Posts

GM Goes Yellow


Wednesday, February 22, 2006

“Live Green, Go Yellow”
GM’s E85 Campaign

Between the SBX snowboard event and Evan Lysacek’s courageous come back in the Olympic free skate, you may have caught General Motor’s advertisement for E85, part of GM’s campaign to promote its “flex fuel” vehicles – cars and trucks that run on fuel comprising 85 percent ethyl alcohol (ethanol) and 15 percent petroleum.

“Let’s create a greener future with cleaner air, renewable energy. GM is harnessing the power of corn. Now you can too.” Young, active, multi-racial, urban and rural, the ad’s actors say, “What if an answer to our dependence on oil was growing right in front of us? What if we could lower greenhouse gas emissions with a fuel that grew back every year? What if a company had already built over 1.5 million cars and trucks that could run on this fuel? What if they were willing to build a whole lot more? What if we could live green by going yellow? Yellow is the E85 ethanol. And one car company will lead us there. Go to livegreengoyellow.com.”

Primarily an air quality and greenhouse gas reduction pitch, the campaign assumes we all know what “living green” is – and that whatever it is, we want it, and ethanol is it. GM presumes, or hopes, that the “ethanol=green” message is enough to win over consumers.

GM’s campaign steers clear of fuel efficiency, possibly because of the company’s position on Corporate Average Fuel Economy (CAFE) standards for the internal combustion engine: “[GM’s] CAFE reflects which products its customers choose. In recent years, consumer trends for larger models, higher performance engines, and more features have offset much of the fuel economy increases from technologies we’ve implemented.” (Other American car manufacturers voiced similar sentiments at the Great Energy Efficiency Debate sponsored by the Alliance to Save Energy in Washington, DC, May 2005 saying, “we’re just giving consumers what they want.” The representative from Toyota, the maker of the Prius hybrid, listened contentedly as Detroit sputtered in defense of its position on fuel efficiency.)

How efficient, then, is ethanol? E&E Publishing’s Greenwire reports “ConocoPhillips CEO James Mulva pointed out that E85 gets only 75 percent fuel efficiency of traditional gasoline.” (“Oil companies question feasibility of E85 in national fuel strategy”)

The GM ad steers clear of messaging around domestic job creation – possibly because ethanol can just as likely come from Brazil as Iowa. The campaign steers clear of national security (reduced dependence on foreign oil). And the campaign doesn’t get into the problematic issue of competition between fuel and food crops (after all, it’s a marketing campaign).

As far as marketing “green” goes, it’s clever, youthful and provocative, particularly when compared with Detroit’s other media buys. The website, branded with integrated print and tv advertising, provides information about E85, a cornulator (a ‘corny’ twist on environmental offset calculations), ‘cobcasts’ (videos of Americans extolling corn), a ‘stalk car’ race (a game), and a schwag shop (t-shirts, screensavers) as well as links to the National Ethanol Vehicle Coalition and DOE’s Energy Efficiency and Renewable Energy (among other) websites.

But I can’t help but wonder…what if GM gave consumers fuel efficiency and better air quality and reduced emissions? That would be downright chartreuse.

:: When you’re really good, you get the gold! Just in time for the winter Olympics, SmartPower received its own Gold Medal for Best Television Advertising Series in the Third Annual Services Industry Advertising Awards (SIAA) – joining the likes of Verizon, Marriott, MasterCard and Time Warner Cable. ::

On U.S. Greenhouse Gas Trading Markets

Earlier in my career, I was heavily involved in the establishment of the first wide-scale emissions trading program: the sulfur dioxide (SO2) allowances that were created as part of the acid rain mitigation provisions of the U.S. Clean Air Act of 1990. By virtually all accounts, the SO2 allowance market has been highly successful in enabling significant SO2 reductions across the U.S. at much lower cost to society than would otherwise have been the case. This experience should serve as a useful model for how to deal with greenhouse gas (GHG) emissions that contribute to global climate change.

Unfortunately, at least for U.S. stakeholders, that really hasn’t happened yet. Leadership in emissions trading markets has now shifted to Europe, where the EU countries have adopted a GHG trading scheme similar in structure to the U.S. SO2 allowance program, except instead applied to GHG emissions.

Because of a lack of any federal initiative to date in the U.S., it has been the states that have taken the lead in developing trading markets for GHG emissions. For instance, several states have sought to impose GHG trading schemes, such as the Regional Greenhouse Gas Initiative in the Northeastern U.S. But, these remain as yet concepts, still to be implemented in the future.

As of today, the only markets in the U.S. aiming to address global climate change are the so-called “REC” markets. Rather than markets on the GHG emissions themselves, several states have encouraged the penetration of cleaner power generation technologies by creating tradeable renewable energy credits (RECs) associated with each kilowatt-hour of electricity from a REC-eligible source.

In my view, the state-level REC markets have two fundamental flaws:

  1. Many states with RECs have implemented different definitions of what sources qualify for REC treatment. In turn, this means that, rather than one nationwide REC market, we instead have separate REC markets for each state that have created RECs. While a number of firms (such as Evolution Markets) offer brokerage services in these various REC markets to help counterparties find each other and facilitate transactions, inevitably such balkanization of the REC markets serves to reduce the ability to transact relative to what could be achieved with a national market. Without adequate market “liquidity”, commodity markets tend to wither away into idleness. If that happens to the REC markets (as it has to some already), then the program is effectively useless. To advocates who claim that their renewable source of energy has an additional monetary value that can be monetized through REC trading, I can only say: “Watch out.”
  2. More fundamentally, REC markets do not address the problem of emissions directly, but rather address them only indirectly by encouraging the adoption of new renewable energy sources. But, other than the significant difference in emissions, is wind or solar energy really “better” than coal-based energy? Is it better than reducing electricity consumption by an amount that offers the same environmental benefit? Why shouldn’t there be any incentive for owners of pre-existing coal-fired powerplants to reduce their GHG emissions by 99%, or even 9%? And, why should wind or solar energy qualify for RECs just by regulatory edict, but not some potential future zero-emission energy source (such as ocean or fusion)?

For these reasons, I believe REC markets are doomed to eventual failure, hopefully to be replaced by a true U.S. cap-and-trade GHG market. The good news is that most proposals for addressing climate change that have been increasingly emerging in the U.S. Congress include cap-and-trade mechanisms of one form or the other. It may take a few more years, but I am optimistic that a bill of this type will eventually be passed and signed into law. Once imposed, we can sweep the various state REC markets into the dustbin.

Energy Efficiency – California Dreamin’

Wednesday, February 15, 2006

Energy efficiency, the red-headed stepchild of energy planning, is re-gaining recognition by utilities and their regulatory agencies – in some U.S. markets and in some states – for its cost-effective role in saving the farm.*

(Note: The term ‘energy efficiency’ could benefit from a visit with “Extreme Makeover.” It could use a new name, better brand image and improved positioning across the country – with an emphasis on non-energy benefits as well as bill-savings. “This season, expect more emotion, tears and joy as life long dreams and fairy tale fantasies come true.”)

Until that time, California has set the bar high for coordinating and organizing statewide education and outreach efforts – building a partnership of California’s utilities, residents, businesses, institutions, government agencies and nonprofit organizations working to save energy.

“Saving Energy. It’s a Way of Life.”

Initiated in 2001, Flex Your Power (“California’s Energy Efficiency Resource”) says it uses “a broad range of marketing and outreach strategies, including television, radio and newspaper ads, printed educational materials, events, a comprehensive website resource serving all parties statewide, a biweekly electronic newsletter, forums and workshops, and partnerships with businesses, local governments, water agencies, non-profits and others, including the state and federal government agencies responsible for energy and water efficiency.”

“The Flex Your Power statewide campaign [with approximately $20.5M in funding] will closely coordinate with the utilities, third-party implementers and other program providers to develop materials, events, the website and other outreach strategies that provide program information using consistent and compelling messages. Specific targeted campaigns for rural areas and to reach California’s Hispanic population are also funded under this program.”

The Flex Your Power electronic newsletter (sign up here) covers news, progress, case studies, design and building, technology and products, incentive programs, policy news and ideas. Anyone confused about the California Public Utility Commission’s judicial/regulatory decisions authorizing the 2006-2008 energy efficiency portfolio plans and funding levels ($2.7 billion!) for the state’s largest utilities might best start with Flex Your Power before trawling individual utility websites.

Not to be left behind in bleeding-edge communications technology, Flex Your Power provides an e-newswire audio and podcast (a “free online subscription-based radio shows for your computer or portable mp3 player. When you subscribe to a podcast your podcatching software will download shows as they become available. You can expect a new e-Newswire show every two weeks.”)

Unlike SmartPower, Flex Your Power does not explain its market research or strategy, nor provide examples of advertising on its website – all of which is insight for those of us living outside California who market energy efficiency and don’t get to see the fruits of California’s labor first hand.

* NREL layoffs. A week to the day that President Bush announced his so-called “Advanced Energy Initiative,” the National Renewable Energy Laboratory laid off Carol Tombari and a slew of other employees at the laboratory in Golden, Colorado. Tombari’s job was to promote energy-efficient cleantech through state and local initiatives…to create demand for cleantech coming out of R&D, an essential element in the push-me, pull-you of market transformation.

Cutbacks at NREL

Lost (to me) during the holiday season was the late December announcement by the Department of Energy of roughly a 10% budget and staff reduction at the National Renewable Energy Laboratory in Golden, Colorado.

Rocky Mountain News Article on NREL Cutbacks

This announcement was accompanied by the expected indignant handwringing from local politicians worried about economic impacts, as well as from most renewable energy community advocates. Given all the hubhub about needing to wean America from its addiction to oil, how dare the Bush Administration simultaneously reduce funding at NREL?

While I concur with the prevailing sentiment that energy is a critical issue facing our society that requires much more technology research and development, I don’t necessarily take the next step in logic (or faith?) that others have in believing that NREL is the place to do it. In its 25+ year history, I would like to see a list of the commercially-viable technologies that have stemmed from NREL research. My guess is that it would be a pretty short and unimpressive list.

In my occasional interactions with current and former NREL staff, there is a recognition bordering on resignation, steeped in cynicism, of a deeply flawed organization with limited impact. NREL is filled with well-meaning people, but somehow, the lab just doesn’t seem to work. Is NREL really the type of place that should be further bloated with more funding? I say, “Not with my taxpayer dollars.” Far better to deploy the funding to other institutions with less dysfunctionalism, greater urgency and a better sense of the pulse of the energy marketplace.

Carbon Capture

Most of us reading these columns are concerned with the impact that man is having on his planet. Despite the relative few(?) who discard the possibility of an anthropogenic impact on climate change, there seems to be an increasing acceptance that the rise in global average temperatures over the past century is largely due to combustion generated carbon dioxide emissions. Given the indisputable fact that global energy demand is ever increasing and the cheapest source of energy for most developing countries is coal – not quite pure carbon, but close to it – the outlook seems bleak. There seems no way that developing nations can be denied access to the cheapest source of energy as we transition to clean renewable sources, so we should take some consolation from the effort being expended to address the issue. There are various programs that address cleaning up the products of combustion but traditionally most have ignored carbon dioxide emissions. Even considerations of bioenergy are often based on the assumption that it is carbon neutral. Irrespective of the balance, it would be better for us all if no carbon dioxide emissions resulted from man’s activities – here, I just want to remind you of a program which promises that – well almost!

The Carbon Dioxide Capture Project started in 2000 and has two underlying goals: reduce the cost of carbon dioxide capture from combustion sources; and develop methods for permanently storing the captured gas underground. Carbon Dioxide capture and geologic storage are seen as bridging technologies that will help move society towards cleaner fuels in the future. It is a project led by some of the world’s largest energy companies in collaboration with bodies such as
the EU and the US DOE. Phase 1 was completed in 2004 and the report has just been published by Elsevier. Phase 2 runs from 2005 till 2007 and most of he original participants are still contributing. It is nice to see some of our oil money being reinvested in a project which, if successful, could benefit so many in almost every industry.

What is even more satisfying is to see the announcement today that BP, one of the Project participants, has committed to building a 500MW power plant in California that will embody the technology developed so far. They are working with Edison Mission Group on the plans for the power plant and with Occidental to explore the options for using Occidental’s California oilfields to host the carbon dioxide. Like most clean (or cleaner than most) alternatives, there will
be an economic penalty to be overcome, but successful demonstration at this scale will be a powerful argument in convincing others to follow. And, of course, Occidental would get a little more oil out of their wells!

GE Abandons Superconducting Generator

The Department of Energy’s dream to build a superconducting power infrastructure in the U.S. has been dealt a symbolically serious, if not unexpected blow.  General Electric has quit its $27 million 100MVA high temperature superconducting (HTS) generator program.  The generator was envisioned as an opportunity to eventually introduce large generators (in the 100 to 500MVA range) that higher power densities and increased efficiency.  The heart of the DOE’s superconductivity program, HTS power cables, remains on track.

There were major problems, or at least challenges, with the program from the outset.  The first was that conventional generators, which use copper windings in both the stator and rotor, are extremely efficient, and the introduction of a HTS rotor meant only about a 0.35 to 0.55% increase in electrical efficiency.  While this does not sound like much, over the course of the machine’s life it meant considerable electricity savings that were anticipated to offset the technology cost of the superconducting rotor, and cryogenic refrigeration system.

GE says that another factor contributing to the decision to terminate the program was a shift in the energy market: “GE has observed that in the present energy marketplace, where the spot market price of natural gas has recently been greater than $10/MM BTU, operators of combustion turbines are shifting larger units to cyclic operation and supporting the base load with less expensive fuels such as coal and nuclear.  This shift in generation dispatch undercuts the economic benefit of the HTS generator.”  

GE has over 5,500 wind and 3,600 hydro turbines, for an installed capacity of renewable energy of 160,000MW, but this is a microscopic fraction of the capacity provided using fossil fuels, so its safe to say the drive for renewable energy is not negatively impacting R&D on large HTS generators.

The other major factors involved the technical and economic hurdles surrounding HTS.  The BSCCO-2223 HTS wire (currently produced primarily by Sumitomo Electric and American Superconductor) was too fragile, too expensive, and required too much cooling.  GE had repeatedly said it wanted the wire to cost well below $25 per kiloAmp-meter (this is the cost for an amount of HTS material sufficient to transport one 1000 Amps across a length of one meter).  At present, that target is a somewhat remote prospect.  (An OP-ED piece in the latest issue of Superconductor Week (v20 n02) provides an interesting analysis of these costs.)

Cooling the HTS rotor is another issue.  Today’s HTS wire does not work sufficiently well in the strong magnetic fields present with a device such as a motor without substantial refrigeration.  Whereas devices such as HTS cables may be able to operate in a liquid nitrogen environment at 77 degrees Kelvin, motors must run closer to 30K, or even cooler, using liquid neon or gaseous helium coolant.  

The cancellation of this program leaves the superconducting generator concept squarely in the hands of the military, which is effectively indifferent to costs, and is focused on increasing power density (the ability to cram a huge amount of generating capacity, or in the case of motors, horsepower and torque, inside a small, light-weight package) for applications where space/weight is restricted, such as ships and aircraft.  

It is likely that if these military programs are successful, the technology will eventually trickle back into the commercial sector.  For now, we will have to focus on the promise of HTS elsewhere.  

Mark Bitterman, Executive Editor, Superconductor Week
http://www.superconductorweek.com

Recent Energy News on Global Policy

Global warming action supported by evangelical Christians

A group of 85 evangelical Christian leaders in the US, including Rick Warren, have initiated a campaign to back legislation opposed by the Bush Administration to fight. They are helping to launch an advertising campaign to support legislation like the McCain-Lieberman Climate Stewardship Act.

Oil prices are a hot topic at upcoming G8 conference

High oil prices and what to do about them, specifically how to spur energy investment are a hot topic at the G8 conference in Moscow.

Exxon announces that energy independence is not feasible

Responding to Bush’s speech on energy and calls for energy independence from mid east oil, ExxonMobil executives have stated that they believe eliminating US dependence on foreign oil imports is not a practical solution. As I have stated in previous Cleantech blog posts, I believe it should be a core part of foreign policy, though I agree it is not easy.

Values and ‘tude in consumer marketing

Wednesday, February 8, 2006

When market research around sustainability asks what people value, so begins effective consumer messaging with emotional hooks. And, it begins the crossing of the chasm from eco-niche marketing to ‘dark greens’—to marketing to masses sporting sea-foam shades of green.

A common thread of values runs through the landscape of marketing sustainability, from transportation to clean energy to high performance building.

“Toyota > The Power to Move Forward”
Toyota nailed values-based consumer marketing in an ad for a 2007 hybrid Camry aired during the 2006 SuperBowl, an ad imbued with themes of sustainability, cost savings, bucolic peacefulness, health and safety – an ad that also appeals to progressive, bi-lingual consumer segments. (“Papa, why do we have a hybrid?” “For your future.” “Why?” “It’s better for the air, and we spend less because it runs on gas and electrical power. Mira. Mira aquí. It uses both.” “Like you with English and Spanish” “Sí!” “But why did you learn English?” “For your future.” Tum, tum, tum.)

“Can Do!” Clean Energy
Presentations at DOE’s Green Power Marketing Conferences provide market research and real-world marketing reports from multiple (pro-clean energy) viewpoints, like Natural Marketing Institute (research), Green Mountain Energy Company (a competitive electricity retailer with some stories to tell) and Utah Clean Energy (a community campaign for clean energy). The conference, now in its tenth year, unearths marketing gems-in-the-rough like a Research Into Action report from 2002 on self-efficacy (the confident “Can Do” attitude) that may be a predictor in market adoption and a basis for messaging. The Toyota ad is all about “Can Do.”

According to Gang & Gang research on Salt River Project’s EarthWise Energy program, the really important emotional issue areas in marketing clean energy center on self and environment, as well as program design. Some of SRP’s non-participating customers had weak but positive, passionate emotions about the program, and others had significant negative, inhibiting emotions.

:: That is, not everybody thinks everything “green” is great. A certain segment, the anti-greens (it’s an attitude), may come to appreciate the value and benefits of green in their own lives when the message is disassociated from ‘tree-hugging liberal lefties.’ The likes of Andrew Bernstein who calls environmentalists “socialists” and discounts anthropogenic contributions to climate change may never be won over. ::

An insightful 2003 Canadian report “Consumers and Green Electricity: Profiling Potential Purchasers” found that consumers’ attitudinal characteristics were especially significant, more so then demographics and socialization in purchasing clean energy. “First, there appears to be continuing message of warning to marketers who think that they should base their segmentation criteria (and hence, their marketing strategy) solely upon demographics. Indeed, the recent conclusions of Straughan and Roberts can be applied to our investigation, virtually verbatim: ‘From the results of both past studies and the present work, the use of either a psychographics-only model (incorporating perceived consumer effectiveness, altruism, and environmental concern) or a mixed model (incorporating a range of demographics and psychographics) should be preferred to traditional demographic profiling methods.’ (Straughan and Roberts, 1999, p. 567).” Per the report, liberalism (progressiveness) is a fourth significant attitudinal variable determining a consumer’s willingness to pay more for clean energy. (Rowlands, Scott, Parker, 2003, p. 45).

:: The “willingness to pay more” benchmark can detour from the values, attitudes and non-energy benefits that inform sustainability marketing strategy. Some people buy coffee infused with milk foam and a squeeze of caramel for $4.00…jeans beaten to look worn for over $100…highway ‘vehicles’ better suited for jungle warfare at nearly the price of real estate…because it makes them feel good. How much would someone pay for a hybrid car, clean energy, a high performance home if it made her feel good, if it spoke to values? ::

Co-op America, a non-profit dedicated to “creating a just and sustainable society by harnessing economic power for positive change” knows what makes people feel good. Executive Director, Alisa Gravitz wrote in their Spring 2005 Quarterly: “When you ask people [young kids in an inner-city school, activists, business people] to describe what they want the world to look like, the pictures come out so much the same…In almost every picture, you see a nice house—representing comfort, quality of life, and economic security. People draw their families and friends relaxing or playing outside of their homes, sometimes sitting together at a picnic, often in a green yard or garden. Indeed, there is usually lots of green—sometimes a meadow or forest—and lots of blue, clear sky and clean water—a lake or stream or the ocean. Family, friends, home, community, blue sky, clean water, good food.”

“Alternative fuel” manufacturers like Toyota and the clean energy crowd are well on their way to incorporating these values and attitudes into marketing strategy.

The high performance building crowd has begun to recognize the values and attitudes of its consumers, spurred by rising energy costs and concerns for quality building—and demands for better product.

The energy efficiency folks? They have a way to go, but have successful examples to emulate, and some valuable insights from the likes of E-Star which posed the question: “What brings people to energy efficiency? Is it the desire to ‘do the right thing,’ the desire to save money?” E-Star says the evidence is conflicting. In polling for Colorado’s renewable energy portfolio standard (a clean energy mandate), the results showed a wide enough margin for a win at the voting booths if the RPS included only renewables. But, when energy efficiency was added to the mix, the margins dropped by 5%. E-Star has found that in residential home construction people want comfort, health and safety, and quality. “There is no single driver that brings brings people to energy efficiency. In the near term, it will not be the price of energy alone. A successful campaign in regard to energy efficiency should probably encompass a broad spectrum of values (saving money, doing the right thing, patriotism, and higher quality products such as homes.)”

Sí!

Over 1,000 Hydrogen Riders in California

2005 finished with over 1,000 Californians taking daily rides on hydrogen vehicles. In addition to about 80 hydrogen cars, SUVs and trucks were eight high-capacity hydrogen buses. Scheduled deliveries will double the number of hydrogen vehicles in California in 2006. 1,000 daily riders is an important increase from a meager few hundred in 2004.

Santa Clara VTA has 3 buses covering standard routes in daily use. AC Transit is bringing its three hydrogen powered buses online now. SunLine Transit Agency received enthusiastic rider acceptance of its first hydrogen bus. It recently added a second. With many vehicles just now being put into commercial service, the daily ridership will jump to over 2,000 in the next few months.

In 2009, we will likely see over 10,000 daily riders of hydrogen vehicles. In 2012, we will likely see over 100,000 daily riders of hydrogen vehicles. Both forecasts assume that vehicle growth will slow to 70% per year in 2007.

Buses have been very helpful in moving hydrogen forward. A fleet of buses needs only one hydrogen fueling station. Hydrogen skeptics have predicted that we will wait forever as public station owners refuse to add hydrogen pumps without millions of hydrogen vehicles and vice-versa. The general public does not take the lead in technology like this. Fleet owners take the lead.

These fleets are like anchor tenants in a shopping center. SunLine started with one bus. Soon other hydrogen vehicles were using the same fueling station. CNG vehicles then started using hydrogen-CNG blends, increasing fuel efficiency and reducing damaging emissions. Stations are being expanded in capacity to support larger fleets. To be part of the California Hydrogen Highway, these fleet stations must provide limited public access. This encourages other organizations and individuals to use hydrogen vehicles.

Most public transit buses carry 200 to 2,000 riders per day. The number varies with routes and urban density. The buses often run 18 hours daily. Hydrogen buses are popular with riders. Jaimie Levin, Director of Marketing for AC Transit, reports rider enthusiasm and strong community support. Being new and somewhat limited in range, hydrogen buses may only average 10 hours of daily use. It is too early to have precise numbers of daily riders, but 250 people per bus per day is reasonable. This will bring us to 2,000 riders on the 8 hydrogen buses running in California.

A sage said that we tend to over estimate success in the short term and under estimate it in the long term. Disruptive technology has always shown this pattern. It took Alexander Graham Bell over 20 years to get a few hundred people to lease telephones. After all, who could they call? IBM’s initial forecast of the saturation of the global computer market was seven. Over time, they increased their forecast. The same growth will happen with hydrogen transportation. As fleets expand and as the hydrogen stations expand in capacity, costs will diminish and ridership will grow.

In his State of the Union Address, President Bush stated, “And here we have a serious problem: America is addicted to oil, which is often imported from unstable parts of the world. The best way to break this addiction is through technology…. tonight, I announce the Advanced Energy Initiative — a 22-percent increase in clean-energy research — and in pollution-free cars that run on hydrogen.” Hydrogen is one of the technologies which will lead us to energy security.

Hydrogen promises to end our nation’s dependency on oil. Wall Street lives in fear of a disruption in the Mideast sending oil to over $100 per barrel and our nation into another Great Depression. Hydrogen is a ubiquitous energy carrier. In today’s modest quantities it is also a good deal more expensive than gasoline.

Early clean transportation riders are benefiting from fleet owners such as SunLine, AC Transit, Santa Clara VTA and South Coast Air Quality Management who are willing to invest in the future. They are leading with multi-million dollar fleets and their own hydrogen fueling stations. California is a role model for the world.

John Addison is the author of the book Revenue Rocket (Executive Summary at www.optimarkworks.com). John Addison’s articles have appeared in H2Nation Magazine. Since 2002, John has been a Board member of the California Hydrogen Business Council. John Addison is president of OPTIMARK Inc. a firm that helps with marketing strategy and partner development. He teaches extension courses for the University of California at Davis and at Santa Cruz. He is a popular speaker in the Americas, Europe and Asia.

Japanese Fuel Cell Expo

To catch up on the state of the fuel cell sector, I traveled to Tokyo last week to attend the grandly titled “2nd International Hydrogen and Fuel Cell Exposition“.

Below are a few observations from my visiting the Japan fuel cell expo:

1. There’s a lot of fuel cell activity in Japan right now — much more than in North America. This is a very sizable show by any standard, and positively immense for an alternative energy field. At over 400 exhibitors, it’s several times times bigger than the biggest comparable event in North America, the annual Fuel Cell Seminar — and even bigger than AWEA’s trade shows that I’ve visited in the past couple years during boom times for the U.S. wind energy sector. According to show promoters, over 20,000 attended last year’s event, and I saw nothing to suggest that such an estimate for this year was off-base. Crowds and crowds of people clogged the aisles. Press and TV cameras were frequently sighted. No doubt, this intense interest is motivated by Japan’s more dire energy supply situation and the high energy prices that result.

2. The fuel cell activity in Japan appears primarily to be by Japan, for Japan. Though it probably shouldn’t have surprised me, given the venue, the vast majority (95%?) of attendees and exhibitors were Japanese. Although the conference was held bilingually, almost all of the booths were exclusively in the Japanese language — and since I don’t read or speak Japanese, most of the information presented was wholly inscrutable to me. From strolling the venue in somewhat of a daze of perplexion, I am led to speculate that there must be a huge tech transfer opportunity for those who can translate Japanese into English and mine the best nuggets from this show to bring to the U.S. and elsewhere.

3. Lots of small firms are involved in the fuel cell industry. It was modestly surprising that many of the most well-known North American fuel cell players — such as Ballard, Plug Power, FuelCell Energy — did not have booths. Even more suprisingly, among Japanese firms, most of the displays were from smaller companies. Several of the most recognizable Japanese megamonoliths — such as Kyocera, Hitachi, Mitsushita, Sharp, Toshiba — had no trade floor presence. I see good news and bad news from this. The bad news is that the lack of participation of bigger firms undermines perceived commercial credibility, which is already weak in the fuel cell sector. The good news is that smaller players are much more likely to be acting with urgency, absent the stifling bureaucracy so prevalent among large corporations, leading to more rapid advancement in the field.

4. Most of the displays were ancillaries and components, as opposed to integrated fuel cell products. To me, this was a good sign. Although there were the obligatory “visionary” displays of the future hydrogen economy and of fuel cell stacks and applications thereof (e.g., scooters, cars, etc.), there were probably five times as many booths focused on more mundane specialized components and supporting goods — pumps, valves, sensors, materials, and so on — that are truly essential to creating a vibrant and viable market-based fuel cell industry. If more attention can be focused narrowly on solving the many small but crucial technical challenges, rather than “shooting for the moon” for grand breakthrough solutions, only then can fuel cells achieve their large potential upside.

As a result of attending the show, what am I thinking about the fuel cell sector? Well, at least in Japan, things are trending in the right direction.

No doubt, it remains prudent to be sanguine and sober about fuel cells. It will be tough for fuel cells to overtake conventional energy technologies in mass-market applications — internal combustion engines for vehicles, batteries for mobile devices, central powerplants for electricity generation – simply because the incumbent approaches work pretty darn well and are pretty darn affordable.

However, a growing number of more finely-defined niche segments are being identified for plausible fuel cell application, where current power approaches are in some way unsatisfactory. And, it does appear that many technical advancement needs in the fuel cell realm are transitioning past the fundamental science stage towards application engineering as a precursor to commercial products. In sum, tough-minded optimism is warranted for the fuel cell sector.

SmartPower is smart marketing

Wednesday, February 1, 2006

Hunter Lovins, President of Natural Capitalism (and former CEO of the Rocky Mountain Institute), met recently with a small gathering of energy consultants in Boulder, Colorado. An advantage of living in Colorado, aside from sunshine (300 days a year) and great skiing, is access to talent like Hunter and her colleagues, the National Renewable Energy Laboratory, Western Resource Advocates and Interwest Energy Alliance, among many others.

In Colorado, we have leading marketers of renewable energy credits (Renewable Choice Energy, Clean & Green, NativeWind). We are home to WhiteWave Foods (Silk and Horizon Organic) one of the nation’s top 25 green power purchasers. New Belgium Brewery in Ft. Collins is on the forefront of sustainable industrial practices (and even has on staff a Sustainability Goddess). In 2004, Colorado voters made history by passing the only voter-mandated renewable energy portfolio standard, overcoming opposition from utilities and coal companies.

Yet, progress toward the next industrial revolution is molasses-slow in Colorado, even with all of our talent and significant milestones…despite rosy reports of clean energy’s dawning over Red Rocks in the Rocky Mountain News. At the gathering at D’Napoli Ristorante, Hunter asked how many of us had read the article by Briton James Lovelock, an independent environmental scientist and Fellow of the Royal Society. (“The Earth is about to catch a morbid fever that may last as long as 100,000 years; each nation must find the best use of its resources to sustain civilisation for as long as they can.”) Hunter asked, what are you – you with expertise in energy – going to do about it?

Building public awareness is front and center for market transformation – a market in which, to quote from “Natural Capitalism,” “business and environmental interests increasingly overlap, in which businesses can better satisfy their customers’ needs, increase profits, and help solve environmental problems all at the same time.”

For cleantech products and services to gain traction, the public needs to know about them, to believe that they work, to know how and where to buy them – and how to finance them if necessary. Competitive pricing, favorable regulations and legislation matter, too, but public awareness, education and marketing are critical for the next industrial revolution to take hold.

“It’s here. It’s real. It’s working. Clean Energy. Let’s Make More.”

SmartPower based in Hartford, Connecticut, gets public awareness, education and marketing. It is a non-profit marketing campaign that promotes clean energy (their tagline: “leading the effort to market clean energy”). SmartPower used “innovative and traditional marketing techniques to identify and create effective messages that resonate with the general consumer, aiming to capture attention, create customers and cultivate a mainstream market for clean energy;” it conducted market research around messaging to find consistent nomenclature (such as “clean energy”), core messages, and branding with emotional hooks.

SmartPower collaborated with the Clean Energy States Alliance (CESA) on public education. “In 2003, as part of the Clean Energy States Alliance (CESA), several state clean energy funds joined resources to develop a public education approach to clean energy. These states (Connecticut, Rhode Island, Massachusetts, New Jersey and Pennsylvania) faced similar market issues: despite consistently reported research findings that showed consumer preference for clean energy over fossil fuels, even at higher prices, market activity failed to materialize. Clean energy has remained a low interest, low purchase commodity that has yet to penetrate at meaningful levels.”

Far from doom and gloom, SmartPower created insightful, uplifting material. Its advertising agency, Gardner Nelson & Partners out of New York City, first conducted focus groups with consumers, businesses and opinion leaders. Participants were asked to: 1) write an obituary for fossil fuels; 2) draw a picture of their clean energy world, name it and date it; 3) review concept ads that reflected a range of potential messaging themes; and 4) select those messages that most resonated.

Gardner Nelson’s findings can explain why people say they want clean energy, but don’t buy it: “Our focus group participants understood that clean energies such as solar and wind would possibly take [the place of fossil fuels], but these energies were described as ‘quirky’ and possibly not up to the task.”

To demonstrate clean energy’s viability, SmartPower produced dynamic tv, radio and outdoor advertising – as well as a streamlined website that provides resources for taking action (options, costs, suppliers). The organization also puts out a newsletter, “The Monthly Charge” to deliver news on clean energy adoption in the CESA. Businesses, faith-based institutions, governments, educational institutions and other organizations that purchase clean energy get their names listed on the website (that’s smart marketing to give recognition where it’s due).

SmartPower plans to expand its message nationwide….and we sure could use it in Colorado. Take a look, and spread the word.

Clean Energy in State of the Union

Today my wife commented that I should be thrilled because of support shown for renewables by the the President in his State of the Union address. She seldom takes an active interest in energy matters and was clearly influenced by the rhetoric surrounding the speech, so should I?

My first response is is of course! It is much better to be seen as part of the solution than part of the problem. However it still does not fill me with joy.

Consider:

  • The monies proposed for renewables in 2007 are not large: $148 million for photovoltaics, $44 million for wind, $150 million for biofuels (read ethanol), $30 million for hybrid batteries and $289 million for hydrogen and fuel cells.
  • The funding is for R&D and seems out of sync. with the previously announced 15% reduction in funding for the National Renewable Energy Laboratory that will cause it to lose 40 researchers!
  • “another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025 ” and the only initiatives he announced that would address this were the biofuels, hydrogen and hybrid batteries. Even though I am an optimist in matters of clean energy this feels like wishful thinking.
  • One of the largest R&D initiatives ($281 million) is aimed at “zero-emission coal-fired plants” that sequester the produced carbon dioxide. This makes a kind of sense given that coal is the main source of power generation in the US and, since the President has shown himself unwilling to commit to the Kyoto Protocol, this shows that he will achieve pollution reduction by other means. Right?
  • Lastly, I am left a little uneasy by his mention of “clean, safe nuclear energy” as part of his plan.
  • Given that the US generating capacity is currently primarily driven by coal, natural gas, hydro and nuclear the latter two initiatives could be interpreted as a move to reduce US dependence on expensive natural gas, but otherwise continue as usual.

Don’t get me wrong! I have nothing against the funding proposals for renewable energy although I am less enamored of the other proposals in the package. However the fruits of research are unpredictable and seldom quick! I am not convinced these proposals will achieve the goals they are supposed to address and I suspect they will be no more successful than past initiatives. Still, I guess my wife was right in one sense – as they say, “any publicity is good publicity!”

Is Ethanol Good or Bad?

One of the most confusing aspects of the alternative energy industry has to be the story about ethanol. Simply put, is ethanol good or bad? Does it help or harm the environment?

The confusion and controversy stems from evaluating the net effect on CO2 emissions of ethanol production and use, relative to the production and use of the incumbent fuel, gasoline. Largely, this is driven by questions concerning the energy balance of ethanol — how much energy is really required to fertilize, grow, harvest and process the ethanol, and what are the CO2 emissions associated with these steps. The proper quantification of these factors has seemingly been a matter of dispute between those who favor ethanol and those who see ethanol promotion as merely a means of subsidizing the agricultural sector.

A Reuters summary of an article in the January 2006 issue of the journal Science, written by several researchers from UC Berkeley, indicates that the current corn-based means of producing ethanol is in fact a dubious environmental proposition. However, the use of emerging technologies to convert cellulosic matter — the tougher fibers as found in trees, bark, woody wastes, etc. — in ethanol should be net environmentally positive.

Not surprisingly, the downside is that cellulosic technologies are now on the costly side. But, perhaps with additional clarification of the type on the net environmental benefit (along with the energy supply benefit) that can be generated by cellulosic ethanol, this controversy can be put to bed. With the concerns more definitively allayed, more effort and capital might flow to this potentially important source of energy.

Can RE Pay its Way?

With renewable energy companies, particularly in the solar and wind sectors, growing at double digit pace, there is a clear need to attract new talent to the industries. Indeed this is the prime reason we created Greenjobs as a place where those interested in working in renewables could find out about the types of jobs and job prospects as well as the different industries and the organizations populating them.

However, in the solar industry, and I suspect the other renewable sectors as well, there is a pervasive attitude that only enthusiasts work in the industry and they are happy to forgo competitive wages. In his excellent course on “Finding your dream job in Solar”, Andy Black actually advises candidates to anticipate lower wages than they can get elsewhere. He rationalizes the inevitability of the situation by the continued entry of new, cut-price entrants in to the marketplace forcing down margins. While this may reflect fairly what has gone before I do not see how it can continue.

As the sectors grow in size they will be less able to rely on enthusiast to fuel their continued growth. In order to attract the best talent, they will increasingly have to compete with other, mainstream industries and this will force them to make packages more competitive. Indeed if renewables become mainstream this is not only a possibility but an inevitability! How we bridge the gap remains to be seen but one thing I do believe is that renewable businesses and organizations will become increasingly focused on remuneration packages in order to be competitive and this will drive a need for more reliable information on what being “competitive” means. Reliable, cross industry statistics for renewables are hard to find and we hope to address the issue this year with the first annual North American survey of employment and remuneration across all RE sectors.

California’s Energy Tech Funding Keeps Rolling

California has a large and broad energy usage, and a very diverse energy mix. We also have one of the best energy tech funding programs in the country, as fitting with our status. A bit on both.

A few of our California energy statistics to think about:

We get 42% of our oil from our own wells (these amounts and the percentages have been declining for 20 years, it was 60% in 1980), 22% from Alaska, and 36% from overseas (the big suppliers are Saudi Arabia, Iraq and Ecuador).

We get only 15% of our natural gas from instate, the rest coming from Canada and other Western US states. Maybe Californians really should enter the debate about an Alaskan North Slope gas pipeline.

We generate 80% of our electricty instate with that same natural gas the largest source, at 40%, with the rest split between coal, rewewables (mainly wind and biomass), hydro, and nuclear, with coal the largest of those sources.

California Energy Commission has a number of programs running to fund and promote new and clean energy technologies in the state. Full details here.

The big ones include:

PIER – Small business R&D grants that in the past have included programs in new generation technologies, energy efficiency, and demand response. At $60 mm per year, PIER is one of, if not the largest government R&D funding program of any non-federal agency. The key funding areas are:

Buildings End-Use Energy Efficiency
Energy Innovations Small Grant Program
Energy-Related Environmental Research
Energy Systems Integration
Environmentally-Preferred Advanced Generation
Industrial/Agricultural/Water End-Use Energy Efficiency
Renewable Energy Technologies

Renewable Energy Funding – CEC runs ths solar rebate programs, to the tune of $135 mm/year. This is one of the largest in the US. Keep in mind, this is state money set aside by the legislature. The new solar news is about the recent PUC solar program – that’s ratepayer money mandated and overseen by the PUC (see earlier Cleantechblog post) . Though if I understand correctly, it is a close partnership as CEC has earmarked some of its funds for some allied programming related to new construction.

I know a lot of Californian’s don’t know exactly where we get our energy, and what we as a state are paying to improve that energy use and demand in the future, but as far as I’m concerned, kudos to the CEC and the people who keep it going.

If you’re not on the CEC listserv, check it out. The mailing list includes information on all upcoming RFPs as well as energy news.

Wind Turbine Manufacturers Getting Greedy?

An article in the January 2006 Windpower Monthly corroborates the rumors heard over the past year in the wind industry: the installed price of wind turbines is rising. Since the installed cost of the turbine is the dominant factor in wind energy economics, this means that the cost of wind energy is rising.

Windpower Monthly Article on Wind Energy Economics

The article goes on to note that wind turbine costs have increased because of unavoidable factors such as higher materials costs and higher shipping costs. Fair enough. But, distressingly, the article points out only in passing two important factors that are well within in the control of the wind turbine manufacturers: tightness of supply and increased margins.

In other words, the wind turbine manufacturers — Vestas, Gamesa, GE, et al — are not expanding assembly capacity commensurate with the rate of demand growth, and are instead using the favorable situation to extract higher prices from project developers who purchase wind turbines.

As a capitalist, I generally have no problem with manufacturers taking advantage of a strong bargaining position to make good money. However, I don’t think the current pricing practices are a good situation for the still-maturing wind industry. Especially without subsidies, wind is still largely uncompetitive relative to other forms of electricity production (especially coal), and wind still faces considerable skepticism from utilities and many uninformed observers. In other words, wind energy is not yet on firm ground: now is not the time to get greedy.

It strikes me that the manufacturers are gouging a little bit while they can — maybe the first time that conditions have allowed them to do so — but at the risk of damaging their market, and thereby reducing the full magnitude of the growth potential open to wind energy. It is a risky strategy that could backfire.

I’d like to see a bit more manufacturing capacity expansion, especially here in the U.S. where little currently exists. Not so much as to create a glut and a subsequent bust — the industry definitely doesn’t need that — but enough so as to facilitate the growth potential of the sector and serve what currently seems to be unmet demand.

Of course, another interpretation of the current situation is that the improvement curve of the dominant 3-bladed upstream wind turbine is flattening out. If so, this would open up opportunities for alternative turbine designs to come into the market. I’ve seen some interesting designs (e.g., vertical axis) with potentially better economics, but these have largely been ignored as unviable against the tried-and-true conventional paradigm.

However, if the standard wind turbine has minimal further cost reduction potential, then perhaps it’s time for the innovators to get to work again on new wind turbine technologies. That would shake things up for the wind turbine manufacturers — and maybe make them regret the overly strong pricing tactics they seem to be using today.

Is Superconductivity Cleantech?

I’ve heard some feedback from people asking why superconductivity is given a voice in a cleantech blog. This is a good question. There are a few reasons.

In one area in particular–power quality–superconductors are directly related to renewable energy. Advanced, flywheels, superconducting magnetic energy storage, superconducting fault current limiters, etc. are all being proposed as technologies that will allow for erratic, geographically distributed generation sources such as wind and solar to be brought onto power grids more effectively. Basically, superconducting power systems developers believe without some way of balancing load versus supply, electric utilities have a difficult time matching load with supply, and all the resulting economic and technical problems that come with it. Also, add-on generation grids such as wind farms are prone to introducing fault currents to the main grid, or require VAR compensation—both of which increase the cost of using that energy. Superconductors are being used in the development of solutions for all three of these problems. Siemens, GE, Sumitomo Electric, IGC SuperPower, American Superconductor, SC Power, CAS in China, KEPRI in Korea, and a bunch more are, or have been, working in this area, and their technologies and businesses have been reported on in some detail.

Perhaps more speculative, developers of high temperature superconducting (HTS) generators are looking to put them in wind turbines. The main reasons for this have to do with the electrical properties of AC superconducting machines, an also because such machines would be dramatically lighter and smaller than conventional generators. There is also some improvement in generation efficiency.

The cost of cooling superconductors is not necessarily a significant hurdle, and refrigerators that cool superconducting devices to their 30 to 65 degrees Kelvin operating temperature are commercially available. Admittedly, the technical challenges of integrating the cooling systems within the device are sometime daunting.

One last reason why superconductors may be considered by some to be “clean tech” is because they may, in fact, provide a cleaner alternative to conventional technology.

For example: in a story we are preparing in Superconductor Week, we look into the massive transformers that are used in substations to take power from transmission voltages to distribution voltages. These devices are inefficient, dangerous, and environmentally hazardous. One company researching the topic concluded that existing conventional 26MVA transformers contain seven tons of copper winding, 16 tons of iron, and 14,000 liters of highly flammable oil. In contrast, an equivalent HTS transformer could contain just 200kg of superconductor in its windings, which are immersed in non-flammable and environmentally benign liquid nitrogen.

In addition, this research concluded that operating at full load, such a HTS transformer would provide an annual abatement of 1,500 ton of CO2 and save $900,000 in electricity over its lifetime. The study concluded “that by including the installation of HTS transformers as part of their national abatement strategy… countries could meet a significant proportion of their Kyoto protocol targets.”

The question of whether superconductors are “clean tech” is semantic. The real question is, can developers make HTS devices that work, and can utilities be persuaded to buy them?

For more information, visit: www.superconductorweek.com

Limitations on Metals Not Usually Addressed by Cleantech

This article on LiveScience comments on an area that we do not discuss that often in the Cleantech world, but gets more attention in sustainability discussions: namely that the base raw materials that we use are running down, as well as our fossil fuel energy sources.

The Live Science.com article primarily quoted a Yale University study in the Proceedings of the National Academy of Sciences.

The statistic in the article that I found most intriguing:

“According to the study, all of the copper in ore, plus all of the copper currently in use, would be required to bring the world to the level of the developed nations for power transmission, construction and other services and products that depend on the metal.”

A couple of comments on metals use reduction:

I’m not entirely sure how our world can reach true sustainability long term without running down inventory stocks of metals to some degree, but we should be able to flatten the decline curve.

I would think that energy efficiency can have some impact on reducing metals use, all the way back down the supply chain. But it is a bit unclear to me how much. As a side note on that, I ran across a new group today, a nonprofit in Oakland called FootprintNetwork.org. Their mandate is analyzing the environmental footprint of businesses, regions, and organizations.

I would think switching fuel sources can sometimes reduce metals on a life cycle basis, when you are switching to a source like photovoltaics, where the materials input/watt produced is much lower than say, a diesel engine and all the fuel, supply chain, manufacturing and production requirements. But the calculation to estimate that is not a simple one.

Superconductor wire technology, like our blogger Mark Bitterman from Superconductor Week has written on before, with tremendously higher efficiencies, is a direct replacement for copper, and uses far less materials, but is not ready for prime time yet. You can find additional blog commentary on HTS and superconductor impact on James Fraser’s The Energy Blog.

Of course, the main area of impact from our daily lives is the sustainability mantra: reduce, recycle, reuse.

Future Looks Brighter Thanks to the California Solar Initiative

On January 12th the California Public Utilities Commission (PUC) approved the California Solar Initiative (CSI), which provides $2.9 billion in incentives from 2007 – 2017 to help promote the development of solar power. This program is aimed at reducing the costs of solar technology for State consumers as California move towards cleaner energy solutions. The CSI represents the largest program of its kind in the United States, setting an example that many hope will lead to nationwide growth opportunities within the renewable energy arena.

“The California Solar Initiative is the largest solar program in the country and I hope it will be a model for other states. The program will be a major source of dependable and environmentally friendly electricity, and is a major tool in the State’s promise to address climate change and meet the Governor’s goals to reduce greenhouse gas emissions,” stated PUC Commissioner Dian M. Grueneich.

It is believed that this program will help to stabilize and solidify the market for solar technology, benefiting consumers as well as participating companies operating within this space. Dr. Robert Wilder, CEO & Founder of Wildershares, LLC and Manager of the WilderHill Clean Energy Index explains, “Many solar companies have already sold out all their panels for this entire year and some into the next year, so this isn’t so much going to create wanted demand – the demand is there now. Instead, it’s going to ensure a more stable scenario for the future. Producers of raw silicon for panels will ramp up with less risk now, as they look five or ten years out.

This Initiative will also help kick-start other States and even Nations to grow their solar programs. Germany and Japan have benefited so far with the jobs created and growth from their ambitious programs, and now it’s California’s turn. I’m proud that the State is going to generate economic growth and new jobs, enacting this smarter energy policy that’s a win-win all around.”

I am looking forward to evaluating the impact that this initiative will have not only for Californians, but for many of the other states that have aggressively been pursuing clean energy

The Solar Market Marches On – Major Recent Trends in Cleantech

I thought for todays post I’d summarize some of the major trends that I see in the solar market:

1. IPOs and VCs Are Stilll Headed Up – Solar is still the biggest thing in cleantech or energy tech from an investor standpoint. I think a solar company has won the NREL Growth Forum award 3 of the last 4 years. Suntech Power just had a big solar splash on NYSE, listed at $19 and is up to $35/share now. (we discussed this on Cleantechblog recently) Q-Cells AG in Germany saw similar results, and we’ve seen numerous little IPOs in the sector. Just wait until one of the real power players like Shell or Kyocera or BP IPOs their solar unit.

2. Everyone’s adding capacity – Every time I turn around their is another press release on solar companies large and small expanding.

3. New power players are emerging. See comment on Suntech Power above (only a couple of years old, as well as my previous post on Honda, More Cleantech News – Honda Enters the Solar Business.

4. The Developing World Will Become a Major Driver – See Peter Beadle’s previous post on Cleantechblog

5. But the big players, Sharp, BP, Kyocera, Shell, etc. are still the big players, and aren’t showing any signs of relinquishing the title.