Who will sell clean energy to the rest of the world?

(Photo of photo cell production in Urumqi, China, from Flickr and Bert van Dijk

Clean energy is a major economic engine of the future, Barack Obama says. “The only question is: Which country will create these jobs and these industries? And I want that answer to be the United States of America.”

He really wants to curb global warming, but since a lot of people aren’t concerned about that, he’s making a big deal about “jobs” and “economy.” Right?

Only partially. It is a big deal and we're being dealt out. Asia is looking to take the lead in green tech, just as it did in automobiles. And we’d better watch out. As the oil and coal interests try to put the skids on change here, Asian countries are getting ready to clean our clock again. In 2008 China was the largest producer of photovoltaic (solar) cells and virtually all of them were sold abroad. With the global economic slump, main customers Spain, Germany and Japan have cut back orders, so now China is re-gearing to use the product itself – at least for now, until exports pick up again.

In the face of recession, some of Asia’s biggest economies are beginning to pour large amounts of stimulus money into solar, wind and other alternative energy sources. They know it’s where the future growth is.

China, India, South Korea and Taiwan are planning to spend hundreds of millions, sometimes billions, on renewable energy, partly for themselves and partly to export abroad.

In China, $30 billion is targeted for clean energy, including wind, solar and hydropower. The goal for solar power in that country is to grow to 20 gigawatts by 2020 (equal to 20 nuclear power plants), from less than 2 gigs now.

In South Korea, the government plans to invest 2% of its GDP in clean energy industries like solar batteries, hybrid cars and LED lights over the next 5 years.

And neighboring Australia is spending $1.35 billion on solar projects, $270 million on home solar systems and $100 million for next-generation solar technologies.

Are we really going to stick with oil and coal? How 20th century is that?

(Sources: Greenwire, Climate Wire, Renewableenergyworld.com)

Financial meltdown slams corn ethanol and threatens mass transit, but Big Oil still riding high

(Photo of ethanol plant from Flickr and and photographer freddthompson, actor, senator and presidential candidate)

Weekly Angst: Because of the financial meltdown, ethanol companies are struggling and some are going under. Caught between corn contracts signed last summer when prices were sky-high and lower fuel prices, and with credit hard to come by, businesses are seeing the ethanol bubble of the past year burst. Investors have lost billions. VeraSun Energy, for example, expects to lose up to $103 million this quarter. Its stock is down 90% from its peak earlier this year. And ethanol companies in Kansas and Ohio declared bankruptcy last week. The Agriculture Department is considering loan guarantees to keep ethanol businesses afloat.

Mass transit hits trouble
Mass Transit agencies are also caught in the crunch. They face having to pay banks billions as old financing deals fall apart. The problem was triggered by the failure of insurance giant AIG, which guaranteed deals between the agencies and banks. Because of long-standing agreements to give banks tax shelters by selling them rail cars and then leasing them back, some 30 mass transit agencies around the country are now in danger of having to pay back their loans all at once. Washington, D.C.’s Metropolitan Area Transit Authority is the first to be hit. KBC Group of Belgium wants $43 million by next week. The feds may have to get in the middle of this one too – to keep the trains running.

Other repercussions include cancellation of a coal-to-liquid joint venture between Consolidated Energy and Synthetic Energy Systems and the delay of a SunCor Energy oil sands project in Canada. (No tears shed over those).

Major oil companies in good shape
So how is the meltdown affecting Big Oil? With prices dropping rapidly you might think they’re feeling the pain. But apparently not. With record profits last year, they have reduced their debt and are cash fat. So now they can buy up distressed smaller rivals and make deals with resource-heavy countries. Production may be down, but refining should be profitable this year. And they expect less pressure to pass windfall profits taxes. So lower prices and lower demand don’t really bother them. (No one ever said life is fair.)

On the bright side
The economic downturn could benefit green technology, though. It could give government a historic opportunity to climate-proof its infrastructure as part of a public works effort to generate jobs. This may translate into an investment opportunity, says a recent report from Deutsche Bank. The International Energy Agency has called for a $45 trillion investment in climate related technology by 2050. And Deutsche Bank says renewable energy investments have more promise in the long term than tradition energy sources.

At the same time, venture capital continues to flow into Silicon Valley and California in general. VC investments in energy and utilities were up in the 3rd quarter 90% over the same period last year, as investors pulled back from other sectors like information technology, media and financial services. Clean tech reported a record $1.08 billion in investments, most of it going to solar. In the Bay Area, which includes Silicon Valley, overall VC was up 22%, the highest single-quarter total since 2001. One benefit of green technology is most of it is tied to government policy so it’s not as vulnerable to swings in the market.
Observers are waiting to see the results of this quarter, however, anticipating that falling oil and carbon prices could have an impact. VC fell in the third quarter in other parts of the country.

And Neal Dikeman, of Jane Capital Partners, warned that a prolonged financial crisis could have an adverse effect on a 2012 post-Kyoto international agreement to fight global warming, by either delaying or weakening it.

For additional comments on the financial crisis’ impact on climate change see my earlier post.

(Sources: Greenwire, Washington Post, Wall Street Journal)

Will financial crisis and bailout help or hurt in fight against global warming?

(Headline collage from Flickr and Mother Pie/Hattie Page)

Weekly Angst: The credit crisis and $800-plus billion U.S. government bailout plan will likely have an impact on spending on climate change, but will the positives outweigh the negatives? While conventional wisdom might say there’ll be little money left over to fight global warming, many see green technology as the engine that will drive future growth and revival – at home and around the world.

The U.S. Conference of Mayors last week predicted 4.2 million new green jobs by 2038, adding to the 751,000 already in existence in 2006.

And green technology in Silicon Valley is one of the few industries still growing in California, Gov. Arnold Schwartzenegger noted.

The bailout
The add-on to the $700 billion bailout extended tax credits to help renewable energy, efficiency and sales of plug-in cars. While wind energy is a bit shaky, with only a 1-year extension and damage to some of its main investors – AIG, Lehman Brothers and Wachovia – the industry sees slower growth in 2010 but is still hopeful that utilities and other new investors will take a stake in the fast-growing new energy source.

Solar seems in a somewhat better position with an 8-year extension of production tax credits. The demand for solar panels reportedly still exceeds demand.

The American auto industry says it will remain on track to continue producing smaller, fuel-efficient cars and looks forward to competing for the $25B in low-interest loans from the federal government approved earlier this month.

Good signs
Other signs of hope that climate change will remain a high priority in Washington:
• The economic crisis raises the possibility of Democrats getting the 60-vote majority in the Senate they will need to pass a renewable energy standard (RES) and a cap-and-trade bill.
• House Speaker Nancy Pelosi says climate change remains a priority for her.
• There will be international pressure on the United States to negotiate a viable post-Kyoto treaty.
• And front-runner Barack Obama, should he become president, has touted a $150 billion renewable energy economic plan and produce 5 million jobs.

Problems
Some Republicans, however, may balk at passing a cap-and-trade bill in 2009, because they’ve always been concerned about its impact on the economy and that fear will be heightened. There are those who think such a bill might be held over till 2010, delaying action another year.

Others raise the alternative of a carbon tax, much easier to understand than another complex financial market. But worldwide carbon trading is thriving and expected to grow 80% to $116 billion by next year, thanks in large part to the Kyoto mandate for the European Union.

A major concern for a post-Kyoto agreement is that rich countries may be unwilling to come up with the money and technology for developing countries needed in order to get them to participate in curbing greenhouse gases.

UN Sec. Gen. Ban Ki-moon expressed concern last week that short-term financial emergency will eclipse the longer-term problem of global warming.

But finance ministers from around the world, at a World Bank and IMF meeting over the weekend, pledged to keep climate change on a front burner. Even bankrupt Iceland’s minister said, “We can’t afford to delay responding to climate change.”

And economists and UN leaders are creating a green New Deal. The Green Economic Initiative, spearheaded by the UN Environmental Programme, will be launched next week in London with its focus on renewable energy, other green technology and saving the world’s natural systems. Funded by the European Commission, Norway and Germany, the Initiative will – among other things – work to save forests, whose loss, they say, equals more than $2 trillion a year. The Initiative could produce hundreds of millions of jobs worldwide, according to Pavan Sukhder, chairman of Deutschbank's Global Market Center.

(Sources: Reuters, Greenwire, ClimateWire, PlanetArk, Daily Green, The Independent)

India’s climate plan includes renewable energy, efficiency, but no emissions target

(Photo of solar energy in rural India from Flickr and and the barefoot photographers of Tilinia)

News Update 3: India, whose economy is growing 8-9% a year, has unveiled its National Action Plan to deal with global warming. It will focus on renewable energy, efficiency and research on green technology. More specifically, the plan covers solar energy, water conservation and energy efficiency, as well as sustainable agriculture, the Himalayan ecosystem and habitat. But it does not set a target for curbing greenhouse gas emissions. India says it has a right to lift its people out of poverty, as industrial nations did while they poured GHG into the atmosphere -- and that it has low per-capita carbon emissions, at 1.2 tons, compared with the United States’ 20.6 tons (2004 data). India’s power is 60% generated by coal, with plans for new plants in the next 5 years that will generate 70,000 more megawatts. Emissions have been growing about 2-3% a year, though the country is responsible for only 4% of the world’s GHG. (Source: Thomson Reuters)