Cleantech: Bright Spot In U.S.-China Cooperation

Despite heated rhetoric from protectionist corners that China and the United States must compete over the massive dollars associated with the clean energy industry, some signs are actually emerging that we’re entering a phase of mutual benefit and collaboration.

It’s a natural fit: the U.S. is an innovation engine short of capital and customers, and China is a commercialization hotspot with lots of money and a major environmental problem. Thanks to interesting new deal structures that allow for commercialization to happen while addressing U.S. intellectual property concerns, cooperation finally appears to be a reality.

In April, Zhongding Group announced a $200 million investment to scale the production of U.S. company EcoMotor’s ultra-efficient motor technology. A new manufacturing facility will be built in China to commercialize a technology that would have otherwise taken years to come to market (if ever) in the United States. Similar deals have started to add up. Wanxiang Holdings acquired faltering U.S. battery company A123 Systems (now renamed B456 – can you say rebrand fail?) for $250 million and also invested $420 million in GreatPoint Energy, a company that turns coal into natural gas. Coal-to-butanol company IGP Energy similarly formed a joint venture with Chinese coal giant Yankuang Group for five facilities. Shanghai steel giant Baosteel also invested in waste-to-fuel company LanzaTech, funding a demonstration plant that is expected to result soon in a fully commercial facility.

All of these deals, and many others, have meant rapid acceleration of technology that may not have otherwise happened. But the benefit isn’t just flowing to U.S. cleantech companies starved for cash. China also desperately needs the technologies to address mounting environmental concerns – air pollution, severe water shortages, food safety and the list goes on and on.

According to Cleantech investor Greg Manuel, there is a 5-plus year “innovation delta” between the clean technologies being developed in the United States and those in development in China (with China lagging behind). Similarly, Manuel says, there will be a $4.5 billion shortfall in capital for U.S.-developed clean technology start-ups in the next three years. “This emerging pattern of cooperation is still in its early stages. But there is a tremendous vector of opportunity when you look at the innovation delta, capital gap and severe environmental and energy challenges facing large Chinese enterprises with large pools of cash,” said Manuel, formerly a special advisor for energy affairs to U.S. Secretary of State Condoleezza Rice and senior vice president for corporate development and strategy at Amyris.

This post originally appeared on Forbes.com

High Noon for US Clean Energy Leadership: March 21, 2011

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 21st 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.

Coal: ‘Clean’ or Otherwise, Get Used to It

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 GoreBill 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.

Cleantech Media Survey: 2009 is Policy, Blog Year

Media covering cleantech expect to pay significant attention to policy in 2009 and they also have declared it the year of blogging and video, according to results of my first Annual Cleantech Media Survey released today. With an Obama administration set to take office and the next president’s commitment to end oil dependence and address climate change, 77% of those surveyed said they expect media to place “significant” emphasis on policy-related cleantech coverage, with the remainder saying policy coverage would be “moderate”. In addition, the survey of more than 100 media – leading blogs as well as mainstream newspapers, magazines and broadcasters – revealed that roughly three-quarters expect to see growing demand for cleantech sector news (from both readers and editors) this year compared to 2008.

Solar will remain king of the renewables. Two-thirds of those surveyed named solar as the renewable energy source to be most covered in 2009, with wind and next generation biofuels coming in a distant tie for second at 15% each. And of note, media expect energy efficiency – long a tough sell to editors and readers – to be the top non-renewables cleantech story for 2009, with 40% naming it their top choice. Carbon market and related technologies was second at 25%, with EVs and industry consolidation coming in at 17% and 15%, respectively.

As far as delivery of cleantech news, a majority of survey participants – nearly 60% – said blogs would be the key tool to tell the cleantech story in 2009, with video garnering one-fifth of the vote (Twitter, podcasts and slideshows also received mention). Concerning to the overall state of cleantech media, a total of 62% of those surveyed expect new media to continue to grow and traditional media to continue to shrink, or for new media to take market share from traditional media. A quarter had a balanced POV, expecting both new and traditional media to look for mutually beneficial distribution relationships.

Among the respondents, there is little consensus on the major untold story for 2009. Categories that received multiple votes included efficiency (including smart grid, building energy use and demand response), coal, power storage and cleantech as the engine for economic recovery. Others receiving votes included CleanNano, bioplastics, the Mideast as solar mecca, urban windmills and water as the next “peak” story, Several media also expect the main untold story to be a negative one – examples included: realization of how long it will take for renewables to become more than a rounding error in the energy diet; new forms of greenwash as companies scramble for Obama dollars, and how solar PV and hybrid cars will contribute nothing significant to cutting GHG.

Some reporters and organizations have done their own stand-alone predictions for the new year. Kerry Dolan of Forbes, for example, predicts that the grid will be big in 2009, and that solar will continue to soar. American Wind Energy Association also did their predictions for wind in 2009, Jetson Green offered up seven trends to expect in 2009 and Greener Buildings offered up their forecast as well.

If you’ve seen other media forecasts for 2009, please add them to the Comments section of this post.

Capitol Hill Update: Cleantech Finding a Voice

The Clean Technology and Sustainable Industries Organization (CTSI) organized a “DC Policy Tour for Clean Technology” this month, taking 50 cleantech industry players (representing cleaner coal, solar, wind, nuclear, hydrogen, demand response, water, biomass and fuel cells, plus investors) on a Congressional walk-about. I spoke with Patti Glaza, executive director and CEO, to get her take on the day and the outcomes. After a total of 45 meetings with elected officials from more than 20 states, Ms. Glaza reported that renewable energy tax credit extensions will happen, but only for one year (longer term extensions will most likely come in the next administration) and that climate change legislation will be considered in June, although again it would be surprising to see anything being signed into law prior to the next administration. She also said that both the House and Senate have requested a significant increase in the Dept. of Energy (DOE) budget from what was in the department’s original request, and that more funding should be available than last year. Ms. Glaza added, however, that it was unlikely that the Advance Research Projects Energy (ARPA-E) program that was approved in the America Competes Act last year will get off the ground.  More details from the day can be gleaned from the Q&A below, including tips from Ms. Glaza for how companies, even start-ups, can work with their elected officials to make a bigger difference at the Federal level.

Q: Any humorous moments from the tour?

A: We learned to never let a tour member tell a Republican official that we should pay for the renewable energy tax extensions with funding for the Iraq war.

Q: Who did you visit and get traction with?

A: The primary focus of the meetings was with members of the Appropriations and Ways & Means Committees as Congress is currently finalizing agency budgets and funding programs slated for this fiscal year. We also targeted the Science & Technology, Small Business, Energy Independence & Global Warming, and Energy & Commerce committees and subcommittees, in addition to several executive-level meetings at the DOE. The highlight was Sen. Byron Dorgan (ND) who leads the Democratic Policy Committee and sits on key committees including Appropriations; Commerce, Science & Transportation, and Committee on Energy & Natural Resources. Sen. Dorgan and his staff took a significant amount of time with our group and showed real interest and knowledge of the challenges the sector faces.    There are a lot of champions on the Hill and we need help in reaching out to all of them. Congressmen that took the time to meet with the tour directly included: Tom UdallVito FossellaDale KildeePhil EnglishJay Inslee, and Dorgan. Additional offices showing high-level support included: Cantwell, Clinton, McNerney, Barrow, Capuano, and Candace Miller.

Q: It seems there is a scarcity of coordinated government relations work being done on the part of the cleantech industry. Is that an accurate read on the situation?

A: My initial assessment is that as an industry or sector, clean technology has not had strong representation in Washington DC. Inslee made the comment that he has been waiting for a group like CTSI and is glad we have started our efforts. That being said, there is strong government relations work being done for specific clean technology segments, solar, wind, and biofuels being examples. The role CTSI is trying to fill is to advocate for policies and programs that address the complexity and interrelated issues of energy, water, and the environment. Renewable energy needs smart grid needs cleaner base load generation needs distributed generation support needs water management/reduction, etc.

It was obvious from our meetings that the Hill is extremely receptive to a sector they see as providing new jobs, energy security/independence, and increasing the US global competitiveness. Regardless of the group organizing, a broad technology platform is essential. Industry has to be seen as working together on solving the bigger issues (growing energy demand, climate change, etc.) and not just advocating for specific industry segments in isolation.

Q: How can companies make a difference on the national level?

A: I see three immediate ways that organizations can make a difference:

- Companies need to take the time to educate their local representatives on their companies, technologies, and how they are working to solve the larger issues.

- Executives need to participate in Washington DC based meetings to emphasize the important role policy and regulation play in developing the clean technology sector. Nothing grabs attention like a company telling their representative that they expect to start laying off workers in June/July because the renewable tax credits haven’t been extended.

- Overall, companies need to recognize that policy isn’t just for the big players. Policy and regulations have and will have a significant impact on the rate of development and adoption of clean technologies, and growing technology companies need to be at the table when those policies and regulations are being created. Yes, resources are limited. Yes, policy is complicated and difficult to understand. Thus the role of policy and trade organizations.

Is Gates Fdn Missing the Sinking Boat?

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.

What coal technology for China?

I spent last week in Beijing for the kick-off meeting of Cleantech China‘s founding members. The air pollution was so bad that my eyes were stinging for two of the days; visibility was less than 500 meters according to the local news, but it seemed more like 200 meters. Understandably, a lot of the conversation was around coal, since it accounts for 70+ percent of China’s power generation and is the main source of pollution and CO2. Todd Glass, who heads the energy practice group at Heller Erhman, was particularly informative on the topic (when he wasn’t being subjected to my harangues that “clean” coal was a mythic moniker, and should be replaced by “cleaner” coal.). Several interesting companies came up in our discussion. Ergo Exergy Technologies already has two projects demonstrating its in situ sequestration/gasification technology, while cash rich GreatPoint Energy and publicly traded Synthesis Energy were two other companies mentioned as leaders in gasification. Interestingly, however, when we toured Tsinghua University’s energy research facilities, we heard from Dr. Cai Ningsheng that the best option for China today is not gasification, but ultra-supercritical pulverized coal (USC-PC) and also coal-fired boiler (CFB) technology. They are working on gasification, pre-combustion and sequestration options too, of course, but Dr. Cai’s opinion is that USC is the near- to mid-term solution for China. USC-PC is at least half the cost of IGCC in China and has a lower technology risk as well. Nor is all coal suitable for IGCC. Technology advances, Cai said, are possible with USC-PC and CFB that allow CO2 capture, post-combustion capture and oxy-fuel combustion. In my earlier conversations with pre-burn technology companies in the US such as CoalTek and Evergreen Energy, their concerns were more around IP protection when going to China, not necessarily market demand. It will be worth watching the outcome of the strategic economic dialogue between the US and China on easing restrictions on coal technology transfer and how the different technologies on the table play out in the market.

The China Challenge

(This is an article I wrote for Yes! magazine a couple of years ago. I am currently updating it for the China Business Review). 

After an initial rush of excitement over writing a piece about China for YES!, a slow creep of dread and unease replaced the thrill. With global oil prices spiking because of China’s rapacious growth in oil consumption and the country poised to replace the United States in the dubious role of world leader in carbon dioxide emissions, could I honestly write an article portraying as positive what is happening with China and fossil fuels?

My doubts were not erased, but amplified, after some initial phone calls to environmental leaders in China were met with long pauses when I asked for suggestions on positive stories.

But I was not deterred. China is important to me. I take what is happening there to heart. In many ways it is my home, and I am protective of it. I have spent nearly half of my life there, as a foreign correspondent and businessman from 1986 to 2002. During that time, I experienced what I consider to be one of the most dramatic periods of transformation in world history from the brief ecstasy of free expression in the late 1980s and the might of totalitarianism in snuffing it out, to a shift toward capital markets and the massive spiritual, economic, and social changes that came with that shift, including the beginnings of civil society. (When the United States industrialized, it had fewer than 80 million people, and it took around 40 years to do it. China has nearly 20 times that number of people, and it is industrializing at hyper-drive speed, manufacturing not only for itself but for the rest of the world.)

I believe it is essential that all of us not only understand what is going on in China, but that we become active agents for making it better. Unless we do something urgent, my two-year-old son will enter adulthood in a world neither he nor I want to contemplate.

When I first arrived in China, Beijing was one big bicycle lane, as was the rest of China. There were no private cars no one had the money and even if they had, private car ownership was prohibited by the government. The few cabs on the road catered to the few foreigners who paid in the equivalent of U.S. dollars.

Read more at Yes! magazine