Green Wombat

A green-collar recession?

It's all about the green economy, stupid.

The United States could lose more than 116,000 green collar jobs and forgo $19 billion in green tech investment in 2009 if Congress fails to extend two tax credits crucial to the renewable energy industry, according to a new study.

One red flag about this report: It was commissioned by the American Wind Energy Association and released by the Solar Energy Industries Association -- two trade groups pressing for extension of the investment tax credit and the production tax credit. Green Wombat tends to look askance at studies paid for by business and whose conclusions support the sponsors' political agenda. But a review of the research conducted by Navigant Consulting indicates that it is solid, based on federal labor data and employment models as well as Navigant's own market analysis.

Some background. The ITC provides a 30 percent tax credit for the installation of solar arrays and other equipment. Homeowners can claim a 30 percent tax credit for solar arrays up to a maximum of $2,000. There's no cap for commercial solar arrays and the tax credit has been a key to attracting financing for large solar installations that can cost millions of dollars. (Several states, most notably California, offer even more lucrative incentives, which should help prop up demand.) The production tax credit provides a subsidy for the generation of electricity by solar, wind, geothermal and other renewable energy systems and has driven the construction of massive megawatt wind farms.

Both credits expire at the end of 2008 and the renewable energy industry and their allies in Silicon Valley and on Wall Street are pressing Congress for a long-term extension -- five to eight years -- to provide a stable investment climate for green projects. (Last week, executives from Google (GOOG), Hewlett-Packard (HPQ), Applied Materials (AMAT) and Credit Suisse (CS) were among those that signed a letter urging Congress to take action by March 1.)

The Navigant study projects that without the investment tax credit installations of solar arrays will fall from a projected 790 megawatts to 325 megawatts in 2009, eliminating 39,400 potential new jobs.

A couple of points to consider about those numbers. Navigant only considered the impact on the photovoltaic industry that manufactures and installs rooftop solar arrays. It did not calculate the consequences for the solar thermal business, which builds large-scale solar power plants that use mirrors to focus the sun's rays on liquid-filled tubes or boilers to create steam to drive electricity-generating turbines. The solar thermal industry is in its infancy but utilities like PG&E (PCG), Southern California Edison (EIX) and San Diego Gas & Electric (SRE) have signed several contracts for solar power plants and negotiations for gigawatts more of solar electricity are ongoing.

The first solar power plants in California won't go online until around 2010 but the construction and operation of those projects are expected to create thousands of jobs. Like the PV industry, solar thermal companies are dependent on the investment tax credit to attract the big money it takes to finance the construction of billion-dollar power plants. The loss of the investment tax credit would hit California particularly hard.

While rooftop solar companies worry about losing business in the future if the investment tax credit is not renewed, the more immediate concern among solar execs Green Wombat has talked to recently is finding enough workers to keep up with demand, especially in California.

Navigant projects an even bigger crash for the wind industry should the production tax credit expire, with installations falling from 6,500 megawatts to 500 megawatts in 2009 with the lose of 76,800 jobs. The wind industry has been continuously buffeted in recent years as Congress has allowed the production tax credit to expire repeatedly only to resuscitate it. In the past, the expiration of the tax credit has resulted in a 73% to 93% drop in the wind market, according to Navigant.

Tech giants back green investment tax credit

Twice now the renewable energy industry has narrowly lost votes in Congress to extend an investment tax credit crucial to jump-starting the market for large-scale projects like solar power plants. In December, Big Oil outmaneuvered green energy advocates and their Congressional supporters by claiming that rescinding huge tax breaks for the fossil fuel industry to pay for renewables would cost consumers at the pump. A more recent attempt to revive the tax credit also failed.

Now the American Council on Renewable Energy is bringing out its big green guns. Representatives from Silicon Valley tech giants, Wall Street investment banks and utilities signed a letter sent to the congressional leadership late Wednesday urging the long-term extension of the 30 percent investment tax credit as well as the production tax credit for the electricity produced by solar, wind, geothermal and other renewable energy systems. Among the signers urging action by March 1 are executives from Google (GOOG), Hewlett-Packard (HPQ), Applied Materials (AMAT), Credit Suisse (CS), Wells Fargo (WFC), venture capitalists Kleiner Perkins Caufield & Byers and utility San Diego Gas & Electric, a subsidiary of energy giant Sempra (SRE).

Interestingly, the phrases “climate change” and “global warming” never appear in the letter. In a savvy move, the council has forsaken doom and gloom for a purely economic message: American jobs, competitiveness and innovation are at stake, the signers argue, and the tax incentive will spark a green tech boom at relatively little cost to the taxpayers. It’s a Silicon Valley mindset and its no surprise that while the signers represent companies from all over the United States, most hail from California.

The tax credits expire at the end of 2008 and proponents argue that a five-to-eight year extension is needed to create a stable investment climate, given that it can take three to five years for a large solar power plant to be permitted and built.

“The United States is in a historic position to lead in innovation and competitiveness in the renewable energy sector,” wrote the council’s three co-chairs, which include Dan Reicher, Google.org’s director of climate and energy initiatives. “As with all energy markets and in plans for growth in any businesses, certainty and continuity in public policy provides the confidence needed for stability in investments. We must ensure we are not creating an environment for boom and bust cycles in renewable energy and that we are not tying the hands of business owners in the sector looking to scale their technologies to meet demand and price points.”

Without an extension of the tax credits, the council warns that renewable energy projects in the pipeline that would produce 42 gigawatts of greenhouse-gas free electricity — enough to power tens of millions of homes — could grind to a halt, giving competitors in Europe and Asia the upper hand when it comes to green tech innovation.

Solar showdown in Congress

With Congress back in session, renewable energy proponents are girding for a battle over legislation that could make or break the nascent solar power industry.

At stake in the energy bill now before Congress is the survival of a 30 percent investment tax credit that make large-scale solar power plants a viable option for utilities under pressure to cut greenhouse gas emissions by obtaining more of their electricity from renewable sources. On the home front, a similar tax credit for residential solar installations is up for grabs as Congress tries to reconcile House and Senate versions of the energy legislation.

"There are at least eight or nine well-funded companies that are actually making great progress in developing large-scale solar," says Joshua Bar-Lev, vice president for regulatory affairs for Oakland, Calif.,-based solar power plant developer BrightSource Energy. "I don’t know if any of them are going to be able to finance projects and get the permits they need without these tax credits."

The solar companies and their allies in the utility industry and on Wall Street had been pressing for an eight-year extension of the investment tax credit. They also want to abolish a prohibition on utilities from taking advantage of the incentive if they invest directly in solar power plants. But since word hit the street that Congressional leaders were considering stripping out the incentives to speed passage of the complex legislation -- catchall bills that will affect the fate of nearly every energy-related industry, from Big Oil to biofuels -- solar proponents have been converging on the Capitol in an 11th-hour lobbying frenzy.

"Things are very uncertain at the moment," says Chris O’Brien, an executive at solar panel maker Sharp who serves as chairman of the Solar Energy Industry Association, a trade group. "In recent years, we’ve seen a very sharp increase in corporate investment, project investment and financing for solar technology companies and solar projects. There’s great concern that the U.S. market continue to grow."

Like other renewable energy sectors, solar has lived and died at the hands of tax incentives. In the 1980s a California tax break encouraged the construction of the state's first utility-scale power plants by Luz International, founded by BrightSource's chairman. When the incentives evaporated with the return of cheap energy that decade, the company's business disappeared (though those Mojave Desert solar power stations continue to operate).

Global warming fears, renewable energy mandates imposed on utilities and a flood of venture capital has revived Big Solar over the past two years. The industry argues that longer term tax incentives must be put in place to ensure solar power plant builders have enough time to break into the electricity market and achieve economies of scale that will drive down the cost of green energy. This time around, the solar entrepreneurs have attracted the support of utilities like PG&E (PCG) and Edison International (EIX) as well as Wall Street titans like Goldman Sachs (GS) and Morgan Stanley (MS), both of which have invested in renewable energy companies. (Morgan Stanley, for instance, is backing BrightSource.)

"We’ve gone to Congress and talked to members about the need for multi-year commitments so we have certainty," Rick Carter, PG&E's director of federal government relations, told Green Wombat. "What we’ve seen over past couple years is stop-and-go with tax credits. If you have multi-year leads to build facilities, that doesn’t work."

Take California, for example. Negotiations between a solar energy company and a utility over a power purchase agreement can last more than a year and it can take another three or four years to to obtain regulatory approval for a solar power plant, secure the site and then get the facility built and operating. PG&E, Southern California Edison and San Diego Gas & Electric (SRE) all have signed long-term power purchase agreements for solar power plants that will be financed and built over the next several years.

Given that the prime solar sites and potential economic payoff for Big Solar is in the sun-drenched West, companies like BrightSource have been targeting Congress members from western states. "We want both representatives and senators to see the benefit of this: price certainty, jobs, clean energy," says Bar-Lev.

While the situation changes daily, action on the energy legislation is expected sometime in the next two weeks.

Australia's green election

Australian voters on Saturday tossed out the decade-old government of conservative Prime Minster John Howard, installing Labor Party leader Kevin Rudd (left) as the new PM. Howard was a staunch ally of the Bush administration on climate change, joining it in refusing to ratify the Kyoto Accord despite -- or because of -- Australia's status as the planet's biggest per-capita emitter of greenhouse gases.

Australia is a proverbial canary in the coal mine when it comes to suffering the consequences of climate change, and Saturday's election may foreshadow how environmental issues will play out elsewhere in the coming years. With the country in the grip of the worst drought on record, global warming -- and the Howard government's emu-in-the-sand stance that prompted corporate Australia to push its own climate change agenda -- became a hot campaign topic. The Australian Labor Party's environment spokesman, former Midnight Oil front man Peter Garret (right) -- a rock-star-environmentalist-turned-politico -- hammered the government at every turn. Meanwhile, Rudd promised to sign Kyoto, up investment in green technology and establish a nationwide carbon trading market to help achieve a 60 percent reduction in greenhouse gas emissions by 2050. Labor also set a target of obtaining 20 percent of this coal-dependent nation's electricity from renewable sources by 2020.

Just how much Labor's climate change policies contributed to its landslide victory is up for debate, though such was the voters' wrath that it appears that even Howard will lose his seat in Parliament, the first sitting prime minister to do so since 1929. But here's one indicator: The Greens scored 20 percent of the votes in some electorates and will take as many as six seats in the Senate, possibly giving the environmental party the balance of power in the upper house. The Greens also contributed to the Labor landslide because under Australia's preferential voting system, ballots cast for unsuccessful Green candidates were re-directed to the ALP.

So with a charismatic greenie like Garrett as Australia's presumptive new environment minister, Australia is about to become the Scandinavia of the South Pacific, right? Not quite. Australia's current prosperity owes much to the resource boom under way as China buys up just about any mineral that can be dug out of the ground. (See my Fortune colleague Brian O'Keefe's excellent story on the ire ore gold rush in Western Australia.)

Green Wombat got a first-hand look at the pressures Rudd will face during a visit last month to Queensland, the new PM's home state. Driving through central Queensland's coal belt, a never-ending procession of trains piled high with coal flanked the two-lane highway, running 24/7 between the mines and the port, where China-bound coal ships are stacked up by the dozens off shore. Bulldozers scaled mountains of coal piled on the side of the road, scooping the sooty stuff up to be put on a conveyor belt that straddled the highway to connect to a train depot. At the Dingo roadhouse, a big color-coded wall map charts central Queensland's major coal seams and Shift Miner Magazine is on sale, chronicling the explosion in coal mining that has turned places like Rockhampton into boom towns. Riding in from the Rockhampton airport, a former coal miner-turned-taxi driver tells me she rues passing up the chance a couple years' back to buy a house for $A10,000 in a nearby mining town; such homes now go for $A300,000. Out on a cattle ranch about 500 kilometers from Rockhampton, a mining company is drilling for gold but rancher John Dennis tells me he hopes they find something else. "Black gold," he says. "Coal." (The biggest corporate takeover attempt now under way Down Under is Aussie mining giant BHP Billiton (BHP)'s $150 billion offer for rival Rio Tinto (RTP).)

So no surprise that Rudd wants to spend $A500 million on so-called clean coal technology to capture and store greenhouse gas emissions from coal-fired power plants. While sun-drenched Australia has some of the world's best solar resource it currently gets about 86 percent of its electricity from coal-fired power plants. In fact, in recent years, Australian solar energy companies like Ausra have relocated to California, frustrated by the government's lack of support for renewable energy. But with the new Labor government pledging to fund a $A150 million Energy Innovation Fund to stop the brain drain as well as increase the mandatory renewable energy targets, Australia may be the next frontier for green business.

Investors to SEC: Require Disclosure of Climate Change Risks

A coalition of institutional investors and state government officials today petitioned the U.S. Securities and Exchange Commission to require companies to disclose to shareholders the risks global warming poses to their business. "The transition to a carbon constrained economy is underway, and public access to material information concerning the risks and opportunities that companies face, and their means of addressing those risks and opportunities, is vital to investors," stated a letter signed by the nation's biggest public pension funds, the California treasurer, the New York attorney general and other state government officials, environmental groups and investors that manage more than $1.5 trillion in assets.  "A firm that is or soon will be subject to greenhouse gas regulation under state or federal policies should disclose, in light of its current and projected greenhouse gas emissions, the effects of regulation upon their capital expenditures, earnings and competitive position."

In an accompanying petition, the coalition said public companies should reveal their total greenhouse gas emissions, provide a strategic analysis of the risks and opportunities presented by climate change, assess the physical risks of climate change to their operations, and analysis the regulatory risk posed by government efforts to fight global warming.

"Regulation of greenhouse gas emissions imposes direct costs on major sources of greenhouse gas emissions and indirect costs on the companies that use their products and services," the petition states. "At the same time, these new regulatory developments will offer major opportunities for firms that can reduce emissions, thereby garnering marketable emissions credits or cost advantages over their competition, and for firms offering technologies and services needed to reduce emissions."

The coalition argues that corporate disclosure of climate change risks is spotty at best. It  noted, for instance, that neither oil giant ExxonMobil (XOM) nor insurer Allstate (ALL) mentioned global warming, greenhouse gases or carbon dioxide in their 2006 annual reports.

Report: National Renewable Energy Standard Would Cut CO2 Emissions

The U.S. Department of Energy has released a report analyzing the impact of proposed legislation from New Mexico Senator Jeff Bingaman that would require utilities to obtain 15 percent of their electricity from renewable sources by 2030. Such a so-called renewable portfolio standard would result in a 6.7 percent decline in greenhouse gas emissions, according to the DOE's Energy Information Administration. Though CO2 emissions from coal-fired plants would fall, utilities' overall greenhouse gas emissions would continue to rise. The study does not take into account renewable energy standards already in place in more than half states For instance, California requires that 20 percent of electricity sold by investor-owned utilities must come from renewable sources by 2010, rising to 30 percent by 2030. California will impose statewide limits on greenhouse gas emissions, and five other western states have agreed to do the same. "The implementation of any combination of these policies would be expected to have a significant impact on renewable generation markets," the report's authors wrote. The study also found:

• Solar energy would grow to eight percent of renewable energy production, largely because of the generous marketable credits rooftop solar arrays would receive.
• Biomass energy production would triple.
• Natural gas and nuclear energy production would decline slightly.
• Electricity prices would rise .9 percent between 2005 and 2030.

Schwarzenegger's Green Foreign Policy

Arnold Schwarzenegger is fond of calling California a nation-state and accordingly he practices his own foreign policy, forging an international alliance to combat global warming. On Friday the California governor signed a memorandum of understanding in Los Angeles with Steve Bracks, the premier of the Australian state of Victoria. The two Pacific Rim states agreed to share technology and develop policies to develop international carbon trading markets, reduce greenhouse gas emissions from vehicles, foster clean energy technologies and worth together on energy efficiency standards.  Schwarzenegger has signed a similar accord with U.K. Prime Minister Tony Blair and he has collaborated on green policies with the premier of British Columbia. But the California-Victorian alliance is particularly noteworthy, representing a growing rebellion against national governments perceived as obstructionist on global warming. "This agreement exemplifies the leadership role of sub-national jurisdictions in driving global climate change solutions," the document states. Australia, of course, is the only other major industrialized country to join the United States in refusing to enact the Kyoto Accord. The country of 20 million is heavily dependent on cheap and highly polluting coal and conservative Prime Minister John Howard, a close ally of President George Bush, has doggedly resisted efforts to impose emissions limits. Victoria, Australia's second-largest state, is governed by the left-leaning Labor Party and is the California of Australia when it comes to promoting clean energy and policies to fight global warming. (Victoria, for instance, is helping fund the world's largest photovoltaic solar power station.)  Howard is in a tough re-election fight, and as the country suffers through one of its worst droughts on record, climate change has emerged as a major campaign issue. The prime minister is bashed almost daily by the Labor Party environment spokesman, former Midnight Oil frontman Peter Garrett, and now he's got the Terminator doing photo-ops with the opposition.

Philips: Time to Banish the Bulb

photo originally uploaded by welshkaren

Philips (PHG), one of the world's leading light bulb makers, wants to flip the switch on incandescent lighting - one of its major product lines. Yesterday the company joined a campaign to push for legislation to phase out by 2016 the use of energy-hogging traditional lighting in favor of more planet-friendly compact fluorescent light bulbs and LEDs. Another unlikely bedfellow in the effort to replace century-old lighting technology is utility giant Duke Energy (DUK). The Lighting Efficiency Coalition - an amalgam of several environmental groups and their corporate allies - supports legislation to promote the switch to less energy-intensive lighting through energy consumption standards for lighting, green buying programs for government agencies and financial incentives for consumers. According to the coalition, energy efficient lighting it could save the U.S. $18 billion annually in electricity costs - the equivalent of shutting down 18 coal-fired power plants or eliminating 158 million tons of carbon dioxide from the atmosphere.  Philips, of course, stands to profit if it can dominate the CFL and LED markets. General Electric (GE) also sells CFLs but recently announced it was developing a more energy efficient incandescent bulb.

Tech CEOs: Double Federal Funding for Green Energy

TechNet, the technology industry's lobbying arm, released a report today calling for an overhaul of U.S. policy to promote renewable energy and support green tech innovation. Silicon Valley heavyweights like Cisco Systems (CSCO) CEO John Chambers and venture capitalist John Doerr, along with green tech startup execs, are in Washington this afternoon to unveil the policy initiative. "We are at a unique inflection point at which it is within our reach as a nation to make the shift from an economy fueled predominantly by oil to one that relies on a balanced mix of alternative energies and new technologies," the TechNet Green Technologies Task Force states. "Clean energy innovations are positioned to be the next great disruptive technologies with the potential to revolutionize the energy industry, spurring economic growth and creating new industries
and jobs."

Among the policy recommendations:

• Double federal funding for energy research to $4 billion a year.
• Restructure tax incentives given to Big Oil and the fossil fuel industry to favor renewable energy and green tech innovation.
• Create a national renewable energy portfolio standard requiring utilities to source a percentage of their electricity from solar, wind and other green energy generation.
• Establish a national carbon trading market to reduce greenhouse gas emissions and fight global warming.
• Allow utilities like PG&E (PCG) to recoup their investments in renewable energy generation and transmission.
• As the largest energy buyer in the country, the federal government should spur green tech innovation through purchases of renewable energy and establish a quota for green energy consumption.
• Promote national energy efficiency standards.

To show its member companies practice what they preach, the TechNet report cited recent corporate efforts to support renewable energy and cut greenhouse gas emissions. Computer chip equipment maker Applied Materials (AMAT), for instance, has pledged to power 12 percent of its headquarters from solar and wind energy while Google (GOOG) is installing a 1.6 megawatt solar array on its headquarters buildings to supply 30 percent of its electricity. Hewlett-Packard (HPQ) has promised to increase its purchases of renewable energy by 350 percent in 2007 and Yahoo (YHOO) converted its employee shuttles to run on biodiesel.

Las Vegas's Bet on Biofuels Pays Off

photo: LVRCCC

Las Vegas usually doesn't make anyone's list of green cities, what with its sprawling water-sucking desert suburbs and smoke-filled casinos. But it turns out that nobody beats Sin City when it comes to powering its vehicle fleet with alternative energy like biodiesel, natural gas, electricity and hydrogen. Sixty-three percent of Las Vegas's buses, cars, trucks and other municipal vehicles - 450 in total - use some form of alternative fuels that emit fewer planet-warming greenhouse gases than conventional gasoline or diesel, according to SustainLane, a San Francisco environmental management service. That made Vegas the No. 1 for alternative fuel fleets in SustainLane's survey of the U.S.'s 50 biggest cities. Next up in the top 10 was Honolulu, with 51 percent of its fleet forsaking Big Oil; Kansas City, Missouri (45 percent), Albuquerque (42 percent), Dallas (39 percent), Denver (31 percent), Phoenix (28 percent), Los Angeles (25 percent), Seattle (25 percent) and Portland, Oregon (25 percent). Conspicuous in their absence from the list were the ecotopias of San Francisco and San Jose.

Taking California's Green Revolution to Washington

photo originally uploaded by prad
Go to any green tech conference and one thing you can count on, other than running into Vinod Khosla, is that participants will spend some time debating whether the alt energy boom is a fad or a phenomenon of world-changing proportions. If this week's Cleantech Forum in San Francisco was any sign, those doubts have disappeared. The discussion these days is about how Silicon Valley venture capitalists can replicate in Washington, D.C., their behind-the-scenes success in getting California Governor Arnold Schwarzenegger to enact the nation's first greenhouse gas emissions cap. During a panel discussion Wednesday evening about green tech opportunities in the post-2006 election season, environmentalists urged investors and VCs to continue exerting their political muscle.

"Suddenly, the venture capital industry has become so involved. This is critical because to a very large extent these are policy-driven markets," said Christopher Flavin, president of the Worldwatch Institute, a non-profit environmental research organization based in Washington. "I’ve been surprised at just how aggressive and assertive leaders in the venture capitalist community in California are. I’ve been at a number of meetings with venture capitalists where I thought I was talking to someone from Greenpeace. They're aggressive and willing to go knock on doors. Some of my environmentalist colleagues in Washington seem conservative compared to some VCs. We may be at some kind of tipping point." 

Daniel Kammen, director of the University of California, Berkeley's Renewable & Appropriate Energy Laboratory, said the passage of California's global warming law and the Democrat's 2006 election victory has changed the game in Washington. "It opens up incredible opportunities," said Kammen, whose lab will contribute to the new $500 million biofuels research center being funded by oil giant BP (BP). "I literally get four to five calls a day from lawmakers asking what would be the key thing to pass to open up green tech opportunities, from plug-in hybrid cars, to putting solar on an even footing."

Stephane Dupont, executive vice president of the Washington-based National Venture Capital Association, said his trade group is beefing up its staff to focus on green tech. He said now's the time to press the clean tech cause in the capital. "There’s a desire by the political elites in Washington to recapture that technological leadership, not only for political reasons but for job creation."

Flavin welcomed the green-green alliance between environmentalists and VCs as well as the willingness of Silicon Valley's heavyweights to take on the brown lobby led by oil companies like ExxonMobil (XOM). "I’m excited to see that some of the troglodytes who have been holding things back are now up against a group that is not only as well funded but that is more intelligent."

San Jose Goes Green to Lure Clean Tech Companies

originally uploaded by victor solanoy

San Jose bills itself as the capital of Silicon Valley. Now the California city is making a bid to become a green tech hub by selling itself as a startup friendly town that has embraced sustainability. Home to Adobe, (ADBE), Cisco Systems (CSCO), eBay (EBAY) and other tech giants, San Jose in December scored its first big green tech player when Nanosolar agreed to build the world's largest solar cell manufacturing plants in the city. (Showing its commitment to tech recycling, the Nanosolar plant, shown at right, is the site of a former Cisco manufacturing facility.) Green Wombat recently talked to Paul Krutko, director of the San Jose Office of Economic Development, about the competition to lure renewable energy companies and other green firms. San Jose, of course, starts out with a few advantages over, say, Austin, Boston or Bangalore.  The valley boasts a well-educated, tech savvy workforce and the capital of venture capital is but a short Beemer ride away, as are the idea factories at Stanford and the University of California, Berkeley. The downsides are the region's $700,000-for-a-tract-home housing market and not-so-green clogged highways. "We are very focused on how we can leverage our assets as a center of innovation in the United States," says Krutko. "We’re tying to forge a cluster of companies and institutions that are actively advancing clean technologies."

But Krutko says when competing for clean tech companies, cities need to show their green cred as well as the green startups will save in the form of tax breaks and other financial incentives. So San Jose touts its green building initiatives - it opened the world's first LEED (Leadership in Environmental Design) certified public library - and cites local companies' efforts to fight global warming. Software maker Adobe's downtown San Jose headquarters, for instance, has been rated the greenest corporate building (photo by twisesq at left) in the United States. And it probably doesn't hurt that Al Gore drops in now and again to meet with area tech leaders. Green tech companies, says Krutko, are "looking at communities that have an approach to sustainability. It is very much a competitive advantage in having a community that really gets it in dealing with the global issues we’re facing in terms of climate change and global warming." A point validated last week by oil company BP (BP) when it chose to locate a $500 million biofuels research center at UC Berkeley, in part, because of California's leading-edge efforts to fight global warming.

To lure Nanosolar, which has bankrolled $100 million in venture capital funding, San Jose officials offered $1.5 million in tax breaks and other incentives. "The state of Nevada and the state of Arizona were attempting to lure this facility with large amounts of public money,"  Krutko says. To fend off out-of-state competition - as well as other Silicon Valley cities - San Jose has taken a venture capital approach and invested in a Pacific Community Ventures fund that will finance local companies. Krutko says San Jose is also streamlining the permitting process and changing development regulations as green tech startups move into office parks and tilt-ups - those sprawling one-story buildings that were occupied by first-and-second generation tech companies.  "The currency in the valley is not about what you do with tax incentives or a grant," Krutko notes. "Our currency is really about time to market. Market entitlements and the ability for a company to find space and quickly occupy that space and move forward."

Schwarzenegger Signs Order on Low Carbon Fuel Standard

In a big boost for hybrid cars and ethanol producers, California Governor Arnold Schwarzenegger today signed an executive order implementing the state's landmark Low Carbon Fuel Standard to cut greenhouse gases produced by cars and other vehicles.  The order mandates that transportation fuel sold in California must be 10 percent less carbon intensive by 2020. That means oil companies like Chevron (CVX) and Exxon Mobil (XOM) must lower the carbon content of the fuel they sell in the Golden State by blending ethanol, improving their production processes or buying emission credits from utilities like Pacific Gas & Electric (PCG) and others that supply cleaner electricity or biofuels to power vehicles. PG&E has been an enthusiastic backer of the fuel standard and efforts to develop plug-in hybrid cars. The executive order directs the California Public Utility Commission to consider ways the state's utilities can help fight global warming by reducing greenhouse gases from vehicles. In his executive order, Schwarzenegger noted that California's 24 million registered cars consumed 16 billion gallons of gasoline in 2005 - exceeding the fuel consumption of Japan, which has four times the population. Only 1.3 percent of California cars are hybrids or flex-fuel vehicles - a number the new fuel standard aims to increase. "Right now, entrepreneurs from around the world are investing billions of dollars in clean technologies and alternative fuels. With this initiative, we are saying invest in California," said Schwarzenegger, surrounded by alt fuel cars at a signing ceremony at the Capitol. The order directs state environmental agencies to propose draft fuel standard regulations by June 30 but some old-line industrial heavy-hitters already are rushing to embrace the governor's green dream. PG&E, not surprisingly, issued a statement today in support of the low carbon fuel standard, but so did East Coast chemicals giant DuPont (DD), which is developing biofuels. "We commend Gov. Schwarzenegger and his administration for taking steps to cost effectively reduce greenhouse gas emissions from transportation fuels and reduce the global dependence on fossil fuels," said Thomas M. Connelly, DuPont's chief innovation officer.

California's New Fuel Standard a Boon for Biofuel Industry, Electric Cars

photo originally uploaded by BinaryLA

While Steve Jobs sent the tech world into a tizzy on Tuesday when he unveiled the iPhone in San Francisco, up in Sacramento California Governor Arnold Schwarzenegger was wowing green techies by ordering Big Oil to slash the amount of greenhouse gases produced by transportation fuels sold in the Golden State. (The governor from Hollywood was not about to try to share the media stage with the Apple (AAPL) chief's carefully choreographed extravaganza so the Low Carbon Fuel Standard was strategically leaked to the press a day earlier). Green Wombat was off the grid in the Australian bush when the news broke, but the new standard – the first of its kind - looks to be a bonanza for biofuels producers and will boost efforts to develop plug-in hybrid cars and a new generation of all-electric vehicles. Schwarzenegger's green team will let the market determine how the Low Carbon Fuel Standard is met, creating new opportunities for green tech startups. Given that 40 percent of greenhouse gases produced in California come from cars and other vehicles, the new standard is a significant step to meet the state's efforts to reduce global warming emissions 25 percent by 2020. According to the governor's office, the Low Carbon Fuel Standard will more than triple the market for alternative energy fuels while putting more than 7 million hybrids and other renewable energy vehicles on the road.

In a nutshell, the new standard means the carbon content of the total mix of fuels used in California must decline by at least 10 percent by 2020 as measured in CO2-equivalent gram per unit of fuel energy sold. Given that oil provides 96 percent of the state's transportation fuel, Shell and Chevron are going to be in the market for alt energy sources. The nitty gritty of the regulations remains to be worked out and fought over, but to meet the standard fuel producers can blend more ethanol into gasoline, produce hydrogen for fuel cell cars or purchase credits from utilities that sell power for electric vehicles. Details on how the latter would work are hazy at the moment but a carbon credit program would provide further incentives for Big Oil and Big Power to push for a new generation of electric cars. Another possible consequence of the carbon fuels standard was floated by the green group Environmental Defense yesterday:  An expansion of California's nascent cow power efforts - which extracts the potent greenhouse gas methane from manure and uses it to generate electricity - to provide a renewable energy source to produce ethanol.

Over the decades, the oil and auto industries have fiercely resisted California's cutting-edge efforts to reduce air pollution, and they essentially gutted a regulation requiring 10 percent of the state's cars be electric-powered by the end of this decade. But the green tech boom and global warming worries has created a constituency that will fight efforts to do the same to the new low carbon fuel program. The ethanol industry - backed by big Silicon Valley players like venture capitalist Vinod Khosla - and PG&E (PCG) - one of the country's biggest utilities - immediately threw their support to Schwarzenegger. "PG&E applauds the governor's new Low Carbon Fuel Standard and his bold leadership in addressing alternative fuels as a way to lead the nation to a climate friendly future," said Pacific Gas and Electric chief executive Thomas King in a statement. "We are committed to doing our part and have seen first hand the significant benefits of alternative fuels on reducing carbon intensity."

The Schwarzenegger Effect: Conservatives Go Green

Green Wombat has been holidaying in Australia for the past couple weeks, observing the Schwarzenegger Effect on state politics. Just like the Republican California governor trumped pro-environment Democrats by embracing global warming legislation and other environmental laws backed by Silicon Valley's tech titans, Australia's conservative politicos are starting to play the green card. The long-entrenched Labor Party government in New South Wales - Australia's most populous state whose capital is Sydney - has called an election for March. In recent weeks, left-leaning Labor has found itself battered by the right-wing Liberal Party on environmental issues. The pro-business New South Wales Liberal leader has promised, if elected, to cancel a controversial coal mine slated for the central coast that locals fear could contaminate the region's water supply - prompting area enviros to urge a vote for the Liberal candidate in the upcoming elections. Meanwhile, conservatives have challenged plans to build temporary desalinization plants on some beaches rather than encourage greater water conservation as Australia endures its worst drought in memory. The Libs have also pledged to dramatically expand a state program to subsidize urban residential rainwater tanks. Standard-issue in dry rural areas, the tanks collect rain - nearly all of which percent runs off into the ocean - to flush toilets, water gardens and supplement drinking water. The national Liberal Party, which controls the federal government in a conservative coalition, is decidedly brown on green issues. But as global warming and other environmental issues come to dominate the Australian consciousness and appear on the corporate agenda, savvy state conservatives, like their California  counterpart, see an electoral payoff in out-greening the greens.

Power and the Passion: Aussie Rocker Joins Labor Party Leadership as Climate Change Point Person

photo originally uploaded  by mrs lala

Peter Garrett, the Midnight Oil front man turned Australian Labor Party politico, has moved to the frontbench in Parliament as the opposition's shadow minister for climate change and the environment.  The post gives Garrett, a veteran greenie, a high-profile perch as global warming becomes a key campaign issue in the upcoming 2007 Australian federal elections. One of Green Wombat's favorite bands, Midnight Oil's in-your-face post-punk agitprop kept the beat on environmental destruction, nuclear disarmament and Aboriginal rights for 26 years. Garrett, the former head of the Australian Conservation Foundation, left the band to run for Parliament and was elected in 2004 to represent Sydney's eastern beach suburbs, including Green Wombat's old stomping grounds in Coogee. Garrett's rapid rise owes to a shake-up last week in the Labor Party's leadership. It should be an interesting ride. As a political activist, Garrett was hardcore on enviro issues. But now the man who once sang "Sometimes you've got to take the hardest line," and "It's better to die on your feet than to live on your knees," has to toe the party line. Still, Garrett isn't one to back down. At the closing ceremonies for the 2000 Olympics in Sydney, Midnight Oil performed "Beds are Burning," their Aboriginal land-rights anthem. Sitting in the audience was conservative Prime Minister John Howard, whose steadfast refusal to apologize to Australia's Aborigines for the genocidal polices of the past had become a hot political issue. As the Oils took the stage before a worldwide television audience, they ripped off jumpsuits to reveal shirts emblazoned with "Sorry." The video is below.

Time for an Alternative Energy Lobby in Washington?

photo uploaded by Phil Ming

On Sand Hill Road in Silicon Valley it's the "S word," mumbled apologetically whenever green tech VCs and entrepreneurs gather to confab about the solar energy boom. "I don’t like subsidies," declared  Innovalight CEO Conrad Burke at yesterday's ThinkEquity Greentech Summit in the now-ritual denunciation of government incentives that have helped jump-start solar and other renewable energy businesses. Part of the enduring mythology of Silicon Valley is that world-changing technology sprang sui generis from Palo Alto garages, Washington's creation of, say, the Internet  a minor detail.  But as was apparent Thursday at the green tech event, there seems to be a realization, increasingly vocalized, that when it comes to competing against Big Oil, Big Nuclear and Big Coal, perhaps it's not quite such a free market after all. "I see as our main competition as the brown rate, the electricity rate we get from dirty coal in places like Texas," said Martin Roscheisen, CEO of solar startup Nanosolar. "It's an uneven playing field. They utilize an existing infrastructure other people created for them and are harmful to the environment." Later in the afternoon, SunPower president Richard Swanson had this to say: "Do yourself a favor one day and study the oil and gas depletion allowance. Be sure to have a (barf) bag nearby." He was referring, of course, to the multi billion-dollar tax break that allows the oil industry to basically write off much of the cost of drilling for oil. It's hard to imagine ExxonMobil's chief appearing at a fossil fuels conference and expressing remorse about the fact that Congress last year granted his industry more $6 billion in tax breaks for oil exploration or that the oil and gas industry has avoided paying billions in royalties for drilling on public lands. "Once we’re bigger, we’re going to pay more for lobbying," joked Roscheisen. But a Greentech Summit audience member suggested during the Q&A that waiting until then would be too late. The time is now, she said, for green energy proponents on Sand Hill Road to head to K Street in Washington and start an alt energy lobby to get actively involved in the policy debate - especially given that the Democrats are now setting the energy agenda.