Consumers in the marketplace will not just simply “go green” or upgrade to cleantech products and services because it’s “the right thing to do.” Cleantech and advance energy brands and services providers will have to become masters of delivering the right value proposition to customers in the marketplace at right price if they expect to be relevant in the looming market share war.
Many of the first early adopters, energy brands, and cause messengers of cleantech, for the most part have been swallowed up by poor economic conditions. Others, as in the case of Solyndra, fell victim to mismanagement. Just a few have been able to breakthrough the noise and clutter by using the only tool that has ever moved minds, changed behaviors and shape markets, direct sales and marketing.
The cleantech market share wars are quickly approaching and are the battles to be had on the front lines of direct sales and marketing. Success will rest largely on the ability of manufacturers and service providers to implement the right online sales and marketing strategy coupled with the right offline direct sales and marketing approach, delivering an effective value proposition.
Market wars are brutal; there are winners, losers and collateral damage. Winning and losing always comes with consequences. In this case, winning means transforming the economy, creating the next generation of jobs and spreading sustainable practices throughout the global marketplace. Winning the cleantech and advance energy war is a call to arms for manufacturers and service providers to perfect their ability to deliver the green and sustainable economy value proposition to the customer in the marketplace in ways where the customer is present to both the cost saving opportunities of upgrading and the environmental responsibility to future generations.
Like the transformative economic periods that came before it, the cleantech and advance energy economy market share war winner will no doubt be cast in the role of an unlikely hero; full of potential to contribute something truly meaningful to the global economy and the environment and in the process, making a whole lot of green.
]]>On May 4, 2012 David Ignatius wrote in the Washington Post: “America is likely to become by 2020 the world’s No. 1 producer of oil, gas and biofuels — eclipsing even the energy superpowers, Russia and Saudi Arabia.” Pretty heady stuff and he gets his information from? “My expert here is Robin West, a friend who is chairman of PFC Energy, a Washington-based advisory group” to be precise, an oil and gas advisory group in our nation’s capital. By the way, Ignatius is not alone; there have been a slew of writers coming out with the same rosy scenario.
Wow! More oil and gas than Saudi Arabia? The most recent 2012 EIA (The US Energy Information Administration) report states, “Domestic crude oil production has increased over the past few years, reversing a decline that began in 1986. U.S. crude oil production increased from 5.1 million barrels per day in 2007 to 5.5 million barrels per day in 2010. Over the next 10 years, continued development of tight oil [shale fracking], in combination with the ongoing development of offshore resources in the Gulf of Mexico, pushes domestic crude oil production in the Reference case to 6.7 million barrels per day in 2020, a level not seen since 1994. Even with a projected decline after 2020, U.S. crude oil production remains above 6.1 million barrels per day through 2035.”
Fact is: the gap between our total consumption and domestic supply has receded from 60% in 2005 to 49% in 2010. We currently consume 20 million barrels per day and adding up our domestic sources of oil, liquefied gas and biofuels was a shade under 9 million and is now a shade over 10 million barrels. Mostly its our consumption that has dropped in the aftermath of 2008. The EIA does not expect the gap to close below 36% even by 2035.
Right now Russian production is almost twice the US as is Saudi Arabia’s. We have a long way to go before we surpass them. So unless there is a sudden and unexpected dramatic drop in Russian and Saudi production the only way we will export more than them is to combine our domestic supply with the imported oil, then the total refined exported product could exceed the refined products from Russia and Saudi Arabia. But don’t confuse total refined with actual domestic production.
The newly discovered oil and gas comes from fracking, a technology that extracts oil and gas trapped in rock formations called shale. As Gail Tverberg wrote, and she is not alone in her observations: “One characteristic of wells in tight [shale rock] formations is that production starts out very high, and then drops off quickly. Because of this, it is necessary to keep drilling new wells, or total production in an area is likely to drop off very quickly. New fracking techniques may help make the drop-off problem less severe, but it is hard to imagine that it will go away completely. If we want production to keep rising, this means that we are likely to need more and more horizontal drilling rigs, more and more fracking equipment, and more and more capital. These considerations help put a lid on how quickly and how high production can be ramped up.”
As capital needs intensify oil prices have to rise to cover the new capital needs. In other words, this new supply has a built-in requirement for ever increasing prices independent of supply and demand and requires us to invest more and more resources in the extraction process. In fact, it is possible, one could argue it is inevitable, that the industry will create significantly greater jobs as it utilizes an increasing share of resources. It’s great for oil companies but not necessarily for the rest of us.
The oil & gas industry is correct in its claims that it can produce more oil and gas and generate more jobs. It’s true that as fracking develops more jobs will be created in the process. But the industry is not being forthright about fracking leading to energy independence or lower prices at the pump — neither will happen.
Consider the following, we in America were the first to massively exploit oil and gas; Europe followed in our footsteps and so did the rest of the “Western World” as it developed economically. In just the past 100 years “we” used just about 50% of all the traditional, that is non fracking, fossil fuels. In fact, according to oil and gas industry sources, we were at “peak oil” territory prior to the arrival of fracking. The sum total of all those generations of people in the past 100 years who made use of this technology barely add up to a billion people.
Today, there are 6.8 billion people on this planet. Three billion people in China, India and South East Asia have advanced to the point where they too have the same appetite for energy as we do. To support this new demand we need 4 times the oil fields we have used to date to support all of us now—never mind tomorrow! We have enough crude for one billion people (the remaining 50% of the non fracking crude). We need an additional 3 times the current crude reserves in equivalent fracking reserves to supply the needs of the other three billion people in Asia who are ready.
The numbers just don’t add up! A brand new IMF study suggests the price of oil will double in real terms in the next 10 years. But the oil and gas industry will be pleased to draw us into the vortex of increased investment on the false premise that we can become “energy independent” in the process. Energy profits will of course skyrocket as demand is likely to outstrip the supply.
The industry has scaled as far as it can and this is good news for alternative energy. Historically, energy sources have been replaced when they either could no longer be scaled (wood/forests were destroyed) or were no longer efficient (steam) for the task. Fracking is the signal that fossil fuels have reached their scaling limit. As the cost of “energy independence” keeps rising, people will start looking into the total life cycle cost of fossil fuel energy and come to the conclusion that the sun which rains down on us 6,000 times our energy needs is economically sunnier.
]]>What if Saudi Arabia is also engulfed by the “Democracy Tsunami” now sweeping the Arab Middle East? Is there any doubt that the price of petroleum will skyrocket? Can we rid ourselves of this rapidly growing and taxing debt? We started with cheap oil 100 years ago. Both business and government grasped at the opportunities created when gas powered cars took over from electric cars. The newly created demand encouraged the oil industry to increase its production of gasoline, which was helped significantly with the implementation of the oil depletion allowance. A subsidy by any other name, the oil depletion allowance incentivized the oil companies to invest vertically. Instead of simply pumping the oil out of the ground, the oil companies made use of the oil depletion allowance to build the infrastructure—refineries, gas stations, pipelines—even the roads necessary for the gasoline era—they were made with asphalt, a petroleum by product. As a result of this governmental subsidy, a tremendous synergy developed between Big Oil and Big Auto. They were the primary industries that defined the 20th century.
We no longer have a domestic supply of oil to speak of. The “Drill Baby Drill” mantra we have heard so much about refers to an untapped, and as of now, an unproven 88 billion barrels of offshore oil. But this prospective supply won’t be cheap to extract and would provide a mere 7 to 10 years of our present needs. These widely dispersed fields would need to be surveyed extensively to ascertain their commercial value. Some are in the Atlantic, where we have yet to actually locate any oil. Others are in the Pacific, where there is considerable resistance to further oil drilling. The best estimate is a minimum of 5 years before any drilling could begin.
We are now in an era when the large oil fields are past their peak. Today scientists, including the ones employed by Big Oil, agree that we have reached “Peak Oil” – an industry term that denotes that supplies of this precious commodity will slowly diminish. As supplies deplete, oil will become more costly. And contributing to greater cost will be the extraction of this oil from increasingly more challenging environments. The BP accident is a harbinger of things to come.
Given that we are still tethered to the gas-powered automobile infrastructure, we can expect that the current annual $1,000 bill per person is going to continue to rise. For example, if the price of oil goes back to pre-recession highs or higher, the oil bill will easily vault to $2,000 and beyond. We can think of this levy as a tax, but unlike ordinary tax dollars which our government can make use of, these dollars are leaving the US permanently. Our dollars will fund the needs of Venezuela, Saudi Arabia and Iran from whom we buy the oil. We will have absolutely no say on how these dollars will be used. Clearly this economic and political path is not consistent with our economic, let alone national interests.
What is to be done? The tax incentives that created the synergy between Big Oil and Big Auto have remained in place and are with us today, even though few can argue that they are necessary now. In fact, the tax advantage enjoyed by Big Oil keep us shackled to the gas powered automobile by giving gasoline providers lower cost basis not available to alternative fuel producers which they have to overcome.
Of the alternatives, by far the most advanced and practical alternative is the electric car. If we want the electric car to succeed rapidly we need to treat batteries like fuel and make it possible for different battery manufacturers to supply them on the road, just like the present different gas companies now provide fuel to cars. This will incentivize rapid development of even better batteries and concomitantly reduce the price of the electric car to be on par or less than the current gasoline automobiles—keep in mind the only way to get us to buy an electric car is for this car to be as cheap as or cheaper than the gas driven car.
These new governmental programs must also include long term incentives for the utilities to develop an electric infrastructure necessary for the transformation to electric driving – constructing charging stations, developing on-the-road solar generation technologies, building robotic systems for battery pack exchanges, and researching battery technologies. We also need to develop securities that will pass the costs (as well as the profits) of electricity generation, much like the ones in use by the oil and gas industry. For example, if the flow from Solar generated electricity could be packaged into MLPs (Master Limited Partnerships) as is done for gas and oil pipelines then investment capital would increase significantly to these currently cash starved projects. This is but one example of many incentives currently enjoyed by the oil industry.
If we take these steps and others and make the incentives as generous as those created for gasoline-powered transportation and infrastructure, we could see a rapid adoption of the electric automobile and concomitantly, the rapidly declining debt will free up capital that now leaves the US. That capital becomes available for our own use. These newly freed funds could also seed a host of new industries that are as yet unforeseen much the same as the auto industry did in the 20th century.
Because this new industry relies initially upon building a new infrastructure here at home, it will create jobs here at home, fueling our economic engine and replenishing our state and federal treasuries with taxes paid instead of unemployment benefits disbursed. And as more households switch to electric vehicles, our transportation sector will use less oil, thereby halting increases in petroleum prices and perhaps even drawing those prices down. In the process, the oil portion of the costs of most goods and services in the US will decrease. As the number of electric cars grows on America’s roads, our trade deficit will recede and eventually disappear. Taken together, these infrastructural and societal changes will create reductions in international tensions traceable to the needs to secure oil supplies and foster profound economic and technological advances here at home as well as abroad.
We have a choice: we can continue shackle are economic well being to external geopolitical forces over which we have no control and pay for foreign petroleum, sending money out of America or we can provide the incentives for making the switch from gasoline to electric and once again restore America to a leadership role. The choice is in our hands.
]]>It seems pretty clear that both the Bush and Obama administrations hoped to extract political capital from Solyndra. But before we throw out the baby with the bathwater, let’s look at the rest of the portfolio, which the Department of Energy (DOE) web site lists right here. Click on the projects tab, and you will discover that some $40 billion—a little more than half of the $76 billion allocated—has been committed thus far, creating 64,000 jobs and raising the question: is this worth half a million dollars per job?
Most of the DOE’s renewable-energy portfolio is likely to pay off handsomely. But is this the right way to go? The government here is functioning as the guarantor of last resort. While these are not losing investments, they are too risky for the private sector to make. That’s because our energy policies, which were developed over the past century, are not structured to handle renewable energy; instead, they favor fossil fuels and nuclear.
Both the depletion allowance and Master Limited Partnerships (MLP) are typical of the kind of economic assistance we provide to the fossil fuel industry. MLPs are tax-exempt corporate structures that help the industry get over the initial high cost of financing fossil fuel projects by shifting them to entities that can use them to offset their tax obligations. And as amazing as it seems, oil companies are actually compensated for depleting their own reserves: they get an extra tax cut to make up for the depletion of the oil they extract from the ground.
As for nuclear, the companies in that business receive even greater benefits: loan guarantees similar to, but even more generous, than the kind Solyndra received. The DOE provided Georgia Power with $8.3 billion in guaranteed loans to build two nuclear reactors (it’s in the same portfolio as Solyndra). The Union of Concerned Scientists has pointedly written on its website that: “even conservative estimates add up to a substantial percentage of the value of the power nuclear plants produce approaching or even exceeding 100 percent.”
The real takeaway from Solyndra is that we need an energy policy that reflects our energy needs for the 21st century. We need to extend MLPs and the depletion allowance to solar energy. Permitting solar-energy projects to be bundled as MLPs would dispense with the need for government-guaranteed loans. We could create a program similar to the oil depletion allowance by helping owners of solar-energy farms to exchange their panels for newer, more efficient ones. This solar-depletion allowance would empower the industry to move forward without the direct subsidies critics of solar complain about.
Finally, we need to recognize that solar energy is our salvation. The sun showers the earth with almost 6,000 times the energy we consume; all other energy sources pale in comparison. We can and must learn how to improve solar technology, which is now on the cusp of parity with fossil fuels, though we are still just at the inception of this science.
New York’s Mayor Bloomberg has been seeking to encourage the creation of a new engineering school in New York City. What if this vision were combined with a second Manhattan Project? Manhattan Project 2 would make it a national goal to crack the secrets of solar-energy conversion and utilization. What we need is to bring together the best minds to focus on solar energy. Success will dramatically alter the cost structure of the sun’s energy. The mayor would do well to establish the planet’s first College of Energy Science and Engineering here in New York City. The Manhattan Project 2, its centerpiece, will focus on solar science and engineering. In the future, it will be seen as the key success factor in leading our country and the planet away from fossil fuel as an energy source and on to a new limitless one that no country will have to go to war over, because everyone has access to it.
]]>“We have doubled the distance our cars will go on a gallon of gas, and the amount of renewable energy we generate from sources like wind and solar,” added President Obama. He goes on to affirm that America will compete with all foreign countries, like China, who are fully investing in clean energy. He offers that his administration will work with businesses by acting quicker and reducing “red tape” to help grow American energy.
Source link: http://www.whitehouse.gov/the-press-office/2013/02/12/remarks-president-state-union-address
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While the “net zero energy” store, located in Evanston, Illinois, is a first of its kind in America and will costs more up front to build, investors expect to see returns over time while learning valuable energy-saving practices for future operations.
Source: http://www.reuters.com/article/2013/03/07/walgreen-environment-idUSL1N0BYFH520130307
]]>Wouldn’t cars cost more? Absolutely not, they would cost less as the battery powering the car would be leased separately from the car reducing the car cost below that of gas powered cars. Our leadership would be sensible enough to mandate the separation of the battery (which is after all the fuel pack) from the car as was done in the gasoline car. Electric cars would also be much cheaper to drive since they are 3 times as efficient as a gasoline powered car and driving it will cost more like 10 cents a gallon. The automobile business would undergo a tremendous new cycle of business opportunities as a result of battery competition, engine miniaturization, material science research and development for lighter and safer cars—we are talking new companies and millions of new jobs.
All those unemployed people would not be collecting unemployment checks because the job of paving America’s interstate highway medians with solar panels to generate the electricity to recharge the battery packs for cars would be going to the currently unemployed. Of course building and maintaining the new PV plants would also be jobs that cannot be outsourced.
Our much argued over budget deficit would disappear because the newly robust cleantech transformation economy will be creating millions of new jobs in the US. Our defense budget will be significantly lower since we will not be bothering to deploy American troops on foreign soils to protect our former energy resources. We have plenty of sun energy available right here in the US. You might say we have a Saudi Arabia of PV energy in the American Southwest.
Alas what if is not what is.
]]>For the future success of solar energy, it’s vital that all of us, regardless of our political colors, make sure that solar is apolitical. I can hear the snickering already; what about Solyndra?
Let me assure you that there will be more Solyndras, just as there will be more Deepwater Horizons. The difference between Solyndra and Deepwater Horizon is 20 billion dollars. Solar energy is too vital for it to become the domain of party line politics.
Let me explain why briefly.
We need to wake up to the power of solar energy. We are about 93 million miles away from the sun but even from 93 million miles out, the Sun is so powerful it showers us with 9,000 times the energy we use.
It is virtually inexhaustible and available everywhere. We can extract its energy directly, so we don’t need fire or water to use it. The process is so benign that each of us can have a solar-energy power station on our roofs, and the EPA will not have to hold environmental-impact hearings.
I believe that Solar is at the beginning of its invention cycle—sort of like where the PC was in the early 80s, just before it took off. At the time, I bought my first PC. Co-workers and IT heads were saying, “What you going to do with that toy.” Well, I built a company of over 100 employees with that toy.
Back then, every new chip was so dazzling it made front page news. Those chips don’t hold a candle to what’s in your Smartphone today; let alone what’s in your computer.
The same kind of thing is starting to happen now with solar panels.
Some quick examples. The most advanced solar cells now on the market have an energy conversion ratio of 20%, well above the market average of 12 to 18%. Sharp Corporation has achieved 36% in experimental units. Last April, the National Renewable Energy Laboratory produced a solar cell with an efficiency level approaching 50%. Note how the technology advances are accelerating now that solar energy is finally gaining traction.
We are at the technology breakout point.
The PC changed many industries and created many jobs and even new industries. So too will Solar. Solar is a powerful job creator. Each megawatt of solar creates 10 installation jobs and 20 technology and management jobs. We can’t let what happened to the climate change debate happen to Solar. That’s why we must be careful not to politicize the process of getting solar energy accepted. Solar is America’s, and indeed our planet’s, next big tech transformation.
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