Silicon Valley's War On Big Oil  

Business 2.0 is continuing what seems to be a very common theme in recent weeks - the rush to develop clean energy technologies in Silicon Valley and the prospect of this ridding us of the curse of big oil - in the comprehensive "Lighting up the $1 trillion power market".

There's a missile-bunker vibe you get when walking into Solaicx, a Silicon Valley startup that manufactures the silicon wafers that are the building blocks of solar panels.

In one half of the nondescript Santa Clara warehouse, three men sit hunched on a wood platform 8 feet above the cement floor, their eyes locked on two monitors. The screens show data and video gathered from a 24-foot-tall steel tower. The tower begins in a squat, gourd-shaped base and tapers to a cannon-size column with a long drum spinning slowly on top. Thick power cables snake down its sides. Another sci-fi-looking tower rises up off to one side of the building.

Inside the tower that has everyone's attention, molten silicon is being added to a thin, 8-inch-long rod, or "seed," of silicon. After 15 hours of precise spinning and pulling, the seed will grow to a mirror-finished ingot about 4 feet long and weighing more than 150 pounds. If it's perfect - and that is the point of Solaicx's cutting-edge technology - it will form a single crystal matrix, which is then trimmed and sliced into 1,000 wafers that sell for $5 apiece and are used by companies like General Electric to build the most efficient solar modules on the market today.

Solaicx is one of dozens of Silicon Valley firms driving a sizzling $11 billion worldwide market in solar energy, part of a rapidly expanding alternative-energy economy that promises to shake up the way power is produced and consumed as profoundly as the region's computer and Internet companies upended global communications and commerce in the late 20th century.

The signs of world-changing transformation are everywhere: Venture capitalists are pouring hundreds of millions of dollars into Valley solar startups pursuing technological breakthroughs to make sun power as cheap as fossil fuel. Three of the largest tech IPOs of 2005 were for solar companies, including San Jose-based SunPower, a spinoff of chipmaker Cypress Semiconductor.

Other old-line Valley tech companies are also jumping into the market. Among the most significant is Applied Materials (Charts). The world's largest chip-equipment maker will begin producing machines to manufacture solar wafers, laying the groundwork for an industrial infrastructure that should lower the cost of producing solar cells. For the first time in many years, high-tech manufacturing plants - yes, factories - are being built in Silicon Valley.

Why the gold rush?

Solar is not the only alternative-energy source generating interest in the Valley: Biofuels, fuel cells, and hydrogen power are all attracting their fair share of investment. But solar energy has just the sort of oversize potential that the titans of tech saw in computing: a free and practically inexhaustible power source that rises every day.

Fears about global warming have triggered public and political demand for renewable energy, which is expected to become a $167 billion global market by 2015. In September, California enacted landmark global-warming legislation to force the state's largest industrial polluters to reduce their greenhouse-gas emissions 25 percent by 2020. The new law will likely lead to the creation of a California carbon market, allowing clean-energy producers in the world's sixth-largest economy to sell carbon credits to polluters who can't or won't reduce their spew. A similar regional market is being developed by New York and six other Northeastern states.

California is also committing $3.2 billion to fund a drive to install solar panels on a million rooftops by 2018, and a November ballot initiative backed by Silicon Valley heavyweights such as venture capitalists Vinod Khosla and John Doerr and Google co-founder Larry Page would tax Big Oil to provide $4 billion in funding for alternative-energy research, programs, and startups.

Alex Steffen interview in Business Week on the WorldChanging book launch and related matters.

BusinessWeek: Green architecture gets a lot of press, and smart companies are starting to see that green buildings can not only help preserve the environment, but also help a business's bottom line—not to mention garner press. Can businesses even push themselves beyond LEED in terms of saving the environment and their own dollars?

Alex Steffen: Traditionally, environmentalists have been perceived as being antitech, antibusiness, and antiprosperity. We're now seeing a new kind of environmental movement that's interested in embracing science and technology for better solutions, and that includes businesses.

We talk a lot about a bright green economy. But the most negative force that has the largest environmental impact is inefficiency. Businesses need to get smarter about delivering what people want, without wasting resources. They need to realize that no one makes money by making more waste.

As for green architecture, LEED was the goal only a few years ago. But now people who are on the cutting edge are going beyond LEED, such as the development of totally self-sufficient, zero-energy-footprint flats in London, developed by Yorklake and BedZed. Businesses should realize that they will make more money if they push farther than LEED.

Some claim that buildings cost less up front by being built green—using materials from the site to cut down on transportation costs such as fuel, for example. I think we're now headed toward the goal of zero-energy, zero-waste buildings. Sure, it sounds really dramatic. But once we get a compelling, good example, the whole field of green architecture will shift.

Grist is posting a step by step guide on "How To Talk to a Climate Skeptic".

I am going to be reposting, article by article, my How To Talk to a Climate Skeptic guide here at Grist. Before beginning, I would like to make a correction, present a plan, offer an explanation, and make a request.

David said that after 60 or so articles the guide is a "mission accomplished." Unfortunately, there really is a lot left to cover! That's the correction.

The plan is to present these articles roughly following the Stages of Denial sorting, so it will read like a "journey of discovery."

The explanation is prompted by a few comments I got from some of the more sophisticated contrarians I tangled with at the original site. They complained that the arguments I was debunking were often shallow or silly -- that they were red herrings. I would like to state clearly for the record: there is not a single argument I addressed that I have not seen being made repeatedly on blogs, usenet, or less scientifically literate venues like the op-ed page of the Wall Street Journal. I can not defend against the charge that the denialist's material is sometimes shallow, silly, or even downright ludicrous, but if it is good enough for the Senate floor or the congressional record, it is good enough for me to address.

Crikey reports that concern about global warming is growing in the business world, which puts the Rodent (one of those climate skeptics who needs a good talking to) in a difficult position - how to do the bidding of the coal companies without getting the rest of the business sector offside.

Next Monday, Sir Nicholas Stern, a former chief economist with the World Bank, will warn that governments need to tackle the global warming problem head-on by cutting emissions or face economic ruin. His findings, according to The Guardian, will turn "economic argument about global warming on its head by insisting that fighting global warming will save industrial nations money."

The US and Australia have refused to join the Kyoto protocol because it would harm the economy. Prime Minister John Howard told Four Corners recently "we have a lot of reservations about carbon taxes because carbon taxes are going to impose huge costs on the Australian economy."

But Crikey has put managed to put together a rather long list of CEOs who seem to disagree with the PM. The following business leaders are putting their money where their mouths are and demanding a stronger government response to global warming. They're also showing how businesses can become more profitable by responding to climate change now.

Michael Hawker, CEO, Insurance Australia Group: Has recognised the risks to insurance industry from global warming and the business opportunities. Recently told CEO Forum Group, “We have a very direct interest in this...we pay claims as a result of environmental events, such as storms, bushfires, and so on, many of which have a direct relationship to global warming. One of the consequences of this is the increasing costs of claims in the market place...We respond to that in two ways: ...price the cost of insurance to reflect the increased risk, but the other is to explain to the community the likely costs of environmental warming...” A member of the Australian Business Roundtable on Climate Change, launched in April, which has called for Australia to have its own carbon pricing regime.

David Morgan, CEO Westpac: Westpac has created a green home loan product that distinguishes Westpac from other banks. In June 2003, Westpac adopted the Equator Principles, a voluntary set of guidelines which have been developed for managing social and environmental issues relating to the financing of projects. In a joint CEO statement as part of the Business Roundtable, Morgan stated, “...Australia can deliver significant reductions at an affordable cost. Furthermore, the longer we delay acting, the more expensive it becomes for business and for the wider Australian economy.”

Paul Anthony, CEO AGL: Told the Eureka Report, "I think the biggest overhang though is the lack of any coherent policy on carbon trading...what we're trying to do is build a modern fleet of generating capability that's a mix of renewable and clean-burn gas-fired generation. So in the back of our mind, we're assuming that there's going to be a carbon policy in place, and every single step we take to build out our generation fleet is either clean-burn gas-fired technology or we're looking at renewable technology.”...

I love reading that kind of stuff - most businesses can't afford to irrationally stick to paranoid ideologies the way some think tanks and political parties do...

Less amusingly, the Minister for Hypocrisy, Ian Campbell, shows that the government is willing to stoop as low as it possibly can when it comes to trying to solve the energy dilemna - the obvious solution - carbon taxes, which allow the market to determine the best way to produce energy cleanly (which is supposedly in line with stated government policy and ideology) are forbidden, but handing out subsidies to start a nuclear power industry is apparently OK - our tax dollars going to waste propping up government cronies to produce a product no one wants...

THE Government would consider subsidising nuclear power to make it affordable, Environment Minister Ian Campbell indicated last night.

Senator Campbell said the Government would not penalise coal-burning power stations in order to make their energy more expensive and bring it on a par with nuclear-generated energy.

Asked on ABC television whether nuclear power would be uneconomic unless coal-fired power stations were penalised for polluting the atmosphere, Senator Campbell said the Government preferred incentives over penalties and taxes.

"When you realise that Australia is 1.46 per cent of global (carbon dioxide) emissions, creating policy measures in Australia that put up the price of energy ... that is the Labor way of doing things," Senator Campbell told ABC television. "The other way is to create incentives. "Whenever you want to create an energy source that is more expensive to create infrastructure-wise than what we are doing at the moment, you will need some sort of subsidy."

On a positive note, the government has been shamed into retaining their small subsidies for consumers to install solar power after feeling the heat from voters.

The Federal Government's recent acknowledgment of the dangers posed by global warming continued yesterday when the Treasurer, Peter Costello, reversed a plan to abolish consumer rebates for solar energy.

The scheme, which provides incentives for installing solar power in homes, business, schools and community centres, was slashed on January 1 and scheduled for abolition by June 30 next year.

But Mr Costello said yesterday he supported the scheme and it would not be phased out. "My own view is it should continue. I am certainly not supporting its abolition." An announcement on the scheme's future was likely to be made in the federal budget in May, but could come sooner, he said.

The about-face followed a campaign by Channel Seven's Sunrise program and criticism from Labor. With the polls showing most people are worried about climate change and the drought fuelling those concerns, the Government has shed its scepticism about global warming in recent weeks.

While the polls seem to be the only thing that can make the government acknowledge global warming, one would hope that their spin that dealing with global warming is expensive is about to come to a shameful end, with more and more reports noting that its cheaper to deal with global warming than it is to let it continue to accelerate (which is no doubt why the business community is largely starting to push for action).

Climate change could push the world into the worst recession since the Great Depression, with many countries facing economic ruin, a comprehensive British report on the effects of global warming will warn next week.

The report, written by the former World Bank chief economist Sir Nicholas Stern and commissioned by the British Treasury, seeks to overturn conventional wisdom by insisting that fighting climate change will save - not cost - governments money.

The report's contents have been kept secret but Sir Nicholas briefed environment and energy ministers from the world's top 20 greenhouse gas-emitting nations - including the Industry, Tourism and Resources Minister, Ian McFarlane - in Mexico this month.

Britain's chief scientist, Sir David King, said the report indicated "that if we don't take global action … we will be faced with the kind of downturn that has not been seen since the Great Depression and the two world wars".

"If you look at sea level rises alone, and the impact that will have on global economies where cities are becoming inundated by flooding … this will cause the displacement of hundreds of millions of people," he said.

Sir David described the Stern report as the most detailed economic analysis that has been conducted and said it would "surprise many people in terms of the relatively small cost of action."

Technology Review has an article on "A Practical Fuel-Cell Power Plant" which looks at cleaner and more efficient ways of generating power from coal in next generation power plants.

GE's advance allows for a solid-oxide fuel cell to use coal-based fuels at costs approaching that of conventional power plants.

One of the most efficient ways to produce power at future coal-gasification power plants is with solid-oxide fuel cells, which use the hydrogen from the gas stream to generate electricity through chemical reactions. This is more efficient than simply combusting the gas stream from coal gasification. And unlike other types of fuel cells, the solid-oxide variety can operate at very high temperatures and efficiencies, and be scaled up to provide cities with power.

But among the various challenges to developing the technology, manufacturing cost has been a potential deal breaker. Now, researchers at GE have demonstrated a manufacturing method that assembles layers of ceramic and electrolyte materials cheaply so that the final product can be built for about $800 a kilowatt, which starts to approach the $500-to-$550-per-kilowatt cost of building a conventional gas-fired power plant.

GE's six-kilowatt prototype achieves 49 percent efficiency in converting fuel into electricity, which compares favorably with the 35 percent efficiency of conventional coal-burning power plants.

John Robb has a micro post on peak oil.

The conventional way to think about peak oil is collapse. I think that the better way to view it is as a test of systemic resiliency. Those systems that can bridge the gap through innovation will reap the benefits (a BIG shift in wealth).

While I completely agree with John, this once again makes me wish people wouldn't accept that the conventional belief regarding peak oil is that it means collapse (though thats certainly true in doomer circles). If everyone believes this then it will become a self fulfilling prophecy when we realise we're past the peak (whenever that happens).

Peak oil is an opportunity to move to cleaner energy sources (or dirtier energy sources, depending on which road we take). Its hard to prepare a convincing case that there will be less net energy available in 10 years time than there is today, even if we've already passed the peak of conventional oil production right now (a subject I'm going to rant about at length one day - and I'm going to rant about a little more tomorrow).

Dave at SPO likes to say "peak oil is an infrastructure problem, not an energy problem", which sums it up perfectly in my view.

Reuters has a report from the ASPO USA conference, quoting Matt Simmons saying that we may have already passed the peak.

World production of crude oil may have already peaked, setting the stage for declining output that could lag demand, a top advocate of the "peak oil" theory said on Thursday.

Matthew Simmons, chairman of Simmons & Co. International, a Houston-based investment banking firm specializing in the energy sector, said U.S. government data showed that the world oil supply has declined through the first half of this year.

Energy Information Administration data showed world supply of crude oil has declined to 83.98 million barrels per day in the second quarter after hitting 84.35 million bpd in the fourth quarter of 2005.

"If you basically have another six to ten months of that decline lasting, then I think for certain we would look back and say, 'Guess what? We actually reached a sustainable peak in crude oil production in December 2005,'" Simmons said at a meeting of the United States of the the Association for the Study of Peak Oil and Gas.
Other speakers at the conference took a more tempered view of the world's oil capacity, arguing that peak production is still a few years out.

William Engdahl has a 2 part series in The Asia Times on "The Emerging Russian Giant" which has a reasonably detailed look at energy and infrastructure projects in Russia anlong with a whole lot of speculation about the geopolitical implications (John Robb also has a post on Russian gas).

Ironically, the aggressive Washington foreign policy of the era of Vice President Dick Cheney and Defense Secretary Donald Rumsfeld since 2001 has done more to nurture the one strategic combination in Eurasia most dreaded by Washington political realists such as Henry Kissinger or Zbigniew Brzezinski, namely a strategic military and economic cooperation on a deep, long-term basis between two former Cold War foes, China and President Vladimir Putin's Russia.

Putin has taken a number of steps in recent months to shore up relations with Russia's most important potential strategic Eurasian partner, China. In March he went to Beijing to discuss increased bilateral energy cooperation, a theme dear to the heart of energy-hungry China. Top on that agenda was China's wish that a pipeline from Taishet in Siberia be built to bring oil to Daqing in China. In addition, the China National Petroleum Co (CNPC) and the Russian Rosneft oil company signed several agreements for joint energy projects. And Gazprom and CNPC signed a memorandum of understanding to supply Russian natural gas to China.

With Sudan and the Middle East under increasing pressure from the United States, Sino-Russian energy cooperation has moved to the top of China's foreign-policy agenda. At the end of this month, Russia and China will meet again in Moscow to discuss further energy cooperation.

As well, Russia is a major supplier of arms to China, and military cooperation between the two states is increasing. In 2001 the two signed the Russia-China Friendship and Cooperation Treaty, the first such bilateral treaty since 1950. A major point covered "joint actions to offset a perceived US hegemonism". That was two months before September 11 and the ensuing Iraq invasion. In August 2005 the two countries held their first joint military exercises to increase bilateral coordination in "fighting the war on terrorism".

In terms of overall standard of living, mortality and economic prosperity, Russia today is not a world-class power. In terms of energy, it is a colossus. In terms of landmass, it is still the single largest nation in the world. It has vast territory and vast natural resources, and it has the world's largest reserves of natural gas, the energy source currently the focus of major global power plays. In addition, it is the only power with the military capability to match that of the United States, despite the collapse of the Soviet Union and consequent deterioration of the Russian military.

Russia has more than 130,000 oil wells and some 2,000 identified oil and gas deposits, of which at least 900 are not being exploited. Oil reserves have been estimated at 150 billion barrels, similar perhaps to Iraq. They could be far larger but have not yet been exploited because of the difficulty of drilling in some remote Arctic regions. Oil prices above US$60 a barrel begin to make it economic to explore in those remote regions.

...

Late last month a seemingly minor dispute exploded and resulted in the revocation of the environmental permit for Royal Dutch Shell's Sakhalin II liquefied-natural-gas project, which had been due to deliver LNG to Japan, South Korea and other customers by 2008. Shell is lead energy partner in an Anglo-Japanese oil and gas development project on Sakhalin, a vast Russian island north of Hokkaido, Japan.

At the same time, the Putin government announced that environmental requirements had also not been met by ExxonMobil for its De Kastri oil terminal built on Sakhalin as part of its Sakhalin I oil and gas development project. Sakhalin I contains an estimated 8 billion barrels of oil and vast volumes of gas, making the field a rare "super giant" oil find, in geologists' terminology.

In the early 1990s the government of Russian president Boris Yeltsin made a desperation bid to attract needed investment capital and technology into exploiting Russian oil and gas regions at a time when the government was broke and oil prices very low. In a bold departure, Yeltsin granted US and other Western oil majors generous exploration rights to two large oil projects, Sakhalin I and Sakhalin II. Under a production sharing agreement (PSA), ExxonMobil, lead partner of the Sakhalin I oil project, got tax-free Russian concessions.

Under the terms of the these agreements, which are typical between major Anglo-American oil majors and weak Third World countries, Russia's government would get paid for the oil and gas rights by receiving a share of eventual oil or gas produced. But the first drops of oil to Russia would flow only after all project production costs had first been covered.

PSAs were originally developed by Washington and Big Oil to facilitate favorable control by the oil companies of large oil projects in third countries. The major US oil giants, working with the James Baker Institute, which drafted Dick Cheney's 2001 Energy Task Force Review, used the PSA form to regain control over Iraq's oil production, hidden behind the facade of an Iraqi state-owned oil company.

Shortly before the Russian government told ExxonMobil it had problems with its terminal on Sakhalin, ExxonMobil had announced yet another cost increase in the project. ExxonMobil, whose lawyer is James Baker III, and which is a close partner to the Cheney-Bush White House, announced a 30% cost increase, something that would put off even further any Russian oil-flow share from the PSA.

The news came on the eve of ExxonMobil plans to open an oil terminal at De Kastri on Sakhalin. The Russian Environment Ministry and the Agency for Subsoil Use suddenly announced that the terminal did "not meet environmental requirements" and is reportedly considering halting production by ExxonMobil as well.

Past Peak has a grim post on coral dieoff.

Researchers fear more than half the world's coral reefs could die in less than 25 years and say global warming may [be] at least partly to blame.

Sea temperatures are rising, weakening the reefs' resistance to increased pollutants, such as runoff from construction sites and toxins from boat paints. The fragile reefs are hosts to countless marine plants and animals.

"Think of it as a high school chemistry class," said Billy Causey, the Caribbean and Gulf Mexico director of the National Oceanic and Atmospheric Administration.

"You mix some chemicals together and nothing happens. You crank up the Bunsen burner and all of a sudden things start bubbling around. That's what's happening. That global Bunsen burner is cranking up."

Last year's coral loss in the Caribbean waters supports predictions that 60 percent of the world's coral could die within a quarter century, said Tyler Smith of the University of the Virgin Islands.

"Given current rates of degradation of reef habitats, this is a plausible prediction," Smith said.

More than 47 percent of the coral in underwater study sites covering 31 acres around the U.S. Virgin Islands died after sea temperatures exceeded the norm for three months in 2005, said Jeff Miller, a scientist with the Virgin Islands National Park.

Up to 30 percent of the world's coral reefs have died in the last 50 years, and another 30 percent are severely damaged, said Smith, who studies coral health in the U.S. Virgin Islands and collaborates with researchers globally.

The "Des Moines Register", from out in the corn fields, has an article on how the adoption of biofuel may alter the physical form of corn plants over time.

Corn raised by future Iowa farmers could look more like the corn produced by their ancestors, with more substantial stalks, biofuels industry experts said Wednesday. As investment in biomass-based, or cellulosic, ethanol production grows, so will demand for crop residue.

He and others predicted that some sectors could be hurt by the growing industry. Corn production may take cropland from soybeans, for instance, making soy products more costly. Higher corn prices, driven up by demand from ethanol plants, could increase costs for many livestock feeders.

"The intersection of agriculture and energy is going to be a disruptive event," said David Miller, director of research and commodity services for the Iowa Farm Bureau Federation. That "can be good or bad, but it is going to be disruptive."

One commenter at TOD noted:

Farmers are at their wits end in getting paid a living wage for producing food. Food is kept cheap in this country at the expense of the people who grow it. Not every year granted, but over the long haul a few bad years can drive a farmer out of business. They are backing anything that increases commodity grain and food prices.

I disagree that people in Iowa do not understand the ramifications of using plants for fuel. They understand very well and expect a balance to be achieved some time in the future for land being used for food, fuel or structural materials. Currently it is only food. When other countries have a good crop, farmers lose money or must get a subsidy (greater subsidy?) from the government. Iowa farmers would rather have everyone pay them more but have the country spend less on imported oil and subsidies. Most people in Iowa understand this as well. Give the farming base more money and they will be better stewards of the land and spend more money locally, that translates into jobs. With enough income in the state you get new business development making farm equipment, service jobs and maybe even a new industrial base making real physical goods other than farm equipment.

The harsh reality is if Iowa ships more finished goods and less raw food stocks, out of state, the state nets more income. It is all about transfer of wealth. Where is the wealth being generated vs where do we want it to be generated? Right now there is a giant sucking sound of money going to oil companies and/or overseas. This must end, either by design or after all the wealth is sucked out of the state and country. And I am sure this means more food must be grown outside of Iowa but isn't that what the shop locally for food movement is all about?

I'm not totally enamoured of the redesign of WorldChanging - it looks nice enough, but I found the old layout a lot more information dense (which is something I'd like Peak Energy to be if I ever find the time to do a redesign). Hopefully the new look will grow on me. One new report is on domestic wind turbines in London

Domestic wind turbines are gaining in popularity in Britain, where some 80,000 homes now use small renewable power generation units to provide energy for residents, reports a recent Reuters article. Donnachadh McCarthy, who last November earned distinction as the first Londoner permitted to put a wind turbine on his house, is using the unit and other renewable energy devices to feed surplus power back to the grid. “I have exported 20 percent more electricity than I’ve imported this year,” he boasts, noting that his carbon footprint is less than half a ton, far below the European Union average of 8.5 metric tons.

A promise earlier this year by David Cameron, leader of the UK’s opposition Conservative Party, to install a wind turbine and solar panel on his home led to dramatically increased sales of “microgeneration” products—especially wind turbines—nationwide, the article notes. Mainstream retailers, such as B&Q, a chain of hardware stores run by Kingfisher Plc., sell domestic turbines for around 1,500 British pounds (US$2,800). But the number of smaller producers is growing as well. Futurenergy, for example, sells about 100 of its £695 ($1,200) turbines each week to customers around the world, according to company director Peter Osborne.

TreeHugger has a post on creating plastics with Vitamin C or Water (though oil is still involved in this process unfortunately, so its not a pure bioplastic).

Two laboratory breakthroughs are poised to dramatically improve how plastics are made by assembling molecular chains more quickly and with less waste. Using such environmentally friendly substances as Vitamin C or pure water, the two approaches present attractive alternatives to the common plastic manufacturing technique called free radical polymerization (FRP).

Plastics are polymers, long, potentially complex, molecule chains crafted from an array of smaller chemical units. Using FRP, chemical engineers can create the right plastic for a range of applications, such as a specific trim for a car door or soft foam for a pillow.

Researchers from Carnegie Mellon University have discovered that adding vitamin C, glucose, or other electron-absorbing agents to a powerful plastic manufacturing method can reduce the needed copper catalyst by 1000 times. Because the catalyst has to be removed from the end products, less of the metal means far less waste and drastically reduced costs.

Note that the plastic will still be made with petroleum. The new technique simply improves on the manufacturing process. Bioplastics are greener because they are made with organic materials, and are thus biodegradable.

No tinfoil tonight (unless you count Engdahl in that category - I'm sure you know where to find some)...