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.

Notes from Renewable Energy Finance Forum

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

New Energy + Mature Energy = Scale

Because of my work with PetroAlgaeSkyFuelEarthTronics and other cleantech companies, it has become clear to me that the degree of success achieved by “new energy” technologies (wind, solar, biofuels, electric vehicles, etc) will in large part be the result of their ability to integrate into and leverage the existing, “mature energy” infrastructure. Whether it’s plug-in, drop-in, co-fire, bolt-on or some other term, it is these types of technology – which DO NOT require significant retooling of refineries, transmission, storage, etc – that will have the best chance to scale, and thereby win in the long-term. Exxon’s recent announcement to invest $600 million in algae is a good indicator of this trend. Similar to the discussion of gigaton scale in my last post, cleantech companies need to be thinking about this issue when developing their positioning and go-to-market strategy.

Go “Gig” or Go Home

At the launch of the Gigaton Throwdown in DC last week, entrepreneurs and investors adopted a new metric for cleantech businesses other than internal rate of return – something called gigaton scale. The herd mentality that has characterized cleantech over the past three years continues today. In 2007 it was biofuels, in 2008 it was solar, and this year it appears to be smart grid and efficiency (which is ironic because for the longest time investors swore up and down that energy efficiency didn’t fit the VC model). What is so captivating about the Gigaton Throwdown is that it challenges businesses, investors and policymakers alike to focus on the technological pathways that have the potential to abate one gigaton of carbon or GHG equivalent per pathway per year by 2020. And executives with vision appear to be buying in. The CEO of Novozymes, Steen Riisgaard, for example told me during a recent conversation: “Thinking at gigaton scale is helping us identify our ultimate potential. Novozymes has the aim to help our customers achieve a 75 million tons reduction in greenhouse gases by 2015. But we actually believe the potential is much, much higher if you look at the entire industrial biotech space, where we think can reach gigaton scale within 10-20 years.” Similarly, Marty Lagod of Firelake Capital referenced one company, EOS Climate, in his investment portfolio that he bet on precisely because it has the potential to reach gigaton scale. Marc Porat, who has founded three cleantech building companies (Serious MaterialsCalStar and ZETA Communities) has focused on building materials and building efficiency for the same reason. In his typical candor, he said that a lot of cleantech businesses in Silicon Valley are “vanities, which will not make a difference”. He’s absolutely right. And while businesses and entrepreneurs seem to be getting it, according to Cathy Zoi, the newly confirmed assistant secretary of energy for energy efficiency and renewable energy, policymakers in DC “don’t fully understand the potential scale of clean energy”. If the Gigaton Throwdown is successful it will change that, and bring all parties involved in the clean economy to the common realization that gigaton scale – besides meaning the possibility of climate stabilization within the necessary timeframe – also means gigadollar scale.

marketing monday: dot freako, pickin on pickens, GEe whiz

This is installment #1 of a regular update – short snippets of commentary – I’ll be doing on happenings related to cleantech marketing. It’s intended to be a smell test. So let’s clear those nostrils:

  • There’s talk of a new dot “eco” domain, with Al Gore attached as the celebrity. First, the last thing we need in the world is another web domain to manage (I’m still trying to get over the buzzkill from .biz). Second, the whole .eco thing will turn into a greenwashing tsunami before you can say Chevron. I can see it already – friendsofcoal.eco, monsantolovesmothernature.eco… the first one I would probably register would be a squatter site at puertor.eco. According to reports, the founders behind the domain plan to foil possible greenwashing by policing whether people deserve to have the dot or not (they use the term “filter”, but let’s just call it what it would be – a subjective value judgment, aka censorship, aka a non-starter). How about we spend our time doing something substantive instead? Gore is too polarizing for the dot eco thing to gain significant mainstream traction (one eco-leaning journalist recently told me that he’s sick and tired of hearing Gore give the same speech over and over, and even after all that Gore-speak people still don’t believe him). The idea behind the new dot – give 50% of profit to environmental causes – is a fine one, but the people who already own URLs at .com, .net, .org and whatever other dot could just as easily save their dot eco registration money and give 10 bucks a year to a good cause through KivaINVESTGreen MicrofinancePractical ActionGlobal Green and Global GivingConclusion: Marketing ploy that’s too clever by half, and ultimately a distraction. Besides, isn’t environmentalism dead?
  • I confess I’m intrigued by the Virtual March that T. Boone Pickens’ organization has announced for early April. If 2 million people really do make their voices heard by policymakers in DC (by phone, email and yes, even something called “fax”) then how bad can that be, right? But I question the whole motivation of Pickens himself. Is it merely coincidence that two central components of the Pickens plan for planetary salvation – wind power and natural gas – just happen to be two of his major areas of investment? Further more, natural gas is just as much in the control of the Middle East and Central Asia as oil (more than two-thirds of world proved reserves). Why replace one foreign addiction with another? Conclusion: I enlisted in the “army”, but I’m pretty sure Congress is only paying attention to the bazillion lobbyists now lurking around every corner of DC (including Pickens) looking for stimulus money.
  • GE’s ecomagination has pulled together an interactive campaign to help people visualize the Smart Grid through an “augmented reality” digital hologram. (Reality is enough for me as is thanks, I don’t need it augmented). But give GE credit for experimenting with something new and different. Unfortunately, I only got as far as the five-part instructions that began with a requirement to print a “Solar Panel Marker” (a what?). Instead, I watched an accompanying video that “shows how it works”. Looks cool. Conclusion: Good if you have 45 minutes in a 6th grade science class. Bad if you are a working stiff like me with two kids that want to go outside and play. Also, need to tone the geek speak way down.

If you have ideas for other issues to explore, send me a note on Twitter @mrcleantech

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.

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