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

Human Health: the Cure for Climate Insanity?

While reading Bryan Walsh’s thoughtful review of a new book The Conundrum by David Owen, I noticed that the review was posted under TIME.com’s “health” section. The book is about energy efficiency.  What does energy efficiency have to do with health? The seeming disconnect between the two, plus a number of other things I’ve seen in the past week, prompted me to revisit an idea that I’ve been meaning to address for a while: Is is possible that humanity’s selfish concern for its own health will be the ultimate road block to inevitable ecological destruction?

I’m not sure. But I’m pretty sure that the answer will likely come from China (or India).

My old friend Bill Bishop, a long-time Beijing resident, posted a recent photo of his air filter after a couple of months removing coal dust and other harmful particulates. Scary. He is not alone, with a recent rush on indoor air filters reported by the Chinese media.  But as those reports point out, most people cannot afford the costly systems.

A lot of China-watchers tend to discount the impact of environmental pollution on the country’s development, preferring instead to debate the possibility of a hard landing due to loose bank lending, housing bubbles or other economic causes.

Clearly, health concerns can help drive change. The oil company-backed Prop 23 campaign in California – which sought to overturn the state’s progressive climate policy – was in part successful because of the support of the American Lung Association, and its ad campaign.

In China, where three decades of double-digit economi growth has resulted in a water crisis, unprecedented air pollution, the toll on human health is just starting to be quantified. But it doesn’t take data for people to know that something in China is wrong, and there is growing social unrest because of pollution.

Social unrest is the boogey-man for China’s rulers. It will be interesting to watch as the dynamic between continued growth and continued deterioration of public health plays out.

Here’s hoping health wins.

Clean Energy and the Last Brand Standing

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)

marketing monday: the green, the clean and the dirty

Friend Joel Makower stirred up a good discussion last week with his article, Green Marketing Is Over. Let’s Move On. Green marketeers Suzanne Shelton and Michael Martin disagreed with him. And while I agree with Joel (I’ve made the case in the past that not only green should be pronounced dead, but so should the notion of sustainability), I don’t expect the use of either to disappear anytime soon.

However, I find it somewhat amusing that Joel is calling for the demise of green on his website, GreenBiz, that is built around the concept of promoting green. Why should green marketing be obsolete, but green media not be? And Joel also mentions that Michael and Suzanne are green marketing consultants, the implication being that they have vested interests in promoting the survival of green marketing. True. But doesn’t GreenBiz also have a consulting arm focused on… helping companies become more green? Hmmm.

Mind you, as a marketer myself of “clean” – as in cleantech, clean energy and the clean economy – I’m not exempt from scrutiny (as I have pointed out in the past, there is no such thing as clean anything when you take a closer look. After all, everything we make requires the consumption of something, including EV batteries, solar panels, wind turbines, etc). Matt Ridley recently wrote a provocative post on this subject, which seems accurate and misguided at the same time. Accurate in that renewables are not strictly renewable if you look at their entire supply chain. Misguided in the assumption that there is an apple to apples comparison between fossil fuels and renewables (can you say “externalities”?).

So what’s the takeaway for me? We can all make the subject moot if products that have a smaller ecological impact 1) cost less, 2) are easy to use and 3) work well. Ultimately, that’s a function of innovative marketing that can help scale market demand, but more importantly innovation in financing, policy and product development. Green only becomes obsolete when there is no need to distinguish from the alternatives on price, efficacy and reliability.

Cleantech Policy Needs Clarity, Consistency and Cojones

EarthTechling recently interviewed me and asked for my perspective on trends in cleantech, including marketing, communications and PR. Some themes that emerged:

  • Five suggestions for cleantech companies to set themselves apart in a crowded market
  • Backing “boring” businesses usually works
  • Technology innovation we have plenty off; we need marketing, financing and business innovation (plus the 3Cs from energy policymakers – clarity, consistency and cojones

See the full interview

EV to be Most Hyped News of 2011: Survey

Media covering renewable energy and cleantech overwhelmingly expect the biggest news hype of 2011 to come from electric transportation, while they identified energy efficiency as the most deserving of coverage, according to my annual survey. With more than 70 respondents from newspapers, magazines, broadcasters and blogs, the survey also revealed that more than two-thirds of media expect demand for cleantech coverage to be greater this year.

The survey strongly confirmed one trend – the migration of content online; and appeared to shoot down another – lack of adequate budget. Nearly all of the respondents – 96% – said their work will primarily appear online, while almost 70% said that they would have enough resources to do a good job of reporting on cleantech this year. At the same time, there is a willingness to use content (video, animation, graphics, etc) produced by non-media sources (73% said they frequently or sometimes used content developed by companies).

In addition, the survey revealed some social media habits with regard to obtaining information, with Twitter (82%) by far and away the top choice of social tools for tracking news.  The RSS feed is also clearly not dead, with 57% naming it as the second tool of choice.

EV received 56% of the votes to be the most hyped sector in 2011, more than double the nearest competitor – smart grid, which received 20% of the votes. The only other technology that registered double-digit percentages was carbon capture and sequestration (16%).  On the flip side, media identified energy efficiency as the area that deserved the most media attention, with 42% choosing EE. This is ironic since I’ve often heard reporters say that they want to cover energy efficiency, but editors find it too boring (this is backed up by page views). The other technologies deserving attention mentioned by  more than 10% of respondents were: carbon management (20%); solar (13%); smart grid (13%) and water (11%). One of the most important sectors from an impact perspective, agriculture and foresty, got no votes.

As in previous years, the overwhelming majority of those surveyed (68%) said B2B coverage would take priority this year, with the remainder paying more attention to consumer technologies. Overall, the overall trend is also of continued interest in the sector – 62% expected increased demand for cleantech news among audiences

Interest in policy coverage also remains high, with nearly 80% expressing significant or moderate interest in tracking government developments.

marketing monday: the distributed brand

As someone who consults on communications and engagement for the Distributed Energy industry, it is clear that the future of communications is The Distributed Brand. Recent research from one of firm Weber Shandwick’s sister agencies, Universal McCann, backs this up. According to their Wave 5 – the Socialization of Brands study, findings included:

a company’s branded website as a destination for consumers is dropping – from 85% to 75% over the past three years – with more attention going to social platforms and mobile applications.

globally, nearly half of active internet users claim to have joined a brand community. Many join such a community to gain access to free content (69.6%), but the higher motivations are to learn (78.6%) and to get access to advance news of products (76.1%). In other words, people was first access to news and information.

of those joining a brand community, 72% said they thought more positively of the brand as a result, 71% said they are more likely to buy the brand, 66% said they felt more loyal to the brand and 63% said they recommended others to join.

At the same time, as someone who came out of the content creation business (I previously produced feature-length films, launched a magazine and newsletter, and worked as a journalist) it is also clear that one of the most important ways to become a distributed brand is to be a great content creator or co-creator, and to use that creation as a means of engaging communities. If you’re interested, some insights on this trend. My favorite: “the Chief Content Officer will be the CMO of the future.” Perhaps an exaggeration, but certainly the role of content and how to socialize it is making The Distributed Brand a shift that cannot be ignored.

Characteristics of Distributed Energy that can be applied to the Distributed Brand:

Both are about getting a solution to the point of use

Both are smaller scale and modular

Both are about peer to peer or many to many, not one to many

Both allow integration of other ancillary applications

Clean Energy: Too Many Interests, Not Enough Group

There is a lot of interest in clean energy. Here’s just a partial list of the US groups out there: American Business for Clean Energy,  Business Council for Sustainable EnergyEnvironmental EntrepreneursInvestor Network on Climate RiskBiomass Power AssociationRenewable Fuels AssociationClean Economy NetworkUS Climate Action PartnershipClean Energy WorksUS Clean Heat and Power AssociationSolar AllianceWe Can LeadAmerican Wind Energy AssociationAmerican Coalition for EthanolAdvanced Biofuels CoalitionWind CoalitionBusiness for Innovative Climate and Energy Policy,  Growth Energy,National Hydropower AssociationGeothermal Energy AssociationSolar Energy Industry AssociationSolar Electric Power AssociationCeresAmerican Council on Renewable EnergyAmerican Biogas Council,Carbon War RoomAlgal Biomass AssociationFuel Cell and Hydrogen Energy AssociationElectrification CoalitionAmerican Council for Energy Efficient EconomyGridwise AllianceDemand Response and Smart Grid CoalitionAmerican Energy Innovation CouncilBlueGreen Alliance, Water Innovations Alliance.

Remember, that is a partial list. And that doesn’t even include state and regional groups, of which there are dozens more.

Get the picture? A jumble of letters: “C” for council (five) and coalition (five); “A” for association (11) and alliance (four) and “S” for solar (three); plus at least four groups directly and indirectly touching “B” (for biofuels) and more than half a dozen groups broadly positioned around “E” for energy. What does that spell? Trouble with a “T”. At a time when the clean energy industry needs one powerful voice to drive policy and get federal and state lawmakers to actually do something visionary, what we are getting is a 100-part disharmony of sometimes clashing, sometimes overlapping agendas. With the recent shift in political winds in DC and many state houses signaling a tougher road ahead for a clean energy agenda, the need for that unified voice is even greater.

In fairness, an examination of the missions for the various groups often shows material differences in their focus, but how important are those differences in the broader picture? That is a question that we need to be asking ourselves.

The environmental NGOs – EDF, NRDC, WRI, etc – failed to influence national policy in a significant way during the first half of Obama’s current (and possibly only) term. But the truth is that, when it comes to getting more aggressive adoption of clean energy policies, the same can be said for the business interest groups listed above. A rationalization and consolidation of these groups is a reasonable expectation, and even if that fails to materialize, there is a strong need for an all-encompassing umbrella “organization of organizations” that rises above the petty jealousies and turf wars that often make the trade association, non-profit world ineffectual and scattered. Just as a consolidation of the cleantech industry itself is overdue, so too is one for the organizations that represent it.

Ironically, my involvement in the Clean Economy Network (CEN) was motivated by a desire for an industry defined by “distributed energy” to become more centralized in its approach to policy. Whether its CEN or some other group that occupies a higher, more unified plane, one thing is certain: faced with a torrent of cash-infused lobbying from big oil and coal companies, a drip campaign from dozens of groups representing a fractured clean energy industry won’t have the desired impact – rapid and decisive action from policymakers.

I plan on being in Washington, D.C. on January 24-25, 2011 to attend the first CEN business leaders summit, with the hope that at least part of the proceedings will be a serious dialogue on organizational strategy for the clean energy industry. It would be great if the representatives of all the groups owning patches of the industry can be there too to create a more cohesive quilt.

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.

GHG: regulation vs. legislation?

I asked my friend Graham Noyes, attorney at renewable energy law firm Stoel Rives focused on bioenergy projects, federal energy incentives and carbon monetization, for his thoughts on the Kerry Lieberman bill.

Q: What was your main takeaway from the bill?
A: Some context first. There’s a massive potential hammer out there on GHG emitters in terms of the risk of regulation under the Clean Air Act (CAA) by the EPA, which has already issued an endangerment finding that found GHGs to be a danger to public health and welfare, thereby making the EPA obligated to regulate GHG’s under the CAA. So the wheels are turning forward at the EPA to regulate GHG. That’s what the EPA will do if nothing else happens. So it’s really surprising that Kerry Lieberman imposes what I think to be much stricter limitations on the EPA than the status quo.

In that sense the bill is very favorable to those industries that have the most to lose from GHG regulation, because it essentially weakens the regulatory landscape for GHG intensive industry when compared to what the EPA is likely to do. That’s why we have the strong industry support lined up for the bill. What’s odd is that we have universal Republication opposition (from a party known for its pro-business stance), and near universal Democratic support (from a party known to support more environmental protections). That is a fundamental disconnect.

The 800 lb gorilla in the room is the EPA’s ability to utilize the CAA if the Kerry-Lieberman bill stalls. That’s a really interesting regulatory and political landscape for this thing to play out.

Q: Can you be more specific on how Kerry Lieberman is easier on emitters?
A: We don’t know what the EPA will do precisely in order to get its targets in the endangerment finding. Emissions levels, cost implications for regulated industries – we don’t know. But it’s easy to imagine a scenario in which the EPA ratchets down harder and harder on these emissions to get the problem under control, specifically the PPM concentration of CO2 in the atmosphere. By contrast, Kerry Lieberman has a slow front-end phase-in (with only some industries included in the first years), price collars and very substantial offset programs to lower the economic impact, none of which the EPA would necessarily do. Most people expect the EPA would be more onerous than Kerry Lieberman.

Q: Is legislation or regulation better at the end of the day?
A: The Clean Air Act was not designed for GHGs, but for what we usually think of as pollutants – emissions that are directly unhealthy. CO2 is not something people worry about breathing, it’s the indirect risk of global warming caused by the escalating CO2 levels that triggered the finding. CO2 is also more ubiquitous than other pollutants hence the tailoring rule actually reduces scope of CAA enforcement.

The EPA would regulate by mandate, not by consensus. If we can’t get legislation passed and the EPA begins enforcement, there will be a lot of criticism about over-reaching and strangling industry. EPA would take a lot of heat for this.

Q: Some argue that EPA will take much longer to regulate than legislation.
A: I don’t necessarily think so. This legislation requires extensive rule-making that will take a long time to happen, consider the RFS2 delay. And the EPA won’t build in phase-in limits like Kerry Lieberman. If EPA moves ahead on its present course, I think it would have a faster impact on emissions than the bill. Ultimately, I think this landscape will spur a deal with a surprising alliance.

Q: What are the top three ramifications on business from this bill?
A: The bill would establish a long-term value to CO2e reductions. This will benefit all renewable energy projects andsupport US offset projects in methane capture, agriculture and forestry that make good GHG sense.