Goldman Goes Green

Just before Thanksgiving, the prestigious investment banking firm Goldman Sachs announced a broad-reaching environmental policy.

Goldman Sachs Environmental Policy

The policy contains several important pledges. Most tangibly, Goldman aims to make $1 billion available for investments in renewable energy (and this is not mere talk, as Goldman bought the wind developer Zilkha earlier in 2005). Goldman promises to take environmental considerations more seriously when considering investment opportunities, for instance refusing to invest in projects that do not comply with local environmental laws. Goldman also intends to become more active in shaping environmental public policy, including the establishment of a think-tank to promote market-based approaches for dealing with environmental concerns.

But perhaps the biggest impact Goldman can have on the environment is by placing pressure on their clients — the largest corporations worldwide. Because Goldman is the channel to literally trillions of dollars in the global capital markets, what Goldman says really matters to clients. Goldman’s clients need to keep the doors open to the investor community, with a good reputation. If Goldman follows through on their environmental pledges, and uses “carrot-and-stick” with its clients to improve their environmental performance, then real beneficial action is likely to in fact take place.

Goldman joins GE and Wal-Mart as major global corporations with huge influence publicly committing to improving the environment in the past year. Titans of industry such as these will be critical in dragging the laggards — the big oil companies, auto manufacturers, electric utilities — into more responsible and proactive environmental practices.

Cleantech News – California’s $3 Billion Solar Initiative Broken Down

California PUC has made a huge splash with its solar rebate program. The pizzazz angle is quite good.

“The goal is to install solar energy on 1 million buildings statewide by 2017, generating 3,000 megawatts of electricity — the equivalent of six large power plants, or enough to serve 2.3 million people. By comparison, all the solar power installed in all 50 states today has a capacity of about 400 megawatts.” – San Jose Mercury News

CPUC Solar Initiative Page

But when we calm down the rhetoric, there are a couple of things to consider.

  1. On the surface, the global solar industry is roughly $3.5 Billion/ year, so a c. $3 Billion bill by California looks great. But consider it over the 11 year time program life, and let’s see how it looks. By 2017 at a 20% per year growth rate, around its current historical pace, the industry will be roughly $26 Billion per year, and will have installed $138 Billion worth of solar panels. That makes this PUC program not an enabler of the solar industry, but a 2.5% drop in the bucket. And since we already spend $300 million or so a year in California subsidizing solar, it’s really just confirming more of the same the long-term. Nothing to shout about.
  2. And keep in mind, that $3 Billion dollars is not the whole cost. At $2.80/watt subsidy, the California consumer will still pay 2x that again out of its own pocket to put solar on their roofs. We’re still buying solar panels mind you, which are a 2-3x more expensive source of electricity than we currently use. We are definitely not saving money here for years if ever.
  3. Is the rationale reducing our greenhouse gas emissions? Not a very good argument. We already get a lot of our power from other states, either coal power dirtying their skies, or hydro with very little greenhouse gas impact. And besides, the quickest way to impact our greenhouse gas emissions is to deal with automotive emissions, 3,000 MW of solar 11 years out is barely a ripple in our power emissions over that time. Bottom line, there are better ways to reduce greenhouse gases.
  4. Now, I will accept the argument that we are building a local solar industry. Japan did it very successfully with long-term subsidy programs. But I’m not certain the state should be subsidizing it at this point. American investors have probably sunk on the order of $1 Billion in private capital into solar investments over the past few years and the industry is rapidly increasing capacity, all without the PUC making a move. The solar industry is the biggest bright spot in the cleantech sector. What we are really doing here is providing long term stability for a subsidized market, and guaranteeing that the IPO market for solar stays hot up so the venture capital investors who got in the last few years make a bundle.
  5. But the big issue from my perspective is this: last year the California “million solar roofs bill”, was defeated in the legislature. Partly because California’s finances are in such a messy state that legislators couldn’t agree that we could afford it, partly from partisan infighting. Now by a 3-1 vote, 4 unelected people on the PUC have enacted roughly the same program, at the same cost to the state (and us), by taxing us through our electric bill. And we never had a say. The amount may be small per household ($0.55 to $1.10 per month per household were among the range of estimates I found), but it is very definitely taxation by unelected officials. And I don’t care for that one bit.

Don’t get me wrong, I’m all for solar power, and I think this is a good program and a fair use of dollars long term for the industry and the state, I just don’t like the way it’s been done.

Personally, I’d just as soon let Germany continue to subsidize solar programs and soak up our exports until the price comes down, then after they’ve paid the cost, roll out a massive solar program for a fraction of the cost.

China and India – Laggards or Leaders?

Even among green enthusiasts there seems to be a feeling that our best efforts could be cancelled out by the growing energy demands of the developing world – particularly the massive economies of China and India which between them comprise 40 percent of the world’s people. This fear may prove unjustified if current trends continue and recent developments are carried to fruition. For example:

  • China’s solar industry already provides water heating for 35 million buildings.
  • India’s pioneering use of rainwater harvesting brings clean water to tens of thousands of homes and the country already has very active solar and wind industries.
  • China has contracted to convert over 10,00 diesel buses in 5 cities to run on hydrogen/natural gas.
  • The Chinese state energy company has pledged to spend at least $2.5bn on renewable energy projects over the next five years.
  • Just this month, China has passed a law that sets tariffs in favor of non-fossil energy such as wind, water and solar power and has set a goal of 15% renewables by 2020 – a massive target given the size of the economy!

Given China’s continued dependence on coal, some might say this is not sufficient but represents a huge commitment by economies struggling to develop and without repeating all the mistakes of the industrialized world. The WorldWatch Institute’s State of the World 20006 has a Special focus on India and China that reports on some of the strategies that China and India are starting to implement. It might just be that the Chinese and Indian pioneers are providing models for a new and sustainable economy and that we in the West are about to be leapfrogged!

Welcome to a New Blogger – Peter Beadle, Solar Exec and CEO of GreenJobs

I want to welcome our new blogger – Peter Beadle.

Peter is currently CEO of He is an is an experienced technology executive and an expert on a wide range of green and energy technologies, including photovoltaics, fuel processing, fuel cells, and oil & gas technologies.

Peter holds a PhD in Physical Chemistry, and served President of BP Solar North America, launching and building the business to one of the largest in North America in the late 1990s. Prior to that he held a number of positions in R&D and technology management within British Petroleum.

Peter will be doing a Friday blog column around renewables.

The website for his current venture is Green Jobs is one of the few dedicated job sites for the renewables and cleantech industry. They put out the online Green Directory, as well as a weekly newsletter on People News in cleantech.

Welcome aboard, Peter.

The Forgotten Renewable Energy

When most people think of renewable energy, they think of hydro, or solar, or wind, or (increasingly) biomass. A few people think of geothermal. But that’s pretty much the list of renewables.

The most forgotten form of renewable energy, and one which I think holds more long-term promise than any other, is ocean-based energy.

The amount of energy that can be found in the ocean — thermal gradients, waves, tides, currents — is enormous, many times the amount required by the human species. As long as we have a sun and a moon (and when we don’t, we’ll have much bigger worries), then the ocean will contain a gargantuan amount of energy. And, it’s always there, day or night, almost completely predictable, unlike many other forms of renewables.

Of course, the challenge is to harness this energy in an economically viable fashion, and without causing adverse effects on marine life, aesthetics, shipping traffic, and so on. Scientists and engineers have been working on various technical approaches to capturing ocean energy for over two decades, and a lot of work remains to reach commercial viability. But, I believe that at least one of these technical approaches will eventually pay off in the next decade or so, and a big payoff it will be.

Believe it or not, unlike the masses and even energy industry experts, the Energy Policy Act of 2005 didn’t forget ocean energy technologies, including provisions for mandatory purchase requirements from ocean energy sources.

How did legislators manage to include ocean energy when everyone else had been overlooking it? Amazingly, it seems to have been because the companies in the ocean energy field — almost all early-stage privately-held companies, no big firms that you might have heard of — came together of their own volition to form the Ocean Renewable Energy Coalition. Web site Bully for them.

Let’s keep our eyes on ocean energy. I’m looking for much bigger things from the ocean in the future. It won’t remain forgotten for long.

Clean-Tech Investor Summit, 2006

If you haven’t tuned into it yet, the 2nd annual Clean-Tech Investor Summit is upon us, to be held Feb. 1-2, 2006 in Rancho Mirage, CA. The event is co-produced by my firm, Clean Edge. Last year’s event sold out, and this one should, too.

This year’s Summit features a solid line-up venture and private equity investors, corporate executives, entrepreneurs, and other notables, including a keynote from Thomas Werner, CEO of SunPower Corp. Werner’s address will be one of his first major presentation since SunPower’s highly successful IPO in November.

Other speakers include:

  • Arthur H. Rosenfeld, Commissioner, California Energy Commission
  • Donald L. Paul, CTO, Chevron Corp.
  • Hank Habicht, CEO, Global Environment & Technology Foundation
  • John Denniston, Partner, Kleiner Perkins
  • Matthew R. Simmons, author of Twilight in the Desert
  • Paul Bieganski, Ph.D., Managing Director & CTO, Cargill Ventures
  • Ron Kenedi, VP of Solar Energy Solutions Group, Sharp
  • William K. Reilly, Former U.S. EPA Director

    I’ll be moderating a panel on corporate clean-tech strategies, featuring Ron Kenedi from Sharp, Ronald Pierantozzi from Air Products and Chemicals, and Juan-Antonio Carballo from IBM Venture Capital Group. My Clean Edge partner, Ron Pernick, will head up a session on how policy is shaping clean tech, with Hank Habicht of Capital E, and Dan Kammen of UC Berkeley’s Renewable and Appropriate Energy Laboratory.

    You can download the most recent agenda Here.

    Those who register by January 12 can redeem a special $350 discount off the regular registration fee of $1495. Register today by contacting the IBF Registrar, Cathy Fenn, at (516) 765-9005, ext. 21 or e-mail Be sure to mention “Clean Edge.” You may also register at the IBF website and use keycode “Clean Edge” to get the discount.

    Hope to see you there.

  • Old Dams = Opportunity for Smallscale Hydro?

    I read a article (see below) recently about the state of the river dams in the US. The article quoted a number of something like 80,000 large dams. Article on Old Dams The author seems quite concerned in the wake of Katrina about the safety and replacement of aging dams. With good reason, as dating back to the 1800s Johnstown Dam disaster in Pennsylvania, aging dams have been a major concern in the US. The article is talking mainly about large dams, but it got me to thinking, if there is a similar issue in small dams as well, perhaps there is an opportunity to increase renewable energy production at a fairly low environmental cost by expanding small scale hydro.
    A bit of power history for those of us who don’t think about it often, but for centuries, the major non-animal source of power was small scale hydro power, driving mechanical works, grain mills etc. The advent of electricity and fossil fuel generation, of course, replaced that in the early part of the last century.
    Hydro power is by far and away the world’s biggest source of renewable electric power. But the primary knock today on hydro development as a major new renewable source is the large environmental footprint required. At the same time, just like wind turbine blade technology has advanced the efficiency of wind farms, water turbine blade technology as advanced the efficiency of hydro, including small scale.
    For those of you interested, I’ve listed a few of micro hydro turbine manufacturers and information about a wide range of sizes below.

    Micro Hydro Manufacturer

    I do know that there are several small companies, including Southwest WindPower, which is venture backed by the guys at Altira, who are helping drive a renaissance in small wind turbines for home use. And while I know the likelihood of a similar renaissance in distributed hydro ever taking off is extremely small, aging dams or not, it’s always fun to think about.

    How Energy Efficient Technology is Helping to Control Energy Costs

    Practical experience reveals that energy is a firm’s third-highest cost. Businesses are looking for the means to reduce costs, increase profits and satisfy ever-increasing demands to reduce greenhouse gas emissions and preserve the environment.

    With America’s commercial business sector leading demand, the cost of providing energy to the nation’s business and residential consumers is expected to easily exceed $200 billion this winter.

    George Burnes, President of SmartCool Systems Inc. (OTC.PK: SSCFF; TSXV: SSC), said recently that the primary driver towards commercial energy efficient technology is a desire to reduce operating costs. The Dow Chemical Company (NYSE: DOW), understanding the need for reducing consumer costs, is committed to helping consumers reduce their energy consumption by producing products that help lower electric bills while making a positive difference for the environment.

    Distributed Energy Systems Corp. (NASDAQ: DESC) delivers power to end users looking to supplement their grids, allowing for more control over their electricity supplies. “Technology is helping to achieve differentiated quality of service in a way that really wasn’t commercially viable even five or 10 years ago,” described Walter W. ‘Chip’ Schroeder, President of DESC. FuelCell Energy, Inc. (NASDAQ: FCEL), also sees significant value in being able to control power usage and costs through on-site systems to ensure that efficiencies are realized.

    International Rectifier (NYSE: IRF) anticipates energy savings through advancements in power management technology as the desire for energy-efficient products continues to increase.

    George Burnes, President of SmartCool Systems, Inc., explains “Recent geo-political instability in major fossil fuel producing regions has only served to increase public demand within North America to reduce dependence on fossil-fuelled electricity generation. This has resulted in cash and tax incentives being offered by utilities and local governments in many states and provinces to encourage industrial, commercial and institutional users to reduce electricity consumption through the installation of energy savings equipment.”

    Steven P. Eschbach, spokesman for FuelCell Energy, Inc added that a powerful driver is the reduction of greenhouse gases. “Again, getting the high efficiency back into the equation, the more efficient you are, the less harmful greenhouse gases you emit.”

    To Read the Full Report