The Future of Venture Capital  

There was a blog post from a tech guy named Giles Bowkett a week or two ago that told a tale of two startups in which he opined that venture capital is dead, which got a bit of attention on some of the social networking sites.

I think what's going on here is that the venture capital system is based around the idea that companies require substantial investment to get going. But that isn't true any more. (Huge hour-long mp3 behind the link, absolutely worth it.) Infrastructure means open source software and bandwidth. Bandwidth is cheap, and open source is free.

Every venture capitalist wants that huge success, the big disruptive innovation that destroys old industries and makes them millions.

The irony is, the biggest disruptive innovation that ever came from the Internet could in fact be open source software, and the old industry it destroys will probably be venture capital.

Think about it. Free software and cheap infrastructure basically eliminates the whole raison d'etre for venture capitalists. Companies are cheap to start. All the stuff you used to need millions for is now free. That means venture capitalists just don't matter any more. It isn't about being lucky enough to get $5 million in funding; it's about starting something with the cash in your pocket. If you make something and it's good enough, the guys with $5 million in funding will come to you, because those guys are basically just money in search of intelligence, and it's a lot better to be intelligence in search of money. If you're intelligence in search of money, you'll choose the best way to get money. The best way to get money isn't to find some VCs to beg, borrow, or steal from; the best way to get money is to make something people will pay for. So if you're intelligence in search of money, you'll make stuff people want to pay for, and you won't even bother with the VCs, because they need you more than you need them.

While there's no doubt that people can startup software companies (particularly ones producing Web 2.0 and other "software as a service" type applications) without much investment, I would still say that it is a rather large leap from "the software market is competitive and has low barriers to entry" to "the venture capital industry will be destroyed". Linux hasn't killed Microsoft, Apache hasn't killed IBM and BEA and the fact that you really can start something like a Digg or a Flickr or a 37 Signals or whatever else in your own house without much money doesn't mean that these will kill off competition from VC funded startups - its really a matter of execution and sometimes full-timers with money behind them will do it best (and fastest).

Of course, there is more to venture capitalism that just the software market - and while I'm not a venture capitalist, it seems to me that there is a large amount of money to be made from the disruptions to the status quo that will occur as a result of peak oil and global warming, and the venture capitalists will seek to profit from these changes. In some ways, this types of shifts make a VC's life easy - instead of having to create disruptive change purely via innovation and marketing, the changes are put in motion for them - they just have to identify and fund companies that can provide products or services that enable people to adapt to the trends that are occurring (in this case, changes to our sources of energy - due to oil "running out" and to the need to drastically cut carbon dioxide emissions).

Business 2.0 had a look at what some big VC's would like to invest in not that long ago, which provides a little insight into where they see money being made in the future. Some of these seem a bit lame to me (or even actively annoying in some cases), but few seem to be easy meat for do-it-yourself-at-home in your part time sort of operations - and some of them (the highlighted ones) are concepts that have the advantage of meeting needs created by my 2 pet topics.

The Ultimate iDrive - A driver's tech fantasy fully realized: an in-dash computer with a keyboard built into the steering wheel and a full-screen heads-up display projected on the windshield.

A Flyweight Database - A new database company. Don't yawn. Draper loves startups that can upend corporate giants with simple products and cheap technology.

The New Power Play - As Musk's two most recent investments - in a space rocket and an all-electric sports car - suggest, the 35-year-old entrepreneur likes to think big. So he's intrigued by the promise of a next-generation battery called an ultracapacitor, capable of powering everything from cars to tractors. Unlike chemical batteries, ultracapacitors store energy as an electrical field between a pair of conducting plates.

Theoretically, they can be charged in less than a second rather than hours, be recharged repeatedly without sacrificing performance, and far outlast anything now on the market. "I am convinced that the long-term solution to our energy needs lies with capacitors," Musk says. "You can't beat them for power, and they kick ass on any chemical battery." Musk would know: He was doing Ph.D. work at Stanford on high-energy capacitors before he helped get PayPal off the ground.

At least one startup, EEStor in Texas, and a larger company, Maxwell Technologies in California, are working on ultracapacitors. Yet Musk believes a university-based research group has an equal shot at a commercial breakthrough, since universities are where the most promising research is bubbling up. "The challenge is one of materials science, not money," Musk says. The team to pull this off, he says, would need expertise in materials science, applied physics, and manufacturing.

Musk wants to see a prototype that can power something small, like a boom box. "Make one and show me that it works," Musk says. "Then tell me what's wrong with it and how it can be fixed."

Spreadsheets That Truly Excel - A Web-based platform to make company spreadsheets--for revenue forecasting and other analytical chores - more easily viewed, updated, and shared by managers.

A Better Energizer - Khosla, a legendary Silicon Valley VC whose winners have included Juniper Networks and Redback Networks, and Kaul are looking for an engineering team to build a lithium-ion battery with five times the life of anything found in cell phones, PDAs, or cameras. Matsushita and Sanyo are pushing the limits on lithium-ion cells, as are a couple of promising startups. But as with ultracapacitors, Khosla and Kaul think the right inventor will come from an academic lab. "We see research that proves it's attainable," Kaul says. "This is not a flying car. If it was, I'd ask for 20 times."

Patient Monitoring to Go - Implantable wireless devices capable of 24/7 patient and data monitoring for conditions such as heart disease and diabetes

New Tricks for Old Drugs - New uses for prescription drugs with expiring patents

Search for the Small Screen - Delivery of new types of Web search to mobile phones.

GPS-Guided Coupons - GPS-enabled ads and coupons piped to your mobile phone at just the right time and place.

Text Ads on the Fly - Text-messaging software that allows local merchants to send offers to mobile phones.

The eBay of Product Placement - An online marketplace that automates the sale of product placement for Hollywood studios.

Helping Vlogs to Flog - A matchmaking site that brings new forms of advertising to one of the Web's fastest-growing new phenomena, the video blog.

The Social Marketplace - A marketplace, with members buying and selling their own creations as much as they blog, link, and post for indie artists, musicians, filmmakers, authors, designers, and other creative types from dozens of countries.

A Matchmaker for Mashups - A Web-based service that allows users to combine their own videos with a library of licensable clips and music to create video mashups online.

Luxury Living on a Budget - A design scheme for a community of affordable new homes, packed with luxury amenities and based on green values. This is yet another baby-boomer play, but AOL co-founder Case and partner Davis - who helped bring fractional ownership to the ultraluxury-home market with Exclusive Resorts - don't think builders like KB Home (Charts) and Pulte Homes (Charts) have all the angles covered.

Sustainable living and "wellness" lifestyles are big draws among retiring boomers. But so is price, Davis says, as more and more people worry about shrinking retirement incomes.

That's why he'd like to see a development based on more modest homes inside a community that offers an eclectic mix of perks--a spa, yoga classes, a community garden, room service, and so on. Revolution is looking for a small team to identify the developable land, map out home architecture and design, and assemble the right mix of services.

"It's about lots of services, lots of amenities, lots of convenience," Davis says. The plan ought to consider not only location options but also different sales models: Homeowners should be able to choose among full or fractional ownership and different levels of property management, perhaps even taking part in selling the community's services to outsiders.

Trip Planning 2.0 - Concierge-grade trip planning over the Web.

Clean, Green Office Space - An enviro-friendly office-maintenance service. Most businesses hire different vendors for recycling, janitorial, and supply services. Kirkpatrick thinks a startup can cobble them together in a tidy green package for clients willing to pay a premium not just for the convenience but for a stamp of eco-approval to tout to employees and customers. Buying a handful of small vendors in a specific region would be the starting point. "Roll-ups in this industry have often been good investments," Kirkpatrick says.

A Weapon Against Superbugs - A device that can identify new types of hospital-borne infections in just a few hours.

Optimized Sales for the Little Guy - A Web-based service that helps small online publishers choose the most profitable way to sell their ad inventory - whether that's direct sales, Google's or Yahoo's ad networks, or other channels.

The Next Massively Entertaining Idea - The next massively multiplayer online hit, whether it's built around a core game like World of Warcraft or a virtual community like Neopets.

When I saw this list I was disappointed at how few energy related ideas there were - and how limited in imagination some of the others are.

Kleiner Perkins' clean energy fund is one example of a VC firm concentrating some attention and money in the right area, with John Doerr noting "Greentech could be the largest economic opportunity of the 21st century."

KPCB XII plans to invest $600 million over roughly a three-year period, backing entrepreneurs and innovation in information technology, life sciences and other fast-growing industries. Ongoing initiatives include mobile and web services, personalized medicine and medical devices, and communications and semiconductor technologies. In addition, today KPCB is announcing a new $100 million initiative in “green technologies”.

For five years, KPCB has quietly backed greentech entrepreneurial ventures, including Lilliputian (battery technology), Miasole (solar cell technology), and a revolutionary solid oxide fuel cell maker. Two other ventures wish to remain “stealth”.

"Entrepreneurs are passionate about pursuing clean and affordable water, power and transportation. We’re seeing exciting, sustainable and scalable ventures, including biofuels (like ethanol), energy storage and energy conservation,“ said John Doerr. ”Greentech could be the largest economic opportunity of the 21st century. Disruptive innovations are possible because of recent advances in chemistry, genetics, and material science. American and world leaders are calling for alternatives to $60-a-barrel oil, and entrepreneurs are rising to the challenge."

My personal list of high priority areas for green investors to concentrate on is (in no particular order):

Electric vehicles - plug in hybrids have been announced by most major car manufacturers now and will be important for some time, but electric vehicles are the future and companies like Tesla Motors, Phoenix Motorcars and Wrightspeed

Batteries and energy storage - every electric vehicle needs a battery for energy storage, and companies like EEStor, AltairNano, A123 Systems and Tesla's Li-ion battery

Solar power - while thin film CIGS solar from companies like Nanosolar, Heliovolt and Miasole is the hottest new thing out there, even regular photovoltaic solar power plants are starting to achieve reasonable size and solar concentrators like Spectrolab's are promising cheap, efficient energy. Other interesting developments include dye sensitized cells from Konarka, silicon quantum dots and biomimicry based approaches

Smart grids and Vehicle to grid - there is no technical obstacle to satisfying all our energy needs with renewable energy - particularly wind, solar and tidal energy (which would completely solve the global warming and peak oil problems) - the main challenge is dealing with the intermittency of most renewable energy sources - managing supply and demand via smart grids and dynamic pricing is one way of dealing with this, the other is storing energy - which can be done within the grid (using all sorts of technologies) or at the customer premises, with the most obvious candidate being to use the energy storage devices within electric cars to provide distributed energy storage across the whole grid - and the alternative being in house energy storage devices - the basis of Richard Smalley's "Smart Grids" concept.

The best sort of grid, in terms of being able to harness as much renewable energy as possible, is a large, highly interconnected one - some Bucky Fuller envisaged long ago called GENI - the global energy grid - getting this built may be more challenging - I suspect it will start in the EU

Biodiesel from algae - the pioneers here are GreenFuels and De Beers (not the diamond people) in South Africa, along with other companies like Solix biofuels

Cellulosic ethanol - Not the regular grain based ethanol that Vinod Khosla, Richard Branson and Bill Gates have been dabbling in - there are too many drawbacks to this approach and it reeks of subsidy farming - though Vinod Khosla has noted this is just a stepping stone to cellulosic ethanol and other biofuels for him. Companies like SunOpta, Mascoma, XEthanol and Iogen are among the new players

Bioplastics - with regular plastics manufacturing becoming difficult courtesy of high natural gas prices (and natural gas depletion), creating bioplastics will be a big area of opportunity (though one I know little about)

Terra Preta Nova - I've said plenty about this one lately - someone just needs to commericialise this

Energy Efficiency and Fuel efficiency - there are vast amounts of energy efficiency and fuel efficiency gains to be made (something Amory Lovins has spent a lifetime explaining to anyone who will listen) - ranging from technologies with huge impacts (like LED based lighting and improving the energy efficiency of computer data centres) to incremental improvements like intelligent car navigation and lighter materials for manufacturing cars

Other areas that need innovation and investment include Combined Heat and Power, Geothermal energy (which will be a big growth area down here and got quite a big write up in the weekend Financial Review), massively increasing Wind power capacity and commerialising Tidal and Wave energy projects


In summary, I think rumours of the death of venture capital are premature - there are a lot of areas where we need lots more venture money being invested - and I think we will.

Ira Ehrenpreis at Clean Edge seems to think much the same way, with an editorial called "Clean Technology’s Coming-Out Party".

Clean tech has been described as “the biggest economic opportunity of the 21st century.”

Last year was a banner year for the clean-tech sector. In many ways, clean technology has been the debutante of the venture asset class over the past twelve months with 2006 serving as the sector’s coming-out party.

From an inconsequential percentage of venture dollars allocated to this sector in prior years, clean technology now boasts the third-highest investment category within the entire venture asset class. This category, which was not even on the venture radar screen just a few short years ago, has now overtaken the semiconductor sector in terms of dollars being invested – quite a feat given how that the latter category has been a mainstay of venture capital.

Moreover, the clean-tech sector has demonstrated its ability to provide large exits and lucrative IPOs. 2005 was the Year of Solar, with Suntech, SunPower, and Q-Cells ringing in banner IPOs. Last year proved to be the Year of Ethanol, with such companies as Verasun and Aventine going public. Clean-tech companies have utilized the AIM market for several other IPOs. By all accounts, 2007 is shaping up to continue the trend of strong clean-tech exits.

Technology Partners has been investing in this sector since the early 1990s and I became involved with my first clean-tech company more than a decade ago. I have long argued that the reason that Technology Partners invests in clean technology is for the “green,” referring of course to the sector’s ability to drive returns for our limited partners – and the exits referred to above bode well for our firm’s investment thesis. When we first started investing in the sector, the goal for investment returns was considered at odds with the aspiration to improve society’s critical environmental issues.

But for the first time in history, the “greens” have converged. Today, there’s now a convergence of social, political, economic, environmental, and entrepreneurial forces collectively driving investment into clean tech. Even Thomas Friedman aptly said that “Green is the new red, white and blue.”

So how did this sector – once ignored by the mainstream investment community – become the new apple pie of venture? Why clean tech? And why now?

While many point to the price of oil as having doubled since 2004 as a fundamental driver behind this newfound attention to clean tech, it is far too superficial to point simply to this factor alone. In fact, only one company in Technology Partners’ entire clean-tech portfolio, our biodiesel investment, has even any correlation to the price of oil. Rather, Technology Partners’ clean-tech strategy has been to invest across the spectrum of energy technology (which includes energy generation, storage, and efficiency), water technology, and advanced materials.

Perhaps the central driver behind the clean-tech opportunity emanates from the sheer lack of historical investment in innovation in these areas – by startups, by big companies, and by governments alike.

Unlike so many other sectors within high tech, in which venture investment has been at the epicenter of innovation, VCs have long ignored clean tech. Thus, the venture community has not been responsible for innovation in this sector historically.

Large companies in the clean-tech ecosystem have also failed to allocate money toward innovation anywhere commensurate to their high-tech peers. It is not atypical for a high-tech company, whose success is based entirely upon its ability to innovate, to spend 10- 15% of its revenue on R&D. By contrast, energy companies often spend an order-of-magnitude less. Dan Kammen of UC Berkeley deftly argues that a similar contrast can be drawn between innovation in clean tech and in the biotech industry, which spends nearly ten times more on R&D than similarly situated companies in the energy industry. He further argues that this disparity exists not only in the private sector, but extends to government spending as well.

The examples of opportunities that result from this dearth of historic innovation are too numerous to cite in this short piece, but nonetheless demonstrate the breadth of the clean-tech opportunity.

Moving on to regular news, Joel Makower has a good roundup of his top green business stories for 2006.

1. Wal-Mart Goes from Zero to Hero

If you've been reading these pages lately, you've seen a succession of stories about Wal-Mart's environmental commitments: its efforts to reduce the toxic ingredients of the products it sells; its five-year plan to reduce packaging; its commitment to green its textile supply chain; its pledge to sell 100 million compact fluorescent light bulbs in 2007; its potentially ravenous appetite for solar; and more.

I'll be honest: I didn't see it coming. The green utterings (PDF) of the company's CEO, Lee Scott, notwithstanding, it was hard to imagine that this much-maligned, seemingly intransigent company could change much, if at all. But I'll be the first to give credit where it's due. Wal-Mart -- like Nike, Starbucks, McDonald's, and several other corporations prodded toward sustainability by activists -- seems hellbent to be a leader, and appears to be putting its considerable heft behind that notion. ...

To be sure, Wal-Mart is far from green, and it has other issues -- labor, community, etc. -- to clean up before it can be considered a truly "good" company. But over the past year, I've found myself fascinated with the conversations taking place in Bentonville. And if Wal-Mart can embrace green, it feels like anything is possible.

2. Alt-Fuel Vehicles Get in Gear

Just one year ago, it didn't feel like there was much hope for alternatively fueled vehicles, notwithstanding a handful of hybrids and a few bold but hopelessly miniscule companies seeking to create a market for small commuter cars and other niche products. ...

But a funny thing happened on the way to the pump: without a lot of fanfare or hype -- indeed, with some initial resistance from Big Auto -- the notion of the electric vehicle, which some had famously considered to have been killed, started showing signs of life. Starting with hobbyists and tech-geeks, then spreading to venture-backed companies like Tesla Motors, plug-in electric vehicles became the talk of Detroit, Tokyo and beyond. By year's end, Toyota and GM had both announced plans to introduce plug-in hybrid-electric vehicles, and the electric car seemed like it might be on the road to recovery.

3. Carbon Neutral Brings Hope and Hype

In the be-careful-what-you-wish-for category, "climate neutral" became the word of the year for 2006. That's good news, of course: the notion of offsetting or zeroing out one's climate footprint has long been a dream of environmentalists. But the word gained such popularity, with no clear guidance over its use, that it became -- well, not exactly full of hot air, but close. ...

4. Financial Sector Takes on Climate

"Follow the money," goes the classic movie line, and if you want to see who's driving corporate action on climate change, that's exactly what you need to do.

With climate change increasingly seen as a serious risk to insurers, that industry last year ramped up its efforts to fully understand and address those risks, along with the inherent opportunities. The U.S. association of state insurance commissioners launched a task force to examine how climate change may affect the availability and affordability of insurance. A few companies began to introduce innovative products and services, such as carbon emissions credit guarantees, or rate credits and other incentives for commercial building owners who re-build damaged properties to LEED-certified standards. A Japanese insurer, Tokio Marine & Nichido Life, took it upon itself to reforest more than 7,500 acres of mangroves in Asia to minimize losses from rising cyclone-related risks. ...

5. Investors Flex Their Muscle on Climate

In some ways, banks and insurers are the least of it. Shareholders -- specifically, large institutional investors like pension funds and university endowments -- are emerging as the real power brokers in the climate arena. ...

The leading investment firms are jumping in, too. Merrill Lynch, for one, issued a report profiling seven companies it believes are best positioned to capitalize on what it calls the "clean car revolution." ...

That kind of involuntary disclosure from the investment community may be exactly what slower-moving companies need to get off the dime.

6. Renewables Become the New Recycled

Remember way back in the early 1990s, when "recycled" was the cutting edge of corporate environmental practice? Companies competed over the use and percentage of recycled materials in their products -- mostly because it was a marketable claim that the public readily understood.

Now, "green power" is the alluring buzzword du jour, and companies are jumping on board, leapfrogging one another to be seen as the leader, at least for the moment. From Walgreens to Whole Foods, the race is on. Who will build the biggest solar installation? (It's Google's claim for now.) Who will claim the largest purchase of renewable power? (The bragging rights were handed to Wells Fargo in recent months.)

But even the Bush administration's Environmental Protection Agency knows that all these efforts aren't enough. Making a dent in climate change will require tackling some big hairy audacious goals, or at least doing more than buying a few megawatt-hours of wind power. As the stark reality of climate stabilization wedges has demonstrated, big companies need to be doing much more, and doing it much more quickly. ...

7. Water Rises as a Business Issue -- and Opportunity

The issue of water scarcity is hardly new. Neither is the potential risks to businesses from insufficient water quality and quantity; I've written about this on several occasions. Indeed, I wrote about "water as a business issue" in my top stories rundown of 2004. ...

But amid the challenges are opportunities. Dow, for one, saw fit to launch a business unit to advance the science of desalination, water purification, contaminant removal, and water recycling. It joined GE, Dupont, and other old-line companies eyeing the potential to bring to market new water technologies with the potential to create massive new revenue streams.

8. Computer Industry Plugs in to Green

Two critical environmental issues came to a head for computer makers in 2006: energy use and waste disposal. Both had been low-level concerns for years, but took on new urgency over the past twelve months.

Electronic waste, or e-waste, became a focus for several activist groups, which pressed major computer manufacturers to provide the ways and means to take back used machines for decommissioning, reuse, recycling, or other disposition. ...

Things are even more heated on the energy front. Millions of computer servers operating 24/7 -- processing e-mail, operating Web sites, and managing just about everything else in our digital and wireless world -- have become gluttonous energy users. One factoid: A single high-powered rack of computer servers consumes enough energy each year to power a hybrid car across the United States 337 times. And with customers of server and chip manufacturers paying those growing monthly energy bills, computer hardware manufacturers have found themselves in a race to the top, competing on who can be most efficient.

9. Green Chemicals Become Supercritical

The notions of "green chemistry" and "sustainable chemistry" may seem odd, if not oxymoronic, but both are becoming part of the industry's vernacular, thanks in large part to increased pressures to reduce toxic substances in both chemical processes and products.

The European Union proposed an "action plan" to boost chemistry innovation on the continent by focusing R&D on what it dubbed "SusChem," shorthand for sustainable chemistry. ... Some companies, like S.C. Johnson, were acknowledged as leaders, along with others that have made strides in green chemistry. It's only a handful of innovators so far, but with the right catalysts it could turn into a chain reaction.

10. Green Becomes an Engine of Growth

Two thousand six may be the year that green business crossed the line from a movement to a market. It was long in coming, of course, with several watershed moments, not the least of which was the launch of GE's Ecomagination campaign in 2005. But in 2006, company initiatives to harness "green" as an engine for topline growth hit their stride. GE, for one, announced that it was ahead of its plan to reach $20 billion in annual sales of Ecomagination products by 2010. ...

It's all part of the Big Green Opportunity -- in theory, at least. It's not yet clear that companies are ready to seize the moment. A sobering study by the Conference Board found that a majority of big companies concerned with corporate responsibility issues lack an active strategy to develop new business opportunities based on those concerns.

Dave Roberts has the first in a series of posts at Tom Paine on how to make progress on the green technology front.

It is up to greens to make sure that in 2007, a year full of possibility on energy and environmental issues, change moves in the direction of long-term sustainability and justice. Powerful forces will be pushing the other way. They—chambers of commerce, dinosaur corporations, think tank and government shills—tend to speak in a unified voice.

The good guys—the side of clean energy and emissions reductions—are a rump coalition of liberal environmentalists, libertarian conservationists, conservative evangelicals, geeked-out entrepreneurs and paranoid defense hawks, among others. ...

Before I suggest a positive agenda most elements of the green coalition can agree on (in my dreams, anyway), it's important to understand why circumstances are uniquely aligned for action, and forecast a few of the forces against which greens should consciously countervail.

Circumstances favor progress. Greens confront opportunities in 2007 that haven't come around since the energy crisis of the 1970s. A new consensus is coalescing.

Public awareness is high, thanks to Al Gore and whole cavalcade of events and media coverage this past year. In addition to a few counterintuitive new members of the green coalition (among them God and Wal-Mart), pop culture trendsetters embraced green as the new black. Everybody's talking about it.

Virtually every winning Democratic candidate in the dramatic November elections was vocal about alternative fuels, energy independence, and (to a lesser extent) global warming, issues that have largely been stripped of their effete, elitist connotations. Particularly at the state and local level, Republicans are blazing environmental paths, part of the coast-spanning Schwarzenegger/Pataki Axis of Non-Crazy. Bush and his political appointees represent an increasingly isolated, reactionary anti-green corporatism. Green is emerging as one of the few areas ripe for efficacious bipartisanship.

Business elites have also seen a vision of our fossil-free future and are aggressively preparing for its arrival. Corporate behemoths like Wal-Mart, DuPont, and GE are focusing on efficiency. Venture capital is pouring into the clean energy sector. The mighty giant of American entrepreneurialism awakes.

Nonetheless, certain political and corporate interests hope to stall progress, or at least use it to further entrench and enrich themselves. There will be the obvious polluters and the old battles , but also a new set of politically-connected industries pushing solutions better for their bottom lines than the public interest. Only a united green front can counter their influence and push in more sustainable direction.

Ethanol. The recent hype around ethanol stands primarily to benefit Big Corn: Archer Daniels Midland alone stands to receive about $2 billion of direct or indirect government largesse in 2007. Big Auto's also getting a piece: For every "flex-fuel" car they crank out, American automakers receive a credit against their federal gas mileage requirements. They put those credits toward making more gas guzzlers while the vast majority of flex-fuel car owners don't even live in areas where E85 is available, much less use it.

Add to this the fact that corn ethanol's energy balance is modest in the most optimistic assessments. Not to mention that corn production is environmentally devastating. Not to mention that ramping up ethanol will increase food prices, and there isn't enough arable land in the U.S. , even if we wanted to level all of it for chemical-intensive monocrops, to supply both sustainably.

Different green constituencies will offer varying levels of support to corn ethanol and its much-discussed but rare successor, cellulosic ethanol. But they should all be able to agree that the backing of multiple large corporate lobbies and a network of powerful farm-state legislators is enough for ethanol, and other, less-heralded sustainability options would benefit from their attention.

"Clean" coal. Following closely behind ethanol on the energy hype scale is coal liquefaction at what are commonly referred toIGCC plants, usually accompanied—at least rhetorically—by carbon sequestration. Integrated Gasification Combined Cycle plants burn somewhat cleaner and can more easily separate out the CO2 so that it can be injected underground. This is how coal companies justify their continued existence.

But where are the IGCC plants adjoined by working sequestration operations? Good luck finding them. IGCC technology is substantially more expensive than traditional coal plants. Sequestration, which is highly speculative, adds another 30-60 percent to the cost, along with huge new demands for energy and water. Meaningful commercialization and deployment are likely decades away. Even if that bright day arrives, "clean coal" still involves the environmental devastation of coal mining, the generation of substantial mercury and particulate pollution, and a per-kilowatt energy costs no better than wind and far worse than energy efficiency.

Nuclear power. The threat of climate change has given the nuclear industry its best talking point since "too cheap to meter" went inoperative. A few fear-stricken greens have fled into the nuclear embrace, much to the delight of man-bites-dog loving pundits. But nuclear's problems have gone nowhere. Each nuke plant is fantastically expensive, uninsurable, subsidized out the wazoo, vulnerable to terrorist attack or accident, and constantly generating waste that we still don't know what to do with. Nuclear is a market Frankenstein, kept alive with jolts of taxpayer cash and bully-pulpit support from political, military and business elites.

Note that all these are supply-focused solutions. The same focus is behind the perpetual push to drill and mine more places (offshore, ANWR, Rocky Mountains, Appalachian Mountains). It's behind the implacable opposition to carbon emissions limits. It goes to the very animating spirit of U.S. power elites.

The green agenda threatens all that. The decentralization and democratization of energy production and the development of a more conscious, thoughtful consumer lifestyle will yield an economy powered by less cheap oil and more valuable human labor—along with a foreign policy conducted from a position of security and independence. Justifications for imperial adventures will be harder to come by.

If greens hope to make any progress, they must use this time of immense possibility to join together and push in the same direction.

Tomorrow: What That Might Look Like.

Richard Stuebi at CleanTech blog has a round up of the top 10 events in clean energy in 2006.

10. Oil addiction. In his January 2006 State of the Union speech, President Bush acknowledged what had long been largely ignored but what should really have been obvious to any sentient being: that "America is addicted to oil" to fuel our transportation, and thereby our economy and society.

9. Biofuel boom. It seemed like every day during 2006 I'd read about something new in the biofuel world. Either it was a big oil company like BP (NYSE: BP) or Chevron (NYSE: CVX) announcing a major research initiative, yet another business plan seeking capital for a biofuel refinery, some scientist in an academic setting working on a new way of converting feedstocks to fuel, or a capitalist like Vinod Khosla going hyperbolic about the future for ethanol.

8. Sizzling solar. With $60+ oil, retail investors were clamoring for alternative energy plays, and after biofuels they went straight to photovoltaics: solar energy is where people seem to instinctively look they think of alternative energy. Capitalizing on these robust (some would say, "frothy") market conditions, we saw a number of sizable IPOs such as First Solar (NASDAQ: FSLR) and Renewable Energy Corp (OL: REC), and a corresponding resurgence of venture capital investment in PV (seeking to achieve an exit before the fickle financial fates close the window). The additional capital is being poured into innovative R&D and new production facilities -- the former to achieve major economic/performance breakthroughs, the latter to debottleneck the recently-constrained industry and alleviate near-term shortages and upward price pressures. If the PV market/sector doesn't make major strides in coming years, it won't be because of capital starvation.

8. 20% from wind by 2030. Offhandedly, President Bush mused in a May 2006 speech on energy that "it's worth trying to find out" if wind could provide 20% of the U.S. electricity requirements. This remark has sent the wind community into a tizzy. Taking Bush's comment seriously, DOE and NREL are now developing a roadmap characterizing how the wind industry could supply 20% of the U.S. electricity requirement. This would imply hundreds of gigawatts of wind generating capacity across the U.S., which would require a new wind turbine to be installed every 15 minutes, every hour of the day, for many years. If we even get halfway to the pseudo-vision suggested by Bush, wind will become a really big player in the energy industry -- "alternative" no longer.

7. 25 x '25. Putting together these three renewable thrusts -- biofuels, solar and wind -- the common element is lots of land. Thus, the segment of interests that own muchs of the land in the U.S. -- the agricultural community of ranchers and farmers -- has put its weight behind the vision of "25 x '25": 25% of the U.S. energy supply from renewable sources by 2025. This initiative is less green than it is red-white-and-blue, as a means to reduce our reliance on imported energy. However, for the first time, this puts a large mainstream conservative force on the cleantech side, potentially a harbinger of an important realignment of interests in the energy debates.

6. What happened to efficiency? Renewable energy is wonderful and did well in the past year, but unfortunately, there were few significant developments on the energy efficiency front. Oh, sure, there were more LEED buildings, fluorescent light sales continued to increase, and hybrid cars are no longer a curiosity. But, there was really no defining moment for the demand-side arguing for an upcoming step-change. Pity, because we need this side of the energy equation to be far more robust -- the opportunities here are enormous, and often more cost-effective than renewables.

5. Whither hydrogen? While fuel cells continue to attract substantial R&D dollars and attention, more and more the so-called "hydrogen economy" is fading into the future. An increasing body of observers are recognizing that the challenges of economically producing, transporting, storing, and utilizing hydrogen may well be too daunting.

4. The Stern report. The U.K. government commissioned a study by Sir Nicholas Stern to assess the economics of climate change. When issued in the fall of 2006, the report was a blockbuster, arguing that the costs of dealing with climate change now were small in comparison to the enormous economic consequences that would accrue later from not addressing climate change. With each ice shelf that slips into the ocean, and each inch of sea-level rise, the costs of do-nothing are getting more apparent every day.

3. Thomas Friedman. Long one of the most influential observers of the Middle East scene, the widely-read op-ed columnist in the New York Times and best-selling author (The World Is Flat, The Lexus and the Olive Tree, From Beirut to Jerusalem) is making energy and the environment the cornerstone of many of his recent essays. When Friedman says/writes something, many thought-leaders get it, some for the first time. The clean energy community could not have a better spokesman.

2. An Inconvenient Truth. Al Gore goes from inventing the Internet, and losing (somehow, ever-more-incredibly in retrospect) the Presidential race to George Bush in 2000, to becoming a movie star in a "talking head" role, educating viewers on one of the least-sexy and most-wonkish topics known to man: climate change. Yet, the movie drew an audience of millions, and perhaps more importantly, generated lots of ink and an increased throbbing in the public consciousness concerning the reality and severity of the threat.

1. A new political landscape. The citizens of the United States spoke loud and clear on November 7: pretty much a landslide victory for the Democrats, a trouncing of the Republicans. There's lots of conjecture as to why this occurred: was it "Just Say No" to Bush and Iraq, or was it a more systemic shift to the left? However, there's no doubt that, for the next few years at least, the new political scene is more conducive to more favorable clean energy policy of all sorts -- not only at the Federal level, but in many states as well (such as here in Ohio). Best of all, Senator James Imhofe (R-OK) -- who is on record as stating that "climate change is the greatest hoax ever perpetrated on the American people" -- will be deposed from Chairing the Committee for Environment and Public Works, where he has been (in my view) an embarassment. I doubt we'll get climate change legislation during the Bush Administration, but at least we'll get less airing of bunk from fictional author Michael Crichton passing off as climate science.

All in all, 2006 was a step in the right direction for the clean energy arena -- but definitely not far enough, not fast enough. Here's hoping that we can make more progress -- on technology R&D, on financing, on human capital, on policy -- in 2007 than we did in 2006.

CleanTech also has a long post by Neal Dikeman on the "The Biggest Unheard Boom of 2006 in Cleantech - Smart Metering and Energy" which looks at some of the pieces (on the metering and customer service systems side) needed to create a smart grid.

In one of the less talked about cleantech mergers and acquisitions of 2006 (but one I think will have a deep impact on alternative energy and the smart metering and AMI market for years to come), First Data recently acquired Peace Software, an early provider of IT, billing, and CRM software to the deregulated utility sector, in a bid to get into the energy market. First Data is one of preeminent transaction processing firms in the world, and by acquiring Peace, has made its first foray into energy.

We have felt for some time that the financial products surrounding payments can be a very major driver for technologies like AMI, BPL and smart metering, and products like green power marketing, RECs, and carbon trading. Bottom line, if you can't measure and charge for it fast and cheap, you can't make and sell innovative electric retailing products. And conversely, if they can, they will.

I think the hurdles to overcome to get adoption of next generation IT and smart metering in the electric utility sector are hugely underestimated. But by the same token, I think the windfalls both the companies and consumers will see long term from those platforms once they are in, are also hugely underestimated.

I want to welcome Dean Cooper, Vice President at the newly formed energy & utilities division, First Data Utilities, and get his take on the merger, smart metering and information technology in the energy and power sector, and the future trends in AMI.

Not many people know that New Zealand, where Peace originated, was the first major electricity market to deregulate. What impact has that had on Peace's history?

You’re right - the New Zealand market led the worldwide movement by government to deregulate energy markets to provide greater competition and lower costs for consumers. Our founder, Brian Peace, was a computer science lecturer at Auckland university at the time the New Zealand energy markets deregulated, which inspired his entrepreneurial crusade to build a software product specifically to service the deregulating energy markets worldwide. Resultingly the heritage of Peace was as a dereg software play for large and small utility (electricity, gas, water) companies initially in New Zealand and subsequently in Australia, Canada, USA, and Europe.

Adding to that, deregulation in some Australian states is now 10 years and running. How has the deregulation changed the investment behavior of the utilities?


Deregulation in Australia and beyond has altered utility behaviour from initially being dominated by engineers with a focus on the poles and wires (distribution) business to an entity focused more on the consumer, where reducing consumer costs and providing increased consumer choice is a key driver to energy retailer success in a competitive market.The larger utilities that had been operating in Australia since the mid 1800’s and then emerged as leaders in the deregulated market of Victoria in the late 1990s were and still are carrying a higher cost to serve than necessary, due to a legacy of disparate systems that come from M&A.

This provided a great incentive for “challenger brands” and new entrant retailers to enter the market in the last 3 years with a point of difference around low-cost, green energy, or tailored customer offers.

How have these entrants fared, and what role (if any) has cleantech information technology played in their bids for market share?

New entrant brands have appealed to many consumers by the nature of their fresh branding, tailored product offerings, and lower cost structure. In comparison it is more difficult for incumbent utilities to offer a new approach through the inertia of their operations. Information technology plays a key role in a new entrant solution offering a lower operational cost to customers. This begins from the time a customer is acquired through to its energy consumption, billing, and customer management activities. Traditional energy companies would have to integrate this information across a number of disparate systems, yet new entrant retailers are able to work with one technology company to provide a seamlessly integrated solution to manage their business. This has had a dramatic effect on costs and therefore appeal to consumers.

I'd love to get the FDU take on the future of demand response programs (in both deregulated and regulated markets). What is the state of the art now, both in the programs and the technologies powering them? How is this tying in with the rise of smart metering?


Demand response is proving to be a very trendy area globally in energy, with Australia being a leading market worldwide on this topic with legislation mandated in Victoria to implement a smart metering program as one means of managing demand response. There are many alternatives to demand response including price incentivisation through pricing monitors installed in households, peaking generation plants, time-based pricing mechanisms such as a smart metering program (such as the telco industry where we pay varying usage rates depending on the time of day – peak/off peak), and suchlike.

One of the major reasons for demand response is the growing age of electrification that we live in where households consume a lot more power due to home appliances, that the network assets were originally built to accommodate. It is very expensive to replace ageing network assets or build generation plants, (along with the debate over environmentally friendly generation assets) meaning a demand response program may be a better means to the consumption/generation imbalance by focusing more on the consumption part of this equation.

Can you give us some ideas of the technology changes that will need to happen? What's going to get commoditized, and where are the key technology areas to watch?


The areas of commodisation are likely to be meter hardware, remote communication, data acquisition, and data management. Because we will be looking at an order of magnitude increase in data volume from smart metering programs you get a sense for the size of the technology challenge. In a situation today where we may have 3 million consumers who have their energy consumption measured on a bi-monthly or quarterly basis. With a smart metering program we would move to 30 minute measurements which would be approximately a 4,000 fold increase in data volumes.

Already players that are grabbing a foothold in this space include Bayard Capital, run by Cameron O’Reilly for meter hardware along with GE, the comms companies, and all IT vendors for the data component, which is where FDU also fits in.

Are we going to see the rise of major IT giants in the smart metering sector, like we did in supply chain IT in other areas?


Good point, we could very well see this happen as the smart metering sector emerges and grows worldwide - smart metering measures consumption on a more granular level (30 minute intervals vs monthly intervals). We are still in the early stages of market trials and legislation worldwide yet already a number of sizeable markets are embarking on smart metering programs such as Australia, New Zealand, Canada, parts of the US, Italy, and Scandinavia. As standards are established for communication, data acquisition, and reporting we will see solutions to these markets develop. As is typical of emerging markets, suppliers are cautious of over-investing until regulators confirm market standards.

All major energy sector IT giants are poised to invest in the smart metering sector and you will see the leaders emerge once standards are confirmed in the leading markets of Australia, New Zealand, and Canada.

Who are some of the market leaders in this game, and where do FDU's products fit in?


In the meter hardware hardware frame Bayard Capital have amalgamated a strong set of assets and are the leader at the front end of the value chain. There is no clear leader in the remaining part of the value chain but FDU believes our business model and company heritage for large scale transaction processing globally puts us in good stead to make a compelling over to the market place.

FDU would therefore be able to continue its meter-to-cash outsourcing business model to include both basic and smart metering worldwide – with the scalability and complexity challenge involved there are not many competitors that would be able to make a similar claim.

“Meter-to-cash” – I like that phrase, can you elaborate on what that means?


Essentially it means the process whereby consumption data from the household meter is acquired, through to the billing and exception management process, and on to collections and credit checks. Effectively the engine room of an energy company’s customer management function.

If you had to pick the top 3 differences the consumer will see from all of this, what are they? And when do you see most of us as getting them?


Top 3? MY best Top 3 are probably:
1. Consolidated billing and convergence;
2. Responsiveness;
3. Targeted campaigning and messaging in the same manner cellular and telco’s have been operating.

Customers in the advanced Australian energy markets are getting these benefits already, so it won’t be long before all global energy markets are experiencing a greater level of service.

There is a AustralAsian Cleantech Forum meeting coming up in Melbourne in April.

In April the 3rd AustralAsian Cleantech Forum will be expanded into two days and for the first time will include the AustralAsian Cleantech Investment Showcase featuring Cleantech companies selected by experts on AustralAsian Cleantech Advisory Board. The AustralAsia Cleantech Investment Showcase will highlight the quality and diversity of some of the most promising Cleantech companies seeking investment and finance. A national call for companies to present to the high level audience of potential investors and partners will be announced soon.

The next twelve months promises to be an eventful and pivotal time for the Cleantech industry in the Asia Pacific region. The 3rd AustralAsian Cleantech Forum will bring together investors, financiers, policy makers, project developers and entrepreneurs to identify and outline how to capitalize on this window of economic opportunity and accelerate the development and deployment of clean technologies in the Asia Pacific region.

Some of the most authoritative speakers representing the spectrum of the global clean technology industry will examine, propose solutions and outline and how to:

* Identify viable Cleantech investment prospects
* Overcome barriers to and strategies for financing Cleantech projects
* Access new project and export opportunities in the growing Asian markets
* Attract new investors from the Australian superfund's community
* Develop corporate Cleantech financing strategies
* Understand the evolution and future development of new market based mechanisms
* Evaluate how the AP6 and a post-Kyoto world will drive new policy settings
* Articulate the roadmap for the future of the Cleantech Industry

The San Francsico Chronicle reports that Google has hired Bill McDonough to design their new offices.

Google Inc. has chosen William McDonough, an acclaimed architect whose projects feature grass roofs and recycled water, to make preliminary designs of its planned offices at the NASA Ames Research Center, according to two sources familiar with the deal.

The assignment signals Google's intentions to go green at the facility, an ambitious complex that could encompass up to 1 million square feet of office space, the equivalent of nearly 17 footfall fields.

Kyle Copas, a spokesman for William McDonough + Partners, confirmed that his company is working for Google but declined to specify whether the job includes the NASA Ames project, which is still under negotiation and must get approval from the space agency before any groundbreaking. Google and NASA had no comment.

Designing Google's offices at NASA Ames near Mountain View is considered a plum job because of the Web giant's high profile, deep pockets and embrace of the unconventional. Many in the technology industry have raised hopes that the facility, built in a research park that is also home to satellite campuses of several colleges, including Carnegie Mellon University, will become an intellectual center of Silicon Valley.

McDonough, whose company is in Charlottesville, Va., is one of the godfathers of environmentally friendly architecture, an idea he started championing in the 1970s. He's the author of "Cradle to Cradle," a seminal book on sustainable architecture and product design that was published in 2002.

Some of McDonough's most maverick ideas include building wind-powered server farms, particularly in the Midwest (because the cold winters there would help reduce the amount of electricity needed to cool thousands of computers). Parking lots, he says, should be built not of asphalt, but layers of stone and dirt so that the ground can absorb rain water rather than have it run off into drainage ditches.

McDonough's landmark building in the Bay Area is Gap Inc.'s office in San Bruno, designed with benches made from eucalyptus trees cleared from the site and biodegradable upholstery fabric that can be composted for organic mulch. The most striking, however, is an undulating roof covered with native grasses and wildflowers that serves as insulation, reduces the amount of heat reflected into the atmosphere and helps clean the air. ...

Depending on the design, environmentally friendly architecture can cost more initially than typical corporate offices because of the special materials and extra planning, Kwan said. However, she said those extra costs can be more than offset over time by lower utility bills, among other things.

Google has already initiated some environmentally friendly initiatives, having recently disclosed plans to mount solar panels on the rooftops and parking lots of its Mountain View headquarters. When completed this spring, the project is expected to generate 1.6 megawatts of electricity, enough to light 1,200 homes.

Co-founders Larry Page and Sergey Brin are also interested in environmental technology. Both invested as individuals in Nanosolar, a manufacturer of solar cells that is run by a former Stanford University classmate, and have spoken publicly about wind power and lauded improvements in batteries for electric cars.

Despite the attention to the environment, Google remains an electricity hog. Its massive data centers, which house hundreds of thousands of servers by some estimates, suck up huge amounts of power.

The LA Times has an article on solar energy pioneer Gary Gerber called "He's still following the sun".

IN the beginning, to explain the concept of a solar water heater, Gary Gerber toted a homemade graphic of a black hose sitting on a lawn. "Do you ever go out in the summer and turn on the hose and the water is hot?" he'd ask potential customers. "Well, that's how it works."

In those "stone age" days of the mid-1970s, there was no solar energy industry, Gerber says, only a small collection of "experimenters, forward-thinking people, inventors." Even eking out a living was an impossibility: Gerber survived, courtesy of a side gig selling cheese from his Volkswagen van.

Three decades later, his Sun Light & Power can barely keep up. A frenzied demand for solar power, or photovoltaic, installations has eclipsed the water heater portion of the business, and since 2002, sales have ballooned by about 66% annually — to more than $11 million in 2006.

Once the domain of hippies, whose off-the-grid escape doubled as an anti-establishment rebuke, renewable energy is now a pillar of California politics. In recent months alone, Gov. Arnold Schwarzenegger has signed the California Solar Initiative, which aims to help bring solar power to a million rooftops, as well as a landmark greenhouse-gas reduction law.

Cities in the Bay Area — California's alternative-energy hotbed — are tricking out public buildings with solar panels, outfitting municipal vehicle fleets with the latest plug-in hybrids and tweaking building codes to require energy-efficient features in new construction. Large companies are scrambling to certify their buildings as "green." And across the state, in locations not at all off the beaten path, solar installations on homes and small businesses have soared, thanks largely to rebates for systems tied into the state power grid.

TreeHugger has an article on living efficiently in japan, which looks at how waste is minimised in Japan.

In Japan, people take energy efficiency seriously. In architect Kiminobu Kimura's house, according to the New York Times: Energy-efficient appliances abound in the many corners of his cramped home. There is the refrigerator that beeps when left open and the dishwasher that is compact enough to sit on the kitchen counter. In some homes, room heaters have a sensor that directs heat only toward occupants; there are “energy navigators” that track a home’s energy use. “It’s not just technology, it’s a whole mind-set,” said Hitoshi Ikuma, a specialist in energy issues at the Japan Research Institute. “Energy conservation is almost an obsession here among government, companies, regular citizens, everyone.” The focus of the article, Mr. Kimura, has a fuel cell in front of his house that converts natural gas to hydrogen and then to a kilowatt of electricity, but that is a bit of a red herring in the story, given that the fuel cell costs $ 51,000 and they import their natural gas.

The real story is about how in Japan people live in smaller spaces and really think about how they use energy and resources: Mr. Kimura says he, his wife, and two teenage children all take turns bathing in the same water, a common practice here. Afterward, the still-warm water is sucked through a rubber tube into the nearby washing machine to clean clothes. Wet laundry is hung outside to dry or under a heat lamp in the bathroom.

“In Japan, it’s natural to think about saving energy,” Mr. Kimura explains. “We learned not to waste from our parents, who had learned it from the hardship of the war and after,” he said.

The different approach is also apparent in the layout of Mr. Kimura’s home, which at 1,188 square feet is about the average size of a house in Japan but only about half as big as the average American one. The rooms are also small, making them easier to heat or cool. The largest is the living room, which is about the size of an American bedroom. "

Technology Review has a good article on GM's new electric vehicle - the "Volt" (noted pretty much everywhere else as well - see Grist, Joel Makower and TreeHugger for examples).

Recently, General Motors (GM) has faced criticism for shutting down production of its EV-1 electric vehicle. Yesterday at the North American International Auto Show, in Detroit, it unveiled the EV-1's successor, an electric-motor-driven concept car called the Chevrolet Volt. It's the first example of a new "E-Flex" vehicle platform that the company is moving toward production.

The concept car runs off electricity from the grid, stored on board in a battery, for the first 40 miles of a drive. For longer trips, a small gasoline-powered generator kicks on to recharge the battery pack, allowing a total range of 640 miles. In between trips, the battery can be recharged in six and a half hours at an ordinary wall outlet. For longer trips, the generator can provide power at the equivalent of 50 miles per gallon.

GM representatives say their reason for including the gasoline generator is to overcome one of the biggest limitations of the earlier electric vehicle: the short range. The original EV-1 had a range of only about 90 miles, and it required an eight-hour recharge at a dedicated 220-volt electrical outlet. The Volt uses lithium-ion batteries that take up one-third of the space of the EV-1's original lead-acid battery pack, while providing the same total energy storage.

The new vehicle is an example of what's known as a series hybrid, another in a growing type of hybrid-vehicle variant. In conventional hybrid vehicles, such as the Toyota Prius, the car can be propelled by a gasoline engine, a battery-powered motor, or both. In a series hybrid, the gasoline engine has no direct contact with the wheels. It serves only to recharge the batteries. One of the major advantages of such a system is that any source of electricity can be used to charge the battery. This includes electricity from a wall outlet, but also electricity generated on board by a gasoline-, ethanol-, or diesel-powered generator. Because these generators can run at a constant speed, they are more efficient than an engine that has to ramp up and down to meet demand.

GM is developing a combination electric motor, alternator-like generator, and battery pack that can be used with various power sources. For example, an engine that runs on diesel might be preferred in Europe. An engine that runs on ethanol might be favored in Brazil. In a hydrogen fuel-cell version, the battery pack would be smaller and primarily used to provide a boost of power and to recapture energy lost from braking.

Last year at the Los Angeles Auto Show, GM announced work on a plug-in hybrid. (See "GM's Plug-in Hybrid.") As with the Volt, the plug-in hybrid can recharge from a wall socket. But the electric motor will not be the sole source of propulsion: an internal combustion engine could provide bursts of acceleration or power for climbing hills. The plug-in hybrid would not switch among the different sources of energy as easily as the series-hybrid system could.

For both the plug-in and series hybrids, GM says the timeline for commercializing the vehicles will depend on the development of the battery systems. But such systems may not be far off. GM representatives say that they have already seen lithium-ion cells that have the performance required for both plug-in and series-hybrid applications. What remains to be done is to combine these cells into large, complex battery packs and make sure they work well together in an actual vehicle. Last week, GM announced that it has a contract with two sets of companies for building lithium-ion-based battery packs and control systems for plug-in hybrids.

Technology Review also has an article on the batteries needed to power GM's electric vehicles.

General Motors (GM) recently announced that it is developing two types of plug-in hybrid vehicles, cars designed to run exclusively or almost exclusively on electricity for daily commutes. (See "GM's New Electric Vehicle" and "GM's Plug-In Hybrid.") But the announcements came with this caveat: the battery technology isn't ready, and production will have to wait. In reality, the battery technology is actually quite close to being ready.

Indeed, GM's vehicle chief engineer, Nick Zelenski, says that individual batteries are already good enough. "We've got enough data at the cell level to feel that the technology is there," he says. What remains to be done is packaging the cells into large battery packs and testing them in actual vehicles. This will be a challenge, Zelenski says, since there is a big difference between using "a single cell and multiplying them all together to get the energy levels that we need for this type of vehicle." But according to development contracts GM recently signed with two groups of companies, such battery packs will be ready for testing in vehicles by the end of this year.

Making batteries for vehicles, especially plug-in hybrids, is very challenging. For accelerating and climbing hills, the battery pack has to deliver enough power to supply the electricity demand of several houses at once. The energy storage capacity required to give a vehicle a 40-mile range would be enough to power a laptop in continuous use for weeks. Yet the space on board for such a battery pack is limited. "What we need is a very reliable and long-lived battery that has also got quite high energy density so we can find a place for it in the car," says Peter Savagian, director of hybrid power-train systems at GM.

Developers also need to make packs that can survive extremes in temperature and constant vibrations on the road, and still last the life of a vehicle. And they have to make the batteries safe. Last year millions of laptops were recalled because of the danger of their batteries bursting into flame. A plug-in hybrid would have the equivalent of hundreds of laptop battery packs bundled together.

Remarkably, at the level of individual cells, many of these problems have already been addressed. Lithium-ion batteries have much higher capacity than the lead acid batteries used in electric cars in the past, and even more than the nickel-metal hydride used in hybrids today. According to GM, its new Chevrolet Volt concept vehicle stores the same amount of energy as the company's EV-1 electric vehicle, but in just one-third the area. And while lead acid battery packs have to be replaced every couple of years, new lithium-ion batteries seem from lab tests to be able to last 10 years or more.

I've got a whole pile of green tech links to plough through but I've run out of time for tonight (and this is probably enough for most readers in any case) - more tomorrow - I'll close for now with an article on one of my other customary topics...

Chris Hedges has an excellent interview about his new book "American Fascists" up at Salon (you'll need to watch an ad to read the whole article). The prospect of an American Theocracy arising (whether purely by the committed efforts of the people Chris Hedges describes, or as a backlash to some economic or environmental calamity sparked by peak oil, global warming or the seemingly intractable economic imbalances that have emerged in the last decade) is alarming on many levels - at least partly because it could severely derail my clean, green vision of the future - totalitarian states (especially religious ones) don't have a good track record for fostering innovation or creative thinking.

The Christian right is a "deeply anti-democratic movement" that gains force by exploiting Americans' fears, argues Chris Hedges. Salon talks with the former New York Times reporter about his fearless new book, "American Fascists."

Longtime war correspondent Chris Hedges, the former New York Times bureau chief in the Middle East and the Balkans, knows a lot about the savagery that people are capable of, especially when they're besotted with dreams of religious or national redemption. In his acclaimed 2002 book, "War Is a Force That Gives Us Meaning," he wrote: "I have been in ambushes on desolate stretches of Central American roads, shot at in the marshes of Southern Iraq, imprisoned in the Sudan, beaten by Saudi military police, deported from Libya and Iran, captured and held for a week by Iraqi Republican Guard during the Shiite rebellion following the Gulf War, strafed by Russian Mig-21s in Bosnia, fired upon by Serb snipers, and shelled for days in Sarajevo with deafening rounds of heavy artillery that threw out thousands of deadly bits of iron fragments." Hedges was part of the New York Times team of reporters that won a 2002 Pulitzer Prize for explanatory reporting about global terrorism.

Given such intimacy with horror, one might expect him to be aloof from the seemingly less urgent cultural disputes that dominate domestic American politics. Yet in the rise of America's religious right, Hedges senses something akin to the brutal movements he's spent his life chronicling. ...

Part of his outrage is theological. The son of a Presbyterian minister and a graduate of Harvard Divinity School, Hedges once planned to join the clergy himself. He speaks of the preachers he encountered while researching "American Fascists" as heretics, and he's appalled at their desecration of a faith he still cherishes, even if he no longer totally embraces it. Writing of Ohio megachurch pastor Rod Parsley and his close associate, GOP gubernatorial candidate Ken Blackwell, he says, "[T]he heart of the Christian religion, all that is good and compassionate within it, has been tossed aside, ruthlessly gouged out and thrown into a heap with all the other inner organs. Only the shell, the form, remains. Christianity is of no use to Parsley, Blackwell and the others. In its name they kill it."

I first met Hedges at last spring's War on Christians conference in Washington, D.C., where Parsley, a wildly charismatic Pentecostal who loves the language of holy war, electrified the crowd. ("I came to incite a riot!" he shouted. "Man your battle stations! Ready your weapons! Lock and load!") It was shortly before the publication of my book, and as Hedges and I spoke, we realized we had similar takes on our subject. ...

Let's start with the title. A lot of liberals who write about the right see echoes of fascism in its rhetoric and organizing, but we tiptoe around it, because we don't want people to think that we're comparing James Dobson to Hitler or America to Weimar Germany. You, though, decided to be very bold in your comparisons to fascism.

You're right, "fascism" or "fascist" is a terribly loaded word, and it evokes a historical period, primarily that of the Nazis, and to a lesser extent Mussolini. But fascism as an ideology has generic qualities. People like Robert O. Paxton in "The Anatomy of Fascism" have tried to quantify them. Umberto Eco did it in "Five Moral Pieces," and I actually begin the book with an excerpt from Eco: "Eternal Fascism: Fourteen Ways of Looking at a Blackshirt." I think there are enough generic qualities that the group within the religious right, known as Christian Reconstructionists or dominionists, warrants the word. Does this mean that this is Nazi Germany? No. Does this mean that this is Mussolini's Italy? No. Does this mean that this is a deeply anti-democratic movement that would like to impose a totalitarian system? Yes.

You know, I come out of the church. I not only grew up in the church but graduated from seminary, and I look at this as a mass movement. I give it very little religious legitimacy, especially the extreme wing of it.

You say they would like to impose a totalitarian system. How much of a conscious goal do you think that is at the upper levels of organizing, with, say, somebody like Rod Parsley?

I think they're completely conscious of it. The level of manipulation is quite sophisticated. These people understand the medium of television, they understand the despair and brokenness of the people they appeal to, and how to manipulate them both for personal and financial gain. I look at these figures, and I would certainly throw James Dobson in there, or Pat Robertson, as really dark figures.

I think the vast majority of followers have no idea. There's an earnestness to many of the believers. I had the same experience you did -- I went in there prepared to really dislike these people and most of them just broke my heart. They're well meaning. Unfortunately, they're being manipulated and herded into a movement that's extremely dangerous. If these extreme elements actually manage to achieve power, they will horrify [their followers] in many ways. But that's true with all revolutionary movements.

The core of this movement is tiny, but you only need a tiny, disciplined, well-funded and well-organized group, and then you count on the sympathy of 80 million to 100 million evangelicals. And that's enough. Especially if you don't have countervailing forces, which we don't.

If there's a historical period that's analogous to the situation we have now, it would come close to being the 1930s in the United States. Obviously we're not in a depression, but the situation for the working class is very bleak, and the middle class is under assault. There has been a kind of Weimarization of the American working class, and there's a terrible instability in the middle class. And if we enter a period of political and social instability, this gives this movement the opportunity it's been waiting for. But it needs a crisis. All of these movements need a crisis to come to power, and we're not in a period of crisis.

How likely do you think a crisis is?

Very likely. The economy is not in healthy shape. I covered al-Qaida for a year for the New York Times. Every intelligence official I ever interviewed never talked about if, they only talked about when. They spoke about another catastrophic attack as an inevitability. The possibility of entering a period of instability is great, and then these movements become very frightening.

The difference between the 1930s and now is that we had powerful progressive forces through the labor unions, through an independent and vigorous press. I forget the figure but something like 80 percent of the media is controlled by seven corporations, something horrible like that. Television is just bankrupt. I worry that we don't have the organized forces within American society to protect our democracy in the way that we did in the 1930s.

Since the midterm election, many have suggested that the Christian right has peaked, and the movement has in fact suffered quite a few severe blows since both of our books came out.

It's suffered severe blows in the past too. It depends on how you view the engine of the movement. For me, the engine of the movement is deep economic and personal despair. A terrible distortion and deformation of American society, where tens of millions of people in this country feel completely disenfranchised, where their physical communities have been obliterated, whether that's in the Rust Belt in Ohio or these monstrous exurbs like Orange County, where there is no community. There are no community rituals, no community centers, often there are no sidewalks. People live in empty soulless houses and drive big empty cars on freeways to Los Angeles and sit in vast offices and then come home again. You can't deform your society to that extent, and you can't shunt people aside and rip away any kind of safety net, any kind of program that gives them hope, and not expect political consequences.

Democracies function because the vast majority live relatively stable lives with a degree of hope, and, if not economic prosperity, at least enough of an income to free them from severe want or instability. Whatever the Democrats say now about the war, they're not addressing the fundamental issues that have given rise to this movement.

In the beginning of the book, you write briefly about covering wars in Latin America, the Middle East and the Balkans. How did that shape the way you understand these social forces in America? What similarities do you see?

... When I first covered Hamas in 1988, it was a very marginal organization with very little power or reach. I watched Hamas grow. Although I came later to the Balkans, I had a good understanding of how Milosevic built his Serbian nationalist movement. These radical movements share a lot of ideological traits with the Christian right, including that cult of masculinity, that cult of power, rampant nationalism fused with religious chauvinism. I find a lot of parallels.

People have a very hard time believing the status quo of their existence, or the world around them, can ever change. There's a kind of psychological inability to accept how fragile open societies are. When I was in Pristina, the capital of Kosovo, at the start of the war, I would meet with incredibly well-educated, multilingual Kosovar Albanian friends in the cafes. I would tell them that in the countryside there were armed groups of the Kosovo Liberation Army, who I'd met, and they would insist that the Kosovo Liberation Army didn't exist, that it was just a creation of the Serb police to justify repression.

You saw the same thing in the cafe society in Sarajevo on the eve of the war in Bosnia. Radovan Karadzic or even Milosevic were buffoonish figures to most Yugoslavs, and were therefore, especially among the educated elite, never taken seriously. There was a kind of blindness caused by their intellectual snobbery, their inability to understand what was happening. I think we have the same experience here. Those of us in New York, Boston, San Francisco or some of these urban pockets don't understand how radically changed our country is, don't understand the appeal of these buffoonish figures to tens of millions of Americans.

But don't you feel like the tipping point is still quite a way off? Speaking personally, when I've read about totalitarian movements, I've always imagined that I'd know enough to pack up and go. That would seem to be a very premature thing to do here.

Well, most people didn't pack up and go. The people who packed up and left were the exception, and most people thought they were crazy. My friends in Pristina had no idea what was going on in Kosovo until they were literally herded down to the train station and pushed into boxcars and shipped like cattle to Macedonia. And that's not because they weren't intelligent or perceptive. It was because, like all of us, they couldn't comprehend how fragile the world was around them, and how radically and quickly it could change. I think that's a human phenomenon.

Hitler was in power in 1933, but it took him until the late '30s to begin to consolidate his program. He never spoke about the Jews because he realized that raw anti-Semitism didn't play out with the German public. All he did was talk about family values and restoring the moral core of Germany. The Russian revolution took a decade to consolidate. It takes time to acculturate a society to a radical agenda, but that acculturation has clearly begun here, and I don't see people standing up and trying to stop them. The Democratic policy of trying to reach out to a movement that attacks whole segments of the society as worthy only of conversion or eradication is frightening.

Doesn't it make sense for the Democrats to reach out to the huge number of evangelicals who aren't necessarily part of the religious right, but who may be sympathetic to some of its rhetoric? Couldn't those people be up for grabs?

I don't think they are up for grabs because they have been ushered into a non-reality-based belief system. This isn't a matter of, "This is one viewpoint, here's another." This is a world of magic and signs and miracles and wonders, and [on the other side] is the world you hate, the liberal society that has shunted you aside and thrust you into despair. The rage that is directed at those who go after the movement is the rage of those who fear deeply being pushed back into this despair, from which many of the people I interviewed feel they barely escaped. A lot of people talked about suicide attempts or thoughts of suicide -- these people really reached horrific levels of desperation. And now they believe that Jesus has a plan for them and intervenes in their life every day to protect them, and they can't give that up.

So in a way, the movement really has helped them.

Well, in same way unemployed workers in Weimar Germany were helped by becoming brownshirts, yes. It gave them a sense of purpose. Look, you could always tell in a refugee camp in Gaza when one of these kids joined Hamas, because suddenly they were clean, their djelleba was white, they walked with a sense of purpose. It was a very similar kind of conversion experience. If you go back and read [Arthur] Koestler and other writers on the Communist Party, you find the same thing. ...

I thought a few of the reader letters are also worth quoting - first from rip:

This movement has been growing for a long time. I know, because I grew up with it. I remember as a child specifically asking my Grandfather how his totalitarian vision of a Christian Nation Under God was any different than the totalitarian precepts of any other form of fascism. His answer was simple: while others may have been led astray by false gods or secular fantasies, his path was righteous and true. You cannot reason with the blinkered thinking of an idealogue who considers their idealism divinely ordained.

My grandfather was a radio engineer who did a great deal of work to help his church and others broadcast their services to the community. I don't believe most urban liberals have any idea how vast and sophisticated the machinery of the extreme right's propaganda machine really is. They have mastered every form of media. They are extrememly politically savy, and have an acute sense of how to target their outreach to the most vulnerable demographics.

Courtesy of the connections of relatives I'm embarrassed to admit I have, I'm one of the few people who's had the pleasure of seeing the 700 club being filmed; because you see, no one really watches it being filmed. The intimate "in you living room" setting is a charade just like any sitcom; filmed in a dark empty studio warehouse, with no one around but a few camera grips. Not a shocking relevation, but certainly emblematic of how society can be so easily manipulated by a small cabal of extremists with their modern-day megaphones and light shows.

I don't quite buy the intimation that the ringleaders of Christian right are cynical hypocritical manipulators though. I think that by and large, they actually believe in the justice of their causes. Don't doubt their sincerity.

Hitler and his ilk are almost always portrayed as insane madmen, subhuman, monsterous. I believe such characterizations are extremely dangerous, because they belie how close we are to the danger of our own best intentions. People with totalitarian mindsets don't think of themselves as evil; they just want you be become part of the better world that has been revealed to them; and they get very angry when people try to stop them from where they think they should be going. We all do ourselves a disservice if we don't admit that we can all feel that way sometimes. The enemy is just like us.

But how far are we willing to go to settle our differences? How easily can we be manipulated into segregating ourselves into opposing war camps?

I don't think the problem is a particular breed or type of person or religion or belief. I think the problem is the institutionalization of belief systems into large hierarchical organizations. I'm more afraid of the institutions than of any particular cause.

I don't think we should be surprised that when society builds large hierarchical organizations, that totalitarian tendencies will emerge. Such structures promote monoculture and stifle dissent. We can see it happen in our own government. The difference between our government and institutions like the Church is that our government has a regular rotation program in place for its core.

And from Alex:

It was Orwell who pointed out that the term 'fascism' has lost completely all of its original meaning, now being used solely to mean "that which is undesirable". So the average person who uses this term applies it indiscriminately to totaliarian communism, fundamentalist Islam (hence the utterly idiotic "Islamofascism"), etc. Of course, most of us reading this and posting are intelligent enough and care enough to actually know the original, more precise meaning, but among the masses, that sense of the word is irretrievably lost to history.

Now, if you believe that language is static and that words mean what they are formally defined as in the dictionary, then there is no problem with using fascism in its original sense to describe certain modern elements. However, if you take the organic view of language now embraced by many linguists and concede that a word's definition is, more or less, its most widely accepted meaning, then I think it might be time for us to give up on the word. Involving it in a discussion generally does more harm than good to getting your point across. This latter option would be more attractive if we had some roughly equivalent word for fascism, but not such an abused one.

And from an anonymous commenter, who gets at the heart of one of my problems with JH Kunstler's variant of peak oil doomerism - you can't just write off the suburbs and tell the residents that they are evil and/or stupid. And if you can show them a future where they can still live the way they want, without wrecking the environment while they are at it, they might be tempted to listen...

What arrogance has been displayed here. Specifically in Hedges descriptions of suburban life. "Soulless homes"? The soul resides in the person, not the place. What a thing to say about people and their families! He goes on to imagine the despair associated with the higher standard of living in suburbs. The woe of single family homes and automobiles. The lack of community due to distance from major urban centers. What Hedges and other urban liberals (I used to be one) fail to understand is that many Americans like living in big houses in the suburbs, they want backyards, they like the time alone in their cars, and they find a greater sense of community in the activities of their children's schools and little leagues than they would by living in an overcrowded urban environment. Perhaps the real appeal of the church is that it doesn't denigrate the very things most people value most in their lives. If liberalism is to have any kind of populist appeal it will have to lose the urban-centricism, and stop insulting the people whose welfare it claims to fight for.

There is a big difference between the cynical and manipulative leaders of the so-called religious right (Dobson, et al) and the church members and participants, and Hedges would do well to focus his attack on those who are misguiding the flock and not the flock itself.