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Jan
Russ Weed: On Disappointment
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: Russ Weed, Graham & Dunn, Greentech Blog, January 26, 2012.
Very early in the morning on November 17, 2011, long before the sun came up, the president of smart grid company GridMobility and I drove from San Jose to SFO for a first flight back to Seattle. The prior two days, the CleanTech Open had held its national business competition.
The vehicle was thick with disappointment, because after advancing from nearly 300 entries to be among 120 regional semifinalists and then further advancing to be one of the 21 national finalists, GridMobility had won the Smart Grid category (and therefore in the top 5 nationally), but not the entire competition.
There were good reasons to be disappointed. The top prize was $250,000, which would have been handy for a start-up that had bootstrapped for over two years. (But last year had not indecent revenues from projects and pilots.) Without that funding, the entrepreneur would now take on some engineering consulting work. There was a feeling the presentation could have gone better. Subjectively, I agreed, but easy for me to say as I mentored and collaborated off-stage with the GridMobility team, including president Jim Holbery, VP operations Fred Barrett, and fellow mentors Dave Watts and Denis DuBois. Objectively, it was not helpful that in the midst of the filled ballroom, the order of the five final presentations was changed on the fly so GridMobility went first, the microphone then malfunctioned, the “times almost up” warning rang out several times halfway through the allotted time, and there was a judge on the some 20 person panel who at the onset of Q & A immediately took a distinctly partisan approach that resulted in the panel moderator shutting the judge down (that was not the end of the story, but it is for here).
But so go business competitions.
There were also good reasons NOT to be disappointed. Winning the Smart Grid category at the national level of the CleanTech Open rightfully caught the attention of the Washington cleantech community. (For another link, go to here). GridMobility is now gaining broader exposure and been identified as among the 12 Smart Grid startups to watch in 2012.
At the investment level, energy storage/smart grid was the top cleantech sector in Q3 2011 with the largest amount of capital invested, while energy efficiency was the most active sector in terms of number of deals. Large companies continue to show they will fill their product and service pipeline through acquisitions, such as Siemens’ acquisition of meter data management software company eMeter in December, and they will build vast global channels to market, such as the Global Intelligent Utility Network Coalition formed by IBM.
The smart integration of renewable energy into the grid is the subject of global attention from industry and government (see also here), and the move of Smart Grid services to the cloud is underway in earnest.
None of this is to say looking on the bright side was helpful during that very early morning drive, the air thick with disappointment. It most certainly was not. But after a time, the size and intensity of the opportunity shines through and dissipates the disappointment . . . until the next one arises and must be vanquished.
Jan
Crosscut: Can Mike Young save the UW?
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: David Brewster, Crosscut, January 10, 2012. He’s been dealt a bad hand, and he’s keeping his cards close to his vest. But the new president may have the smarts and the steadiness to rebuild the finances of this critical institution.
The new president of the University of Washington, Michael K. Young, a former law professor who arrived this past summer from the presidency of the University of Utah, has a steady, unflappable, and low-key manner that is already wearing well with legislators and faculty.
But he is also giving off a faint and perfectly understandable sense of being daunted by the job he is facing. One hopes the circumspection reflects a smart strategy of waiting for the right moment to produce a turnaround strategy.
After a strong start, Young somewhat faded from view. “As the CEO of a major institution,” observes one key, impatient legislator, “Young ought to be in the second rollout of his major plans for change. It’s showtime!” But not even the first rollout has come, and Young is studiously vague on some of the big issues such as Governor Chris Gregoire’s proposal for a three-year sales tax boost to help buy back the recent brutal cuts in state funding of higher education. “I like the idea of additional revenues,” is as close as he would come at a recent Crosscut editorial gathering to commenting on Gregoire’s deeply controversial proposal.
Some observers and insiders I’ve talked to are concerned at this slow start, but most feel it’s too early to judge how effective Young can be and what his actual plan for turning around the UW’s fortunes will turn out to be. He’s clearly taking his time, figuring out whom he can trust, and starting to make some changes in his key staff. He’s also settling into a new state, a new marriage (to a woman 24 years younger than he is), and trying to get his arms around an array of challenges likely worse than he thought when he took the job. Maybe it’s not showtime, at least yet?
In politics, including academic politics, timing is everything. When it comes to Olympia, and repairing the university’s rocky relationship, particularly with Speaker Frank Chopp (both a UW graduate and the representative from the university district), a pause seems wise. The last legislative session was all about higher education, and Democrats (with Speaker Chopp’s grudging acquiescence) overcame their historic aversion to high tuition and agreed to a program resulting in a 20 percent hike in UW undergraduate tuition in this year and probably a similar boost next year.
That’s what’s known as “a heavy lift.” So the 2012 legislative session is most likely going to focus on funding for human services, hoping that the universities spend the year finding internal economies and digesting the recent changes. It’s also a good year to repair relations with legislators, something that the interim president, Phyllis Wise, effectively did. Her open, “vulnerable” manner was a welcome relief after the more lordly approach of former president Mark Emmert.
Young seemed to wlcome this year of lowered temperatures, saying that “the tone of the legislature has changed,” and that he’s leaving a lot of the lobbying to the business community, which he says has weighed in to prevent any further hollowing out of research universities. Given that there will be a new governor in 2012 and maybe new majorities in the legislature, it also makes sense to avoid trying to fashion any big changes in funding for the UW.
Young himself would appear to have a heavy lift. President Emmert notably delegated the two big tasks of running a university, the budget and academic affairs, to Provost Wise, so when Wise departed this fall to be chancellor of the University of Illinois, Young inherited a big job of rebuilding. His first two major appointments seem solid. He chose to restrict the provost search to UW candidates, reversing an initial instinct for a national search, and made an admired choice of the arts and sciences dean, Ana Mari Cauce, a Cuban American with a forceful manner and a passion for social equity issues. For chief of staff he brought back a highly regarded former top lawyer for the university, Jack Johnson. Next up: he’ll need to build up the financial strategic planning capabilities of his office.
The university thus faces two daunting facts of life. First, the recession, as well as UW’s decade-long unpopularity in Olympia, has sharply cut state funding. What had been $14,000 in state funding per student in 1990 is now $5,000. The bulk has been made up by tuition boosts. Tuition and fees, which totaled $4,863 in 2003, are now $10,574. And while this amount is slightly under the tuition of peer state research universities, there is not a lot more blood in that stone.
The second fact of life is that the university has not had distinguished leadership for the past decade. Former President Richard McCormick was badly overmatched by the job and never caught on with faculty or in Olympia before departing to head Rutgers University. Emmert, who now heads the NCAA, was initially skilled with politicians and always deft with donors but also hands-off and prone to temporize on hard decisions.
The university seems to have soldiered on fairly well with a coherent group of deans and other top officers. But it has always fought above its weight in the academic sweepstakes for front-rank research universities, largely by developing a prowess at getting research grants. The UW is thus dangerously over-leveraged and vulnerable to taking a mighty tumble. Now it clearly needs decisive leadership. One former regent predicts: “It’s got five years to rebuild its financial base.” And Young probably only has a year or two to come up with a strong plan for doing so before panic would set in.
During Crosscut’s wide-ranging, 90-minute conversation with Young, one could discern certain themes and personality traits. He clearly loves and respects teaching, and his most animated and eloquent moments came when he turned into a lucid law professor and talked about reconciling religious-liberty issues with human rights. (I was ready to sign up for his class on the spot.)
He is also a skilled negotiator, from much high-level experience in that field (including German unification and Asian trade issues). He easily uses phrases such as, “Let’s back up and view the problem from another perspective,” or, “Let me unpack that issue a little, and I LOVE that question.” He’s substantive and has a lot of intellectual bandwidth. He gets that one of the key advantages of the UW is its fabled skill in highly complex, interdisciplinary programs. And he’s been effective in creating new programs of note at major universities (Columbia and George Washington law schools, and Utah).
I was also struck by his open-mindedness. At one point, for instance, he was asked for his views on “activity-based budgeting,” which is a way of flowing more dollars to departments that agree to teach more students, particularly introductory courses. He pointed out how that had broken down professors’ resistance to such courses in Utah, but “now, having said that, it does create some problems”: small departments like philosophy could suffer, and it is a disincentive for interdisciplinary programs. Over and again he made clear his relish for “very complex analytical disciplines.”
One might think this temperament would be well suited for some fairly modest reforms that do not stir up the furies of academic debate too much. There are some dials that can be turned, gently. Allow in more out-of-state students, who pay much higher tuition (currently about 80 percent of undergraduates are from Washington state, higher than at most peer universities). The university is admirably generous in its support for low- and modest-income students. One could, if the politics were to allow it, pare back the number of full-ride, low-income Husky Promise students (currently 25 percent, or 8,500 students). A generous State Need Grants program, a program so far evading the state scalpel and which partially funds education for students from families with incomes below $70,000, could also be reformed and cut (again, a political hot potato).
Read more.
Jan
Mark Muro: Why Is America Rushing to Export Natural Gas?
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: Mark Muro, Brookings Institution Metropolitan Policy Program, The New Republic, January 5, 2012.
Last month, I said I thought it would be premature for the Department of Energy (DOE) to rush into authorizing massive exports of natural gas, notwithstanding the amazing recent boom in American shale gas production. My worry was that precipitous large-scale exports could tighten U.S. supplies and raise prices, with negative ramifications for domestic industrial concerns that depend on cheap gas.
My thought: Wouldn’t it be preferable to re-shore good-paying manufacturing jobs rather than serve as a resource colony for the rest of the world? Seems we should be prudent here!
Now, Rep. Ed Markey has weighed in with a letter to Energy Secretary Steven Chu, and, to his credit, the ranking member of the House Natural Resources Committee has expanded on these concerns, added some new ones, and done it with an admirable eye to the long-term economic and industrial interests of the country.
Markey’s primary thrust is to question natural gas exports from two primary angles: their potential influence on the cost of energy for households and industries, and their potential influence on the use of natural gas as a “bridge fuel” for reducing carbon emissions.
To the first point, Markey is concerned that permitting the export of natural gas could raise the price American families and businesses pay for it given that the global market price for natural gas is considerably higher than the domestic one. That could hurt household budgets and place a further drag on American manufacturing just as the nation’s producers and exporters have begun to compete more aggressively. As to the carbon factor, Markey worries that higher prices driven by foreign demand would reduce natural gas’ cost-competitiveness vis-à-vis coal and slow the U.S.’ transition to cleaner-burning fuels. That would reduce natural gas’ potential as a so-called “bridge fuel” in the transition away from coal and oil and toward renewable energy sources.
Yet there is one more aspect of Rep. Markey’s letter that bears consideration. Simply through its format, which presents fully 11 basic questions about natural gas exportation, Markey has usefully underscored how many open questions remain about the natural gas boom, gas supplies, its use, its regulation, and prices. Markey sticks to questions directly focused on liquid natural gas exports—“What would be the consequences of exporting this volume of natural gas?” “How important is the price of natural gas for the competitiveness of manufacturers?” “Would DOE deny export applications if we experience a spike in domestic prices?” But even with those queries (which leave aside myriad unresolved regulatory, environmental, and well-yield questions) underscore how incredibly early it is in the latest gas boom.
In my book, it’s simply way too soon to commit to the massive export of natural gas given that we’re only beginning to understand the volume of recoverable supplies, the feasibility of extraction, and the impact of newly-tapped shale gas on downstream industry input costs and consumer budgets. Furthermore, medium- and long-term regulatory uncertainties still loom over the entire industry. My bottom line for now: Let’s not give away the store until we know how much gas is safely accessible with existing technologies.
Jan
Bill Lemon: The Year Ahead for Cleantech Investing in the Pacific Northwest
Posted by Tom Ranken | 2 Comments | Categories: Commentary, Complete Digest
Source: Bill Lemon (Northwest Energy Angels) Xconomy, Jan 04, 2012.
Even though our local economy is far from strong, I am pleased to report that at the Northwest Energy Angels, we continue to see and invest in interesting deals across the spectrum of clean technologies.
In the past year, we’ve seen and closed deals in virtually every segment of the cleantech industry, including more efficient lighting, purer water technologies, and more productive renewable energy. Contrary to the popular press, our shrewd entrepreneurs are doing it with little reliance on special subsidies or government funding.
For 2012, there are several trends that I expect to see emerge and develop in these segments (borrowing the category definitions from the Cleantech Open):
Air, Water, and Waste: For the last few decades we have been wrestling with the need to develop alternatives to fossil fuel reliance and are now clearly on a path to consider water and its shortages in a similar vein. In many respects, the clean water segment is where the energy industry was a couple of decades ago. We will continue to see companies looking to develop ways to use water more efficiently, measure water and its cleanliness more precisely and cost-effectively, and recoup water that was previously thought unusable.
Domestically, vigilance in air quality makes opportunities for dramatic improvement difficult. Obviously, carbon dioxide emissions are a huge exception to this, but uncertainty over government mandates and/or incentives will make CO2 control a market that startups will have a hard time making a dent in.
The area of waste will continue to offer a wide variety of disparate, but valuable opportunities as cost of disposal and potential value of the refuse continues to be recognized.
Energy Efficiency: The Pacific Northwest has been blessed and cursed in this segment. The ethic of the region is very pro-conservation but our energy costs are among the lowest of any region, which gives priority to other faster-paying investments in this economy. As we look at efficiency technologies, the key questions are, first, will it sell in California (and elsewhere) and second, is there any way for a local company to deploy, test and further develop its technology for commercial roll out?
Given recent predictions for climbing energy costs, the second question is most often the decider for investor involvement. As I’ll explain below, I see a very positive trend here and am bullish on this sector for our local companies for the first time in a long while.
Green Building: As in the case of efficiency, our region enjoys quick consideration for new green building products here and enthusiasm for early winners. Status quo materials and practices are, unlike our energy, on par cost-wise with the nation, giving local solution providers an excellent chance to gain early market traction.
Renewable Energy: This segment of the cleantech world is seeing the biggest changes. The sunsetting of many U.S. government incentives is causing entrepreneurs to rethink their prospects. Opportunities will continue for those companies that have a “mine the miners” strategy to help established renewable energy equipment manufacturers to improve their product offerings—especially when products are aimed at the world market, which is expected to see much less retrenchment in 2012.
One area of exception to the slowdown is renewable transportation fuels, aviation fuels in particular. Our region has a leg up with Boeing and military interest in the subject as well as the nation’s largest operating biodiesel producer, Imperium Renewables. While it won’t be built overnight, I do see more and more opportunities for companies that can contribute to the success of this industry.
Smart Power, Green Grid, and Energy Storage: The Smart Power, Green Grid, and Energy Storage category encourages links between information technologies and electricity delivery that give customers greater control over when and how their energy is delivered and used.
In many regards, startups in this space have a chicken-and-egg problem: Utilities and regulators want to see products before using these new technologies at scale, while startup companies (and their investors) want to see buyers ready to write checks before gearing up for production.
Our region is rich in the technologies needed to implement the smart grid and its cousins—we have a tradition of progressive utilities that have implemented its precursors. But I remain skeptical of a fast market uptake in 2012.
Our Secret Weapon: Military installations. The local cleantech community has been sought out by representatives of the Navy (Naval Base Everett) and the Army/Air Force (Joint Base Lewis-McChord) to help them achieve some truly remarkable sustainability goals for waste, water, and energy.
Don’t get me wrong—this isn’t to say that the procurement floodgates have opened. They haven’t. The military is on a downward budget trend and they know it. But what they do have is a long view and a willingness to invest in projects that will pay off over a longer term than most homeowners or businesses would.
These military installations capture a complete subset of our local economy: industrial operations, commercial/office buildings, residences, and more. In some cases there are also financial partners who will step in alongside military sustainability initiatives, to provide funding where others wouldn’t.
Perhaps most importantly for our entrepreneurs, these bases are looking for good, early commercial products to test, demonstrate and embrace to achieve their goals.
The Road Ahead
While I don’t think that cleantech is in for any 1990′s-style boom, I do think we will continue to see a wide variety of clever entrepreneurs with great market insights and technological breakthroughs in 2012. And the Northwest Energy Angels will continue to be ready, willing, and able to fund them.
Dec
John Gardner: Lesson Plan
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: John Gardner, Seattle Business Magazine, December 2011. Knowing how to make your business ‘green’ requires a commitment to sustainability education. John Gardner is a WCTA Board Member, is dean of the Bainbridge Graduate Institute, and has more than 20 years of experience in the sustainability field.
- John Gardner, Bainbridge Graduate Institute
Intrapreneurs—people who act like entrepreneurs inside large organizations—often serve as the catalysts for sustainability initiatives. Those profit-making breakthroughs increasingly come from innovative ways of coping with environmental, social, ethical and political issues. Collectively termed “sustainability,” it requires practice and doesn’t happen overnight. Employees can gain a competitive edge by educating themselves in sustainability, whether through an MBA program or a course in sustainable businesses.
Major corporations like UPS, EMC, DuPont, AT&T, Kellogg, PG&E and Coca-Cola have made dramatic changes to their business practices by creating high-ranking sustainability executives. The trend is also supported by the increasing number of companies producing corporate social responsibility reports and the rising number of sustainability degree programs. More than ever before, major companies and entrepreneurial ventures are finding success by embracing sustainability—environmental and social responsibility—as a core business strategy.
The Green Economy represents more than $230 billion a year in sales of socially and environmentally responsible products and $2.2 trillion in investments. It was one of the few industries to survive the recession without taking a big hit. Still, skepticism about being “green” persists.
Pursuing greater profits through practices genuinely improving sustainability requires deep skill. As distinguished from “greenwashing”—promoting the perception that a company is environmentally conscientious—a commitment to sustainability takes sophisticated business management to make it work, thus creating a need for sustainability experts. Local companies like Boeing and REI have realized this and sent members of their corporate social responsibility teams to take courses in sustainability.
In large corporations, sustainability experts often appear as intrapreneurs—a term coined by Gifford Pinchot, president of the Bainbridge Graduate Institute. They develop new and innovative ideas for their companies and also challenge industry norms. These intrapreneurs are the keys to furthering sustainability programs in the corporate world. In fact, the global competitiveness of many American firms has suffered from a lack of internal renewal and reinvention.
No matter how a sustainability program begins or how large or small a company is, the goals tend to be the same: to create programs that help contribute to the bottom line responsibly.
Sustainable-business courses prepare students to create and manage dynamic enterprises that build a better today and tomorrow. They also supply a new generation of innovators and leaders with the tools needed to shape a corporate culture supportive of sustainability goals.
Most traditional MBA programs have begun to incorporate into their curricula classes on sustainable business. A 2010 survey by Beyond Grey Pinstripes, a business education initiative of the Aspen Institute, discovered that the number of business schools requiring a course on business and society issues had doubled since 2001.
Sustainable MBA programs dig deeper to discuss how and why ecological and social sustainability practices are a necessity in every company. Concentrations in key sectors provide students the opportunity to analyze challenges and implement on-the-ground solutions for their industries.
Forward-thinking companies, business leaders and middle managers all recognize this trend, but they are sometimes hesitant to take action or don’t know where to start. Higher education and continued learning are smart investments for businesses even in a down economy. As executives learn new skills and apply them to real-world issues, they’re able to make informed business decisions and find profitable solutions that support their company’s sustainability goals.
In the past few years, there’s been growth in consumer awareness and understanding of sustainability, which has led to the growing market for sustainable businesses, products and services. Consequently, now is the time for companies and individuals to take a step forward and recognize sustainability as an innovation opportunity.
Dec
Mark Muro: Sizing the Clean Economy: A National and Regional Green Jobs Assessment
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: Mark Muro, Brookings, December 20, 2011.
July 13, 2011 — The “green” or “clean” or low-carbon economy—defined as the sector of the economy that produces goods and services with an environmental benefit—remains at once a compelling aspiration and an enigma.
As a matter of aspiration, no swath of the economy has been more widely celebrated as a source of economic renewal and potential job creation. Yet, the clean economy remains an enigma: hard to assess. Not only do “green” or “clean” activities and jobs related to environmental aims pervade all sectors of the U.S. economy; they also remain tricky to define and isolate—and count.
View the report’s interactive indicator map »
Watch video from the report’s launch event »
Find statistics for your state or metropolitan area »
The clean economy has remained elusive in part because, in the absence of standard definitions and data, strikingly little is known about its nature, size, and growth at the critical regional level.
Seeking to help address these problems, the Metropolitan Policy Program at Brookings worked with Battelle’s Technology Partnership Practice to develop, analyze, and comment on a detailed database of establishment-level employment statistics pertaining to a sensibly defined assemblage of clean economy industries in the United States and its metropolitan areas.
“Sizing the Clean Economy: A National and Regional Green Jobs Assessment” concludes that:
The clean economy, which employs some 2.7 million workers, encompasses a significant number of jobs in establishments spread across a diverse group of industries. Though modest in size, the clean economy employs more workers than the fossil fuel industry and bulks larger than bioscience but remains smaller than the IT-producing sectors. Most clean economy jobs reside in mature segments that cover a wide swath of activities including manufacturing and the provision of public services such as wastewater and mass transit. A smaller portion of the clean economy encompasses newer segments that respond to energy-related challenges. These include the solar photovoltaic (PV), wind, fuel cell, smart grid, biofuel, and battery industries.
The clean economy grew more slowly in aggregate than the national economy between 2003 and 2010, but newer “cleantech” segments produced explosive job gains and the clean economy outperformed the nation during the recession. Overall, today’s clean economy establishments added half a million jobs between 2003 and 2010, expanding at an annual rate of 3.4 percent. This performance lagged the growth in the national economy, which grew by 4.2 percent annually over the period (if job losses from establishment closings are omitted to make the data comparable). However, this measured growth heavily reflected the fact that many longer-standing companies in the clean economy—especially those involved in housing- and building-related segments—laid off large numbers of workers during the real estate crash of 2007 and 2008, while sectors unrelated to the clean economy (mainly health care) created many more new jobs nationally. At the same time, newer clean economy establishments— especially those in young energy-related segments such as wind energy, solar PV, and smart grid—added jobs at a torrid pace, albeit from small bases.
The clean economy is manufacturing and export intensive. Roughly 26 percent of all clean economy jobs lie in manufacturing establishments, compared to just 9 percent in the broader economy. On a per job basis, establishments in the clean economy export roughly twice the value of a typical U.S. job ($20,000 versus $10,000). The electric vehicles (EV), green chemical products, and lighting segments are all especially manufacturing intensive while the biofuels, green chemicals, and EV industries are highly export intensive.
The clean economy offers more opportunities and better pay for low- and middle-skilled workers than the national economy as a whole. Median wages in the clean economy—meaning those in the middle of the distribution—are 13 percent higher than median U.S. wages. Yet a disproportionate percentage of jobs in the clean economy are staffed by workers with relatively little formal education in moderately well-paying “green collar” occupations.
Among regions, the South has the largest number of clean economy jobs though the West has the largest share relative to its population. Seven of the 21 states with at least 50,000 clean economy jobs are in the South. Among states, California has the highest number of clean jobs but Alaska and Oregon have the most per worker.
Most of the country’s clean economy jobs and recent growth concentrate within the largest metropolitan areas. Some 64 percent of all current clean economy jobs and 75 percent of its newer jobs created from 2003 to 2010 congregate in the nation’s 100 largest metro areas.
The clean economy permeates all of the nation’s metropolitan areas, but it manifests itself in varied configurations. Metropolitan area clean economies can be categorized into four-types: service-oriented, manufacturing, public sector, and balanced. New York, through mass transit, embodies a service orientation; so does San Francisco through professional services and Las Vegas through architectural services. Many Midwestern and Southern metros like Louisville; Cleveland; Greenville, SC; and Little Rock—but also San Jose in the West—host clean economies that are heavily manufacturing oriented. State capitals are among those with a disproportionate share of clean jobs in the public sector (e.g. Harrisburg, Sacramento, Raleigh, and Springfield). Finally, some metros—such as Atlanta; Salt Lake City; Portland, OR; and Los Angeles— balance multi-dimensional clean economies.
Strong industry clusters boost metros’ growth performance in the clean economy. Clustering entails proximity to businesses in similar or related industries. Establishments located in counties containing a significant number of jobs from other establishments in the same segment grew much faster than more isolated establishments from 2003 to 2010. Overall, clustered establishments grew at a rate that was 1.4 percentage points faster each year than non-clustered (more isolated) establishments. Examples include professional environmental services in Houston, solar photovoltaic in Los Angeles, fuel cells in Boston, and wind in Chicago.
The measurements and trends presented here offer a mixed picture of a diverse array of environmentally-oriented industry segments growing modestly even as a sub-set of clean energy, energy efficiency, and related segments grow much faster than the nation (albeit from a small base) and in ways that are producing a desirable array of jobs, including in manufacturing and export-oriented fields.
As to what governments, policymakers, and regional leaders should do to catalyze faster and broader growth across the U.S. clean economy, it is clear that the private sector will play the lead role, but governments have a role too. In this connection, the fact that significant policy uncertainties and gaps are weakening market demand for clean economy goods and services, chilling finance, and raising questions about the clean innovation pipeline reinforces the need for engagement and reform. Not only are other nations bidding to secure global production and the jobs that come with it but the United States currently risks failing to exploit growing world demand. And so this report concludes that vigorous private sector-led growth needs to be co-promoted through complementary engagements by all levels of the nation’s federal system to ensure the existence of well-structured markets, a favorable investment climate, and a rich stock of cutting-edge technology—as well as strong regional cast to all efforts. Along these lines, the report recommends that governments help:
Scale up the market by taking steps to catalyze vibrant domestic demand for low-carbon and environmentally-oriented goods and services. Intensified “green” procurement efforts by all levels of government are one such market-making engagement. But there are others. Congress and the federal government could help by putting a price on carbon, passing a national clean energy standard (CES), and moving to ensure more rational cost recovery on new transmission links for the delivery of renewable energy to urban load centers. States can adopt or strengthen their own clean energy standards, reduce the initial costs of energy efficiency and renewable energy adoption, and pursue electricity market reform to facilitate the use of clean and efficient solutions. And localities can also support adoption by expediting permitting for green projects, adopting green building and other standards, and adopting innovative financing tools to reduce the upfront costs of investing in clean technologies.
Ensure adequate finance by moving to address the serious shortage of affordable, risk-tolerant, and larger-scale capital that now impedes the scale-up of numerous clean economy industry segments. On this front Congress should create an emerging technology deployment finance entity to address the commercialization “Valley of Death” and also work to rationalize and reform the myriad tax provisions and incentives that currently encourage capital investments in clean economy projects. States, for their part, can supplement private lending activity by providing guarantees and participating loans or initial capital for revolving loan funds targeting clean economy projects using new or improved technologies. And for that matter regions and localities can also help narrow the deployment finance gap by helping to reduce the costs and uncertainty of projects by expediting their physical build-out, whether by managing zoning and permitting issues or even pre-approving sites.
Drive innovation by investing both more and differently in the clean economy innovation system. With the needed major scale-up of investment levels unlikely for now, Congress at least needs to embrace continued incremental growth of key energy and environmental research, development, and demonstration (RD&D) budgets. At the same time, Congress should continue its recent institutional experimentation through measured expansion of such recent start-ups as the Energy Frontier Research Centers, ARPA-E, and Energy Innovation Hubs programs. Two worthy additional experiments would be the creation of a water sciences innovation center and the establishment of a regional clean economy consortia initiative. States can also advance the clean economy through maintaining and expanding their own RD&D efforts, perhaps by tapping state clean energy funds where they exist. All should be focused and prioritized through a rigorous, data-driven analysis of the nature, growth, and strengths of local clean economy innovation clusters.
In addition, the “Sizing the Clean Economy“ emphasizes that in working on each of these fronts federal, state, and regional leaders need to:
Focus on regions, meaning that all parties need to place detailed knowledge of local industry dynamics and regional growth strategies near the center of efforts to advance the clean economy. While the federal government should increase its investment in new regional innovation and industry cluster programs such as the Economic Development Administration’s i6 Green Challenge, states should work to improve the information base about local clean economy industry clusters and move to support regionally crafted initiatives for advancing them. Regional actors, meanwhile, should take the lead in using data and analysis to understand the local clean economy in detail; identify competitive strengths; and then move to formulate strong, “bottom up” strategies for overcoming key clusters’ binding constraints. Employing cluster intelligence and strategy to design and tune regional workforce development strategies will be a critical regional priority.
The measurements, trends, and discussions offered here provide an encouraging but also challenging assessment of the ongoing development of the clean economy in the United States and its regions. In many respects, the analysis warrants excitement. As the nation continues to search for new sources of high-quality growth, the present findings depict a sizable and diverse array of industry segments that is—in key private-sector areas—expanding rapidly at a time of sluggish national growth. With smart policy support, broader, more rapid growth seems possible. At the same time, however, the information presented here is challenging, most notably because the growth of the clean economy has almost certainly been depressed by significant policy problems and uncertainties.
That question is: Will the nation marshal the will to make the most of those industries?
Dec
Crosscut: Feds are Key to Sustainable Development
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: David Warm, Crosscut, December 18, 2011. David Warm is Executive Director of the Mid-America Regional Council, the metropolitan planning organization for the Kansas City area. Through very small expenditures, federal agencies can promote cooperation within a region on everything from climate change to economic growth.
Across America, regional communities are actively envisioning and investing in new patterns of sustainable growth and development that aim to promote economic competitiveness, environmental integrity and social opportunity. For the most part, these efforts are homegrown, prompted by a host of new market forces, social realities and environmental constraints.
In recent years, the federal government has stepped up its role in this process, bringing engaged leadership, yet also prompting questions about whether it should be involved in this arena. From my perspective, the answer is clear: federal leadership in fostering sustainable development is important to both the interests of the federal government and to the health of the nation.
There is a clear and compelling federal interest in promoting sustainable development as a proactive strategy to target and leverage federal investments in infrastructure, innovation, and human capacity, as a protective strategy to guard the efficacy of federal assets and investments, and as a preemptive strategy to minimize the need to expend federal resources to mitigate the environmental, social and economic consequences of inefficient and unsustainable development practices.
Progress in almost every federal policy area — transportation, air quality, water resources, public health, agriculture, education, management of federal lands and military bases, housing, social welfare, workforce development — is advanced if federal investments are aligned with sound strategies for the sustainable development of the places in which investments are made.
In addition, the federal government has a direct interest in creating a more competitive economy. The nation’s economic performance is essentially determined by the health of metropolitan and regional economies. Regions that grow in ways that are fiscally sustainable, have effective infrastructure systems, and minimize social disparities perform better and contribute more to national performance.
Yet, few formal structures or mechanisms exist for creating and implementing effective regional growth strategies. American regions are ill-equipped to address the complex challenges of our national future — challenges that range from energy independence, climate change, and global competition to concentrated poverty, traffic gridlock, and the housing market collapse. All of these issues are interrelated, and all of them are profoundly affected by how regions grow.
It is imperative to our national future that American regions grow better. We need to build regions that waste fewer natural resources, create more opportunity, and develop more efficient places that are economically competitive.
To achieve this, federal leadership is both necessary and effective. Federal leadership helps drive policy innovation, promulgate best practices, create networks across regions that broaden awareness and consensus, and align policies, plans, and programs. Competitive federal planning grant programs consistently demonstrate that even small levels of funding are powerful incentives for complex regions to develop cooperative strategies that transcend political and institutional boundaries.
Of course, it is important that the federal government not only supports sustainable development, but that it does so in ways that are effective. The Housing and Urban Development (HUD) Sustainable Communities Initiative is a thoughtful and promising approach. It promotes community-driven planning processes and community-generated solutions. It emphasizes outcomes over means, and it fosters integration of interrelated but traditionally isolated policies in areas such as land use, transportation, workforce and economic development, and infrastructure investments.
Read full article here.
This article is distributed by Citiwire.net.
Dec
Mahesh Konduru: A Historical Perspective of Energy Subsidies
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: Mahesh Konduru, Xconomy, December 12, 2011.
As we turn the page on the year 2011, there is no shortage of topics about which the entire world seems to be debating. One that interests me the most is the renewed debate on the role of government in the energy sector, specifically in the United States. Budget shortages, deficit increases, front-page analysis of public-backed private enterprises, and a particularly bitter political climate have combined to push this topic to the forefront more so in 2011 than in recent years. It’s as though we are back in the smoky classrooms of the University of Chicago in the ‘50s and ‘60s where economists engaged in frequent Keynes Vs. Friedman (Milton not Thomas, mind you!) debates.
Energy is always a popular topic in the U.S., given its strategic importance to national security. All this recent debating has been interesting to follow but a bit confusing. Economists, reporters, business folk, and politicians do not seem to agree on what constitutes a government subsidy, let alone which sub-sector is the recipient of how much. While I do not want to take any sides, I thought it would be worthwhile to examine what constitutes a government subsidy, and what subsidies and how much were provided by the U.S. government historically.
As I began to think about what sectors to focus on, it made sense to examine those that have been of significant strategic importance to U.S. economic growth in the past. The rise of the U.S. to be the largest economy in the world was driven to a large extent by what some refer to as the second industrial revolution constituting the rise of the railroad, steel making, telecommunications, petroleum, and the automobile industries. This article attempts to capture the subsidies provided by the U.S. government to some of these industries at different stages of their growth cycle.
What is an energy subsidy?
I am no economist, but it seems to me that we can all agree on what constitutes a government subsidy without too much debate. Table 1 (below) attempts to summarize the different forms that energy subsidies can take. Most of these subsidy types are immediately recognizable. The “type” that has generated much debate so far is the “Failure to include Externality Costs.” No matter where you stand on the climate change debate, it is not that hard to see that pollution has at the very least caused smog and acid rain—ask the residents of the Los Angeles from the ‘80s and, more recently, those from Beijing. There has not been a worldwide accepted externality cost measure yet, but as we move forward the chances of that happening are higher.
Regardless, it is safe to say preferential tax treatments and price controls are as much a government subsidy as a cash grant or a low-interest loan. The U.S. government wallet is a bit lighter in both cases.
Historical U.S. government subsidies
The growth of the U.S. economy after the Civil War to become the world’s largest economy was driven by increasing commercialization of technologies including the railroad, iron and steel making, petroleum, and the internal combustion engine. Besides private capital and resources, an important catalyst behind the development and growth of these industries were U.S. government subsidies at different stages. Table 2 summarizes the amounts, types, time period, and stage at which government subsidies were provided to these industries.
Railroad and transportation
U.S. railroad companies laid more than 35,000 miles of track between 1867 and 1873—more than three times that laid in the previous 30 years. Congress gave the railroad companies more than $64 million ($8 billion in 2011 US$ at 3.5 percent inflation) in loans and tax breaks and more than … Next Page »
Mahesh Konduru is currently a Principal at the Potomac Energy Fund. He is an alumnus of the MIT Sloan School of Management.
Dec
Mark Muro: Export Natural Gas? Not So Fast
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
Source: Mark Muro, New Republic, December 6, 2011.
The astonishing boom in American shale gas production continues to change everything–perceptions of fuel abundance and scarcity, projections of the U.S. energy mix, and the price environment for renewables.
Now, the glut of cheap gas is driving another revolution: the pivot of discussion from anxiety about natural gas imports to debates about whether to export the fuel–something that requires approvals from the Department of Energy.
Michael Levi of the Council on Foreign Relations–who isn’t sure where he comes down on the new conundrum–has nicely articulated a number of possible complications to the standard argument that the United States should clearly export what is suddenly cheap here to European and Asian countries where prices are much higher.
Levi worries that exporting gas might increase the volatility of U.S. prices for the fuel. Likewise, he worries that price increases driven by exporting might impact domestic consumers more than they benefit producers and limit how much the United States is able and willing to cut its own greenhouse gas emissions–something it needs to do in order to be able to negotiate emissions cuts in developing nations. At the same time, Levi conversely believes there may be an environmental case for sending gas abroad since there are few cheap opportunities to substitute natural gas for oil in the U.S. and many abroad (though some of us would disagree on the latter point).
At any rate, these points are good, and the question of exporting is definitely layered. However, for all that I would like to add another perspective.
My view flows from the emphasis at the Metropolitan Policy Program on the long-run need to restructure the U.S. economy and move toward higher-value production and export activities.
Along these lines, I would place the overall well-being of higher-order U.S. industrial production at the top of my priority list, and consider the benefits of cheap natural gas to the growth and health of the U.S. economy. To be sure, having companies like Cheniere Energy liquefy and export natural gas to cash in on the spread between low U.S. prices and much higher European and Asian ones would allow U.S. producers to reap a bonanza and help cut into the U.S. trade deficit.
Jan
EPA Administrator Lisa Jackson Meets With Cleantech Executives
Posted by Tom Ranken | No Comments | Categories: Commentary, Complete Digest
By Tom Ranken, Washington Clean Technology Alliance
Since being named President Obama’s cabinet member in charge of environmental protection, EPA Administrator Lisa P. Jackson leads federal efforts to protect the environment. She and a staff of more than 18,000 professionals work to develop the nation’s green economy, address health threats from pollution in our air, water, and land, and renew the public’s trust in the EPA. Jackson is a summa cum laude graduate of Tulane and earned a master’s degree in chemical engineering from Princeton. She started with the EPA as a staff-level scientist in 1987 and has spent the majority of her career working in in New York. In 2002, Jackson joined the New Jersey Department of Environmental Protection and was appointed Commissioner of the agency in 2006. Jackson lives in Washington D.C. with her husband, Kenny, and two sons, Marcus and Brian.
In Seattle, Jackson toured EnerG2, a Seattle-based battery technology company, and spoke at a town hall meeting at the University of Washington.
In between those public meetings, Jackson met with a small group of leaders interested in the environment and the development of cleantech businesses at the University of Washington. Acting as hosts were EPA Regional Administrator Dennis McLerran, Seattle Mayor Mike McGinn, and executives from the University of Washington. WCTA Board members David Allen (McKinstry), Anson Fatland (Washington State University), Linden Rhoads (University of Washington Center for Commercialization) were present, as was I. Other WCTA members represented included Puget Sound Energy and Stoel Rives. The session opened with brief remarks from the Administrator, followed by short comments from each of the participants about issues of concern, then open discussion.
Jackson emphasized the Administration’s commitment to rebuilding the nation’s economy and protecting the environment. She discussed the President’s emphasis on equity, “fair share” wealth distribution, and assisting the middle class. She reiterated that the Recovery Act had created or saved 3.2 million jobs and helped create companies like EnerG2. She noted that imported oil had decreased and the importance of manufacturing to the US economy, which needs to be nimble enough to support the technologies of the future. She reiterated the Administration’s support for higher education.
Seattle area leaders emphasized the need to support technology development, entrepreneurs, and commercialization in order to grow companies, products and services, and new jobs. Environmental regulation that is stable adds to investor confidence and encourages private investment. Jackson was urged to find ways to reward efforts that go above the norm, and not just focus on regulating violations of policy. Several participants voiced support for more funding for cleantech business development—though all in the room understood the budget pressures in the federal government.
I was able to add brief comments emphasizing:
Administrator Jackson emphasized that regulation can created new business markets. While she said that the EPA would not regulate sustainability, she encouraged incorporating sustainability into business operations. The Holy Grail, she said, will be when we begin to think about the life cycle of products from initial development all the way to disposal.
More information: Ross MacFarlane, Sr. Advisor, Business Partnerships, Climate Solutions, Jackson Doubles Down on Clean Energy, January 27, 2012 | Gary Chittim, KING 5 News, EPA chief comes to Seattle, vows job growth, January 25, 2012.