The U.S. government offers a lot of subsidies to expand renewable energy. Should it be doing more to subsidize conservation?
By SARI KRIEGER
The U.S. government is committing billions of dollars to support renewable energy such as wind- and solar-power plants. Some say it should use more of that financial clout to encourage less energy consumption in the first place.
Advocates of conservation, including businesses that help homeowners and companies save energy, think there should be more subsidies and tax incentives for basics like insulation and window shading, and for newer, more costly products like light-emitting-diode lamps and building-automation systems. LEDs cost more but use less energy than incandescent bulbs. The new automation systems help buildings waste less energy on cooling, heating and lighting.
Projects that improve efficiency pay for themselves quickly, the advocates say, and help people and businesses save money. Renewables, meanwhile, cost more money to achieve the same reductions in carbon-dioxide emissions.
By the Ton
A study by New York-based management consulting firm McKinsey & Co. earlier this year compared the cost of eliminating one ton of CO2 emissions using different means: Wind power cost about $38 per ton of CO2 saved; solar cost about $30. But replacing incandescent lights in a home with light-emitting diodes saved about $159 per ton of CO2, and using energy-efficient appliances saved about $108 per ton.
Some say it makes more sense to retrofit buildings for energy efficiency before adding renewable technologies like solar and geothermal power, because buildings account for about half of the CO2 emissions in the U.S. Efficiency improvements, these sources add, are often an easy, cheap fix in the struggle to reduce CO2 emissions.
“No matter how you cut this, it is always better to reduce, then produce,” says Matt Golden, founder of Sustainable Spaces Inc., a San Francisco-based home-retrofit company and president of Efficiency First, a home-retrofit trade group based in Washington, D.C., with about 300 members. But, Mr. Golden adds, “it turns out the incentives are absolutely backwards. The things that save the most energy and create the most jobs get the least incentives.”
The recently passed stimulus package provided about $40 billion of funding in the form of grants, tax credits and research money for renewable technologies. But it had only about $20 billion for energy-efficiency measures, such as better insulation and highly efficient windows in homes, and automation systems in commercial spaces. These figures are based on government and industry-group calculations.
In the tax-credit portion of the bill, renewable technologies get a credit of 30%, with no cap on the amount, while the credit for energy-efficiency technologies is capped at $1,500, according to the Environmental Protection Agency. A hypothetical $40,000 solar-panel installation on a home would be eligible for a $12,000 tax credit. But a $20,000 energy-efficiency job on a home would be eligible for only a $1,500 credit.
Even the solar industry recommends starting with energy-efficiency steps. “It’s silly to invest in solar energy if the extra power is blowing out the window,” says Monique Hanis, a spokeswoman for the Solar Energy Industries Association in Washington, D.C. “We believe they work together.”
So why do lawmakers provide more incentives for renewable energy? Natalie Mims, an energy consultant at the Rocky Mountain Institute, Snowmass, Colo., says it’s because renewables tend to cost more and take longer to pay for themselves than most efficiency measures. “Renewable energy has historically received higher subsidies than energy efficiency, particularly in research and development,” Ms. Mims says.
But new efficiency technologies, while cost-effective, have yet to be embraced by a wider public; some are unfamiliar and may have a high initial cost, like LEDs, while others are older technologies that aren’t as interesting compared to solar panels, such as insulation. Subsidies, Ms. Mims says, could help these technologies spread.
Some energy-efficiency advocates say renewables get more government subsidies because wind farms and solar power are more glamorous and easier to understand than, say, building-automation systems and LEDs, and because the renewable industries are larger and more organized.
Clark Wilson, chief executive of Green Builders Inc., an Austin, Texas, home builder and retrofit company, adds, “The solar-panel industry has a great lobby and a unified story, while the efficiency industry spans several heretofore competing trades and [has] no one champion of the group.”
House Bill
One efficiency advocate in Congress is Rep. Peter Welch, a Democrat from Vermont. Mr. Welch supports renewables but says efficiency is his primary focus because it’s more cost-effective and creates more jobs. He introduced a bill in March that would create $10 billion of incentives over four years for homeowners and businesses that adopt efficiency measures. His bill has since been rolled into the energy bill now working its way through Congress.
“When you look at the stimulus tax rebates, the amount that goes to insulation is the least, but it’s the most effective,” Rep. Welch says. “Your first dollar spent you’d want to spend on what would give you the most return. I have been astonished about how neglected efficiency is when it’s the low-hanging fruit.”
Incentives in Rep. Welch’s bill are performance-based, offering homeowners rebates of $1,000 to $3,000 for achieving a 10% to 20% increase in efficiency, with $150 more for every additional percentage point of energy savings achieved. Businesses could qualify for 15 cents per square foot for the first 20% to 30% increase in efficiency, and as much as $2.50 per square foot for energy reductions of more than 50%.
The bill has 30 co-sponsors and is supported by environmental groups like the New York-based National Resources Defense Council.
“We should have the policy of efficiency first,” says Mr. Welch. Printed in The Wall Street Journal, page R4
Monday, 15 June 2009
Catching the Wind
Some commercial fisheries are bucking their industry with plans for their own wind farm off New Jersey
By YULIYA CHERNOVA
Instead of fighting offshore-wind power like most of their peers, some East Coast commercial fisheries are trying a different tack: They’re angling for a piece of the action.
The company they formed, incorporated as Fishermen’s Energy LLC in 2007, moved a step closer to that goal in October when it won a $4 million grant from the state of New Jersey to begin the initial stages of development on a proposed 350-megawatt wind farm off Atlantic City. The group is betting that with fishermen as principal developers, a key opposition to offshore-wind projects will be removed.
Fishing companies traditionally have resisted offshore-wind development out of fear that large industrial structures on the water might interfere with their routes and equipment. Daniel Cohen, the owner of Atlantic Capes Fisheries Inc. in Cape May, N.J., and the president of Fishermen’s Energy, says his group chose a different path after concluding that offshore-wind development was more than just a fad.
Getting Ahead of the Trend
“We realized that society felt strongly about the benefits of offshore wind and that it will be built despite our opposition, and we would be the victims of that change,” says the 54-year-old Mr. Cohen, who co-founded Fishermen’s Energy along with Andrew Gould, 55, president of merchant and investment bank Arthur P. Gould & Co., which is based in Great Neck, N.Y., and provides funding to the fishing industry.
The group initially lost its bid for the New Jersey grant to rival developer Garden State Offshore Energy, which is seeking to build a 350-megawatt wind farm about 16 miles off the coast of South Jersey. Garden State Offshore is a joint venture of Deepwater Wind of Hoboken, N.J., and Public Service Enterprise Group Inc., an electric utility based in Newark, N.J. “Fishermen’s is not going to score as [high as] somebody that has PSEG Enterprises sitting there, that develops energy projects all over the world,” says Lance Miller, chief of policy and planning at the state board of public utilities.
But a decision by Gov. Jon Corzine to triple New Jersey’s offshore-wind goal to 3,000 megawatts—about 13% of the state’s total electricity—by 2020 resulted in Fishermen’s Energy and another developer, Bluewater Wind LLC, winning their own $4 million grants for separate 350-megawatt offshore projects, each capable of powering about 90,000 homes annually.
Strong Headwinds
The U.S. Department of Energy has said that because the U.S. has long coastlines with strong winds and coastal cities with large electricity needs, offshore-wind power could play a huge role in helping the U.S. meet its renewable-energy goals. In a May 2008 report on how the U.S. could achieve 20% of its electricity generation from wind by 2030, the department identified 54 gigawatts as coming from offshore installations.
While there are already more than 33 offshore-wind projects producing electricity in Europe, there are none in U.S. waters. States with offshore-wind plans in the works include New York, Massachusetts, Rhode Island and Delaware, but developers in some of those states have run into opposition from groups that say wind farms pose a threat to birds and fish and to homeowners’ ocean views.
A proposed wind farm off Cape Cod, Mass., for example, has been mired in legal fights for years, while in New York, commercial fishermen launched protests in 2006 when Long Island Power Authority, a nonprofit municipal electric utility, wanted to build an offshore-wind farm near Jones Beach.
“They were going to privatize a section of the ocean that was premier fishing grounds,” says Bonnie Brady, chairwoman of the Long Island Commercial Fishing Association.
Critics within the fishing industry say offshore-wind projects could interfere with the routes of fishing boats that follow migratory species. These boats tug mobile gear such as dredges and nets along the ocean bottom to capture things like surf clams, sea scallops, quahogs, mackerel, herring and squid.
Offshore-wind development also could affect aquatic life by interfering with fish migration, altering the quality of water and sediment, and generating noise and vibrations, according to a 2004 report by the Ospar Commission, an organization formed by European governments to protect the marine environment of the Northeast Atlantic. It’s possible, however, that wind-farm structures might actually help fish proliferate by protecting them against predators and fisheries, said the report, which pointed out that more scientific information is needed to draw a conclusion.
Scaling Up
Although Long Island Power Authority eventually canceled the Jones Beach project, Kevin Law, the president of LIPA, says the decision was not a result of the fishermen’s concerns. Rather, he says, the project was shelved because it was “too close to the shore and too small, which made it too expensive,” he says.
The utility is now collaborating with Consolidated Edison Inc. of New York on a proposal to build a wind farm much farther offshore—about 13 miles off the Rockaway Peninsula. Mr. Law says LIPA will examine the fishing industry’s concerns as part of an environmental-assessment statement it is required to complete as part of the permitting process.
“One thing we have to make sure is that in the effort to create green-collar jobs we don’t displace the fishing industry,” Mr. Law says.
Ms. Brady says her association needs more details about the proposed project before saying whether it will fight it.
“It’s not that fisheries are inherently against these projects,” she says. “Just prove that you are not polluting and not putting the turbines into productive fishing grounds.”
Neutralizing the Opposition
Fishermen’s Energy, meanwhile, believes that by having the fishermen on its side, it can avoid a protracted battle to win a construction permit for its proposed wind farm off the Jersey coast.
“It’s a fact we haven’t heard opposition from fishery interests thus far,” says Mr. Miller of the state utilities commission.
Currently staffed with about 20 people and a team of consultants, Fishermen’s Energy is preparing to build a meteorological tower to measure wind resources and collect other data it will need to begin construction of the wind farm. As part of that process, it is turning an ordinary fishing boat, 128 long by 28 feet wide, into a geotechnical vessel capable of extracting core samples from the ocean floor that will be analyzed and used by engineers designing the foundation of the wind towers.
Eventually, the company plans to install between 70 and 96 wind turbines in the ocean off Atlantic City. “Depending on permitting, we expect construction to commence in about 2012,” says Mr. Gould. The project ultimately may cost more than $1 billion, according to the company.
In addition to funding, the companies connected to Fishermen’s Energy plan to contribute equipment and manpower to the offshore-wind effort. Together, their sales exceed $400 million annually, they own more than 100 fishing vessels and they oversee servicing, docking, repairing, processing, and marketing operations at facilities in Massachusetts, New York, New Jersey, Maryland and Virginia.
At Home on the Water
The group plans to avail itself of docks that belong to its constituent fishing companies. It also plans to employ fishermen who are knowledgeable about handling vessels in harsh deep-water conditions.
“One of the limitations in Europe [for offshore-wind development] was that they needed to attract employees that were comfortable working offshore,” says Mr. Cohen, who bought his first fishing boat in 1978, four years after the death of his father, who was the first in the family to start a commercial-fishing business.
In the meantime, Fishermen’s Energy is exploring several sites for a potential shipyard that could service both fishing and offshore-wind vessels. In addition to the geotechnical vessel, which Fishermen’s intends to offer to other offshore-wind developers, the company will need ships with lifts to jack up heavy turbines and carry other construction materials. It plans to retrofit fishing vessels for some of these tasks.
Reaching Out
Mr. Cohen, who now spends most of his time at Fishermen’s Energy, declined to say how much funding the group currently has. Like other independent power producers, Fishermen’s Energy says it expects outside investors to provide some of the financing for its project.
“Fishermen’s expects to retain significant ownership in each of its projects,” says Mr. Gould. It also plans to “play a direct and active role in managing, operating and maintaining each of its projects, and in arranging the sales of the power that each project produces,” he says.
The company wants to develop projects outside New Jersey, and it is reaching out to fisheries along the entire East Coast in an attempt to involve more of them in the effort.
“We plan to expand ownership of Fishermen’s Energy and invite investment by commercial fishermen, fishing companies, and allied marine industries from Maine to South Carolina,” says Mr. Gould.
Mr. Cohen says it would be very difficult for any offshore-wind project not to affect local fisheries, but the effects can be mitigated by installing larger turbines and concentrating the area of the project. His group plans to offer fishermen a role in the development or servicing of wind projects, as well as retraining. In the future, if “we end up siting wind farms where people lose the ability to fish, we will mitigate that through compensation,” he says.Printed in The Wall Street Journal, page R7
By YULIYA CHERNOVA
Instead of fighting offshore-wind power like most of their peers, some East Coast commercial fisheries are trying a different tack: They’re angling for a piece of the action.
The company they formed, incorporated as Fishermen’s Energy LLC in 2007, moved a step closer to that goal in October when it won a $4 million grant from the state of New Jersey to begin the initial stages of development on a proposed 350-megawatt wind farm off Atlantic City. The group is betting that with fishermen as principal developers, a key opposition to offshore-wind projects will be removed.
Fishing companies traditionally have resisted offshore-wind development out of fear that large industrial structures on the water might interfere with their routes and equipment. Daniel Cohen, the owner of Atlantic Capes Fisheries Inc. in Cape May, N.J., and the president of Fishermen’s Energy, says his group chose a different path after concluding that offshore-wind development was more than just a fad.
Getting Ahead of the Trend
“We realized that society felt strongly about the benefits of offshore wind and that it will be built despite our opposition, and we would be the victims of that change,” says the 54-year-old Mr. Cohen, who co-founded Fishermen’s Energy along with Andrew Gould, 55, president of merchant and investment bank Arthur P. Gould & Co., which is based in Great Neck, N.Y., and provides funding to the fishing industry.
The group initially lost its bid for the New Jersey grant to rival developer Garden State Offshore Energy, which is seeking to build a 350-megawatt wind farm about 16 miles off the coast of South Jersey. Garden State Offshore is a joint venture of Deepwater Wind of Hoboken, N.J., and Public Service Enterprise Group Inc., an electric utility based in Newark, N.J. “Fishermen’s is not going to score as [high as] somebody that has PSEG Enterprises sitting there, that develops energy projects all over the world,” says Lance Miller, chief of policy and planning at the state board of public utilities.
But a decision by Gov. Jon Corzine to triple New Jersey’s offshore-wind goal to 3,000 megawatts—about 13% of the state’s total electricity—by 2020 resulted in Fishermen’s Energy and another developer, Bluewater Wind LLC, winning their own $4 million grants for separate 350-megawatt offshore projects, each capable of powering about 90,000 homes annually.
Strong Headwinds
The U.S. Department of Energy has said that because the U.S. has long coastlines with strong winds and coastal cities with large electricity needs, offshore-wind power could play a huge role in helping the U.S. meet its renewable-energy goals. In a May 2008 report on how the U.S. could achieve 20% of its electricity generation from wind by 2030, the department identified 54 gigawatts as coming from offshore installations.
While there are already more than 33 offshore-wind projects producing electricity in Europe, there are none in U.S. waters. States with offshore-wind plans in the works include New York, Massachusetts, Rhode Island and Delaware, but developers in some of those states have run into opposition from groups that say wind farms pose a threat to birds and fish and to homeowners’ ocean views.
A proposed wind farm off Cape Cod, Mass., for example, has been mired in legal fights for years, while in New York, commercial fishermen launched protests in 2006 when Long Island Power Authority, a nonprofit municipal electric utility, wanted to build an offshore-wind farm near Jones Beach.
“They were going to privatize a section of the ocean that was premier fishing grounds,” says Bonnie Brady, chairwoman of the Long Island Commercial Fishing Association.
Critics within the fishing industry say offshore-wind projects could interfere with the routes of fishing boats that follow migratory species. These boats tug mobile gear such as dredges and nets along the ocean bottom to capture things like surf clams, sea scallops, quahogs, mackerel, herring and squid.
Offshore-wind development also could affect aquatic life by interfering with fish migration, altering the quality of water and sediment, and generating noise and vibrations, according to a 2004 report by the Ospar Commission, an organization formed by European governments to protect the marine environment of the Northeast Atlantic. It’s possible, however, that wind-farm structures might actually help fish proliferate by protecting them against predators and fisheries, said the report, which pointed out that more scientific information is needed to draw a conclusion.
Scaling Up
Although Long Island Power Authority eventually canceled the Jones Beach project, Kevin Law, the president of LIPA, says the decision was not a result of the fishermen’s concerns. Rather, he says, the project was shelved because it was “too close to the shore and too small, which made it too expensive,” he says.
The utility is now collaborating with Consolidated Edison Inc. of New York on a proposal to build a wind farm much farther offshore—about 13 miles off the Rockaway Peninsula. Mr. Law says LIPA will examine the fishing industry’s concerns as part of an environmental-assessment statement it is required to complete as part of the permitting process.
“One thing we have to make sure is that in the effort to create green-collar jobs we don’t displace the fishing industry,” Mr. Law says.
Ms. Brady says her association needs more details about the proposed project before saying whether it will fight it.
“It’s not that fisheries are inherently against these projects,” she says. “Just prove that you are not polluting and not putting the turbines into productive fishing grounds.”
Neutralizing the Opposition
Fishermen’s Energy, meanwhile, believes that by having the fishermen on its side, it can avoid a protracted battle to win a construction permit for its proposed wind farm off the Jersey coast.
“It’s a fact we haven’t heard opposition from fishery interests thus far,” says Mr. Miller of the state utilities commission.
Currently staffed with about 20 people and a team of consultants, Fishermen’s Energy is preparing to build a meteorological tower to measure wind resources and collect other data it will need to begin construction of the wind farm. As part of that process, it is turning an ordinary fishing boat, 128 long by 28 feet wide, into a geotechnical vessel capable of extracting core samples from the ocean floor that will be analyzed and used by engineers designing the foundation of the wind towers.
Eventually, the company plans to install between 70 and 96 wind turbines in the ocean off Atlantic City. “Depending on permitting, we expect construction to commence in about 2012,” says Mr. Gould. The project ultimately may cost more than $1 billion, according to the company.
In addition to funding, the companies connected to Fishermen’s Energy plan to contribute equipment and manpower to the offshore-wind effort. Together, their sales exceed $400 million annually, they own more than 100 fishing vessels and they oversee servicing, docking, repairing, processing, and marketing operations at facilities in Massachusetts, New York, New Jersey, Maryland and Virginia.
At Home on the Water
The group plans to avail itself of docks that belong to its constituent fishing companies. It also plans to employ fishermen who are knowledgeable about handling vessels in harsh deep-water conditions.
“One of the limitations in Europe [for offshore-wind development] was that they needed to attract employees that were comfortable working offshore,” says Mr. Cohen, who bought his first fishing boat in 1978, four years after the death of his father, who was the first in the family to start a commercial-fishing business.
In the meantime, Fishermen’s Energy is exploring several sites for a potential shipyard that could service both fishing and offshore-wind vessels. In addition to the geotechnical vessel, which Fishermen’s intends to offer to other offshore-wind developers, the company will need ships with lifts to jack up heavy turbines and carry other construction materials. It plans to retrofit fishing vessels for some of these tasks.
Reaching Out
Mr. Cohen, who now spends most of his time at Fishermen’s Energy, declined to say how much funding the group currently has. Like other independent power producers, Fishermen’s Energy says it expects outside investors to provide some of the financing for its project.
“Fishermen’s expects to retain significant ownership in each of its projects,” says Mr. Gould. It also plans to “play a direct and active role in managing, operating and maintaining each of its projects, and in arranging the sales of the power that each project produces,” he says.
The company wants to develop projects outside New Jersey, and it is reaching out to fisheries along the entire East Coast in an attempt to involve more of them in the effort.
“We plan to expand ownership of Fishermen’s Energy and invite investment by commercial fishermen, fishing companies, and allied marine industries from Maine to South Carolina,” says Mr. Gould.
Mr. Cohen says it would be very difficult for any offshore-wind project not to affect local fisheries, but the effects can be mitigated by installing larger turbines and concentrating the area of the project. His group plans to offer fishermen a role in the development or servicing of wind projects, as well as retraining. In the future, if “we end up siting wind farms where people lose the ability to fish, we will mitigate that through compensation,” he says.Printed in The Wall Street Journal, page R7
Steaming ahead with waste savings
By Michael Kavanagh
Published: June 15 2009 03:00
The use of steam, or "autoclaving", in the waste sector has previously been relatively small-scale and limited to sterilising medical waste, writes Michael Kavanagh .
Sterecycle's clean waste treatment process "steam sterilises" the unsorted waste at low temperatures in rotating 40ft sealed vessels called autoclaves, using a combination of steam and pressure, treating 25 tonnes of waste in each batch.
The waste is then sorted using a series of recycling processes such as size screening, magnetic separation and infra-red.
The process is able to sterilise and recycle the steam-cleaned metals and plastics, as well as convert the waste food and paper into a high-quality organic fibre that can be burnt or used as a soil enhancer for land remediation.
The planned expansion comes as local authorities are under pressure to reduce landfill use or face the threat of heavy financial penalties.
Currently, more than half of domestic rubbish is dumped in landfill sites.
The recent UK budget means that landfill tax will increase to £72 a tonne by 2013.
The company suggests it can divert 70 per cent of waste away from landfill at a cheaper cost to incineration.
Copyright The Financial Times Limited 2009
Published: June 15 2009 03:00
The use of steam, or "autoclaving", in the waste sector has previously been relatively small-scale and limited to sterilising medical waste, writes Michael Kavanagh .
Sterecycle's clean waste treatment process "steam sterilises" the unsorted waste at low temperatures in rotating 40ft sealed vessels called autoclaves, using a combination of steam and pressure, treating 25 tonnes of waste in each batch.
The waste is then sorted using a series of recycling processes such as size screening, magnetic separation and infra-red.
The process is able to sterilise and recycle the steam-cleaned metals and plastics, as well as convert the waste food and paper into a high-quality organic fibre that can be burnt or used as a soil enhancer for land remediation.
The planned expansion comes as local authorities are under pressure to reduce landfill use or face the threat of heavy financial penalties.
Currently, more than half of domestic rubbish is dumped in landfill sites.
The recent UK budget means that landfill tax will increase to £72 a tonne by 2013.
The company suggests it can divert 70 per cent of waste away from landfill at a cheaper cost to incineration.
Copyright The Financial Times Limited 2009
The Latest on Alternative-Energy Deals From Dow Jones Clean Technology Insight
What’s New
By MARA LEMOS STEIN AND SARI KRIEGER
Capturing the Imagination
Large and small companies are putting down markers as providers of carbon capture and sequestration, or CCS, now that a national emissions-trading program is becoming a more likely prospect in the U.S.
Saskatchewan Power Corp. is going ahead with retrofitting an existing coal-fired power plant with CCS technology that will capture the plant’s carbon-dioxide emissions for resale. Among the companies vying to provide SaskPower with this CCS technology are Irving, Texas-based Fluor Corp., Montreal-based Cansolv Technologies Inc., and Powerspan Corp., of Portsmouth, N.H., which recently received more than $50 million from George Soros and a handful of private-equity investors.
What companies in the CCS business have in common is that they see government support as critical to making the technology feasible, given the high cost. SaskPower, for example, is relying partly on Canadian government support for its retrofit of the Boundary Dam Unit 3 project. The Canadian government will contribute C$240 million (US$220 million) toward the project, which SaskPower estimates will cost C$1.4 billion.
”We’re observing governments around the world that are beginning to propagate regulation [and] incentives” to promote CO2 removal from coal-fired plants, says Frank Alix, Powerspan’s chief executive. “In the absence of a regulatory driver, the only way to deploy these systems commercially would be for the government to put financial incentives in place, such as tax credits, or loan guarantees, that would make it economically attractive.”
The recent stimulus package included $3.4 billion in grants to promote research for carbon-based fuels, including coal. The Energy Department also offers loan guarantees for commercialization of new clean technologies, but it isn’t yet clear how the agency will allocate these funds.
Powerspan, meanwhile, intends to apply for grants and loan guarantees once the DOE publishes guidelines for the programs, Mr. Alix says. The company has developed an ammonia-based technology that removes CO2 from the flue gas emitted by coal-fired power plants and maintains it in a form that can be transported or stored underground. The company plans to use its $50 million in new equity to deploy its technology at a commercial-scale demonstration plant.
Lighting the Way
Makers of light-emitting diodes expect that market to heat up soon. Change is coming thanks to the impending U.S. ban on incandescent bulbs—due to be phased in starting in 2012—as well as improved technology and greater corporate focus on energy efficiency.
LEDs rely on semiconductors to generate light. They use less energy than incandescent bulbs and last a lot longer. But they cost a lot more, too. So far, they are mostly used in high-usage commercial settings. But costs are dropping, and manufacturers plan to target a broader market.
Philips Electronics NV, the Dutch lighting giant, has launched a new LED-lighting audit and retrofit business that aims to help redesign the lighting in the U.S.’s 100 billion square feet of commercial, industrial and government space. It has new LED products as well, including a floodlight, recessed light and streetlight.
Rudy Provoost, chief executive of the Philips Lighting unit, says he expects LED lighting to reach $30 billion in annual sales in the next 15 years, up from about $5 billion estimated by analysts for 2008. Philips executives say floodlighting is the largest part of its lighting business, and with these lights selling for about $5,000 each, they expect significant revenue from this product.
Chris Hammelef, vice president and general manager for Philips Hadco, another Philips lighting unit, says he expects the LED streetlight design to bring $30 million to $40 million a year in sales in the next five years.
But Philips doesn’t have the LED market to itself. Other top companies that make various products along the LED supply chain include Cree Inc., of Durham, N.C.; Nichia Corp., of Tokushima, Japan; Osram GmbH, of Germany; Cooper Industries Inc., Peachtree City, Ga.; and Renaissance Lighting Inc., Herndon, Va.
Cree recently launched its first LED replacement light, which is being tested by companies for possible large-scale deployment. The lights can be used in current fixtures. “The markets that this product enables are massive,” says Gary Trott, Cree vice president of market development.
By MARA LEMOS STEIN AND SARI KRIEGER
Capturing the Imagination
Large and small companies are putting down markers as providers of carbon capture and sequestration, or CCS, now that a national emissions-trading program is becoming a more likely prospect in the U.S.
Saskatchewan Power Corp. is going ahead with retrofitting an existing coal-fired power plant with CCS technology that will capture the plant’s carbon-dioxide emissions for resale. Among the companies vying to provide SaskPower with this CCS technology are Irving, Texas-based Fluor Corp., Montreal-based Cansolv Technologies Inc., and Powerspan Corp., of Portsmouth, N.H., which recently received more than $50 million from George Soros and a handful of private-equity investors.
What companies in the CCS business have in common is that they see government support as critical to making the technology feasible, given the high cost. SaskPower, for example, is relying partly on Canadian government support for its retrofit of the Boundary Dam Unit 3 project. The Canadian government will contribute C$240 million (US$220 million) toward the project, which SaskPower estimates will cost C$1.4 billion.
”We’re observing governments around the world that are beginning to propagate regulation [and] incentives” to promote CO2 removal from coal-fired plants, says Frank Alix, Powerspan’s chief executive. “In the absence of a regulatory driver, the only way to deploy these systems commercially would be for the government to put financial incentives in place, such as tax credits, or loan guarantees, that would make it economically attractive.”
The recent stimulus package included $3.4 billion in grants to promote research for carbon-based fuels, including coal. The Energy Department also offers loan guarantees for commercialization of new clean technologies, but it isn’t yet clear how the agency will allocate these funds.
Powerspan, meanwhile, intends to apply for grants and loan guarantees once the DOE publishes guidelines for the programs, Mr. Alix says. The company has developed an ammonia-based technology that removes CO2 from the flue gas emitted by coal-fired power plants and maintains it in a form that can be transported or stored underground. The company plans to use its $50 million in new equity to deploy its technology at a commercial-scale demonstration plant.
Lighting the Way
Makers of light-emitting diodes expect that market to heat up soon. Change is coming thanks to the impending U.S. ban on incandescent bulbs—due to be phased in starting in 2012—as well as improved technology and greater corporate focus on energy efficiency.
LEDs rely on semiconductors to generate light. They use less energy than incandescent bulbs and last a lot longer. But they cost a lot more, too. So far, they are mostly used in high-usage commercial settings. But costs are dropping, and manufacturers plan to target a broader market.
Philips Electronics NV, the Dutch lighting giant, has launched a new LED-lighting audit and retrofit business that aims to help redesign the lighting in the U.S.’s 100 billion square feet of commercial, industrial and government space. It has new LED products as well, including a floodlight, recessed light and streetlight.
Rudy Provoost, chief executive of the Philips Lighting unit, says he expects LED lighting to reach $30 billion in annual sales in the next 15 years, up from about $5 billion estimated by analysts for 2008. Philips executives say floodlighting is the largest part of its lighting business, and with these lights selling for about $5,000 each, they expect significant revenue from this product.
Chris Hammelef, vice president and general manager for Philips Hadco, another Philips lighting unit, says he expects the LED streetlight design to bring $30 million to $40 million a year in sales in the next five years.
But Philips doesn’t have the LED market to itself. Other top companies that make various products along the LED supply chain include Cree Inc., of Durham, N.C.; Nichia Corp., of Tokushima, Japan; Osram GmbH, of Germany; Cooper Industries Inc., Peachtree City, Ga.; and Renaissance Lighting Inc., Herndon, Va.
Cree recently launched its first LED replacement light, which is being tested by companies for possible large-scale deployment. The lights can be used in current fixtures. “The markets that this product enables are massive,” says Gary Trott, Cree vice president of market development.
Australia calls for aviation to be part of climate change treaty
Proposal brings worldwide carbon tax for airline passengers closer
Dan Milmo
guardian.co.uk, Sunday 14 June 2009 15.41 BST
The prospect of a worldwide carbon tax for airline passengers is gathering pace after the Australian government demanded the inclusion of the aviation industry in the global climate change treaty.
The Australian administration has proposed that airlines are set a carbon dioxide reduction target as part of the treaty that will emerge from the Copenhagen summit this year. The latest plan would see responsibility for any aviation deal handed over to the UN Framework Convention on Climate Change, which is overseeing the treaty talks.
The proposal is one of four suggestions for dealing with aviation emissions that will be discussed in Copenhagen. If the Australian plan is accepted, it is likely that airlines will join a global emissions trading scheme. British Airways backed a global scheme last week and its chief executive, Willie Walsh, said it would force up fares as airlines pass on the multibillion-dollar cost of acquiring carbon credits.
Under a carbon trading scheme, airlines would be set an emissions limit – for instance, no more than 97% of the total amount of carbon dioxide emitted by carriers in 2005 – and would be given free carbon credits equivalent to 85% of that total. The rest would be acquired in an open auction, with the proceeds being handed to developing countries.
The Australian proposal is gathering momentum because the body representing airlines at the talks is struggling to form its plan due to internal wrangling.
Environmental campaigners welcomed the Australian proposal. Joss Garman, of Greenpeace, said: "Scientists project that unless world leaders take action, ships and planes would eat up 50% to 80% of the world's carbon budget by 2050, making it essential that governments end these industries' special treatment and include them in a strong Copenhagen treaty."
Dan Milmo
guardian.co.uk, Sunday 14 June 2009 15.41 BST
The prospect of a worldwide carbon tax for airline passengers is gathering pace after the Australian government demanded the inclusion of the aviation industry in the global climate change treaty.
The Australian administration has proposed that airlines are set a carbon dioxide reduction target as part of the treaty that will emerge from the Copenhagen summit this year. The latest plan would see responsibility for any aviation deal handed over to the UN Framework Convention on Climate Change, which is overseeing the treaty talks.
The proposal is one of four suggestions for dealing with aviation emissions that will be discussed in Copenhagen. If the Australian plan is accepted, it is likely that airlines will join a global emissions trading scheme. British Airways backed a global scheme last week and its chief executive, Willie Walsh, said it would force up fares as airlines pass on the multibillion-dollar cost of acquiring carbon credits.
Under a carbon trading scheme, airlines would be set an emissions limit – for instance, no more than 97% of the total amount of carbon dioxide emitted by carriers in 2005 – and would be given free carbon credits equivalent to 85% of that total. The rest would be acquired in an open auction, with the proceeds being handed to developing countries.
The Australian proposal is gathering momentum because the body representing airlines at the talks is struggling to form its plan due to internal wrangling.
Environmental campaigners welcomed the Australian proposal. Joss Garman, of Greenpeace, said: "Scientists project that unless world leaders take action, ships and planes would eat up 50% to 80% of the world's carbon budget by 2050, making it essential that governments end these industries' special treatment and include them in a strong Copenhagen treaty."
It’s Time to Cool the Planet
Cutting greenhouse gases is no longer enough to deal with global warming, says Jamais Cascio. He argues that we also have to do something more direct—and risky.
By JAMAIS CASCIO
If we’re going to avoid climate disaster, we’re going to have start getting a lot more direct. We’re going to have to think about cooling the planet.
The concept is called geoengineering, and in the past few years, it has gone from being dismissed as a fringe idea to the subject of intense debates in the halls of power. Many of us who have been watching this subject closely have gone from being skeptics to advocates. Very reluctant advocates, to be sure, but advocates nonetheless.
What has changed? Quite simply, as the effects of global warming have worsened, policy makers have failed to meet the challenge. As a result, if we want to avoid an unprecedented global catastrophe, we may have no other choice but to reduce the impact of global warning, alongside focusing on the factors that are causing it in the first place. That is, while we continue to work aggressively to reduce the amount of carbon released into the atmosphere, we also need to consider lowering the temperature of the Earth itself.
To be clear, geoengineering won’t solve global warming. It’s not a “techno-fix.” It would be enormously risky and almost certainly lead to troubling unforeseen consequences. And without a doubt, the deployment of geoengineering would lead to international tension. Who decides what the ideal temperature would be? Russia? India? The U.S.? Who’s to blame if Country A’s geoengineering efforts cause a drought in Country B?
Also let’s be clear about one other thing: We will still have to radically reduce carbon emissions, and do so quickly. We will still have to eliminate the use of fossil fuels, and adopt substantially more sustainable agricultural methods. We will still have to deal with the effects of ecosystems damaged by carbon overload.
But what geoengineering can do is slow the increase in temperatures, delay potentially catastrophic “tipping point” events—such as a disastrous melting of the Arctic permafrost—and give us time to make the changes to our economies and our societies necessary to end the climate disaster.
Geoengineering, in other words, is simply a temporary “stay of execution.” We will still have to work for a pardon.
Nothing New
Altering the Earth’s temperature, of course, is hardly anything new. Human civilization has been changing the Earth’s environment for millennia, often to our detriment. Dams, deforestation and urbanization can alter water cycles and wind patterns, occasionally triggering droughts or even creating deserts. On a global scale, industrial activity for the past 150 years or so has changed the Earth’s atmosphere, threatening to raise average world temperatures to catastrophic levels, even if we were able to stop releasing carbon into the atmosphere immediately.
What we’re talking about with geoengineering, however, is something new. It’s a more deliberate manipulation of the environment, rather than a byproduct of other activities. And while we know more than we did just a few years ago about how it might work, there are still plenty of unknowns.
Geoengineering mainly takes two forms: temperature management, which moderates heat by blocking or reflecting a small portion of the sunlight hitting the Earth; and carbon management, which gradually removes large amounts of carbon from the atmosphere (as opposed to simply reducing the amount of additional carbon we’re releasing into the atmosphere). Temperature management is the more likely course of action, as it has the advantage of potentially quick results, while carbon-management techniques that would have a global impact might take decades or centuries to show results.
Sun Block
Temperature-management proposals boil down to increasing how much sunlight the Earth reflects, rather than absorbs. (Increasing the planet’s reflectivity by 2% could counter the warming effects of a doubling of CO2 emissions.) While a variety of techniques have been suggested, some don’t pass the plausibility test, either due to cost, clear drawbacks, or both.
For instance, one proposal would place thousands of square miles of reflective sheets in the desert to reflect sunlight—an interesting plan, until you realize that this would effectively destroy desert ecosystems. Another proposal calls for launching millions of tiny mirrors into orbit, where they would block some sunlight from reaching the atmosphere. But one study of the orbiting-mirror plan concluded that, to keep pace with the continual warming, we’d need to launch one square mile of sunshade into orbit every hour.
Two approaches hold the most promise: injecting tons of sulfates—essentially solid particles of sulfur dioxide—into the stratosphere, and pumping seawater into the lower atmosphere to create clouds. A recent report in the journal Atmospheric Physics and Chemistry Discussions identified these two approaches as having a high likelihood of being able to counter global temperature increases, and to do so in a reasonably short amount of time.
The sulfate-injection plan, which has received the most study, is explicitly modeled on the effects of massive volcanic eruptions, such as Mount Pinatubo in the Philippines; in the months after the 1991 eruption, global temperatures dropped by half a degree Celsius.
To trigger a drop in global temperatures, we’d need to loft between two million and 10 million tons of sulfur dioxide (which combines with oxygen to form sulfate particles) into the lower stratosphere, or at about 33,000 feet. The tiny particles suspended in the atmosphere act like a haze, reflecting a significant amount of sunlight—though not enough to notice at ground level (except for some superb sunsets).
While this seems like a large amount, several studies have shown it could be done using some combination of high-altitude balloons, dispersal in jet-aircraft exhaust, and even more exotic platforms such as artillery shells. As with volcanic sulfates, the particles would eventually cycle out of the atmosphere, so we’d have to refresh that two to 10 megatons of sulfur dioxide roughly every year.
Stratospheric sulfate injection appeals to many geoengineering proponents for a few reasons. It doesn’t require a massive leap in technology to carry out successfully; arguably, we could start doing it this year, if we needed to. It’s relatively cheap, probably costing just a few billion dollars a year. And because stratospheric sulfate injection emulates an effect of volcanic eruptions, we already have some idea of what to expect from it—for better and worse. We know, for example, that the cooling effect could start within weeks of the injection process.
We also know that stratospheric sulfates will likely damage the ozone layer (as happened after Mount Pinatubo erupted), potentially resulting in more skin cancer and damage to plants and animals. In addition, the scattering of sunlight will reduce the efficiency of some kinds of solar power, and some studies have suggested that it could disrupt monsoonal rain cycles.
A Higher Chance of Clouds
The other high-impact proposal, cloud brightening, increases the amount of reflected sunlight by making more clouds and thickening existing ones. One idea is to use ships to propel seawater thousands of feet in the air, where it would form or increase cloud cover.
The technique has both advantages and disadvantages compared with the sulfate-injection method. Lofting seawater into the air to seed cloud formation would have fewer environmental side effects than the sulfates, and may allow for targeted use to counter droughts. Because it would be relatively low altitude, it wouldn’t have the same scattering effect on sunlight as sulfate injection.
But increasing the extent and thickness of cloud cover could also have at least as powerful an effect on rainfall patterns as sulfate injection, increasing downpours in one area or contributing to unexpected droughts in others. Finally, the technologies required for cloud brightening are still experimental, though initial proposals look to be markedly more environmentally benign than those used for sulfate injection.
Both solutions could present a more dramatic problem if the geoengineering was to stop abruptly. According to some studies, global temperatures would spike once the geoengineering steps were ended, actually exceeding for a short time where they would have been without any geoengineering. Afterward, the temperature increase would continue as if nothing had been done to slow it. While this doesn’t mean we’d have to undertake geoengineering indefinitely, it underscores why geoengineering must be accompanied by carbon cuts.
Also, neither would do anything to solve other problems that arise from excessive levels of carbon dioxide, such as oceans becoming more acidic from increased carbon loading.
The Political Impact
Any kind of geoengineering would also face other issues. Most prominent are the political concerns. Since geoengineering is global in its effects, who determines whether or not it’s used, which technologies to deploy, and what the target temperatures will be? Who decides which unexpected side effects are bad enough to warrant ending the process? Because the expense and expertise required would be low enough for a single country, what happens when a desperate “rogue nation” attempts geoengineering against the wishes of other states? And because the benefits and possible harm from geoengineering attempts would be unevenly distributed around the planet, would it be possible to use this technology for strategic or military purposes? That last one may sound a bit paranoid, but it’s clear that any technology with the potential for strategic use will be at the very least considered by any rational international actor.
There are also more mundane questions of liability. If, for example, South Asia experiences an unusual drought during cyclone season after geoengineering begins, who gets blamed? Who gets sued? Would all “odd” weather patterns be ascribed to the geoengineering effort? If so, would the issue of what would have happened absent geoengineering be considered relevant?
Consider the Alternative
With all of these drawbacks, why would I consider myself an advocate of geoengineering, no matter how reluctant? Because I believe the alternative would be worse.
The global institutions we rely on to deal with a problem like climate change seem unable to look past short-term roadblocks and regional interests. At the same time, climate scientists are shouting louder than ever about the speed and intensity of environmental changes coming from global warming.
In short, although we know what to do to stop global warming, we’re running out of time to do it and show no interest in moving faster. So here’s where geoengineering steps in: It gives us time to act.
That’s if it’s done wisely. It’s imperative that we increase funding for geoengineering research, building the kinds of models and simulations necessary to allow us to weed out the approaches with dangerous, surprising consequences.
Fortunately, the deployment of geoengineering need not be all or nothing. Though it would have the greatest impact if done globally, some models have shown that intervention just in the polar regions would be enough to hold off the most critical tipping-point events, including ice-cap collapse and a massive methane release.
Polar-only geoengineering strikes me as a plausible compromise position. It could be scaled up if the situation becomes more dire and could be easily shut down with minimal temperature spikes if there were unacceptable side effects.
Still, we can’t forget: Geoengineering is not a solution for global warming. It would simply hold temperatures down temporarily, doing nothing about the causes of climate change, let alone ocean acidification and other symptoms of a carbon overdose. We can’t let ourselves slip back into business-as-usual complacency, because we’d simply be setting ourselves up for a far greater disaster down the road.
Our overall goal must remain the reduction and then elimination of greenhouse-gas emissions as swiftly as humanly possible. This will require feats of political will and courage around the world. What geoengineering offers us is the time to make it happen.
--Mr. Cascio, based in the San Francisco Bay area, is a futurist and Senior Fellow at the Institute for Ethics and Emerging Technologies. He can be reached at reports@wsj.com. Printed in The Wall Street Journal, page R1
By JAMAIS CASCIO
If we’re going to avoid climate disaster, we’re going to have start getting a lot more direct. We’re going to have to think about cooling the planet.
The concept is called geoengineering, and in the past few years, it has gone from being dismissed as a fringe idea to the subject of intense debates in the halls of power. Many of us who have been watching this subject closely have gone from being skeptics to advocates. Very reluctant advocates, to be sure, but advocates nonetheless.
What has changed? Quite simply, as the effects of global warming have worsened, policy makers have failed to meet the challenge. As a result, if we want to avoid an unprecedented global catastrophe, we may have no other choice but to reduce the impact of global warning, alongside focusing on the factors that are causing it in the first place. That is, while we continue to work aggressively to reduce the amount of carbon released into the atmosphere, we also need to consider lowering the temperature of the Earth itself.
To be clear, geoengineering won’t solve global warming. It’s not a “techno-fix.” It would be enormously risky and almost certainly lead to troubling unforeseen consequences. And without a doubt, the deployment of geoengineering would lead to international tension. Who decides what the ideal temperature would be? Russia? India? The U.S.? Who’s to blame if Country A’s geoengineering efforts cause a drought in Country B?
Also let’s be clear about one other thing: We will still have to radically reduce carbon emissions, and do so quickly. We will still have to eliminate the use of fossil fuels, and adopt substantially more sustainable agricultural methods. We will still have to deal with the effects of ecosystems damaged by carbon overload.
But what geoengineering can do is slow the increase in temperatures, delay potentially catastrophic “tipping point” events—such as a disastrous melting of the Arctic permafrost—and give us time to make the changes to our economies and our societies necessary to end the climate disaster.
Geoengineering, in other words, is simply a temporary “stay of execution.” We will still have to work for a pardon.
Nothing New
Altering the Earth’s temperature, of course, is hardly anything new. Human civilization has been changing the Earth’s environment for millennia, often to our detriment. Dams, deforestation and urbanization can alter water cycles and wind patterns, occasionally triggering droughts or even creating deserts. On a global scale, industrial activity for the past 150 years or so has changed the Earth’s atmosphere, threatening to raise average world temperatures to catastrophic levels, even if we were able to stop releasing carbon into the atmosphere immediately.
What we’re talking about with geoengineering, however, is something new. It’s a more deliberate manipulation of the environment, rather than a byproduct of other activities. And while we know more than we did just a few years ago about how it might work, there are still plenty of unknowns.
Geoengineering mainly takes two forms: temperature management, which moderates heat by blocking or reflecting a small portion of the sunlight hitting the Earth; and carbon management, which gradually removes large amounts of carbon from the atmosphere (as opposed to simply reducing the amount of additional carbon we’re releasing into the atmosphere). Temperature management is the more likely course of action, as it has the advantage of potentially quick results, while carbon-management techniques that would have a global impact might take decades or centuries to show results.
Sun Block
Temperature-management proposals boil down to increasing how much sunlight the Earth reflects, rather than absorbs. (Increasing the planet’s reflectivity by 2% could counter the warming effects of a doubling of CO2 emissions.) While a variety of techniques have been suggested, some don’t pass the plausibility test, either due to cost, clear drawbacks, or both.
For instance, one proposal would place thousands of square miles of reflective sheets in the desert to reflect sunlight—an interesting plan, until you realize that this would effectively destroy desert ecosystems. Another proposal calls for launching millions of tiny mirrors into orbit, where they would block some sunlight from reaching the atmosphere. But one study of the orbiting-mirror plan concluded that, to keep pace with the continual warming, we’d need to launch one square mile of sunshade into orbit every hour.
Two approaches hold the most promise: injecting tons of sulfates—essentially solid particles of sulfur dioxide—into the stratosphere, and pumping seawater into the lower atmosphere to create clouds. A recent report in the journal Atmospheric Physics and Chemistry Discussions identified these two approaches as having a high likelihood of being able to counter global temperature increases, and to do so in a reasonably short amount of time.
The sulfate-injection plan, which has received the most study, is explicitly modeled on the effects of massive volcanic eruptions, such as Mount Pinatubo in the Philippines; in the months after the 1991 eruption, global temperatures dropped by half a degree Celsius.
To trigger a drop in global temperatures, we’d need to loft between two million and 10 million tons of sulfur dioxide (which combines with oxygen to form sulfate particles) into the lower stratosphere, or at about 33,000 feet. The tiny particles suspended in the atmosphere act like a haze, reflecting a significant amount of sunlight—though not enough to notice at ground level (except for some superb sunsets).
While this seems like a large amount, several studies have shown it could be done using some combination of high-altitude balloons, dispersal in jet-aircraft exhaust, and even more exotic platforms such as artillery shells. As with volcanic sulfates, the particles would eventually cycle out of the atmosphere, so we’d have to refresh that two to 10 megatons of sulfur dioxide roughly every year.
Stratospheric sulfate injection appeals to many geoengineering proponents for a few reasons. It doesn’t require a massive leap in technology to carry out successfully; arguably, we could start doing it this year, if we needed to. It’s relatively cheap, probably costing just a few billion dollars a year. And because stratospheric sulfate injection emulates an effect of volcanic eruptions, we already have some idea of what to expect from it—for better and worse. We know, for example, that the cooling effect could start within weeks of the injection process.
We also know that stratospheric sulfates will likely damage the ozone layer (as happened after Mount Pinatubo erupted), potentially resulting in more skin cancer and damage to plants and animals. In addition, the scattering of sunlight will reduce the efficiency of some kinds of solar power, and some studies have suggested that it could disrupt monsoonal rain cycles.
A Higher Chance of Clouds
The other high-impact proposal, cloud brightening, increases the amount of reflected sunlight by making more clouds and thickening existing ones. One idea is to use ships to propel seawater thousands of feet in the air, where it would form or increase cloud cover.
The technique has both advantages and disadvantages compared with the sulfate-injection method. Lofting seawater into the air to seed cloud formation would have fewer environmental side effects than the sulfates, and may allow for targeted use to counter droughts. Because it would be relatively low altitude, it wouldn’t have the same scattering effect on sunlight as sulfate injection.
But increasing the extent and thickness of cloud cover could also have at least as powerful an effect on rainfall patterns as sulfate injection, increasing downpours in one area or contributing to unexpected droughts in others. Finally, the technologies required for cloud brightening are still experimental, though initial proposals look to be markedly more environmentally benign than those used for sulfate injection.
Both solutions could present a more dramatic problem if the geoengineering was to stop abruptly. According to some studies, global temperatures would spike once the geoengineering steps were ended, actually exceeding for a short time where they would have been without any geoengineering. Afterward, the temperature increase would continue as if nothing had been done to slow it. While this doesn’t mean we’d have to undertake geoengineering indefinitely, it underscores why geoengineering must be accompanied by carbon cuts.
Also, neither would do anything to solve other problems that arise from excessive levels of carbon dioxide, such as oceans becoming more acidic from increased carbon loading.
The Political Impact
Any kind of geoengineering would also face other issues. Most prominent are the political concerns. Since geoengineering is global in its effects, who determines whether or not it’s used, which technologies to deploy, and what the target temperatures will be? Who decides which unexpected side effects are bad enough to warrant ending the process? Because the expense and expertise required would be low enough for a single country, what happens when a desperate “rogue nation” attempts geoengineering against the wishes of other states? And because the benefits and possible harm from geoengineering attempts would be unevenly distributed around the planet, would it be possible to use this technology for strategic or military purposes? That last one may sound a bit paranoid, but it’s clear that any technology with the potential for strategic use will be at the very least considered by any rational international actor.
There are also more mundane questions of liability. If, for example, South Asia experiences an unusual drought during cyclone season after geoengineering begins, who gets blamed? Who gets sued? Would all “odd” weather patterns be ascribed to the geoengineering effort? If so, would the issue of what would have happened absent geoengineering be considered relevant?
Consider the Alternative
With all of these drawbacks, why would I consider myself an advocate of geoengineering, no matter how reluctant? Because I believe the alternative would be worse.
The global institutions we rely on to deal with a problem like climate change seem unable to look past short-term roadblocks and regional interests. At the same time, climate scientists are shouting louder than ever about the speed and intensity of environmental changes coming from global warming.
In short, although we know what to do to stop global warming, we’re running out of time to do it and show no interest in moving faster. So here’s where geoengineering steps in: It gives us time to act.
That’s if it’s done wisely. It’s imperative that we increase funding for geoengineering research, building the kinds of models and simulations necessary to allow us to weed out the approaches with dangerous, surprising consequences.
Fortunately, the deployment of geoengineering need not be all or nothing. Though it would have the greatest impact if done globally, some models have shown that intervention just in the polar regions would be enough to hold off the most critical tipping-point events, including ice-cap collapse and a massive methane release.
Polar-only geoengineering strikes me as a plausible compromise position. It could be scaled up if the situation becomes more dire and could be easily shut down with minimal temperature spikes if there were unacceptable side effects.
Still, we can’t forget: Geoengineering is not a solution for global warming. It would simply hold temperatures down temporarily, doing nothing about the causes of climate change, let alone ocean acidification and other symptoms of a carbon overdose. We can’t let ourselves slip back into business-as-usual complacency, because we’d simply be setting ourselves up for a far greater disaster down the road.
Our overall goal must remain the reduction and then elimination of greenhouse-gas emissions as swiftly as humanly possible. This will require feats of political will and courage around the world. What geoengineering offers us is the time to make it happen.
--Mr. Cascio, based in the San Francisco Bay area, is a futurist and Senior Fellow at the Institute for Ethics and Emerging Technologies. He can be reached at reports@wsj.com. Printed in The Wall Street Journal, page R1
Emerald Isle plots green revolution
Ireland seems ready to lead the way as Europe gears up for the low-carbon future
guardian.co.uk, Sunday 14 June 2009 19.29 BST
Of all the world's developed nations, Ireland is the one that is closest to a depression. The banking system is shot, the housing market has collapsed, unemployment is expected to rise to more than one in six of the population. The deterioration in the public finances – and this is saying something – has been even more acute than in Britain. The Irish economy is expected to contract this year by just under 10%.
That's just a bit of the bad news. While Labour and the Conservatives at Westminster bicker about which party is going to make spending cuts, Ireland has already had four stabs at reducing its budget deficit in the past year. Spending programmes have been slashed and tax increases announced.
Green new deal
Without the measures announced by the government in April's budget, the deficit this year would have come in at 12.75% of gross domestic product (GDP). It is now expected to be two points lower than that.
The good news is that Ireland's predicament makes it a prime candidate for a "green new deal" – policies aimed not just at helping the economy through a difficult time but also to make it better able to face the twin challenges of a world where fossil fuels are dwindling and the temperature is rising.
Even better news is that Ireland appears quite keen to act as Europe's guinea pig for the green new deal concept, and is likely to reap a considerable dividend as a result. While the short-term outlook for Ireland is dire, the longer term picture is much rosier. As Eamon Ryan, a Green party minister in the coalition government, put it: "The crisis makes it easier … The status quo is gone. This is a moment when you can recalibrate everything."
Policymakers in Dublin see it this way. As a country on the western edge of Europe, Ireland is particularly vulnerable to peak oil and peak gas. It has no fossil fuels to speak of and is at the end of the pipelines that bring gas from Russia. Dell's decision to close its Limerick plant and move production to Poland underlines Ireland's vulnerability to the constant search by US inward investors to reduce costs.
But these weaknesses are outweighed by considerable strengths. The first is that Ireland's export sector, despite the loss of some big names and the impact of the global downturn, has come through the events of the past nine months relatively unscathed. Overseas sales are down, but not by nearly as much as in other export-led economies such as Germany and Japan. Although it has recently experienced the downside of footloose global capitalism, the Celtic Tiger period of the 1990s provided Ireland with a core of hi-tech expertise in sectors such as IT, pharmaceuticals and medical equipment. The intention is to use this strong industrial platform as the springboard for a green manufacturing revolution.
A second is that Ireland's recession has nothing to do with banks dabbling in exotic financial instruments and everything to do with the failure to prevent the rapid growth of the 1990s turning into a colossal housing bubble in the noughties. From the air, the country looks as if it has measles: it is pockmarked by ugly Southfork-style homes built during a boom that saw construction accounting for 15% of GDP. In the UK, by comparison, construction is about 6% of GDP.
A third advantage is that Ireland's framework for decision-making is more like Germany's than Britain's. It operates a system of social partnership in which the government, unions, business, the agricultural lobby and civil society collaborate to find consensual solutions to the country's problems. The downside of this approach is that it can be slow-moving and cumbersome; the upside is that when the social partners agree, things can happen fast.
Brendan Halligan, the chairman of Sustainable Development Ireland, believes the social partners have not yet quite internalised the green agenda but are close to doing so. "The Irish system is very peculiar," he said. "It takes time but when it decides to do something it does it, and it does it well." That process is being accelerated by the presence of the Green ministers in the coalition with Fianna Fáil, but the idea of a green new deal has been embraced across the political spectrum. The opposition Fine Gael – while lambasting the prime minister, Brian Cowen, for presiding over a "bubble economy" – says that as the world enters a third industrial revolution driven by climate change and peak oil, "the Irish state must once again lead the way in reorienting our industrial and economic structures."
Forfás, Ireland's national policy body for enterprise, will provide the expertise for a high-level action group on the green economy. It will look at four areas: renewables, water and waste water, waste management, and consultancy on energy and the environment. Given that Ireland is often battered by the wind and waves that sweep in off the Atlantic ocean, it is hardly surprising that Forfás sees ocean and wind power as crucial to having 40% of power generated by renewable energy sources by 2020.
Brain power
Forfás is looking at ways to redeploy unemployed construction workers into the green sector. It is also counting on universities to provide the brain power for a green industrial revolution and wants to re-focus a strong R&D sector so that it provides the know-how for the transition to a cleaner environment.
It is not going to be plain sailing. A quarter of Ireland's emissions come from agriculture and progress there is likely to be slow. Comhar, the government-funded sustainability development council, makes the point that retro-fitting homes to make them more energy efficient is good, but it would have been better to have built houses to better specifications. So far, budget cuts have not impaired the development of a green new deal, but the speed of progress will depend on when Ireland emerges from its slump.
Where the UK government talks a lot about sustainability and opportunities in a low-carbon economy, the Irish government appears to be putting words into action. Forfás wants Dublin and Belfast to co-operate on developing wind and ocean power as well as on electricity supply. Northern Ireland has a strong manufacturing tradition ripe for transformation into the new environmental industries. If it waits for London to get its act together, it may wait a very long time.
larry.elliott@guardian.co.uk
guardian.co.uk, Sunday 14 June 2009 19.29 BST
Of all the world's developed nations, Ireland is the one that is closest to a depression. The banking system is shot, the housing market has collapsed, unemployment is expected to rise to more than one in six of the population. The deterioration in the public finances – and this is saying something – has been even more acute than in Britain. The Irish economy is expected to contract this year by just under 10%.
That's just a bit of the bad news. While Labour and the Conservatives at Westminster bicker about which party is going to make spending cuts, Ireland has already had four stabs at reducing its budget deficit in the past year. Spending programmes have been slashed and tax increases announced.
Green new deal
Without the measures announced by the government in April's budget, the deficit this year would have come in at 12.75% of gross domestic product (GDP). It is now expected to be two points lower than that.
The good news is that Ireland's predicament makes it a prime candidate for a "green new deal" – policies aimed not just at helping the economy through a difficult time but also to make it better able to face the twin challenges of a world where fossil fuels are dwindling and the temperature is rising.
Even better news is that Ireland appears quite keen to act as Europe's guinea pig for the green new deal concept, and is likely to reap a considerable dividend as a result. While the short-term outlook for Ireland is dire, the longer term picture is much rosier. As Eamon Ryan, a Green party minister in the coalition government, put it: "The crisis makes it easier … The status quo is gone. This is a moment when you can recalibrate everything."
Policymakers in Dublin see it this way. As a country on the western edge of Europe, Ireland is particularly vulnerable to peak oil and peak gas. It has no fossil fuels to speak of and is at the end of the pipelines that bring gas from Russia. Dell's decision to close its Limerick plant and move production to Poland underlines Ireland's vulnerability to the constant search by US inward investors to reduce costs.
But these weaknesses are outweighed by considerable strengths. The first is that Ireland's export sector, despite the loss of some big names and the impact of the global downturn, has come through the events of the past nine months relatively unscathed. Overseas sales are down, but not by nearly as much as in other export-led economies such as Germany and Japan. Although it has recently experienced the downside of footloose global capitalism, the Celtic Tiger period of the 1990s provided Ireland with a core of hi-tech expertise in sectors such as IT, pharmaceuticals and medical equipment. The intention is to use this strong industrial platform as the springboard for a green manufacturing revolution.
A second is that Ireland's recession has nothing to do with banks dabbling in exotic financial instruments and everything to do with the failure to prevent the rapid growth of the 1990s turning into a colossal housing bubble in the noughties. From the air, the country looks as if it has measles: it is pockmarked by ugly Southfork-style homes built during a boom that saw construction accounting for 15% of GDP. In the UK, by comparison, construction is about 6% of GDP.
A third advantage is that Ireland's framework for decision-making is more like Germany's than Britain's. It operates a system of social partnership in which the government, unions, business, the agricultural lobby and civil society collaborate to find consensual solutions to the country's problems. The downside of this approach is that it can be slow-moving and cumbersome; the upside is that when the social partners agree, things can happen fast.
Brendan Halligan, the chairman of Sustainable Development Ireland, believes the social partners have not yet quite internalised the green agenda but are close to doing so. "The Irish system is very peculiar," he said. "It takes time but when it decides to do something it does it, and it does it well." That process is being accelerated by the presence of the Green ministers in the coalition with Fianna Fáil, but the idea of a green new deal has been embraced across the political spectrum. The opposition Fine Gael – while lambasting the prime minister, Brian Cowen, for presiding over a "bubble economy" – says that as the world enters a third industrial revolution driven by climate change and peak oil, "the Irish state must once again lead the way in reorienting our industrial and economic structures."
Forfás, Ireland's national policy body for enterprise, will provide the expertise for a high-level action group on the green economy. It will look at four areas: renewables, water and waste water, waste management, and consultancy on energy and the environment. Given that Ireland is often battered by the wind and waves that sweep in off the Atlantic ocean, it is hardly surprising that Forfás sees ocean and wind power as crucial to having 40% of power generated by renewable energy sources by 2020.
Brain power
Forfás is looking at ways to redeploy unemployed construction workers into the green sector. It is also counting on universities to provide the brain power for a green industrial revolution and wants to re-focus a strong R&D sector so that it provides the know-how for the transition to a cleaner environment.
It is not going to be plain sailing. A quarter of Ireland's emissions come from agriculture and progress there is likely to be slow. Comhar, the government-funded sustainability development council, makes the point that retro-fitting homes to make them more energy efficient is good, but it would have been better to have built houses to better specifications. So far, budget cuts have not impaired the development of a green new deal, but the speed of progress will depend on when Ireland emerges from its slump.
Where the UK government talks a lot about sustainability and opportunities in a low-carbon economy, the Irish government appears to be putting words into action. Forfás wants Dublin and Belfast to co-operate on developing wind and ocean power as well as on electricity supply. Northern Ireland has a strong manufacturing tradition ripe for transformation into the new environmental industries. If it waits for London to get its act together, it may wait a very long time.
larry.elliott@guardian.co.uk
Zero emissions, no MOT required: meet America's bestselling car
John Crace
The Guardian, Monday 15 June 2009
At last some good news for the US car industry. While most of the leading manufacturers have faced a drop in sales of nearly 40% over the last year, an Ohio-based company has bucked the trend to report record sales in the same period. The Cozy Coupe sold more than 457,000 units - the second bestselling car, the Ford F series pickup, registered barely a third of that number with 143,717, and the third-placed car, the Chevrolet Silverado pickup, was a long way behind with just 125,183.
Even better news for environmentalists is that the Cozy Coupe is a genuinely zero-emissions car. Nor does it require a battery, insurance or an MOT. The downside is that it will only go as far as your little legs will carry you, for the Cozy Coupe is a stunningly unattractive red and yellow plastic Little Tikes pedal car that, if you have children, has at some point or other almost certainly blocked your hallway or crashed into your kitchen table and had you longing for the day when you could offload it on to some other poor sucker.
Sales of the Cozy Coupe in the UK have also held up well, with some 4m having been shifted off the shelves since it went into production 30 years ago. Fashions have changed over the years. Little Tikes have stopped making the 4x4 - "Buying trends tend to mirror the motorised market," says a spokesman coyly. Though not that closely, unless I've happened to miss out on a new trend in bright pink cars, as the Cozy Coupe also comes ready-pimped for Barbie lovers. The Police and Fire models are available for fans of Village People.
"We're delighted to be at the top of the UK car sales league table in our 30th anniversary year," says Ron Brawer, managing director of MGA's Little Tikes. "Cozy Coupe delivers on design, fuel consumption, safety and fun." Although from what I remember of my son's model, the front wheel had a nasty habit of falling off. Especially after I had loosened the nuts to hasten its demise. "Oh dear, Robbie," I said. "It seems to be broken. Perhaps we should get rid of it."
The Guardian, Monday 15 June 2009
At last some good news for the US car industry. While most of the leading manufacturers have faced a drop in sales of nearly 40% over the last year, an Ohio-based company has bucked the trend to report record sales in the same period. The Cozy Coupe sold more than 457,000 units - the second bestselling car, the Ford F series pickup, registered barely a third of that number with 143,717, and the third-placed car, the Chevrolet Silverado pickup, was a long way behind with just 125,183.
Even better news for environmentalists is that the Cozy Coupe is a genuinely zero-emissions car. Nor does it require a battery, insurance or an MOT. The downside is that it will only go as far as your little legs will carry you, for the Cozy Coupe is a stunningly unattractive red and yellow plastic Little Tikes pedal car that, if you have children, has at some point or other almost certainly blocked your hallway or crashed into your kitchen table and had you longing for the day when you could offload it on to some other poor sucker.
Sales of the Cozy Coupe in the UK have also held up well, with some 4m having been shifted off the shelves since it went into production 30 years ago. Fashions have changed over the years. Little Tikes have stopped making the 4x4 - "Buying trends tend to mirror the motorised market," says a spokesman coyly. Though not that closely, unless I've happened to miss out on a new trend in bright pink cars, as the Cozy Coupe also comes ready-pimped for Barbie lovers. The Police and Fire models are available for fans of Village People.
"We're delighted to be at the top of the UK car sales league table in our 30th anniversary year," says Ron Brawer, managing director of MGA's Little Tikes. "Cozy Coupe delivers on design, fuel consumption, safety and fun." Although from what I remember of my son's model, the front wheel had a nasty habit of falling off. Especially after I had loosened the nuts to hasten its demise. "Oh dear, Robbie," I said. "It seems to be broken. Perhaps we should get rid of it."
Green + Green = ?
Take capitalism. Add a passion for sustainability. The result: investment funds focused on mitigating the effects of climate change.
By MARA LEMOS STEIN
Kevin Parker isn’t about to let his passion for the environment get in the way of his day job.
“I’m a devout capitalist, and there’s money to be made whilst respecting the planet and the environment,” says Mr. Parker, the global head of Deutsche Asset Management, a unit of Germany’s Deutsche Bank AG. “These are not mutually exclusive,” he says.
Mr. Parker, a member of Deutsche Bank’s group executive committee, oversees $613 billion of assets under management. Four years ago, he launched what are thought to be the first investment products focusing on businesses that will help mitigate the effects of climate change. Those funds currently have about $4 billion in agribusiness, clean technologies, energy efficiency, environmental management and water.
A believer that information breeds action, Mr. Parker’s next project is to raise awareness about the daily greenhouse-gas emissions around the world by setting up a second-by-second counter in New York City.
The Wall Street Journal sat down with Mr. Parker recently at his Park Avenue office in New York and had a wide-ranging conversation about organic farming, the environment, renewable energy and policies to address climate change. What follow are edited excerpts of that conversation.
A Vintner’s Approach
THE WALL STREET JOURNAL: You have made the environment a major theme for Deutsche Asset Management. How did you get interested in this topic?
KEVIN PARKER: I bought a vineyard in the South of France with a friend in 1995, and we converted it to organic and biodynamic farming based on a personal philosophy. Biodynamic farming is about the sustainability of soil and about creating what we call live soils, as opposed to having soils that become dead as a result of too much fertilizer.
We believed that eventually we could make better wine as a result. And 10 years later, we have seen that’s indeed the case: We were voted the 57th best wine in the world by Wine Spectator in 2005.
WSJ: How did you go from organic wine producer to investing in mitigating the effects of global warming?
MR. PARKER: The vineyard is what started the whole approach toward sustainability. We then looked at renewable energy around 2000, because I felt we couldn’t continue to pollute the planet and get away with it. I made a bunch of personal investments in the sector long before I joined the asset-management business.
When I joined the business [in 2004], it seemed like a natural place to push this theme. Because I felt money had to go into developing all of these technologies to build greater efficiency in the current infrastructure, but also, longer term, to address the issue of a lower-carbon-based economy.
Building Consensus
WSJ: How did you get Deutsche Bank to buy into this idea?
MR. PARKER: That wasn’t easy. It’s very untypical for someone in this industry to take this issue up and be an advocate. Because in typical business, the thought is, “This is a cost, this is a burden.” With Germany being more green than most places in the world, I think we’ve been able to find some early adopters.
We built an internal consensus, and climate change ended up making the list of our megatrends in 2005. Then we launched a couple of products, and to everyone’s astonishment, the uptake was overwhelming. In a very short period of time, we raised $12 billion.
And by the way, of the $12 billion, only $50 million came from the U.S.
WSJ: What is investing in the theme of climate change, anyway?
MR. PARKER: The way we define green and climate change is a little bit different.
The conventional wisdom says, it’s all about new energy—so it’s solar, wind, biofuels, things that are in the bucket of hope. We think that’s the small end of the wedge in terms of the investable universe, because what we’ve got is this enormous $100 trillion global economy that today runs on hydrocarbons. Making the existing plant equipment more efficient and optimizing that, and being smarter about the way in which we use energy, conserve energy and conserve valuable resources is a much more interesting part of the mix.
Sectors of Interest
WSJ: What are some of the specific sectors that Deutsche Asset Management invests in under the climate-change banner?
MR. PARKER: One area that’s of particular interest to me is agriculture. With energy crops and biofuels creating such a stir over the last couple of years, and the debate about food and sustainability and demographic growth causing dislocation in share prices, I asked our climate-change research team to work on a simple question: If the planet goes to nine billion people in 2050, can we feed nine billion people?
There’s enough land on the planet, at conservative productivity rates, to feed nine billion people and grow what we need to produce the energy we need.
What’s wrong with this picture is that there’s a whole host of tariff systems and subsidies that create distortions on the global agriculture markets. Those distortions lead to a lack of capital formation around the logistics and the supply lines in the agricultural markets and also the development of farmland.
As an investor, these are opportunities.
Covering the Spectrum
WSJ: How do you approach new energy and clean technologies’ investments?
MR. PARKER: The developments in those areas are going to have a great impact one day on the hydrocarbon side. So you need to have a footprint in both. We have some products that are trying to capture those changes and those developments, so that we really can cover the spectrum of the available and the potential investable universe in the broad shift from high-carbon to low-carbon.
We want to be involved all along the value chain, from the incubation of small companies and development of new technologies, all the way to the more mature business.
WSJ: Are there any areas of investment that you avoid?
MR. PARKER: There are certain industries that we think are going to face difficulties. We see signposts along the way that companies that are reliant on coal can’t get financing, and that insurance companies are going to start putting those liabilities on balance sheets. Then the coal industry in general is going to start to face some serious headwinds.
I cannot go to the managers [of Deutsche Asset Management] and say, “Let’s get out of coal,” for instance, because there may be, from time to time, some opportunities in coal.
However, what we strive for is for our managers to understand that coal is in the firing line of this debate. This debate is an urgent and really important issue, and they’d better be aware of it.
Winners and Losers
WSJ: If we look ahead to 2040, what kind of industry or sector that we see today would be out of business as a consequence of changing behavior or environmental changes?
MR. PARKER: When there are large dislocations and changes in new technologies, when a new way of doing things burst on to the scene, there’s a sort of adaptability of human beings.
So it wouldn’t surprise me that ExxonMobil is one of the biggest solar operators in the world in 2040. Less than 1% of the world’s energy today comes from solar, there’s a pretty big opportunity there, and let’s not forget that ExxonMobil makes $45 billion a year in profits.
The companies that aren’t going to be around anymore are not going to be around because of mistakes they make, not because of some exogenous forces putting them out of business.
WSJ: What do you think will make a big difference for tackling climate change in coming years?
MR. PARKER: Until you can see the amount of carbon emissions in the atmosphere and the price of carbon every single day, I don’t think the world is going to be sensitive enough to the urgency that is required to attack the problem. So you sensitize everybody to it, you remind them daily about it. Then you put a price on it, and let the market figure it out. Printed in The Wall Street Journal, page R5
By MARA LEMOS STEIN
Kevin Parker isn’t about to let his passion for the environment get in the way of his day job.
“I’m a devout capitalist, and there’s money to be made whilst respecting the planet and the environment,” says Mr. Parker, the global head of Deutsche Asset Management, a unit of Germany’s Deutsche Bank AG. “These are not mutually exclusive,” he says.
Mr. Parker, a member of Deutsche Bank’s group executive committee, oversees $613 billion of assets under management. Four years ago, he launched what are thought to be the first investment products focusing on businesses that will help mitigate the effects of climate change. Those funds currently have about $4 billion in agribusiness, clean technologies, energy efficiency, environmental management and water.
A believer that information breeds action, Mr. Parker’s next project is to raise awareness about the daily greenhouse-gas emissions around the world by setting up a second-by-second counter in New York City.
The Wall Street Journal sat down with Mr. Parker recently at his Park Avenue office in New York and had a wide-ranging conversation about organic farming, the environment, renewable energy and policies to address climate change. What follow are edited excerpts of that conversation.
A Vintner’s Approach
THE WALL STREET JOURNAL: You have made the environment a major theme for Deutsche Asset Management. How did you get interested in this topic?
KEVIN PARKER: I bought a vineyard in the South of France with a friend in 1995, and we converted it to organic and biodynamic farming based on a personal philosophy. Biodynamic farming is about the sustainability of soil and about creating what we call live soils, as opposed to having soils that become dead as a result of too much fertilizer.
We believed that eventually we could make better wine as a result. And 10 years later, we have seen that’s indeed the case: We were voted the 57th best wine in the world by Wine Spectator in 2005.
WSJ: How did you go from organic wine producer to investing in mitigating the effects of global warming?
MR. PARKER: The vineyard is what started the whole approach toward sustainability. We then looked at renewable energy around 2000, because I felt we couldn’t continue to pollute the planet and get away with it. I made a bunch of personal investments in the sector long before I joined the asset-management business.
When I joined the business [in 2004], it seemed like a natural place to push this theme. Because I felt money had to go into developing all of these technologies to build greater efficiency in the current infrastructure, but also, longer term, to address the issue of a lower-carbon-based economy.
Building Consensus
WSJ: How did you get Deutsche Bank to buy into this idea?
MR. PARKER: That wasn’t easy. It’s very untypical for someone in this industry to take this issue up and be an advocate. Because in typical business, the thought is, “This is a cost, this is a burden.” With Germany being more green than most places in the world, I think we’ve been able to find some early adopters.
We built an internal consensus, and climate change ended up making the list of our megatrends in 2005. Then we launched a couple of products, and to everyone’s astonishment, the uptake was overwhelming. In a very short period of time, we raised $12 billion.
And by the way, of the $12 billion, only $50 million came from the U.S.
WSJ: What is investing in the theme of climate change, anyway?
MR. PARKER: The way we define green and climate change is a little bit different.
The conventional wisdom says, it’s all about new energy—so it’s solar, wind, biofuels, things that are in the bucket of hope. We think that’s the small end of the wedge in terms of the investable universe, because what we’ve got is this enormous $100 trillion global economy that today runs on hydrocarbons. Making the existing plant equipment more efficient and optimizing that, and being smarter about the way in which we use energy, conserve energy and conserve valuable resources is a much more interesting part of the mix.
Sectors of Interest
WSJ: What are some of the specific sectors that Deutsche Asset Management invests in under the climate-change banner?
MR. PARKER: One area that’s of particular interest to me is agriculture. With energy crops and biofuels creating such a stir over the last couple of years, and the debate about food and sustainability and demographic growth causing dislocation in share prices, I asked our climate-change research team to work on a simple question: If the planet goes to nine billion people in 2050, can we feed nine billion people?
There’s enough land on the planet, at conservative productivity rates, to feed nine billion people and grow what we need to produce the energy we need.
What’s wrong with this picture is that there’s a whole host of tariff systems and subsidies that create distortions on the global agriculture markets. Those distortions lead to a lack of capital formation around the logistics and the supply lines in the agricultural markets and also the development of farmland.
As an investor, these are opportunities.
Covering the Spectrum
WSJ: How do you approach new energy and clean technologies’ investments?
MR. PARKER: The developments in those areas are going to have a great impact one day on the hydrocarbon side. So you need to have a footprint in both. We have some products that are trying to capture those changes and those developments, so that we really can cover the spectrum of the available and the potential investable universe in the broad shift from high-carbon to low-carbon.
We want to be involved all along the value chain, from the incubation of small companies and development of new technologies, all the way to the more mature business.
WSJ: Are there any areas of investment that you avoid?
MR. PARKER: There are certain industries that we think are going to face difficulties. We see signposts along the way that companies that are reliant on coal can’t get financing, and that insurance companies are going to start putting those liabilities on balance sheets. Then the coal industry in general is going to start to face some serious headwinds.
I cannot go to the managers [of Deutsche Asset Management] and say, “Let’s get out of coal,” for instance, because there may be, from time to time, some opportunities in coal.
However, what we strive for is for our managers to understand that coal is in the firing line of this debate. This debate is an urgent and really important issue, and they’d better be aware of it.
Winners and Losers
WSJ: If we look ahead to 2040, what kind of industry or sector that we see today would be out of business as a consequence of changing behavior or environmental changes?
MR. PARKER: When there are large dislocations and changes in new technologies, when a new way of doing things burst on to the scene, there’s a sort of adaptability of human beings.
So it wouldn’t surprise me that ExxonMobil is one of the biggest solar operators in the world in 2040. Less than 1% of the world’s energy today comes from solar, there’s a pretty big opportunity there, and let’s not forget that ExxonMobil makes $45 billion a year in profits.
The companies that aren’t going to be around anymore are not going to be around because of mistakes they make, not because of some exogenous forces putting them out of business.
WSJ: What do you think will make a big difference for tackling climate change in coming years?
MR. PARKER: Until you can see the amount of carbon emissions in the atmosphere and the price of carbon every single day, I don’t think the world is going to be sensitive enough to the urgency that is required to attack the problem. So you sensitize everybody to it, you remind them daily about it. Then you put a price on it, and let the market figure it out. Printed in The Wall Street Journal, page R5
Credits for Cutbacks
Connecticut hopes to expand its ‘efficiency market’ to households. If it’s successful, be prepared for other states to follow.
By MARK PETERS
Connecticut is in the forefront of states developing market incentives to encourage the biggest consumers of electricity—households—to use a little less.
Since 2007, the state has used something called an efficiency market to offer incentives to commercial and industrial electricity customers. Now it wants to make residential customers part of the mix.
Here’s how an efficiency market works: The state awards credits to electricity customers, or third-party companies that work with them, to permanently cut their consumption. These companies perform projects from changing light bulbs to replacing appliances, and receive one credit for each 1,000 kilowatt-hours saved. The companies then sell their credits to the state’s electricity producers, which are required by law to purchase the credits in increasing numbers each year. The price of each credit is determined by supply and demand. Recently, credits were selling for around $23 apiece.
Consumers will basically end up paying for the market, since energy suppliers for the most part can pass through the cost of buying the credits. But the expense for each electricity customer is a sliver when spread across the entire user base. Moreover, the program wasn’t designed just with cost savings in mind. It really is about achieving larger climate-change and energy goals.
Open the Door
To achieve the emission-reduction goals that states and the federal government are discussing, the door needs to be thrown open to third parties, such as the companies that do efficiency projects in Connecticut, says Andy Frank, executive vice-president of business development at Efficiency 2.0, a New York-based start-up and provider of software that helps households and small businesses save energy. The old process of utilities proposing projects and regulators approving them is too small and clunky and slow, Mr. Frank says. To reach the needed scale, he says, market-based approaches are needed.
Connecticut’s efficiency market “is important nationally,” Mr. Frank says, “because it is proving a model for other states.”
Indeed, the state’s efforts are being closely watched by other state and federal policy makers, and by start-ups hoping to grab some of the expanded market. But expanding the market to residential power customers is no simple matter. For starters, it’s much more difficult to measure cuts in usage by individual households than, say, by a factory. Plus, the savings will be far smaller on a case-by-case basis.
Connecticut regulators are finalizing new rules, but issues that still have to be worked out include how to measure the absence of electricity usage, and how to make sure reductions are permanent. Commercial and industrial projects have faced similar issues, putting in place specific measurement systems to track the reductions. Another question: where to cap the price of credits.
Who Will Compete?
A business entering this market could offer households a free service to replace incandescent light bulbs with more-efficient compact fluorescent lights, for instance. The business would make its money by selling the credits it earns to either a power supplier or a market middleman in the state’s deregulated electricity industry.
Companies that already do this in the commercial part of the efficiency market focus on manufacturers, large retailers and other big consumers of electricity. These companies, sometimes referred to as energy-service companies, will change lighting, replace air-conditioner chillers and make other upgrades. For a business customer, the savings produced by such upgrades quickly erase the expense of the projects. Meanwhile, the energy-service companies earn their money in a variety of ways, sometimes being paid directly for the work, other times sharing in the revenue from the credits produced by a project.
But costs rise and savings shrink when the energy-service firms move from the factory floor to the living room. Reducing residential electricity demand means making a business out of delivering a few dollars a month in savings to thousands of homes. The rewards often aren’t enough to make it profitable for an efficiency business or tempting for residents.
“If [residential] efficiency was such a great business, it would be happening,” says Steve Mitnick, a partner in the energy practice of consulting firm Oliver Wyman Group, a unit of Marsh & McLennan Cos., and a former chief energy adviser to New York’s governor.
Nevertheless, a handful of firms have submitted proposals to Connecticut regulators. Earth Markets LLC, a start-up based in Cromwell, Conn., plans to work with community groups to get into tens of thousands of homes to change incandescent light bulbs to more-efficient compact fluorescent bulbs.
Customers of Earth Markets would pay nothing, while the company would take the estimated savings that the bulbs produce, convert them into credits, and sell the credits in the efficiency market for a profit. Consumers would benefit by saving about $150 a year in electricity costs, says Bryan Garcia, Earth Markets co-founder.
Once it gets its foot in the door, the company plans to help come up with ways for residents to make even deeper cuts in electricity use.
“When we’re in the home, we want to start learning what’s inefficient,” says Mr. Garcia, who is also program director of the Center for Business and the Environment at Yale University in New Haven.
Retail Approach
Other companies are taking different approaches. New York City-based CPower Inc. wants to work with retailers to lower prices on energy-efficient models of home appliances and light bulbs. The company would calculate the energy savings produced when consumers opt for the products. Then it would sell the resulting credits and share some of the revenue with the retailers to offset its costs for lowering prices.
“Retail stores are in a spectacular position,” says Gray Fromer, chief executive of CPower. “They are touching those consumers every day.”
Efficiency 2.0 wants to use software to help people track and change how they use electricity at home. Homeowners would commit to certain cuts in consumption and share in the credits they help produce on top of lowering their electricity bills.
San Francisco-based Nexant Inc. is considering adding residential projects such as installing insulation to work it does already in Connecticut on commercial and industrial efficiency projects.
Role for Utilities
Power distributors like Connecticut Light & Power, meanwhile, an integral part of the state’s commercial efficiency market, are also already helping households use electricity more efficiently. The company, owned by Northeast Utilities of Berlin, Conn., collected about $70 million in electricity-rate add-ons last year for its work retrofitting homes and working with commercial customers on energy-efficient building designs.
Some energy-service companies say this threatens the development of the residential portion of the efficiency market. The fear is that deep-pocketed utilities could end up doing so many efficiency projects that they flood the market with credits, thus lowering their value.
The utilities respond that the money they bring in selling credits simply increases the number of efficiency programs they can do.
Indeed, relying on utilities to reduce power demand is a traditional approach that some favor, especially because of the tedious nature of trying to increase efficiency one home at a time.
Broader Debate
The debate over efficiency markets extends well beyond Connecticut. To reduce emissions of greenhouse gases, national energy policy makers are considering whether to rely heavily on utilities and government programs, efficiency markets, or both.
One version of energy and climate-change legislation currently being debated in Congress includes a proposal to add an efficiency market to new national markets for carbon-dioxide emissions and renewable energy credits.
Mr. Mitnick says policy makers should focus on giving local utilities incentives to encourage efficiency, because they’re connected with customers and have a strong understanding of a region’s electricity needs.
Speed It Up
Slowly states are starting to change the incentive structure, rewarding utilities for cutting electricity consumption, but more work needs to be done, Mr. Mitnick says. “We have no chance to meet those lofty goals without the utilities going all-out,” he says.
But advocates of efficiency markets see a need to widen the pool of companies working to cut energy use. They warn that utilities have a spotty record at cutting overall use.
“There are other approaches that may be more innovative,” says Mr. Garcia, the Earth Markets co-founder, who favors more competition from entreprenuers, start-ups and other new entries.
--Mr. Peters is a reporter for Dow Jones Newswires in New York. He can be reached at mark.peters@dowjones.com. Printed in The Wall Street Journal, page R7
By MARK PETERS
Connecticut is in the forefront of states developing market incentives to encourage the biggest consumers of electricity—households—to use a little less.
Since 2007, the state has used something called an efficiency market to offer incentives to commercial and industrial electricity customers. Now it wants to make residential customers part of the mix.
Here’s how an efficiency market works: The state awards credits to electricity customers, or third-party companies that work with them, to permanently cut their consumption. These companies perform projects from changing light bulbs to replacing appliances, and receive one credit for each 1,000 kilowatt-hours saved. The companies then sell their credits to the state’s electricity producers, which are required by law to purchase the credits in increasing numbers each year. The price of each credit is determined by supply and demand. Recently, credits were selling for around $23 apiece.
Consumers will basically end up paying for the market, since energy suppliers for the most part can pass through the cost of buying the credits. But the expense for each electricity customer is a sliver when spread across the entire user base. Moreover, the program wasn’t designed just with cost savings in mind. It really is about achieving larger climate-change and energy goals.
Open the Door
To achieve the emission-reduction goals that states and the federal government are discussing, the door needs to be thrown open to third parties, such as the companies that do efficiency projects in Connecticut, says Andy Frank, executive vice-president of business development at Efficiency 2.0, a New York-based start-up and provider of software that helps households and small businesses save energy. The old process of utilities proposing projects and regulators approving them is too small and clunky and slow, Mr. Frank says. To reach the needed scale, he says, market-based approaches are needed.
Connecticut’s efficiency market “is important nationally,” Mr. Frank says, “because it is proving a model for other states.”
Indeed, the state’s efforts are being closely watched by other state and federal policy makers, and by start-ups hoping to grab some of the expanded market. But expanding the market to residential power customers is no simple matter. For starters, it’s much more difficult to measure cuts in usage by individual households than, say, by a factory. Plus, the savings will be far smaller on a case-by-case basis.
Connecticut regulators are finalizing new rules, but issues that still have to be worked out include how to measure the absence of electricity usage, and how to make sure reductions are permanent. Commercial and industrial projects have faced similar issues, putting in place specific measurement systems to track the reductions. Another question: where to cap the price of credits.
Who Will Compete?
A business entering this market could offer households a free service to replace incandescent light bulbs with more-efficient compact fluorescent lights, for instance. The business would make its money by selling the credits it earns to either a power supplier or a market middleman in the state’s deregulated electricity industry.
Companies that already do this in the commercial part of the efficiency market focus on manufacturers, large retailers and other big consumers of electricity. These companies, sometimes referred to as energy-service companies, will change lighting, replace air-conditioner chillers and make other upgrades. For a business customer, the savings produced by such upgrades quickly erase the expense of the projects. Meanwhile, the energy-service companies earn their money in a variety of ways, sometimes being paid directly for the work, other times sharing in the revenue from the credits produced by a project.
But costs rise and savings shrink when the energy-service firms move from the factory floor to the living room. Reducing residential electricity demand means making a business out of delivering a few dollars a month in savings to thousands of homes. The rewards often aren’t enough to make it profitable for an efficiency business or tempting for residents.
“If [residential] efficiency was such a great business, it would be happening,” says Steve Mitnick, a partner in the energy practice of consulting firm Oliver Wyman Group, a unit of Marsh & McLennan Cos., and a former chief energy adviser to New York’s governor.
Nevertheless, a handful of firms have submitted proposals to Connecticut regulators. Earth Markets LLC, a start-up based in Cromwell, Conn., plans to work with community groups to get into tens of thousands of homes to change incandescent light bulbs to more-efficient compact fluorescent bulbs.
Customers of Earth Markets would pay nothing, while the company would take the estimated savings that the bulbs produce, convert them into credits, and sell the credits in the efficiency market for a profit. Consumers would benefit by saving about $150 a year in electricity costs, says Bryan Garcia, Earth Markets co-founder.
Once it gets its foot in the door, the company plans to help come up with ways for residents to make even deeper cuts in electricity use.
“When we’re in the home, we want to start learning what’s inefficient,” says Mr. Garcia, who is also program director of the Center for Business and the Environment at Yale University in New Haven.
Retail Approach
Other companies are taking different approaches. New York City-based CPower Inc. wants to work with retailers to lower prices on energy-efficient models of home appliances and light bulbs. The company would calculate the energy savings produced when consumers opt for the products. Then it would sell the resulting credits and share some of the revenue with the retailers to offset its costs for lowering prices.
“Retail stores are in a spectacular position,” says Gray Fromer, chief executive of CPower. “They are touching those consumers every day.”
Efficiency 2.0 wants to use software to help people track and change how they use electricity at home. Homeowners would commit to certain cuts in consumption and share in the credits they help produce on top of lowering their electricity bills.
San Francisco-based Nexant Inc. is considering adding residential projects such as installing insulation to work it does already in Connecticut on commercial and industrial efficiency projects.
Role for Utilities
Power distributors like Connecticut Light & Power, meanwhile, an integral part of the state’s commercial efficiency market, are also already helping households use electricity more efficiently. The company, owned by Northeast Utilities of Berlin, Conn., collected about $70 million in electricity-rate add-ons last year for its work retrofitting homes and working with commercial customers on energy-efficient building designs.
Some energy-service companies say this threatens the development of the residential portion of the efficiency market. The fear is that deep-pocketed utilities could end up doing so many efficiency projects that they flood the market with credits, thus lowering their value.
The utilities respond that the money they bring in selling credits simply increases the number of efficiency programs they can do.
Indeed, relying on utilities to reduce power demand is a traditional approach that some favor, especially because of the tedious nature of trying to increase efficiency one home at a time.
Broader Debate
The debate over efficiency markets extends well beyond Connecticut. To reduce emissions of greenhouse gases, national energy policy makers are considering whether to rely heavily on utilities and government programs, efficiency markets, or both.
One version of energy and climate-change legislation currently being debated in Congress includes a proposal to add an efficiency market to new national markets for carbon-dioxide emissions and renewable energy credits.
Mr. Mitnick says policy makers should focus on giving local utilities incentives to encourage efficiency, because they’re connected with customers and have a strong understanding of a region’s electricity needs.
Speed It Up
Slowly states are starting to change the incentive structure, rewarding utilities for cutting electricity consumption, but more work needs to be done, Mr. Mitnick says. “We have no chance to meet those lofty goals without the utilities going all-out,” he says.
But advocates of efficiency markets see a need to widen the pool of companies working to cut energy use. They warn that utilities have a spotty record at cutting overall use.
“There are other approaches that may be more innovative,” says Mr. Garcia, the Earth Markets co-founder, who favors more competition from entreprenuers, start-ups and other new entries.
--Mr. Peters is a reporter for Dow Jones Newswires in New York. He can be reached at mark.peters@dowjones.com. Printed in The Wall Street Journal, page R7
The Latest on Alternative-Energy Deals From Dow Jones Clean Technology Insight
What’s New
By MARA LEMOS STEIN AND SARI KRIEGER
Capturing the Imagination
Large and small companies are putting down markers as providers of carbon capture and sequestration, or CCS, now that a national emissions-trading program is becoming a more likely prospect in the U.S.
Saskatchewan Power Corp. is going ahead with retrofitting an existing coal-fired power plant with CCS technology that will capture the plant’s carbon-dioxide emissions for resale. Among the companies vying to provide SaskPower with this CCS technology are Irving, Texas-based Fluor Corp., Montreal-based Cansolv Technologies Inc., and Powerspan Corp., of Portsmouth, N.H., which recently received more than $50 million from George Soros and a handful of private-equity investors.
What companies in the CCS business have in common is that they see government support as critical to making the technology feasible, given the high cost. SaskPower, for example, is relying partly on Canadian government support for its retrofit of the Boundary Dam Unit 3 project. The Canadian government will contribute C$240 million (US$220 million) toward the project, which SaskPower estimates will cost C$1.4 billion.
”We’re observing governments around the world that are beginning to propagate regulation [and] incentives” to promote CO2 removal from coal-fired plants, says Frank Alix, Powerspan’s chief executive. “In the absence of a regulatory driver, the only way to deploy these systems commercially would be for the government to put financial incentives in place, such as tax credits, or loan guarantees, that would make it economically attractive.”
The recent stimulus package included $3.4 billion in grants to promote research for carbon-based fuels, including coal. The Energy Department also offers loan guarantees for commercialization of new clean technologies, but it isn’t yet clear how the agency will allocate these funds.
Powerspan, meanwhile, intends to apply for grants and loan guarantees once the DOE publishes guidelines for the programs, Mr. Alix says. The company has developed an ammonia-based technology that removes CO2 from the flue gas emitted by coal-fired power plants and maintains it in a form that can be transported or stored underground. The company plans to use its $50 million in new equity to deploy its technology at a commercial-scale demonstration plant.
Lighting the Way
Makers of light-emitting diodes expect that market to heat up soon. Change is coming thanks to the impending U.S. ban on incandescent bulbs—due to be phased in starting in 2012—as well as improved technology and greater corporate focus on energy efficiency.
LEDs rely on semiconductors to generate light. They use less energy than incandescent bulbs and last a lot longer. But they cost a lot more, too. So far, they are mostly used in high-usage commercial settings. But costs are dropping, and manufacturers plan to target a broader market.
Philips Electronics NV, the Dutch lighting giant, has launched a new LED-lighting audit and retrofit business that aims to help redesign the lighting in the U.S.’s 100 billion square feet of commercial, industrial and government space. It has new LED products as well, including a floodlight, recessed light and streetlight.
Rudy Provoost, chief executive of the Philips Lighting unit, says he expects LED lighting to reach $30 billion in annual sales in the next 15 years, up from about $5 billion estimated by analysts for 2008. Philips executives say floodlighting is the largest part of its lighting business, and with these lights selling for about $5,000 each, they expect significant revenue from this product.
Chris Hammelef, vice president and general manager for Philips Hadco, another Philips lighting unit, says he expects the LED streetlight design to bring $30 million to $40 million a year in sales in the next five years.
But Philips doesn’t have the LED market to itself. Other top companies that make various products along the LED supply chain include Cree Inc., of Durham, N.C.; Nichia Corp., of Tokushima, Japan; Osram GmbH, of Germany; Cooper Industries Inc., Peachtree City, Ga.; and Renaissance Lighting Inc., Herndon, Va.
Cree recently launched its first LED replacement light, which is being tested by companies for possible large-scale deployment. The lights can be used in current fixtures. “The markets that this product enables are massive,” says Gary Trott, Cree vice president of market development.Printed in The Wall Street Journal, page R5
By MARA LEMOS STEIN AND SARI KRIEGER
Capturing the Imagination
Large and small companies are putting down markers as providers of carbon capture and sequestration, or CCS, now that a national emissions-trading program is becoming a more likely prospect in the U.S.
Saskatchewan Power Corp. is going ahead with retrofitting an existing coal-fired power plant with CCS technology that will capture the plant’s carbon-dioxide emissions for resale. Among the companies vying to provide SaskPower with this CCS technology are Irving, Texas-based Fluor Corp., Montreal-based Cansolv Technologies Inc., and Powerspan Corp., of Portsmouth, N.H., which recently received more than $50 million from George Soros and a handful of private-equity investors.
What companies in the CCS business have in common is that they see government support as critical to making the technology feasible, given the high cost. SaskPower, for example, is relying partly on Canadian government support for its retrofit of the Boundary Dam Unit 3 project. The Canadian government will contribute C$240 million (US$220 million) toward the project, which SaskPower estimates will cost C$1.4 billion.
”We’re observing governments around the world that are beginning to propagate regulation [and] incentives” to promote CO2 removal from coal-fired plants, says Frank Alix, Powerspan’s chief executive. “In the absence of a regulatory driver, the only way to deploy these systems commercially would be for the government to put financial incentives in place, such as tax credits, or loan guarantees, that would make it economically attractive.”
The recent stimulus package included $3.4 billion in grants to promote research for carbon-based fuels, including coal. The Energy Department also offers loan guarantees for commercialization of new clean technologies, but it isn’t yet clear how the agency will allocate these funds.
Powerspan, meanwhile, intends to apply for grants and loan guarantees once the DOE publishes guidelines for the programs, Mr. Alix says. The company has developed an ammonia-based technology that removes CO2 from the flue gas emitted by coal-fired power plants and maintains it in a form that can be transported or stored underground. The company plans to use its $50 million in new equity to deploy its technology at a commercial-scale demonstration plant.
Lighting the Way
Makers of light-emitting diodes expect that market to heat up soon. Change is coming thanks to the impending U.S. ban on incandescent bulbs—due to be phased in starting in 2012—as well as improved technology and greater corporate focus on energy efficiency.
LEDs rely on semiconductors to generate light. They use less energy than incandescent bulbs and last a lot longer. But they cost a lot more, too. So far, they are mostly used in high-usage commercial settings. But costs are dropping, and manufacturers plan to target a broader market.
Philips Electronics NV, the Dutch lighting giant, has launched a new LED-lighting audit and retrofit business that aims to help redesign the lighting in the U.S.’s 100 billion square feet of commercial, industrial and government space. It has new LED products as well, including a floodlight, recessed light and streetlight.
Rudy Provoost, chief executive of the Philips Lighting unit, says he expects LED lighting to reach $30 billion in annual sales in the next 15 years, up from about $5 billion estimated by analysts for 2008. Philips executives say floodlighting is the largest part of its lighting business, and with these lights selling for about $5,000 each, they expect significant revenue from this product.
Chris Hammelef, vice president and general manager for Philips Hadco, another Philips lighting unit, says he expects the LED streetlight design to bring $30 million to $40 million a year in sales in the next five years.
But Philips doesn’t have the LED market to itself. Other top companies that make various products along the LED supply chain include Cree Inc., of Durham, N.C.; Nichia Corp., of Tokushima, Japan; Osram GmbH, of Germany; Cooper Industries Inc., Peachtree City, Ga.; and Renaissance Lighting Inc., Herndon, Va.
Cree recently launched its first LED replacement light, which is being tested by companies for possible large-scale deployment. The lights can be used in current fixtures. “The markets that this product enables are massive,” says Gary Trott, Cree vice president of market development.Printed in The Wall Street Journal, page R5
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