Report from Energy Innovation Summit

Last week, many of the leading minds of the cleantech world congregated in suburban Washington DC for the 2012 Energy Innovation Summit.

The Summit is mainly oriented as a showcase of some of the most interesting and promising technologies that have surfaced directly or indirectly as a result of ARPA-E:  the Advanced Research Project Agency for Energy, a subgroup of the U.S. Department of Energy that was launched in 2009.

Of all the cleantech conferences I’ve attended in the past 12 years, and there have been far too many, this was one of the best, for several reasons.

First, most of the speakers were excellent (= interesting + informed).  Often at these kinds of events, the roster is populated by some combination of bureaucrats that in actuality are mid-level paper-pushers and geeks that speak in such granular detail about science or engineering topics that no-one can understand.  Either way, the comments are usually delivered in monotone, to overeager junior audience members busily taking notes they’ll never read and dozing or smartphone-checking senior audience members that have heard most of the same boring nonsense before.  (Cynical, much?  Yeah, I know.)

In contrast, we got to hear from Dr. Steven Chu, the Secretary of Energy, who is arguably the most brilliant cabinet member of all time (having won the 1997 Nobel Prize in physics for the cooling and trapping of atoms with laser light).  Dr. Chu reiterated some of his recent stump speech on the need for technological leadership to maintain/enhance U.S. competitiveness in the global economy, and the risks encountered from the need to stay on the frontier (Solyndra, anyone?)

We got to hear from Dr. Arun Majumdar, the Director of ARPA-E, who is just about as smart and knowledgeable, and perhaps more passionate and dynamic, than Dr. Chu.  Just one nugget from Dr. Majumdar:  the design life of a utility transformer is 40 years, yet the average in-service age of transformers on the U.S. utility grid is 42 years.  (Yet another factor in the drive for the “smart grid”.)

We got to hear from Bill Gates – yes, that Bill Gates – who revealed a depth of insight and concern that one would only expect of someone who had been playing in the cleantech game and fighting the good fight for decades.  Sample observation from Gates:  “Energy innovation in the U.S. is underfunded by at least a factor of 2.”  Gates talked at considerable length about the need for more research in carbon sequestration and in nuclear – noting his interest in TerraPower.

We got to hear from the Fred Smith and Ursula Burns, CEO’s of Fortune 100 companies FedEx (NYSE: FDX) and Xerox (NYSE: XRX), along with Lee Scott, the former CEO of WalMart (NYSE: WMT), talking about how energy technology innovation is critical to these goliaths of business.

I couldn’t attend all of the sessions because of various other commitments, and I purposely avoided sitting in on the remarks of the politicos – including Bill Clinton, Senator Lamar Alexander (R-TN), and Representative Nancy Pelosi (D-CA) – because (a) I’m disgusted with the state of the political environment and discourse in the U.S. these days,  (b) I’m confident that these speakers have arbitrarily-close-to-zero to say that would be useful or relevant to someone trying to actually create value with new cleantech innovations entering the commercial marketplace, and (c) I had better things to do when they were talking.  But, what I did hear from the keynotes and panels I did attend was generally pretty interesting and informative.

The networking at the event was impressive.  Many of the leading cleantech venture capitalists were milling around, along with actually-empowered senior executives of leading industrial corporations sponsoring truly novel stuff in energy technologies.  I only wished the name tags were of a larger font, so I could better see the identities of some of the people I was passing by, knowing that I was missing connecting with someone I really wanted to get to know.

But perhaps the most important reason that the Summit was such a positive event for me was the quality of the technology innovations and innovators that exhibited at the show – spanning from university research projects to start-up ventures to large corporations such as General Electric (NYSE: GE), Boeing (NYSE: BA) and Cree (NASDAQ: CREE).

At times over the years, I feel like I’ve seen or heard pretty much everything in cleantech, which sometimes makes me wonder if everything that could be invented or needed to be invented was already being worked on.  An event like this put lie to this misbelief.  People were talking about exotic/crazy stuff like wireless electric vehicle recharging while roaming.

After just the first day, I could see that there were lots of promising technologies being worked on really big opportunities beyond the set I kept seeing over and over again.  Moreover, most of these initiatives were led by entrepreneurs that were not only committed but also much more competent and capable than the tinkerers that represented most of the cleantech innovation realm a decade or so ago.

My overall impressions of the Summit gave me good hope that we are making real progress in the cleantech world, and that there’s a lot more for me to do and be excited about in the decades to come.  I myself was recharged on the fly.

Environmental Regulation of Coal Power: Train Wreck or No?

Over the past several months — well, years, really — there’s been a lot of to-and-fro about various new environmental requirements that may or may not face coal-fired powerplants.

Some observers have called it a regulatory “train wreck”, arguing that some of the requirements run at cross-purposes to others, or are planned to be sequenced in a manner that are difficult to manage, so that it will be incredibly costly for owners of coal powerplants to comply, and will drive the retirement of a large portion of the U.S. generating capacity.  For this view, see this report from the American Legislative Exchange Council.

In August, the Congressional Research Service released a report largely refuting this view.  As noted in the Executive Summary, “supporters of the regulations assert that it is decades of regulatory delays and court decisions that have led to this point, resulting in part from special consideration given electric utilities by Congress under several statutes.”  Or, put another way, the fix that coal powerplant owners are in is substantially of their own doing.

As Ezra Klein of the Washington Post asks, “Who’s right?” 

Maybe the more interesting take is from Ken Silverstein of EnergyBiz, whose article headline says it all:  “Coal’s Woes Run Deeper than EPA Regs”.  In particular, mining in Central Appalachia is experiencing significant declines due simply to depletion of the lowest-cost reserves there.  Coal production is not only shifting west to larger and cheaper reserves, but is being threatened by low-cost natural gas due in large part to the boom in shale gas production.

Coal is an industry in retreat and on the defensive, ornery — notwithstanding the sector’s efforts to portray itself to the public in a positive light, such as at America’s Power.  The promise of advancements in so-called “clean coal” technologies involving carbon sequestration has largely failed to bear fruit.  The economic supremacy of coal over other fuels is under seige.  Mining safety incidents and mountaintop removal practices continue to give the industry a black eye.

Yes, coal is abundant, and many of the premises about coal’s enduring place in the energy economy put forth by the seminal MIT study “The Future of Coal” no doubt remain true.  But, as tough as it’s been for the nuclear and renewables sectors, it’s also going to be a rough ride for players in the coal industry.  I wouldn’t want to ride that train, whether or not a train wreck ensues.

Failure Is An Option: Cost Is Not No Object

I’m pretty skeptical when it comes to polls about energy issues.  Way too often, the questions are posed in such a way that they practically compel the respondent to answer in a certain way. 

Seriously:  if someone asks you “would you like the energy you use to have less environmental impact?”, are you going to answer “no”?

Valuable polls force people to make tough tradeoffs, as it is under “either-or” situations that true preferences are more accurately revealed.  In the case of energy polls, since most consumers are fundamentally economic decision-makers, questions have to be wedded to the potential dollars-and-cents implications.

And so I put a bit more credence in the results of a recent poll by the investment banking firm Lazard (NYSE: LAZ), in which they asked U.S. voters how much more they were willing to pay for lower-carbon sources of electricity. 

As reported in an article by the Financial Times, the Lazard poll indicates that, on a scale of 1-10 (1 meaning highly unwilling, 10 meaning highly willing), only 21% of respondents reported a score of at least 8 in terms of willingness to pay more for clean energy, with an average willingness to pay of an extra $9.74 on the monthly electricity bill.

Since the average American household spends about $100 per month on electricity, these findings suggest that the average American would be willing to tolerate about a 10% increase in electricity bills.  Implicitly, this means that the average American would be willing to pay about twice as much as they normally pay for electricity — for 10% of their electricity supply.  Given that the average price of electricity in the U.S. is about 10 cents/kwh, the typical American would thus be willing to spend up to 20 cents/kwh for 10% of their electricity to support an accelerated transition to cleaner power generation. 

Unfortunately, many clean electricity generation options — especially those that can achieve large-scale in the many locations not endowed with truly excellent renewable resources — remain at costs at or above 20 cents/kwh delivered to the customer. 

Consequently, it’s unrealistic for clean electricity technologies to supply more than a small portion of the overall power generation portfolio in the U.S. unless and until that fact changes.

In other words, without significant cost reductions, the promise of many clean energy technologies will remain just that:  promise.  Customers — citizens, voters — will not bend over backwards economically to foster a high degree of penetration of new clean energy technologies.  And, we’ll keep more or less doing what we’re doing today.

Against this backdrop, it’s interesting to read the recent report by Google (NASDAQ: GOOG), “The Impact of Clean Energy Innovation”.  Google recognizes that the clean energy movement needs significant cost breakthroughs to become massive in scale, and aims to depict what could happen if such breakthroughs were achieved over the next few decades:  offshore wind down from 20 cents/kwh today to below 5 cents/kwh, solar from 15-20 cents/kwh today to 2-4 cents/kwh, and carbon-sequestered coal generation from ???? (i.e., unavailable) today to below 5 cents/kwh.

As much as anything, the report is a call to unstick the lethargy and break from the status quo do-nothing posture that tends to befall the energy sector.  It’s as if Google aims to goad the energy industry into action, with such implorations as “Technologies that innovate fastest win” — something that Google should know about first-hand.  The closing line of the study couldn’t be any clearer in prodding for acceleration:  “The benefits [of energy innovation] are clear, so let’s go!” 

But Google is fundamentally a nimble and entrepreneurial Internet company, and they are shouting into the din of the massive and bureaucratic energy sector.  It seems naive, to me, that their words will resonate with their (presumably) intended audience.

Alas, along with the rah-rah cheerleading, the Google report’s authors also identify the immense obstacles to the path they themselves promote.  Notably, they confess that “smart policies are needed to drive innovation.”  In today’s toxic political environment, it is difficult to imagine any substantive new policies encouraging further energy innovation being implemented, much less so-called “smart” policies — always difficult to achieve in the best of times.

And, as Devon Swezey of the Breakthrough Institute notes in his recent essay “The Coming Clean Tech Crash” in the Huffington Post, “In an era of heightened budget austerity,  the subsidies required to make clean energy artificially cheaper are becoming unsustainable.”

At bottom, Google recognizes the challenge:  “Coal is very hard to displace on economics alone.”  Coal-fired generation is just so damned cheap (as long as environmental issues are overlooked), that its 50+% market share in the U.S. will be hard to dent materially if the invisible hand of the market is the only hand on the tiller.

Compounding the issue is the return of cheap natural gas.  As Google notes, greater utilization of natural gas generation driven by recent low gas prices would be good in the short-term for reducing emissions, but will slow innovation leading to wider-scale deployment of truly clean (i.e., zero or near-zero emissions) energy solutions truly necessary for the long-term:  yet another example of the type of tradeoffs often faced in the energy sector and indeed in society at large — with the short-term usually winning out over the long-term.

So, ultimately, a cleantech utopia is only achieveable with major technology breakthroughs to reduce costs to politically acceptable levels, yet clean energy innovation is greatly hindered (though not entirely stymied) by many of the forces at work.  This is the playing field on which we in the cleantech sector are faced with playing.  Sound like fun to you? 

Before you opt in, be aware that failure is indeed an option.  Don’t jump into the game thinking that this will be easy, because it will be anything but.  And, the way to score big points in the game is to reduce costs, period.

What If…?

…someone invents an economically-competitive energy storage technology that could be deployed at any electricity substation at megawatt-hour scale?

…the power grid were brought up to 21st Century standards to match the true power quality needs of our increasingly digital society?

…high-speed rail was not the exclusive province of Europe and Asia?

…customers had real choice about electricity supplies, via ubiquitously cost-effective on-site generation options?

…cities and industries pursued viable cogeneration options with real vigor, and companies like Echogen revolutionize the capture of waste heat?

…the use of fracking was reliably paired with other technologies and solid oversight to assure that local water quality is not harmed when shale gas is produced?

…recovering coal and tar sands was undertaken only via mining approaches that don’t leave huge gouges in the earth’s crust?

…all companies involved in the mining and burning of coal would honestly acknowledge and deal responsibly with the environmental challenges associated with coal?

carbon sequestration technologies are more than just a pipe dream and can be widely applied with confidence that no leakage will occur?

…environmentally-responsible technologies were commercialized to produce oil from shale in the Piceance Basin, making the U.S. self-sufficient for years to come?

Joule is really onto something and can produce liquid fuels for transportation directly from the sun?

…fuel cells expand beyond niche markets via continuing improvements in technology and economics to penetrate mass-market applications?

nuclear fusion could ever become viable as a technology for generating electricity?

…new technologies for the production and use of energy in a more environmentally-sustainable matter were responsible for a major share of new jobs and economic growth in the U.S.?

…we stopped sending hundreds of billions of dollars overseas every year to fight both sides of the war on terrorism?

…we stopped subsidizing mature and profitable forms of energy?

…we determined that climate change was simply too big of a risk to keep ignoring and decided to tackle the issue out of concern for the future?

…Americans were willing to pay at least a little bit more for energy to help defray the costs of pursuing much — and achieving at least some — of the above?

…we later found out that we didn’t spend that much more money and also found ourselves living on a healthier planet and in a more fiscally-solvent country with a viable industrial future?

…certain fossil fuel and other corporate interests would cease misinforming the public on many economic and environmental issues related to energy consumption?

…Democrats and Republicans could come together and do what’s best for the country rather than what’s best to strengthen or preserve their party’s political power?

…more Americans cared about the above than who wins American Idol, Survivor or Dancing With the Stars?

An Evening With Ernest Moniz

by Richard T. Stuebi

Last week, the MIT Club of Northeast Ohio hosted a talk at the Great Lakes Science Center in Cleveland by Professor Ernest Moniz, the Director of the MIT Energy Initiative, and a member of the President’s Council of Advisors on Science and Technology.

Over the course of about an hour of spirited commentary and responses to questions, Prof. Moniz made a number of interesting points. A few highlights:

  1. Arguably the key challenge facing the energy sector is the virtual monopoly that petroleum has on the transportation sector. Producing more non-petroleum options/alternatives for transportation will be pivotal to a better future. By virtue of its considerable domestic resource and lower carbon intensity, natural gas is an attractive option — either as a transportation fuel directly (e.g., CNG), or in generating electricity to support electrified vehicles.
  2. One must never lose sight that energy is a capital-intensive commodity industry subject to “complex politics”, which in turn means that the asset base changes very slowly, and (unlike other economic sectors such as consumer products) is driven first-and-foremost by considerations of cost. Technologies exist today to address most of our challenges, but “inconveniently” they are considerably more expensive, which is not attractive to either customers or politicians.
  3. Although more study at greater detail is always helpful, climate scientists have erred in framing public debates via increasingly sophisticated analysis. Over a century ago, predictions were made about carbon dioxide levels and planetary impact that are a good first-order approximation of what is being evidenced today. Rather than being required to prove that human-induced climate change is occurring, the burden of proof should be on others to show convincingly that human-induced climate change isn’t occurring — that second- and third-order effects (such as feedback loops and consideration of other variables) are somehow dominating the first-order linkages between carbon dioxide concentrations and average planetary temperatures.
  4. The exact future impacts of climate change are unknown, but the distribution of probable planet-wide average outcomes is fairly well described. An increase of 2 degrees Celsius by 2050 — what many consider to be the point beyond which planetary impacts become much more problematic — is on the lower-end of the range of possibilities even if global per capita carbon dioxide emissions are cut by 80% from today’s levels. If status quo is maintained, there’s virtually no statistical chance of containing temperature increases to 2 degrees Celsius by 2050.
  5. From a technological standpoint, advancements in all forms of low-carbon electricity generation — nuclear, renewables, and coal with carbon sequestration — will need to be pursued intensively. In addition, because some amount of future climate change is virtually predetermined given our past history, adaptation strategies and technologies should get much more attention. Although premature to employ, and scary because of the principle of unintended consequences, serious research should at least begin on planetary engineering approaches (e.g., deliberate emissions of sulfates) to offset the effects of an increased level of carbon dioxide concentrations in the atmosphere.
  6. The recent climate negotiations at Copenhagen never had much of a chance of producing a meaningful agreement without U.S. Congressional action. Hopefully, Congress will act to pass good legislation on climate change, because the prospect of EPA regulating carbon dioxide and other greenhouse gases as pollutants under the Clean Air Act is “horrific”.

In Prof. Moniz’s view, there is significant urgency for action, and a good chance of a not-very-good outcome. But, all we can do is the best we can do, so we have to move forward in a mood of determined optimism.

Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

Sober Words from DOE

by Richard T. Stuebi

At the recent Western Energy Summit, Dr. Steven Koonin (Undersecretary of Science at the U.S. Department of Energy) made a speech with some eye-opening tid-bits. In this review on GreenTechMedia, Koonin is quoted as saying about the daunting challenges in moving away from fossil fuels:

“We have limited time and limited resources….We cannot let 1,000 flowers bloom indiscriminately.”

“The deployment of inefficient feel-good resources is doubly-bad” because they give the illusion of progress and divert scarce resources.

Coal “is not going to disappear anytime soon,” so much more effort needs to be put into carbon capture and storage technologies.

“If the world wants to seriously address emissions, nuclear will almost certainly have to be part of the future.”

Most interestingly, as reported by the August 3rd issue of the Peak Oil Review, Koonin is said to have opined in his speech that “resource constraints soon will force the Department of Energy to narrow its focus onto the most promising technologies.” If true, this is worrisome because (1) it possibly implies that the DOE isn’t necessarily expecting any major increases in R&D funding — and our national energy R&D budgets are considered by many to be pretty darn low in light of the challenges we face (see, for instance, this report by the Government Accounting Office), and (2) it suggests that DOE will increasingly start picking “winners and losers” — and the public sector is not known for being good at making such judgments.

If anyone can find Koonin’s speech text in full, I’d appreciate getting a copy.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Effective September 1, he will also become Managing Director of Early Stage Partners.

Joule Biotech Sun-Powered Fuel – Biofuel Vs Solar PV

There was much furore recently surrounding the story ‘Joule Biotech comes out of stealth with sun-powered biofuel’.
The premise is that the technology can take solar energy and use it to convert carbon dioxide directly into fuel. A one stop-shop to soak up carbon dioxide and produce a biofuel.
Having dug into it a little, the conclusion I came to is that its not as radical as it sounds. Its basically directed photosynthesis : same principle as oil from algae, or biofuels. The overall efficiencies are likely to be 10 times lower than solar PV processes, but, it in terms of where biofuels are heading, its on the right track…..

The press release included the following:“The SolarConverter captures the sun and is fed carbon dioxide and combine inside where a solution of brackish water and nutrients exist with photosynthetic organisms—secreting the SolarFuel,” Joule’s CEO Bill Sims said, describing the end-product as a hydrocarbon-based fuel, not a biofuel.

Points to Note:
1. This is a solar powered system
2. It’s a Biological system
The input energy into this system is incident solar radiation. This varies from place to place but in North America, a reasonable average year round figure would be 200 Watts per m2. That’s what you have to work with. That is what is referred to as Primary energy. Solar panels are about 15% efficient, so you get 15% of that 200 Watts of incident power as useful energy, converted into electrons, which is the energy carrier. Electricity is a verstaile energy carrier, but difficult to store. Hence why high energy density liquid fuels are so good in transportation. They are an energy carrier, or ‘Secondary energy’. What is described here is the production of a secondary energy carrier via photosynthesis.This is exactly what Oil from Algae is. Algae are fast growing unicellular organisms, certain species of which produce large quantities (50%) of oil as a percentage of the total cell weight. The algae oil is very like diesel, so you can get biodiesel. The Joule Biotech system is using a photosynthetic organism also. They don’t say whether its an algae, plant cell cultures, or some new genetic hybrid, but either way, I dont think they will have improved on millenia of evolution in terms of the net efficiency of the photosynthesis process, i.e. how much of the solar energy the living organism is capable of capturing.
Compared to other plants, the photosynthetic efficiency of algae is very high – almost 3 times that of sugar cane for instance. Compared to solar energy, however, the energy efficiency of algae is very low – around 1 percent, while solar panels have an efficiency of at least 10 percent, and solar thermal gets 20 percent and more.
So the absolute efficiency of the Joule Biotech system at converting solar energy into chemical energy is likely to be similar to algae or other high yield plants.

So why go with Joule Biotech Vs Solar PV?

1. Carbon sequestration – this could be the tail wagging the dog. There is business to be made in tieing up CO2. Overall this is carbon neutral, however, if you take the CO2 from a coal power station stack, there may be some credit to be had.

2. There is a demand for alternative liquid fuels
Even if Solar PV is a more efficient method of capturing solar energy, it produces electricity and we still run our transport fleet on liquid fuels. You could take Solar PV and use the electricity produced to synthesise hydrogen or other chemical fuels such as methyl hydrate, but the overall accumulated losses might make a Joule Biotech type option more favorable.
3. The alternative chemicals produced are likely to be a higher value than the fuels produced.

What Joule Biotech may have, and this is one of the challenges with oil from algae, is engineered a system which works. The challenges are maintaining a pure cell culture on an on-going basis. If you want high yield of a certain product, you need pure cultures. That raises challenges when you try and do it on a large scale, particularly if you need to expose it all to sunlight.
The other way to go is low yield open ponds. It’s a mixed culture, low efficiency, low yield process. You accept you get a lower yield but its cheaper to build. So on a cost per unit of fuel produced it may be the same. Its like the debate between high efficiency PV solar and low efficiency solar. What matters is the unit cost per Watt of capacity. The fuel is free, so low efficiency is fine, the capital cost per watt of installed capacity is key. The other challenge with producing fuel from photosynthetic bio-organisms, is getting the fuel out afterwards. The extraction and purification process. You have cells and what you want is pure fuel. So maybe Joule Biotech have something unique to offer in this regard as well.
Overall in terms of where the biofuels market is heading, Joule Biotech appear to be on the right track. The ability to be able to produce multiple different products, different fuels and different chemicals is key. This allows you flexibility. As the demand or price of one product increases, you can alter your output to match market demand. The future of biofuels appears to be the interlinking of technology platforms to allow the use of multiple feedstrocks, to produce multiple products. Vinod Khosla has invested in a large number of Biofuel companies which all synergise and interlink. In terms of feedstock, Joule Biotech are using carbon dioxide and sunlight. It’s a biofuel with an accelerated path, less steps, from biology to fuel and the option to tailor it to produce different fuels.
Joule’s CEO Bill Sims says that the end-product they produce is a ‘hydrocarbon-based fuel, not a biofuel’. I think that is semantics. They still use a living organism to carry out the chemical synthesis to produce the fuel product.
This means that they have some of the same issues and challenges as other bio-based processes.

1. Cells need phosphorus
I wrote about Peak Phosphorus in a previous blog. This is a big issue. The cells used by Joule Biotech will need nutrients. Phosphorus is a non-renewable resource and one of the challenges for biofuels, first generation and 2nd generation, is that if you are growing a crop, be it switch grass, sugar cane or algae, you need phosphorus. Now in the case of Joule Biotech, they may be able to keep recycling this back into the system and keep a closed loop going, if so, that would be great.
2. Water is required
All living cells need water. Sure, they may be able to function on wastewater, brackish water or saltwater, but you need to provide them with water.
Check out Leave the Algae Alone for an excellent piece on this.
The idea of converting solar energy into chemical energy is an excellent one. Biofuel based processes are one way of doing this. If one could avoid the biology altogether that would be even better. Check out Blue Fuel Energy for some interesting ideas on how to chemically synthesise a chemical energy carrier, or ‘liquid electricity’ using renewable energy. Its still at a very nascent stage, but it stacks up very well as an overall concept.

This post was written by Paul O’Callaghan, founding CEO of the Clean Tech consultancy, O2 Environmental Inc. and lecturer on Sustainable Energy at the BC Institute of Technology.

Peter Huber: Low-Confidence in Low-Carbon

by Richard T. Stuebi

A few weeks ago, I wrote here that it is often a good thing to read and reflect upon intelligently-crafted opinions that differ from those you hold.

A good example is offered by the essay “Bound to Burn” by Peter Huber, a Senior Fellow at the Manhattan Institute. In this thought-provoking piece, Huber makes the following interesting statements about the challenges to be faced in moving to a lower-carbon economy:

· “We rich people can’t stop the world’s 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach….We don’t control the global supply of carbon.”

· “We no longer control the demand for carbon, either. The 5 billion poor – the other 80 percent – are already the main problem, no us. Collectively, they emit 20 percent more greenhouse gas than we do. We burn a lot more carbon individually, but they have a lot more children. Their fecundity has eclipsed our gluttony, and the gap is now widening fast.”

· “Might we instead manage to give the world something cheaper than carbon?….For the very poorest, this would mean beating the price of the free rain forest that they burn down to clear land to plant a subsistence crop. For the slightly less poor, it would mean beating the price of coal used to generate electricity at under 3 cents per kilowatt-hour.”

· “Fossil fuels are extremely cheap because geological forces happen to have created large deposits of these dense forms of energy in accessible places. Find a mountain of coal, and you can just shovel gargantuan amounts of energy into the boxcars. Shoveling wind and sun is much, much harder.”

· “Another argument commonly advanced is that getting over carbon will, nevertheless, be comparatively cheap, because it will get us over oil, too….But uranium aside, the most economical substitute for oil is, in fact, electricity generated with coal….By sharply boosting the cost of coal electricity, the war on carbon will make us more dependent on oil, not less.”

· “By pouring money into anything-but-carbon fuels, we will lower demand for carbon, making it even cheaper for the rest of the world to buy and burn. The rest will use cheaper energy to accelerate their own economic growth. Jobs will go where energy is cheap, just as they go where labor is cheap.”

· “If we’re truly worried about carbon, we must instead approach it as if the emissions originated in an annual eruption of Mount Krakatoa. Don’t try to persuade the volcano to sign a treaty promising to stop. Focus instead on what might be done to protect and promote the planet’s carbon sinks.”

· “Carbon zealots despise carbon-sinking schemes because, they insist, nobody can be sure that the sunk carbon will stay sunk. Yet everything they propose hinges on the assumption that carbon already sunk by nature in what are now hugely valuable deposits of oil and coal can be kept sunk by treaty and imaginary cheaper-than-carbon alternatives.”

By no means is Huber’s writing perfect: the essay is too long by half, runs a too-circuitous path with considerable redundancies, and doesn’t lead to a very satisfying or forceful conclusion.

Along the way, some of Huber’s snide asides are too pessimistic. As an example, he claims “there is no serious prospect of costs plummeting and performance soaring” for solar and wind energy, but there is ample evidence (and lots of activity funded by prominent venture capitalists) to dispute this assertion.

And, Huber’s clearly got some facts wrong. For instance, he talks of $500/ton carbon offsets and 15 cent/kwh wind energy. If you believe these far-too-high numbers, no wonder you reach conclusions that aren’t very favorable to low-carbon energy sources.

Huber has been wrong before. About ten years ago, he and Mark Mills launched the Digital Power Report, which was touting the emergence of advanced technologies in distributed generation and energy storage to revolutionize electricity supply. Although quite compelling and seemingly well-supported, the perspectives they put forth in their periodical were at best far premature – and less charitably, inaccurate or incorrect. After a run of a few years, Huber and Mills wound down the Digital Power Report, presumably because the world wasn’t turning out the way they were predicting.

But, I still think this latest work by Huber is a worthy contribution to the discussion. Most notably, Huber’s concluding call for much more focus on carbon sinks as a no-regrets approach is hard to dispute.

Huber is no dummy. Many of the points he makes along the way are logically sound, and ought to be factored into any strategy for moving towards a lower-carbon economy. As unpleasant as some of the concerns raised by Huber may be, they are nevertheless important to hear to develop a more compelling story that overcomes the objections to thereby mobilize more real movement (rather than just talk) towards a low-carbon world.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become Managing Director of Early Stage Partners.

Carbon Capture and Storage: To Be or Not To Be? Or, To Partially Be?

by Richard T. Stuebi

One of the more contentious questions in the cleantech community is the role of coal in the energy sector of the future. There’s a lot of coal in the world — many decades of supply left — including here in the U.S. It’s pretty darned cheap to mine. So, it would be great to figure out a way to use it in non-harmful ways.

And there’s the rub: it’s a pretty nasty fuel. Putting aside the issue of how to mine coal in an environmentally-acceptable manner, coal is one of the most highly carbonaceous of hydrocarbons, meaning that it generates a lot of carbon dioxide per unit of energy released when burned — much more so than oil or natural gas. As a result, the worldwide use of coal — primarily for power generation — is the largest component of global carbon dioxide emissions, which in turn is the most important of the greenhouse gas emissions contributing to climate change.

In the arena of climate change, coal is therefore the main culprit. Not the only culprit, to be sure, but the main one.

For coal advocates, the first line of defense is to dismiss the climate change issue outright. That tactic is still used, but is becoming increasingly untenable under the Obama Administration, which appears to be remaining steadfast in pushing for climate change legislation.

That leaves the coal industry in the position of promoting new approaches for coal utilization wherein the carbon dioxide produced from combustion is somehow prevented from being released into the atmosphere. The most well-known of these approaches is termed carbon capture and storage, or CCS.

The idea behind CCS is intellectually appealing, if a bit fantastic: extract the carbon dioxide from the exhaust stream of a powerplant, and inject the carbon dioxide underground in such a way that it stays entrained in the earth. The technological concepts are pretty well-understood.

Alas, as this article in the March 7 issue of The Economist shows, the main challenge associated with CCS is the cost. CCS has never been undertaken at a large-scale at any powerplant, much less attempted for a fleet of powerplants, because the capital and operating costs of a CCS system are seen to be so high as to be daunting.

As with many things in life, a half a loaf is better than none, and so may be the case with CCS. As indicated in this article in the March/April issue of Technology Review, perhaps the economic challenges can be tackled by biting off something less than 100% carbon capture and storage.

Many environmental advocates can’t stand the concept of coal utilization in any guise, and decry the use of the phrase “clean coal” as an oxymoron. I don’t think we can afford idealistic dogma, but neither do I think we can afford the environmental cost of unlimited conventional coal use. There’s got to be a middle-ground somewhere.

In the energy and environmental realm, I have consistently found in my 23 years of experience that there is rarely a perfect solution to any situation, and everything involves tradeoffs. Partial CCS might yield an outcome in which neither the green community nor the coal/power industry get all of what they want, but produces a far better result than the “worst-case” scenario each side fears.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director at Early Stage Partners.

Another Way to Skin the Carbon Cat

by Richard T. Stuebi

The challenges associated with climate change are so daunting — so much emission reductions to achieve, so much money to invest in energy efficiency and low/zero-carbon energy technologies and infrastructure, and so little time to do it — that we’re going to have to be awfully creative.

In the past, I’ve blogged about geoengineering the planet, putting stuff up in the atmosphere to block incoming solar radiation, thereby reducing the energetic input to the planet from the sun. This week, I take note of an article entitled “Eating Carbon” in the November 15 issue of The Economist.

It appears that the Earth is endowed with massive reserves of a particular type of rock called peridotite, which seems to be able to react quickly with carbon dioxide to produce carbonates. One thought is to grind up the peridotite and expose it to exhaust streams, but a new approach profiled in a paper (see abstract) in Proceedings of the National Academy of Sciences by Peter Kelemen and Juerg Matter of Columbia University involves injecting carbon dioxide in mass quantities (e.g., from powerplants) into the peridotite strata, leaving inert byproducts in-situ underground.

The big challenge appears to be depth: the peridotite is 20 km down. But, the upside appears to be substantial, with seemingly much more carbon dioxide sequestration capacity than the caverns and reservoirs mainly being considered in the carbon capture/sequestration (CCS) community — and with no potential for leakage.

Apparently, peridotite is not the only rock that “eats” carbon, as researchers are now investigating volcanic basalt as well. With luck, perhaps geologists can find a good rock type that is both quickly reactive, highly plentiful and dispersed on the planet, and relatively cheap/easy to access.

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

ConocoPhillips’ CTO on the Future of Cleantech and Energy Technology

I had the opportunity recently to chat with Stephen Brand, the chief technology officer for ConocoPhillips (NYSE:COP), one of the largest major oil companies in the world. I have a long personal history with the ConocoPhillips organization. One of the first IPOs I ever worked on was the Conoco, Inc. IPO when DuPont spun it out in the late 1990s. At the time (pre dotcom) it was the largest IPO on record. My uncle worked for Phillips Petroleum on the other side of the company for 30 years. And for the last several years I have advised parts of the ConocoPhillips company in its emerging technology and alternative energy groups.

ConocoPhillips has always been the quietest of the majors when it comes to the press, so I was delighted when Stephen agreed to speak on the record on energy technology, cleantech and alternative energy technology with Cleantech Blog. He recently also headlined the Rice Alliance for Technology and Entrepreneurship forum. Stephen himself came out of the Phillips organization from the exploration and production side of the business, originally starting as a geologist.

ConocoPhillips has always been a quiet leader, with technology budgets at levels swamping all but the largest venture capital organizations in cleantech, and was the first oil company to join US Climate Action Project and are part of the Carbon Disclosure Project. They are also quietly repositioning the company around a global energy strategy – not just oil.

This move tracks the history of the company. While one of the oldest oil companies in the world, 20 years ago Phillips was not generally considered a major player in the oil industry, and given the changes driven through M&A in the last 15 years, which Amoco, Mobil, Arco and numerous other massive organizations did not survive as independent, it certainly was not clear the Phillips would become one of the Tier 1 companies. But today, at $178 Bil in assets, it clearly is. The current CEO, Jim Mulva, took over as chief executive about 10 years ago, and the moves the company has made, including deals that brought Conoco, Inc. and Burlington into the fold, helped vault the company well above its historical presence. In some respects COP is positioned to do the same thing in energy and technology more broadly. Especially given that its annual capital expenditures of $15 Bil are on the same scale as the whole solar industry revenues or the global venture capital sector, and in one underreported move in the last couple of years they doubled annual technology spending to $500 mm.

I put a few questions to Stephen during our discussion to outline what all of this means.

Stephen, how important do you see technology to the future of the oil patch in general?

Neal, by 2030, global energy demand is forecast to be about 50 percent higher than it is today, even with improvements in energy efficiency. Emerging technologies will help us meet the world’s growing energy needs as we look for oil and natural gas in ever more challenging environments – for example the deepwater Gulf of Mexico and offshore Arctic – and in more challenging forms such as oil sands and gas hydrates. Innovation also will help us to minimize the impact on our environment and reduce greenhouse gas emissions.

In the 1980s/1990s oil companies under oil price pressure cut back on R&D drastically as WTI prices fell down to $10, was that a mistake in hindsight, even though it made financial sense at the time? Besides energy prices, what else has changed?

We take a long-term view of our business which enables us to stay focused on results. We apply a consistent, systematic business model with the flexibility to adapt to changing business conditions around the world, but we understand that we need to take a long-term perspective of for innovation that will develop future business opportunities. ConocoPhillips is committed to invest in people, technology and projects that allow us to safely, reliably produce oil, natural gas and to develop the next generation environmentally superior fuels to sustain our economy and way of life.

In which area is technology most important for the energy business?

Technology is important in every segment of our business. It is one of the most important tools we have for finding and producing new sources of oil and natural gas, but also for developing and delivering energy in new, more efficient ways. For example:

New exploration technology – 3-D seismic – allows us to detect undersea oil and gas deposits at great depths with minimum impact on the environment;
Breakthroughs in lithium-ion battery technology greatly improve the safety, power and reliability of batteries for hybrid vehicles, thereby improving fuel economy and reducing emissions;
A “coal-to-gas” technology that allows the use of this abundant resource in an environmentally superior manner;
Innovations in carbon capture and storage will allow us to address concerns regarding global climate change.

You have announced the long term transition of ConocoPhillips from an integrated oil company to a global energy company, what does this mean, and how does that apply to technology?

Yes, ConocoPhillips is not looking just at oil for the future of our company, but energy broadly. Technology is a key part of that transition. Any moves into new markets for any company requires access to innovation and technology. The ConocoPhillips Technology group has more than 350 scientists and engineers – 50 percent of them with Ph.D.s. These are the people driving our innovations and our transition as we become more technologically sophisticated. One of the most significant aspects of that transition, I believe, will be our ability to recruit and retain the kind of scientists and researchers who can develop the next generation of energy. That’s one reason why ConocoPhillips is creating a new 400 acre global technology center outside of Denver, Colorado and why budgets have gone up.

I’ve followed the Company for a while, but can you share some perspective on COP’s technology budgets are with our readers, and how and where they have been growing?

We have doubled our research and development spending. In 2008, we invested $500 million in technology – technologies that improve our existing assets, as well as those that create new emerging businesses. We expect that figure to grow in the future. As I mentioned, our global technology center, projected to open in 2012, is another indication of our emphasis emerging technologies and their role in the future.

In the last several years ConocoPhillips made a number of moves in technology, including a much reported biofuels effort, but also launched a groundbreaking lithium ion battery electrode business called CPreme. But more broadly what technology areas is COP interested, and how might you rank them?

Safety is always our top priority; and we believe safety is very much tied to operational reliability at all our facilities, which is large part a technology problem. But in addition to using technology to enhance operational reliability at our core upstream and downstream facilities, we’re focused on identifying breakthrough technologies that can deliver energy while lowering greenhouse gas emissions – next generation energy including alternatives like biofuels and renewables like solar and geothermal; and technologies to reduce industrial CO2 emissions.

Are you looking to do more in-house R&D or external partnerships?

Both. We are actively recruiting for our own efforts, and to foster technology innovation, we have several co-ventures with Iowa State University, the Colorado Center for Biorefining and Biofuels and the U.S. Department of Energy’s National Renewable Energy Laboratory. We also established the ConocoPhillips Energy Prize, in partnership with Penn State, to recognize new ideas and original, actionable solutions that can help improve the way our country develops and uses energy. The first awards will be announced in October.

Okay, so then do you see COP making technology acquisitions at any time in the future, or will it all be homegrown?

We are supporting innovation inside and outside the company. While we have not made any technology acquisitions, being open to new concepts and innovation means that we would not rule that out.

As far as the internally grown R&D efforts, you’ve had a major expansion in the works for some time but hasn’t gotten much press. Can you share a little about the upcoming Denver technology center?

Our Louisville, CO, technology and learning center outside of Denver, slated to open in 2012, will be a center of innovation for us. In Louisville we will have a purpose-built facility where we can work to explore new and expanded research and development opportunities in upstream, downstream, environmental, renewable and alternative technologies. This is also part of our push to recruit and retain top talent.

Oil and gas is not the only core technology area for the company. COP has had a long history in materials technologies, and most people don’t know has developed some of the most innovative lithium ion battery technology in the world. Can you talk some about Cpreme?

Our CPreme ® graphites are the highest-performing anode materials currently available for lithium-ion batteries. We are rapidly scaling up to meet growing transportation demand. We are also developing high performance cathode material to help reduce the cost of batteries, while meeting demanding automotive industry performance standards. This product will be available soon for testing by battery manufacturers, and we have begun commercializing the technology – not only can we develop new technologies but we can move from R&D to the commercial side.

And the COP biofuels program has gotten lots of press, what can you share about that?

We are engaged in development and production of new biofuels that have a better environmental footprint than existing sources. We currently produce renewable diesel fuel at our Whitegate refinery in Ireland using vegetable oils as a feedstock, and are testing the process at our Borger refinery in Texas as part of our arrangement with Tyson Foods to utilize by-product animal fat as a feedstock. We are also doing research – internally and outside the company – on new biomass fuels. We have a joint development agreement with Archer Daniels Midland to develop fuels from agricultural wastes and a relationship with Iowa State to research all phases of biofuels. We are also a founding member of the Colorado Center for Biorefining and Biofuels, a cooperative research and educational center devoted to the conversion of biomass to fuels and other products and where we will be studying the prospects for algae in biofuels development.

What else do you see COP looking at alternative energy? Solar? Wind?

We look at those innovative alternatives where there is potential for technology to make a significant breakthrough. With our emphasis on research and development, alternatives like solar, geothermal, clean coal and battery technology are where we put our efforts, in addition to moving forward on renewables like biodiesel and cellulosic ethanol.

And I should ask before I let you go, when exactly did COP decide to create the position of “CTO”? That’s not a typical oil company title.

Well Neal, officially I’m the senior vice president for Technology. ConocoPhillips created the position in 2007 to better centralize and coordinate research and development (R and D) efforts that had always gone on in different parts of the company. This focus on R and D allows us better pursue projects that help strengthen energy security and to better allocate financial resources to invest in new technologies that reduce the environmental impact of our operations.

Stephen, thanks for finally coming on the record with us. It is exciting to see what’s going on.

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

Into the Blue

by Richard T. Stuebi

Last week, the International Energy Agency released a study entitled Energy Technology Perspectives 2008, in which the agency estimated the shifts in the world’s energy system required to reduce CO2 emissions substantially.

In their so-called “BLUE” scenario (I haven’t figured out what “BLUE” refers to), a 50% CO2 reduction from 2005 levels by 2050 — what many scientists believe is about what needs to occur to stabilize the climate — is only achievable by tackling emission reductions that have a marginal cost of over $200/ton CO2. Ouch!

Even more provocatively, IEA estimates that the BLUE scenario would imply a widespread move to near-zero carbon buildings and the deployment a billion electric/hydrogen vehicles plus annual investments between 2010 and 2050 of 55 coal plants with carbon sequestration, 32 nuclear plants, 17,500 utility-scale wind turbines, and 215 million square meters of solar panels. By their accounts, this represents $45 trillion of investment above and beyond business as usual.

In IEA’s words, “BLUE is only possible if the whole world participates fully” in shifting to “a completely different energy system.”

Does anyone doubt the magnitude of the CleanTech challenge/opportunity in the coming decades?

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

The Status of Carbon Sequestration

by Richard T. Stuebi

At a recent symposium on climate change solutions at Oberlin College, I heard a presentation by David Ball, who leads the Midwest Regional Carbon Sequestration Partnership (MRCSP) at Battelle Memorial Institute in Columbus.

His presentation was a fascinating collage of facts and observations about the status and prospects for in-situ sequestration of carbon emissions from coal powerplants and other large point sources. To wit:

CO2 must be sequestered deep underground to avoid cross-contamination with water aquifers, and also to find the low-density “spongy” strata underneath the impermeable “caprock” strata. This tends to be on the order of several thousand feet below the surface. In order to keep the CO2 underground at these depths, given the high hydrostatic pressures that pertain so far below the surface, the CO2 must be compressed to approximately 100 atmospheres before injection. No wonder the energy/capacity penalty associated with carbon capture/sequestration is so significant!

The average coal powerplant emits about 24,000 tons per day of CO2. Meanwhile, the largest pilot project attempted to date in the U.S. for carbon sequestration has only dealt with a volume of 10,000 tons per day. In the North Sea off of Norway, the carbon sequestration effort led by StatoilHydro (NYSE: STO) at Sleipner has been sequestering about 2800 tonnes per day since 1996. In other words, carbon sequestration has not yet been performed in anywhere near the volumes associated with powerplant emissions.

Notwithstanding the significant volumes of CO2 emitted in the upper Midwest from our fleet of coal generation and large industrial facilities, there is enough regional underground sequestration capacity to hold “hundreds of years’” worth of CO2 emissions. This was news to me: I had heard concerns that the carrying capacity of the deep underground reservoirs suitable for sequestration would be small relative to our current emissions.

As with many of the cleantech challenges, carbon sequestration is not a question of if something can be technically done. Rather, it’s a question if it can be done at an out-of-pocket cost that will be acceptable to politicians and their constituents.

Recent conversations I’ve had with a Norwegian company named Sargas, which is developing a 95% carbon capture technology applicable to pressurized fluidized bed boiler combined cycle power generation facilities, indicates all-in costs (including capital recovery and returns) of under 10 cents/kwh, perhaps to as low as 7-8 cents/kwh. This isn’t too bad, but I suspect that the costs will have to proven at lower levels (or energy prices are otherwise going to have to rise much further) before many in the U.S. are assured that the potential economic impact of climate legislation won’t be severe.

And, of course, sequestration doesn’t address any of the concerns associated with mining the coal to begin with. For some ardent environmentalists, that makes coal unacceptable, even with cost-effective carbon sequestration. That said, practically speaking for voters and officials alike, it’s hard to overlook such an inexpensive and domestically abundant fuel.

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

FutureGen Stalled?

FutureGen is the major US Department of Energy backed effort to pilot a technological solution to prove that carbon capture and sequestration from coal fired power plants is possible. At a slated price tag of $1.5 Billion ($1 Bil estimated originally, now estimated at $1.8 Billion), it is one heck of a science project – but one that sorely needs to be done.

Now that project appears to have hit a snag. While the site the consortium picked to build the project was selected in December as Mattoon, Illinois, after a short delay in responding, the DOE is now hesitating to give formal approval – their Record of Decision.

The CEO of the FutureGen Alliance, Michael Mudd, seems confused as to why, though cost overruns, disagreements about the scope and technological objectives, and objections to moving to fast for good practice have been suggested.

After thinking about it this morning, I had a few initial reflections:

  1. We are a nation of massive coal reserves and 50% of our power comes from coal generation. Investing in clean coal technology should definitely be a prime DOE objective. let’s keep our comparative advantage in energy.
  2. While CCS is likely to be an expensive way to abate greenhouse gases, if we are going to solve the global warming problem, we are going to need help from everything and the kitchen sink. Pilots exactly like this need to be tried.
  3. At the kind of price tag and scale up risk we are talking about with CCS, government research support and funding is vital.
  4. On a practical level, the Department of Energy is 74% of this project. I really do not understand why there should be any miscommunication. He who writes the checks makes the call. If they have real concerns over cost overruns, technology, or management, make the changes and get going.

There, I said it. Now let’s just get it done, people.

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, Chairs, and a blogger for the CNET Cleantech Blog.

Powering the Planet

by Richard T. Stuebi

“Powering the Planet” is the title of an extraordinary speech that is regularly given by Nate Lewis, Professor of Chemistry at CalTech. It is a bit long and detailed, but very much worth reading, as it elegantly frames the scale of the worldwide energy/environmental challenges to be faced in the coming decades.

The gist of the presentation is that aggressive pursuit of energy efficiency is critical — but we still need to supply the remaining human energy requirement in some carbon-free fashion, which leaves us relatively few viable options:

  • Nuclear power, which concerns Lewis not for safety/security reasons but because of inability to expand nuclear utilization quickly/sufficiently to meet the world’s needs
  • Carbon sequestration of fossil fuel burning, which Lewis says may not be available in time or at the volumes necessary to have significant beneficial impact on climate change
  • Hydro, geothermal, wind and ocean energy, which are all fine in Lewis’ view, but inadequate in scope to supply global energy demands
  • Bio-based energy, which Lewis finds to be highly inefficient and therefore unlikely to be able to provide more than a small fraction of worldwide energy requirements

This leaves solar energy, which Lewis concludes is the best hope for the planet — technologically known to work, scalable with no binding supply limitations, at potentially reasonable economics with continued advancement. Then Lewis closes with the clincher: if we’re going to succeed with solar energy, our priorities need to change:

“In the United States, we spend $28 billion on health, but only about $28 million on basic solar research. Currently, we spend more money buying gas at the pump in one hour than we spend funding basic solar research in our country over an entire year. Yet, in that same hour, more energy from the sun is hitting the Earth than all of the energy consumed on our planet in that year. The same cannot be said of any other energy source.”

‘Nuf sed.

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

2007 Roundup

by Richard T. Stuebi

As has become my custom, with the year drawing to a close, I now look in the rear-view mirror and try to distill what I see. In no particular order, here are my top ten reflections on 2007:

1. Popping of the ethanol bubble. Not long ago, it seemed like anyone could get an ethanol plant financed. Now, no-one will touch them. Why? Corn prices have roughly doubled, and producers can’t make money selling ethanol into the fuel markets when having to pay so much for feedstock. Along with the increasing realization that public policies so far to build ethanol markets has largely been for the financial benefit of big agri-businesses such as Arthur Daniels Midland (NYSE: ADM), ethanol has now become a dirty word to many. Progress on cellulosic ethanol technologies may not happen fast enough to redeem seriously diminished public perceptions about ethanol generally.

2. Continuing photovoltaics bubble. For illustration of this phenomenon, let’s take a look at First Solar (NASDAQ: FSLR). Nothing whatsoever against the company; indeed, they make a very fine product. It’s just that their share price has increased by a factor of 10 — from $27 to nearly $280 — in one year. At current levels, the company’s market cap is $20 billion, at a P/E ratio of over 200. I know the solar market is hot, but geez, c’mon. A 10x return in one year on a publicly-traded stock is simply not supposed to happen.

3. Increasing costs for wind energy. For many years, wind energy has become more competitive, as the industry matured and production efficiencies were tained. However, with increasing prices for virtually all commodities (e.g., steel, copper, plastics) and a weakening dollar against the Euro (note that most turbines are made in Europe), the economics of wind are unfortunately moving in the wrong direction right now.

4. Gore as rock star. First, an Oscar for An Inconvenient Truth. Then, the Nobel Peace Prize. To top it off, becoming a partner at top-notch venture capital firm Kleiner Perkins. What next for the what-could-have-been 43rd President? Whatever it is, at least the cleantech sector now has its iconic poster-child.

5. Cheers to Google. Google (NASDAQ: GOOG) has gotten into the cleantech game in a big way by creating an initiative with the mission to develop and launch renewable energy technologies that produce electricity more cheaply than coal. Once that aim is achieved, renewable energy will rapidly become ubiquitous, and we really will start getting on a path of serious carbon emission reductions.

6. Death of the incandescent lightbulb. Early in 2007, Australia led the way to ban incandescents, to force a shift to more energy efficient lighting technologies (fluorescents for now, perhaps eventually LEDs). Amazingly quickly, the U.S. followed suit, passing an energy bill by year-end that effectively phases out incandescents by 2014. This should have a major energy efficiency impact, and yield a big cut in greenhouse gas emissions, in a relatively short amount of time.

7. Tightening CAFE — finally! After decades without change, the U.S. Congress finally acted to impose more stringent corporate average fuel economy (CAFE) standards for auto/truck manufacturers. The main milestone is a 35 mpg combined car/light-truck standard by 2020. For the first time, trucks are now part of the CAFE equation, closing the loophole that helped propel SUVs to prominence. Strengthening CAFE is probably the most important thing that American politicians could do to actually make a meaningful dent in reducing dependence on Middle Eastern oil.

8. Uncertain future for coal. On the one hand, MIT released a major study entitled “The Future of Coal” that compels a radical R&D push to commercialize technologies for carbon capture and sequestration (CCS), underscoring the reality that coal-fired electricity generation is going to be a major factor for a long time. On the other hand, I don’t see any such coal R&D push actually happening, nor even that much progress on CCS. A recent statement by the U.S. Department of Energy concerning its oft-touted FutureGen program for piloting CCS technology indicates a possible retrenchment. Meanwhile, Pacificorp — which is owned by Warren Buffett’s legendary holding company Berkshire Hathaway (NYSE: BRKA and BRKB) — recently cancelled a coal CCS project in Wyoming, with a spokesman quoted as saying that “coal projects are no longer viable.” Ouch.

9. Oil at $100/barrel. Starting the year at about $60/barrel and then promptly falling to near $50, oil prices increased steadily from February to November, reaching the high-90’s. I suspect we’ll see $100/barrel sometime in 2008; I don’t suspect we’ll see oil below $40/barrel very much anymore. Even at prices not long ago considered absolutely stratospheric, it appears that there’s been very little customer/political backlash so far: the world doesn’t seem to be ending for most Americans.

10. Serious dollars betting on energy technology. There’s been a lot written about the big surge in venture capital invested in new energy deals. I find even more intriguing the increasing amount of corporate and public sector investment in new energy R&D. As perhaps the most prominent example, in the U.K., the government has pledged up to $1 billion over the next 10 years in matching support to private investments in the Energy Technologies Institute, which includes the participation of such leading corporate lights as BP (NYSE: BP), Shell (NYSE: RDS.A and RDS.B), Caterpillar (NYSE: CAT), Electricite de France (Euronext: EDF), E.ON (Frankfurt: E.ON), and Rolls-Royce (London: RR.L). That’s a lot of money and corporate weight in the mix. I can’t imagine that such an initiative will produce nothing of use.

Best wishes to you and yours for 2008. Let’s hope it’s a good year, even better than the one wrapping up.

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

Policy Progress in the Midwest

by Richard T. Stuebi

When it comes to clean energy, it’s no secret that the Midwest U.S. far lags beyond the East and West Coasts. This is because, on the coasts, public policy far more aggressively promotes advanced energy. The Regional Greenhouse Gas Initiative (RGGI) in the Northeast and the Western Climate Initiative in the West are regional emission-reduction compacts that will drive significant adoption of renewable energy and energy efficiency. Correspondingly, much of the future advanced energy industry is emerging on the coasts, getting established to serve local markets, while the Midwestern industrial base largely hollows out and stagnates.

A few weeks ago, the Midwestern Governors Association (MGA) began to take steps to close the gaps. The Governors of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Ohio, South Dakota and Wisconsin, along with the Premier of the Canadian province of Manitoba, met to discuss shared energy challenges. The result: two pacts that start to lay the groundwork for regional collaboration and commitment to energy/emissions reductions.

The Energy Security and Climate Stewardship Platform sets significant goals in four areas:

  1. Energy efficiency: electricity demand reduced by 2% by 2015, 2% per year thereafter
  2. Biofuels: 1/2 of regional transportation satisfied by biofuels and other low carbon fuels by 2025
  3. Renewable energy: 30% of regional electricity supply from renewables by 2030
  4. Coal with carbon sequestration: all new coal plants with sequestration by 2020, all plants in fleet by 2050

The Energy Security and Climate Stewardship Platform also proposes six areas of regional collaboration:

  1. Carbon management infrastructure: for transporting and storing CO2 in a coordinated fashion
  2. Bioproduct procurement: to establish a common marketing/sales framework for bioproducts
  3. Electricity transmission: to expand transmission to accomodate greater amounts of renewables (especially wind)
  4. Renewable fuels infrastructure: for transporting biofuels and other low carbon fuels
  5. Bioenergy permitting: to avoid duplicating or conflicting efforts in various jurisdictions and arrive at common standards
  6. Low carbon energy integration: to demonstrate the potential to harness multiple forms of advanced energy synergistically

Lastly, some of the Midwestern governors signed the Greenhouse Gas Accord, which commits the signatories to establishing targets and timeframes for greenhouse gas reductions on the order of 60-80% reductions by 2050, along with a cap-and-trade mechanism for reaching these targets.

Note that only some of the Midwestern governors got on board with the Greenhouse Gas Accord. Signatories were Iowa, Illinois, Kansas, Michigan, Minnesota, Wisconsin, and Manitoba. Indiana, Ohio and South Dakota only opted for “observer” status — whatever that really means.

A spokesman for Ohio Governor Strickland was quoted by Gongwer in saying that “the governor supports the Midwest states’ effort to move forward in the way outlined in the agenda, but Ohio is not in a position today to participate actively in [the Greenhouse Gas Accord].” I am compelled to ask: what exactly about Ohio’s current energy situation is materially different than, say, Michigan (which signed the Greenhouse Gas Accord)?

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

To Coal or Not To Coal?

by Richard T. Stuebi

A number of people recently have contacted me for my perspective on a large new coal powerplant being considered here in Ohio.

The plant is proposed by American Municipal Power of Ohio (AMP-Ohio), a nonprofit wholesale power supplier that provides electricity to several municipal utilities in Ohio, including Cleveland Public Power (CPP).

The implicit question is whether it’s a prudent course of action for AMP-Ohio, and for its clients such as CPP, to commit to building a new coal plant in a world in which climate change appears to be accelerating, and in which future constraints on carbon emissions to combat climate change will be relatively more burdensome for utilities that rely upon coal for power generation. Many environmental advocates clearly think that this proposed coal plant is just plain a bad idea.

I lunched last week with CPP Commissioner Ivan Henderson to get a more detailed view of CPP’s plans for subscribing to a portion of AMP-Ohio’s new coal plant. And, from my discussions with Commissioner Henderson, it appears as if there are two underreported aspects of CPP’s plan that merit consideration before objections are lodged.

First, CPP’s go-ahead to their share of the AMP-Ohio coal plant is contingent upon the results of an independent assessment by an engineering consultant (to be selected) of the viability of implementing the ECO2 CO2 carbon capture technology developed by Powerspan Corporation of New Hampshire. This technology, essentially a CO2 scrubber, is designed to remove 90% of CO2 emissions from the plant’s flue stream, and is being tested in pilot scale at the R.E. Burger powerplant owned and operated by First Energy (NYSE: FE). If the assessment indicates that the Powerspan ECO2 CO2 scrubber technology is not-ready-for-primetime, CPP is out of the deal.

Second, assuming the new coal plant is built, AMP-Ohio is committed to retiring its 1950’s vintage Gorsuch coal powerplant. Clearly, replacing an old relic with a new plant benefitting from 90% CO2 capture will lead to substantial CO2 emission reductions, relative to the status quo.

Thus, there is more to the story than might initially appear to the casual reader. Assuming that both of the above conditions apply, the construction of this new coal plant is actually a good idea, not a bad idea. The moral of the story is that environmental advocates need not have a rabid knee-jerk reaction against new coal plants, if new coal plant construction results in substantial CO2 emission reductions.

Make no mistake: I love wind energy and photovoltaics. However, they only provide intermittent sources of generation. On the electricity grid, lacking truly economic large-scale electricity storage, wind and PV cannot fulfill the role of dispatchable (a.k.a. “firm”) power.

I also love energy efficiency, and we should all do more of it. Energy efficiency can reduce our electricity generation requirements considerably. Ultimately, though, in our current society, we still will need some form of firm generation.

Coal power with 90% CO2 capture fits that bill pretty darn well. If the Powerspan technology works as advertised at reasonable economics, it might be a whole lot cheaper and more quickly available than zero-emission baseload technologies, such as IGCC with carbon sequestration or advanced nuclear designs. In which case, Powerspan is a company to watch.

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

Hydrogen Energy

by Richard T. Stuebi

Whenever someone mentions “hydrogen” to me, I immediately think of fuel cells. So, when someone mentioned to me in passing the other day something about BP (NYSE: BP) and hydrogen in Southern California, I was really confused: I didn’t think that BP was doing much with fuel cells these days.

Now I understand. In May, BP announced (press release) that it has partnered with mining-giant Rio Tinto (NYSE: RTP) to form a joint venture, named Hydrogen Energy, that has licensed integrated gasification combined cycle (IGCC) technology from GE (NYSE: GE) and will develop IGCC projects involving carbon sequestration — and one of its first projects will be a 500 megawatt facility located adjacent to BP’s refinery in Carson, California. (project description)

Hydrogen Energy’s efforts therefore have nothing to do with fuel cells. Hydrogen is simply the main constituent of the syn-gas produced from the gasification of the input fossil fuel (in Carson’s case, petroleum coke), which will be combusted in a conventional combined cycle for power generation.

A few observations occur to me from this development:

1. The selection of the L.A. Basin of California for one of the first projects is extraordinary. It’s hard enough to permit a new office building in Southern California, much less a 500 megawatt powerplant that is more akin to a refinery. Then too, with California’s climate initiatives, placing any new industrial infrastructure in-state has to be massively challenging. I would have guessed someplace like Texas for one of the early IGCC plants — easy to get things done there. The Carson IGCC project is only possible because the gasification step produces relatively pure streams of by-products that can relatively easily be diverted from being emitted into the air — including CO2, which will be pumped underground. So, the Carson location for an early project is great PR not only for all the corporate parties (“We’re producing clean domestic energy for California”), but for the state of California too (“See — we’re not anti-energy, we support energy businesses and new energy projects.”).

2. The sequestration of the CO2 will occur in the Southern California oil/gas fields, which are very mature and can thus benefit from enhanced oil recovery (EOR) techniques to pressurize the underground reservoirs and thereby improve yields. The increase in oil/gas production, worth a lot at current energy prices, helps offset the costs of CO2 capture and pumping. As more carbon sequestration projects occur, I expect to see many of them in areas with old producing fields that can benefit from EOR, such as Pennsylvania, Ohio, West Virginia, Kentucky, Illinois and so on. Oh, coincidentally, these states have lots of coal to burn in the IGCCs.

3. According to the press release BP partnered with Rio Tinto in order to obtain access to Rio’s
coal mining/extraction expertise. In this context, the selection of Rio makes sense: like BP, it too is a global colossus of a company, and gargantuan corporations tend to work best with partners of similar size. If other big oil companies want to follow in BP’s footsteps to pursue IGCC with a coal company as partner, there will be few players in the coal industry of similar heft. Indeed, I wonder if one way to view this partnership as BP moving more into coal — and if other oil majors will increase their coal activities?

4. The naming of the partnership as “Hydrogen Energy” is an interesting choice. I used to think that the “hydrogen economy” hype of a few years ago had produced a semantic burden to be avoided rather than embraced. But, here come BP and Rio Tinto — no dummies — deliberately positioning their venture not as “carbon-free” or “zero emission” or “clean coal”, but rather as “hydrogen”. This has significant branding implications. If Hydrogen Energy becomes a success, hydrogen as an energy source (or, more properly, an energy storage approach, or energy “carrier”) may therefore become more validated in the eyes of those who are currently skeptics.

5. In turn, if Hydrogen Energy really takes off, and hydrogen’s reputation is burnished, fuel cells may ultimately benefit substantially. If many IGCC plants become installed across the continent, it becomes more plausible to envision hydrogen transport and distribution on a mass-scale to support fuel cells — initially in selected stationary power applications, perhaps ultimately for vehicles too.

Of course, it will take years for us to see if Hydrogen Energy becomes a big deal, or is yet another example of a highly-touted joint venture between two mega-corporations that ultimately comes to very little.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. (Note: Mr. Stuebi has no affiliation whatsoever with BP.)

Clean Coal Developments, or Lack Thereof

by Richard T. Stuebi

This past week, the nation’s largest utility American Electric Power (NYSE: AEP) announced that it was installing carbon capture and sequestration technology from Alstom (Paris: ALO) at two of its large coal fired powerplants, Mountaineer in West Virginia and Northeastern in Oklahoma.

In AEP’s press release, AEP CEO Mike Morris was quoted as saying “With Congress expected to take action on greenhouse gas issues in climate legislation, it’s time to advance this technology for commercial use.”

As Alstom’s press release indicates, the demonstration projects will employ chilled ammonia to capture CO2 from the flue stream for injection into underground saline aquifers (at Mountaineer) and for enhanced oil recovery (at Northeastern).

Just a day previously, however, my illustrious alma mater The Massachusetts Institute of Technology (MIT) released a new report entitled The Future of Coal, which calls U.S. efforts so far to develop and commercialize clean-coal technologies “completely inadequate”.

I couldn’t agree more. Like it or not, coal is going to be a huge part of our energy future. We need to figure out how to use it in an environmentally-sustainable manner, and right now we’re mainly paying lip-service to our intentions for clean-coal research. Time to up the ante.

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