In the ten months (has it been that long) since the launch of the BusinessGreen blog we've purposefully avoided stories about the furious pace of climate change and the various milestones on the road to apocalypse that we seem to pass on an almost weekly basis.

There are several good reasons for this. Firstly, our core remit of providing news and best practice analysis for environmentally-conscious execs means that news of the rapid demise of the polar ice caps has less weight from an editorial perspective than a story on a new clean technology or an analysis of attitudes towards green taxation. Individual businesses and executives can do a lot to limit their carbon emissions, but they can not on their own stop the ice caps melting.

Secondly, and perhaps less justifiably, you could argue that commenting on every single piece of bad environmental news creates a sense of defeatism that could easily undermine green investments ands initiatives.

However, that being said sometimes there climate change scare stories become so terrifying they prove impossible to ignore.

According to reports last week, scientists have been left "stunned" after the Arctic ice cap collapsed at an unprecedented rate this summer leaving sea ice levels in the region at record lows.

The Northwest passage to the north of Canada has been left fully navigable and the Northeast passage along Russia's coastline is expected to open up soon.

At the current rate the Arctic could be totally free of summer ice in less than 25 years.

Speaking to The Guardian, Dr Mark Serreze, an Arctic specialist at the US National Snow and Ice Data Centre at Colorado University in Denver, said: "If you asked me a couple of years ago when the Arctic could lose all of its ice then I would have said 2100, or 2070 maybe. But now I think that 2030 is a reasonable estimate. It seems that the Arctic is going to be a very different place within our lifetimes, and certainly within our childrens' lifetimes."

The ice should begin to recover somewhat as the winter begins, but Serreze is less than confident we will see significant changes in the coming months. "This summer we've got all this open water and added heat going into the ocean. That is going to make it much harder for the ice to grow back… The rules are starting to change and what's changing the rules is the input of greenhouse gases."

Meanwhile, scientific reports continue to raise very real concerns that the break up of the Greenland and West Antarctic ice sheets and subsequent catastrophic increases in sea levels is now inevitable. And if the ensuing human catastrophe does not get you worrying, perhaps a study from the US Geological Survey predicting two thirds of Polar Bears will be extinct within 50 years will.

These scare stories are easy to ignore, as perhaps we have been guilty of here. After all, the Arctic is a long way away and not many of us are ever likely to visit.

But they still serve as an important reminder as to why low carbon business models are so important and also how overly optimistic many firms risk assessments remain. It is time to start basing our climate change strategies on the startling realities of what is happening at the poles and not on the best case scenarios of various scientific reports that even their authors accept are now looking increasingly out of date.

Posted by James Murray on September 21, 2007 | Permalink | Comments (0)

Wave power firm Embley Energy has just secured £150,000 in funding from the Carbon Trust as it continues development work on the innovative floating concrete that underpins its Sperboy wave energy converter.

The investment will be used on a new project designed to prove the economic and technical viability of the new technology when compared to fossil fuels and other renewable energy sources.

Experts have long argued that wave energy could provide more reliable power than other forms of renewable energy such as wind, while the UK's long coastline means it could meet a huge proportion of the country's energy needs. A recent Carbon Trust study estimated as much as a fifth of the country's electricity could be generated by wave power.

However, the technology has struggled to prove its viability with concerns over cost and the difficulty of maintenance hampering its adoption.

However, now Bristol-based Embley thinks it may have found a solution to many of wave powers problems in the form of a new "oscillating water column" buoy that it claims can generate reliable energy at low cost.

The buoy works by moving with the waves and forcing displaced air within the buoy to drive turbine generators.

But while this approach is not new where the design is interesting is in the use of advanced laminated floating concrete and a configuration that ensures that the moving parts are above the waterline. As a result the buoys are estimated to have a life of 40 years and require minimal maintenance, drastically reducing the running costs.

"The use of concrete for the main vessel will considerably increase the working life of the wave-energy converter and our design should deliver energy at a cost to compete with traditional forms of energy production," said Embley's Michael Burrett.

The company will now invest the Carbon Trust funding in a two year development programme that will see it run a series of water tank trials that will help it prove the viability of the floating concrete structure.

Embley said the research would move it closer to its goal of attaining commercial production by 2015, at which point the Sperboy technology could be deployed in large wave farms with 750 buoys spread over 15 square kilometres.

Wave and tidal energy is currently seeing a surge of investor interest ahead of expected changes to the government's renewable obligations legislation that will see generators of wave and tidal power receive more money for the energy they generate through the government's renewable obligations certifictes (ROCs) subsidy mechanism than wind and other forms of renewable energy providers.

Speaking to BusinessGreen earlier this year, Martin Gibson of venture capitalists Atlas Ventures predicted the marine renewable energy was on the verge of a major breakthrough as technologies mature and the government signals it is willing to support the sector.

"What is interesting is that the regions where this technology is necessarily developed, like the South West, Western Scotland and Northern Spain, are areas with a great engineering heritage through ship building or mining that have been under-exploited in recent years," he added. "There is a lot of untapped engineering talent out there."

Posted by James Murray on September 11, 2007 | Permalink | Comments (0)

Arnold Schwarzenegger's California may be at the vanguard of the US' green revolution, but, argues Benoit Wirz, Florida and its growing biofuel market could soon be close on its heels

When California's eco-active governor Arnold Schwarzenegger and venture capitalist-turned-ethanol-apostle Vinod Khosla held court in Miami a few weeks ago to heap praise on Governor Charlie Crist's new climate change proposal, it seemed that Florida's rise to an alternative energy paradise was well underway.

Following the path Schwarzenegger sketched out in the Golden State, Crist unveiled a mixture of mandates and incentives aimed at capping the levels of greenhouse gas emissions, increasing consumption of biofuels (ethanol and biodiesel) and requiring that 20 percent of electricity generated in Florida be derived from renewable resources.

Similar initiatives, some implemented decades ago, birthed the development of the solar and wind industries in California and Texas, as well as corn ethanol in the Midwest. Energy price increases over the last four years turned green into gold for alternative energy producers in these states, making the financial fortunes of farmers, entrepreneurs and big businesses alike.

By almost any gross measure, Florida is the largest untapped market for alternative energy in the U.S. At 23.5 million gallons of gasoline sold per day, we are the third largest transportation fuels market according to the Department of Energy but the volume of biofuels currently consumed is negligible.

Similarly, $17.8 billion spent on electricity every year makes the state the fourth largest electricity market in the country, but only 3.7 percent of the nation's renewable energy is generated in the Sunshine State.

In the wake of Crist's announcements, the key question being debated here is simple: What would a greener Florida look like? After all, our state's late arrival to the clean energy party stems in part from the fact that neither large-scale wind projects (no wind) nor large-scale solar projects (too much cloud cover) are viable here.

Florida Farm to Fuel, a crowded if somewhat less star-studded conference hosted by Florida's Commissioner of Agriculture after Crist's announcements, revealed that the types of renewable technologies most likely to play to Florida's strengths, namely biodiesel, closed loop biomass and cellulosic ethanol, remain some years away in terms of large scale commercial viability.

The smart money is betting that in the short run, Florida will have to import ethanol to reach its policy goals. Brazil's status as both Florida's largest international trading partner and the world's low-cost producer of ethanol make it the obvious near-term source of GHG-compliant renewable fuel.

Gate Petroleum Company, a Jacksonville based petroleum distribution company shelved plans to construct its own (Midwestern corn-based) ethanol production facility in favor of a bio-fuels port storage terminal convenient for import from Brazil. Because of ethanol's distinct transportation and storage requirements, infrastructure investment by distributors will be key to making the fuel more widely available here.

The first renewable fuel likely to be generated in large volumes locally is biodiesel. Made from a variety of animal and vegetable oils, cheap oil is the key to making biodiesel competitive. The key to cheap oil: getting a maximum yield of bio-oil per quantity of land and nutrients used in production.

Particularly in the southern part of the state, Florida's climate could yield high volumes of bio-oil rich crops. Xenerga, an Orlando-based, vertically integrated producer of biodiesel, has already identified and patented a strain of jatropha, a high yielding crop, and is looking to partner with local farmers. PetroAlgae, based in Melbourne, is looking to grow and harvest algae for bio-oil with the potential for even higher yields per acre.

After tourism, agriculture is Florida's largest industry and if high-yielding energy crops do prove to grow successfully in Florida, farmers will have a powerful incentive to join together in co-ops to finance biodiesel refineries and accelerate wide-scale distribution. Such co-ops have proved a successful hedge against market fluctuations for farmers in other parts of the country as well as a source of great wealth. David Kolsrud, President of DAK Renewable Energy, pointed out that a $1,000 investment in his Minnesota corn-based ethanol co-op in 1997 is worth $97,000 today.

Depending on the type of legislation enacted, solar energy could also be a key contributor to a greener Florida. Photovoltaic technology, although expensive on a wholesale-basis, is proven and financeable. If, as Crist proposed, utilities are obligated to pay retail rates to solar energy producers, rather than the lower "avoided cost" rates they currently pay, Florida's electric consumers, whose bills are 10 percent higher than the national average, will likely begin to take advantage of Federal and state subsidies by installing their own photovoltaic power systems.

Cellulosic ethanol, a more efficient but complicated method of converting plant matter to ethanol is not predicted, even by optimists like Vinod Khosla, to be commercial before 2012. Nonetheless, Florida stands as good a chance as any in the hunt to commercialise cellulosic ethanol, if only because of the diversity of routes being pursued here.

An enzymatic technology developed by the University of Florida has been licensed by Massachussetts-based enzyme manufacturer Verenium. Alico, a large Florida agricultural company and landowner has received Federal and State grants to commercialise a gasification/fermentation technology. A more specialised approach is being pursued by utility company Florida Power & Light, which teamed up with local technology company Citrus Energy to construct a plant specifically to refine citrus waste into ethanol. If any of these technologies are successful, the cost of producing ethanol from Florida's plentiful biomass could decrease dramatically.

Another fundamental change to Florida's environmental and energy profile will come if and when we begin to grow our own fuel for baseload electric generation. No carbon trading regime is in place here yet and Florida utilities, the largest source of GHG emissions after transportation fuels, have focused on getting cheaper traditional technologies that reduce carbon emissions like nuclear and coal gasification recognized as "green."

Neither nuclear energy nor coal is considered entirely green, however, and carbon caps can drastically change the economics of electric generation. Green Circle Bio Energy, a Scandinavian owned company, is scheduled to complete a plant this year in Northern Florida that will ship 750,000 tons of wood pellets per year to CO2-conscious European power plants, where they will be co-fired with coal. As carbon caps kick in, Florida's utility companies are likely to start co-firing biomass grown here as well, particularly as we approach the first GHG reduction deadline in 2017.

Progress Energy, the state's second largest utility company, is not waiting until then, it has signed a power purchase agreement with Biomass Investment Group to purchase power from a 130 MW closed-loop biomass project to be located in central Florida as well as a separate contract with Atlanta-based Biomass Gas & Electric for purchase of electricity from a 75 MW wood-waste fueled biomass gasification plant in Northern Florida.

Some of these technologies will bring a greener future to the sunshine state, just as some will end up disappointing investors, entrepreneurs and policy makers alike. The kinds of change envisioned by Crist and Khosla in Miami will require a revolutionary change in the way that Florida currently generates energy. To quote Thomas Friedman, "A revolution without sacrifice where everyone is a winner? There's no such thing."

Despite these risks, the potential size of the market and greener political climate have set the stage for Florida to eventually catch up with and perhaps even surpass states that are already further down the green path.

Benoit Wirz is a partner with US Global, LLC, a South Florida company that funds companies and develops projects in energy, technology and real estate. Benoit is primarily responsible for the firm's energy related activities, and is currently focused on identifying alternative and renewable energy investment opportunities in Florida.

This article first appeared at Greenbiz.com

Posted by James Murray on September 6, 2007 | Permalink | Comments (0)

Just days after we posted urging the BBC to stand up to its climate change critics and go ahead with plans for a series of programmes on global warming it emerges that the corporation has lost its nerve and canned the idea.

According to reports on the BBC website it has scrapped plans for a TV special on climate change, provisionally titled Planet relief and scheduled for early next year, after senior executives and climate change sceptics expressed concerns that it would breach impartiality rules.

The BBC is yet to comment on the reports, but it is hard to interpret the decision as anything but a major climbdown.

To suggest this has anything to do with impartiality is a smokescreen.

If the BBC really thinks all campaigns must be entirely impartial and must not take political or campaigning positions then I for one expect the immediate cancellation of Children in Need and Comic Relief on the grounds that some people don't believe in charity.

It will also need to apologise for its recent programmes campaigning to save certain species on the grounds that some people regard extinction as evolution in action.

In fact, they'll also have to get rid of the blatant liberal bias they show in all their reporting on poverty, poor health and social injustice issues on the grounds that there are plenty of people who think the BBC's hand-wringing reporting style refuses to acknowledge alternative explanations for these problems that go against the liberal consensus.

The charge list against the BBC's impartiality goes on and on.

No, this is not about impartiality - if it was there are plenty more valid causes for concern than some programmes on climate change. What the cancellation is really all about is the BBC bottling a row with a small but highly vocal group of climate change sceptics and some of its own senior executives who are apparently happy constantly defending themselves against charges of liberal bias, but don't have the backbone to stand up to similar criticism of its stance on climate change.

The BBC's u-turn again highlights the influence and success of the climate change denial lobby. If there was a real national consensus that we are on the brink of a "planetary emergency", as the vast majority of climate change scientists now believe, then no one would have any problem with the BBC campaigning on the issue.

It also sends out worrying signals for many businesses that are trying to limit their carbon footprint.

Like it or loath it the BBC often sets the tone for the national debate and if it is backing away from campaigning on climate change it is a cause of considerable concern.

The BBC's cowardice has just made it harder for businesses, politicians and other public bodies to convince customers, employees and citizens of the urgent importance of reducing their carbon footprint.

It seems a bizarre situation given their established positions on the political spectrum, but with the BBC lacking the stomach to take a strong position on climate change perhaps it is now up to Rupert Murdoch's News International and its commitment to climate change campaigning to help promote more sustainable lifestyles.

Posted by James Murray on September 5, 2007 | Permalink | Comments (5)

While some pretty risky clean technologies are being wildly overhyped other safer sectors remain strangely under the radar. One such technology, according to Roger Franklin, is solid state or LED lighting and Europe looks like it is missing the boat.

One factor often complicating investments in cleantech is the tortuous route to market that lies ahead for many of the sector's promising technologies. For example, however cool your wave power device, it is likely to require substantial capital expenditure to ever have it capture a significant portion of the energy generation market.

In addition, clean energy generation technologies are likely to need some sort of public sector support to make them competitive- witness the widespread feed-in tariff regime for solar PV and wind in Europe. These issues mean that investing in many clean energy plays can be a very risky business. Having a large addressable market is only relevant if you have some way of getting to it rapidly and without the need for billions of dollars.

So where in cleantech can we find a large addressable market without these complications? At Library House we've believed for a while that solid state lighting is just such an opportunity.

The market for lighting solutions is vast, estimated at $12bn by Stephen Naor, CEO of Group IV Semiconductor, and growing. Furthermore, because this is an energy efficiency play, there is perfect alignment between financial and political/scientific imperatives. More efficient lighting benefits the customer through lower electricity bills and the environment through reduced carbon emmissions. No need for tax breaks, or feed-in tariffs or any other state-sponsored route to market with inherent political risk built in. A huge, clear and addressable market. No wonder this month has seen a couple more big deals in the area.

Group IV Semiconductor, based in Ottawa, Canada has received another 'substantial' round of funding from Khosla Ventures, Applied Materials, Garage Technology Ventures Canada and BDC Venture Capital to go with the €7m ($9.1m, £4.8m) raised by the company towards the end of last year. California-based BridgeLux has also raised a substantial amount of cash, €16.8m ($23m, £11.3m), in a third round of funding.

So what are these companies up to exactly?

Solid state lighting is essentially the idea that light can be produced more efficiently by directly converting electricity into photons ('packets' of light) using a semiconductor rather than by heating up a filament or relying on fluorescence. There is no doubt that the basic principle is sound - the most advanced 'energy saving' bulbs are only 25 percent efficient whereas solid state lighting solutions can reach up to 80 percent - but the problem is cost. Making solid state (aka LED) lighting cheap enough to achieve significant market penetration is the key challenge.

BridgeLux and Group IV have different strategies in this regard - whereas Group IV are aggressively pursuing a strategy based on all-silicon chips for the general lighting market, BridgeLux is using Indium Gallium Nitride approaches (i.e. an alternative semiconductor) to target large but specialised markets such as industrial lighting or mobile phone flashes.

However, these two companies are far from the only ones targeting this fertile area. For example, Quanlight of San Diego is developing LEDs based on an alternative semiconductor known as dilute nitride which is reputed to have superior qualities at high current loads. The company has been backed by Blackbird Ventures and (SHW)2 Enterprises. Other key players include DFJ, backed by Intematix, which is also involved in the utilisation of new materials in fuel cell technology.

Overall, this is a key space to watch for any cleantech investor. Depressingly, however, Europe appears to have been left out of this exciting arena. Not a single venture backed-company in Europe is targeting the solid state lighting market despite its clear attractions.

Sadly solid state lighting looks set to go down as yet another example of North America leading Europe when it comes to actually bringing clean technologies to market.

Roger Franklin is a Senior Analyst in Venture Capital and Cleantech at investment research firm Library House. The company provides information and research on the fastest growing privately-held companies across Europe

Posted by James Murray on August 28, 2007 | Permalink | Comments (0)

Another day, another report on the dangers associated with the rush towards biofuels.

However, this latest study from the World Land Trust might just represent a significant blow to the burgeoning biofuel market.

Up to now many of the reports attacking the viability of biofuels have focused on the fuel versus food debate and whether the need to allocate land for biofuel production will take land from food crops, leading to increased food prices and even shortages.

This is obviously not an insignificant problem with groups ranging from Mexican farmers to German gummy bear manufacturers testifying to the serious commercial consequences of already rising food prices.

However, the latest research from Renton Righelato of the World Land Trust and Dominick Spracklen of the University of Leeds has taken a different tack and argues that not only could increased biofuel production lead to food shortages it could also contribute to massively increased carbon emissions.

Biofuel, in short, could be exacerbating the one problem it set out to resolve.

The study - which has been published in the journal Science - claims to represent the first assessment of the carbon emissions across the whole biofuel lifecycle of planting, extraction, conversion into fuel and use and concludes that biofuel could result in the release of between two and nine times more carbon dioxide than fossil fuels.

The analysis is based on the prediction that demand for biofuel will lead to increased deforestation of tropical rainforests to make way for biofuel crops such as sugar cane and palm oil. Such deforestation, which is already well underway in several tropical countries, results in an immediate release of carbon emissions. The report argues that these emissions when added to further emissions associated with harvesting, biofuel conversion and transport ensures that biofuels are significantly more polluting than the fossil fuels they are designed to replace.

The report also warns that developing enough biofuel to meet US and European governments' targets without widespread deforestation is untenable, noting that 40 percent of Europe's arable land would be required to hit the target of just 10 percent of transport fuel coming from biofuels by 2020. As a result the burden for biofuel production will fall on the developing world, the report predicts, where acceleration in deforestation would become inevitable.

The study recommends that policy-makers would be better advised to invest the money ear marked for biofuels into preserving tropical forests and "increasing the efficiency of fossil fuel use and developing carbon-free transport fuels to replace fossil hydrocarbons".

The report is just the latest in a series of blows to the still burgeoning biofuel sector. Earlier this month the head of the International Food Policy Research Institute warned that food prices could climb by up to 80 percent as a result of the predicted biofuel boom, while a recent UN report warned about potential damage to wildlife and livelihoods as a result of biofuel.

Businesses, meanwhile, would be well advised to tread very carefully with any biofuel-based initiatives for their fleets until some kind of scientific consensus on the climatic impacts of the fuel emerges.

Posted by James Murray on August 20, 2007 | Permalink | Comments (2)

Concerns over the wider impact of the booming demand for biofuels continued to grow last week after a leading agricultural think tank warned prices could soar by as much as 80 percent as land is diverted towards biofuel production.

According to an AFP report, Joachim von Braun, director general of the International Food Policy Research Institute, warned that food prices could climb by between 40 and 80 percent unless investments in improving agricultural productivity are made.

Speaking earlier this month at a conference in Manila, von Braun said that correlations between demand for biofuel and an increase in food prices were already evident and that the situation could worsen.

"If it's well managed and we have more investment in research and technology to bring up yield levels in the crops and improve the efficiency of biofuels, these price effects may only be between five and 15 percent," he observed. "So it depends on government policy."

His comments are the latest in a line of warnings from industry experts who fear that the rush to develop biofuels could have a detrimental effect on food supplies and even carbon emissions.

A major report from the UN earlier this year predicted that increased demand for biofuels could lead to deforestation and food shortages. Meanwhile other studies have argued that while biofuels claim to be carbon neutral the increased demand for fuel sources such as palm oil has led to a net increase in carbon emissions as the growth of plantations has led to deforestation of tropical rainforests.

Consequently, environmental campaigners have called for a moratorium on all biofuel targets and incentive schemes until there is greater certainty that the current trend is environmentally sustainable.

However, advocates of biofuel maintain that the emergence of so-called second generation biofuels that are significantly more efficient and based on non food crops such as wood chips or straw will ensure US and EU targets to increase biofuel use will not have a significant impact on global food prices or land use.

A recent European Commission report into the impact of its target of sourcing 10 percent of transport fuel from the biofuel sector endorsed this view, claiming that while prices of oil seed products were expected to climb by around 15 percent agricultural markets would remain stable, based on the assumption that around a third of the demand would be met by second generation fuels.

But despite such reassurances the controversy has still prompted several firms to reassess their biofuel plans. Most notably coach company National Express this month announced it was pulling out of a trial that would have seen some of its fleet running on up to 30 percent bioethanol citing fears the fuel was having a detrimental effect on the environment and world food prices.

Posted by James Murray on August 15, 2007 | Permalink | Comments (0)

A leading scientist with the Tyndall Centre for Climate Change Research has warned that "doing nothing is better than offsetting" on the grounds that there is a serious risk that the practice is leading to increased emissions.

Dr Kevin Anderson, an academic at the University of Manchester and energy programme leader for the Tyndall Centre, said that the failure by many offset firms to look at the wider implications of investing in carbon reduction projects in developing economies meant that they were guilty of inadvertently increasing carbon emissions.

"Many of these schemes are not accounting for the economic multiplier effect of the offset investments," he said. "For example, if you take one popular offset project in the form of donating low energy bulbs to a Jamaican hotel you have to ask, what is the full impact of that investment? Electricity in Jamaica is expensive, so what does the hotelier do with the money he saves? He may use it to pay for a flight for himself or he may invest in extending the hotel, both of which could cancel out the initial emission reductions."

Anderson argued that there is no way that offset providers can guarantee that their investments will not spark significant multiplier effects that would ultimately lead to increased emissions.

"Such multipliers are the whole point of economic development, so if you want to invest in development that's fine, but if you are investing in offsetting emissions you need to be certain that your investment does not lead to an increase in emissions," he said. "And you just can't give that guarantee, particularly when you consider that a lot of the offset projects are based on assumptions about emission reductions taking place over 100 year time periods."

Anderson said that the Environmental Audit Committee's recent report recommending that the carbon offsetting industry could play a major role in tackling climate change failed to sufficiently account for multiplier effects and as a result businesses would be wise to ignore the report's advice and avoid offsetting schemes altogether.

However, David Wellington, director at leading offset provider Climate Care, rejected Anderson's analysis claiming that offsetting best practices did indeed account for multiplier effects. "We refer to it as leakage - the effect the project will have on other aspects of the economy – and it is well accounted for in the Kyoto Protocol and the Clean Development Mechanism's (CDM) checks and balances for assessing a project's additionality," he said.

He added that all Climate Care's projects were either qualified under the CDM or mirrored the CDM requirements.

Wellington also argued that it was "ludicrous" that Anderson was attacking offsetting when the multiplier effect applies equally to many other emission reduction investment. "It is a nonsense to imply this issue is unique to offsetting," he claimed. "There are many emission reduction schemes that have the same problem because if they help people save money they will spend that money elsewhere on things like food and education. To suggest it means that you should not offset is frankly ludicrous."

However, Anderson rejected Wellington's criticism arguing that the idea that the CDM legislation tackled the problem was "at the best highly misleading". He added that the central problem remains that CO2 emissions from a car journey or flight will typically remain in the atmosphere for 100 years meaning there is no way offsetting providers can be sure their investment does not lead to an increase in emissions at some point far into the future.

"Wellington's crystal ball must therefore be up there with Harry Potter's if it is to estimate with any level of certainty the economic multiplier over many decades," he said. "Wellington's ball would have been able to predict Concorde, the Space Shuttle, Satellites and Mars probes etc at the time of the Wright brothers - as well as their carbon implications."

Anderson added that while the problem also applied to other emission reduction investments that provided no reason not to address the issue. He argued that the only way to counter the multiplier effect and make carbon offset schemes more secure would be to place emission caps on any country receiving offset investments.

Furthermore, even if offsetting schemes were 100 percent reliable Anderson maintains that they would not be desirable on the grounds that they would remove the incentive to innovate new low carbon technologies. "For example, a tenner on a flight from London to Rome is not going to put us off flying - and hence there is no market signal for improving the train service or changing our attitudes," he explained.  "In the meantime, we build more capitally expensive airports and runways and buy more A380s and Dreamliners - all which lock us in to high emissions travel for many years to come and absorb capital that could otherwise be spent on alternative low-carbon options."

This analysis is again contested by many advocates of offsetting who argue that by adding cost to carbon intensive activities offsetting actually creates a greater incentive for innovation in low carbon technologies.

Anderson also rejected Wellington's suggestion that his opposition to offsetting could be perceived as an opposition to carbon emission reduction and economic development projects, arguing that he was critical of the offsetting funding mechanism and not the many "carefully conceived and monitored" emission reduction projects they involve.

"These developments should be funded as reparations, not as aid," he insisted. "It is us who have brought about the position whereby these countries cannot develop along the carbon profligate route we - unknowingly at first - proceeded… I would argue we have moral imperative to assist these countries - but not as a mean of buying indulgencies."

Posted by James Murray on August 14, 2007 | Permalink | Comments (4)

Martin Gibson of venture capitalists Atlas Venture reckons predictions of a clean tech bubble under estimate the extent to which environmental concerns are now shaping the economy

Venture capitalists are by nature a pretty optimistic breed. They may have an acute understanding of risk and many of the most successful investors may be inherently cautious, but ultimately when you are making multi-million pound bets on businesses so young many of the staff are still wearing short trousers you have to have a pretty up-beat outlook on things.

But even with this optimism taken into account it is still reassuring to hear a seasoned venture capitalist dismissing talk of a green tech investment bubble as over-blown scaremongering.

"To call it a bubble suggests there is no substance there," muses Martin Gibson, a Partner in the technology team at Atlas Venture, over coffee at a small eaterie opposite the investment firm's Mayfair offices. "But there is real substance here, not least in changing consumer attitudes. The red stand-by dot on your TV is not a mark of convenience any longer – it is a mark of guilt."

This shift in consumer attitudes has coincided with a global increase in energy prices which according to Gibson have made green products not just socially desirable but also economically viable: "Whether it is related to the availability of oil or not – and there are people in the industry who keep saying that there is not much new oil out there - the shift in energy prices means that whether it is because of their carbon footprint or cost savings people have two reasons to address energy use".

Other commentators have argued that despite these shifts in underlying economic conditions many clean tech companies are over valued and a correction, if not a full blown crash, is on the cards. A recent report from Lux Research argued that the clean energy sector in particular was looking "overheated".

But Gibson insists such concerns were to be expected as the hype cycle follows its natural course, but he insists these fears are based on a common mislabelling of the clean tech movement. He argues that far from being a discernable sector clean tech is a wide-reaching trend that reaches into countless different sectors. As such it is difficult to imagine all "clean tech" investments suddenly crashing.

Meanwhile, the investment case for clean tech firms has been strengthened in recent years by a spate of government subsidies that have made a wide range of clean tech innovations attractive. Atlas, for example, has been keeping a close eye on the area of tidal and wave energy and it is an interest that has become more acute since the government earlier this year increased the subsidies, or so called wet ROCs, available to the sector.

"The ideal business does not depend on subsidies but if they are available they can help early stage firms," observes Gibson. "The UK blew its chances with wind energy because the government wouldn’t back it and there are signs we are not going to make that same mistake with wave and tidal power."

Marine renewable energy has been a perennial next big thing for about 30 years, but Gibson is convinced that the technology is fast approaching maturity and with various studies estimating as much as 15 percent of the UK's energy could be generated by such technologies [see diagram] the potential revenue stream for marine renewable projects is huge.

Moreover, there are several attractive and highly-skilled companies out there developing the technology. "What is interesting is that the regions where this technology is necessarily developed, like the South West, Western Scotland and Northern Spain, are areas with a great engineering heritage through ship building or mining that have been under-exploited in recent years," comments Gibson. "There is a lot of untapped engineering talent out there."

The increase in government subsidies is one of the last pieces of the jigsaw for Gibson, making wave and tidal power technologies increasingly economically viable throughout their early stage development and allowing the sector to hopefully grow to a point where it becomes profitable without government backing.

Some critics have argued that relying on government subsides or the prospect of new regulations when making investment decisions represents a dangerous game. There is a feeling in some quarters that too many VC bets are being made on the assumption that governments will deliver an international framework that places a price on carbon and makes low carbon technologies commercially competitive. Based on this analysis the clean tech bubble would burst within hours of the US or Chinese delegations walking out of the next round of Kyoto talks – a prediction that has a concerning ring of plausibility.

Yet Gibson maintains that well-selected clean tech investments should be immune to such political vagaries. "Venture capitalists know that predicting what governments will do is very difficult so the focus has to be on businesses that can stand on their own two feet," he argues. "Subsidies are important and help make early stage businesses viable, but they are never the only consideration. It may sound hackneyed but what we're looking for are companies with potential markets, viable products, strong entrepreneurs, potential for internationalisation, and a capital efficient model that does not require too much capital too early – if there is a government framework that is just a plus."

Posted by James Murray on August 8, 2007 | Permalink | Comments (0)

It is unclear if the recent floods are directly linked to climate change and businesses would be wise to avoid jumping to conclusions, argues Lawrence Gosling

"We'll always have weather," a senior member of the Meteorology Office in the UK was quoted as saying in a Radio Five debate the last week.

It ranks as one of the great quotes I've heard in recent times, and if the gentleman who uttered hadn't been so intelligent you'd swear he was a politician.

Obviously taken out of context like this he does sound like a politician, and not the intelligent man he is. He was taking part in a debate as to whether the current period of wet (if that is not understating it) weather in the UK is as a result of climate change.

His view was that while it might be, it is too early to say, and that we need more time to study the changes.

Of course he wasn't on strong ground – if you believe it is as a result of climate change – when you bear in mind it is apparently the wettest this period of the year has been in the UK since the French Revolution in 1789.

And of course all those desperately unfortunate people living in the South of England who are now suffering the same fate as part of Northern England did in June, are looking for reasons. Even scapegoats.

Governments are always good scapegoats, and the new Prime Minister might find his honeymoon period getting shorter every time there is another down pour.

Ironically the Government might be happy for the debate about the flooding to be focused on climate change, because that camouflages its own less than perfect aid response to the regions and longer term issues about house building on flood plains.

But can we blame climate change on relative wetness of the UK, and the extreme heat in Continental Europe, both as the same time?

I think it probably depends on how much reliance you put on climate change to explain many things.

The eventual extinction of dinosaurs was as a result of climate change, arguably unless we take the current climate change seriously we could be the next generation of dinosaurs.

But just blaming it for every catastrophe, no matter what the size or extent, is not the way to have a sensible debate or create meaningful change.

The best way to sum up this episode, given its link back to the French Revolution, was made by the Radio Five presenter Nicky Campbell. So clever it would be shameful to claim any credit for it. So in his words.

"Liberty, fraternity and a lot of rain."

Lawrence Gosling is the editorial director of Incisive Media

Posted by James Murray on August 1, 2007 | Permalink | Comments (0)