The Future of Green Tech Investment

According to a recent article in Green Technica by author Joshua S. Hill, green tech investment could “skyrocket” by 2030. Hill cites research from Bloomberg New Energy Finance, including a detailed analysis of three different potential scenarios. As their research shows, wind and solar could have the efficiency and popularity needed to bring the renewable energy industry into its own.

Although clean energy ETFs have been underperforming in an era where fossil fuels have largely recovered from recession-era prices, each of the three scenarios explored by Bloomberg New Energy Finance shows an increase in green technology investing. A 230% increase in annual investment by 2030 would mean increasing to a total of $630 billion per year. Bloomberg New Energy Finance largely attributes this to the decreasing cost of wind and solar technologies, as compared to fossil fuel alternatives. The report also shows increased use of hydro power, geothermal and biomass.

Michael Liebreich, Bloomberg New Energy Finance’s chief executive, believes that we have already passed the “tipping point” for clean energy technology. He points out that, even though most news coverage is discussing the future of fossil fuels, costs for green energy and implementation are falling. He says, “The news right now is dominated by stories of pain caused by overcapacity on the supply side of clean energy, and the lure of cheap shale gas, but this is playing out against the falling costs of renewable energy and of all the technologies required to integrate it into our energy system, and falling costs win. What it suggests is that we are beyond the tipping point towards a cleaner energy future.”

The three scenarios explored by Bloomberg New Energy Finance are “New Normal”, “Barrier Busting” and “Traditional Territory”. “New Normal” is cited as the most likely, and ends with a probable $630 billion per year in green tech investing. Each scenario calls for growth in the renewable energy sector, notably in solar and wind energy, along with decreases in fossil fuels. Even the modest “Traditional Territory” scenario shows green tech investment increasing to $470 billion by 2030.

Guy Turner, the head of economics and commodities for Bloomberg New Energy Finance, says that renewable technologies will be the “anchor of new generating capacity additions” in all scenarios. He points out, “The main driver for future growth of the renewable sector over this timeframe is a shift from policy support to falling costs and natural demand.” Read the original article.

When we last looked at solar energy in particular, we noted that 2013 is a slower year for installations due to an oversupply of solar panels. However, by bringing this technology to end-users more quickly and at lowered prices, we explored the idea that solar energy may be closer to being at parity with fossil fuel based energy. Also helping the situation is a budgeted increase in spending for the Department of Energy, including a 75 percent increase in spending on advanced vehicles to $575 million, and a 29 percent increase in spending on the ongoing effort to integrate solar and wind power into the national electric grid.

CleanEquityMonaco: A Must-Do for the Greentech Aficionado or Investor March 4-5

One of the high points of the greentech year is coming up March 4-5: CleanEquityMonaco (http://www.cleanequitymonaco.com) in the picturebook-lovely city of Monte Carlo.  Interestingly enough it is not a costly conference to attend, probably because it has very distinguished sponsors, and probably worthwhile even for Americans to fly to.  The conference has arranged very attractive hotel rates, a fraction of what one would expect on the Riviera, and quite reasonable flights can be found from the Northeast to Nice (which is the airport for Monaco as well).

Monaco Harbor from the Old City

CEM is a meetingplace for people with new and significant green technologies of all types, and from all over the globe.  There are several plenary meetings set, and some very distinguished guest speakers as well.  Awards for the best technologies and best commercializations will be made by Sir Stelios Haji-Ioannou and HSH Prince Albert II.  The conference coincides with an annual meeting of the United Nations Environmental Programme (UNEP) and green technocrats from all over the world will be in town at the same time.

But the real show are the new technologies themselves.  The publisher of this blog, Allen & Caron (http://www.allencaron.com) is working with the conference organizers on a pro bono basis, and we have admired the arrangements as they have been made over the last 6-8 months. 

Loopwing Wind Turbine from Japan -- meet them at CEM March 4-5

For obvious reasons, the largest category of new technologies will be in the field of alternative energy: solar, wind, new fuels, etc.  But there will also be environmental technologies that run the gamut.  The sponsor and organizer is London-based Innovator Capital (http://www.innovator-capital.com), a boutique investment bank and financial advisor with a devotion to environmental causes, and there will be investment bankers prowling around looking for clients, as well as technocrats from big multinationals looking for acquisitions and partnerships.  Many of the companies that are showing new technologies are not listed or publicly traded, and quite a few are really post-academic, though all have demonstrated proof of what they claim to be able to accomplish.  All are scrappy, feisty, fearless and have new mind-bending ideas.

Some “hot” publicly listed companies will also be presenting, including Shanghai-based China Energy Recovery, Oak Park MI-based Azure Dynamics, Torrance CA-based Enova Systems, Oxford UK-based Oxford Catalysts, Southboro MA-based Protonex, Cuxhaven Germany-based PNE Wind, Perth Australia-based Enerji Ltd,  and Griesheim Germany-based BGI EcoTech.

Jigar Shah, CEO of The Carbon War Room

The keynote speaker will be Jigar Shah, CEO of The Carbon War Room(http://www.carbonwarroom.com) , a noted authority on renewable energy, and the founder of SunEdison, which has more megawatts of solar energy under management than any other company in the world.  Mr Shah is an alumnus of BP Solar, a DOE contractor on fuel cells and alternative energy, and a member of several boards, including Greenpeace USA and the Prometheus Institute. 

Sir Stelios Haji-Ioannou

Sir Stelios will introduce the Next Wave segment of new technologies on the second day of the conference.  He is best known for having founded EasyJet, a leading lowcost airline that has revolutionized European travel, but he is also the founder of several other companies.  His Stelios Philanthropic Foundation is devoted to environmental sustainability, education and entrepreneurship. 

We highly recommend that you consider attending.  The cost is reasonable and the technology rewards potentially earth-changing.  Some of these concepts will completely reorder the way you see the world.

50 Emerging CleanTechs Each Year: An Interview with Mungo Park of CleanEquityMonaco

We had a conversation with  our old friend, Mungo Park, on Friday the 23rd, primarily to talk about the annual CleanEquityMonaco conference (http://www.cleanequitymonaco.com/) hosted by his company, London-based boutique investment bank, Innovator Capital (http://www.innovator-capital.com/).  The 2010 edition of CleanEquityMonaco* is set forMarch 4-5, 2010, and it will follow the established mandate of finding 50 of the most innovative and potentially world-changing emerging technologies in the cleantech/greentech world. 

 

Innovator Capital's Mungo Park, organizer of CleanEquityMonaco

Mungo Park (a descendent of the 18th-century Scots explorer of the same name) has spent most of his professional life working with emerging technology companies, largely in the role of  investment banker.  The Irish Mr Park started at Prudential Bache, and then came up through the ranks at northeastern US investment banks of legend, many swallowed up by larger institutions in the consolidation frenzy of the latter years of the 20th century: Alex Brown & Sons, Cowen & Company, Dillon Read & Co.  He headed Nomura’s European i-banking operation before founding Innovator Capital.  Innovator was at first devoted to life science banking, and broadened over the last 5-6 years to include cleantech banking, due to its obvious connection with preventive healthcare and societal wellness. 

The following are excerpts from the conversation:

SCW: You were originally attracted to life sciences.  Why are you now seeking out alternative energy and greentech companies?

MP: I was working on a financing for a company that had a technology to remove oxides of nitrogen from diesel emissions and I realized that not only was this a way to make people healthier (less asthma, fewer respiratory ailments), but the business plans of cleantech companies follow a similar pattern to what I had seen in biotech and healthcare in general.  That is, invention, research, development into a usable product, commercialization.  A biotech product has to survive 7-9 years of test, however, and in many cases a greentech product can be ready for market in 7-9 months, which means the potential for a return on investment is much closer, if the wheel lands on your number.  Most green technologies do not have to clear through an FDA-type regulator in order to be “legal,” which makes all the difference in the world, often reducing the length of time from conception to commercialization.

The most important reason I am working on cleantech is, however, that it ticks the “ethical box” — that is, it improves the quality of human life.  And that is also the reason for CleanEquityMonaco.

SCW: Other than the name, what’s different about CleanEquityMonaco?  There are greentech/cleantech scientific or financial conferences springing up everywhere.  And how does a company get invited to participate?

MP:  About the time I was becoming more and more interested in cleantech, His Serene Highness Prince Albert II became the sovereign of Monaco.  I have had the good fortune to know him and he has significant credentials in environmental issues.  Shortly after his accession I had a meeting with him and we came up with the idea for CleanEquityMonaco, a conference whose purpose is to introduce emerging/early-stage, innovative, next-generation technologies from all over the world.  The fields of interest are, broadly, clean energy, clean earth, clean water, clean air.

Many of the presenting companies are fresh out of academia or an inventor’s laboratory.  Many are working on their first proof of principle and are very early stage.  They need money, yes, but they need other things as well.  CleanEquityMonaco is set up as a platform to introduce them to sources of investment (financial and strategic), but also to media, politicians and political influencers, potential licensees and potential technology partners. 

As to how a company can be invited, there are numerous ways.  We have developed a list of about 300 companies that we are looking at ourselves.  Many of those, as it turns out, are not qualified because they are too large or too well-established.  We try to invite presenters who are below €250 million in fair value — and that is an important distinction between our search for emerging technologies and other conferences’ searches for faits accomplis.  But we accept nominations from people we trust, and apply our diligence principles to those.  We try for a geographic spread that is global, so we don’t want more than, say 10 companies from North America, preferring to be clearly and fairly global.  And we give some preference to companies that are not yet listed for trading in a public market — and that may not have that as a goal either.  We are interested in the entrepreneurial spirit as it affects the cleantech/greentech movement, and, potentially, the health of people around the world.

Hotel de Paris, Monte Carlo

SCW: Why would a company want to present?

MP: If we put it together right — and so far the conferences have gone pretty well — in the 2 days of CleanEquityMonaco, the companies can cover a huge amount of ground.  They can save a lot of time and money because there is such a good mix of people there.  We have heard back from the participants that it is an extremely productive meeting.

We have two levels of participation for companies in different stages of development: full participation for companies who are post-development/expansion stage, and a “Next Wave” participation for companies who are pre-revenue/early-stage.  The Next Wave companies make a shorter presentation, but they have all the opportunities for networking which, in the final analysis, is what the conference is about.

SCW: We hear that Sir Stelios Haji-Ioannou will be presenting a new award at the conference. 

MP: Of course Stelios is very well known in Europe as a hugely successful entrepreneur, perhaps most famous from EasyJet and EasyGroup, but from many businesses that he has started or encouraged from scratch.  And as a successful entrepreneur, he wants to give something back to the world.  He has been looking at cleantech for a while, and attended CleanEquityMonaco 2009.  He is sponsoring the conference, and has indeed agreed to present an award for entrepreneurship in cleantech, but he is particularly looking forward to meeting people, sharing his experience.  The Stelios Foundation (http://www.stelios.com/ ) has as its areas of interest: the environment, education and entrepreneurship.

SCW: What makes this conference different from other conferences?

MP: The extraordinary thing about this conference is the rich texture of participation.  We invite 50 companies to present, and about 300 attendees to mix, mingle and offer their help.  The focus is strictly on emerging technologies — not on upcoming financial deals.  The view is global, not country specific, and the attendees tend to be quite senior in their positions, representing international organizations like the UN, sovereign governments, big international corporations, academia, and finance.  We expect to see big multinationals there, shopping for investments and looking for junior partnerships — companies like Philips, GE, Siemens, Nissan and IBM.

Perhaps most important, the attendees go to Monte Carlo specifically for the conference, and they tend to be in attendance for all the sessions both days.  If we tried to do the same thing in London, we would have people popping in and out, coming to the lunch, and some presenters would get short shrift.  That is simply not the case in Monte Carlo.  It is a two-day event for everyone concerned, and the attendees tend to be at the conference 12 hours a day.

SCW: The upcoming conference will be the 3rd annual.  Have you had particular success stories that came out of the first two editions of CleanTechMonaco?

 MP: Several come to mind right away.  Zenergy Power (http://www.zenergypower.com/ ) presented in 2008; they are a superconductor energy technology company, listed on AIM, but operating in Germany, the US and Australia.  They have a variety of products targeted at electric utilities, and have done very well with the technology for transmitting large quantities of electricity over long distances with little or not leakage.  They got a large amount of recognition at CleanEquityMonaco, which also resulted in a lot of publicity.  Subsequently they have received additional funding and are, I believe, the first superconductor developer to be partnered by a major US utility.

Ener1 (http://www.ener1.com/ ) presented at that same meeting.  At the time they presented, they were pretty early-stage, and had recently restructured their capitalization.  They spent a good deal of their time at the conference with Think Electric, an auto company from Norway that was also presenting — and the two have subsequently partnered in several ways.  Ener1 has been a success story on the stock market, and was the recipient of a large US stimulus matching grant to expand its manufacturing in Indiana. 

Heliocentris Fuel Cells AG (http://www.heliocentris.com/en/about-us/profile.html) , based in Berlin and traded in Germany, is a hydrogen fuelcell company that presented to the 2009 conference.  Very soon thereafter they were able to announce a new financing that has helped them expand their business considerably.  They are partnered with many of the leading fuel-cell companies around the world.

US Geothermal (http://www.usgeothermal.com/) is headquartered in Idaho and traded on the NYSE Amex.  It is what its name implies: a company that uses the earth’s own heat to generate power.  They have had a steep growth trajectory, and were recently awarded a grant by DOE for a project in Oregon. 

Scots company Aquamarine Power (http://www.aquamarinepower.com/ ) is installing the world’s first nearshore wave energy device that will generate clean energy from the movement of waves.  They presented at the 2009 conference and have won numerous awards and commendations from all over the world.  They were able to raise a fair amount of new capital during a very difficult market subsequent to their participation in CleanEquityMonaco, and we are pleased that the timing was so propitious for them.

SCW: It is all business then?

MP:  CleanEquityMonaco is held in one of the most beautiful cities in the world, and the camaraderie that comes out of the meeting may be as important in some cases as the sharing of scientific developments. The meeting is small enough and senior enough that it helps create a network that’s not dissimilar to some “old school” or university networks — reaching all over the world and to many parts of society and industry. 

We have special rates from the best hotels in Monte Carlo: the fabulous Hotel de Paris, the beautiful beaux arts Hermitage, and the modern seaside Monte Carlo Bay Hotel.  We will be announcing several social events, including a CEO-only dinner on the night before the first day of meetings.  However serious we are, it is still Monte Carlo, after all.

SCW:  Many thanks. 

*Allen & Caron, publisher of this blog, is working with CleanEquityMonaco on a collegial basis in North America.

Mine It, Drill for It, then Push It Back Underground

Fossil fuels are usually found underground; we mine for them or drill for them.  Occasionally we find fossil substances boiling up to the surface, as in the LaBrea Tar Pits in Los Angeles, a major source of fossils of mastodons and sabre-toothed tigers and giant sloths. 

LaBrea Tar Pits -- Page Museum Los Angeles

Interestingly enough we tend to want to store both fossil fuels and various other substances back underground, sometimes at pretty great depths too.  Everyone has read about the Strategic Petroleum Reserve (http://www.fossil.energy.gov/programs/reserves/spr/spr-facts.html) which consists of 4 sites where crude oil for national security reasons is stored in deep underground salt domes, where it is safely held, and cannot bleed out into the surrounding geology. 

As we become more and more aware of the effects of greenhouse gases, there is an assumption that those gases can be stored underground too.  http://www.enn.com/top_stories/commentary/39987.  Would it allow us to burn coal, for instance, if we could capture the CO2 and force it back underground, perhaps even deeper than the coal that contained it?   Shell certainly thinks so: http://www.reuters.com/article/environmentNews/idUSTRE54687K20090507?rpc=64.

That activity would be regulated by the EPA’s underground injection control unit (http://www.epa.gov/safewater/uic/wells_sequestration.html), which is the same group that regulates the injection of water into underground wells to keep it from flowing into surface water, and sometimes to increase the pressure in the well itself.

If there is an industry in storing things underground, how would an investor find companies that might benefit from it?  Well, to start off with you could look at some o f the energy industry giants like Shell, but that is clearly not a pureplay in underground storage.

There are several US-based energy-oriented companies that  have major natural-gas storage caverns, injecting future fuels and chemical feedstocks into underground facilities, most frequently salt domes, such as occur naturally around the western end of the Gulf of Mexico in Texas and Louisiana.

Kansas City MO-based Inergy (Nasdaq: NRGY, http://www.inergypropane.com/) operates a natural-gas underground storate facility in upstate New York (salt domes occur everywhere, not just in TX and LA).  Although it is a full-spectrum natural gas company, an investor could look at their shares, which are trading around $24.58 vs a year-high of $29.49, with average daily volume of about 260,000 shares and a market cap of about $1.4 billion.

Other companies with significant underground natural-gas storage include Houston-based Spectra Energy Corp (NYSE: SE, http://www.spectraenergy.com/) .   SE, with a market cap of around $10 billion, is solidly outside out area of interest, but its shares are selling for $15.60,  around half the 52-week high of $29.18.  Another big company with strong underground storage capabilities is Dallas-based Atmos Energy Corp (NYSE: ATO, http://www.atmosenergy.com/) , whose shares are trading at $23.55 vs a 52-week high of $28.66 and a market cap of $2.1 billion, still a small cap in an industry of big guys.

Calgary-based TransCanada Corp (NYSE: TRP, http://www.transcanada.com/) is yet another candidate for those seeking companies with underground storage capabilities.  TRP shares are trading in the range of $28.78 vs a year-high of $40.25, and a solidly midcap market cap of over $17 billion.

There are some small companies that have their feet wedged in the door as well.  Have a look at Sirius Exploration (AIM: SXX or OTC Pink Sheets: SRUXY, http://www.siriusexploration.com/), a small UK-based diversified resources company with significant salt and potash deposits in North Dakota that has recently acquired 51% of Dakota Salts (http://www.dakotasalts.com/), which has the potential to be a freelance storer of natural gas or electricity (in the form of compressed air, which would be used to drive turbines when needed) in their own salt caverns that are local to the ND wind-energy industry (the largest in the US).  Certainly the smallest of these companies, Sirius may also be the dark horse for an investor looking to capitalize on way-underground real estate opportunities.  Sirius ADRs have only recently been listed on the Pink Sheets, and it is hard to get a current quote, but their common shares trade very high volumes on AIM in London.  There are 500 AIM shares, which are currently trading for about 1.8p (around US $0.03) in 1 US ADR share.

“Air and Water Are More Important Than Money”: A Talk with Neil Eckert/CEO of Climate Exchange plc

Last Friday, I spoke with Neil Eckert, CEO of London-based Climate Exchange plc (LSE: CLE, OTC Pink Sheets: CXCHY; http://climateexchangeplc.com), which is not only the pioneer in emissions trading and other clean-tech issues such as water extraction rights trading, but is, practically speaking, the only global exchange with a meaningful stake in this fast-growing area. Climate Exchange plc has two direct subsidiaries, the Dublin-based European Climate Exchange (ECX) and the Chicago-based Chicago Climate Exchange (CCX). Through these there are several other subs and joint ventures that spread their influence throughout North America, Australia, China and India, as well as the US and Europe. They also operate the Insurance Futures Exchange (IFEX), which concentrates on hurricane risk, and potentially on other natural disasters such as earthquakes.

CLE was picked by Gabelli Asset Management as one of its top recommendations for 2009 in a webcast on December 4, 2008 (http://www.wsw.com/webcast/gabelli25/). In a recent report, major institutional holders included Invesco Asset Management (29.85%), Harbert Management (17.42%), BlackRock (8.37%), Fortis, Moore Capital, and others. Lehman Brothers had a stake that was apparently sold off on the open market and is now history. Insiders including directors own 20.55%.

Most trading exchanges around the world are significantly off their year-ago highs in terms of valuations, and in terms of trading volumes in many cases. At CLE revenues are up in triple-digit percentages consistently, and expectations are for a doubling of emissions trading this month over February 2008 – in spite of the economic doom-and-gloom that obliterates the sun around us like a Dickensian London black fog.

Valuations of trading exchanges have been hit hard across the board: at NYSE Euronext, Nasdaq OMX and the LSE, valuations Friday were between 65% and 80% lower than a year ago. CLE shares closed Friday in London at 465.25 vs a 52-week high of 2,117.00, in spite of strongly improved results as of the last report, which covered 6 months ended June 30 2008. CLE reported plenty of cash on hand for the first 6 months of 2008, with ECX volumes up 150%, CCX volumes up 286%, and CCFE (Chicago Climate Futures Exchange, a sub of CCX) up 214%.

Neil Eckert, CEO of Climate Exchange plc

Neil joined Climate Exchange from Brit Insurance (LSE: BRE, http://www.britinsurance.com) , where he served as CEO, and where I first had the pleasure of meeting him. He remains a director of Brit Insurance, as well as of Atlanta-based EBIX Inc (Nasdaq: EBIX, http://www.ebix.com), the Isle of Man Assurance Company, privately held US-based Environmental Credit Corp (http://www.envcc.com), and London-based Ri3k (http://www.ri3k.com). He also serves as chairman of AIM-listed Trading Emissions plc (http://www.tradingemissionsplc.com) and Design Technology & Innovation Ltd.

Expansion of Cap-and-Trade Programs

The first cap-and-trade program (for a primer on cap-and-trade: http://www.americanprogress.org/issues/2008/01/capandtrade101.html/) was launched in 1995 in North America to help reduce SO2 emissions, a culprit in various environmental problems, most publicly acid rain. According to Eckert, cap-and-trade programs have expanded significantly since then. “The first programs,” Eckert said, “were directed at reducing sulfur dioxide emissions, and SOX is still the largest category. Since then NOX, or oxides of nitrogen, a prime component of urban smog, have been added, and more recently RGGIs, which are Regional Greenhouse Gas Initiative futures and options have begun to trade, and are really roaring. RGGIs are the carbon footprint-related futures that are most in the public awareness regarding climate change. In addition, we are beginning to trade some water extraction futures and options.

“Too much water is being extracted from the Great Lakes, for instance. Water extraction limits are being set among users, and to the extent that users can get by with lower extraction rates than they are allocated, they can monetize those extraction rights on the Chicago Climate Exchange, which is our subsidiary. During the last year a fairly large lake near Atlanta, Georgia, almost completely dried up due to over-extraction of water for municipal use.” He said that they may be trading water quality soon in Asia, essentially a cap-and-trade program for pollutants that go into the water, but that is not in place yet.

$1.6 Trillion Market

We asked about the global spread of emissions abatement trading, and the expansion of CLE into new geographies. “We do now have operations and joint ventures in Canada, Australia, China and India. Between those areas we will be dealing with a larger portion of the world’s carbon and other emissions, but there are clearly other areas to be addressed, most notably, I suppose, Japan and Russia. The Middle East may be significant, but at present their emissions are not as substantial as one might think.

“If you think about the size of the market, depending on where you look, there are about 40 billion tons of CO2 going into the atmosphere each year. The abatement cost – the cost to keep that from going into the atmosphere – is about $30 to $40 per ton. Notionally, that means the market we are addressing is presently at $1.6 trillion per annum, and probably growing.

“Emissions trading in Europe has huge volumes, and they are growing very quickly and very steadily. Open interest yesterday <Feb 19> was over 400 million tons. To some extent those are compliance trades, that is, they are done to comply with regulations regarding emissions or other environmental issues, but there are a lot of trades that relate to the underlying properties of the fuels that we use.

“Natural gas is a relatively clean fuel, for instance – and coal is less clean. Electric utilities tend to prefer natural gas when it is economical to use, for the reason that emissions are less costly to either hedge or clean up when there are fewer of them. But in a situation where, for example, Russia cuts off the supply of natural gas to Europe, the utilities quickly revert to coal, which means that they have to hedge their compliance issues quickly and sometimes in a very volatile market.

Who Is/Should Be Trading?

In discussing the types of people who are now trading emissions futures and options, Eckert said, “RGGIs are a new style of futures contracts, and the first traders are those we call ‘naturals,’ eg, people with underlying exposures, such as utilities in the case I just mentioned with Russian gas and increased coal use. As those types of contracts begin to gain traction and volume, you then tend to get some speculators, and finally you get larger and more stable audiences of options traders.”

Eckert said that counter-party risk is on the decline, and CLE partners with Intercontinental Exchange (ICE), which now clears about 60% of trades through ICEclear (their London-based electronic clearing house), which means for those trades there is no counter-party risk at all. The remaining 40% are a combination of back-room and counter-party trades at present, but ICEclear instantaneous no-worry electronic clearing is taking market share very quickly.

When asked about competitors, Eckert said that in Europe they have 8 direct competitors, but CLE does 95% of the futures and options. One of the competitors is newcomer Paris-based Bluenext (http://www.bluenext.eu), which just came into being about 14 months ago, and is a joint sub of NYSE Euronext and Caisse des Depots. Another might have been NYMEX (http://www.nymex.com), which is now a subsidiary of the Chicago Mercantile Exchange; NYMEX announced an RGGI trading program in July 2008, but we believe that NYMEX volumes are not yet significant.

We asked Neil what lies ahead for CLE. “We need to get our existing products trading more, and add liquidity for investors,” he said. He indicated that as the size of contracts grows, more US traders will be interested. “Right now, we are meeting companies, going to conferences, doing lots of sales presentations.” When asked to name sectors who ought to be trading, he listed utilities, oil & gas companies, refiners, mining, paper & pulp operations, cement producers, and companies that make aluminum, glass and steel. He said that although in the US, oil & gas companies have lagged behind for the most part, the European and UK “big oils” are trading RGGI contracts now. He believes the majors will all come around, as will governments and regulators worldwide.

“When all is said and done,” Eckert said, “air and water are more important than money.”

<Note: We have no business dealings with Climate Exchange or its affiliates, nor do we own shares in Climate Exchange or any other entity associated with Mr Eckert.  JA>

New Hydrogen Advances: Aberdeen Catalyst; Florida “Tri-Brid” Car

Last week as reported in GreenCar Congress, scientists at the University of Aberdeen (http://www.abdn.ac.uk/)  released results of a 10-year collaboration with some international partner labs, that detail a natural and renewable method for producing hydrogen to generate electricity.  The method, they say, could drastically reduce the dependency on fossil fuels in the future.  http://www.greencarcongress.com/2009/01/researchers-dev.html

Professor Hicham Idriss, Energy Futures Chair at the University of Aberdeen, said that they have successfully created the first stable catalyst to generate hydrogen using ethanol produced from crop fermentation.  The breakthrough means ethanol can be completely converted to hydrogen and carbon dioxide for the first time.

The hydrogen generated would be used to power fuel cells which convert fuels into electricity directly without the need for combustion, so it has the potential to be used to power homes, buildings and cars in the future.  The carbon dioxide could be captured for storage.

Hydrogen as a fuel is not only for fuel-cells, it can be “burned” directly (creating water), and is also used in refining gasoline.  If hydrogen as a fuel interests you, you should look at what the folks are doing at St. Petersberg-based World Energy Solutions (OTCBB:WEGY, http://www.worldenergysolutionsinc.com/). Their proprietary HHO (Hybrid Hydrogen-Oxygen) System is a unique approach to a hydrogen technology that can increase an internal combustion engine’s gas mileage and reduce its emissions to little more than water.

Today World Energy Solutions announced that it has expanded the HHO system for use on a “tri-brid” engine in a Ford “Escape” SUV to produce even greater fuel efficiency and emission reduction. http://worldenergysolutionsinc.ir.stockpr.com/company/detail/171 

Ben Croxton, World Energy CEO, said, “The concept works extremely well. We successfully increased the mpg of the prime fuel. We are now embarking on a sophisticated testing program to find the best combinations of gasoline and gasses to provide the optimum increase of mpg whilst maintaining the engine’s torque and horse power. We are pleased to refer to this development as ‘Tri-brid Technology’.”

Currently over 90 percent of the hydrogen generated across the globe is made using natural gas found in fossils fuels.  The drawback with this method is that the generation of large amounts of carbon dioxide increasing the risk of global warming. 

However, Aberdeen’s Idriss points out that the new production method uses ethanol which is produced by the fermentation of crops is carbon neutral, meaning any carbon dioxide produced is assimilated back into the environment and used by plants to grow.  He adds that hydrogen generated using this method is very clean and therefore suitable for fuel cells It also converts carbon monoxide, a suffocating gas that robs people of oxygen, to carbon dioxide.

US Soars to Lead Wind Energy Producer, Saving Carbon Emissions, Lags in Energy Storage

The American Wind Energy Association put out its “state of the union” message just before Christmas, and it reads like a list of victories.  First of all DOE put out a statement in the spring (when energy prices were heading to their bubble-high-mark) that by 2030 we can drive 20% of our energy from wind.  Woo hoo.  More concretely, in the second half of 2008, the United States surpassed 20,000 megawatts of wind energy capacity, emphasizing the increasing speed of technology change — because the first 10,000 MW had taken 2 decades to get to by 2006.  http://www.awea.org/newsroom/releases/Year_End_Wrap_Up_22Dec08.html

There are lots of feel-good statistics associated with that, like a putative saving of 91 million barrels of oil per year OR a saving of 30+ million short tons of coal, etc.  Either way, of course, it decreases the output of carbon into the atmosphere IF we are able to cut back on the carbon burning.  Problem is that just having a lot of wind energy available does NOT cut back on coal-burning, which is largely utility-driven — and utilities are not turning off turbines to accommodate energy streams from the new renewables. 

The month of September was unusually cool, so consumption was off compared to the sweltering September of the previous year, but if you look at the report from EIA, the results are not encouraging with regard to energy created by burning things vs energy created by capturing energy from nature.  http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html

According to EIA data, our sources of energy have not varied substantially in spite of the apparent spike in renewables:

Energy Production by Feed Stock (EIA Sept 2008)

Looked at another way, this pie chart shows just WHERE the energy we use comes from on a comparative basis.  Note that other than hydroelectric generation, renewables barely make the chart.

Where Our Energy Comes From (EIA Sept 2008)

One logical argument is that utilities have no choice but to keep their turbines running all the time at full tilt, because it costs an arm and a leg to stop them and start them — and their liabilities if they do not generate enough energy are not worth risking a change or variation in SOP. 

What would change that?  Well, EPRI (trade association for electric utilities and their, um, buddies) put out a paper this month saying that deployment of a “smart grid” could save — actually save — up to 4% of electricity generation needs by (ready?) 2030. http://my.epri.com/portal/server.pt/gateway/PTARGS_0_237_317_205_776_43/http;/uspalecp604;7087/publishedcontent/publish/epri_releases_report_on_energy_savings_and_carbon_emissions_reductions_enabled_by_a_smart_grid_da_613496.html Admirable though that is, by 2030 my granddaughter would be 26 (she is 4 now), and the icecap in Greenland would already be substantially gone (as would various low-lying cities and nations around the world).  That may not cut it. 

What we need, it could be suggested, is a way of storing energy in huge quantities, so that we can actually cut back on burning, and concentrate on capturing energy from nature (solar, wind, tidal, hydro, geothermal, etc).  Switching to burning biomass or biodiesel or non-petroleum gases will not arrest the climate change process.  Only two things will do that — burning less STUFF, and cutting back energy consumption, possibly through making consumption more efficient.

However you look at it, energy storage is key, and energy storage is an area where we (that is, the WORLD, not just the US) is not making a lot of progress, at least not noticeably.  We are seeing a lot of interest in Li-ion and NiMH batteries for cars and trucks — that promises to help control carbon emissions.  But we are seeing very little progress in storing energy centrally or commercially — in ways that would affect the light switch on your wall.  Why?

Most batteries are too expensive, in a word.  By one calculation, a kilowatt-hour of energy storage in a li-ion or NiMH battery could cost hundreds of dollars.  Just for comparison, kilowatt-hours of electricity to consumers are in the $0.18-$0.20 range on the high end.  http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html

NYSERDA is conducting some demonstration projects on storage of renewable energy and storage of night-time turbine energy for reintroduction onto the grid as needed.  http://www.nyserda.org/  Various utilities are pursing demonstration projects as well.  But for the most part they are using batteries whose cost may be prohibitively high. 

One non-sexy but smart solution may be to have a closer look at advanced lead-acid batteries — an old technology that STILL contributes most of the battery power worldwide.  Check out http://www.alabc.org or http://www.axionpower.com, a leading developer of advanced lead-acid batteries that use plain nanocarbon to replace much of the lead in a traditional lead-acid battery, with strong performance improvements and low cost compared to other batteries.

Algae Fanciers to Converge on Houston to Discuss How Pond Scum Can Provide Energy, Decrease CO2

Well, not just pond scum, obviously, but how often can you write a headline like that?  The National Algae Association, which is for real, is holding its Algae Commercialization, Research and Business Networking Forum January 29-30 at the Sheraton North Houston at Bush Intercontinental Airport.  http://www.nationalalgaeassociation.com/.  It may also be helpful to look at Algae Fuel Making (http://www.algaefuelmaking.com/), BioFuels Digest (billed as the world’s most widely read biofuels daily at http://www.biofuelsdigest.com/), or the interestingly named Oilgae (http://www.oilgae.com/). 

LATER ADDITION TO STORY (Dec 22, 1:15 EST): San Diego, CA-based Sapphire Energy (http://sapphireenergy.com/company) , a startup whose goal is to be the leading carbon-neutral supplier of biofuels from photosynthetic organisms, announced that former BP executive, Cynthia Warner, has joined Sapphire to honcho the company’s transition from technology innovator to commercial producer of algae-created biofuels. http://sapphireenergy.com/press_release/7.

“Sapphire Energy’s development of a sustainable, carbon-neutral gasoline, diesel and jet fuel from algae is progressing and we now need a top energy industry executive with the expertise to bring new fuel products to market in this complex industry,” said Jason Pyle, Sapphire Energy CEO. “Warner will be a tremendous asset as we bring green crude to commercial scale in the next five years. We founded Sapphire to create the perfect fuel, knowing that we’d build a world-class team along the way. With C.J., we’ve found our next star.”

According to the NAA, “Current high oil prices, the collapse of food-for-fuel initiatives and concerns about increased levels of CO2 emissions in the atmosphere have all created awareness of the need for alternative fuel solutions. Algae has emerged as one of the lowest cost feedstocks for the biofuels and cellulosic industries. Algae is considered to be a promising source of renewable fuel, that does not affect the food channel and eats CO2. which can be processed and refined into a variety of transportation fuels. (i.e., jet fuel, biodiesel, biogasoline). ”

Algae are one of the most plentiful types of organism on the earth — more plentiful than beetles, which is saying a lot.  They form the basis of many food chains, and the group includes a lot of seaweed (think kelp) as well as the pond scum that comes to mind.

The use of algae as a fuel stock originated at MIT in the 1950s.  That cudgel was picked up by DOE, but eventually abandoned in the mid-90s.  But a lot has happened to the energy business over the last 30 years, and the algae lobby believes this may be the dawning of the Age of Algae. 

Algae use photosynthesis to grow, meaning that they “eat” carbon dioxide and excrete oxygen.  They also can double in volume overnight, which means they can consume carbon dioxide at a faster rate than most other organisms can.  Processed algae is a decent foodstock in terms of nutrition, and I have actually eaten bread made from algae flour (ok, so it isn’t what I was used to, but it is very nutritious as opposed to white flour that has virtually no nutritional value).

Although it may not be one of the standard reference publications, American Airlines’ magazine, American Way, offers an article in its current edition by Heather Millar that brings some perspective to algae as a career: http://www.americanwaymag.com/tabid/2855/tabidext/4343/default.aspx

“Oil prices must be maintained at a level that encourages investment, especially in alternative energy sources.”

Words from Al Gore?  T. Boone Pickens?  Robert Redford?  Nope. They came from Saudi Arabian oil minister Ali Naimi.  See for yourself. http://tinyurl.com/4zhbyc .   OPEC, as characterized by Naimi, is concerned that low oil prices will hurt the push for renewable energy. He gets an A for good politics and good communications, but one might wonder whether he might have his fingers crossed behind his back.

More believable but in a continuum of surprise nonetheless are results from a Deloitte survey of 52 high-level oil and gas executives released last week in which 75% said it was a good idea for the country to turn away from fossil fuels for transportation. http://in.sys-con.com/node/774181

This may give renewable companies, environmental lobbies, climate-change watchers, and people in general more confidence that quickly retreating oil prices will NOT stymie the movement for renewable energy as they did in the late 70s and early 90s.  

What effect does the price of oil have on renewable energy stocks? It seems like a logical assumption that bullishness on the sector would have a direct dependence on the price of traditional (mostly fossil) energy. Charles Morand, in a Seeking Alpha article, looks at research on the subject only to conclude that “there is none” – not yet anyway. The sector is still too young to build into any strong statistical analysis. http://tinyurl.com/4h57wu. 

If an investor were to use the price of oil as a metric for judging the value or viability of cleantech stocks, that might be to miss a key point. The sector is made up of companies that are searching for alternative energy: maybe cleaner, maybe more renewable, maybe easier to control.  Others concerned have goals for energy independence, reduction of greenhouse gases, slowing of climate change, opposition to acid rain or environmental despoliation from mining or slag.  But no one has set out to find alternative energy that is primarily just cheaper. That said, investment in such ventures may have a variety of goals, and usually one of those is to make money.  Obviously it is easier to visualize profits if there is a benchmark to look at, and — for convenience alone — that benchmark has been light sweet crude.  Whether it makes sense or not.

 

AMEE: New Funds, Aiming to Aggregate ALL the Energy Data in the World

Though the amount of money conveyed has been kept private, London-based AMEE (which calls itself “The World’s Energy Meter”) has raised “substantial” funds from a group of VCs in the UK and US, including O”Reilly Alphatech Ventures, Union Square Ventures, and The Accelerator Group.  For AMEE’s announcement see http://www.amee.com/?p=556.

Ever since Francis Bacon and Michel de Montaigne began to write essays on what we would call science and the scientific method, measurement has been a key to scientific endeavor, and now that climate change and cleantech are clearly global concerns that require global efforts, that measurement is no less important — just that the scope of measurement is unimaginably large.  Following on the Encyclopedists of the 18th century, AMEE’s goals are universal in scope.

AMEE already provides environmental assessment tools to many large organizations, including the UK government, Morgan Stanley, Google, Radiohead, Sun Microsystems and BRE.  AMEE’s website has some brief case studies, of which this is one on UK government use: http://www.amee.com/wp-content/uploads/2008/12/amee-decc.pdf.  

AMEE software and data are supplied as an SaaS web-based service that, according to its seemingly hubristic self-description,  looks to collect “every emission factor and methodology in the world related to CO2 and energy assessments (individuals, businesses, buildings, products, supply chains, countries, etc.), and all the consumption data (fuel, water, waste, quantitative and qualitative factors). The service combines measurement, calculation, profiling and transactional systems.”  AMEE says it “can facilitate smart grids, information systems, legislative frameworks and compliance schemes.”

AMEE was named to Greenbang’s UK Clean Tech Start-Up Index earlier this year (http://www.greenbang.com/4848/the-clean-tech-start-up-index-amee/). 

This sort of investment may, happily,  be a significant variant from the statistics collected by Om Malik, who translates them by saying that in 2009 VCs will be “hiding under their desks.” (http://gigaom.com/2008/12/17/proof-group-think-a-dominant-vc-trait/).