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Forward Osmosis – Solving Tomorrow’s Water Challenges Using Nature’s Remedy

Nature has an ingenious way of extracting water, but does it have the potential to solve many of today’s global water challenges? Before going into more details on how nature’s way of extracting water can help cut energy usage in water treatment processes, an appreciation is needed of why energy reduction in water treatment is an essential prerequisite for continued global development.

Since water is used in all energy production processes and energy is used to generate fresh, potable water from impaired sources, water and energy are two sides of the same coin. Factor in that global fresh water resources are rapidly declining and energy prices are one the rise due to over-utilization of fossil fuels, you quickly realize that energy reduction in water treatment processes will make a tremendous positive impact on the challenges faced in this water-energy nexus.

Moving back to nature’s way of extracting water, you may have wondered how trees are able to extract water from the soil in which they grow to the leaves in the treetops? Or how mangroves are able to extract fresh water from the seawater surrounding their roots? Given the obvious lack of electrically powered high pressure pumps, nature has come up with it’s own way of generating the pressure needed to transport water in trees and to extract fresh water from seawater in mangroves. It turns out that nature extracts water by utilizing the principle of forward osmosis in which water diffuses spontaneously (and without the input of energy) across a semi-permeable membrane from a low concentration solution on one side of the membrane to a high concentration solution on the other side of the membrane. The driving force for forward osmosis processes being the difference in osmotic pressure between the aqueous streams on either side of the forward osmosis membrane.

Coming back to the trees and mangroves mentioned earlier, the intracellular solution of root cells contains high concentrations of sugars and other dissolved molecules, which in turn generate a large enough osmotic pressure to extract water from soil and seawater respectively and transport this water throughout the stems and leaves of these amazing biological systems.

Now, how can water transport in trees help solve the looming water challenges facing our world today? Well, fortunately scientists have been able to develop artificial forward osmosis membranes and systems for industrial water treatment applications. And since forward osmosis systems do not require electrical energy inputs other than the energy needed to pump solutions across its membranes, it is potentially possible to reduce the overall energy consumption of water extraction by 90% compared to traditional pressure driven technologies such as reverse osmosis and nano-filtration.

Wide-spread adoption of forward osmosis systems in industry is still limited due to lack of high-performing, large-scale system capacity as well as industry preference towards proven technologies with long-term operational track records.

A number of startups and tech companies are working in the area.

 

Oasys Water 

Porifera

HTI Water

As well as ongoing research projects at a number of universities and labs around the world are working hard to commercialize forward osmosis technologies, so don’t be surprised if you – in the near future – start running into examples of forward osmosis being used to treat water in industries or even households.

Speed in the Oil Patch – Automation at the Wellhead looks like Cleantech

I had a chance to wander around the Offshore Technology Conference this week and chat about some of the technologies on display.

OTC is still heavily a mechanical engineer’s conference.  Despite the high tech nature of the industry, in large part vendors are not yet leading customers, and steel still rules the day in technology.

One of the areas that interests me is speed.  Speed to find, speed to drill, speed to produce.  In every industry, speed kills.  (In the good way). Speed with more data and more controllability? That changes the way we do business.  Efficiency, speed, better, safer, cleaner.  That’s where the oil & gas industry is headed.

Superior Energy Services (NYSE:SPN) one of the largest drilling and wellhead services companies, picked up one of the technology awards with CATS, the Complete Automated Technology System.  Neat stuff.  Basically, take a small workover rig that needs half a dozen or so people and a lot of manual labor, modularize components into a truly mobile ready to use package, add more robotic material handling, soup up the control system, cut down to half the people, and automate completions.

  • Cuts labor.  They’ve got 3 people where they had 6.
  • Improves safety, now on 3 rigs running for 8 months, zero loss time incidents.  I asked how many he’d have expected in that time – 6.
  • Controllability and knowledge management.  Once automated, we can turn to a statistical management, not a black art.
  • Speed.  The units themselves are small units, so a bit slower in use if I follow correctly.  But more controllability means more predictability.  And a ready- to-use design means faster up, faster down, higher percentage of time on.

Quote: we won’t be building any more conventional ones.  These are expensive day rates, but all fully utilized.

 

Baker Hughes (NYSE:BHI) picked up another one of the awards with a steerable drilling liner technology called SureTrak.  Basically, same directional steering and drilling system, within liner in place, packed with logging-while-drilling and measurement-while-drilling sensors, once done, unhook the liner, and just leave it there.  Brand new, done it 8 times now, with Shell and Statoil according to one of the sales managers.  Same as before, automate and integrate a process, allow you to solve different and more technical problems, and deliver speed, less time up and down.

 

Eventually, we will automate our industry and move it all the way to the information age.  REALLY automate it.  Until then, one step at a time.  That sounds odd from an industry that uses seismic and ROVs and supercomputers.  But one of the guys at the Weatherford booth said it best when asked about the digital oilfield – is anyone yet using all of your digital oilfield software the way you think it should be used?  Answer, no, it’s all still very silo’d.

Why is it So Hard to Make Money in New Battery Technology?

Energy storage is still the rage in cleantech.  But after the collapse of A123 and Beacon, and the spectacular failure on the Fisker Karma in its Consumer Reports tests, fire  in Hawaii with Xtreme Power’s lead acid grid storage system and with NGK’s sodium sulphur system, and now battery problems grounding the Boeing Dreamliners, investors in batteries are again divided into the jaded camp, and the koolaid drinker camp.   Not a perjorative, just reality.  New batteries and energy storage is still one of the juiciest promised lands in energy.  And still undeniably hard.  Basically, investors are relearning lessons we learned a decade ago.

Batteries are just hard.  Investing in them is hard.  Commercialization of batteries is hard. So why is it so difficult to make money in new battery technology?

Above and beyond the numbers, there are a number of commonalities related to the commercialization and venture financing life cycle of battery technologies that seem to differ to some degree from other venture investments in IT or even other energy technologies.  Having looked at probably 100+ deals over the years, and on the back of an deep study we did a couple of years ago on benchmarking valuations in energy storage, here’s our take on the why.

Timing – Battery technology commercializations have historically tended to be one of the slower commercialization cycles from lab stage to market.  Startups and investors in batteries have a long history of underestimating both the development cycle, capital required, and the commercialization cycle, as well as underestimating the competitiveness of the market.

Special chemistry risk – There is significant risk in launching a technology in newer battery chemistry.  There have been only a limited number of new chemistries succeed, and when they do, as in the case of NiMH and Energy Conversion Devices, they are typically either co-opted by larger competitors obviating a first mover advantage (that advantage is typically much weaker in this field than others) or requiring expensive patent suits.  Also as in the case of NiMH, there is no guarantee the chemistry will have legs (just when it is hitting its stride, NiMH is already becoming eclipsed by Li-On.  This risk has proven to be especially high for new chemistries (like Zn type) that are not as widely researched, as the supply chain development does not keep pace.  In addition, the battery field is highly crowded, and research is old enough that and despite new chemistry in most cases truly defensible patent positions are extremely hard to come by, or provide only discrete advantages (ability to supply a range of quality product cheaply in high volumes (or with value add to the product) seems to be the primary competitive advantage).  Few battery technologies of any chemistry end up their commercialization cycle with anywhere near as sustained an advantage as their inventors expected.

High capital costs – In any case, almost all battery startups will require extremely large amounts of capital (on the order of US$50 to 100 mm+) to achieve commercialization (much higher for real manufacturing scale), and the end product margins tend not to be particularly high.  Even with stage gate, a very large portion of this investment (US$10-50 mm+), is generally required to be spent while the risk of technical and economic failure is still high.  In addition, during the manufacturing scale up phase post R&D, capital investment required per $1 of revenue growth tends to be linear, making these technologies capital intensive to grow.

Degradation of initial technical advantage – In many technology areas one can expect the performance of the final manufactured product to improve over the performance in initial lab results, In part because of the low cost target, high reliability, high volume requirements of this product type however, promising battery technologies, are often forced to make compromises in the scale up, manufacturing, and commercialization stages that mean the performance of actual product might be expected to fall from levels or rates seen in lab scale experiments (though cost may go the other way).    At the same time, battery performance of standard technologies, while mature, is a moving target, and during the time frame for commercialization, will often improve enough to obviate the need for the remaining technical advantages.

Size matters – Most battery products (whether batteries or components like anode or cathode materials or electrolyte), are sold to large customers with very large volume requirements, and highly competitive quality and performance requirements.  As a result, breaking into new markets generally is extremely hard to do in niche markets, and means a battery startup must prove itself and its technology farther and for a longer period of time than other technology areas (see capital costs, timing and down rounds).  Many battery components technology developers as a result will be relegated for early adopters to emerging customers with high risks in their own commercialization path.

Lack of superior economics from licensing – As a result of these size, capital cost, timing, and commercialization risk issues most battery technologies will command much lower and more short-lived economics than anticipated from licensing (or require expensive patent lawsuits to achieve), and will require almost as late a stage of development (ie manufacturing operating at scale with proof of volume customers) and commensurate capital requirements, as taking the product to market directly.

Propensity for down rounds – In addition, battery technology companies tend to have down rounds in much larger numbers in the post A rounds (Series B through D+) than other venture investment areas, as these challenges catch-up to investors and management teams who overestimated the scope of work, capital and timing required in the seed, A and B rounds.  In particular, battery investors have tended to invest in seed, A and B stage battery technologies (pre-scaled up manufacturing process or even lab and prototype scale) with expectations of typical venture style timing and economics.  Quite often instead, it is the B, C, or D investor group that post cram-down rounds achieve the Series A economics (even when the technology IS successful), and the seed, A and B investors suffer losses or subpar IRRs.

Chief Blogger’s Favorite Cleantech Blogs

I’ve personally written hundreds of articles over the years.  I selected a few I thought were pretty timeless or prescient, and worth rereading:

What is Cleantech?  Always a good starting point:

or try, The Seminal List of Cleantech Definitions

 

The “Rules” in Cleantech Investing – Rereading this one after the cleantech exits study we just did, wow, was I on the money!

 

VeraSun IPO analysis – Read this carefully, I predicted exactly what would happen, and try the later version Beware the Allure of Ethanol Investing

 

Cleantech Venture Capitalists Beware, What You Don’t Know about Energy CAN Kill you – The title says it all.

 

 

Cleantech Venture Backed M&A Exits? Well, Yes, Sort of . . .

When people ask me, are investors making money in cleantech, I tell them yes, but not by whom or in what you thought they were.

Most of the analyses of cleantech exits do not differentiate for venture backed companies.  So we conducted our own study.

In the last 10 years, Cleantech.org’s Cleantech Venture Backed M&A Exit Study shows a grand total of 27 venture backed cleantech deals > $50 mm.

All in all, very tough returns.   A number of 8 to 10 figure fortunes made, just laregly not by the investors spending the 9 and 10 figure investments.

19 where we had data on both exit values and venture capital invested, 8 where we had revenue estimates.

We found a 2.78x Median Exit Value Multiple on Venture Capital Invested

– Those exit numbers include the founders and management’s shares, so average returns to investors would be somewhat lower.

We found a 2.2x Median Exit Value Multiple on Revenues.

$13 Billion in total M&A exit value.  Not bad, until you realize that’s over 10 years where cleantech has seen tens of billions in investment, and we used a pretty broad definition of “venture backed”.  To get there we included Toshiba’s Landys+Gyr, Total’s Sunpower, EDP’s Horizon and ABB’s Ventyx deals.  Those are the top 5 deals by value, and represent 60% of the $13 Billion.  None were backed by investors you would normally think of as cleantech venture capital powerhouses (Bayard Capital, Cypress Semiconductor, Zilkha and Goldman Sachs, Vista Energy).  Three of them included prior acquisitions themselves.

Excluding those and looking at only the transactions where we had both valuation and exit data we found and even weaker $3.8 Billion on $1.8 Billion in venture capital, 2.1x.

Most surprising, if you looked at the list of investors in these Nifty 27 exits, you’d have heard of very few of them.  This is truly not your father’s venture capital sector.

The exits have a surprisingly low tech flavor, and were carried by renewable energy project developers, ESCOs, and smart grid, and solar balance of system manufacturers.

If we had limited this to Silicon Valley venture investors in high tech deals, well, you’d have wondered if M&A were a four letter word.

Interesting, isn’t it?  Contact me at dikeman@janecapital.com with any questions or if you’ve got deal data you’d like to see included.

How About A Sane Energy Policy Mr. Obamney?

It’s Presidential Election year.  Ergo, time to discuss our 40 year whacked out excuse for an energy policy.  Royally botched up by every President since, umm?

Objectives:

Make US energy supply cheap for the US consumer and industry, fast growing and profitable for the American energy sector, clean, widely available and reliable, and secure, diversified, environmentally friendly and safe for all of us.

or

Cheap, Clean, Reliable, Secure, Energy

 

An Energy Policy that leaves us more efficient than our competitors

An Energy Policy that leaves us with more and more diversified, supply than our competitors

An Energy Policy that leaves us more reliable than our competitors

An Energy Policy that makes us healthier and cleaner than our competitors

An Energy Policy that makes us able to develop adopt new technologies faster than our competitors

An Energy Policy that makes it easy for industry to sell technology, energy, and raw materials to our competitors

An Energy Policy that keeps $ home.

A Sane Energy policy

 

Think more drilling, less regulation on supply, lower tariffs, more investment in R&D, tighter CAFE and energy efficiency standards, simpler and larger subsidies for new technologies, less regulation on infrastructure project development.

 

A couple of key action items:

  • Support the development of new marginal options for fuel supply, and support options that improve balance of payments, whether EVs ethanol, solar et al
  • Make crude oil, refined products, Gas, LNG and coal easy to import and export
  • Drive energy efficiency like a wedge deep in our economy
  • Support expansion and modernization of gas, electric, and transport infrastructure
  • Support long term R&D in both oil & gas, electric power, and renewables
  • Reduce time to develop and bring online new projects of any type (yes that means pipelines, solar and wind plants, offshore drilling, fracking and transmission lines).
  • Support policies and technology that enable  linking of energy markets
  • Challenge the OPEC cartel like we do EVERY OTHER cartel and break the back of our supply contraints
  • Support the export of our energy industry engineering, services and manufacturing  sectors overseas
  • Incorporate energy access into the core of our trade policy
  • Support deregulation of power markets
  • Support long term improvement in environmental and safety standards
  • Broadly support significant per unit market subsidies for alternatives like PV, wind, biofuels, fracking as they approach competitiveness

Or we could do it the other way:

  • Leave ourselves locked into single sources of supply in a screwy regulated market that involves sending massive checks to countries who’s governments don’t like us because that’s the way we did it in the 50s?
  • Keep massive direct subsidies to darling sectors so the darling sectors can fight each other to keep their subsidies instead of cutting costs?
  • Keep a mashup of state and federal regulatory, carbon and environmental standards making it virtually impossible to change infrastructure when new technology comes around?
  • Promote deregulation in Texas, and screw the consumer in every other market?
  • Every time there’s a crisis, we can shoot the industry messenger in the head, stop work, and subsidize something.
  • Continue the Cold War policy of appeasing OPEC so they can keep us under their thumb for another 30 years
  • And drop a few billion here and there on pet pork projects

Come on guys, stop the politics, let’s get something rational going.  Oh wait, it’s an election year.  Damn.

And in the meantime how about making energy taxes (a MASSIVE chunk of your gasoline and power prices) variable, so they go DOWN when prices go up.  Then at least the government’s pocket book has an incentive to control cost, even if they’re incompetent at putting together a policy that does so.

The End of Nuclear Power? Or Just the Beginning?

This week’s news: US NRC freezes decisions on new reactor, license renewal applications

“The US Nuclear Regulatory Commission voted unanimously Tuesday not to issue final decisions on granting licenses to build new nuclear power reactors and 20-year license renewals to existing ones, pending resolution of the agency’s waste confidence rule overturned by a court in June.

The commissioners, however, also ordered that NRC review of these license applications continue and that the agency’s Atomic Safety and Licensing Board Panel not accept or deny new challenges that may be filed in these proceedings relating to waste storage issues.”

Nukes in the US not dead of course, but the revival still on hold?

 

The post Fukushima nuclear future in Japan?  Still shut down, the replacement generation fleet still a patchwork.  The future is . . .?

 

And Germany?  Trying to get out of nukes puts intense pressure on gas (from Russia), renewables, and the grid.  As well as adds costs. Prognosis unclear.

 

Has Fukushima changed China’s nuclear energy ambitions? Or just its technology choices?

 

And exactly what are the costs for nuclear?  I will say generally, that on a cents per kwh basis, the broad lowering of interest rates benefits nukes better than any other form of power but hydro, given the combination of high portion of the of costs from the capital, and the high capacity factor.

 

So is the end of nuclear power’s 50 year challenge to coal power insight?  Or are we on the verge of a resurgence?  Situation unclear at best.

David Anthony’s Last Question – Can We Power the US Solely off of Solar?

By Tao Zheng, with David Anthony, an active cleantech venture capitalist, who passed away in April 2012.

 The sun is the champion of all energy sources, in terms of capacity and environmental impact. The sun provides earth with 120,000 terawatt (TW) energy, compared to technical potential energy capacity of single digit TWs from other renewable sources, such as wind, geothermal, biomass and hydroelectric. More energy from the sun hits the earth in one hour than all of the energy consumed on our planet in entire year. In the last blog, we estimated that the technical potential of electricity generation from rooftop photovoltaics (PV) can take over 1/3 of U.S. electricity consumption demand. The next question is: can we power the U.S. solely by solar energy, technically? The answer will rely on development of utility-scale solar farms and energy storage solutions.

Assuming the rest 2/3 of U.S. electricity demand can be fulfilled by utility-scale PV solar farms, we can estimate how much land required to install such solar farm systems. The total U.S. electricity demand in 2009 was 3,953 TWh with 1% annual growth projection in next 25 years. Two third of U.S. electricity demand is about 2,635 TWh. The PV power density is calculated with a weight-averaged module efficiency using market share for the three most prevalent PV technologies today: crystalline silicon, cadmium telluride, and CIGS. The resulting PV power density is 13.7 MW/million ft2, assuming an average module efficiency of 18.5% in 2015. If we assume 10 hours/day and 200 days/year with sunshine, the annual available sunshine time is 2,000 hours. The total land required for solar farms to generate 2,635 TWh, can be calculated as:

Total Land Required = Total Energy Generated / PV power density / Annual available sunshine time

                                 = 2,635,000/13.7/2000 = 96.2 ×109 ft2 = 8,937 km2 @ 100 × 100 km

Therefore, to generate energy equivalent to 2/3 of U.S. electricity demand, we need to install solar panels in a tract of land with size of 100 by 100 km, the area about 0.1% of U.S. land. Technically, to provide electricity for entire U.S. demand, we only need to cover PV-accessible residential and commercial rooftop with solar panels and install solar farms in desert area equivalent to 0.1% U.S land. In addition to rooftop and desert, there are many opportunities for installing PV on underused real estate, such as parking structure, airports, and freeway margins. PV can virtually eliminate carbon emissions from the electric power sector.

In comparison, Nathan Lewis, professor at Caltech, predicted a solar farm with land size of 400 by 400 km to generate 3 TW energy to power entire America. The represented area is about 1.7% of U.S. land size, comparable to the land devoted to the nation’s numbered highways. As shown in Figure 1, the red square represents the amount of land need for a solar farm to match the 3 TW of power demand in the U.S. Of the 3 TW energy, only 10% represents electricity demand, and the rest represents other energy needs, such as heating and automobile. Thus, Lewis’ calculation is consistent with our estimation: 10,000 km2 solar farms can generate enough electricity to fulfill 2/3 U.S. demand.

Figure 1. Solar Land Area Requirement for 3 TW Solar Energy Capacity to Power Entire U.S. Energy Demand. (Source: Prof. Nathan Lewis group at Caltech).

One of big challenges using solar to power U.S. grid is intermittency of sunlight. Solar energy is not available at night, and the variable output of solar generation causes voltage and frequency fluctuations on power network. Energy storage technology can smooth the output to meet electricity demand pattern. There are many grid energy storage technologies, from stationary battery to mechanical storage methods. Pumped hydro technology is clearly a better choice for solar energy storage, due to its high energy capacity, low cost, and public safety assurance.

For solar to have a dominant role in the electric power generation mix, in addition to power storage infrastructure, upgrading America’s transmission grid is required. In contrast to traditional electricity generation, solar power collections are distributed across numerous rooftops or centralized in utility-scale farms. Distributed solar requires grid operators to install smart grid technology to monitor power supply and demand and balance thousands of individual generators with central power plants. The current century-old transmission grid needs to be upgraded with high-voltage lines to carry electricity from remote solar farms to consumers. The American Recovery and Reinvestment Act (ARRA), signed into law by President Obama in 2009, has directed $40 billion to accelerate the grid infrastructure transformation.

The U.S. photovoltaic market has been growing quickly in recent years. In 2010, the U.S. installed 887 megawatts (MW) of grid-connected PV, representing 104% growth over the 435 MW installed in 2009. Current trends indicate that a large number of utility-scale PV power plants are in the south and southwest areas, such as in the sunny deserts of California, Nevada and Arizona. For example, the Copper Mountain Solar Facility in Boulder City, Nevada, is one of the U.S. largest solar PV plants with 48 MW capacity, as shown in Figure 2.

Figure 2. One of the U.S. Largest Solar Plants, the Copper Mountain Solar Project with 48 MW photovoltaic in Boulder City, Nevada.

Historically, solar PV deployment has been limited by economic factors, since solar energy is too expensive to compete with traditional fossil fuels, due to lack of economies of scale. However, the cheapest solar cells are now being produced for as little as 70¢ per watt. They are selling for about $1.26 per watt, with prices expected to drop to $1.17 next year. Most anticipate the price of solar module, such as thin film, will hit 50¢ per watt within four or five years. First Solar, the world’s largest maker of thin-film solar panels, has told investors that production costs will range between 52¢ and 63¢ per watt by 2014. When companies can produce solar photovoltaic modules for less than 50¢ per watt, solar energy will reach grid parity. Grid parity refers to the point at which the cost of solar electricity rivals that of traditional energy sources, such as coal, oil, or nuclear. The solar module price drop is driven by cheaper manufacturing costs, lower costs for such crucial raw materials as silicon, and rapidly improving technology. A recent study even claims solar grid parity is already here today, based on a legitimate levelized cost of energy (LCOE), calculated the cost in $/kwh. The value of LCOE is determined by the choice of discount rate, average system price, financing method, average system lifetime and degradation of energy generation over the lifetime. Figure 3 illustrates the effect of initial installed cost and energy output on the LCOE value. For a PV system with production cost at $0.5/W, the initial installed system cost will be $1.5-$2/W, after considering labor cost and module margin. If we assume energy output is 1500 kWh/kW/yr, which is reasonable in south west area in the U.S., the LCOE value in Figure 3 will fall in the range between $0.06/kWh and $0.08/kWh, the lower side of grid parity value for the U.S. residential electricity rates range.

Figure 3. LCOE contours in $/kWh for solar PV systems for energy output versus initial cost of the system for a zero interest loan, discount rate of 4.5%, degradation rate of 0.5%/yr and 30 year lifetime (Courtesy of Prof. Joshua Pearce at Queen’s University)

Based on the analysis above, it is reasonable to believe we can power the U.S. electric grid solely by solar PV, technically and economically. Thomas Edison had a great quote on solar energy: “We are like tenant farmers chopping down the fence around our house for fuel when we should be using Natures inexhaustible sources of energy — sun, wind and tide. … I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”

 

David Anthony was the Managing Director of 21Ventures, LLC, a VC management firm that has provided seed, growth, and bridge capital to over 40 technology ventures across the globe, mainly in the cleantech arena. David received his MBA from the Tuck School of Business at Dartmouth College in 1989 and a BA in economics from George Washington University in 1982. David passed away in April 2012. 

Tao Zheng is a material scientist in advanced materials and cleantech industry. He held 20+ patents and patent applications, and published many peer-reviewed papers in scientific journals. Tao Zheng received his B.S. degree in polymer materials sciences from Tsinghua University in China, and a Ph.D. degree in chemical engineering from University of Cincinnati. He obtained his MBA degree with distinction in finance and strategy from New York University, Stern School of Business, where he was designated as “Stern Scholar” and received “Harold Price Entrepreneurship Award”. 

Cleantech Blog’s Parameters for a Workable Energy Policy

Energy is life, the rest runs on it.

Since the 70s through every presidential administration and every Congress, we have had an energy policy that boiled down to fighting the cold war through oil and getting lucky on locally sourced coal and gas.  It’s not a zero planning energy policy, we’ve spent money, defined policies, written rules, set goals, etc.  We’ve just done our planning with 50 year old assumptions and zig zagged our way to idiocy.

One of my first ever blogs over five years ago touched on this topic:

My comments at the time after the 2005 energy bill:

We need to achieve low oil prices, and ensure that no one country is able to control our fuel supply. We have just passed a new Energy Bill. It does not do so. What we do need to do: Drop the ANWR fight and instead break the back of OPEC, slash consumption, and work closely with China.

But first things first.  This time I’d like to simply lay out the parameters of what ought to be in a workable, comprehensive, energy policy for the US in a post cold war era, where economic powers are shifting, where the war on terror is real, where environment matters, and where energy supply sources are changing and maybe getting more expensive.

Cleantech Blog has defined 20 parameters needed in a good energy plan.

  1. Has a clear cut and articulated vision – including acknowledging that energy security is not just  “energy independence”
  2. Deals with both demand and supply issues holistically
  3. Considers least cost path in any change
  4. Is phased in manageable ways
  5. Takes into account our current supply mix, load growth forecasts, and geographic considerations
  6. Includes both transport fuels and electric power
  7. Provides us with least cost or comparative advantage in energy both today and in the future vis a vis our core economic competitors
  8. Provides secure and interchangeable supply of energy resources and flows both domestic and cross-border
  9. Doesn’t destroy our current energy industry
  10. Allows time for energy and industry change
  11. Does the least environmental damage possible, and includes ongoing improvement in environmental impact
  12. Survivable under multiple energy demand growth scenarios and resource supply shocks in a global world
  13. Provides reliable energy to our industry and population
  14. Deals with or changes the current state and federal regulatory and permitting structures
  15. Considers the practicalities of infrastructure change, both lead time, economics, financing, technology, and regulatory
  16. Deals with the political considerations of OPEC and the Middle East
  17. Takes into account supply resources where we do have a comparative advantage
  18. Is fair and equitable during any shift in costs for one region or group
  19. Addresses and capitalizes on technology improvement in the US and globally
  20. Deals with China and India and Brazil as rising consumers and producers of energy resources

The energy policy itself should be simple in concept, and the energy plan hellishly detailed and complex in implementation.  But we desperately need this energy plan.

Energy is life, the rest runs on it.

Cleantech Parasites

It dawned on me today, that after buying green ecommerce store Greenhome.com 8 months ago, we put up links to the site on CleantechBlog.com, and included special coupons for all our Cleantech Blog readers and Cleantech.org members in the monthly emailings.  Here I thought people who were making a living off cleantech might *gasp* care about walking the walk and might appreciate it.

I think Greenhome.com saw a total of 3 coupon downloads out of that, and two were spam.  Worse, I’ve gotten more than that many personal comments asking why I’d clutter up the cleantech site with blog columns about green products.  On Saturdays no less, when the weekend traffic falls off 75%.  For the record we pulled those columns a few months ago

Fine save your money or buy somewhere else, but that rate is so abysmally low, it made me wonder if the entire of my audience is completely hypocritic.  And yes, it’s the web.  And yes, I DO pay attention.   I can see what pages y’all click on, and where you comment, I moderate every single one. And several times a week I read every Yahoo, Facebook and LinkedIN comment, and systematically delete and block anyone I find that spams, no appeals.  When I ignore you, it’s because you’re being annoying, I mean err, “that comment does not meet our unpublished comment policy or is not conducive to the health of the CleantechBlog.com and Cleantech.org community”.

So I’m pretty sure this group likes to read and talk and b*%&h about cleantech and a greener better world.  But do you actually care?

 

Do you actually think about cleantech, green products, and energy or water use when you’re not at work?

How many of you actually have a solar system?

How many of your light bulbs are now CFLs or LEDs?

How many have done an energy audit?

What green/ecofriendly versions of a product have you actually bought?

Do you know what makes that product green?

Do you actually recycle/compost?  Do you do the minimum required, or make an extra effort? At your home?  At your office?  Do you even know?

Do you have a clue what your energy bill is?  How many kW hours you use per square foot?  How that compares to the average? – For the record, when I asked a number of people that question at the last Cleantech Forum, I got a bunch of very polite laughs.

 

Or, and please excuse the language, are you just a cleantech parasite sucking off the teat of the government subsidies in cleantech?  Warren Buffett literally eats the food from the restaurants he owns, right?  Do you even bother to turn your lights off? 😉  What’s the phrase?  Oh yeah, “the choice is yours”.

It’s The End Of The World As We Know It (And I Feel Fine)

Last week, I was made aware of an extraordinary essay published by GMO called “Time to Wake Up:  Days of Abundant Resources and Falling Prices Are Over Forever” written recently by Jeremy Grantham, the legendary investment strategist.

I don’t use the word “extraordinary” lightly.  The essay is immense in its historical sweep, extensive in its analysis, eye-opening in its implications.

To Grantham, the long era of economic growth we have enjoyed commonly known as the Industrial Age is doomed by a declining supply of resources — especially, unreplenishable fossil fuels, but other metals as well — inevitably limited by a finite planet, in the face of intense competition and the unsustainability of never-ending exponential growth.  The human race will have to move on, somehow, into a different era.

When I sent this essay to some colleagues, suggesting that they would find the paper thought-provoking, one responded very critically, noting that Malthus in the late 18th Century and many others since (see, for instance, 1972’s The Limits of Growth) have been wrong in predicting the imminent collapse of human progress.  I replied that Grantham in fact invokes Malthus, goes into some detail on why his forecast was incorrect at that time, and makes a quite compelling case of why this time could (emphasis, could) be different.  My colleague then went off on a rant, to the effect of “We optimists assume we’ll find answers to our challenges and we usually do, while you pessimists see major problems ahead and want all of us to incur extreme costs and inconveniences to conform to your apocalyptic views and address your fears — which are usually wrong.”

Well, I don’t see it so pessimistically.  Grantham is saying we may well have daunting challenges in front of us — but I personally like challenges.  Grantham is also saying that these are simply the fundamentals of supply and demand, and investors can make wiser bets taking these factors into account — and I personally am allocating my capital and my time with the aim of making gains under some variation of the kind of future environment that Grantham describes. 

These are huge opportunities for those of us in the cleantech community.  Whatever the outcome, I’m not going to be miserable along the way.

One of the rubicons to be crossed in a lifetime is to accept finitude without falling into gloom.  As Grantham notes, we Americans are pretty poor in coming to grips with tough issues.  But, there’s just no way around it.  The Second Law of Thermodynamics states that, purely based on physical laws, the universe is in a perpetual and irreversible state of decay.  As John Maynard Keynes famously said, “In the long-run, we’re all dead.”  With a little more verve, I prefer to roll with R.E.M.“It’s The End Of The World As We Know It (And I Feel Fine)”.

7 Book Reviews in Cleantech and Energy

Sandor Schoichet s a longtime Cleantech Blog reader, and Director of Meridian Management Consultants.  Sandor has EE and SM degrees in Electrical Engineering & Computer Science from MIT, where he studied artificial intelligence, office automation, and business process reengineering, and completed a joint program in Management of Innovation at the Sloan and Harvard business schools. He holds undergraduate degrees in Information Sciences and Philosophy from UC Santa Cruz.  He published these book reviews on our sister site Cleantech.org, and following our Cleantech Bookshelf,  we liked them so much we’re republishing them here as a Reader’s Choice Bookshelf.

Natural Capitalism: Creating the Next Industrial Revolution
by Paul Hawken, Amory Lovins, L. Hunter Lovins

If there was one key to turning around the damaging business and environmental practices of modern culture, what would it be?  ‘Natural Capitalism,’ the seminal 1999 call for a broader focus on sustainability, presents an overwhelming case that the key is resource efficiency and effectiveness.  Just as conventional capitalism is all about using financial capital effectively, so ‘natural capitalism’ is about expanding that bottom line focus to include the  natural resources and ecosystem services underlying the ability of business and society to function in the first place.  The authors argue that with appropriate shifts in business perspective and government policy, our economy could be something like 90% more efficient in its use of irreplaceable natural resources, thereby mitigating ecosystem impacts, enabling global development, and staving off climate change.

Throughout history, until very recently, man has been a small actor in an overwhelmingly large world.  Most of the book explores how this has given rise to our ingrained cultural patterns of wasteful resource utilization, limited focus on capital efficiency, and drive for production volumes, while assuming unbounded access to subsidized natural resources and ‘free’ ecosystem services.  Shifting perspective to include natural capital on the business balance sheet, and to expand lean manufacturing principles beyond the factory walls is what’s required to address the ecology/climate change nexus.  This change in perspective is embodied in a range of sustainable business concepts, including the ‘triple bottom line’ (profits, people, and planet), and the ‘cradle-to-cradle’ model for recycling products and integrating industries to eliminate ‘waste’.

The basic principles of natural capitalism put forward can be summarized as: (1) focus on natural resource efficiency (2) using closed loop, biomemetic, nontoxic processes (3) to deliver more appropriate end-user services (4) while investing in restoring, sustaining, and expanding natural capital.  Following these principles leads not to constraints on business or lowered expectations, but an enormous range of new business opportunities to profit from improved efficiencies and environmentally beneficial activities.  One of the best expressions of this perspective comes in the discussion on climate change, providing a refreshing contrast to the recent spate of bad news on this front: “Together, the [available business] opportunities can turn climate change into an unnecessary artifact of [our] uneconomically wasteful use of resources.”

While the authors deliver an awesome, deeply researched articulation of their vision, showing with many examples why it’s important and how it can work within our current capitalistic economies, the book has two key flaws.  First, it falls prey to the syndrome first articulated by Paul Saffo, founder of the Institute for the Future, of confusing a clear vision of the future with a short path.  This combines with an  excessive reliance on sheer volume of examples to make their points, too many of them poorly explained, bristling with non-comparable numbers, and substituting hand-waving for real outcomes.  Deeper exploration of fewer examples might have illustrated the principles better, and have been much easier to read.  Also, 11 years after the original publication, many of the examples are seen to be hastily chosen and and used to support glib and overreaching conclusions that make the authors seem naive.  Examples include the advent hydrogen powered cars (“hypercars”), the potential for shutting down Ruhr Valley coal production in favor of direct social payments to coal workers, or the imminent triumph of the Kyoto Protocols for international carbon trading.  And, while much attention is paid to articulating the perverse incentives, misguided taxes and subsidies, and split responsibilities that impede more efficient system approaches, there’s short shrift given to new technology adoption rates, the scale of existing infrastructure investments, or the political complexities of changing incentives and subsidies.

However, if you are interested in understanding the genesis and foundations of the modern sustainability movement, this is a fundamental text.  Despite its flaws, after 11 years the fundamental argument and principles hold up well and are still inspiring.

Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future
by Robert Bryce

Bryce bills himself as a purveyor of “industrial strength journalism,” and ‘Power Hungry’ doesn’t disappoint. Starting with a clear statement of his own energy policy – “I’m in favor of air conditioning and cold beer.” – Bryce provides a muscular, data-driven analysis of our modern industrial civilization and the changing mix of energy sources that power it. This is an eye-opening discussion that does an unusually good job of conveying the scale of our existing energy infrastructure, and the challenge of providing adequate energy supplies for the future, not just for the US and Europe, but for the developing world and the third world as well, under the constraints of economics and decarbonization. Bryce articulate four energy imperatives – power density, energy density, cost, and scale – and uses them as a consistent framework for looking at what he calls the “Myths of Green Energy.” His “myths” run the gamut from the idea that wind power can really reduce overall CO2 emissions, to the idea that the US lags other countries in energy efficiency, to the idea that carbon capture and sequestration could work at scale, and intriguingly, even the idea that oil is a dirty fuel compared to the alternatives. While the debunking of green alternatives has flaws, especially in the lack of attention to advanced biofuels, smart grid technologies, and green building materials, it is refreshingly apolitical – focused on facts, practical alternatives, and the requirements of scale. In some ways Bryce ends up with conclusions similar to those of Bill McKibben in his recent book ‘Eaarth': we will not be able to turn the tide on atmospheric CO2 quickly enough, the scale is too large, the transition times are too long, the pressure for global development is too great. We will have no choice but to mitigate some problems and adapt to the rest. However, instead of advocating acceptance of a “graceful decline” as McKibben does, Bryce lays out an energetic path forward, a “no regrets” policy he dubs N2N: shifting electrical generation aggressively towards natural gas in the near term, while investing in advanced nuclear technologies for the long run. The strongest element of the book is how he effectively links the future economic health of the US with rising prospects for the rest of the world … and that will take massive quantities of carbon-free power, not only for economic development, but for mitigating unavoidable climate change impacts as well. ‘Power Hungry’ is a challenging and valuable read for everyone interested in green energy and an effective response to the climate crisis.

Whole Earth Discipline: An Ecopragmatist Manifesto
by Stewart Brand

Brand, as ever, is a clear and forceful writer, fearlessly putting himself on the line with specific recommendations and a call to action. This is the Plan missing from Al Gore’s otherwise excellent textbook, ‘Our Choice: A Plan to Solve to Climate Crisis’ –harder-edged, more urgent, more tech-savvy, willing to name names, kick butt, and provoke a reaction. This is the place to start if you’re ready to move beyond the conventional green perspective and really get a grip on what responding to the climate challenge entails. Frightening and exhilarating at the same time!

Eaarth: Making a Life on a Tough New Planet
by Bill McKibben

I’m conflicted about this book, and McKibben’s style in general. First, this is a valuable contribution to the debate about how to think about climate change and appropriate goals for our planetary future. McKibben actually presents many good ideas (in the second half of the book), rooted in a realistic and compelling vision of how our world is changing and how we need to adapt. However, his writing style, especially when presenting bad news (the first half of the book) is just “one damn thing after another,” an endless listing of specifics without adequate context or meaningful analysis … he apparently does not understand that anecdotes are not evidence. While he makes his argument most energetically, and has lots of suggestive detail that appears to support it, in the cases with which I am directly familiar he is guilty of taking things out of context, then making gross simplifications and overreaching generalizations. And this is too bad, because, overall, I think he’s basically right, and that his suggestions for change are excellent. Probably the most important aspect of this book is simply his tough, clear-eyed situation assessment of the damage that’s already been done, the building momentum of environmental change, and the need to get on with a meaningful response. I worry, though, that by beating us over the head with a stream of bad news, and then framing his suggestions for a response in terms of achieving a “graceful decline”, too many people will be turned off and won’t hear the good ideas towards the end of the book. The grand project of changing our culture so that we can live in a durable and robust symbiosis with our environment on a global scale … that’s not a graceful decline, but a call to help create a new age as exciting as any that went before.

Turning Oil Into Salt: Energy Independence Through Fuel Choice
by Anne Korin, Gal Luft

This slim volume is the clearest and most direct analysis I’ve yet seen of oil’s position as a strategic commodity, and the potential for open fuel standards to enable a market-based pathway to transportation fuel choice. Especially notable for its independent perspective … we hear so much about the need for ‘drop in’ petroleum equivalents and the ‘ethanol blend wall’, but not nearly enough about other approaches that might emulate the open interface model that has driven the phenomenal growth of the internet. Absolutely required reading for anyone interested in clean energy, the potential contribution of biofuels to achieving energy security, and the practical steps that we need to take to move down the path.

Science as a Contact Sport: Inside the Battle to Save Earth’s Climate
by Stephen H. Schneider, Tim Flannery

If you care about the big picture of climate change that’s driving the urgency behind global environmental agreements and the commercialization of greentech, then Schneider’s ‘Science as a Contact Sport’ is must reading. The book achieves two objectives in an engaging and forceful manner. First it is a great introduction to the science of climate change, presented through Schneider’s personal experience as a key participant in its development. And second, it provides much-needed insight into how the issue has played out in the US legislature and the global media, again from an up-close and personal point of view. Democracy and government are both messy systems, but still are forums where the environmental and greentech communities must ultimately triumph, and Schneider’s personal experience should be of value to everyone engaged in the battle. Some elements of Schneider’s message echo Al Gore’s discussion in ‘The Assault on Reason,’ but are presented in a clearer, more direct, and better operationalized manner. Highly recommended!

Why We Hate the Oil Companies: Straight Talk from an Energy Insider
by John Hofmeister

Hofmeister writes with refreshing directness and lack of pretense about two key ideas: the disconnect between “political time” and “energy time” that drives legislative dysfunction in energy and environmental planning; and his own proposal for an independent Federal Energy Resources Board to fix it. Most of the book is a walkthrough of the current US energy business and infrastructure … the “straight talk from an energy insider” part. He convincingly lays out an array of problems with the approaches advocated by just about everyone, from left-wing environmentalists, to right-wing “infotainers”, to the energy and utility power industry itself … with special scorn for the disastrous and long-running failure of our elected officials of all stripes to address our energy needs in a serious manner. The book provides a prescient and unnerving in-depth background to current newspaper reporting on the BP spill disaster in the Gulf (it went to press just before the explosion and blowout). Hofmeister is on less firm footing, however, when he switches to his proposal for an independent energy regulatory agency modeled on the Federal Reserve. While he surely gets an ‘A’ for boldness and for thinking outside the box, how this is supposed to work and how we are supposed to get there in advance of a national energy disaster akin to the Great Depression, are both left up to “grassroots pressure.” All I can say is that I hope his non-profit, Citizens for Affordable Energy.org, is successful at pushing his ideas onto the national stage, and helping to build a consensus focus on practical solutions. Highly recommended … wherever you stand on these complex issues, Hofmeister will push your buttons and make you think about what a real solution might look like.

5 Cleantech Wishes for 2011

Five things I’d like to see in cleantech 2011.

  1. A fuel cell in one of my blogger’s houses.  This one’s actually in progress, so hopefully it’s a gimme.  So come on Marc, we’re waiting for the pictures and the blog!
  2. More cleantech IPOs.  Come on guys, the market’s been rolling, we ought to be able to deliver ONE good IPO or two?  We did see RigNet (NASDAQ:RNET) get out in a $60 mm IPO.  RigNet’s a telecommunications for remote and offshore oil and gas markets but maybe no one outside of Texas counts it.  Of course, a nine year old c. $80 mm in revenues/$25 mm in EBITDA company backed by long time cleantech investor Altira, ought to to make the list.  And Chinese LED maker SemiLEDS (NASDAQ:LEDS) made it out in an $89 mm IPO.  So maybe the IPO market isn’t dead to cleantech, and after market performance is guaranteed to go badly, at least for profitable companies.
  3. And speaking of LEDs, I’d like to see lots more of them next year – in houses, on street lights, hanging from Christmas trees.  And I’d like to see them brighter and cheaper.  And I probably will!
  4. A major cleantech conference in Houston.  Perhaps someday rivaling the OTC – Offshore Technology Conference.  When that happens, perhaps we’ll know cleantech has arrived as a real sector.
  5. Lots of EVs!  I admit it, I don’t think much of venture backed EV startups, but I’m really excited to see some EVs.  I imagine them like the herd of tractors in the tractor tipping scene from the movie Cars (don’t ask why, that’s just the mental image I have).  And since I’m testing driving an Nissan Leaf Electric Vehicle a couple of weeks, this wish is bound to come true.  I will definitely be blogging it.

Here’s thanking all our Cleantech Blog and readers and Cleantech.org members for your support. Happy holidays, and good luck in a new year!

A Cleantech Energy Funding Adventure

by Jason Barkeloo, CEO of Pilus Energy

My business partners and I discovered an innovative way to unlock energy stored in carbon compounds. After a little back-slapping and “atta-boys,” we sought to raise the capital to launch a pilot. This led to another discovery; the destructive impact the economic crisis is having upon the capital markets. This means innovation, which requires capital, does not have the fast movement opportunity to market that capital provides.

It is a long way from the days when a business plan with a dot com name could attract large amounts of capital. Many funders are accustomed to the software funding model. It is very different from funding a cleantech energy company. Cleantech energy producing firms may have software, but they may also have hardware, which requires manufacturing. Most funders do not like manufacturing. They prefer software. The funding requirements for energy production are substantially different because they require more time and capital. More time means the return on investment (ROI) will take longer. Consequently, their capital will be tied up longer. More time and capital mean more risk. Investors seek to reduce or avoid risk.

Cleantech innovations for distributed production remind me of the evolution from centralized servers and node computing models to the distributed Internet. As personal computer functionality increased, the computing power of the server was distributed to the edge of the network. Similarly, energy production will distribute as new innovative technologies develop. This is an opportunity for investors. If you did not recognize the transition from centralized computing to distributed computing, this is the opportunity to realize the distribution of energy production.

Before we get to a distributed-centric model, we will have a hybrid model. This will be an intermediate position before distributed becomes the norm.

Funding Structure Changes: The Vacuum
Generally speaking, Limited Partners (LPs) are significantly disappointed with the returns their venture capitalist (VC) money managers have provided. As a result, less capital is flowing into VCs. The vacancies along Sand Hill Lane in Menlo Park, CA attest to this. The seeming capital availability growth in China also provides insight into the changing VC landscape in America.

The population of VCs that remain is smaller. As one of my entrepreneurial colleagues told me last week, “It is one thing to kiss a lot of frogs to find a funding prince, but it’s a whole lot harder finding them when they are vanishing.” It struck me that amphibians in the natural world are also becoming extinct. Now, before we try to get VCs on the Endangered Species list, it is important to mention that their industry is evolving. In the interim though, there is a vacuum.

Our firm attracted enough pre-Seed funding to find and protect an important discovery. The amount of pre-Seed funding we needed for our cleantech discovery was significantly more than a friends-and-family round a software firm would raise. However, when our Company scales, our visionary investors will be rewarded handsomely, as well they should be.

The Company’s next milestone is revenues from a pilot. We must do this with our breakthrough technology as a minimum viable product. We will need more funding than most traditional angels will risk. If we could find a VC that would partner with a pre-revenue cleantech energy producing firm, the amount needed would be too low. As we are pre-revenue, going straight to a Series A with a VC is about as probable as getting Republicans and Democrats to [fill in the blank].

The funny thing is, governments are starting to fill the due diligence and risk reduction activities that angels need. No experienced angel is going to make a significant investment if there is no VC to fund the next level of a Company’s growth. Therefore, angels are starting to look to government for the nod and wink as to who are the winners and losers. I do not make a habit of saying things about an endorser’s expertise to conduct endorsement activities. Suffice it for me, if an angel is comfortable, then I am comfortable.

As part of the evolution of the capital landscape, I see an enhanced role for corporate joint ventures (JV). This may require a bit more “corporate” flexibility of the entrepreneur than s/he is accustomed. However, the corporation likely has resources and expertise than can assist the company’s growth. Of course the corporation gets the first right of refusal for licensing, product distribution, marketing, sales, and even liquidity. Since I am presently in such discussions it is best to shut my thoughts (aka, my mouth).

Back to the governmental funding role for a moment. Tax-payer funded programs like the small business innovative research program (SBIR), and similar programs, can be a very slow road to growth. We are fortunate. Our research team is well versed in grant writing. Surviving in academia requires the ability to pursue and manage grants. We were luckier still to get a top-notch writer who can do science, technical writing, and journal authorship. As a grant-writing company we accept, begrudgingly, that our deployment timeline is painfully lengthened by this funding strategy. We estimate an added twelve to eighteen months over angel funding to get a pilot completed. Speed is critical to capture markets. Hopefully, our competitors are experiencing the same slog.

The other downside is that grant requests for proposals (RFPs) serve as the starting point for grants. Those RFPs are usually not issued for breakthrough technologies. It is a breakthrough because no one else thought of it; hence no RFPs are issued in advance. Being ahead with innovation can slow down the startup even further. Securing a grant for an innovation will require political help expanding unsolicited RFP Programs and reducing the timelines.

The danger with this phase of capital market evolution is the vacuum left by vanishing VCs and angels who feed deals to VCs. Filling the vacuum requires time and experience. The time lost filling the vacuum results in less innovation to help grow the economy. Innovation keeps our economy healthy (or regain its health). Innovation begins with education and free markets. Funding innovation should not have government competing against the market. Perhaps government can participate in the innovation market?

As it turns out, the government is already participating in the market. Starting with innovation incubators like the Department of Defense (DoD) Defense Advanced Research Projects Agency (DARPA) and its two year old Department of Energy (DoE) twin, the Advanced Research Projects Agency for Energy (ARPA-E), to development stage programs like SBIR, to its own VCs like In-Q-Tel. What is needed now is to reduce the timelines for awards. Providing ROI mechanisms for tax payers beyond the promise of jobs may help streamline the process.

Additionally, government can encourage large firms sitting on capital to invest in startup innovations. Startup entrepreneurs can also encourage corporations to invest.

Conclusion
The longer it takes to fill the funding vacuum, the further American innovation will lag. Capital does not respect human borders. It will flow where it can grow. Entrepreneurs have a responsibility to their investors to follow the money. Therefore, innovation will follow the money too.

America is at risk of losing its cleantech innovation advantage. While America waits for the void of innovation funders to be filled, other countries are moving forward. American Federal and State governments might consider fast-tracking their cleantech funding programs. The United States Patent Office (USPTO) offers a fast-track cleantech energy patenting process. However, most of us understand the dangers associated with a fast-tracked patent when it comes to defending it, particularly for re-examination. However, the USPTO is commended for taking a leadership role in trying to maintain the innovation pipeline. The thinking is that a company with an issued patent is more fundable than one without.

Lastly, the American governments might also encourage established firms to take risks with innovative startups. If existing corporations can fill the funding vacuum, innovations might come to market more quickly. Such a strategy might also rapidly increase American economic health. How do you think Federal and State governments can incentivize cash-rich corporations to take investment partnership risks with startups?

Valuing the Electron

I am struggling to find a single function in our society that is not impacted by the electron. The electron is a negatively charged particle that fuels digital work. It makes software work on hardware. It powers motors and manufacturing. It lights our bulbs and amplifies our sound. In my opinion, the electron is the unsung hero of the Internet age.

If the generation, distribution, storage, potential work, and informatics of the electron were properly valued by the market beyond just metering it, a new market and industry could erupt.

Thus far, the electron is not valued for its ability to enable our society to function. Because electrons cost money to generate, distribute, and store, a commodity metering model developed at the founding of the industry. That model is due for a change. It is outdated and does not truly reflect the important role the electron now serves as a platform. As a necessary service, regulations overtook the industry. More on this later.

It might seem strange in the digital computer and Internet age that the value of the electron was not measured in it’s ability to do the digital work. Outside the some 150 utility companies in the USA, its genesis and work value was ignored. But what happens if you start valuing the electron for the work it can perform, just like software as a service might be valued?

I am not proposing that utilities be valued like Internet service providers (ISPs). Rather, I suggest the genesis, storage, and/or transmission of the electron be valued relative to the criticality of the digital work the electron performs. A distributed electricity producer or centralized utility are creating a platform. The market has not valued this. Or has it and the Genie just needs to be released?

The electron enables fascinating technologies. Generating and distributing electrons remains archaic, inefficient, and undervalued. Most do not know that nearly fifty percent of centrally generated energy is lost in vampire effects ranging from friction in power lines to voltage step-down to the appliance plug.

When the world is able to value the electron for the real value and future potential technologies, cleantech energy production will generate another Internet-like growth phenomenon. The value of the electron extends far beyond software and web pages. It is the platform that everything else in the modern technological world is built upon. Interject a solar flare, equipment failure, loss of fuel, or nuclear force, and the platform is disrupted and society stops. However, absent such events the electron moves on powering societies critical functions. The nice thing about the benevolent electron is anyone can build and monetize services upon it.

The highly regulated utility industry does not have the same unbridled freedom to monetize the platform it facilitates. Politically, it is realized the electron is critical to do work that maintains modern human life. It enables necessary functions from 911 telephone calls to heaters and air conditioners; from traffic lights to water purification. As a result, the production and distribution of the electron is classified as an essential service. This classification results in regulation. Highly regulated markets do not attract innovation because they can not attract capital. Capital investments are not made because the regulation prevents the proper monetization (such as valuing the electron as a platform). And so the circle continues. Meanwhile the infrastructure ages and begs for innovation.

Nordhaus and Shellenberger have it right. In their article, “How to Change the Global Energy Conversation” they argue that stimulating innovation in the energy production market is more effective than regulations such as emission caps (The Wall Street Journal, 29 Nov 2010). I add the following caveat. Allowing business model innovation is as equally important as technological innovation. For example, you might imagine getting your electricity for free in exchange for providing usage data the producer can monetize.

The lack of competition gives the impetus to a highly regulated environment. One can envision policy-makers grappling with the idea that an unregulated market would result in an extra abundance of overhead power lines. But what would happen if competition and market forces were unshackled electron generation and distribution? Perhaps distributed energy production would push forward and make overhead power cables obsolete?

Policy is often a preemptive action, or reaction, to the absence of a solution. That is, instead of entrepreneurial innovation being the response brought against the problem, a policy is crafted instead. In the case of the overhead power lines, historically there was little incentive for entrepreneurs to develop distributed power generation to get rid of those unsightly and expensive power lines. Getting into the power generating business is haunted by the shadow of regulation – and that keeps capital from enabling innovation. Everybody loses when such a closed environment surrounds such an open platform.

If the generation and distribution of electricity were opened it would incentivize the growth of the industry. This explosive growth would create multiple new industries and millions of new jobs.

For cleantech energy production to realize its market potential, the value of generating the electron must reflect its ability to foster technological progress. It is time to open the generated of electrons (electricity) so as to match the openness the electron itself enables. It is time to let markets and entrepreneurs solve energy production and distribution problems. The resulting industry will be an open platform. It will enable new industries and explosive job growth. This may include creating jobs to remove and recycle those nasty overhead power lines.

Guest blog bu Jason Barkeloo of Pilus Energy.

Can I Hate the Solar Bill of Rights and Still Love Solar Power?

by Neal Dikeman

A few of you may have run across the Solar Bill of Rights Petition that’s floating around the web.  I was really excited at the idea, until I read it.  For a good environmental conservative like me, I had a lot of trouble swallowing the actual demands, despite the fact that a whole bunch of my friends and people I respect are already signatories.  To be honest, instead of being excited over the soaring rhetoric and call to action, or enthralled by the detailed and well thought out solutions to the thorny issues around power deregulation, local choice, and distributed energy, and my first response after reading it was along the lines of “where do they get off”.  It reads like a very self serving, our child is prettier than your child, our cause is more important than your cause, partisan politics please subsidize me call to unlevel the playing field, and ignores all the devils in the details.

Whereas the reall Bill of Rights is a carefully crafted attempt to reserve rights to protect the individual from the state, this feels like an attempt to use the state’s engines to smash all opposition to particular industry, and local choice and the rights of the people and businesses affected be damned.  Not my idea of a Bill of Rights.

To my friends who know how much I believe in the solar sector and its promise – I’m sorry, I’m sorry, I’m sorry in advance of you reading this.  But somebody please bring me a new version of the Solar Bill of Rights worth signing.

The text of the Solar Bill of Rights is below in italics, with my thoughts and questions after each point.  Read through for yourself, and post your comments on the blog.  Tell me whether you think I should sign, and Cleantech Blog should endorse it.  Or post suggestions for amendments we can propose, and we’ll write our own.

We declare these rights not on behalf of our companies, but on behalf of our customers and our country. We seek no more than the freedom to compete on equal terms and no more than the liberty for consumers to choose the energy source they think best.

1. Americans have the right to put solar on their homes or businesses


Millions of Americans want to put solar on the roof of their home or business, but many are prevented from doing so by local restrictions. Some homeowners associations have prevented residents from going solar through neighborhood covenants, which allow for the association to veto any changes to a property’s aesthetics. Some utilities and municipalities have also made it prohibitively time-consuming and/or expensive to have a system permitted or inspected.

I loved this one, at first blush.  A right to solar?  Terrific.  Then I started thinking, hey wait a minute.  HOAs and deed restrictions are a core defender of local property rights.  Where do we get off retroactively telling the massive number of property owners and zoning boards, we’re sorry, despite the fact that you can’t get 50% vote of your neighborhood to approve changes to the agreement you all live under in your democratic process (and that your neighborhood may have had for 100 years), here’s your new amendment.  That smacks of eminent domain to me.  I hate the use of eminent domain to benefit a specific constituency.  Needs lots of nuance before I could get behind this one.

2. Americans have the right to connect their solar energy system to the grid with uniform national standards


Currently, each state (in some cases, each utility) has a unique process for connecting solar systems to the local electricity grid. National interconnection standards will create a uniform process and paperwork, creating a simple process for the homeowner and a standardized physical connection for manufacturers. Connecting a home solar system shouldn’t be any more complicated for the homeowner than setting up an Internet connection.

Got to love standards, but who’s going to set them?  That part always creates big winners and losers.  Telecom standards for that local internet connection were supported by the government, but never did we have a mandate all ISPs shall go DSL, right?  Oh, and by the way, all local utility grids are very different in design.  Some can do things that others can’t.  How exactly will that be reconciled, and who will pay for it?  Like this one but Devil’s in the details and I don’t think these guys have thought it through.

3. Americans have the right to Net Meter and be compensated at the very least with full retail electricity rates

Residential solar systems generate excess electricity in the middle of the day, when the owners aren’t usually at home. Net metering requires the utility company to credit any excess generation to the customer at full retail rates at a minimum – effectively running the electricity meter backwards when the system is generating more electricity than the occupants of the house are using. Allowing customers to net meter is critical to making solar an economically viable option for most homeowners.

Net metering is a terrific idea in principal, but 1) again, not all grids are capable of handling the impact easily, especially if it’s at volume, 2) right now our always available power distribution system is paid for by charges buried in your power usage bill, if the net metering house still wants the benefit of being hooked up to the grid, how are they compensating the rest of us for the on demand infrastructure use?, and the big one 3) why is retail a fair price?  Saying the utility (in many places owned by you and I) has to buy all the power its customer produces at the same price it would retail it to you is about like saying your local grocery store has to buy the 10 lbs of tomatos you grow at retail.  They buy the rest of their tomatos in volume, with delivery and quality restrictions, for a much lower price (and for the non produce they send back the unsold volumes to the manufacturer);  and 4) which utility has to buy it?  In places like Texas which are deregulated, you can choose your provider.  Shall we pick one at random and force them to buy our power at the highest price they’ve ever sold to any customer?  That sounds fair.

Then I read that last line again, ummh, so you deserve a “right” because the only way it’s profitable for you is if you make somebody else buy it at higher than their current cost?

4. The solar industry has the right to a fair competitive environment


The highly profitable fossil fuel industries have received tens of billions of dollars in subsidies from the federal government for decades. In addition, fossil fuel industries are protected from bearing the full social costs of the pollution they produce. The solar energy industry and the public expect a fair playing field, with all energy sources evaluated based on their full, life-cycle costs and benefits to society. Therefore it is critical that solar energy receive the same level of support, for the same duration, as the fossil fuel industry.

I’m getting really, really tired of this argument.  Renewable and solar advocates conveniently ignore that even incorporating a kitchen sink approach to fossil fuel subsidies (and heaven forbid we add the massive percentage of solar R and D spent by governments over the years), the solar subsidy is many, many, many times higher the fossil fuel subsidy level on a per unit basis (i.e, if we gave the solar guys the same subsidy per kilowatt hours or btu equivalent that they claim the fossil fuel industry gets, the solar industry would never have started.  And it smacks of total smarminess to have this argument right below the “let us sell back power at retail rates” subsidy demand).

Or maybe we should just add as a corollary that all Americans have the right to shares and dividends from any venture capital backed solar company which receives greater than 1/3rd of its funding from a DOE loan program or other public R and D funding and later benefits from a subsidy that Americans pays for in their regulated utility bill.  I’ll go look in my mailbox tomorrow and see if my check arrived.

5. The solar industry has the right to produce clean energy on public lands

America has some of the best solar resources in the world, which are often on public lands overseen by the federal government. But even though oil and gas industries are producing on 13 million acres of public lands, no solar permits have been approved. Solar is a clean, renewable American resource and solar development on public lands is a critical component of any national strategy to expand our use of renewable energy.

Hang on, big fan of leasing national natural resources in a fair and responsible manner, but I don’t necessarily want solar, oil, or ANY industry to have an unrestricted right to use my share of the public lands without environmental reviews, an open and transparent process with stakeholder inclusion, and a competitive market.  While I want to see solar thrown up all across the country, why should the solar industry be demanding this as a right?  The wind industry doesn’t?  The hydro industry doesn’t?  The geothermal industry doesn’t?

6. The solar industry has the right to sell its power across a new, 21st century transmission grid


Over the last 100 years, the transmission grid in the United States has been built as a patchwork of local systems, designed and planned to meet local needs. As the needs of customers have changed, so has the way the electric industry does business. What haven’t changed are the rules crafted in an era of coal-fired power plants. What is needed now is an investment in infrastructure to connect areas rich in solar resources with major population centers.

Uh, I’m a big advocate of an advanced grid.  And the cost here is measured well into the 11 or 12 figures, or significant portions of total GDP.  Let’s not write checks and demand someone else’s body has to cash them.  This is a tremendous topic but totally does not belong in a solar bill of rights unless the solar industry is ready and willing to pay for it (which in turn would be unfair to ask of them alone either).

7. Americans have the right to buy solar electricity from their utility

Many utility companies have never considered offering their customers the option to purchase clean solar energy, rather than dirty energy from coal or other fossil fuels. Nation-wide over 90 percent of people support increased use of solar energy, and over three-quarters believe it should be a major priority of the federal government. Despite this, only around 25 percent of utility customers in the U.S. have the ability to actually purchase clean, renewable power from their utility, and only a fraction of those programs offer solar energy. Utilities should be required to offer the electricity source that their customers want.

Dude, a few years ago California voters voted down a solar initiative because of cost, only to have the CPUC implement it anyway.  We could do the right thing and just deregulate like Texas and New Zealand did (instead of stupidly like California tried), and I could buy dirt cheap 100% wind power, hydro power, 20% wind power, natural gas only power, average grid mix, cap and save, fixed rate, floating rate, or any other different combination a marketer can dream up.  Oh wait, since all other forms of renewable power are cheaper than solar, I’d buy that 11.4 cent/kwh all wind power than the solar.  Maybe that’s why the solar industry wants their private right.  How about, every American has the right to buy power in a free market and switch providers when they want to?  And then let’s make the subsidies we give all energy companies transparent, as opposed to making new back door ones?

8. Americans have the right to – and should expect – the highest ethical treatment from the solar industry


Solar energy systems are an investment as much as a physical product. Consumers deserve top-quality information and treatment from solar energy providers and installers. Consumers should expect the solar industry to minimize its environmental impact and communicate information about available incentives in a clear, accurate and accessible manner. Finally, consumers should expect that solar systems will work better than advertised, and that companies will make every good faith effort to support solar owners over the life of their systems. Read SEIA’s code of ethics.

This is just plain odd.  I wasn’t aware we needed this.  Maybe I missed something important about how ethical the solar industry is today?

I’m sorry guys, this whole SOB of Rights just reads as very self serving.  But bring your comments, if the weight of Cleantech Blog readers want me to, I will sign it and we will support.

Neal Dikeman is the chief blogger of Cleantechblog.com, and creator of Cleantech.org, a huge advocate of solar and policy powered financing and R&D, he just doesn’t like using his government to support hidden subsidies to pick winners.  He is a partner at cleantech merchant bank Jane Capital Partners LLC, and has helped found or invested in companies in carbon, solar, superconductors, and fuel cells.

Why Conservatives Are Bad on Energy: It’s All About the Costs

By Tom Rooney, CEO SPG Solar

Conservatives,  let’s talk about energy. And why so many conservatives are so wrong — so liberal, even — on wind and solar energy.

Let’s start with a recent editorial from the home of ‘free markets and free people,”
the Wall Street Journal. Photovoltaic solar energy, quoth the mavens, is a “speculative and immature technology that costs far more than ordinary power.”

So few words, so many misconceptions. It pains me to say that because, like many business leaders, I grew up on the Wall Street Journal and still depend on it.

But I cannot figure out why people who call themselves “conservatives” would say solar or wind power is “speculative.” Conservatives know that word is usually reserved to criticize free-market activity that is not approved by well, you know who.

Today, around the world, more than a million people work in the wind and solar business. Many more receive their power from solar.

Solar is not a cause, it is a business with real benefits for its customers.

Just ask anyone who installed their solar systems five years ago. Today, many of their systems are paid off and they are getting free energy. Better still, ask the owners of one of the oldest and most respected companies in America who recently announced plans to build one of the largest solar facilities in the
country.

That would be Dow Jones, owners of the Wall Street Journal.

Now we come to “immature.” Again, the meaning is fuzzy. But in Germany, a country 1/3 our size in area and population, they have more solar than the United States. This year, Germans will build enough solar to equal the output of three nuclear power plants.

What they call immaturity our clients call profit-making leadership.

But let’s get to the real boogie man: The one that “costs far more than ordinary power.”

I’ve been working in energy infrastructure for 25 years and I have no idea what the WSJ means by the words “ordinary power.” But, after spending some time with Milton Friedman whom I met on many occasions while studying for an MBA at the University of Chicago, I did learn about costs.

And here is what every freshman at the University of Chicago knows: There is a difference between cost and price.

Solar relies on price supports from the government. Fair enough — though its price is falling even faster than fossil fuels are rising.

But if Friedman were going to compare the costs of competing forms of energy, he also would have wanted to know the cost of “ordinary energy.” Figured on the same basis. This is something the self-proclaimed conservative opponents of solar refuse to do.

But huge companies including Wall Mart, IBM, Target and Los Gatos Tomatoes figured it out. And last year so did the National Academy of Sciences. It produced a report on the Hidden Costs of Energy that documented how coal was making people sick to the tune of $63 billion a year.

And that oil and natural gas had so many tax breaks and subsidies that were so interwoven for so long, it was hard to say exactly how many tens of billions these energy producers received courtesy of the U.S. Taxpayer.

Just a few weeks ago, the International Energy Agency said worldwide, fossil fuels receive $550 billion in subsidies a year — 12 times what alternatives such as wind and solar get.

Neither report factored in Global Warming or the cost of sending our best and bravest into harm’s way to protect our energy supply lines.

Whatever that costs, you know it starts with a T.

All this without hockey stick graphs, purloined emails or junk science.

When you compare the real costs of solar with the fully loaded real costs of coal and oil and natural gas and nuclear power, apples to apples, solar is cheaper.

That’s not conservative. Or liberal. That comes from an ideology older and more reliable than both of those put together: Arithmetic.


Tom Rooney is the CEO of SPG Solar, one of the largest solar installers in the US.

Energy Versus Water

There is a growing awareness that there are two convergent crises facing the world: Energy and Water. Scientific Amercican just launced a dedicated environmental publication this month, Earth 3.0 and the cover story? … ‘Energy Vs Water’.

The article explores the dichotomy between the fact that we need energy to produce water and we need water to produce energy. Both resources are running out. As we are reaching Peak Oil, we also appear to approaching Peak Water. This creates a very interesting dilemma and one which will require no small amount of innovation to solve.
Biofuels, cited as one option to wean us away from petroleum, can consume 20 or more times as much water for every mile traveled than the production of gasoline. Not all biofuels are created equal however, some are worse offenders than others, and the US National Research Council addresses this very well in ‘Water Implications of Biofuels Productions in the United States’.
Electric hybrids are another solution to get away from imported gasoline. But if we switch to electric cars, we will need more electricity and at the moment 90 percent of electricity in the US is generated at thermal power plants, – those that consume coal, oil, natural gas or uranium, and these plants are water hogs. They use vast quantities of water for cooling. The US Army Corp of engineers is currently trying to find a middle ground in an interesting water drama unfolding between the states of Florida, Alabama and Georgia. Part of the problem is that both Georgia and Alabama have come dangerously close recently to having to shut down their nuclear power plants due to lack of water.
The Energy Vs Water article goes on to say that ‘any switch from gasoline to electric vehicles or biofuels is a strategic decision to switch our dependence from foreign oil to domestic water’.
The Concept of Virtual Water
To help assess issues relating to water use and water balance, Professor John Anthony Allan from Kings College London, developed the concept of ‘Virtual Water’. He was awarded the Stockholm Water Prize this year for his work in this area. The idea is that you can calculate how much water there is in, say an apple, not just physically in the apple, but on a life cycle basis, how much water went into growing it, transporting it etc, By doing this with various food items or other commodities, a country could take a view to import ‘water heavy’ items, as a kind of a virtual way of importing water. For instance behind that morning cup of coffee, are 140 litres of water used to grow, produce, package and ship the beans. The ubiquitous hamburger needs an estimated 2,400 litres of water. Put simply, it may be more cost effective to import oranges from a region that has plenty of water than to try and de-salinate water at home to irrigate an orchard. Now that doesn’t always work though, you can’t grow things like oranges in wet damp countries like England.
And herein lies one of the fundamental problems. There is a reason why it is easier to grow 50% of the nations fruit and vegetables in California – it’s warm and sunny. And for this same reason, populations have been moving to the sunshine belt. If we could all live in California and import melons and oranges and strawberries from England, wouldn’t that be great? And you can’t cool a nuclear reactor with virtual water – at least not yet!

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

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

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

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

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

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

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

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

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

The Shiny Copper Penny Plan for Energy and Cleantech

I wrote a piece last week arguing that McCain / Palin was my energy/cleantech dream ticket, and promptly got slammed by my readers on the left (who generally think McCain’s plans for the environment /cleantech investing are nowhere near aggressive enough and that Palin is way too conservative), AND friends on the right (who think that Palin is anti-Big Oil). There were more of the former than the latter since Cleantech Blog has been more of a progressive voice than anything else. I think I have published all the comments that came through on the blog (though not the emails), even those ripping me to shreds.

But pretty much everyone agreed I was crackers for one reason or another. So of course I’ve expanded the discussion, and am opening the floor to you. I am looking for comments that reflect at least one pro AND con for each candidate as the best candidate for energy / cleantech. Comments that only offer pros on one side or the other will be sent straight to the trash can.

Here’s mine to get you started – and while you’ll see my opinion come straight through, attached are the reasons behind it:

Barack Obama – Dubbed the Shiny Copper Penny Plan

His environmental and energy issues page

His stated plan’s objectives (editor’s notes in [brackets])

“Provide short-term relief to American families facing pain at the pump [How, by raising taxes elsewhere to subsidize energy and thereby support increased demand but oppose any increase in domestic production? Our gas prices are already way lower than Europe’s. The best policy I’ve seen to reduce gas prices is corn ethanol, yes the much maligned corn ethanol, which has reduced prices at the pump $0.29 to $0.40 / gallon. That plus CAFE plus domestic drilling, and we may have a viable answer. The real short term answer to high gas prices is break the back of OPEC as a cartel, but NOBODY wants to go there.]

Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future. [Despite the fact that this would likely make me quite rich (I have significant interests in several companies that could milk the hell out of this), I’m not really interested in massive increases in government spending. And let’s be clear, Presidents do not create jobs, you and I do. Oh, and Barack wants to get the US government into the venture capital business in cleantech. On what planet is THAT a good idea?]

Within 10 years save more oil than we currently import from the Middle East and Venezuela combined. [We don’t import a lot of our oil from the Middle East, it’s too far away, we get a large chunk of ours from Mexico and Canada :)].

Put 1 million Plug-In Hybrid cars — cars that can get up to 150 miles per gallon — on the road by 2015, cars that we will work to make sure are built here in America. [I’m a big fan of PHEVs, but right now the technology is just not there yet, despite all my electric car friends. This is definitely a shiny copper penny. I would rather focus on CAFE, car size, and biofuels.]

Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025. [2012 is just around the corner in energy terms, virtually nothing the next President can do would really change our trajectory here. 25 x 25 is a good goal, and probably his best energy plank in my opnion, but he’s short on the details of how to actually achieve it, even at astronomical energy price increases. One main challenge is that to accomplish this, we need more clean baseload (coal, gas, nuke or hydro) to underpin it and lots and lots and lots of new transmission lines – which are 7 to 10 year projects in of themselves. And of course, it depends on what you mean by renewable, right now every state in the US defines it differently.]

Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050. [I’m very pro cap and trade, but Obama’s plan is the high cost, unilateral way to do it, resulting in the most revenues to the government. The other issue here (which McCain will also face), is that even reducing the US impact on CO2 emissions is pretty much lost in the wash if China and India et al don’t commit to some sort of reductions (And of course if we do and they don’t the net effect is to push manufacturing jobs overseas. THAT is why neither the US Senate, the Clinton administration nor the Bush Administration, Barack Obama or John McCain has supported ratifying Kyoto (Hillary used to, then flipped once she figured it out))]”

The Pro

  • Clearly the most aggressively stated energy and environmental plan – if you like all green with costs taking a back seat, Obama is the way to go. But it’s very hard to conceive of cheap energy and aggressive switchs to alternatives.
  • Supports most aggressive climate change proposals out there – would definitely put us in the lead in solving the climate change problem – if you believe that us solving our part of the problem internally is more important than the world working to solve it together.
  • Supports long term not short term incentives for alternatives in general (as does McCain)
  • Would likely spend mega bucks on new energy techology spending and subsidies – great for me personally, bad for you and the country in the near term, possibly good for the country in the long term.

The Con

  • Very limited resume of actually authoring any legislation on energy or the environment
  • No experience in domestic energy policy
  • Anti- drilling (or was until he realized that like two-thirds of Americans support it)
  • Supports climate change plan that would represent a wealth transfer from the central US to the coasts and result in a several hundred billion dollar per year new tax on energy (that’s on the order of the Iraq war size)
  • Picked a VP with no real energy experience
  • Seems to have little respect for the cost of his energy plan to you and I – read Jimmy Carter all over again?

John McCain – Steady Wins the Race

John McCain’s energy page. His stated plan’s objectives (editor’s notes in [brackets])

  • “Expanding Domestic Oil And Natural Gas Exploration And Production – John McCain Will Commit Our Country To Expanding Domestic Oil Exploration. John McCain Believes In Promoting And Expanding The Use Of Our Domestic Supplies Of Natural Gas. [You may not like it, but most Americans do, and underpinning domestic supplies should be a part of every energy policy discussion. Tax the output at the pump if you want, but this country was built on cheap domestic energy, never forget that.]
  • Taking Action Now To Break Our Dependency On Foreign Oil By Reforming Our Transportation Sector – The Nation Cannot Reduce Its Dependency On Oil Unless We Change How We Power Our Transportation Sector. John McCain’s Clean Car Challenge. John McCain Will Propose A $300 Million Prize To Improve Battery Technology For Full Commercial Development Of Plug-In Hybrid And Fully Electric Automobiles. John McCain Supports Flex-Fuel Vehicles (FFVs) And Believes They Should Play A Greater Role In Our Transportation Sector. John McCain Believes Alcohol-Based Fuels Hold Great Promise As Both An Alternative To Gasoline And As A Means of Expanding Consumers’ Choices.Today, Isolationist Tariffs And Wasteful Special Interest Subsidies Are Not Moving Us Toward An Energy Solution. John McCain Will Effectively Enforce Existing CAFE Standards. [I hate prizes. The government shouldn’t be in the l0ttery business, but battery technology IS the ultimate force multiplier in energy and transport. Flex fuel, should be a basic requirement. See above on ethanol’s impact on prices already. CAFE standards, here is our near term transport lynchpin, I’d like to see McCain stronger on this.]
  • Investing In Clean, Alternative Sources Of Energy – John McCain Believes That The U.S. Must Become A Leader In A New International Green Economy. John McCain Will Commit $2 Billion Annually To Advancing Clean Coal Technologies. John McCain Will Put His Administration On Track To Construct 45 New Nuclear Power Plants By 2030 With The Ultimate Goal Of Eventually Constructing 100 New Plants. John McCain Will Establish A Permanent Tax Credit Equal To 10 Percent Of Wages Spent On R&D. John McCain Will Encourage The Market For Alternative, Low Carbon Fuels Such As Wind, Hydro And Solar Power. [Long term R&D tax credit, finally! This is part of a policy that has helped Australia punch outside it’s weight in technology for years. Nukes + clean coal, we may not like it, but it HAS to be done to baseload all those new renewables. Obama will figure this out, eventually.]
  • Protecting Our Environment And Addressing Climate Change: A Sound Energy Strategy Must Include A Solid Environmental Foundation – John McCain Proposes A Cap-And-Trade System That Would Set Limits On Greenhouse Gas Emissions While Encouraging The Development Of Low-Cost Compliance Options. Greenhouse Gas Emission Targets And Timetables: 2012: Return Emissions To 2005 Levels (18 Percent Above 1990 Levels)2020: Return Emissions To 1990 Levels (15 Percent Below 2005 Levels) 2030: 22 Percent Below 1990 Levels (34 Percent Below 2005 Levels) 2050: 60 Percent Below 1990 Levels (66 Percent Below 2005 Levels). The Cap-And-Trade System Would Allow For The Gradual Reduction Of Emissions. [See below, the most practical multi-lateral plan yet devised in the US]
  • Promoting Energy Efficiency John McCain Will Make Greening The Federal Government A Priority Of His Administration. John McCain Will Move The United States Toward Electricity Grid And Metering Improvements To Save Energy. [Investing in the smart grid and smart metering, now there’s an interstate highway style policy I can support. Smart grid is THE key to underpinning a generational shift in our power use or EV fleets. It’s our electric power sine qua non – without which there is nothing]”

The Pro

  • His energy plan is balanced, focuses on the force multiplier’s like R&D tax credits, batteries, and smart grid, and cleaning up cheap domestic resources like gas, coal, nuke, and ethanol, not the shiny copper pennies like a US Venture Capital Fund, PHEVs, and cool sounding names like 25×25.
  • Only candidate to actually author a climate change bill. It gets dinged for not being aggressive enough, but it is MORE aggressive than Kyoto, and probably the most reasonably practical one that’s come through Congress.
  • Picked a VP with lots of domestic energy experience (The state of Alaska is basically an oil company) who while pro drilling is not pro Big Oil.

Con

  • Legislative record on environmental protection issues is generally considered spotty. I’d like to see more balance here.
  • Hasn’t pushed CAFE like I’d like.
  • I’d like to see explicit support for a 10 year PTC (Obama supports a 5 year one)
  • Depending on your position, pro nuclear (which is a very climate change friendly answer, by the way), but often viewed as anti environmental.

So sorry folks, I think McCain’s energy and environmental plan is as spot on as any presidential candidate in a long time. Yes his record on the environment is “spotty”, but energy and environment always involve tradeoffs with economic and technological reality, and I think any balanced plan will look spotty to some.

My rationale for McCain getting the crown on energy and cleantech, because it’s real and focuses on the long term force multipliers that will keep us competitive, clean and safe in the most economic manner, not Obama’s shiny copper penny plan.

In full disclosure for those of you who don’t know me, of my two largest clients, one is an oil company, and the other is an all renewable power company. I have been helping them develop their solar and low carbon strategies and businesses. I have founded cleantech startups myself in superconductors and carbon, and stand to see more financial benefit from Obama’s plan than McCain’s. But that doesn’t make it right.

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 Editor to Alt Energy Stocks, Chairman of Cleantech.org.