight of an average package is now less. People are shipping more iPods; less big stereos. This allows FedEx to expand its deployment of Sprinter Vans, and reduce its need for the larger 16,000 pound (GVWR) vans. Sam Snyder stated that FedEx uses, “The right truck for the right route, saving millions of gallons of fuel.”

With oil topping $100 per barrel, FedEx is evaluating alt-fuel, and electric vehicles while continuing its investment in hybrids. FedEx hybrids have accumulated more than 2,000,000 miles in revenue service.95 diesel hybrids are in service globally, primarily in the U.S; 77 more hybrids will be added in 2008. The hybrids are an excellent investment with a 42% improvement in fuel economy. FedEx Hybrids

FedEx is making a bigger investment in hybrids than its major competitor UPS. UPS Clean Fleet

An indicator of the future is the 48 FedEx E700 Eaton hybrids in New York. In Milan, ten Iveco, a Fiat Group company, diesel hybrids will be used in a van similar in size to the Sprinter; a Bosch electric motor and Johnson Controls batteries are used. Green Car Congress

In May 2008, 20 Azure gasoline parallel hybrids (Ford E450 chassis and Utilimaster body) will be placed in service in LA and Sacramento. WestStart is managing this program.

Also being hybridized are the traditional FedEx 16,000 pound vans with a cargo capacity of approximately 670 cubic feet. Eaton’s hybrid electric system has been placed in the standard white FedEx Express W700 delivery truck, which utilizes a Freightliner chassis and an Utilimaster body, and designated E700.

FedEx would like to move towards more fuel-efficient 4-cylinder diesel hybrids, but it may not see an EPA certification until 2010 or later. Until then, FedEx may forge ahead with the less fuel-efficient 6-cylinder diesels. EPA continues to certify based on engine emissions, rather than more efficient hybrid duty cycle.

Hybrids are just one way that FedEx is becoming less oil dependent. Currently, FedEx Freight is actively testing hydrogen fuel cell forklifts, hybrid electric Class 7 trucks, and alternative fuels.

FedEx Express and FedEx Freight are members of the U.S. Environmental Protection Agency’s SmartWay Transport Partnership with fuel efficiency strategies such as:

* Instituting policies and technologies to reduce or prevent vehicle idling
* Locating FedEx facilities in order to eliminate idling from overnight trips
* Installation of tractor/trailer/van aerodynamic packages
* Use of advanced, low-friction synthetic oils and lubricants
* Introducing automatic tire inflation devices to increase fuel economy
* Introducing wide-based tires to increase fuel economy through reduced road friction

As one of the world’s largest private air carriers, FedEx is a major user of oil-refined jet fuel and a major emitter of greenhouse gases. To improve its carbon footprint, FedEx Express is replacing the B727 model aircrafts in its fleet with the Boeing 757 model. It has 20% greater payload capacity, but it also uses 36 percent less fuel. FedEx Express also plans to acquire Boeing 777 model aircraft, with a greater payload capacity, and 18% reduction in fuel use.

FedEx also saves annually over 5.5 million gallons of aviation fuel by using in-gate aircraft auxiliary power units, eliminating more than one hour of fuel usage per flight throughout the fleet.

FedEx is also taking a leading role in using renewable energy at its facilities. At the FedEx hub in Oakland, California, 80% of the facility’s electricity and is provided by a 904 kilowatt Sharp solar rooftop system that over its 25-year life cycle this plant will offset 10,800 tons of carbon dioxide – the equivalent of removing 2,100 cars from the road. Another 550kW will be added at its Fontana and Whittier facilities.

FedEx Kinko’s, Inc. purchases renewable energy at more than 520 branches in 26 states, for an estimated 69 million kWh per year. FedEx Kinko’s, Inc. is procuring its power from a wide variety of sources, including wind, geothermal, landfill gas, solar, and small hydro.

This year, Fed Ex was recognized as #6 on FORTUNE’s list of the World’s Most Admired Companies and #7 on FORTUNE’s list of America’s Most Admired Companies. For the seventh consecutive year, Fed Ex has been part of this prestigious list. Fed Ex’s leadership in clean transportation helps keep it at the top.

John Addison publishes the Clean Fleet Report and speaks at cleantech conferences.

Heavy-Duty Vehicle Trends for 2008

By John Addison (2/8/08). Most oil consumption and greenhouse gas emissions from transportation are not from passenger vehicles; they are from the heavy-duty vehicles, ships, and planes that move all our goods, serve public transit, and provide the infrastructure that keeps cities running. Heavy-duty operators have often been years ahead of passenger vehicle owners in using advanced technology to do more with less fuel.

Hybrids. Wal-Mart operates 7,000 trucks that in 2005 drove 872 million miles to make 900,000 deliveries to its 6,600 stores. Wal-Mart has set a goal of doubling the fuel efficiency of its new heavy-duty trucks from 6.5 to 13 miles per gallon by 2015. 26 billion pounds less of carbon dioxide would be emitted over 15 years as a result. Demand for oil is also reduced with over one billion less gallons of diesel required over that 15 year period.

Wal-Mart is defying the conventional wisdom that hybrid technology is of little help for large trucks that already have efficient diesel engines. Wal-Mart delivers goods from regional warehouses on an optimized route to its stores. Routes often involve heavy stop-go city driving. With hybrid technology, every touch of the brakes causes energy to be captured. Where trucks previously idled with engines running, hybrids can run all auxiliary power with the engine off, using large battery stacks for the electricity.

Wal-Mart has more than 100 hybrid light-duty vehicles. Now Wal-Mart sees bigger potential savings in heavy-duty Class 8 trucks. Wal-Mart plans to replace Peterbilt 386 big-rigs with hybrid versions of the same truck by 2009. Wal-Mart Clean Fleet Report

Plug-in Hybrids. PG&E is one of 14 utilities in the nation participating in the pilot truck program, sponsored by WestStart‘s Hybrid Truck Users Forum (HTUF), a hybrid commercialization project bringing together truck fleet users, truck makers, technology companies, and the U.S. military, to field-test utility trucks with an integrated hybrid power-train solution.

This new Class 6/7 hybrid truck is built by International incorporating the Eaton (ETN) hybrid drive system with a 44kW electric motor. Eaton has produced more than 220 drive systems for medium and heavy hybrid-powered vehicles. Vehicle configurations include package delivery vans, medium-duty delivery trucks, beverage haulers, city buses and utility repair trucks – each of which has generated significant fuel economy gains and emission reductions. Fleet customers for Eaton hybrid power have included FedEx Express, UPS, Coca-Cola Enterprises, The Pepsi Bottling Group, and the 14 public utility fleets into which were placed 24 hybrid-powered repair trucks.

Idle-off. In many heavy-duty fleets, engines idle 40% of the time at stops for many auxiliary needs including air conditioning, heating, running electronics inside the cab and more. These auxiliary functions can now be powered with the batteries in hybrid powertrains, with auxiliary power units such as fuel cells, and with truck-stop electrification. Heavy-vehicles can now be programmed to automatically idle-off after a prescribed amount of stop time, such as California’s five-minute law. Idle-off is possible by GPS location, such as specific bus stops. Wal-Mart alone estimates savings of $25 million with idle-off and APUs for its 7,000 trucks. Transit operators save millions of gallons of fuel and keep passengers happy with electronic air conditioning without diesel fumes.

Natural Gas. There are about five million natural gas vehicles in operation globally. These vehicles consume 238 million gasoline gallon equivalents. That amount has doubled in only five years. CNG vehicles are popular in fleets that carry lots of people: buses, shuttles and taxis. Natural gas fleets are likely to double again in the next five years. Los Angeles County Metropolitan Transportation Authority (LAMTA) serves over ten million people with the nation’s largest natural gas fleet, comprised of over 2,000 CNG buses. A growing number of riders enjoy higher-speed service with LAMTA’s bus rapid transit.

To help clear Southern California air, the Ports of Los Angeles and Long Beach established a $1.6 billion Clean Truck Superfund to purchase 5,300 alt-fuel trucks by 2010 out of a total fleet of 16,800 Class 8 trucks. All are likely to be Westport LNG systems installed in Kenworth T800 trucks.

Hydrogen Fuel Cells. Many passenger cars have the potential to meet all driver needs by plugging in for a nightly recharge of batteries in electric vehicles. Buses running 16 hours daily and climbing 12% grades can also be electric, but most need the added electricity provided by hydrogen fuel cells. Over 3,000,000 people have ridden these vehicles in Europe and the U.S.

Energy Security. The Army’s NAC is pursuing hybrid truck technology to significantly reduce the Army’s fuel consumption and logistics needs, to provide field-generation of power and to provide quiet, stealth operations. The U.S. Army has a fleet of over 246,000 vehicles with a goal to reduce fuel consumption by 75% by 2010.

Green Supply Chains. ConAgra has contracted with Nova Biosource Fuels to convert food processing waste into biofuel, greatly helping with waste regulations. This provides Nova Biosource Fuels with a low-cost feedstock for high-quality biodiesel. ConAgra has guaranteed the purchase of 130 million gallons per year. California-based State Logistics, has grown its business by providing more-sustainable shipping options for companies like Clif Bar. Prologis will only build USGBC LEED certified distribution centers.

On February 20, fleet managers, vehicle technology leaders, government leaders, other experts and stakeholders will gather in San Diego to discuss their success in all of these areas at the Clean Heavy-Duty Vehicle Conference 2008.

“Clean Heavy Duty Vehicle 2008 highlights the vehicles and fuels that will actually cut our greenhouse gases and reduce our dependence on oil,” said John Boesel, President and CEO of WestStart-CALSTART, a leader in spurring green tech in transportation. “The conference brings together the key business and political leaders helping bridge the technological and financial gaps to bring clean transportation solutions to market.”

Stay tuned for more exciting progress in 2008.

John Addison publishes the Clean Fleet Report.

Super Mileage with New Four-Door Sedans

By John Addison (1/17/08). Fuel economy was on display at the Detroit Auto Show. Starting Saturday, even more exciting vehicles will be unveiled at the North American International Auto Show, also in Detroit. $100 per barrel oil and new CAFÉ standards have made improved fuel economy mandatory for auto makers.

Most popular with individuals and fleets is the four-door sedan. Over the next three years, there will be a number of affordable offerings with fuel economy from 40 miles per gallon, to infinite miles per gallon.

General Motors continues to draw considerable attention with its Chevy Volt, which will offer 40 mile range in electric mode before its small 1L engine is engaged. 40 miles accommodates the daily range requirements of 78% of all U.S. drivers. The Volt uses an electric drive system with a small ICE in series that is only used to generate added electricity, not give power to the wheels. GM hopes to take orders for the Volt at the end of 2010.

World hybrid leader, Toyota, is likely to beat GM to market with a new plug-in hybrid also using lithium batteries. Toyota President Katsuaki Watanabe discussed Toyota’s vision, “Sustainable Mobility addresses four key priorities. First, we must address the vehicles themselves and the advanced technologies. Highly advanced conventional engines, plug-in hybrids, fuel cells and clean diesels, as well as many other innovative new technologies, will all play a part. Second, we must address the urban environment, where these new technologies will live. In the future, we foresee ‘mixed mobility,’ combining intelligent highways and mass-transit, bike paths and short-cut walking routes, recharging kiosks and hydrogen fuel stations…. By 2010, we will accelerate our global plug-in hybrid R&D program. As part of this plan, we will deliver a significant fleet of PHEVs powered by lithium-ion batteries to a wide variety of global commercial customers, with many coming to the U.S.” President Watanabe’s Remarks

A new offering from China’s leading battery manufacturer, BYD, will bring a plug-in hybrid to market sooner than Toyota and GM and at a lower price. BYD executive Mr. Lin said BYD Auto plans to launch the plug-in hybrid during the Beijing Olympics at a price of less than $30,000 (200,000 Yuan). The company sold about 100,000 cars in China in 2007, he said. The F6DM (Dual Mode, for EV and HEV), is a variant of the front-wheel drive F6 sedan that BYD introduced into the China market earlier this year, actually offers three modes of operation: full battery-powered EV mode driving its 75 kW, 400 Nm motor; series-hybrid mode, in which a 50 kW, 1.0-liter engine drives a generator as a range-extender; and parallel hybrid mode, in which the engine and motor both provide propulsive power. Expect the BYD F6DM to be selling in the U.S. by early 2010. Green Car Congress

Ford announced EcoBoost – this new 4-cylinder and 6-cylinder engine family features turbocharging and gasoline direct injection technology. The EcoBoost technology will deliver approximately 20% better fuel economy and 15% fewer CO2 emissions. The company will introduce EcoBoost on the new Lincoln MKS in 2009. Eventually the technology will be integrated into a range of flex fuel vehicles, which currently suffer from poor gasoline mileage, and 27% worse mileage with E85 ethanol.

Europeans are already enjoying 25% mileage improvements with new turbo diesels with direct injection. Exciting models will be available in the U.S. this year. Daimler, Audi and Volkswagen, all partners in the BLUETEC clean diesel marketing initiative showed a new Tier 2 Bin 5 compliant (i.e., able to be sold in all 50 states) BLUETEC model at the North American International Autoshow in Detroit

VW is the diesel passenger car sales leader. The Tier 2 Bin 5-compliant 2009 model year Jetta TDI, equipped with the clean diesel engine option, will be on sale later this year. Some drivers may experience over 40 miles per gallon with the Jetta’s efficient 2L four-cylinder engine.

Will we see the combined efficiency of diesel and hybrids? Yes. The Mercedes S 300 BLUETEC HYBRID is a 4-cylinder diesel a with hybrid module that gives it the performance of a V-8. The luxury saloon delivers 44 miles per gallon (5.4L/100km).

The Detroit shows unveiled a dazzling array of muscle trucks, loaded SUVs, hot sport cars, concept electric vehicles, and many model improvements.

Over the next three years, the biggest impact on reduced fuel use and lowered emissions will be in the every popular four-door sedan. Toyota has a commanding lead with over one million four-door Priuses on the road. Soon, Toyota will be selling one million hybrids per year.

Fuel economy improvements in the new vehicles are the result of using lighter materials, better aerodynamic design, lighter and more efficient engines, replacement of more mechanical components with electric, hybrid and plug-in hybrid designs.

While some auto executives still think that the key to financial success is yesterday’s big heavy and low-mileage cash cow, others recognize the path to sustained profitability is to deliver great fuel economy in popular full-featured cars. The global race is on. The sure winner is the customer.

John Addison publishes the Clean Fleet Report.

California’s Low Carbon Diet

By John Addison (12/5/07). When Coke and Pepsi were in the middle of their diet wars, California was an early battle ground. It is a state which tends to do much in excess, including drinking colas. In fact, only a handful of countries spend more money on beverages. Parties of happy and surprisingly fit youth were shown on TV commercials drinking their beverage of choice.

Now millions of Californians are being targeted as early adopters for a low carbon fuel diet. More miles, less carbon emission. It is the law. Executive Order S-1-07, the Low Carbon Fuel Standard (LCFS), calls for a reduction of at least 10 percent in the carbon intensity (measured in gCO2e/MJ) of California’s transportation fuels by 2020. Low Carbon Fuel Standard Program

Successful implementation of the LCFS will be critical to California’s even more ambitious law, the California Global Warming Solutions Act (AB-32), which requires California’s 2020 greenhouse gas emissions to not exceed 1990 emissions. The challenge is that in 2020, California’s population will be double 1990.

Because transportation is the main source of greenhouse gases in California, it is urgent that Californians use vehicles with better miles per gallon and that less greenhouse gases be emitted from the use of each gallon of fuel.

The world will learn from the successful implementation of LCFS because gasoline and diesel are currently becoming more carbon intense. There has been a shift from oil that is easy to get, to extraction and refining that increases greenhouse gases, as we make gasoline from tar sands, coal-to-liquids, and a future nightmare of shale oil. For example, monster earth movers strip-mine northern Alberta, extracting tar sands. Elizabeth Kolbert reported in the New Yorker that 4,500 pounds of tar sand must probably be mined to produce each barrel of oil. The converting of tar sands to petroleum will require an estimated two billion cubic feet of natural gas a day by 2012. Carbon intensity includes all the emissions from the earth movers and all the natural gas emissions from refining.

“All unconventional forms of oil are worse for greenhouse-gas emissions than petroleum,” said Alex Farrell, of the University of California at Berkeley. Farrell and Adam Brandt found that the shift to unconventional oil could add between fifty and four hundred gigatons of carbon to the atmosphere by 2100. Article

So, how can California reduce the carbon emission from fuel use? As a major agricultural state, E10 ethanol will be part of the solution. E10 can be used in all gasoline vehicles including 40 mile per gallon hybrids and in the new 100 mile per gallon plug-in hybrids being driven by early adaptors. Higher percentage blends of next generation ethanol are even more promising. Biodiesel is better at reducing carbon intensity than corn ethanol. Most heavy vehicles have diesel engines, not gasoline. Exciting new European diesel cars are also starting to arrive.

There are over 25,000 electric vehicles in use in California. Heavy use of electricity for fuel would take California far beyond the minimal target of a ten percent reduction in carbon intensity. This is especially true in California where coal power is being phased-out in favor of a broad mix of renewable energy from wind, geothermal, solar PV, large-scale concentrated solar, ocean, bioenergy and more.

California Low Carbon Fuel Standard Technical Analysis documents that there is a rich diversity of sources for biofuels within the state and in the USA including the following in million gallons of gasoline equivalent per year:

In-state feedstocks for biofuel production Potential volume
California starch and sugar crops = 360 to 1,250
California cellulosic agricultural residues = 188
California forest thinnings = 660
California waste otherwise sent to landfills = 355 to 366
Cellulosic energy crops on 1.5 million acres in California = 400 to 900
California corn imports =130 to 300

Forecasted 2012 production capacity nationwide Potential volume
Nationwide low-GHG ethanol = 288
Nationwide mid-GHG ethanol = 776 to 969
Nationwide biodiesel = 1,400
Nationwide renewable diesel = 175

A variety of scenarios have been examined with detailed analysis by U.C. Berkeley, U.C. Davis, and stakeholder workgroups that include technical experts from the California Energy Commission and the California Air Resources Board. Several scenarios are promising including one that would achieve a 15% reduction in carbon intensity with the following percentage mix alternate fuels and vehicles of some 33 million light duty vehicles by 2020:

Low-GHG Biofuel 3.1%
CNG 1.7%
Electricity 0.6%
Hydrogen 0.4%
Low-GHG FT Diesel .9%
Sub-zero GHG Biofuel 3.9%

CNG vehicles 4.6%
Plug-in hybrid vehicles 7.4%
Flex-fuel vehicles 34.7%
Diesel vehicles 25.5%
Battery electric vehicles 0.5%
Fuel cell vehicles 1.9%

The ultimate mix will be determined by everyday drivers in their choice of vehicles and fuels. Low emission choices are becoming more cost-effective with the growth of electric vehicles, waste and renewable hydrogen, fuel from biowaste and crops grown on marginal land, and even fast growing poplar trees that absorb more CO2 than is emitted from resulting biofuels. The alternatives make fascinating reading for those interested in future scenarios for fuels and vehicles:

California Low Carbon Fuel Standard Technical Analysis and Scenario Details
California Low Carbon Fuel Standard Policy Analysis

California’s ambitious goals to reduce greenhouse gas emissions will benefit by the increased motive energy per CO2e that is described in these scenarios. California will also benefit from vehicles that will go more miles with the same energy input. Vehicles are getting lighter and safer as high-strength carbon fibers and plastics replace heavy metal. The shift to hybrids and full electric-drive systems allow replacement of heavy mechanical accessories with light electric-powered components. Hybrids allow big engines to be replaced with smaller, lighter engines. Pure electric vehicles can eliminate the weight of engines and transmissions. Less fuel weight is needed. Aerodynamic vehicles are becoming more popular.

Employer programs are leading to more flexible work, less travel, and increased use of public transit. Demographics may also cause a shift to more urban car sharing, use of public transit, bicycling, walking, and less solo driving. It can all add-up to a celebration of low-carbon living.

John Addison publishes the Clean Fleet Report which includes over 50 articles about clean transportation.

What About Diesel Hybrids?

by Richard T. Stuebi

My good friend Gerrit visited me last week from Canada, driving down his prized Mercedes diesel. We talked about diesel autos, and how they were likely to be an increasing part of the energy/environmental solution.

Gerrit told me that he had been hearing that auto manufacturers were losing enthusiasm for hybrids, coming to the realization that most Americans drive lots of highway miles, for which diesels are simpler, cheaper and more efficient than hybrids.

Certainly, diesel hybrid designs are beginning to show up for commercial vehicles, such as delivery vans and garbage trucks. For instance, Eaton (NYSE: ETN) announced earlier this year a pilot program for UPS (NYSE: UPS) involving a diesel delivery truck with a hydraulic (not battery) motive augmentation system.

But what about diesel hybrid autos? Is anyone doing anything interesting in that field? If not, why not?

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

Westport – The Greening of Big Trucks

One of the companies I have followed for some time is Westport Innovations, Inc., (TSX:WPT) out of Vancouver. The technology and product suite allows large diesel trucks to run standard diesels on a 95% natural gas mix, enabling fuel switching as well as significantly improved NOx and PM, as well as CO2 emissions. The company’s rapid expansions date from a late 1990s joint venture with Cummins (NYSE:CMI), and Westport has led this market sector since then.

I had the opportunity at the recent Greenvest 2007 Conference I chaired in San Francisco to hear the talk of my friend Dr. Mike Gallagher, President & COO of Westport, and asked him to share a few thoughts for Cleantech Blog based on his conference presentation.

A few quick quotes from their website on the technology (you’ll see why I like it so much):

“Westport™ HPDI (High Pressure Direct Injection) natural gas engines on the road are producing approximately 50% less nitrogen oxides (NOx), 80% less particulate matter (PM), and 20-25% less carbon dioxide (CO2) emissions than equivalent diesel engines.” – These are the regular diesels running on 95% natural gas.

Westport has also been developing a Compressed Natural Gas Direct Ignition technology that basically similarly enables a straight natural gas engine to run direct injection like a diesel. The benefits include:

“- near-zero emissions of particulate matter
– 20% less greenhouse gas emissions (mainly carbon dioxide) than equivalent diesel engines
– 25% increased fuel efficiency over current spark-ignited natural gas engines”

Mike, before we go into your thoughts on Westport, let me lay out some of your background in energy engineering. Mike was previously Senior Vice-President, Americas, for Fluor Corp, and held executive officer positions with the Bechtel Group in San Francisco and London-based Kvaerner Group. He also has PhD from Stanford in Mechanical-Nuclear Engineering. So Mike, thanks for the time today.

Mike, I know Westport makes products to run diesel engines on natural gas – how exactly does this work?

Westport’s LNG System for Heavy-Duty trucks uses a small amount of diesel pilot fuel for robust ignition and then allows the truck engine – we’ve based our technology on the Cummins ISX diesel engine platform – to operate using approximately 95% natural gas for high duty cycle applications. The combustion approach uses a high pressure direction injection of natural gas into the diesel combustion chamber.

Can you tell us about the greenhouse gas impact of your products? That’s such a hot topic these days.

Emissions regulations are the norm now, particularly in California where we are actively pursuing opportunities for the use of our heavy-duty product. The Westport LNG system truck produces 15-20% less greenhouse gas emissions, compared to an equivalent diesel engine.

Our joint venture company, Cummins Westport Inc., offers mid-range products for medium-duty truck and bus applications. CWI’s advanced ISL G engine produces 7-13% less greenhouse gas than the equivalent diesel.

As you just alluded to, and for those who haven’t followed the company, Westport has a major joint venture with engine company Cummins. How does this arrangement work and what’s in it for Westport?

Cummins Westport Inc., or CWI as we call it, is a 50:50 joint venture between Westport and Cummins Inc. The JV company is headquartered right here in Vancouver with us, it has a dedicated management team and a dedicated Board of directors.

Profits (and losses) are shared equally by the two parent companies. CWI Cummins Westport Inc., a joint venture of Cummins Inc. (NYSE:CMI) and Westport Innovations Inc. (TSX:WPT), manufactures and sells the world’s widest range of low-emissions alternative fuel engines for commercial transportation applications such as trucks and buses. Cummins is a global power leader in engines, electrical power generation systems and related technologies. Westport Innovations is the leading developer of technologies that allow engines to operate on clean-burning fuels such as natural gas, hydrogen, and hydrogen-enriched natural gas (HCNG).

Revenues grew approximately 40% from 2006 to 2007, to $60 million Canadian, what were the major drivers – and is that growth expected to continue? Where should investors expect the growth from?

The 39% increase in annual revenues was driven by increased CWI engine shipments (up 50%) and the delivery of our first Westport LNG systems for heavy-duty trucks. Product sales growth which we measure in Canadian dollars was actually offset by a 5% decrease in the US dollar exchange rate. In US dollar terms, revenue growth was 44%. Growth for the next couple of years is expected both from CWI global sales growth around the launch of its new ISL G, and from sales of Westport’s new LNG systems for heavy duty trucks.

And the company turned a profit for, I believe, the first quarter ever in this last quarter. Does this mean Westport has turned the corner? The company has a fairly large retained deficit – and I know investors have been looking for profits to begin erasing it.

We are pleased about this last quarter’s results for sure. We have a solid history with CWI and a new HD product now and the markets are responding. The profitability for this recent quarter was driven by a number of fortuitous events that occurred during the quarter on a one time basis. So we will continue to push for improved profitability on a recurring basis.

Perseus, one of your major shareholders (who has had two seats on the board) recently sold a large amount ($50 million worth) of shares. What was the story there? Didn’t Perseus loan money to the company just last year? Should existing or prospective investors be worried?

No, certainly no cause for worry, quite the reverse actually. In fact, the sale erased planned interest payments by Westport to Perseus which is a positive for us, and Perseus elected to capitalize on a a very attractive financial opportunity available to them based on our significant share price increase in recent months.

The stock price has tripled in the last year – what were the drivers and are you worried the run up was too steep?

It’s always hard to know exactly what is going on out there in the marketplace, but we think the market has responded primarily to two things: our CWI business is demonstrating strong and growing profitability, and our heavy duty LNG truck business has launched with some early sales and big opportunities at the Port of LA and others.

We think we are now being valued more broadly for our expertise, we are meeting expectations, and the regulatory system is catching up with our technologies, opening the door for more sales. CWI has an engine offering available now that is certified to 2010 emissions standards – that’s 3 years ahead of schedule! And Westport is positioned to provide LNG systems in trucks in California now, where they have approved a five year Clean Air Action Plan at the Ports of Los Angeles and Long Beach to replace up to 5,300 older diesel trucks with LNG trucks in five years.

Do you have any plans to list on Nasdaq in the future to make it easier for US investors to buy in?

We are always looking at listing alternatives and have expanded our communications with US institutions and investors. But we don’t have any immediate plans to do a US listing.

You personally came to Westport from big corporate engineering – what had attracted you to the company?

That’s true, I had spent 25 years and grew into senior executive positions with the pre-eminent engineering and project management companies in the world- well known names like the Bechtel Group and the Fluor Corporation. Within those companies though I had dedicated a fair piece of my career to development of alternative energy technologies- particularly alternatives to oil- and to environmental cleanup technologies. And to the entrepreneurial creation and growth of new businesses. And of course I had my Stanford and MIT engineering and technology roots to draw from. So when the Westport opportunity came along almost five years ago, I felt it was a great way to take everything I had learned and apply it to a fast-growing technology company. A place where I could work with some of the brightest young talent around to transform Westport from an R&D company to a full commercial company, making a serious contribution to solving some of the world’s oil, energy, and environmental challenges.

If you had to give an investor three reasons to like Westport – what would you pick?

Real and growing sales, short term commercialization opportunities, and a technology right in the wheelhouse of current world needs around oil, energy, environment, and climate change.

For more information, you can visit the Westport website.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog, a Contributing Author for Inside Greentech, and a Contributing Editor to Alt Energy Stocks.