Solyndra is getting a lot of headlines, but the company's high-profile implosion is the symptom of a renewable energy industry rationalization that has been long anticipated. It shouldn't be a surprise or generate excessive hand wringing.

Whether it's solar, bioenergy, power storage or any other cleantech vertical, there will be a lot of dead bodies littered across the market in the next 12 to 18 months. That is just a fact, and a natural outcome of an industry (finally) maturing.

Most importantly, it is a signal that we are moving from a period of technology innovation to one of market innovation, and therefore true mass adoption. And with mass adoption, the focus of corporate communications is necessarily shifting toward building brand credibility, loyalty, engagement and awareness.

The companies that have the strongest brand coming out of the industry consolidation cage match will be best positioned to be the last brands standing. Many executives I speak with expect only a handful of brands to survive the shake-out of each sector. The stakes are high, as brand equity has many implications: lower cost of capital, lower cost of customer acquisition, the potential to charge a premium, etc.

Brand ≠ Hype

But make no mistake, many of the companies that are perceived as having the strongest renewable energy brands today in fact do not.

Often funded by Silicon Valley investors used to the hype cycle and quick returns of media, ecommerce and high-tech companies, many of the cleantech brands now considered the darlings of their respective sectors will soon enough be dead and gone, or acquired for pennies on the dollar by existing conglomerates.

A strong brand is not just about hyping awareness, it is about delivering on your promises — to achieve business milestones, to hold up your end of a strategic channel partnership, to nurture employees, to provide a return for investors and to provide a benefit to society (economic, environmental or otherwise).

Many of today's renewable energy brands have over-promised, and just as many if not more have under-delivered. Caveat emptor.

The Impact of China and "The Strategics"

While it is still too early to make iron-clad declarations of winners and losers, already some of the brands that will survive are starting to rise to the surface. Some of them are new, and some of them are familiar.

In the electric vehicle industry, for example, Tesla appears to have survived its start-up origins to evolve into an automotive brand with staying power, while the likes of Chevrolet and Nissan seem to have shifted laterally early enough to have carved out a future niche as well.

Similarly, multinationals in other sectors — chemicals, fuels, generation, transmission, infrastructure — are starting to play an increasingly prominent role in the looming brand wars, and may end up being the de facto renewable energy brands of the future. With market conditions buffet the renewable energy sector, many of these strategics smell good deals and are becoming more acquisitive.

At any rate, it seems fair to say that some of the ultimate brand winners will be ones we may not even know of yet, while others will belong to existing Fortune 500 companies, who buy early leaders, then apply their significant marketing muscle to enhance them further or subsume them entirely.

The other question hanging out there: where will the leading brands reside?

Given the emergence of China and Brazil as important players and the fact that the developing world is ripe for renewable energy deployment, it remains to be seen if the winning brands will be the usual suspects from Europe, the United States or Japan, or whether the companies will be based in the developing world.

Some brands from China seem poised for leadership. But will they have the foresight to invest strategically in brand enhancement on a global scale, something corporate culture there has not traditionally valued?

We will see. In the meantime, let the brand wars begin.

(This post also appeared on GreenBiz.com)

A wise man once said that contemporary politics is fueled by two things: raising money, and a fear of angry mobs. OK, I actually said that. Nevertheless, it makes sense that the ultimate nightmare for DC lawmakers would be an angry mob with money. At the Renewable Energy Finance Forum-West this week in San Francisco, a gathering of top financiers, project developers, executives, etc, it was clear that there are a lot of angry and frustrated American businesspeople with money who are sick and tired of Washington's refusal to treat renewable energy and cleantech as THE pillar of our future economic growth (not to mention a solution to our increasingly resource-constrained world). Not surprisingly during REFF, Beijing’s aggressive moves to become the cleantech power were repeatedly contrasted against DC’s cowardice and failure to act. Yet, so far the efforts to change the situation in DC by the broader clean energy business community have added up to only a sliver of the lobbying dollars spent by Big Oil and Coal, plus the occasional pilgrimage to DC by a few handfuls of business leaders to implore action (and increasingly that requested action is just short-term fixes, not long-term solutions). So with Solar Power International just around the corner; with WindPower coming up in May 2011; I have a question for Rhone Resch and for Denise Bode. Why are you gathering your mobs with money in Los Angeles?

Perhaps what’s not needed is the current drip campaign, nor “constructive engagement” with the representatives in DC, but blunt force trauma. Congress, and especially the Senate, needs to be convinced that the clean economy interest group is just as powerful as the fossil fuel lobby, with the money to back up its talk. Congress also needs to viscerally feel that the clean economy is a money-making, tax-generating, vote-swaying reality. So I have two specific calls to action for the renewable energy industry.

1. For the next 3 years, EVERY major trade show for every sector of clean energy – solar, wind, geothermal, power storage, smart grid (thanks Gridwise Alliance Forum for being in DC already), should take place in Washington, D.C. Seeing is believing. If Solar Power’s 50,000 delegates, Windpower’s 25,000 delegates and other similar numbers descended on DC every year and disrupted Congressional limos, lawmakers might pay more attention.
2. That 1,000,000 business people – employers and employees (present and future) – from the clean energy industry descend on the Capitol Building on March 21, 2011, and show the power and confidence of the new “industrial evolution”. Not NGOs, not lobbyists, but the real deal – CEOs, CFOs, installers, retrofitters, you name it. If we need a sea change in US energy policy, let’s put a sea of angry people with money at the doorstep of those failing to act.

Jeff Immelt of GE: you called Congress “stupid” because of it’s failed energy and climate policy. Will you sign on?

Jim Rogers of Duke Energy: you’ve argued that the most energy efficient economy will be the leader of the 21^st century. Will you sign on?

Bill Gates: you want billions of dollars more investment in clean energy R&D. Sign up.

Tom Friedman of the New York Times: you clearly have a bee in your bonnet on this topic. Will you show up?

Being an optimist, I have already created an event page on Facebook, called the Million Business Voices for a Clean Energy Economy and another on LinkedIn. If there are at least 10,000 people signed up before October 10, this thing might have a chance. So spread the word.

This week I had the opportunity to join 200+ business leaders from 35+ states in Washington, DC to present the business case for comprehensive climate and energy policy for the US. The We Can Lead group met with senior Obama administration officials and members of the Senate. It was a great first step in kicking off an effort to provide an institutional counter-point to the fossil fuel lobby, but my conclusion from the event was that we face a major uphill struggle. Specifically:

·         the current Administration is still measuring itself against the inaction of the Bush years, and needs to measure itself against the action of China and other governments that are accelerating their steps toward a clean economy while we appear to be stuck in 2nd gear.

·         the US Senate is still nowhere near enacting any climate or energy policy. 2009 is definitely out because of healthcare (I heard last week at REFF that the market has already discounted anything for 2009 as well). And there is even the possibility (albeit remote) that immigration reform could be up for deliberation before climate.

·         There are doubts on the key Senate finance committee about imposing a cap on carbon. The complexity of the issue has people searching for band-aids, and I fear stepping away from what’s really needed – reconstructive surgery.

 

On the positive side, it’s about time that the business sector representing the clean economy finally has an influential voice on Capitol Hill, and money to put behind it and against the fossil fuel lobby. I am a founder and on the steering committee of the Clean Economy Network, which was one of the co-organizers of the DC event (along with CERES).

Some of the trends, information I found interesting at REFF-West (rather than Tweet all of them, I’ve just listed them here):

 

• Compared to REFF-West last year, the mood was considerably more positive. Especially important, project finance appears to be recovering (the “community as a whole is looking to migrate back to development projects”) and tax equity is attracting more players than just JP Morgan. Jonathan Yellen of Deutsche Bank said “the projects market… is very strong for what we just went through”. He attributed this in part to the tightening of the bond market, which was pushing institutions more aggressively into funding solar, wind and geothermal projects.
• Some skepticism exists – Dan Reicher of Google said that without more policy support “we’re staring at the biggest cliff” for renewables when stimulus funding runs out in 18 months. Many at the meeting said DOE needs to be replaced by a CEDA (or the Green Bank), with Matt Cheney of Fotowatio less upbeat on the prospects for solar projects, and saying that “banks were not open for business” as claimed and calling for more innovation from the banking community on financing models.
• VCs are also seeing more action – Anup Jacob of Virgin Green Fund said he’s now seeing 6 deals a day, up from 6 a week half a year ago. He lamented, however, that the quality of the deals was too low.
• The forecast for M&A activity in 2010 is to expect “a lot of upside”, according to Jim Metcalfe of UBS Securities. IPO outlook “is improved, but there is still some way to go” to get back to the sweet spot of 2006/2007, according to Kevin Genieser of Morgan Stanley. There are 24 IPOs on file in various markets, but they will be smaller in scale, so likely to get good reception,
• Not new, but good quote from Mike Eckhart of ACORE: “If you’re interested in clean energy, the government is your partner”. Like it or not, in the highly regulated energy space, you better get your government groove on.
• Coal-to-liquid – I was unaware that the US CTL program began in 1944. Give it up already, or in the words of John Geesman, “after 65 years, the audacity of hope should yield to the audacity of nope”.
• Parker Weil of BofA Merrill Lynch said the “markets doesn’t believe that the best companies are getting the government funding”. 250 reviewers in DOE building every day since May reviewing ARRA projects, Matt Rogers of DOE said. But oddly, there is little transparency in how the decisions to fund are made – the credit committee for DOE loan program is confidential. That was troubling to many.
• Renewable energy technology entrepreneurs should not see utilities as competitors who will try to go it alone and scale their own technology, according to Weil, who said the utilities do not have as strong of a capital position as many believe.
• Former US Rep. Vic Fazio thinks the Senate can find 60 votes for climate and energy bill in the January-March 2010 timeframe. On a similar note, Tim Newell, advisor to U.S. Renewables Group, said that the capital markets have already discounted the possibility of climate legislation happening in 2009,
• China – good intelligence from Ryan Wiser of LBNL
  • Good chance it will surpass the US in wind installations for 2009.
  • Solar PV feed-in tariff could come this year, but more probable next year (already feed-ins for biomass and wind).
  • Expecting government to significantly increase their targets for wind and solar generation by end of 2009
• “Biofuels is a 4-letter word in most investment shops right now” – Jacob
• Hottest sectors in next 12 months:
  • PV, CSP – Yellen
  • “Big Wind and Small (i.e. distributed) Solar” – Weil
  • Wind for developers, smart grid for private equity – Jim McDermott
  • Smart grid and solar – Jacob
  • Smart grid (including demand response, meters and data management) – Geneiser

Interesting events mentioned that are worth sharing: US Partnership on Renewable Energy Finance and The Networked Grid

I know this POV will upset some folks, but here goes: coal isn’t going anywhere anytime soon. It’s cheap, plentiful and easy to access, so we better start figuring out how to use it in a cleaner way. Of course there is no such thing as “clean coal” (as I’ve noted on my blog several times in the past). For that matter, there is no such thing as 100% clean solar or clean batteries (someone is out there right now extracting silicon, cadmium and lithium from the ground). But there is something as “cleaner” coal. Don’t get me wrong – I think it’s important that people like Al Gore, Bill McKibben and the folks at Power Shift are out there demanding that the dirtiest coal-fired power generation facilities be dealt with. I agree that we need voices to be demanding an accelerated roadmap to coal alternatives in a loud and unequivocal way (including the tongue-in-cheek voice of the Coen brothers). And apparently, according to this map, Coal Power Death Watch, these voices appear to be gaining traction in the US.

But guess what – there’s an elephant in the room called China. Around 70% of China’s primary energy consumption comes from coal today, and that number, even with the most aggressive forecasts for replacing it with renewables, is going to remain around 35-40% by 2050. And coal replacement has no doubt been prolonged by the current economy, which is keeping alternatives at a higher price point relative to fossil fuels. And don’t blame China. The US is just as much to blame on the coal front, if not more so (according to new analysis, one third of China’s GHGs come from export-oriented industries. Guess who’s to blame for that Wal-Mart shoppers?). Not to mention that China’s government is going gangbusters trying to replace fossil fuels. It’s in its interest to do so – from a public health, economic development, political stability and national security perspective.

But let’s face reality. Beijing is not going to create a domestic economic and political meltdown by shutting the country’s coal plants tomorrow. Nor will it risk that in 2020, or 2030. In fact, the government has already been aggressively shutting down dozens of smaller, dirtier coal-fired plants in recent years, but China’s need for more energy also means it continues to open new plants. So a couple of things are needed: 1. a clear and aggressive mechanism for cooperation between the US and China on reducing the impact of burning coal and an immediate removal of all tech transfer restrictions for dual-use technologies that have the ability to abate coal emissions and 2. a willingness on the part of the replace-coal community, myself included, to work with what we’ve got and make sure that we do everything possible to promote cleaner coal as we transition to more renewable forms or energy.

If you want to get arrested for protesting in front of coal plants that’s all fine and good, but once you’re released from custody, start working to help coal plants in China figure out a way to deal with their emissions in as clean a way as possible. They need all the help they can get and time is precious. Whether its sequestering flue gas in building materials, using underground coal gasification, IGCC or something else, it doesn’t matter to me. It just needs to happen.  

By the way, I’m more than happy to be convinced otherwise, so if you want to state a different case, I’m all ears.

China’s amazing surge as an economic power started with the creation of special economic zones (SEZs) nearly 30 years ago, as did my “it’s complicated” love affair with the country. The zones provided a blueprint for the rest of the country toward accelerated wealth creation. They also marked the beginning of a catastrophic decline in environmental capital. Now the country may be dusting off the SEZ concept and considering the creation of Low Carbon Zones (LCZs). My involvement in the US-China Clean Energy Forum and JUCCCE has put China front of mind, as has my front-row seat in the international race to see who becomes the superpower of cleantech. In the resource-constrained world of the future, the economies that are most efficient (i.e. best at innovating and adopting clean technologies) will win. First proposed in 2007, the idea of Low Carbon Zones was an outcome of interaction between EU and Chinese think tanks, with the support of the UK Foreign Ministry and China’s National Development and Reform Commission (NDRC). The concept, thumbnailed here and here with even greater detail here, states:

LCZs would aim to stimulate transformational regional political leadership, endorsed at the national level, to create an enabling environment for large-scale innovative low carbon private and public investment. Just as SEZs provided China with a laboratory to shape its participation in the global market economy, the LCZs could pioneer approaches to decarbonisation compatible with Chinese institutions and development approaches.  

It appears an initial pilot of the LCZ concept is planned for China’s heavy industrial province of Jilin. I hope the idea flies, as it’s clearly in the global long-term interest. But no doubt questions of IP, tech transfer and ultimately money could create concerns within the industrialized democracies that the West is once again funding China’s development, only to be left holding the bag.  

Another seemingly similar initiative in China has recently emerged from the Climate Group, outlined in a new report, which also focuses on developing low carbon cities. According to the Climate Group, the program aims to recruit, motivate, and engage 20 Chinese cities in a five-year campaign to transform and accelerate the local market for energy efficiency and renewable energy technologies. MOUs have already been signed with the cities of Guiyang and Dezhou.  It’s unclear from the materials I’ve read what the specific funding mechanism for either of these concepts will be, although with the backing of groups like the NDRC at the central government level, it’s certainly within the realm of the possible. As I’ve written about before, China’s scale offers the greatest potential for any country (except for maybe India) to drive down costs of cleantech and make clean solutions truly commercially viable.   

But that doesn’t mean other countries aren’t trying to compete. Less developed ideas seem to be emerging in the US and Europe. Cities like Seattle and Boston have been floating the idea of cleantech innovation hubs. Various states are also vying to attract cleantech investment and economic stimulus money, including Colorado, Pennsylvania, New Mexico and Michigan. In Europe, efforts are also under way to create the region’s first cleantech incubator, which if successful, might be followed by others. And of course, there is the Oz-like effort in MASDAR in Abu Dhabi (“pay no attention to that man behind the curtain”), where the Wizard is oil money.  

It’s great to see a growing understanding that low carbon leadership will mean future political and economic leadership in the world. I just hope that those in the emerging Cleantech Great Game keep in mind the lessons of the original Great Game – that the fight for supremacy over a largely unmapped, strategic territory often leads to unnecessary pain and suffering at the expense of the common good. Let’s hope that the newly announced International Renewable Energy Agency (IRENA) can play a role in fostering the needed collaboration and help us put aside the myopia often caused by financial gain.

Here's an op-ed that I penned with Dan Rosen that appeared in the Tacoma News Tribune. If you haven't joined Business Leaders for Climate Solutions, you should. 

For a long time, "green" in Washington state has stood for Granny Smith and pine trees. With the Legislature's passage last session of the Climate Action and Green Jobs bill, the state took a big step in creating a future based on the new green – a vibrant economy based on clean technology (cleantech), the green consumer and green exports.

Gov. Chris Gregoire deserves congratulations for requesting and championing the bill. But we all still have more work to do. The window for establishing leadership in the cleantech economy is fast closing. The opportunity to have a strong voice in shaping federal climate policy is closing fast, too. According to the Cleantech Network, while the total amount of venture capital invested in clean technology grew explosively in the last year, the Northwest accounted for just four percent of the total. The Northwest's share was $261 million out of a national total of $6.4 billion, barely placing it in the top 10 regions. And that's not just Washington state, but Oregon and British Columbia as well.

 

Discount the investment in the local biodiesel company Imperium Renewables in 2007, and Washington easily trails the Vancouver, B.C., cleantech cluster and is arguably far behind Oregon, where business leadership has articulated a much clearer vision for establishing an industrial base around the theme of sustainability. California and the Northeast have taken significant leads, and places like Austin, Texas, and Chicago are mobilizing civic leadership around this sector.

As members of Business Leaders for Climate Solutions, we are proud to have supported the Climate Actions and Green Jobs bill. We were joined by 32 other state business leaders, representing cleantech entrepreneurs, investors, energy consultants, service providers or simply business people passionate about sustainability.

But if the Evergreen State is going to emerge from the ongoing cleantech boom with a significant piece of the green that is being created, the broader business community must rapidly and definitively elevate its game.This is not a niche issue; the challenge of using energy more efficiently and developing sustainable products and services affects every sector of the economy and will provide both opportunities for leadership and tremendous risks for the laggards. A recent survey found 61 percent of business executives around the world expect climate change solutions to boost company profits. That's why the major corporations that provide Washington's economic backbone and their executive leadership need to bring their vitally important participation to the table: It's of great economic interest to all of us.

Washington state arguably has several characteristics that will help us as we strive for a piece of the green economy. Our assets include: unrivaled branding as a center of "green" ideas; a consumer base that is highly sophisticated and demands truly sustainable products and services; and strong trade and economic ties with China and the Far East, which is fast emerging as a leading consumer of cleantech products and services. We applaud Sen. Maria Cantwell's efforts to make Seattle the center for the dialogue with

China about these issues.We also have a vibrant green building-and-design industry, which is one of the key pillars of the green economy. And we have the potential to become a power in providing integrated design solutions that will be needed to reduce energy usage worldwide, including "green software" and smart-grid applications.

Along with these strengths, we need to find sustainable and verifiable ways to leverage our vast forestry and agricultural resources as sources of renewable fuels and carbon sinks as regional and international markets take root.

But key pieces are missing. Specifically, for Washington to compete and lead in the cleantech economy, the business community must demand and achieve three things:

  • Legislation next year that commits Olympia to put a price on carbon through a regional cap-and-trade system, along with complementary policies that promote clean energy, sustainable development, transportation and land use, energy efficiency and training for the green-collar workforce;

  • Pressure on the federal government for strong climate policy that achieves reductions in global warming pollution that is science-based and beneficial to the economy;

 • And we need a business community that is focused on and organized around the vision of making the region an international leader in the coming cleantech transformation.

 We have a chance to truly be Evergreen. Now let's seize it.

Last year, I said that a time would come when the term "green" would fall into disuse. I'm now wondering if that time is nearer than I originally thought. I'm already sensing some fatigue from friends in the media. At the consumer level it's also more pronounced (depending on the day, search for "green fatigue" on a leading search engine bring back 500,000 to over 1 million results). Ironically, at the recently concluded Fortune Brainstorm: Green event, Andrew Shapiro of Green Order said that it felt as if 2008 would be the "apex of green". Which of course begs the question: How steep is the downward slope in 2009? Ted Nordhaus (who coincidentally was my childhood neighbor growing up in the southeast quadrant of Washington, DC, back when we both had hair) and his cohort Michael Shellenberger, in 2004 shook up the establishment with their paper called "Death of Environmentalism". They succeeded in pounding the final nail in that coffin. Now green's utility is in question and it is even being challenged by another color – "blue". Sustainability advocate Adam Werbach is now selling blue as the next step beyond green, arguing that blue is more accessible because it, in effect, means having your cake and eating it too (I've tried that, by the way, and I keep biting my hand by mistake). But really, green or blue, aren't we just creating another arbitrary label that will also fade away with time? Aren't we just setting ourselves up for "blue fatigue", when the next Adam Werbach comes along and pronounces the blue movement dead, and argues that its time for chartreuse to have a turn? Not to mention the fact that people in the developing world (I spent 16 consecutive years in China from 1987-2003 so I have some credibility) have just started the Long March to consumerism and couldn't really give a damn about green or blue, unless its related to the color of their new car or the tile in their newly renovated, air-conditioned kitchen.  

I moved into technology because public capital markets (and human activity more generally) are driven by short-term interest and unsustainable growth. Facing a powerful system backed by powerful inertia, it was my conclusion that fundamental change to our behavior around consumption/growth is highly unlikely to happen (to the degree or within the timeframe needed) to address the ecological problems we face. That POV was largely informed by my time in China, where I watched stock markets open, bans on advertising lifted, private cars allowed back on the roads and consumerism return with a vengeance. I witnessed China's boom and how it raised a lot of people out of poverty. The problem is that we can't raise the remaining 1 billion Chinese out of poverty without totally screwing ourselves and the ecology. And China is just the start – Brazil, India and the rest of the developing world are going through the same transformation. Far be it for me to deny others the chance to live lives of comfort. But it is highly naïve to assume that individual Chinese or Indians or Brazilians will have the foresight to look beyond their drive to material comfort and make decisions on how they live based on a moral responsibility for the health of the planet. The West didn't. It just won't happen (no offense Bill McKibben, whose conclusion for our generation – that more is not better – ignores the fact that its mainly people who know wealth who have room to think about less). Only when people are so afraid of the ramifications of climate change or toxic sludge seeping out of their water taps will they be motivated to change behavior (as recent events in Juneau underscored). But of course, by then it will be too late.  

So my bet for overcoming the challenges is technology, broadly defined. The way I see it, technology is the layer buffering natural resources from consumer and corporate behavior. It allows consumers to continue to behave much as they do and it allows natural resources to get a reprieve from that behavior. The more scaleable the technology, the bigger the reprieve and the better our chances. What Lawrence Berkeley National Lab has done with appliance standards in China is a perfect example of this. "Technology buffering" is not a panacea, but at least there is an opportunity to insert new clean technologies into existing products and systems and have a significant and accelerated impact. That's what gets me moving in the morning. (Several new books, The Cleantech Revolution, The Plot to Save the Planet and Apollo's Fire address this movement). 

What interests me from the Fortune event and others that I've attended over the past two years is a shift in the conversation. Many of the people I talk to say green/blue doesn't really matter. I agree. What matters is that "industrial restructuring" takes place. Whether the CEO of Stonyfield Farm ("we don't even use green to describe our customers, but 'quality' or 'educated'"), the chairman of SC Johnson ("we need to move the conversation from going green to transforming industry"), Vinod Khosla ("people's view of green is obsolete, its about mainstream business"), or builder Steve Glenn ("within 15 years green building goes away as a category"), the focus is more and more on creating a technological buffer to reshape the way we supply and demand.  

So let's focus on the technology that is going to get rid of the only color that deserves our attention – the black of oil and coal.

Hundreds of leaders from business, policy and NGOs in the same room for two days, naturally some interesting things will emerge. Below is a quick sketch of trends and comments from the just wrapped Fortune Brainstorm Green that I thought of particular note:

• The media "needs to get off cars and on to buildings" – Autodesk executive chairman Carol Bartz on the fact that the issue of buildings sucking energy, material and water is still not getting the attention it deserves. The numbers back her up. Conversely, it was noted by others in the green building space like Hycrete and Serious Materials that after a two decade hiatus, venture funding has found its way back to building in the past 2 years.
• A new version of LEED is set for unveil at Greenbuild in Boston and will be a "quantum leap" – head of USGBC Rick Fedrizzi
• Seems to be growing unease, and even skepticism, that cap and trade is going to be as easy at many thought. 2011 was heard repeatedly as a possible timeframe for legislation. Will a nascent business consensus fray into a mess? Are the economics fully understood to push forward aggressively? Is the Hill ready? Anecdotally at least, the answer is still clearly in the balance. One interesting alternative presented was Cap and Dividend.
• Like building, energy efficiency is still struggling to get more than a lot of lip service. Is recession the catalyst for cracking that nut? It was mentioned as a possibility.
• Hybrids and small cars are the fastest growing segment of US automotive market, according to Beth Lowery of GM. "The price of fuel is driving behavior," she said.
• "Living building" that taps into biomimicry is going mainstream. HOK – the giant architecture and design firm is starting to position itself as "bio-inspired", according to Janine Benyus, the founder of the Biomimicry Guild. Benyus' group is also looking to launch Asknature.org – a cool idea that allows anyone to query a database with questions about how nature addresses specific issues.
• Coke's environmental guru Jeff Seabright said look for something soon about consumer-facing information about "water used" in the company's products. It may not be on-package information, but something is coming. This would be welcome, since embedded water in consumer products is still very opaque to the consumer (for example, according to Dow Chemicals' Scott Noesen, it takes 2,000 liters of water to make a McDonald's hamburger if you do the whole-cost analysis.) There is nutritional information, now carbon labeling information has appeared, and water is the logical next step. Let's hope it happens.
• Vinod Khosla was the most provocative in my opinion during a 1:1 with Fortune's Adam Lashinsky. Highlights include:
  • Next generation batteries are not on a rapidly declining cost curve and require a quantum jump with a high probability of failure
  • The "Prius is more greenwash than green"
  • Technology for clean energy will only succeed if it passes the Chindia price test. If it's affordable in China and India then it has a shot.
  • Carbon emissions from all-electric cars are 3x more than that of cars powered by cellulosic ethanol.
• The highest correlation in the movement of solar stocks is the price of oil (not the price of natural gas as would be expected) – David Edwards, analyst at Morgan Stanley
• Both Monsanto CEO Hugh Grant and Khosla cited the same statistics placing biofuel as the fourth leading cause for the spike in global grain prices. The top three – rise in oil prices, drought in Australia and change in eating habits in developing countries like China (to more meat). I found one paper on Khosla's site about Fuel vs. Food, but it didn't appear to include the above list. Anyone know where it comes from?
• When Fortune's Marc Gunther asked a panel of Xerox, GM, SC Johnson and Dupont executives what grade corporate America should get in addressing environmental challenges (10 being the best grade), all of them said "1″, with the exception of GM's Lowery, who gave a "2″ because of innovation happening around new technologies. If you want to actually score a company, you can thanks to the CEO of Stonyfield Farm Gary Hirshberg, who has created an online corporate scorecard at Climatecounts.org

It's an unenviable position to have to prioritize the world's problems and solutions. First, there are too many. Second, there is an inter-relatedness to all of the problems that makes it difficult to pinpoint a chief culprit. Increasingly, however, it is clear that one issue trumps them all: energy. Plenty of other smart people have explained this, so I will just quote one – Nobel laureate Richard Smalley, who said "It is impossible to imagine bringing the lower half of the economic ladder of human civilization – about three billion people – up to a modern lifestyle without abundant, lowcost, clean energy". He made a strong case that energy touches everything – disease, water, poverty, terrorism, malnutrition, etc. As you might guess, I'm no Bjorn Lomborn booster. From where I sit he's advocating buying a dinghy to save those stranded on a desert isle when we need to marshal resources for an Armada to save the island's inhabitants... and everyone else. 

 

At any rate, it is encouraging to see a shift in public, business and government urgency that recognizes the energy calculus, some for energy security reasons, others for economic prosperity reasons and still others for climate change reasons. Support, happily, is getting stronger every day. Unhappily, as the Intergovernmental Panel on Climate Change notes, even with drastic action, we are still in big trouble.

 

Yet curiously, from a non-descript building on Lake Union here in Seattle, the Bill and Melinda Gates Foundation – the Fort

Knox of the NGO world with funds north of $30 billion and Warren Buffett's still to come – is so far nearly quiet on the issue of energy. And dare I say that Mr. Gates, a technology revolutionary himself, seems nonplussed that he is missing a revolution that badly needs him.

 

It almost goes without saying that the Foundation is doing incredible work to alleviate suffering of the world's poor. That work must continue and is testament to the size of Bill Gates’ heart and his commitment to activism and witness. But there are two sides to the coin. He is addressing the symptomatic and saving millions of lives, but oddly there is still nothing on the systemic issues surrounding energy that threaten billions. Even odder since technology – Mr. Gates' playground – has a key role to play in reducing poverty through the production of clean, distributed energy. 

 

Gates has clearly thought about energy. He has made two public pronouncements that I could find. One a 2006 interview with Newsweek, in which he stated that he was “already reading some books on energy and the environment… But I will read a lot more two years from now and think whether there's something the foundation should do in those areas,” he said. “The angle I'll have when I'll look at most things is, What about the 4 billion poorest people? What about energy and environmental issues for them?”

 

In November 2007, he added for Rolling Stone: "Between now and 2100, how many people in Africa are going to die of malaria? Just do the numbers. Helping them avoid an eleven-inch rise in the water in 2100, we could do it and we should do it, we will do it. But in terms of relative priorities, if you want to help the poor, this is not the issue to be focused on."  For a genius who started one of the most successful companies in human history, Gates appears to be unwilling to fully accept that energy affects the global commons, not discriminating based on income. While he's reading up on the issues, China put 90,000 megawatts of coal-fired power online in 2006 alone (about the equivalent of two Californias in capacity). All dirty coal, some of which finds its way to our lungs here in the Pacific Northwest. In Beijing last week for the Cleantech Forum, the Chinese government's cleantech guy, Shi Dinghuan, said that even by 2050, coal would still account for 50% of China's power generation (it's 70% now).  

So far, the Foundation appears to be hedging on energy/climate change. In August, it made its first investment, with a 100 million Euro commitment to Peony Capital Ltd., a Beijing-based company that is using investment in technology to lower GHG emissions through the UN CDM process. But we are all fooling ourselves if we think the market will take care of introducing the technologies to deal with GHG quickly enough to make a dent. Nor is the slow churn of policy going to get us there fast enough. Where Mr. Gates could make a difference, for example, is using his financial leverage to advocate for the creation of a public/private fund that works to provide financing for clean technologies that are already out there but not being implemented because of cost. Coal plants in China are a great example. They don't spend the money on cleaner technology, but if a powerful enough fund was created to drive the cost of the gasification/sequestration technology down and provide favorable financing (or even give it away), things could be greatly accelerated.  

 

It is certainly just a coincidence that the Gates Foundation is moving its offices from the lakeside to higher ground over the next two years. But maybe not. Maybe they are preparing to add their important voices to the campaign against dirty energy – from dry ground as the world's waters continue their eleven foot rise. One only hopes.