World is Green

Business Pundit asks the question, Will Products That Enable Energy Independence Be Big Business?

While the Micro Fueler product certainly isn’t cheap, and may or may not succeed, it does raise an interesting question: do products like this one, which would help to decentralize the source of energy in the US, have the potential to generate big profits?

A real interesting one. Past experience shows that centralization provides economies of scale, efficient production and better utilization of resources for providing energy. However, the downsides are flexibility, costs and the possibility of a large breakdown in case of any downtime.

Decentralization can be helpful to check out new products, can work in remote areas where the grid is not available. The other possibility is “non-consumers” like villages in India. Now, the question is of profitability.

I think that decentralization is a phase that will be strong between now and the clean energy future. How long is that? we do not know. Depending on the market needs, the cost of implementation and the break-even number for the products, these decentralized energy products may be profitable. But, there are lots of variables to work with.

Atanu looks at the global energy needs in the future and analyses the option of using solar or nuclear energy for India and concludes:

As far as I am concerned, the answer to the question–solar or nuclear–is a no-brainer. It has to be solar. Otherwise India is up the proverbial creek without a paddle.

Slashdot points to an article by Joe Romm, who is considered “one of the world’s leading experts on clean energy, advanced vehicles, energy security, and greenhouse gas mitigation” discussing the merits of solar thermal energy.

Frankly, I have never seen a better article on this and is an eye opener to me.

Mr. Romm understands the issue very clearly because the title of the article is “The technology that will save humanity” and not the other way round of saving the Earth. As Atanu Dey pointed out to me sometime back, it is us; humans; who need saving and not the Earth.

Romm after the excellent start, goes on to explain the constraints of a good carbon free source of energy.

He then goes on to provide a good history of the technology and its use in the last century and the developments in this century.

Solar has the biggest potential of all and looks like thermal electricity is better than PV.

The Tata Mundra power project has been provided the necessary loans and subsidy by the IFC to start the project. As I argued yesterday in Coal power or no power, the power plants need to be built.

Dot Earth considers the dilemma and provides more stark numbers.

India faces power shortages that leave more than 400 million people without access to electricity, mainly in poor rural areas. The country needs to expand generation capacity by 160,000 megawatts over the next decade, and this new project helps address this gap.

As Michael Wines reported last year, the 700 million people of sub-Saharan Africa outside of South Africa have access to the same amount of electricity used by the 38 million people of Poland.

Dot Earth concludes, “Is all of this bad? If you’re one of many climate scientists foreseeing calamity, yes. If you’re a village kid in rural India looking for a light to read by, no.”

Sreenivas Ghatty points me to a interview with Thomas M. Connelly, Executive Vice President & Chief Innovation Officer of DuPont. The main important part of the interview is the discussion on the food vs fuel debate in bio fuels.

But how is it that DuPont, which thinks much ahead of others, was caught on the wrong foot on this issue of using food crops?

It is not a question we did not recognise. We thought the timescale on which we will move there would be different. Keep in mind, for example, that certain other agricultural commodities were trading at low prices for decades. And frankly, many farmers were looking for additional markets for their products.

So while we recognised that in time the supply trends would become a limiting factor, that the grand plan would accelerate in a matter of five years we never anticipated. We thought it would be at least ten years. The pace at which this has been progressing has been surprising to us.

I think it is because of the global emphasis on climate change, run up in the prices of petroleum. All these are pushing us to non-food crop sources of carbon material for the production of fuel.

I should say we anticipated the direction but not the speed at which we would reach there.

This is the interesting part. How fast the food prices have gone up and the increasing ban on exports from various countries. In some cases, countries like India are ready to sacrifice growth to curb food inflation.

The Wall Street Journal chimes in on the climate change opportunity. (Hat tip: Crikey)

…If you’re worried that stopping global warming will wreck the economy, you’re looking at this all wrong. Solving global warming will be an added cost, yes – but a bargain compared with the economic cost of unchecked climate change. And fixing this problem will create an historic economic opportunity.

Energy is the biggest business in the world, “the mother of all markets,” says venture capitalist John Doerr, Google’s first funder. The winners of the race to reinvent energy will not only save the planet, but will also make megafortunes.

[...]

A Silicon Valley firm, Innovalight, has figured out a way to harvest solar energy much more cheaply than present technology allows by dissolving silicon nanocrystals in ink, which will ultimately be printed onto roof panels like we print ink onto paper. Using a platform they developed as postdoctoral students at Berkeley, the founding scientists of a company called Amyris have re-engineered yeast to ferment sugar into pure hydrocarbon fuels. Unlike ethanol, the fuel has the energy density of gasoline (or jet fuel, if that’s what they program the yeast to produce) and can be shipped through existing pipelines and pumped into any car now on the road.

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Under a cap-and-trade regime, Congress will set limits on greenhouse gas pollution, and ratchet down those limits over time. Congress won’t dictate to business which technologies to use – the marketplace will determine the ones that work best at the lowest cost. Cap-and-trade is a proven approach. When applied to acid rain pollution in the 1980s, it solved the problem faster and cheaper than anyone thought possible.

Global warming skeptics notwithstanding, fixing global warming won’t be a drain on the economy. On the contrary, it will unleash one of the greatest floods of new wealth in history. When Congress finally acts, America’s entrepreneurs and inventors will find the capital they need to solve global warming – and a lot of people will make a killing.

Six Environmental groups, Environmental Defense Fund, Friends of the Earth US, National Wildlife Federation, Bretton Woods Project and the International Accountability Project are fighting the World bank to stop providing a subsidy for the construction of the Tata Mundra coal plant which will provide electricity to 16 million people in 5 states in western and northern India.

The IFC says that the Tata Mundra Project (PPT)

• will have amongst the lowest GHG emission rates globally - lower by 40%, 18% and 16% compared to the average GHG emission rate of coal based plants in India, across the globe and OECD, respectively

• first supercritical project sets a precedent for efficient coal usage: consumes 1.7 million tons of coal less per year than traditional subcritical plants of comparable size

The environmental groups want to consider the costs to the environment and have suggested wind and solar technologies as alternative to the coal plant. The coal plant would cost about $4.2 billion with the World bank providing a subsidy of $450 million. The wind or solar alternatives would cost around $24 billion for the same capacity.

Clearly, coal is the cheapest option at this point in time.

The question that these groups need to consider is this - what happens when there is no power? What are the costs and benefits of providing the least cost power to poor people in a developing country to providing no power at all? Who is working on the side of the people?

The following image from the German Advisory Council on Global Change’ provides a good idea of the countries without power.

The interesting option is the reliance of people on biomass. In some ways Coal may be a better option.

It is a very clear case that development around the world has been due to the emergence of cheap power. What these environmentalists miss in the entire picture is the case for the poor people to come out of poverty using energy. What about the person who dies since there was no electricity in the hospital? What about the child who cannot study because of the lack of electricity?

Interestingly, there are other people supporting the environmental groups. For example, Sreekumar Raghavan at the International Business Times. He provides examples of countries like Australia and the US where there is a movement towards not supporting coal powered plants unless there is a carbon capture mechanism. That is a really good initiative. However, he misses the point. Firstly, Australia and the US do not have millions of people without electricity in their countries. If that is the case, they would have gone ahead with the coal powered plant like the UK has done recently. Also, the US and Australia are highly dependent on coal powered plants. 75% of Australia’s electricity comes from coal.  Second, the per capita GDP of these countries are way above India. There is no comparison at all. It is foolish to think that India can solve its poverty issues without abundant and cheap energy.

Robert Zoellick, the president of World Bank,  makes an important point. He said, “…that if developing nations are deprived of energy it will be counter productive and a setback for the larger issues of climate change.” Mr. Raghavan calls this a weak defense. However, it is he who needs to understand that this is an important argument. The capacity to fight and adapt to climate change is dependent on the ability of nations to develop economically. And to develop economically, we need to have cheap and abundant energy.

There is another argument too. The IPCC predictions for future increases in CO2 emissions have already considered the growth of transport, energy and other emissions in their calculations. This growth would mean the building up of coal powered plants and small cars like Nano. If the cuts suggested by IPCC are to be followed by the world, then there should be no opposition to the current growth of power and CO2 for developing countries.

Well, the point is simple. Coal power or no power. Which is better?

This is the new blue ocean strategy. Find a business/service/product which uses environmental resources (electricity being the biggest one), figure out a way to create new solutions to decrease their resource use and then add the green tag for branding. As an addition, if you can provide measuring systems, you have another revenue source.

The greening of data centers seems to go the same way.

ZdNet Australia has a new article on this space.

Being green, in terms of IT and datacentres, only very superficially has anything to do with saving the environment. In reality it is about cold, hard cash — and how to spend less of it.

CIOs are facing a challenge. There is a relentless demand for more powerful datacentres and the cost of power is increasing. Combine this with increasingly strict environmental laws and the issue becomes clear — IT needs to do more with less electricity.
[...]
In order to meet these energy efficiency challenges, a series of innovations has sprung up, centred on hardware, software and datacentre design. The champion of these innovations is virtualisation.
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Kumar describes a scenario in which a virtualised server moved from performing at 10 to 20 percent of its capacity to more than 80 percent capacity.

“In real power terms, a 300 Watt server which was running at 20 Watts is actually now running at 280 Watts. You are reducing the footprint but putting in more processing power, so the power per footprint has gone up,” Kumar said.

[...]

The sudden rise in green IT has created opportunities for vendors and business to profit from this blossoming market. Recent research from analyst firm Forrester has predicted that the global market for green IT will peak at US$4.8 billion in 2013, and then decline thereafter — as businesses reach peak efficiency.

Analyst group S2 intelligence predicts a potential market in “green accounting“, where firms pay to accurately measure their environmental impact. Such measurement would likely be software based, and would help to satisfy government regulation, customers and trading partners.

New opportunities beckon.

Biofuels are a growing area of new renewable fuels to satisfy the growing demand for energy. We have had reports of biofuels increasing cost of food, enabling deforestation to grow them, life cycle costs being higher than fossil fuels. Apart from understanding life cycle costs, what we do know is that there can be unintended consequences when taking complex actions.

Well, Sreenivas Ghatty, sends me a new study from the US Department of Energy (DOE) and US Department of Agriculture (USDA) on a Biodiesel Lifecycle Inventory Study which is a “comprehensive “cradle to grave” inventory of materials used, energy resources consumed and air, water and solid waste emissions generated by petroleum diesel fuels and biodiesel in order to compare the total “lifecycle” costs and benefits of each of the fuels.”

The findings:

In terms of effective use of fossil energy resources, biodiesel yields around 3.2 units of fuel product for every unit of fossil energy consumed in the lifecycle. By contrast, petroleum diesel’s life cycle yields only 0.83 units of fuel product per unit of fossil energy consumed. Such measures confirm the “renewable” nature of biodiesel. ‘The report also notes: “On the basis of fossil energy inputs, biodiesel enhances the effective utilisation of this finite energy source.”

[...]

The overall lifecycle emissions of carbon monoxide (a poisonous gas and a contributing factor in the localized formation of smog and ozone) from biodiesel are 35 per cent lower than overall carbon monoxide emissions from diesel. Biodiesel also reduces bus exhaust-pipe emissions of carbon monoxide by 46 per cent. The study observes: “Biodiesel could, therefore, be an effective tool for mitigating CO.”

Well, the quest continues to find the right answer. However, there are some important aspects of the issue.

Bio fuels are mainly categorized into bio ethanol and bio diesel. Ethanol has been making a lot of noise, but bio diesel has great potential.

Firstly, the food stocks that we use for the production of the fuel. Does it come from perennial trees like Jatropha and Pongamia or does it come from Corn and Sugarcane? In the later case, the food pyramid is disturbed. In the former case, we have a new cash crop to grow.

Second, whether the crops are grown on already available arable land or through deforestation of current grasslands and/or forests as we have been seeing in South East Asia. This should include taking of soil erosion and bio diversity loss.

Third, the method of production needs to be ecologically friendly.

Fourth, there can be a good case for local economic development opportunities and for farmers to utilize unused land.

I think the debate will continue for sometime now but there is a need for an alternative fuel and for all its problems, biofuels still will have a role to play.

One of the clean tech areas of the future is Water. Allianz has launched a new fund which will target this area across the world.

“Less than 0.007% of all the water in the world is potable, or safe for consumption,¹ yet the demand for fresh water is steadily increasing,” said Bozena Jankowska, portfolio manager of the Allianz RCM Global Water Fund. “Solving this global water challenge demands a long-term effort from institutions around the world which we believe will require significant investment from the private sector.”

The Fund will seek long-term capital appreciation by investing in a portfolio of companies that are substantially engaged in water-related activities that relate to the quality or availability of or demand for potable and non-potable water. The following are included among these activities:

• Water production, storage, transport and distribution;
• Water supply-enhancing or water demand-reducing technologies and materials;
• Water planning, control and research;
• Water conditioning, such as filtering, desalination, disinfection and purification;
• Sewage and liquid waste treatment; and
• Water delivery-related equipment and technology, consulting or engineering services relating to any of the above-mentioned activities.