The good news is that his tests show he has 24 hours to live.

The patient asks, "What's the bad news?"

To which the doctor replies, "I meant to tell you about this yesterday."

Timing is everything, my friends.

And while jokes about bad timing can certainly give you a good laugh, there's nothing funny about it when you're at the losing end of a poorly-timed trade...

I certainly got a dose of that bitter pill when I first began studying energy markets back in the early 1990s.

You see, the more I read and the more I learned, the more I was convinced that this very dangerous and unsustainable fossil fuel foundation on which our energy economy was built would ultimately leave us vulnerable to economic and environmental catastrophe.

There was no swaying my belief that alternative energy solutions were the only way by which we could avert disaster. So I began sharing what I had learned, and I also jumped on a few early alternative energy startups that, well, went belly up.

Now understand that these were not bad companies...

Management was always top-notch; the technology was about as advanced as it came back then; there was definitely some big money backing these operations. In fact, most of the guys I knew back then are now major players in the alternative energy industry.

But none of that mattered back then. Because, while it was obvious to me that we would not be able to quench our future thirst for energy with only conventional fossil fuel resources, no one else seemed to know it — or even cared to discuss it.

The fact is back in 1993-1994, you would've been hard-pressed to find more than a dozen investors who knew about peak oil, the liquidation of natural capital, or the billions in subsidies that have kept the fossil fuel machine purring for all these years.

You weren't going to read about this stuff in Newsweek; you weren't going to hear it from the major news organizations, and you know damn well the politicians weren't going to bring it up.

But all that has changed. And today, there's a wealth of data available for any investor willing to take the time to do the research. Not to mention, literally hundreds of alternative energy stocks to choose from.

Of course, there is one thing that hasn't changed — and that's the importance of timing.

Is the Timing Right for these Green Chips?

In 2009, timing allowed us to help a lot of investors make a lot of money. Especially in energy efficiency, where our Comverge (NASDAQ: COMV) play delivered gains in excess of 145.5%, and our EnerNOC (NASDAQ:ENOC) play finished the year with a gain of 321.07%.

But as the year came to close, I began cautioning against a market that was just getting too hot — especially considering the still very volatile global economy.

This is the reason editors Nick Hodge, Sam Hopkins, and I have only provided coverage on a few stocks so far this year.

Bottom line: The timing simply hasn't been right for the kind of buying spree we witnessed last year after the market bottomed out.

But it's getting pretty damn close again. Especially in solar, where an overreaction to a German feed-in tariff cut put additional downward pressure on a broader market-driven decline...

It was a double whammy that has pushed a number of quality solar stocks down to some pretty attractive levels.

Especially the Chinese players.

You see, while a cut in the German feed-in tariff (which is absolutely necessary if you want to avoid a massive bubble) will not make life easy for German manufacturers, the Chinese manufacturers — with their significant pricing advantages — will inevitably benefit from new market share.

The first half of this year will still be a bit bumpy. But by the end of the year, it will be many of these Chinese players profiting big time from Germany's solar market — this, by the way, is not insignificant.

This is a very pro-solar country, representing about 50 percent of the global market for photovoltaics (oddly enough with nowhere near the solar potential as in the United States), a pro-solar government, and pro-solar banks with relatively deep pockets for financing.

So in an effort to capitalize on what is sure to be a continuation of China's solar dominance going forward, we're looking to pick up shares of the following Chinese solar stocks on major dips:

• Yingli Green Energy (NYSE: YGE)

• JA Solar (NASDAQ: JASO)

• Canadian Solar (NASDAW: CSIQ)

• Suntech Power (NYSE: STP)

• Trina Solar (NYSE: TSL)

At current levels, I have little doubt that these stocks will deliver gains of anywhere between 10 to 30 percent by summer — assuming the market doesn't implode again. And for sake of clarification, I wouldn't necessarily cross that off as a possibility, either.

Again, it's all about timing.

But while it's impossible to pinpoint the bottom with complete accuracy, it doesn't take a rocket scientist to know a bargain when you see one.

And as we learned last year, those who are in it for the long haul — and can exercise a little patience — will be rewarded.

To a new way of life, and a new generation of wealth...

Jeff

Though fracking has been around for decades, drilling companies are now using it in conjunction with a horizontal drilling technique.

Fracking a horizontal well costs more and uses more water (up to 5 million gallons per well), but it produces more natural gas from shale than a traditional vertical well.

However, once the rock is fractured, an estimated 15-40% of the water comes back up the well, bringing with it water that is five times saltier than seawater and contaminated with sulfates and chlorides.

Conventional sewage and drinking water treatment plants are not equipped to remove these solids.

Initially, drilling companies brought the wastewater to sewage treatment plants that processed the water and released it into rivers. These rivers are the same ones that water utilities then drew drinking water from.

Environmental regulators say that high levels of salts and other minerals can kill fish and wildlife.

Not to mention what they can do to human health.

In 2008, the Monongahela River in Pennsylvania, a source of drinking water for more than 700,000 people, saw levels of dissolved solids spike above government standards.

The results?

The area's tap water became tinted, smelly, and started to leave a white film on dishes.

One 11-year-old boy, allergic to sulfates, broke out into hives that lasted several weeks until his mother realized the cause of the rash and was forced to switch him to bottled water.

In states like West Virginia and New York, fracking is on hold while companies wait for a new set of state permitting guidelines.

The Marcellus Shale, a rock bed that lies roughly 6,000 feet below Pennsylvania, West Virginia, New York, and Ohio, is believed by geologists to host the most productive natural gas field in the United States, capable of supplying the entire country with energy for up to two decades.

But, until a solution is found to the pollution this process yields, one must wonder... is it worth it?

There were facts and data aplenty, and as soon as I reread my notes and comb through the PowerPoints, I'll be passing the information along to you. But the short version is this...

The United States had better get its act together. We've still no federal renewable energy standard; no carbon pricing mechanism; no robust incentive or tariff plans to bring solar and wind to parity; no way to streamline big projects; and no 21^st century grid to handle the new generation sources that we're behind in deploying.

Meanwhile... China emerged last year as the number one wind market in the world, nearly doubling their capacity with 13 gigawatts installed. They're spending $12 million an hour ensuring not only that they win the cleantech arms race... but that they're in a position to export that technology around the globe.

China's financial commitment to cleantech is fully 3% of their GDP. The funds that have been allocated here in the States work out to about 0.5% of ours.

During a session at the conference, Hunter Jiang, president of GCL Solar Energy, didn't mince words about his country's position. After ruminating on China's laggard position throughout modern history's industrial revolutions and commenting on how automobiles and computers were cradled elsewhere, he said, "Today we are the leader."

Next year his company, GCL Solar Energy, will produce 21,000 metric tons of polysilicon. Their wafer capacity will be 2 gigawatts.

Elsewhere this week...

Brazil's Cosan (NSYE: CZZ) — GCI stock pick and world's largest ethanol and sugar processor — agreed to merge its ethanol and fuel distribution businesses with Shell in a $12 billion deal.

The European Union decided this week to hold a technology competition for capture and sequestration (CCS). The prize is nearly $6 billion, and will be taken from the bloc's carbon market.

At the World Economic Forum in Davos this week, the International Monetary Fund said it's working on plans for an international "green fund" to help developing countries deal with climate change. IMF Managing Director Dominique Strauss-Kahn said it "could climb to $100 billion a year."

In the U.S., our wake up call continued...

The International Energy Agency warned this week that we can't meet our emissions goals unless we put a price on carbon (Remember, the EU is handing out $6 billion prizes from their scheme.).

According to executive director Nobuo Tanaka: "To really achieve these (emission) targets, the U.S. certainly has to introduce carbon prices either by cap-and-trade or carbon tax. The Senate must pass this comprehensive energy and climate bill otherwise it cannot design a cap and trade system."

And while the president's budget calls for a "comprehensive market-based policy" to fight climate change, it dropped any projected revenues from such a scheme. Last year, Obama forecast revenues of $646 billion in the years 2012-2019 from an emissions trading program.

That's pretty much the last nail in the cap-and-trade coffin.

We also learned that cellulosic ethanol makers won't come close to meeting their 100 million gallon Congressional output target this year. Instead, the target will be more than 90% less at just 6.5 million gallons.

Yet, I mentioned to find a few bright spots...

The Obama budget asked Congress for a second time to end nearly $40 billion in subsidies for the oil and gas industries and to direct those funds to foster the clean energy economy.

And a report by the RES-Alliance for Jobs found that a federal RES of 25% by 2025 will create three times more jobs than other measures currently being debated by Congress. With unemployment hovering at 10%, Washington is all about jobs these days.

If energy security and reduced emissions won't get Congress to act... maybe a few million green jobs will.

Expect full coverage of the conference next week. You can catch up on the rest of this week's coverage below...

Call it like you see it,

Nick

The Best-Kept Secret of the New Decade: A Single Chinese Lithium Battery Company
The same inventor who perfected the lithium-ion batteries that enable your laptop, cell phone, and other devices to last days on a single charge has been working on his latest to capitalize on the future of transportation. Green Chip reveals this tiny Chinese battery company and what you need to know to get in on this profit opportunity.

The Monster Metal: The Most Profitable Nuclear Advancement in 50 Years
Short of nuclear fusion (which is still decades away), this discovery could prove to be the greatest advancement to the world's energy crisis in 50 years! Green Chip reveals the company with the worldwide monopoly on this monster metal — and why you should buy this stock while it's still selling for less than 20 cents.

Nuclear Energy Stocks: Nuclear Hurdles & Profitable Leaps
Energy and Capital's Nick Hodge gives readers the ins and outs of the upcoming nuclear revival, including the best way for investors to play this growing trend.

Sugar and Cellulosic Ethanol Stocks: Shell Bets Billions on Brazilian Ethanol
Editor Sam Hopkins writes from D.C. today, where he's attending the American Council on Renewable Energy's RETECH expo, and mining the showcases and speakers for new stock picks...

Green Dividend Stocks: Green Stocks That Pay Investors a Bonus
Green Chip Editor Nick Hodge discusses green dividend stocks, how to identify them, and why they're a good buy during rough times.

Cellulosic Ethanol Plant Opens: Tennessee Plant to Turn Corn Cobs into Fuel
Green Chip's Sam Hopkins reports on news of DuPont Danisco, opening a demonstration plant in Tennessee in February where cellulose-rich corn cobs and switchgrass will be converted to fuel.

Cosan stands to gain big from an efficient system of turning agricultural leftovers into fuel in its own right.

Of all the money and knowledge changing hands, one part is most important: By gaining access to Shell's distribution system, Cosan will have the luxury of ramping up production without worrying if there will be buyers.

Shell wants to fertilize Cosan's cane-based business. Cosan output now has to grow from 2 billion liters per year up to the 3 billion that will be needed to satisfy a total 4,500 fuel stations in Brazil. From there, it's up to 4 and 5 billion liters annually and on to making ethanol a global commodity.

(Sugar) Ethanol as a Global Commodity

You'd be hardpressed to tell the difference between Shell and Cosan's statements on this joint venture if you removed a couple of words. Very simply, each company wants access to the other's expertise. "Cosan represents the best entry to sustainable biofuels in the market — the best entry of scale," Shell's Mark Williams said in London.

In Sao Paulo, Cosan Chairman Rubens Ometto said the tie-up is intended to be "the step forward that was lacking, in spite of all our efforts, to make ethanol a global commodity."

The next step is one that governments and consumers in the U.S. (which maintains a tariff on foreign biofuel) and Europe will have to take in order to give Shell and Cosan a real global market for their 2-3 billion liters of increased output.

Currently, Brazil's ethanol exports aren't living up to the state's expectations. Outbound shipments of the renewable fuel jumped by 46% when the oil price surged to nearly $150 a barrel, then dropped hard as air went out of the crude price bubble.

That bull run in black gold made ethanol much more attractive... but Shell, Cosan, and anyone who's being real about the industry knows that high oil prices will do more to make ethanol a global commodity than any sales pitch or "synergy boost" ever could. Low prices also help, as evidenced in Brazil where flex-fuel vehicles now account for 90% of new cars and truck sales.

Shell's 45,000 stations around the world will pump biofuel to vehicles that can run on gasoline, ethanol, or a mixture of the two (Brazil mandates that all gasoline have at least a 20% ethanol component). As it stands, Brazilians are the end users of the vast majority of the ethanol that their country produces (about 25 billion liters annually).

And you wouldn't know it from most of the media, but ethanol is more than just an automotive matter...

Flex-Fuel Power Plants Now Opening in Brazil

On January 19, the first ethanol-fired power plant whirred into action in Brazil. National oil company Petrobras (NYSE: PBR) and American systems giant General Electric (NYSE: GE) pitched in resources to turn an existing 87 MW plant into a flex-fuel power station that can alternate between natural gas and ethanol (which are both considered alternative fuels, even though only one is renewable). GE wants to see how its turbines can be adapted to work in flex-fuel plants in Brazil and in developed countries like Japan, where clean-burning power plants are gaining momentum.

My top takeaway from the GE/Petrobras collaboration on this flex-fuel plant in the Brazilian state of Minas Gerais is the following: Brazil's water-dependent hydroelectric infrastructure teeters during the dry season in places where natural gas isn't easily accessible.

It just so happens that wind power peaks at the opposite time of the year as the water in running rivers that drives dam-based generation. Ethanol and wind could supplant natural gas as the primary alternative source of electricity generation during the dry season in Brazil and other countries with similar climate.

President Luiz Inacio Lula da Silva said earlier this week in the Brazilian press that Brazil could be self-sufficient in natural gas after several pre-salt (read: incredibly deep) offshore fossil fuel pockets are tapped. That capacity is at least five years away. Ethanol is there now, and after wind power auctions started last December, 773 wind turbines will be turning across Brazil by 2012.

Shell, Petrobras, GE, and Cosan will surely push hard to get the government in Brasilia to initiate a nationwide "ethanol electricity" campaign to ensure that oil and automotive fuel aren't the key determinants of sugar ethanol's success.

As in so many other areas of the world, those communities that are now underserved by fossil fuels can benefit most from such clean energy advances.

Washington Waxes Brazilian

Brazil provides us with an example of a rapidly developing, energy-hungry economy in the Western Hemisphere where biofuel is a fact of life. Biofuel is also an investment imperative for energy investors and companies that want to make money in Brazil. As an important part of the #3 economy in the Americas, ethanol can't be ignored by the top dog, the United States — even if our homegrown bet (corn) wasn't as successful as we would like it to have been.

Corn ethanol will surely advance, as major crop science companies like Archer Daniels Midland (NYSE: ADM) work hard to keep it on our energy menu, but any American move to advance ethanol should include a couple of calls to Brazil.

The Obama Administration completed its revised Renewable Fuels Standard (RFS2) this week. Involving the EPA, Congress, the Department of Agriculture, and college researchers, RFS2 will move towards a national goal of 36 billion gallons of biofuel production by 2022.

I'll be gauging investor response to RFS2 here, and next week you can expect a full update on what the White House is doing.

Regards,

Sam Hopkins

P.S. We saw Cosan's potential way back in 2007 and told Green Chip International readers all about it. Shell has validated our optimism lately, and so has the stock market. Take a peek at GCI today to find out more about tomorrow's billion-dollar clean energy winners.

Specifically, they want to know about green dividend stocks.

Of course, dividend stocks are nothing new in the investment world. But in case you're not familiar, here's a brief recap.

What are Dividend Stocks?

When a company turns a profit, it has a few options:

• It can pay down debt;

• It can repurchase shares;

• It can reinvest in the business; or

• It can share the profit with shareholders.

When a company chooses to share its profits with shareholders, it pays a dividend.

The dividend can vary in percentage and must be approved by the company's board of directors. The amount you receive is called a dividend yield.

My colleague Steve Christ succinctly described dividend yield in a recent Wealth Daily article:

Dividend yield is simply your rate of return from dividend payouts, exclusive of any stock price appreciation. It's calculated by dividing the dividends you receive over a year's time by the price you paid for the stock.

For example, your dividend yield is 5% if you paid $20 per share, and you receive $1 per share in dividends ($1/$20) over the 12 months following your purchase.

Dividend yield, however, is not a fixed number. It changes along with the share price. For instance, say someone else buys the same stock a week later when the share price had moved up to $25.

Instead of 5%, their dividend yield would only be 4% ($1/$25).

In short, it is a cash payout that you receive for simply being a shareholder, sort of like receiving a bonus based on a company's earnings.

What's more, dividends are taxed at a much lesser rate than other income.

During times of market angst, many investors turn to dividends because they are paid regardless of the stock's performance — especially if the company has a solid history of dividend payouts.

Are There Green Dividend Stocks?

When choosing a dividend stock, you'll want to look for its annual dividend rate. For most investors, the easiest way to do this is in the Key Statistics section on Yahoo! Finance. Take Emerson Electric (NYSE: EMR) for example, the smart grid and efficiency specialist...

You'll see that it pays a $1.33 annual dividend (Rate), or 3.2% (Yield) of the current share price. That means you get $1.33 per year per share. The Yield will change based on the stock price, but the Rate will remain the same, until changed by the board of directors.

Now, some green stocks are in nascent industries like wind and solar, and haven't yet established the constant earnings and cash flow required to offer a dividend. You're probably better served by checking out larger companies like utilities, water companies, and transmission and distribution companies.

Anything above 5% yield is pretty good, but you'll want to check the company's website to see its history of payouts. General Electric (NYSE: GE), for example, has been constantly decreasing its dividend.

Here's a brief list of green dividend stocks to get you started:

• ABB (NYSE: ABB)

• ESCO Technologies (NYSE: ESE)

• Flowserve (NYSE: FLS)

• Johnson Controls (NYSE: JCI)

• Lindsay Corp. (NYSE: LNN)

• Integrys Energy (NYSE: TEG)

• Ormat Technologies (NYSE: ORA)

• United Technologies (NYSE: UTX)

• Veolia Environment (NYSE: VE)

Call it like you see it,

Nick

Using actual kernels of corn to produce ethanol fuel was deemed by most of the investing community to be too inefficient in its production to justify the process. Intensive water and land usage—as well as corn price surges and subsequent "tortilla riots" in Mexico—made corn a liability on large projects. At the beginning of 2010, we're seeing more momentum in more efficient sugarcane ethanol, and in cellulosic ethanol, which is made from plant-based agricultural waste.

DuPont Danisco, a joint venture between the American chemicals giant and a Danish company, is opening a demonstration plant in Tennessee in February where cellulose-rich corn cobs and switchgrass will be converted to fuel.

The goal is to churn out 250,000 gallons of renewable fuel each year, at a cost competitive with $90 a barrel oil. That means each gallon will need to take about $5.50 per gallon to make instead of the current $8, so DuPont Danisco is working closely with crop scientists and fuel experts to bring those input costs down.

By 2012, investors and researchers hope to reach the point where production can begin in earnest.

-Sam Hopkins

The disparity between cleantech news and stock performance couldn't be greater.

News of completed deals, capacity expansion, IPOs, and the availability of capital whirled around the wire all week... yet the sell-off continued, putting us back to November levels:

Of course, it's hard to blame investors for taking profits on a market that surged 60% since last March.

I'd like to think of it as the inverse of the "two steps back" colloquialism; this is our one step back before marching forward.

So we know that stocks have been off a bit. Here's this week's portion of the reasons they'll come back...

We learned on Monday that U.S. wind capacity surged 39% in 2009, from 25,100 MW to 35,000 MW. The 9.9 GW installed last year far surpassed the 8.4 GW installed in 2008.

More than 85,000 people now find work in the U.S. wind energy industry.

On Tuesday, General Motors continued to cement the future of electric transportation. As Chris Nelder pointed out this week (you can catch his article below), the Volt is quickly emerging as GM's flagship product — much like Toyota's Prius — and the company embraced it by announcing it will set up a $246 million plant to build electric motors.

That's on top Ford's $450 million battery plant announcement a few weeks ago.

Things were really heating up by Wednesday, before the State of the Union was even delivered.

In a major breakthrough, the U.S. Securities and Exchange Commission (SEC) voted 3-2 that "companies have a responsibility to discuss the effects of the environment and pending rules on their business." That decision should add to the value of cleantech companies while detracting from those with climate or carbon risks.

The same day, a $3.9 billion BlackRock energy fund anointed the cleantech sector, saying it's about to increase its exposure to solar stocks. More than half of the mega energy fund is now weighted in renewable energy

By Wednesday night, the wheels were really turning as the President mentioned "clean energy" or "clean technology" at least four times in his first State of the Union address.

Here's a little piece of it:

...We need to encourage American innovation. Last year, we made the largest investment in basic research funding in history, an investment — an investment that could lead to the world's cheapest solar cells or treatment that kills cancer cells but leaves healthy ones untouched.

And no area is more ripe for such innovation than energy. You can see the results of last year's investments in clean energy in the North Carolina company that will create 1,200 jobs nationwide, helping to make advanced batteries, or in the California business that will put 1,000 people to work making solar panels.

But to create more of these clean-energy jobs, we need more production, more efficiency, more incentives, and that means building a new generation of safe, clean nuclear power plants in this country...

It means making tough decisions about opening new offshore areas for oil and gas development...

It means continued investment in advanced biofuels and clean-coal technologies.

And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.

And the industrial world is taking notice of the trend. Power equipment giant Alstom declared on Thursday that it "expects demand for renewable and nuclear technologies to outstrip growth in coal and gas fired electricity projects."

I've been telling you nuclear would heat up this year...

And by the end of the week, Obama had proposed a tripling of government loan guarantees for nuclear reactors to more than $54 billion.

Look for a new Green Chip nuclear play in the coming week to take advantage.

You can catch the rest of this week's coverage below.

Call it like you see it,

Nick

Reduce Your Monthly Energy Bill by 44%: How You Can Stick it to Your Power Company
The tech behind this little company is a foolproof winner. It makes so much sense, for so many reasons, that Alternative Energy Guru Nick Hodge has no doubt everyone will be using it within the next decade.

Thank You, Mr. President: How Obama has Made Green Investors Rich
Green Chip reports: How what started as a campaign promise to be ‘greener' has become the surefire investment of our lifetime... and how those who invest appropriately are going to make an absolute fortune over the next four years.

Spain's Solar Power Market Meets Morocco: Europe Looks South for Clean Energy Growth
International Editor Sam Hopkins highlights Morocco's role in reinvigorating the Spanish solar power market and generating more local energy for North Africa.

How to Profit from Energy Efficiency: The NYSE Itself is Bullish on this Tech
Energy & Capital Editor Nick Hodge discusses the business of energy efficiency and how investors can profit as global companies optimize their operations.

Green Energy, the Belle of the Ball in 2010: The Day the World Turned from Brown to Green
Green Chip Editor Chris Nelder marks the moment when public sentiment switched from fossil fuels to green energy.

Scott Brown Energy Agenda: Will this Senator Kill Renewables?
Publisher Jeff Siegel reviews new political influence in Washington and discusses how it could impact renewables.

Seeing 2020: Part III, Kauai in the Next Decade
Contributing Green Chip Editor Jon Letman completes a three-part series as he details how climate change evokes real change in Hawaii's communities.

The following is the final installment of a three-part series that examines opportunities and challenges confronting Kauai in the new decade. Click here to read part one and part two.

KAUAI-One of the best ways to predict the future is to simply make it happen, according to David Burney, a paleoecologist and conservation director for the National Tropical Botanical Garden.

Yet at the beginning of this new decade, the future of Hawaii's wildlife includes the sobering reality that a large number of plants and animals may go extinct by 2020. Nearly 25 percent of all federally listed threatened and endangered species in the United States are native Hawaiian flora and fauna. Approximately 90 percent of native Hawaiian plants and animals exist nowhere but the Hawaiian Islands.

Already documented to be growing warmer, drier, and more prone to flooding, scientists at the University of Hawaii and elsewhere say climate change in Hawaii will impact every ecosystem from reefs and wetlands to dry, mesic, and wet forests in the highlands. In considering how these changes, combined with the advance of invasive species, will affect Hawaii's plants and animals in the next decade and beyond, Burney is blunt.

"Possibly dozens of plant species will go extinct in the next 10 years. Quite a few are incredibly close right now despite a lot of talented, innovative people focusing on conservation," Burney says. "But there are some rare species that, if recent successes in conservation strategies continue to work, may become less rare and quite a few may hold their own."

Pointing to successful recovery efforts of the nene and the recent introduction of bio-control agents to fight the erythrina gall wasp, Burney says he is hopeful but adds that more progress needs to be made in controlling invasive plants and animals. The big question, he says, is how invasive species will react to climate change.

Rapidly changing weather patterns and altered rainfall distribution will continue to be critical factors for conservation, agriculture, and ordinary life, Burney says. But he is not a proponent of "freezing in the dark," as he puts it. Instead, Burney favors progressive, pre-emptive measures to mitigate the effects of climate change.

"Conservation cannot be separated from larger, global issues," Burney says. "‘How are people going to get everything they want out of this planet?' is a huge philosophical, even theological question."

Along with the threat of extinction, Burney expresses concern about rising sea levels and coastal issues.

"The land needs to be managed like an entire pie, not just around the edges like a donut," Burney says.

He says provisions need to be made for coastal wetlands, pointing out the importance of approaching land management on the ahupuaa or watershed level.

Despite the enormous challenges facing Hawaii's wilderness and environment, Burney remains optimistic. The alternative, he says, is extreme pessimism.

"If we don't think we can deal with these problems, we won't," Burney says. "I am willing to work for it."

Another Kauai-based scientist is Chuck Blay, a sedimentary geologist and educator who is well-known for documenting the geologic character of Kauai after he walked the perimeter of the island in 1986.

Blay is accustomed to examining changes over eons, not decades. He points out that while beaches take tens to hundreds of thousands of years to form, sea level rise, beach erosion, and reef degradation bring changes in centuries or even decades.

If climate change produces more frequent and intense storms, then coastal erosion, offshore loss of sand, and subsequent stronger rip tides like those which followed Hurricanes Iwa (1982) and Iniki (1992), could become more commonplace. However, based on historical records, Blay says there is a much greater probability of a large tsunami impacting the Hawaiian Islands in the next decade or two.

"Everyone was freaked out by Iwa and Iniki, but historically hurricanes have not been as frequent as major tsunamis over the last century. Hurricanes tend to lose energy as they move into northern latitudes. Plus they have a hard time hitting these islands which are just tiny dots in the middle of an ocean that takes up half the hemisphere of the planet," Blay says.

Considering current building codes which place great emphasis on wind and hurricane tolerance, Blay urges builders, planners, and policy makers to give more consideration to the possibility of a major tsunami.

"The human species," Blay says, "is crisis-driven. We don't take care of things until we really have to. Whether it's conservation, peak oil, climate change or whatever, it's that last-minute desire to avert coming catastrophe that often motivates people."

And while Blay nor anyone else can predict natural disasters, he says it is highly probable that by 2020 there will be some sort of unpredictable global catastrophe that will make all other changes-both good and bad-seem insignificant.

Keone Kealoha is the executive director of Malama Kauai, a Kilauea-based nonprofit organization that encourages sustainable practices, relocalization, and the advancement of environmentally and socially responsible systems. Kealoha suggests that changes we make now, as a community, will minimize the adverse effects any such event could have at a later date.

The outlook of many top-tier economists is worrying Kealoha, he admits, but says that barring an unforeseen large-scale disaster, he is hopeful that at the end of the new decade people on Kauai will be living more in concert with locally available resources. He envisions the Kauai of 2020 as having a larger, better developed network of community-based resource management systems.

Kealoha points to the intersecting trajectories of diminishing natural resources, tighter controls of those resources through globalization and corporatization and the threat of climate change as creating a sense of urgency around the world. He sees one way to mitigate the impacts of any future collapse through organizing the public and recreating basic power structures.

The last decade's dramatic advances in communications technology have made it possible for pockets of like-minded people, sometimes continents apart, to exchange knowledge and information in real time to effect change. Whether it's resisting political ineffectiveness at a global climate change conference in Copenhagen, exposing police brutality in St. Paul or Tehran, or opposing an unwanted ferry in Nawiliwili Harbor, internet-based communications have enabled people to cooperate at a grassroots level like never before.

"The changes coming our way are going to be a lot bigger than we now realize," Kealoha says. He asserts that the current model of government in the U.S. is essentially broke (and broken) and doesn't believe government can live up to its potential good without changing policies that impede the flow of financial and human resources to where they are most effective.

"Ultimately I see people being the agent of change with the government falling in line behind the people," Kealoha says.

"We are going to see big chunks of the system chip off. If we have trusting community relationships and places for knowledge transfer already in place, it will be much easier to weather big system breakage, whether this means shortages of food, energy, housing materials, or other essential resources."

We are already living in a state of emergency, Kealoha says, but don't realize it because things haven't stopped yet. He points to the unsustainability of our current food import model saying, "Not everybody is going to be able to eat strawberries and blueberries whenever they want."

By the end of the new decade, Kealoha envisions people on Kauai spending a lot more time in their local communities. People will likely work, socialize, and get food closer to home.

Kealoha wants to be part of helping people on Kauai make the transition to becoming more self-sufficient, better integrated with the natural environment, and better able to withstand any future storm whether it is of internal or external origin.

"Now we are at the point where we are seeing the effects of what happens when we don't take care of that which takes care of us," Kealoha says. "Kauai is absolutely sustainable. We have all the resources here, but we are not currently managing them to fully realize all the island has to offer. We've applied a Western economic model over the top of what this place truly is-the mountains, the water, the soil-but ultimately nature will always prevail."

The system Kauai operates under now, as Kealoha sees it, is flawed. He says the current political-economic model is based on accumulation and making "the bottom line."

"I'm focused on building networks and models that work within the current framework as viable and inspiring choices that can also weather any worst-case scenario," Kealoha says.

He urges people on Kauai to make these shifts now while the changes are fun and exciting: "It feels good to take control over your own destiny. It's exciting to build a system of self-determination that offers a degree of personal sovereignty. ... If our systems collapse, these are the solutions we are going to have to find anyway. If we do it now, we're going to be that much further ahead."

**Jon Letman is a freelance writer in Hawaii. He writes about politics, society, culture and conservation on the island of Kauai. You can read the original articles here and here. 

January 2007 was such a moment, a time of palpable excitement around renewable energy. Solar, wind, and other renewable plays exploded that year, and First Solar (NASDAQ: FSLR) gained 866%.

July 2007 offered another, when the IEA had its "come-to-Jesus moment." The depletion of mature oil fields was finally out of the bag and in plain view, and it worked a sea-change on the debate about the future of oil. Fairy tales of endless growth gave way to a more earnest discussion about whether unconventional oil could replace conventional oil, which had flatlined since the end of 2004.

I marked Memorial Day 2008 as the moment when peak oil emerged from obscurity in the media, and the debate shifted from denial to serious inquiry. My intensive study of the subject, Profit from the Peak, had just been published and numerous media appearances followed where I explained what peak oil was about.

Now, anyone who is paying attention knows what it means (or at least think they know what it means), and the topic is casually included in financial and news discussions.

But those were mere eddies compared to the wave I can feel building now. It's as if all the political momentum — indeed the entire public dialogue about energy — has suddenly changed from Brown to Green.

In the wake of the failed Copenhagen talks, and with the potentially imminent death of cap-and-trade legislation, the world seems to have realized what I've been saying all along: It's better to incentivize than penalize. Focus on generating renewable energy first, and then worry about the emissions that remain.

Automobiles

Peak oil awareness has clearly motivated the auto industry to shift aggressively into electric propulsion. Toyota U.S.A. President and COO Jim Lentz said in November, "Our model on future energy is that we will probably see peak oil some time around the end of the next decade, so whether it's 2017 or 2020, it's gonna be some time in that neighborhood."

GM Vice Chairman Bob Lutz was even blunter in his keynote at the LA Auto Show in December: "Going forward, the automobile industry simply can no longer rely on oil to supply 98 percent of the world's automotive energy requirements."

Their response has been dramatic. Toyota's Prius and GM's Volt are their new flagship products. BMW, to my great relief, has abandoned its hydrogen car program and is going full-throttle into electric cars. Nissan and Mitsubishi are tooled for mass production of their electrics. Better Place, the recharging infrastructure and battery swapping play, has raised $700 million and it's not even in operation yet.

Rail

Rail is moving back onto the U.S. national agenda, with $8 billion in new grants for high speed rail announced this week as part of its $13 billion share of the federal stimulus package. Florida is expected to capture $2.5 billion of that for a high speed link from Orlando to Tampa. A $171 million Department of Transportation loan announced this week will green-light the rebuilding of San Francisco's Transbay Terminal as a high-speed rail depot while the project's $400 million federal stimulus application is reviewed.

To be sure, $8 billion is a paltry beginning-perhaps 2% of the federal commitment that will be needed to really rail-ify America. The San Francisco-Los Angeles high speed line alone will cost on the order of $40 billion. The full cost of installing high speed rail and intra-city light rail across America will be somewhere in the low trillions, it will probably take us decades, and most of the interstate links will have to be federally funded.

The stimulus money for high speed rail isn't part of some comprehensive national transportation strategy to counter the peak oil threat, because no such strategy exists. But it could be the best investment in the hastily conceived, shovel-ready jobs stimulus package, because it will give us in a critically important long-term asset.

For perspective on that $13 billion, consider that Beijing is already executing its plan to build a $556 billion high speed rail system linking nearly all its provincial cities in the next five years. The Shanghai-Beijing link alone is expected to create half a million jobs. And unlike the $779 billion in the U.S. stimulus package that will not go to rail projects, Beijing's investment will result in a permanent and absolutely vital asset.

Were the U.S. doing anything of the kind, I might never worry my weary head again about peak oil.

Wind and Grid

A study released this week by the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) showed that as much as 30% of the eastern seaboard and the Midwest could be powered by wind, and 20% could be done by 2024 — if the transmission lines existed.

NREL estimates the grid will need 20,000 new miles of backbone at a cost of around $90 billion. Building it would create around 280,000 new jobs and give us a critical long-term asset. It's a perfect example of appropriate federal investment in national infrastructure, yet it faces NIMBY opposition everywhere. A heavier hand may be required to push it through. It's good to see transmission reform legislation making its way through Congress now, but I pray it doesn't blow up into a states' rights hubbub.

Compare that to the $42 billion HVDC "super grid" that nine European countries plan to build around the North Sea that will enable all of them to use renewable power, whether it's being generated by offshore wind in Denmark, wave power in Scotland, solar power in North Africa, or hydropower in Norway. It will form the heart of a much larger, $400 billion pan-European super grid; a critical link in achieving the EU's 20% by 2020 target.

Or compare again to China, with its $217 billion investment in electric grid infrastructure from 2006 to 2010 alone.

The good news is that while building the electric infrastructure of the future isn't cheap, it isn't expensive either. The NREL study concluded that the avoided future cost of coal-fired power would more than offset the cost of the new grid infrastructure. We must assume that's before even factoring in any externalized costs, or any peak-oil adjusted estimates of the future costs.

However we'll have to move faster. NREL's 20% scenario is based on 225,000 megawatts (MW) of new wind capacity, or 16,000 MW a year through 2024. The U.S. installed only 10,000 MW of new capacity in 2009 according to the AWEA, so we'd have to post a 60% growth rate from current levels to deploy that much.

Meanwhile, ten times that — more than 100,000 MW of offshore wind capacity alone — is currently under development in Europe.

Solar

Solar power is making progress on several different fronts.

The snowball of Chinese solar manufacturers opening plants in the U.S. rolls on, with the announcement that Suntech (NYSE: STP) is building a new plant in Arizona.

Distributed local generation is making great strides. In California, the Southern California Edison utility has launched a competitive bidding process for 225 MW of rooftop solar capacity, with a project size of 1-2 MW. Another 250 MW will be purchased from independent solar developers. Utility PG&E is expected to launch a similar 500 MW offering soon. Even better, a proposed feed-in tariff for 1 to 10 MW-sized renewable projects is in the works. The progress for bellwether California in distributed generation bodes well for the rest of the country, suggesting that transmission grid support for utility-scale solar may become less of a hurdle for the industry as a whole.

Incentive programs elsewhere in the country continue to enjoy enthusiastic receptions where the price is right. A new $4 million incentive offering for residential and small commercial solar in Massachusetts was fully subscribed in the first four hours this week, reflecting a strong build-up of demand. Generous rooftop solar incentives in states like New Jersey and New York are being exhausted and replenished yearly.

Materials research in photovoltaics (PV) continues to show promise as well, in areas like cell backing materials, adhesion methods, new cell formulations and production methods, and longevity testing and hardening. PV looks well on its way to cutting costs on a Moore's Law curve.

Building efficiency is also enjoying an explosion of subsidies and new plays. Watch this space for developments in that sector.

Brown Going Down

Meanwhile, things aren't going too well for the fossil fuel sector, which is under attack on every side.

Oil remains precariously balanced on the narrow ledge of prices, as does natural gas to a lesser extent. The supply of both remains sufficient to keep the specter of shortage marginal pricing at bay. Inventories are reasonably high, and prices aren't high enough to induce new drilling for high-risk or high-cost prospects. Even so, the worsening outlook for the refining sector continues to support the price of gasoline and other finished products.

Costs remain a bit too high for the comfort of marginal producers, as evidenced by an interview with Royal Dutch Shell CEO Peter Voser in London's Financial Times this week. The company was no longer counting on growth from tar sands production, he said, and its plan to expand operations in Albert by roughly half a million barrels per day remained shelved. Conventional oil and gas drilling is their new strategic direction, simply because the costs are so much lower than for tar sands development. (This, of course, is no surprise.)

The commodities markets in general seem to be showing signs of post-traumatic stress disorder, or at the very least recency bias. The trade is overwrought on fairly inconsequential signals, and there seems to be a roughly equal balance between those expecting higher and lower prices. I'm beginning to suspect that this will be a low signal-to-noise ratio year for the commodity sector, with traders slugging it out in a narrow price range and fewer solid tradeable opportunities than the last several years offered.

Concerns over public water supply contamination from hydraulic fracking shale gas operations aren't going away, and the EPA has set up a consumer complaint hotline. We simply don't have enough information yet to know whether the issue is overblown or a serious enough problem to kill the practice. However, public sentiment isn't likely to yield to science on this issue any time soon and could dampen the enthusiasm for new shale gas development.

The effort to stop mountaintop removal in coal operations isn't going away either, and emissions control is still very much in play at the EPA.

The news is nearly all bad. The fossil fuel industry wakes up every day to a drumbeat of reports on oil spills, tanker traffic interruptions, environmental lawsuits, and so on, but their main sales pitch to the public is a weak one about jobs. Their message continues to fall hard on the consumer's ear, which is much more attuned now to the questions on long-term supply, security, and sustainability.

The Browns are looking more the lumbering, hidebound beast every day; meanwhile, a thousand alternatives sprout around them. They trumpet their investments in clean energy, but the fact remains that it still represents a small fraction of their investment in new BTUs overall.

I don't know what to call it: the Great Eye, the hive mind, the ideasphere... but it has turned and its attention is fixed on renewables. The Browns will find it hard to get any love this year, but the Greens will be the belle of the ball.

Until next time,

Chris

Note: If you want to see where the Greens gather to do business, you should join my colleagues and Green Chip International editors Sam Hopkins and Nick Hodge at the ReTech 2010 conference in Washington, D.C. taking place February 3-5. You can choose from 6 different informational tracks that will get you up to speed on all the changes taking the U.S. and global economy from Brown to Green. Check the conference website for more information.

The only reason Spain doesn't eat up the same proportion of power as its GDP would suggest is that Morocco's energy intensity (usage per unit of GDP) is highly inefficient.

Despite the current disparities between the two countries — or maybe because of them — in 2010, we will see Morocco take the baton from Spain in solar power generation plans against a backdrop of previous Spanish strength in the sector.

Over the past several years, the Spanish government in Madrid stimulated the global market for solar power modules and components with attractive subsidies. The goal with such incentives is to guarantee residential and commercial solar power customers that they won't hemorrhage money from high-cost installation and panel prices. Instead, feed-in tariff (FIT) plans for solar PV in Spain and Germany, and for wind energy in Denmark, effectively bring clean power technology down to coal or natgas prices.

In 2008, Spain saw solar power capacity jump by 380% over 2007 as the national subsidy quintupled, but at the end of that year Madrid hit the brakes. Spain dialed down its solar subsidy, put a limit on the amount of sun power it would subsidize (500 MW per year), and effectively gave whiplash to worldwide suppliers and module makers like Germany's Q-Cells and China's Yingli Green Energy (NYSE: YGE), who had expected a hungry Spanish solar market for years to come.

So many assumptions came crashing down in late '08, as the credit crisis shocked companies into deep job cuts, investors ran from the market's falling knife, and politicians looked for any tourniquet they could find.

Over a year after the you-know-what hit the solar panel, Morocco, which imports 95% of the energy it uses, is launching a bidding round to start building 500 MW in concentrating solar power (CSP).

Moroccan Energy Minister Amina Benkhadra announced that the first bidding round to build and supply the solar plant at Ourzazate will be held in late February, just over a month from now.

That auction could put Spain in the driver's seat as a primary producer rather than a primary consumer of solar power products.

Empty Land, Full of Promise

One downside of large-scale solar power that its detractors like to point out is just how much land a major array takes up. Yet the desert Southwest of the U.S., Spain's southern desert regions just across from Morocco, and Morocco itself possess vast, virtually uninhabitable areas where solar power plants make sense.

Though Morocco won't get to 500 MW overnight, the country's goal of drawing 38% of its power from five local solar projects will in turn draw money and technology from around the world. Japan — one place where they don't have much land to play with, let alone sun-soaked deserts — is putting up $7.4 million for photovoltaic plant in Morocco. That announcement came along with commitments to up Japanese involvement in water access and rural electrification in Morocco.

Greentech Media reports that Spanish companies Cuantum Solar, Siliken, and Fotowatio are moving into the U.S. market to offset domestic weakness, and we're sure those firms are willing to hop the ferry over to Morocco for new business, too.

Let's not forget that even though Morocco gets lumped in with the Middle East, North Africa is a distinct region with history and potential. At this week's World Economic Forum in Davos, Switzerland, Francis Beddington of emerging market investment house Insparo Capital told Reuters, "Not investing in Africa is like missing out on Japan and Germany in the 1950s, Southeast Asia in the 1980s and emerging markets in the 1990s."

Morocco's primary industry is textiles. It won't get anywhere beyond being the European Union's poorest southern neighbor without energy. Spain has the practical and political expertise to get Morocco off the ground and even make it part of the EU's Desertec plan to draw 15% of continental electricity from North Africa by 2050. The grid linkup technology is there (high voltage direct current HVDC), and so is the resource.

You can take a peek at the future in this Desertec map from the Club of Rome:

From Brazil to Japan to Israel, Spain, and Morocco... it's time to tie all these international experiences in together for comprehensive energy development action.

Regards,

Sam Hopkins
International Editor

P.S. From February 3-5, Nick Hodge and I will be at ReTech, the premier technology conference and exhibition in Washington, D.C. There, I'll be focused on the "International Markets and Competition" track, one of six different "courses" over 5,000 attendees will follow to get updates on the state of the global industry.

I'm looking forward to catching up with old company contacts and meeting new ones, as well as getting a clear picture of how different regions and companies are adjusting to tough financial conditions to keep their clean energy progress rolling. You read my report from the ACORE Phase II Renewable Energy Policy Forum direct from Capitol Hill this fall, and I expect the info from ReTech to be just as vital for investors. There are still spots open if you want to attend ReTech. Find out more here.

Certainly those less-than cordial messages that show up on our message board from time to time remind me of this. But rest assured those messages don't dissuade us. 

Because bottom line: When it comes to investing in energy, it's imperative to pay very close attention to what's going on in Washington. Like it or not, policy can dictate the performance of various energy sectors.

We've seen proof of this with President Obama and his alternative energy agenda.

Although despite the overwhelming evidence that proves renewables to be both environmentally and economically superior to fossil fuels — don't think for a second that the backward fossil fool mentality in Washington has gone gently into that good night just because the President's supporting the transition to clean energy.

Take Democrat Robert Byrd, for instance. The West Virginia Senator is often the first to sing the praises of coal while folks in his home state have had to sit by and watch roughly 2,000 miles of their streams be buried in mining debris, due to the highly unsustainable practice of mountaintop removal.

Or Republican Jim Inhofe, who has blatantly and unapologetically lied about the cost of climate legislation. The Oklahoma Senator has been quick to call out some climate scientists for manipulating data — yet Inhofe doesn't seem to have a problem manipulating his numbers when it suits him.

The point is, we always have to monitor the actions (and words) of those on the Hill.

Because not only can these actions (honest or dishonest) affect our portfolio, they can also deter progress on the kind of alternative energy development that will help provide a safer, cleaner, and more economically-sustainable energy economy.

And this is why we've decided to take a closer look at newly-elected Senator Scott Brown's position on energy and the environment.

Don't Rush to Judgment

He flipped the switch on the Democrats' reign in Washington. And now, many Democrats are worried that Scott Brown will put the kibosh on any kind of quality environmental and energy legislation.

Of course, this assumes that all Republicans seek to stall clean energy progress. And that's definitely not the case. Especially for those who represent states that are now home to wind farms, turbine manufacturing facilities, and geothermal power plants. You know, the types of things that provide jobs and revenue!

It also assumes that Scott Brown — because he is a Republican — has zero environmental credibility.

But that may not be the case. And rushing to judgment on something like this accomplishes little more than continued partisan bickering.

The fact is if you step back and take a look at Brown's track record, you'll find that his position on some of these issues may not actually be so black and white.

For one, Brown supported Massachusetts' Ocean Management Plan. This is a plan that sets standards for the development of offshore wind and tidal energy projects. It also provides protections for environmental resources in about 60 percent of Massachusetts' coastal waters.

However, Brown also opposes the Cape Wind Project, saying that putting turbines in that location would be like putting turbines on Boston Common. 

Well, at least he admits it's about the location and didn't try to manufacture an excuse like so many other opponents have... 

Brown also supported the 2008 Green Communities Act, which provided the Commonwealth's 25 percent by 2030 renewable portfolio standard. 

Now we know that Brown is not a supporter of Cap & Trade, but he seems to support reducing emissions through conservation efforts and by integrating more wind and solar. Of course, Brown is also a huge supporter of nuclear, which while there are no emissions issues, there are still plenty of environmental issues that are too often swept under the rug. 

Don't Blame Me, I Voted For. . .

Of course, at the end of the day what matters most is what Brown will offer going forward. We hope folks will at least give the Senator a chance before launching partisan criticisms. 

We all know that it's not uncommon for people these days to go out and print up "Don't Blame Me I Voted For..." bumper stickers or attack the other side because, well, they're on the other side. But when we talk about the environment and we talk about energy, we can't continue to waste time on such nonsense.

Because while all those flag-waving hypocrites disguised as patriots are busy throwing around empty rhetoric and Thomas Jefferson quotes, we're spending more than $500,000 every minute on foreign oil. 

And while all those talk show bullies and D.C. spin doctors continue to mock environmental sustainability efforts, we're quickly depleting our limited fresh water supplies, allowing tar sands operations and coal-fired power to take precedence over the one thing we can't live without — water.

This is NOT acceptable.

Not for the environment and not for the economy. And make no mistake about it — both are connected.

To a new way of life, and a new generation of wealth. . .

Jeff

Stocks slid this week on multiple concerns, ranging from a pullback in Chinese lending... to a new Obama bank plan... to missed blue chip earnings.

Closer to cleantech, a German solar subsidy scare and the realization that an energy bill won't be possible this year added to the selling sentiment. Of course, I've been telling you we wouldn't pass meaningful legislation this year.

The main reason an energy bill won't pass is an overambitious agenda. You can't tackle health care and energy in the same year. But the election of Scott Brown has given the Dems one less vote, and has already led House Majority Leader Steny Hoyer to announce the bill could be split in two.

I think cleantech stocks will have a good year anyway.

Nonetheless, stocks sank as the negative news startled the masses. And after such a sustained bull run, there were plenty of profits to be taken.

A look at a weekly chart for major wind, solar, and smart grid ETFs tells the story:

The German solar subsidy cut was probably the biggest news of the week... though the market reacted in entirely the wrong way. First of all, a subsidy cut is a sure side of industry maturation, which is a long-term bullish indicator with short-term pangs.

The cut will mostly affect European producers, since their prices are higher than manufacturers in Asia. They'll either have to cut prices or buy cells and modules from China. As such, Chinese solar stocks should've bounced on the news. The opposite reaction has created buying opportunity.

In fact, I'm seeing good buys in multiple cleantech sectors. So be sure not to fall victim to shortsightedness. The long-term positives far outweigh the blip we're experiencing this week.

There have been increased applications for initial public offerings (IPOs), which points to confidence in the public market's ability to provide funding. Chinese turbine blade maker HT Blade, Indian PV cell maker Indosolar, Chinese polysilicon producer Daqo, and wafer maker JinkoSolar have all said they'll test their luck on major exchanges.

And it seems investors are constantly forgetting the great growth ahead for the cleantech industry. Renewable energy capacity has only made a small dent in developed nations. Continued growth in the U.S. and Europe, coupled with leap-frogging in India and China — where billions need energy and water — will lead to several doublings over the next few decades.

We've talked about cleantech growth in China for weeks on end now. This week, India announced new rules for trading clean energy certificates with the aim of "doubling green power generation to 25,000 MW in four year."

Other long-term bullishness came domestically, when the DOE's National Renewable Energy Laboratory released a report saying wind energy could power 20% of the eastern grid. The report, which came out this week, said the goal would require a $90 billion investment in turbines and transmission. (You can catch that article below.)

That alone would create investment opportunities. But wind growth isn't limited to the eastern U.S.; it's expanding all across the globe. And if $90 billion seems unrealistic, consider Canada. A $6.7 billion deal was announced in Ontario this week to build four wind and solar power clusters with a capacity of 2,000 MW.

So don't let a few bad days in the market get you down... or allow you to question the future of cleantech. Deals are getting done, projects are being completed, and there is plenty of growth ahead.

We're still very much in the early stages of this energy transition, and those that take note early, support the transition, and invest... those folks will be rewarded accordingly for years.

You can catch up on the rest of the Green Chip's coverage below.

Call it like you see it,

Nick

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This past week, I've been privy to Peru's national renewable energy auction process, which aims to bring clean power production in this leading Latin American economy up to the needs of GDP growth and a growing population. On Monday, bids in closed envelopes were delivered to the Ministry of Energy and Mines for the first major round of clean power pricing.

And I have a good handle on who the winners will be...

Just a few days before, I met with Juan Coronado, head of one of the bidders, Energia Eolica (which means "wind energy" in Spanish). Señor Coronado echoed lessons I learned in Brazil in 2009 about the need to alternate between abundant but seasonal hydropower resources and sizable breeze-blown power potential.

It's a matter of math.

From 2006 to 2008, Peru averaged 8.8% economic growth each year, and similar levels of expansion are going to be needed to give jobs to the 370,000 people who enter the workforce annually.

The stakes are high, as my other local contacts here reinforce with stark statistics. Cesar Peñaranda, Executive Director of the Institute for the Economy and Business Development at the Lima Chamber of Commerce, told me this Tuesday that 85% of Peruvians in areas with little or no infrastructure are poor.

That means that roads, water, and above all, energy, are hard to come by for large sections of this strategically important country between China and Brazil. As a result, the denizens of those underserved slums and shantytowns are scarcely involved in the economy except to sell inflatable toys and bubblegum-flavored Inca Cola to the middle and upper class as they escape to the beach each weekend.

When the global economy turns down, as it has in the past year, the lower classes get knocked two steps back for every one step forward they took during boom times.

Even if commodity prices of Peru's natural resources like gold, silver, natural gas, and rice are on the rise, the government needs to initiate and attract a lot more investment in infrastructure to achieve first world status — which President Alan Garcia hopes to do by 2021.

This is where this week's clean energy auction comes in, and where you'll see why Spain is leading the charge.

Spain's Clean Power Pole Position in Latin America

Spain has become the top source of foreign direct investment (FDI) in Peru, as major Madrid companies like petroleum giant Repsol YPF (NYSE: REP) seek dynamic new markets.

Historical and cultural ties make Latin America an easy choice for expansion beyond Europe, and in the current clean energy bidding in Peru, Spanish clean energy companies are — as my fellow Green Chip International editor Nick Hodge likes to say — in the catbird seat.

In fact, GCI readers already know about two Spanish companies that are sure to be among the winners when Peru names its clean energy champions on February 12.

Lima is celebrating 475 years as a city this week. Founded by the Spaniards as the City of Kings, Lima is now a capital in its own right.

Spain still has plenty to teach Peru about kick-starting a native clean energy industry. At the end of 2009, Spain reached a record 42% of its electricity capacity from wind power; the problem now is storage. Incidentally, Spanish leaders started chirping this week about a big national electric vehicle push, and we're hearing more and more from energy aficionados around the world that EV batteries could themselves become a widespread storage mechanism for the smart grid. More on that another time...

In Peru, Spain's top wind power firms can help ramp up generation right now.

But as forcefully as Spain is moving into this market, they're not alone...

Why Peru is Our Global Green Stock Bellwether, and How to Benefit

The United Nations Conference on Trade and Development says that Peru was unique among emerging markets in bringing FDI up in 2009. Peru's foreign investment inflows grew by 28.1%, while mighty Brazil's gravy train delivered only half of its 2008 load last year.

Not only Spain but neighboring Chile, the United States, and of course China are pouring money into Peru.

As I said above, Peru can't just bank on commodities to keep FDI and GDP flowing, so the country is searching for sustainable means of growth.

For our purposes, the best approach is stocking up on shares in the Spanish companies that are already the leading investors in Peru's highly attractive investment scene.

But not just any Spanish company will do... which is why I've traveled both to Spain and to Latin America to investigate precisely which firms have the best approach, and which will pay off biggest in the end.

And I've prepared a video report from right here in Lima for Green Chip International subscribers. I'll be updating them on exactly how our portfolio will be affected when the February 12 announcement of winners in the Peruvian clean energy auction comes around.

These stocks aren't only attractive as long-term plays on international clean energy advancements — they're also trading at a discount right now, which means there's never been a better time to buy. Come what may in the market, Nick and I expect upwards of 60% returns in these two companies over the next several months.

And Peru isn't the end of the story. Other countries on this continent and elsewhere are engaged in similar auction rounds to draw money and create energy for growth, and the same companies we're talking about have a truly international edge.

To learn more, check out GCI today and get the global advantage so many investors already enjoy.

Saludos,

At the same time, Murkowski is also one of the top three Senators in Congress favored by the oil and gas industry, receiving $142,000 in contributions in 2009. Since 2005, Murkowski has received a total of $244,000 from the energy industry, according to the Center for Responsive Politics.

It seems as no surprise that what naturally follows are accusations of undue influence over the Senator on one side and denial of those accusations on the other. What is most apparent is at least an appearance of the possibility of a conflict of interest.

Indeed, one critic, Clean Air Watch president Frank O'Donnell, tells Greenwire (sub. required) that he doubts Murkowski's entire motivation for hobbling the EPA is from the source of her campaign contributions. But "it's hard to avoid the impression that it's a factor," he said. "I don't believe you can buy a senator for $50,000, but you can certainly rent one."

A little help from her friends

Beyond a financial influence over Murkowsi's position on the Clean Air Act, Murkowsi's detractors point at industry lobby influence in drafting legislation. The Washington Post reported last week that two energy lobbyists, Jeffrey Holmstead and Roger Martella, Jr., helped Murkowski write a failed amendment proposal last fall that sought to block the EPA from imposing greenhouse gas regulations on stationary sources for one year.

Holmstead heads up the Environmental Strategies Group at Bracewell & Guiliani. Martella is a partner at Sidley Austin. Two of Holmstead's clients - Southern Co. and Duke Energy Corp. -  are among Murkowski's largest contributors. Federal lobbying records show that at least five others, including Ameren Corp., Arch Coal, Energy Future Holdings, CSX Corp., and Progress Energy, have also contributed to Murkowski's war chest.

Holmstead acknowledged in an interview working with Murkowski and her staff on the amendment.  "I was involved... I certainly worked with her staff," he said, though he denies playing any role in drafting the language for the amendment proposal last fall. Murkowski also maintains that lobbyists held no sway in the text of the document.

Holmstead also says he has no knowledge of his clients campaign contributions, including those made to Senator Murkowski.

Some industry representative have come to the Senator's defense, pointing out that environmentalists are also involved in drafting legislation.

Duke Energy spokesman Tom Williams said there is nothing unusual for "people from all sides of the aisle to comment on legislation. To suggest it's somehow nefarious or inappropriate for one side to do it is inconsistent with reality." Williams has declined comment on Duke Energy's involvement with either Senator Murkowski or Bracewell & Guiliani.

Public interest groups and environmental groups aren't buying it.

The difference, says Tyson Slocum, director of the energy program at Public Citizen, is that lobbying firms are paid for by private companies. While that in itself certainly isn't unusual, "It's rare that we have a lobbyist publicly acknowledging ... ‘Hey, I played a role in this.' There are bad things that happen all the time, and that doesn't necessarily make them right."

"Not only do we have campaign contributions,' Slocum said, "but now we have evidence of active legislative collaboration by a lobbyists representing special interests."

Public Citizen, along with MoveOn.org and public interest groups, are calling on Murkowski to return any campaign donations she received from Holmstead's energy industry clients.

"I think it makes Murkowski's amendment positively radioactive," said Frank O'Donnell from Clean Air Watch, "because it makes it look like she's simply carrying water for businesses that gave her money."

And through all this sits the great state of Alaska, which Murkowski ostensibly represents. A state that is warming faster than most any other place on the planet.

The U.S. Department of Energy's National Renewable Energy Laboratory has just released its latest study on the technical, operational and economic issues facing the integration of increased wind energy.

According to the report . .

• There are no fundamental technical barriers to the integration of 20% wind energy into the electrical system, but transmission planning and system operation policy and market development need to continue to evolve in order for these penetration levels to be achieved;

• Without transmission enhancements, substantial curtailment of wind generation would be required for all of the 20% wind penetration scenarios;

• Interconnection-wide costs for integrating large amounts of wind generation are manageable with large regional operating pools, because increasing the geographic diversity of wind power projects in a given operating pool generally makes the aggregated wind power output more predicable and less variable, while also reducing the variation in load and increasing the number of generation assets that can be committed and dispatched;

• Although the costs of aggressive expansion of the existing grid are significant, they make up a relatively small piece of the total annual power system costs in any of the scenarios studied;

• Wind generation displaces carbon-based fuels, directly reducing carbon dioxide emissions. Emissions continue to decline as more wind generation is added to the energy supply; and

• Reduced expenditures on fossil fuel costs more than pay for the increased costs of transmission in all wind scenarios.

The newly published report consists of wind resource assessments, transmission studies and wind integration studies.

Jeff

For several years running now, the hottest cars at the Detroit Auto Show — and most auto shows, for that matter — have been cars that use less gas: the Tesla, Volt, new versions of the Prius, etc.

And this year was no exception. In fact, the show added an all-electric wing called Electric Avenue that hosted popular attractions like the Nissan Leaf, Volvo C30, and the Ford Fusion Hybrid, which won Car of the Year.

There wasn't a Hummer to be found. Ironically, GM is halting production of all Hummers this week as the brand continues its stay in auto purgatory.

Efficiency is all the rage in home appliances, too. I just bought a new Energy Star dishwasher made by Maytag, thanks to a $300 million rebate program made possible through the stimulus — the equivalent of Cash for Clunkers for water heaters, air conditioners, clothes washers, and more.

Surely you haven't heard anyone asking for appliances that use more energy or cars that use more gas...

And the reason for that is simple: using more energy costs more money.

The Fifth Fuel

It's not as sexy as erecting a massive wind farm or commissioning a new nuclear reactor — and it certainly offers far fewer photo ops — but businesses and decision-makers the world over are quickly starting to realize the power of energy efficiency.

Wal-Mart is adding billions to its bottom line by making its stores and supply chain more efficient. Boeing has outdone Airbus with its 20% more efficient Dreamliner. Forbes recently reported that "BP made over $2 billion substituting efficiency for fuel; DuPont and Dow Chemical, $3 billion apiece."

That's what's so exciting about energy efficiency... A small investment on the front-end leads to huge savings on the back-end. And it applies to every business...

Retail chains can save money by retrofitting stores with energy efficient lights and HVAC systems. Grocers can improve the electricity use of their massive coolers and freezers. Companies producing goods can optimize their factories and distribution chains.

It's like a brand-new, earth-shattering discovery has been made. Only it's not a new product — it's a concept. The idea is to do more with the energy we already have access to. And the net savings have been dubbed "The Fifth Fuel."

And there are two best parts here...

First, there are incentives available for many of these upgrades. I already mentioned the $300 million available to upgrade your appliances. The Cash for Clunkers budget came in at $3 billion. And just this month, the Department of Energy announced $187 million to improve efficiency for heavy-duty trucks and passenger vehicles, $47 million to improve efficiency in the information technology and communication sectors, and $37 million for next generation lighting.

Second, there's more than a handful of publicly-traded companies on the receiving end of not only billions of gov't cheese, but also billions in sales from the private sector as the financial benefits of efficiency are realized.

They Spend, You Profit

As these billions are spent on energy efficiency upgrades, a few companies (and their shareholders) are making a lot of money.

For example, Ford, Cummins, GE, IBM, BAE, HP, Yahoo!, and many others have all been declared recipients of energy efficiency dollars from the federal government.

And look how companies that provide energy efficiency solutions have been performing:

Veeco Instruments (NASDAQ: VECO), a smart lighting company — and the best performing stock in the chart above — has gone from about $3.00 to over $32.00... since March.

Many companies have made runs like that. And more are about to.

I actually have my eye on one company — currently trading for less than $1.00 — that's about to make a similar run.

They make a device called a "Negawatt Box" that can drastically reduce energy consumption in both residential and commercial buildings. And a tax credit is being offered to all who install it.

Our electrician recently installed one at our Baltimore headquarters... and we quickly realized 44% savings on our utility bill.

The device is so unique — and the investment opportunity so large — that I've compiled a full report about the company.

It describes not only how to take advantage of the product for yourself, but also how you can profit by owning shares of the company that makes it.

Call it like you see it,

Nick

The following is part two of a three-part series that examines opportunities and challenges confronting Kauai in the new decade. Read part one here.

KAUAI-If tourism has been the central pillar that has supported Hawaii's economy for the last half century, the question of what role it will play in the coming decade cannot be ignored. Between 2000 and 2010, Kauai and the rest of the state saw how external forces like terrorism in New York, disease in Hong Kong, a war in Iraq, or global economics and energy costs can dramatically and immediately impact tourism and the entire island's economy.

Internal events like the cessation of cruise ship arrivals, collapse of airlines and extreme weather events like the severe rains of 2006, and Kaloko Dam failure also affected the tourism-based economy. Roller coaster-like boom and bust development trends, shortages in rental cars, and the ongoing debate about hotel development and how much to limit vacation rental accommodation also impacted Kauai in the last 10 years and will almost certainly continue to do so in the new decade.

The future of tourism remains a big question mark. Can tourism rebound? If so, when? Some ask if it should come back at all. Kapaa-based green economist Ken Stokes of the Kauaian Institute asks not when the tourists will be back, but which ones will return.

"Some of the best futurists at UH presented four scenarios," Stokes says. "In these, not a single one indicated anything like mass tourism in the ten to twenty year horizon."

Stokes cites what he calls a "morality and consciousness," which he believes will make some people think twice about continuing to fly great distances to Hawaii.

"Your global share of carbon output is the equivalent to one airplane trip to the West Coast," Stokes says. "That's for an entire lifetime."

The upper tier of the travel market is fairly solid, Stokes says, but he expects mass tourism to "fall away" as the overall contribution of tourism to the island economy declines.

Sue Kanoho, executive director of the Kauai Visitors Bureau, looks at the future of tourism on Kauai from another perspective. She sees much of Kauai's market the result of available accommodation.

"If properties shift to fractional or timeshare units, those are the kind of visitors we get. First time visitors tend to stay in hotels," Kanoho says, referring to the large number of return visitors to Kauai.

The type of accommodation offered, the condition and capacity of harbors and airports, and the level at which Kauai can comfortably welcome visitors will continue to be key considerations in the decade ahead, says Kanoho.

"On an island, it's important to acknowledge the capacity for certain areas," she says. Kanoho refers to talk of the Department of Land and Natural Resources limiting the number of permits issued in order to preserve environmentally delicate places, just as camping permits are already limited now.

"We may be a destination that requires planning a vacation further in advance," Kanoho says, pointing out that advance planning is part of having a destination where the quality of experience is more important than the quantity.

"Kauai is not a fast food drive-thru," Kanoho says.

She concedes that other destinations like Mexico or the Caribbean may be closer, quicker, and cheaper to the mainland than Kauai, but says the quality and uniqueness of Kauai will remain a draw for those willing and able to spend for tropical vacations.

"Everyone has their breaking point. When you hit $1,000 or $1,200 round-trip airfare (to Kauai), some people will consider other destinations," Kanoho says.

In the coming decade Kanoho doesn't foresee Kauai becoming a solely exclusive destination that only serves the high-end market.

"That's just not who we are and I don't think that's what people want," she says. Kanoho expects Kauai will remain a laid-back, rural, natural destination.

Recognizing that a few years ago there was a palpable tension as increasing numbers of people on Kauai felt the island was being lost to development, Kanoho says there have been concerted efforts to respond positively to those concerns and that the island is no longer on a "slippery downward slope."

"We need to ask Kauai, ‘what does she want to be when she grows up?' That's not just a KVB question, but one for the leaders and people of Kauai."

Visitor industry trends like "voluntourism," growth in both Korean and Chinese travel markets, untapped potential in the Japanese market, and a greater emphasis and commitment to sustainable and green practices in the tourism sector are all likely to become even more prominent in the coming decade, Kanoho says. But she cautions: "Whatever your goals might be ten years out, in less than a day an event like September 11 or an airline closing suddenly can change your whole world."

Adam Asquith, a taro farmer and managing director for Kauai Farm Fuels, a biodiesel manufacturer in Hanapepe, says that big changes are coming to Kauai-you can bet on it. Asquith envisions a Kauai 10 years from now that is subject to the effects of global fuel shortages. He imagines $200 a barrel oil making travel to Kauai unaffordable for all but the wealthiest travelers.

Visitor arrivals on Kauai could be half that of 2010, he says, with many hotels closed and those that remain offering free vehicles and fuel as a gimmick to attract occupants. $10-per-gallon gasoline would mean that bicycles would be as common as cars on the road and the horse would return as a viable means of transportation.

By 2020, Asquith says many people on Kauai will have installed wind, photovoltaic, or battery systems in order to gain some energy independence as electricity rates rise to more than a dollar per kilowatt hour. He envisions 20 percent unemployment, frequent blackouts, and people returning to hunting and fishing for sustenance, rather than recreation.

On the bright side, Asquith expects Kauai in 2020 to be a place where neighborhood and farming communities have turned to small, independent energy grid systems or locally produced plant oil (kukui, coconut), ethanol, and wood gas. Asquith says surf breaks will be uncrowded, traffic non-existent and nearly everyone will maintain a garden or farm.

According to Asquith, 10 years from now, "parties will be more frequent, larger and last longer. We will thrive in household economies that would have been considered abject poverty in 2010, but kupuna will remark that Kauai is now a lot like it was when they were growing up."
In 2020, Asquith says, "we will have rediscovered what our kupuna had-a sense of place."

Part III, the final installment in this three-part series, will examine possible changes to Kauai's natural environment and communities in the new decade.

**Jon Letman is a freelance writer in Hawaii. He writes about politics, society, culture and conservation on the island of Kauai. You can read the original article here 

INTRODUCTION: For your edification this long weekend: In this posting, we return to address in greater detail the faulty assumptions underlying the conclusion by the National Research Council's (NRC) fuel cell analyst team that it would be a mistake to commit to plug-in vehicles because battery costs will remain high for over a decade.This report has gained wide attention. And on the same day that GM opened its new Michigan battery plant, the Boston Consulting Group (BCG) released a study saying it would take decades for plug-ins to become competitive without subsidies.

We believe BOTH reports are mistaken and are already being eclipsed by industry developments.

Real-world information is already a step ahead of their assumptions. Battery and auto manufacturers would not be spending tens of billions of dollars on factories to support over a dozen new plug-in vehicle models unless they saw a long-term path to low-cost, competitive components. We back this up below with citations from multiple sources — including just-in news of the first response from a National Lab to the NRC report.

We hope they will deter these reports' unquestioned acceptance by journalists, analysts and legislators. Read to the end and you'll find our explanation of how these studies affect the US Department of Energy's future plans. And you'll see our call to some missing voices — battery manufacturers and automakers besides GM and Nissan — to release some vital proprietary information. Multiple constituencies need the full story to understand battery economics and help shape public and private strategies. This is all-important as priorities are being set in Washington and across the globe.

REMINDER ON OUR INITIAL RESPONSES: This posting goes beyond our December "Plug-In Community Needs to Respond to Outdated/Biased NAS Report" on the National Academy of Sciences/NRC document. (See other comments on our posting at http://green.autoblog.com/­2009/­12/­22/­squaring-off-again-plug-in-advocates-respond-to-anti-phev-repo/ and http://blogs.edmunds.com/­greencaradvisor/­2009/­12/­plug-in-backers-say-recent-slow-growth-phev-report-has-hydrogen-bias.html .) And in three postings last April (all found at http://www.calcars.org/­news-archive.html ) we and others criticized BCG's report for the President's Automotive Task Force.

NRC CRITICISMS BOILED DOWN: Here we focus on just the central organizing assumption they presume will dramatically limit EV and PHEV acceptance through the next decade: high battery costs. Most notably, the reports say today's PHEV battery packs can cost well over $1,000/kilowatt-hour. They see it taking 10 years for packs to drop from $1,000+ to the $400/kwh necessary to make unsubsidized EVs and PHEVs competitive. Even by 2030, the NRC says the battery premium for a Volt-like PHEV with a 40-mile range would still be over $10,000. Anticipating that long before then, governments will stop providing the $5-$10,000 subsidies necessary to sell cars with $15-$20,00 packs, they conclude only a "battery breakthrough" or a quintupling of oil prices will motivate consumers to buy plug-ins.

SHORTCOMINGS AND MISINTERPRETATIONS OF THEIR APPROACH: They limit expected price reductions to the low rate expected for already-high-volume and already-cheap laptop and mobile phone battery cells. They don't evaluate PHEVs with 10 or 20 mile ranges, which have much smaller batteries and very different economics than PHEV-40s and all-electric vehicles. They don't count the cost savings from an all-electric vehicle not including an internal combustion engine. And they don't factor in the likelihood of an eventual cost to emit carbon - already an assumption in much corporate long-range planning. Finally — and fundamentally — they don't follow standard research procedures used in similar studies to document their cost assumptions, look at cost sensitivities or conduct a bottoms-up cost model. Add in all these flaws and ignore the results and reports below, and we can see why they forecast EV and PHEV sales totaling a few million by 2020 — instead of the tens of millions that automakers already plan to build and expect drivers to buy.

CLOSELY-HELD INFORMATION: It's hard to get battery pack pricing data. Each battery manufacturer and automaker sees its costs as key to its competitiveness. With some batteries selling at dramatically high retail prices, manufacturer prefer to limit access to pricing forecasts for cells or packs in large volumes to potential automotive customers. And since automotive batteries are not yet mature products, price and performance continually evolve. With such competitive pressures and rapid-fire changes, researchers and even governments are often left with incomplete, inconsistent, out-of-date, or even erroneous price data.

LIMITED DISTRIBUTION EVEN OF PUBLIC INFORMATION: It's frustrating that many useful insights are trapped behind firewalls that some conference organizers short-sightedly enforce. They often limit distribution of presentations to those who paid to attend their conferences. (We've often suggested they experiment to see if they gain more attendees next time and achieve their broad goals more by unlocking their gates.) Fortunately we have been able to glean much from reports some authors choose to post online and from media reports.

MULTIPLE SOURCES FOR MORE REALITY-BASED DATA: Below, we've gathered information from primary sources — two automakers, and no battery manufacturers — and secondary sources including electric utility organizations, independent advocacy groups, and academic research cited or commissioned by government agencies. We cover the implications of the information we have gathered, then challenge industry players, including battery manufacturers, to release some of their proprietary pricing data. They will ultimately benefit through more support for plug-in vehicle incentives, building demand, and thereby expanding the marketplace for all players. We start with extracts from some reports that directly rebut the NRC:

AUTOMAKERS: GM TO AUTOBLOG GREEN: BATTERIES ALREADY CHEAPER THAN REPORTS'
FORECASTS: "There do appear to be some holes in the new [NRC] study. For example, the study cites a current cost of $1,000-1,200 per kWh for automotive lithium ion batteries. That figure may be as much double the actual cost if General Motors is to be believed. When we spoke with Denise Grey and Jon Lauckner from GM this week they both hinted that the Volt battery was actually in the $500-600/kWh range now and they expect this number to drop." http://green.autoblog.com/­2010/­01/­08/­study-battery-electric-vehicles-unlikely-to-be-cost-competitive/ . "Grey tells [AutoBlogGreen] GM is working closely with suppliers to cost optimize all of the pack's components and hopes to hit the US Advanced Battery Consortium target of $300/kWh by 2015." http://green.autoblog.com/­2010/­01/­07/­general-motors-builds-first-volt-battery-pack-on-production-line/ . (Note: these figures and those below refer to actual available energy — 8 kwh, not 16 kwh, in the case of the Volt.)

GM TO CNN: NRC'S BLOATED ESTIMATES: "GM spokesman Rob Peterson called the NRC's estimates of battery cost 'bloated,' saying the Volt's battery would cost much less than that. Battery costs will also come down quickly, he said. 'Our starting point, which already costs much less than they estimate, is just the first step,' he said." http://money.cnn.com/­2009/­12/­15/­autos/­nrc_plug-in_hybrid_report/

AUTOMAKERS: NISSAN/RENAULT CEO CARLOS GHOSN BETS HEAVILY ON PLUG-INS: "Ghosn is so sure the vision will work that he's building factories to assemble 500,000 EVs a year — 10 times more units than General Motors Co. is planning to make of its Volt hybrid." And (talking about battery cell, not pack costs): "[Deutsche Bank AG analyst in New York Rod Lache] predicts that high-volume manufacturing will cut battery costs — now $650 per kilowatt-hour — in half by 2020. Ghosn says costs will fall faster. He's working on batteries with twice the range of Leaf's and has teamed up with Sumitomo Corp. to sell used batteries that can no longer withstand automotive requirements but can store power for utilities. [thereby effectively bringing down battery prices for the consumer]" From a long and comprehensive review by Bloomberg reporters John Lippert, Kae Inoue and Laurence Frost http://www.bloomberg.com/­apps/­news?pid=20601109&sid=aJEVrzt2t.8o&pos=11 . And as Nissan arranges for billions of dollars in financing to lease its batteries for EVs, it has worked with financiers whose due diligence looks at proprietary cost, reliability, and longevity data unavailable even to the NRC and BCG. The total Nissan-Renault investment is over $6 billion http://www.bloomberg.com/­apps/­news?pid=20601090&sid=a0vDcOKdXYoM .

ARGONNE NATIONAL LAB EXPLAINS HOW SCALE AFFECTS BATTERY COSTS: In what looks like the most detailed analysis to date, "Factors Determining the Manufacturing Costs of Lithium- Ion Batteries for PHEVs," Paul A. Nelson and Danilo J. Santini from Argonne National Laboratory and James Barnes, battery expert at the US Department of Energy, in May 2009 project the mass production costs to the vehicle manufacturer at $255/kwh for a PHEV-20 and $210/kwh for a PHEV 40 (table p.6). The authors go on the say, "The cost estimates in this study assume a stable rate of pack manufacture at a high rate of 100,000 packs/yrIf the plants were designed for [only] 10,000 battery packs per year, a reasonable production level for the first year for both a new battery pack design and a new vehicle, then the unit costs for the batteries would be approximately 60 to 80% higher. If, in addition, the plants were designed to be expanded for future production or the plant equipment was amortized over a shorter period to allow for the uncertainty of future orders (discontinuous production), the unit battery prices would be even higher. Thus, the low production rates anticipated for initial production of the batteries creates serious per-vehicle battery cost barriers that must be subsidized either by vehicle manufacturers or governments in order to achieve a viable long-term PHEV battery market." (p.9) The paper was delivered at EVS-24, May 2009 in Norway; it's found at http://www.cars21.com/­files/­papers/­Nelson-Santini-Barnes-paper.pdf

(Along the same lines, but not from the Argonne studies: The NRC report indicated that Li-ion batteries are already in high volume production for laptop computers and cell phones, so their costs are unlikely to fall rapidly. It did not mention that, while laptop and cell phone cells have become commodities selling at fairly stable prices as low as $200/kWh, cells for plug-in vehicles are quite different and are still produced in low volumes at prices that are far above materials costs, with a lot of room to fall rapidly.)

MORE AS WE WENT TO PRESS: (as they used to say) As we were about to post this, we saw "Cost-Effective PHEV Range: Battery Costs Versus Charging Infrastructure Costs," a presentation to the Transportation Research Board's Annual Meeting, "Investing in Our Transportation Future — BOLD Ideas to Meet BIG Challenges," on January 12 by Argonne's D.J. Santini. This may be the first response we've seen from a government entity comparing the NRC study to Lab and other studies. (And it happens to have been presented to another branch of the NRC!) Slides include ones titled, "Battery Cost Estimates are Hard to Compare. Many Factors Influence Our $/kWh vs. NAS & Others" and "The Recent Incremental PHEV and E-REV Price Increases Estimated by Argonne CTR Staff Are Well Below those of the NAS." We encourage journalists to request the study from TRB or Argonne. (A PDF of last year's presentation by Santini is available for $25.) And we hope a version of this talk will soon be online at no charge from one or the other place.

THE NRC MAY NOT HAVE NOTED CARB'S CONCLUSIONS: The California Air Resource Board's Zero Emission Vehicles Review led to a White Paper in November 2009. From its detailed appendix, "Status of ZEV Technology Commercialization," http://www.arb.ca.gov/­msprog/­zevprog/­2009zevreview/­attachment_a_tsd.pdf , based on multiple studies, we highlight four key points:

1. Cites its commissioned study by TIAX that, with volume production, battery pack prices for PHEVs will reach $340-$400/kwh in the time period ending 2015 (p. 17).
2. Tesla Motors already buys laptop cells for $200 per kWh and in a costly and time-consuming procedure, carefully packages them for EVs. As they mechanize and expand this procedure, their EV packs will come in under $400/kwh. (pp. 17-18)
3. From ARB surveys: "Some automakers reported PHEV and BEV near-term, moderate volume costs would be on the order of $500-$600 /kWhr, with evolutionary changes and moderate volume production 'next generation' design changes necessary before costs move further down into the $400-500/ kWhr range." (p. 19)
4. Finally, the section concludes: "No automaker has stated that current design, or even next generation Li Ion batteries, will achieve sufficiently low cost to make them competitive with conventional vehicles without ongoing government incentives and/or tax credits. Several automakers do, however, believe that Li Ion battery systems will evolve sufficiently to allow automakers to sell cost competitive PHEVs and BEVs sometime prior to 2020" (p.25)

THE ELECTRIC UTILITY INDUSTRY VIEW: The Electric Power Research Institute has been centrally involved in plug-in vehicle development for more than a decade. With the Natural Resources Defense Council, EPRI produced the authoritative "Environmental Assessment of Plug-In Hybrid Electric Vehicles" in 2007. Now "Plug-In Hybrid Electric Vehicles: Promise, Issues and Prospects" is by Fritz R. Kalhammer (battery expert and longtime consultant to EPRI and government agencies), Haresh Kamath, Mark Duvall, Mark Alexander (Project Manager, Director of Electric Transportation, and Project Manager, respectively at EPRI), and Bryan Jungers (researcher at the UC Davis Institute of Transportation Studies). They concur with the Argonne Labs projection that $200-$400/kwh battery packs are feasible with technology now available. And they conclude, "investments in HEVs and PHEVs with mass-produced Li Ion batteries promise to pay back within the nominal 10-15 year lifetime of a vehicle, even at today's driving energy (fuel and electricity) prices and vehicle efficiencies.These conclusions hold without invoking longer- term economic incentives for PHEVs and/or penalties for excess CO2 emissions from conventional vehicles. However, such incentives and penalties will be instrumental in helping to offset the higher costs of batteries produced at lower rates during the introduction of PHEVs." That careful statement is on p. 6; the chart on p. 7 shows a PHEV-40 having an even-better near-term payback of 10.5 years and a few years out, 4 years. This EVS-24 paper can be found at http://steps.ucdavis.edu/­People/­bdjungers/­Plug-In%20Hybrid%20Electric%20Vehicles%20-%20Promise,%20Issues,%20and%20Prospects.pdf . We hope to hear more from EPRI soon.

ADVOCATES: The Electrification Coalition has taken the lead in pointing to flaws in the NRC study: find links at to its press release and fact sheet at http://www.electrificationcoalition.org/­news.php . The Washington Post published EC CEO Robbie Diamond's response to its over-the-top editorial; his letter said in part, "the NRC seems to ignore these economies of scale. The NRC has done much important work over the years. In this case, however, its assumptions are badly out of line with industry and government estimates, and its conclusions — and unfortunately, those of the Post editorial that relied on them — suffer as well." Its reply at http://www.electrificationcoalition.org/­news-response-to-nrc.php says, "The NRC study significantly overestimates current battery costs, placing them out of line with published research by DOE National Laboratories, exhaustive research by auto-industry analysts and current industry experience." It cites conclusions from its own comprehensive "Electrification Roadmap" that, "Based on current and expected industry costs, a PHEV-40 will be cost effective for consumers in 2015 — without any government subsidy whatsoever."

FILLING IN THE MISSING PIECES

WHERE DOES THIS LEAVE DOE, WHICH COMMISSIONED THE NRC STUDY? The Department of Energy has much data internally and from its national labs that conflicts with this report. But it has not reacted publicly even as the report's consequences circulate mostly unchallenged in the media and in Congress. Outside parties can help DOE validate its commitment to electrification and continue to sponsor research grants, loan guarantees, ARPA-E, and the US-China EV Initiative. With more data on the jobs and environmental impacts, DOE can catalyze volume purchases of both new vehicles and conversions of much of its existing military, civilian, and postal service fleet. These programs will in turn accelerate technology development and volume production — leading to further cost reductions for batteries and other components.

WAITING IN THE WINGS: We're hoping that battery manufacturers — the key primary source — will weigh in over the next few weeks, along with automakers other than GM and Nissan. In 2009, 14 U.S. companies formed the National Alliance for Advanced Transportation Batteries. They and many others are committing billions of dollars to this effort because they think they'll soon be selling their product in the millions of units. While citing their confidence that costs are declining, that batteries are lasting longer than ever, and that carmakers can draw down more than the 50% of the available energy used by GM's Volt, these companies have volunteered little data, though some have said privately that they are willing to respond if asked.

MOMENT OF OPPORTUNITY FOR THE BATTERY COMPANIES: These companies strenuously work to remain friends with everyone as they aggressively expand their businesses, gain customers, and compete on rapidly improving technology. Even understanding that, our fond hope zeroes in on the very first session of the Electric Drive Transportation Association Conference in Washington. It's aptly named, "Batteries for Electric Drive Vehicles: Manufacturing Challenges and Opportunities" http://www.electricdrive.org/­index.php?ht=d/­sp/­i/­13921/­pid/­13921 .

ON JANUARY 27, we urge the CEOs, founders and top executives from leading suppliers Johnson Controls-Saft Advanced Power Solutions A123 Systems, Ener1, Inc. Electrovaya, and Compact Power each to take five minutes to compare the NRC's outlook to the mid-term prospects for their batteries' performance and cost in mass production. We urge them as well to release their slide shows to the general public — not just to industry insider attendees at the conference. If they do, they'll help ensure the expansion of their entire industry. They'll earn the thanks of all those working to accelerate the electrification of transportation. And you'll hear about it from us!

**Felix Kramer is the founder of the California Cars Initiative - a Palo Alto-based nonprofit startup of entrepreneurs, engineers, environmentalists and consumers promoting 100+MPG plug-in hybrid electric vehicles (PHEVs).  You can read more from Felix at www.calcars.org. 

When it comes to cleantech news, the weeks just seem to be getting busier.

It's great news for us as a community of green investors, but it makes it difficult to some up the news in just a few paragraphs.

Last week was full of evidence pointing to the increased global traction of clean technologies. And that theme continued this week.

On the same day Kenya announced a government-backed $26.5 million open-end clean energy fund, the African nation also announced a power purchase agreement with Lake Turkana Wind Power to forge ahead with a 300 MW project.

In Italy, a 14% annual rise in solar capacity was announced, from 700 MW to 795 MW. That came just days after announcing a 30% rise in annual wind capacity.

Expect increased capacity numbers like that from countries across the globe...

And especially from China, where progressive policy is paying off with steel in the ground. Solarfun (NASDAQ: SOLF) announced three new contracts this week, worth 12.65 MW. Suntech (NYSE: STP) announced it has sold out of panels through at least the second quarter. And Yingli (NYSE: YGE) is expanding so fast that it earned a $3.4 million tax credit this week to build a plant here in the States.

If that weren't enough, the Chinese solar market is now so robust that U.S.-based firm eSolar licensed its technology to a Chinese firm anxious to build a 2,000 MW facility to crank it out.

But China isn't the only Asian nation with a green future...

As the Detroit Auto Show presses on in Michigan, several Asian firms are getting excited about battery technology. South Korea's LG Chem will supply batteries for Ford hybrids with annual sales estimated to top $440 million.

Toyota has set up an independent division to "accelerate next-generation batteries." And Hitachi announced it is also entering the lithium-ion battery market with a new product.

But the most poignant piece of global cleantech entrenchment news came from the International Renewable Energy Agency or, more precisely, from countries that will join at this week's meeting: Mexico, Belgium, and Kyrgyzstan. China and Saudi Arabia will attend as observers, but are likely to join soon.

And here's a piece of news to show just how far cleantech has come over the years: a $19.1 million deal has been announced by the Good Energy Group to replace turbines at the UK's oldest wind farm, built in 1991.

Finally, Deutsche Bank was out with a new report this week that told us what we already know. It showed that "companies specializing in energy efficiency and renewable energy such as wind and solar power outperformed peers across the wider global economy last year and expected more to come in 2010."

Said the head of the bank's global asset management: Cleantech companies will present "the economic and investment opportunities of our lifetime."

We prove that each and every day.

You can catch up on the rest of this week's coverage below.

Call it like you see it,

Nick

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This week, we'll draw some insights from communities that have gone local.

Jefferson, the Almost-49th State

Following two previous unsuccessful rebellions in 1852 and 1854, residents of the area from roughly Mt. Shasta in Northern California to just above Coos Bay in Oregon made a serious attempt to secede from the states in 1935, out of frustration over the lack of state support for their critical transportation infrastructure needs.

A Time magazine article from 1938 lauded the area's "rich deposits of chrome, copper, gold, iron, coal, limestone, and platinum beneath an evergreen blanket of several billion feet of virgin timber," which remained largely inaccessible for a lack of good roads and rail.

It described how a local self-made resource magnate named Gilbert Gable had tried to get approval from the Interstate Commerce Commission to build a rail link from Port Orford over the mountains to the Southern Pacific rail line 50 miles inland, in order to bring the region access to eastern markets. A rival group made its own bid for a rail connection from the SP line to Crescent City, on the California-Oregon border.

Both applications were denied by the ICC. The examiner commented, "Recent army reports show that the prospect of future growing importance of the ports of Port Orford and Crescent City definitely may be discarded as a factor of consequence in this proceeding."

Frustration grew until November 27, 1941, when the residents created a provisional government and elected a governor, declaring themselves the State of Jefferson, the 49th State of the Union. A Proclamation of Independence was published and pamphlets were distributed. Armed citizens put up road blocks on the main north-south artery of U.S. Highway 99 where they collected tolls for crossing their new state line.

The Proclamation's intent was clear: "Until California and Oregon build a road into the copper country, Jefferson, as a defense-minded State, will be forced to rebel each Thursday and act as a separate State."

One week later, amid much fanfare, the state's new governor was inaugurated in Yreka. Signs had been posted around town saying: "Our roads are not passable, hardly jackassable; if our roads you would travel, bring your own gravel." Hollywood showed up and shot some newsreels.

But three days after the inauguration, the whole thing was over with the bombing of Pearl Harbor. The nation united behind the war effort and built good new roads into Jefferson to access its much-needed copper and timber.

Some useful observations can be drawn from the Jefferson experiment.

First, it highlights the importance of getting resources to market. In an age when declining fossil fuels increasingly jeopardize truck transport, alternatives will be needed.

Locals may have to find ways to finance the rail and ship transport infrastructure for their goods — even if they have to do it on their own. Government officials are typically shortsighted about securing critically important infrastructure.

Second, it demonstrates that even in the not-too-distant past of the U.S., regions can (and will) secede if the support of larger entities fails. The notion that our union could fall apart under the pressures of the coming decades is hardly outlandish.

Indeed, I didn't have to wait long for the fulfillment of my prophecy last week that California should expect another debt downgrade. This week, S&P cut its rating on California's $63.9 billion general obligation debt from A to A-. More severe budget cuts are sure to follow, starting with health and human services. As the budget squeeze rolls downhill, it's forcing counties and cities to follow suit.

Issuing IOUs to state residents instead of tax refund checks is one thing; but when schools, law enforcement, food assistance, and basic transport begin to fail, it's another thing entirely. The impact of such cuts always hits the welfare and working classes first... people who would rally for secession if their state and nation failed them.

I have personally heard locals near the southern Mendocino County border joke about blowing up the Highway 101 Bridge in Hopland, if the worst should happen and hungry hordes from Southern California begin to migrate north. I've also heard residents of the redwoods have no great love for those of the plastic lands.

Some thought experiments may be useful here.

If our critical infrastructure were to become unreliable as state and federal unions fail, which communities would fare best? Those utterly dependent on freeway transport, like Dallas; or those with ample rail, seaborne, and pipeline capacity, like Houston? Those who can disconnect from the grid, like Texas; or all the other states, which cannot?

As Scott Pugh of the Department of Homeland Security said at the ASPO conference last year, "Texas can secede from the union any time they think they should."

And where would the boundaries of the new regions be drawn? Would I, as a resident of the Bay Area in California, prefer to end up in Mexicali, with its massively overbuilt and overpopulated deserts... or in Jefferson, with its low population, timber and minerals, farmland, ample rainfall, and a working rail and port infrastructure?

Where would offer the better opportunity to secure a food supply within a 100-mile radius: Las Vegas, or a town in rural Iowa?

Which has the most old-school, low-energy shipping infrastructure to fall back on: Baltimore or Chicago?

The Marin County Secession

Another type of secession is playing out right now, right here, which could become a model for the rest of the country.

In 2002, California passed a state law (AB 117) allowing communities to form their own entities to buy electrical power as so-called Community Choice Aggregations (CCAs). The notion is that CCAs could choose to buy more renewable energy than the existing investor owned utility (IOU) monopolies provide, while those utilities continue to own and maintain the distribution network and billing.

State revenues normally distributed to utility energy efficiency programs, plus the usual charges per kilowatt-hour, would be redirected to the CCAs, enabling them to buy green energy and alleviate the need for building new peak-capacity plants (typically powered by natural gas). Customers are automatically enrolled in the CCAs unless they opt out.

According to the New York Times, the nation's first test of the concept in Ohio has been an unmitigated success with 126 municipalities participating in 67 CCAs, providing power to about 800,000 customers with only a 5% opt-out rate. The latest supply contract signed by one of the CCAs, the Northeast Ohio Public Energy Council (NOPEC) offers rates 6% lower than the local utility. Thank you, Ohio.

In California, however, it's been a long road for those who have taken it. None have succeeded yet.

San Francisco is very close, with several bids for potential suppliers in hand. It intends to obtain 51% of its electric supply from renewables by 2017 — more than double what the ineffectual state renewable portfolio standard (RPS) mandates.

The Kings River Conservation District in the San Joaquin Valley, the farming area that forms the southern part of California's Central Valley, tried to form a CCA since the law was passed but has essentially given up. It was simply going to cost them too much to fight the opposition of PG&E, the state's largest utility.

With 15 million customers, PG&E has the budget and the lawyers to easily win a pitched battle with a struggling farming community. Instead, Kings River has opted to issue bonds and build its own power plants running on local solar, micro-hydro, and biomass resources.

In Marin County, where I live, the effort to create the Marin Energy Authority (MEA) CCA has been under way for six years. The county and all but three cities within it have so far chosen to join the MEA, which is scheduled to sign a power supply contract with Shell Energy North America on February 4. At that point, the majority of the county's customers would be enrolled in the program — unless they opt out.

The MEA aims to source 25% of its supply from renewables initially, growing to over 60% by 2015, and eventually to 100%.

PG&E has launched a multi-pronged assault on the MEA, feeding sour analysis and misinformation to a grand jury investigating the proposal; creating negative press; sending out a direct mail assault full of distortions under the auspices of a "Common Sense Coalition," which I stapled to my wall, and sending consultants to represent its views at local government meetings.

With the contract deadline at hand, the battle has intensified as city councils and the county board of supervisors decided whether to remain with the program.

I have followed the MEA since its creation, including brief correspondence with Paul Fenn, who authored the CCA laws, and conversations with local elected officials who support the MEA. Over the last two weeks, I showed up at my city council and county meetings to share my view on why it's imperative for municipalities to take control of their own renewable energy procurement. And I have a meeting scheduled this week with the mayor to explain my reasons in more detail. I consider it my civic duty and a fulfillment of my resolution to work harder on local solutions.

CCAs are a different sort of secession than the State of Jefferson, but the aims are really the same: to let local communities take advantage of their resources when their faith in the state has failed.

Smart grid technologies and rooftop solar need not wait for sweeping support from the federal and state levels. Indeed, given the extraordinary fiduciary stress that federal and state governments are under, I don't believe local communities can afford to wait for it. Local supply is now the name of the game. God bless the child that's got his own.

Add in "micro-islanding" capabilities, so small services areas can disconnect from the larger grid and get by on their own distributed generation capacity, and you have the seeds of a full-blown renewable power rebellion. I have no doubt that if we pulled out all the stops on local generation capacity, and pumped water up the mountain as storage capacity, that we could get by on our own just fine.

After years of watching my state government fail to meet its renewable energy targets... of watching my utility monopoly stymie the rapid deployment of renewables... of watching the public utilities commission install a torturous obstacle course of red tape in the path of rooftop solar... I'm willing to carry that rebel flag.

It might be the only way forward.  

Until next time,

Chris