June 2010

Woolsey, Khosla: Bullish on biofuels

June 29, 2010

Corntassel_7095What should we do with corn?

Shove it into cows that become fatty, high-cholesterol meat that contributes to heart disease? Turn it into cheap sugars that make people fat or sick?

Or use it to produce biofuels that will help reduce the U.S.’s dependence on Middle East oil, improve our balance of payments and  create jobs instead of funding terrorists?

That’s a loaded question, of course, but that’s the way that James Woolsey, the former head of the CIA who is now a venture capitalist, put it to a friendly audience of biotech executives.

The biofuels industry has been subject to “propaganda” and “false narratives,” he said

Putting a new twist on the food-vs.-fuel debate, Woolsey argued that there’s plenty of acreage to grow corn and, in any event, that corn is better used as a biofuel to replace oil than it is to make “cheap junk food” so that the “grocery manufacturers association can make more money making our children obese.”

“We need to go on the attack,” he declared.

No wonder he’s been called a “green hawk.”

Woolsey, a partner at VantagePoint Venture Partners, and Vinod Khosla, the venture capitalist and relentless advocate of biofuels, spoke today to BIO’s World Congress on Industrial Biotechnology and Bioprocessing at the National Harbor convention center, just across the Potomac from Washington, D.C.

[click to continue…]

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Why count carbon?

June 28, 2010

Hara Software is a clean tech startup, funded by Kleiner Perkins, that originally got a lot of attention as a company to that help others curb their carbon footprint. Oops. That doesn’t look like such a great selling point today, as proposed U.S. legislation to curb greenhouse gases is stalled and we are moving farther away, not closer to, an international agreement to deal with climate change.

But Hara now talks about “organizational metabolism” — the idea that companies can run more efficiently while consuming fewer inputs — and says that its software will help clients “minimize environmental impact and maximize profits.” It’s got a solid list of customers, including Safeway, Intuit, News Corp., Brocade and, most recently, Hasbro.

logo_greenbizThis Tuesday (6/29) at 2 p.m. EDT, I’m going to moderate a free webinar organized by Greenbiz.com (where I am a senior writer) in which we’ll learn more about how environmental, energy and carbon management can deliver bottom-line benefits. It’s called “From Reporting to Reduction: The Resource Optimization Imperative” (not my title!) and you can sign up for it here.

I’m looking forward to it because the speakers who will be joining me are smart executives with long and impressive track records in business, the nonprofit world and government. Matt Arnold is a principal with PriceWaterhouse Coopers who leads the firm’s climate change practice; he previously worked at IBM, Merrill Lynch and as a top exec at the World Resources Institute, and he’s a member of the board of Forest Trends. Michel Gelobter is the chief green officer at Hara, the founder of Cooler, the former director of environmental quality for the city of New York, and a board member of the NRDC and Ceres.

Please join us — we’ll be taking questions during the hour-long webinar.

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Modern-day slavery: Here, there and everywhere

June 27, 2010

57470512SH007_migrantsModern-day slavery is not just about sex workers or poor people in faraway places.

Some farmworkers in the U.S., for all practical purposes, work as slaves.  Laborers  with few or no rights, working under inhumane conditions, typically far home, have produced such products as  blueberries, organic milk, personal computers or cell phones and garments imported from India, a new report says.

Consider:

An estimated 12 to 27 million people are victims of slavery, and other forms of forced labor around the world. In the United States alone, 10,000 or more people are being forced to work at any given time.

The report, called Help Wanted: Hiring, Human Trafficking and Modern-Day Slavery in the Global Economy (PDF for download, here),  was published by Verite, a non-profit based in Amherst, Mass., that monitors and reports on  labor rights abuses around the world. (It was funded by Humanity United, a nonprofit focused on peace and human rights started and chaired by Pam Omidyar.) Over the years, Verite has helped identify and clean up the supply chains of such global brands as Timberland, Gap, Levi Strauss, Apple, Disney and HP. I met with Verite’s executive director, Dan Viederman, last week in Washington to talk about the report, and what can be done to deal with slavery. [click to continue…]

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Can a coal-carrying railroad be green?

June 24, 2010

UNION_PACIFIC_Y2513_20070228Recently, FORTUNE sent me to Omaha to write this story about the Union Pacific, America’s biggest railroad. Impressive company in a fascinating industry without which our lives would be very different. Here’s how the story begins:

The strawberries on your cereal. Your laptop, cell phone, and TV. The coal that’s burned to power them. The car you drive. The roof over your head. We may work in a knowledge economy, but Madonna had it right: We live in a material world.

That’s why the Union Pacific railroad, No. 164 on the Fortune 500, has played a vital role in the U.S. economy since 1862. With $14.1 billion in revenue last year, the UP, which is based in Omaha, is America’s largest railroad. Close behind is its chief rival, the Burlington Northern Santa Fe (BNI) (2009 revenues: $14 billion), headquartered in Fort Worth, which was acquired this year by Warren Buffett’s Berkshire Hathaway (BRK.A) for $26.4 billion. The deal put a spotlight on the often troubled railroad business — in a good way. “It was a vote of confidence in the industry,” says Jim Young, the 53-year-old chairman and CEO of Union Pacific. “He sees the long-term value in the rail franchise — how unique it is in America.”

The story goes on to talk about how Young led a turnaround at the railroad, which suffered from lousy service, not once but twice–in the late 1990s after its merger with the Southern Pacific and again in 2004-2005 when the company cut back too deeply on equipment and staff and wasn’t prepared for a burst of economic growth. As Young told me: “We were the best marketing arm of our competitor.” The UP’s competitors include the Burlington Northern, which also operates in the west, and, interestingly, long-haul trucks.

In its battle for market share with trucks, the railroad industry is touting its environmental advantages. [click to continue…]

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Solar’s strange bedfellows

June 21, 2010

solar-home-1.540.330.sNot long ago, it would have been unthinkable for a big utility company to encourage homeowners to put solar panels on their roofs.

If people generate more of their own electricity, after all, utility companies will sell less, they’ll need to build fewer power plants and, at least under traditional regulatory regimes, they’ll make less money.

That’s changing, as evidenced by a deal announced today by PG&E Corp., the $13.4 billion a year utility company based in San Francisco, and SunRun, its much smaller San Francisco neighbor, whose business is providing financing for home solar systems. Pacific Energy Capital II, a unit of PG&E, will provide $100 million in tax equity project financing to fund SunRun’s installation of more than 3,500 new home solar installations across the nation, the companies said.

In plain language, that means that the utility company will, in partnership with SunRun, pay the upfront costs of solar panels in exchange for tax credits and a share of future payments from the homeowners who install them. SunRun is one of several companies trying to take some of the risk and complexity out of home solar by paying the upfront costs (which can mount to $20,000 to $50,000) and managing the installation hassles for its customers. (See my 2009 blogpost SunRun: A new deal for solar for more.)

This is the second investment this year by PG&E in a home solar firm. Back in January, the utility invested $61 million with Solar City, which competes with SunRun. Generally, PG&E is bullish on solar, although most of its investments have been in centralized solar thermal or solar photovoltaic plants, as opposed to distributed, rooftop panels. It’s ranked No. 1 in the Solar Electric Power Association’s utility solar rankings. (PDF, download.)

Nor is PG&E alone in promoting distributed solar. As  I reported yesterday, New Jersey-based PSEG has a solar loan program for homeowners although it doesn’t cover the full costs of installation.

So why would a utility like PG&E Corp. finance a competitor? Partly because it expects to make money on the deal, partly to better understand the solar business and partly because if the utility companies doesn’t get into the home solar business, someone else will.

As Brian Steel, director of corporate strategy and development at PG&E told Forbes:

We’re happy with the financial returns. And by investing in these assets it gives us an opportunity to learn in a way we wouldn’t have otherwise. When you get down in the weeds, the difference in what one learns is stunning.

Ed Fenster, the CEO of SunRun, told me much the same thing when we spoke about the deal: “This is going to happen with them or without them. If it happens with them, they are earning a return on it.”

None of this would be likely, it’s safe to say, if California hadn’t taken a smart approach to utility regulation by decoupling a utility’s financial returns from the amount of electricity it sells. That enables utilities to make money by serving their customers’ energy needs, even if what they are selling is energy efficiency or distributed power.

sunrun-logoStill, it’s important to keep all this in perspective. SunRun and rooftop solar are still small businesses. SunRun signed up about 1,000 customers in the first quarter of this year, and it has about 4,500 customers in all, Fenster told me. Still, he said, even though California’s subsidies for solar are declining, the company’s growth rate is accelerating–no small feat in this sluggish economy. The PG&E deal will enable the company to fund solar systems in at least five states, he said, including California, Arizona, Colorado, Massachusetts and New Jersey. All offer solar-friendly subsidies.

Because the Gulf oil disaster is on everyone’s mind these days, I asked Ed if he thinks it will have any impact on his business. Americans don’t burn much oil to make electricity, but we do use natural gas, which may have been a factor in the explosion. What’s more, if electric cars roll out later this year as planned, electricity may become an alternative transportation fuel, albeit on a small scale.

“The BP tragedy may very well lead people to think harder about renewable energy,” he said.

Let’s hope so.

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Steve Zwick: Paying for nature’s services

June 21, 2010

Steve_ZwickToday’s guest post is from Steve Zwick, who edits Ecosystem Marketplace, an online news service that reports on market-based solutions to environmental problems.  Based on the premise that the cost of production should include the cost of environmental degradation, EM is published by non-governmental organization Forest Trends and funded by a diverse array of NGOs, governmental agencies, and private companies.

A native of Chicago, Steve began contributing to EM in 2006, after more than a decade writing about sustainable business for publications such as Time and Fortune.  He also produces radio features for Germany’s Deutsche Welle Radio and National Public Radio in the United States. Steve’s background combines journalism, business and the environment—he studied journalism at Northwestern, worked as a runner at the Chicago Board of Trade, became a futures trader and then got involved in local environmental campaigns, which led to his writing career. Steve sent me this thoughtful post from Hanoi, where he was watching Ivory Coast play Brazil in the World Cup and preparing for the 17th Katoomba meeting this week, as he’ll explain:

BP’s Deepwater Horizon debacle reminds us once again that our economy depends on our ecology and that one man’s cheap solution is often another’s cost.  It’s as true in the United States as it is here in Vietnam, where subsistence farmers often must choose between feeding their families and preserving nature.

But the apparent conflict between commerce and nature is a false one, because in the long run everything we buy, sell, eat, and produce is derived from nature.  If we destroy nature, we destroy our own livelihoods.

mangrove0459smMangroves, for example, provide shelter for vulnerable fish and breeding ground for shrimp.  They also shield the coast from slow erosion and sudden storms; they extract impurities from water and pull carbon dioxide from the atmosphere, depositing it in the ocean floor – thus helping to reduce the greenhouse effect and slow climate change.

All of these are ecosystem services, delivered to us by nature, free of charge.  And because they’re free of charge, they are taken for granted – and destroyed to make things we can put a price on.

Over the last four decades, however, we’ve seen scores of efforts to measure the economic value of services provided by wetlands, forests, and other living ecosystems – as well as habitat supporting endangered species – and then attempts to entice those who either benefit from these services or contribute to their destruction to instead pay for their upkeep.

That’s what payments for ecosystem services (PES) are all about. Some of the more exciting emerging PES schemes involve water.  Indeed, water quality trading (WQT) schemes are proliferating in streams, rivers, and lakes across the world. WQT is a pillar of the Obama administration’s new scheme to clean up the Chesapeake Bay. [click to continue…]

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PSEG’s Ralph Izzo: Greening the garden state

June 20, 2010

Before we discuss big issues like global warming, carbon pricing and renewable energy, I toss a couple of “lightning round” questions at Ralph Izzo, the chairman, president and CEO of  New Jersey-based PSEG, a $13.3-billion a year energy company with strong commitment to solar power and action to curb climate change.

Izzo, Ralph1First, Yankees or Mets? Izzo grew up in Queens (Mets country) and pitched for the baseball team at Columbia University (Yankee territory), where he earned an B.S. and M.S. in mechanical engineer and a Ph.D in applied physics. “Yankees, Knicks, Rangers, Giants,” Izzo replied. He’s still a big sports fan.

Second, Democrat or Republican? After a stint as a research scientist at the Princeton Plasma Physics Laboratory, Izzo worked as a science fellow in the office of Sen. Bill Bradley, a New Jersey Democrat, and then as an energy-and-tech policy adviser to New Jersey Gov. Tom Kean, a Republican. “Independent,” he said. “Pretty much down right down the yellow stripe.” True enough–he’s given money to George Bush and Hillary Clinton.

Third, nuclear power or “clean coal”? Much as it would be nice to light up the world with wind, solar or geothermal power, odds are that the U.S. will need nuclear power, coal or natural gas to provide baseload (i.e., round the clock) electricity for the foreseeable future. Izzo, as  a utility CEO and a scientist, gave nuclear his qualified endorsement over clean coal.

“The technology is in existence already,” he said. “It has a more benign environmental footprint. It doesn’t have the mercury, NO2, SO2 or carbon baggage. Having said that, all of our investments right now are in natural gas.” [click to continue…]

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The Gulf disaster, and the future of coal

June 17, 2010

If you like the BP oil spill…

cleaning-oil-spill-2

you’re going to love carbon capture and storage.

Coal_power_plant_Datteln_2_Crop1

Carbon capture and storage, or CCS, is the technology that offers the best hope of generating electricity from coal in a way that doesn’t further heat up the planet. When people talk about “clean coal” – a phrase that deserves quotes because coal is never entirely clean — they’re often talking about CCS.

CCS technologies, which can be applied before or after the coal is burned, are designed to capture carbon dioxide, transport it to a secure location, typically deep under the ground, and then sequester it safely for a long, long time, with little or no risk that it will ever escape.

Get the connection? Just as the oil industry assures that they can safely drill for oil a mile under the ocean, the coal companies and utility industry are very confident that can bury CO2 deep under the ground, with little or no risk that it will ever escape.

Do you want to take them at their word?

I asked Mike Brune, the executive director of the Sierra Club and a leading anti-coal activist, about BP and CCS. He replied by email:

The BP deep water oil disaster is an example of how seeking out new and riskier ways of feeding our addiction to fossil fuels leads to new and more catastrophic problems….If there’s a lesson in this, it’s that relying on unproven and complicated methods to sustain our dependence on oil and coal has disastrous consequences.

You may be surprised to learn that CCS isn’t favored just by the coal guys or the utilities. Some environmental groups like the technology, too. David Hawkins, the estimable head of the climate program at the Natural Resources Defense Council, which strongly opposes conventional coal plants, says it’s essential that we figure out CCS. Here’s his very thoughtful argument on behalf of CCS, from NRDC’s Switchboard blog:

As a community, we have achieved great success in blocking new coal plants one by one but we need a comprehensive coal policy as well.  Showing CCS is an available tool helps us to convince policymakers that they should oppose construction of coal plants that do not capture their carbon.  Is such a policy as attractive to many in our community as a law that says no more coal plants, period? No.  But we need to ask ourselves — what are the realistic odds of getting Congress or any significant coal-using state to adopt a “no new coal, period” policy in the next handful of years?   I have fought the coal industry for 40 years and in my judgment the odds of a total ban on new coal plants are not large.

The Obama administration is also an enthusiastic supporter of CCS on a grand scale, in the form of a controversial, costly project known as Future Gen. Just a week ago, even as oil was spewing into the gulf, Obama’s DOE  announced that it would spend up to $612 million in recovery act money (to be matched by $368 million in private funding) to demonstrate large-scale CCS from industrial sources (not power plants, although the technology is similar).

One project will store CO2 in a “deep saline formation,” as part of a corn ethanol project. Two others will use the CO2 in “enhanced oil recovery” in the Gulf, believe it or not. Such well-connected companies as Archer Daniels Midland and GE are among the beneficiaries. From the DOE announcement:

·         Leucadia Energy, LLC (Lake Charles, LA)—Leucadia and Denbury Onshore LLC will capture and sequester 4.5 million tons of CO2 per year from a new methanol plant in Lake Charles, LA. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield, starting in April 2014. The project team includes Leucadia Energy, Denbury, General Electric, Haldor Topsoe, Black & Veatch, Turner Industries, and the University of Texas Bureau of Economic Geology.  (DOE share: $260 million)

·         Air Products & Chemicals, Inc. (Port Arthur, TX)—Air Products will partner with Denbury Onshore LLC to capture and sequester one million tons of CO2 per year from existing steam-methane reformers in Port Arthur, Texas, starting in November 2012. The CO2 will be delivered via a 12-mile connector pipeline to an existing Denbury interstate CO2 pipeline and sequestered via use for enhanced oil recovery in the West Hastings oilfield. The project team includes Air Products & Chemicals, Denbury Onshore LLC, the University of Texas Bureau of Economic Geology, and Valero Energy Corporation.  (DOE share: $253 million)

·         Archer Daniels Midland Corporation (Decatur, Ill.)—The project will capture and sequester one million tons of CO2 per year from an existing ethanol plant in Illinois, starting in August 2012. The CO2 will be sequestered in the Mt. Simon Sandstone, a well-characterized saline reservoir located about one mile from the plant. The project team includes Archer Daniels Midland, Schlumberger Carbon Services, and the Illinois State Geological Survey. (DOE share: $99 million)

Unfortunately, these subsidies don’t appear to be linked to actual tons of carbon sequestered. They support demonstration projects. Still to be determined are such issues as who “owns” the store CO2, who will be responsible, financially, if it escapes, etc.  To be fair, CO2 has been stored underground for years as part of enhanced oil recovery, but we’ve also been doing deepwater drilling for a long time.

Interestingly, the connection between the BP disaster and CCS was suggested to me,  not by an environmentalist, but by a very sophisticated investor in clean technology. This investor—who asked not to be identified, because he works closely with big companies like GE and with the Obama team—has placed bets on solar power, energy storage and efficiency, so he’s no fan of coal, but he’s also driven by a personal passion around the climate crisis.

Since I can’t quote the investor, I’ll give the last work to the Sierra Club’s Mike Brune:

Relying on carbon capture and storage is like a heroin addict finding a new vein to shoot. It’s not a solution, it’s simply a new way to perpetuate the problem. The Sierra Club has no objection to using private, corporate resources to fund CCS research to see if CCS can ever be done safely, cheaply, and without requiring massive amounts of energy. In the meantime, we shouldn’t be seeking out more expensive and dangerous ways to feed our dependence on oil or coal. Instead, we should be putting our innovation and resources to work in the service of clean energy that will create jobs and keep our coasts, wild places, and communities healthy and intact.

Photo links/credits: duck (Audubon Society of Florida)  coal plant (wikimedia)

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The Gulf disaster, and you can hum along

June 16, 2010

So much has been written about the disaster in the Gulf that I’ve felt no need until now to add my two cents. But I’ll ask you to check out this video from the Environmental Defense Fund which uses music and images to get to the heart of the issue. Better, I might add, than our president did last night.

Please, let’s not allow this crisis to pass without taking action to cap carbon emissions and promote clean energy. This is about our legacy.

-

Here are a few words about the video from David Yarnold, the executive director of Environmental Defense Fund:

From a comfortable distance the BP oil disaster is depressing and horrific. But up close, it’s worse.
Two days in the Gulf of Mexico left me enraged – and deeply resolved. Both the widespread damage and the inadequacy of the response effort exceeded my worst fears. I’d spent a full day on the Gulf and we ended up soaked in oily water and seared by the journey.
By Tuesday night, I was home. My throat burned and my head was foggy and dizzy as I showed my pictures and video to my wife, Fran, and my 13-year-old daughter, Nicole, on the TV in the family room.
Images of the gooey peanut-butter colored oil and the blackened wetlands flashed by. Pictures of dolphins diving into our oily wake and brown pelicans futilely trying to pick oil off their backs popped on the screen. And, out of nowhere, Nicole put on the music from the season finale of Glee.
With all these horrific images on the screen, she had turned on the show’s final song of the year, “Somewhere Over The Rainbow.” The song, a slow, sweet, ukulele and guitar-driven version, couldn’t have added a deeper sense of tragic irony.
I choked up. And then that resolve kicked in: I wanted anyone/everyone to see what our addiction to oil had done to the Gulf and to contrast that with the sense of hope and possibility that “Somewhere” exudes.
Long story short, last weekend, Peter Rice, Chairman of Fox Networks Entertainment, gave Environmental Defense Fund the green light to use the song. The pictures you’ll see were shot by two incredibly talented EDF staffers, Yuki Kokubo and Patrick Brown – and a few are mine.
The inspiration was Nicole’s. This is for her, and for all of our kids – and theirs to come.

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Vestas: Will business be brisk again?

June 15, 2010

“Wind is all we do,” says Martha Wyrsch, the president of Vestas Americas.

93821358_3dfdf9f725That’s great for the planet–wind energy is part of the solution to the climate crisis. It hasn’t been good for the company’s bottom line, at least not lately. But Vestas sees better days ahead.

Vestas, as you may know, is a global company, based in Denmark, and the world’s largest manufacturer of wind turbines. (It installed 5,581 MW of capacity  in 2009, which represents 12.% of the global market.)  Two of its biggest wind industry competitors—General Electric and Siemens—also make plants and equipment to burn coal and natural gas, and they are diversified beyond the energy business as well. They aren’t as “green,” at least in the environmental sense of the word, but they don’t depend on wind.

Vestas does, and so the company has taken a hit  because of a global slowdown in the wind industry, driven in part by the 2009 recession and credit crunch. Low natural gas prices are a problem for wind-turbine manufacturers, because utilities build gas-fired plants instead. So are the continuing uncertainties of energy policy in the U.S.–an investment tax credit that is crucial to wind projects is set to expire this year. Another worry for the biggest players: China, a huge market,  has become intensely competitive, with dozens of local competitors entering the fray.

As a result, in the first quarter of 2010, Vestas took a hit. The company booked revenues of  755 million Euros, down from 1,105 mEUR in 2009. It reported a loss of 96 mEUR, which compares with 76 mEUR in EBIT during Q1 of 2009. The stock is down by more than 20% in the last year.

Wyrsch says things are looking better for the year ahead. “We see orders picking up again,” she says. [click to continue…]

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