Climate Change Legislation

This past week has seen two noteworthy political events - the culmination of the Democratic primary and the collapse of the Warner-Lieberman sponsored climate change legislation. As one of the longest Democratic primaries I can remember winds to a close with Barack Obama pulling into the winning lane, it makes sense to start looking at how the different candidates and parties are addressing the issue of climate change legislation. This investigation becomes equally important given the failure of what was billed as the "best chance" for climate legislation under the current Bush regime.

Looking at the two candidates, the easiest thing to note is their current rhetoric on the issue. While primary debates are heavy on promises and may not be the best indicator of future implementation, they do provide a sense of how well the candidate can understand and speak about the issue. The following points are culled from New Hampshire speeches by both the candidates (YouTube videos linked):

Barack Obama (NH primary)
1) Would cap emissions of greenhouse gases for everyone. Create a market. Make renewables competitive and help lower-income people with adjustment to higher electricity prices.
2) Implement renewable energy standard (aka renewable energy portfolio).
3) Increase fuel efficiency standards on cars.
4) Change habits. Conservation and energy efficiency.

John McCain (NH town meeting)
1) Cap and trade system which would work within the capitalist system.
2) Nuclear power got to be part of equation.
3) "Energy independence". Needed for security purposes.

Obama seemed to be ahead on this one, as he acknowledged climate change and elucidated several steps towards a reasonable solution (of course, these solution steps closely mirror the philosophy of Jeff Bingaman and the majority side of the Senate Energy and Natural Resources Committee) The next place one should look to learn more about the individual candidates and their plans for a national energy plan is the candidate's web sites, and this quest yielded the following results:

Obama - "Energy & Environment" page with a linked "Energy Fact Sheet" *.pdf and "Environment Fact Sheet" *.pdf that contain detailed information on Obama's plans to reduce carbon emissions by 80% from 1990 levels using an auctioned credits cap-and-trade system while investing $150 billion in clean energy over the next ten years. Plans also call for re-engaging the international community on climate change, raising the biofuels mandate, increasing incentives to efficient building constructors and utilities, and even phasing out the incandescent light bulb. While a grain of salt is needed in considering the feasibility of success of all these measures, there is clear evidence of some serious thought and a well-developed understanding of the problem.

McCain - "Climate Change" page that outlines McCain's allocated credits cap-and-trade system (very similar in levels to the Warner-Lieberman bill that failed this week, essentially requiring a 60% drop below 1990 emissions by 2050, 20% smaller than Obama's system). Also, some rhetoric about McCain's role in international climate change negotiations going forward, but I was rather disappointed by the "detailed" description of the plan as it turned out to be a pop-up that basically showed jobs being created as power plants cut emissions and then showed the US increasing exporting numbers of wind turbines while getting an increasing amount of cash from India, China, and Europe. Lacked any clear evidence of a real understanding of the need for a coherent energy policy, as well as a decent description of the climate change system (especially important since allocations rather than auctions are McCain's preferred method of credit dispersal).

Obama - 2, McCain - 0. Moving past the rhetoric, I also find it useful to check the actions people have completed that either support or contradict their stated stance on an issue. For Congress-people, the most useful source for this information is The Library of Congress' THOMAS legislative information system as it lets you look at legislation sponsors as well as actual Congressional records. Looking through the current (110th) Congress' information, I found the following regarding Obama and McCain:

Obama - Has sponsored and referred to committee more than five bills in the past Congress, spanning topics from climate change to fuel standard increases, including one on providing incentives to the auto industry for advanced vehicle research (the sole authorship indicates that the candidate and his staff must actually have thought the bill up themselves, a good sign).

McCain - Nothing. No sponsorships of anything related to energy or climate change in the past Congress. Big emphasis is on security and the military.

Clearly, Obama's rhetoric and actions show a better understanding of the issues and possible solution steps when compared with John McCain's. Such evidence does not in any way indicate that actual progress will occur during the next presidency and should not be used as the sole determinant of anyone's voting preference, so please do not read this article as an endorsement of Obama over McCain (in interest of full disclosure, my original intent was to show that McCain had experience and leadership on this issue compared to the novice Senator Obama, but that direction was clearly overruled by the facts on the table).

What is important is for Americans to understand the scope of the problem and the need for a solution in the form of some sort of climate change plan and energy plan. With gas up to nearly $4 a gallon, this issue is increasingly on the average consumer's mind, but the big challenge will be designing something that does not choke the US economy while also allowing renewable and efficient energy solutions to appear. We can only hope, pray, and vote to see such change emerge in the next four years.

MA Biofuel Bill Proposed ... Mixing the Carrot and the Stick

The Boston Globe reported today on a MA biofuels bill that has been proposed by prominent members of the MA legislature. The focus definitely seems to be on the oil security side here...

The Stick
The bill would mandate that all home heating oil and diesel fuel sold in MA contain at least 2% "renewable bio-based alternatives" by 2010, rising to 5% by 2013. From the wording of the article, it would appear that this does indeed apply to diesel for automobiles. Could be a major boon for regional biodiesel suppliers such as Twin Rivers...

The Carrot
According to the Globe, the bill would also exempt gasoline containing ANY cellulosic ethanol from the state gasoline tax of 23c/gallon. Treating cellulosic ethanol as "special" is hugely important to allow this market to grow to scale and ideally grow to become cheaper than corn ethanol. I am sure that the real wording must put a minimum on the % by volume or energy of the cellulosic ethanol content of gasoline to qualify for the exemption. Otherwise, I have a good single ethanol molecule injection/mixing technology startup in the works.... :)

Are there any cellulosic ethanol plants planned/under construction in New England???

Exciting to see MA leading the way here!!!

MA Clean Energy Industry Census: A Brief Review and Some Thoughts

Last week, the Massachusetts Technology Collaborative (MTC) released the results of its recent "Massachusetts Clean Energy Industry Census".

Most importantly, in my opinion, the findings of this report provide quantitative evidence of what most of us involved with the MA clean energy cluster have already clearly observed over the last few years: the MA clean energy cluster is hot and growing fast. (I highly recommend taking a look at the New England Energy Innovation Collaborative's (NEEIC) New England Energy Innovation Cluster Map for a very visual representation of the "cluster".)

I predict that this report (on hype alone) will begin to land MA/Boston onto most of the "Hot Spots for Cleantech" lists in the near future, on which it has been notably absent up until now (for example MA/Boston was not mentioned in "The Clean Tech Revolution", a popular recent book on cleantech by The Clean Edge folks) . For example, RenewableEnergyAccess.com wrote a story on the MA clean energy cluster because fo the census report.

The report gives a good fact-based picture of the current state of the MA clean tech industry. It also shows some very promising trends and provides insights for potential bottlenecks to growth.

However, in my opinion, the report was a little bit too focused on jobs and not enough on revenues/profits. A high tech cluster should have high productivity and create high market value/profits per worker (while providing a whole bunch of high paying jobs as well of course). But given the MTC's mandate, this bias is too be understood.

One more criticism is the lack of a detailed discussion of clean technology research intensity trends in MA's most valuable hubs of innovation: its universities. I didn't see any explicit mention of the MIT Energy Initiative, for example. A lot of MA university professors have been unable to work on clean energy for more than two decades due to a lack of government/university financial support during a previous era of low oil prices, and are hungry to innovate in this technology area. It is the growing number of university clean tech innovations that are happening now that will be fueling the continued growth of the MA clean energy industry down the line.


Some highlights below:

Clean Energy Cluster is Significant in Employment Size:
The clean energy cluster (at 14,400 jobs) is the 11th largest industry cluster in MA (closely behind "Textiles and Clothing", which is no slouch cluster due to the presence of Reebok, New Balance, et al in MA)

Clean Energy Cluster Employment is Growing Much Faster than Any Other MA Cluster :
Clean energy executives expect the number of clean energy jobs in MA to grow by 20% next year, more than 3x the rate that any cluster grew last year. The number of clean energy start-ups founded each year has grown at a CAGR of 15% since 1995.

Large Number of Small Firms in MA Clean Energy Cluster:
68% of MA clean energy firms have annual revenues < $10M, 41% have revenues <$1M.

The study identified some potential bottlenecks that need to be overcome:
1.) The need to develop a strong regional market in New England for clean energy products. This will require pro-active regulatory action by MA gov't to both instate clean energy product friendly rules and regulations (i.e. net metering laws, ...) and to provide state clean energy product subsidies (i.e. feed-in tariffs, tax credits, ...)
2.) The need for MA clean energy companies to expand their reach into non-local markets as well.
3.) The need to compete with California, which census respondents identified as the most supportive region for a clean energy cluster, by creating a regulatory and subsidy environment supportive of the clean energy industry.


A parting thought related to the MA clean energy industry cluster: the MACA Fallacy?

How obsessed should the MA clean energy cluster be in comparing itself to California?? California is clearly the leader right now (and often has been in the past) in terms of progressive energy policies. However, when absolute numbers are compared between MA and CA (which they often are and are used as evidence that MA is lagging CA), CA's numbers should always be bigger simply because it is just a much larger economy (area & people). For example, the Clean Tech Venture Network (according to Rob Day) reported that approximately 20% of Q1 2007 venture investment in cleantech was in companies in the Northeast. Is this number good or bad for New England? I think we need some better metrics. Perhaps MA/Boston should compete directly with CA/Bay Area or CA/LA-San Diego.....

Anyone have any ideas for a good metric/comparison methodology?