State of the Union Starts Water Boom?; Renewables Funding Plan Gets Mixed Reviews; Efficiency Program Launches; Carbon Tax Lives; GE Takes Wind Lead

Mixed Reviews for Obama’s Green Energy Agenda

President Obama dedicated four minutes and 37 seconds of his State of the Union speech Tuesday night to renewable energy and climate change, promising that “if Congress won’t act soon to protect future generations, I will.”

Citing “overwhelming judgment of science” that the recent spate of droughts, floods and heat waves were not “all just a freak coincidence,” the president proposed a new Energy Security Trust that would redirect $200 million in royalties every year from drilling on federal lands and water into developing electric batteries, biofuels and vehicles powered by natural gas, adding up to $2 billion over the next decade, according to Bloomberg. The White House will ask Congress to approve such a change, an administration official told The New York Times.

Some groups, including the Solar Energy Industries Association and the National Resources Defense Council, support the idea. But environmental groups, including the Sierra Club, worry that it could push the U.S. to open more land and offshore sites to drilling.

In his address, the President also proposed an energy efficiency initiative to cut residential and commercial energy waste in half by 2033. The announcement came a week after the Alliance Commission on National Energy Efficiency Policy issued its  proposal to double energy efficiency and reduce carbon emissions by a third, and which called on the White House to take executive action through measures including tightening efficiency standards for household appliances and requiring improved efficiency for states as a condition for federal grants, according to the Washington Post.

What was surprising was the broad—if tenuous—support the president’s comments on energy received from Republican leaders, some of whom were seen nodding their heads and smiling during this part of the speech. Republicans were encouraged by Obama’s support for more gas drilling, and the opening up of energy development on public lands.

“When I hear him talk about the big idea of energy independence, I get excited about that,” Rep. Louie Gohmert (R-Texas), told The Huffington Post. “I’m not sure he’s really talking about it — I hope he is — but we now know we can be energy independent, and the key to doing that right now would be natural gas.”

Naturally, support from the right was far from universal. In an editorial responding to the address, David W. Kreutzer, a research fellow at the conservative think tank Heritage Foundation, blasted the president.

“The economic argument for green subsidies has already collapsed,” Kreutzer wrote. “It is time for the administration to quit using both arguments to justify a regulatory and fiscal power grab.”

The president also drew fire from his left flank. Daniel Souweine, campaign director for Forecast the Facts, a group that advocates policies to reverse climate change, said Obama failed to state substantive goals.

“Tonight, President Obama set the lowest possible bar for action—he did not pledge to stop the carbon-spewing Keystone XL Pipeline nor promise carbon regulations on existing power plants. In fact, he pledged no specific actions at all,” Souweine told USA Today.

While agreeing that Keystone XL was notable in its absence from Tuesday night’s speech, other environmentalists believed they sensed in Obama’s remarks a renewed commitment to climate policy and renewable energy.

“I’m glad to see the president, after the long, odd silence of the campaign, ratcheting up the rhetoric about climate change,” said Bill McKibben, founder of, an environmental advocacy group.

President Calls for U.S. Water Infrastructure Boom?

During his State of the Union speech, Obama also called for a new “Fix-It-First” program to pay for urgent repairs to the nation’s crumbling water and sewage systems. He also introduced a “Partnership to Rebuild America” that would attract private capital to fund infrastructure projects.

While Obama did not mention water by name, he “did say ‘infrastructure’ and he very clearly said ‘public-private partnerships,’” Michael Deane, executive director of the National Association of Water Companies told Bloomberg. That was seen as a sign by some in the industry that Obama was talking about water infrastructure, since 85 percent of Americans get water from cash-strapped, public-private entities, Bloomberg reported.

The U.S. will need to invest at least $1 trillion in infrastructure by 2035, according to the American Water Works Association.

Many old water pipes are over 100 years old and made of wood, Cindy Wallis-Large, president of the water division of the engineering firm Black & Veatch Corp., told Bloomberg.

“Many of the U.S. water systems are already at the end of their planned lifetime,” Su Gao, a Bloomberg analyst, said. “You have a lot of older pipes and deferred investment — it’s underground, out of sight, out of mind. Public-private partnerships are very important because the municipalities don’t have the means to fix their infrastructure.”

Big Win, Bigger Fail for Two Cleantech Funds

Lux Capital announced this week that it has exceeded its fundraising expectations, even as cleantech heavy-hitter Hudson Clean Energy Partners was forced to close its funding round early due to a lack of interest.

New York City-based Lux raised $245 million, the biggest fund it has raised so far, according to DealBook. That was significantly better than its original target of $200 million. “We feel very, very fortunate,” Peter Hébert, a Lux co-founder, told the Times.

Hébert credited his firm’s success to focusing on only about two dozen companies. According to its website, Lux’s investment portfolio includes Acclergy, which produces low-carbon, synthetic transportation fuels; and Crystal IS, which sells light-emitting diodes for energy-efficient air and water purification devise. The firm’s leaders include R. James Woolsey, the former CIO director, and Jeffrey B. Kindler, formerly CEO of Pfizer.

Meanwhile, Hudson Clean Energy was experiencing significant problems. Managed by Neil Auerbach, formerly a Goldman Sachs partner, and John Cavalier, the former Vice Chairman of the Investment Banking division at Credit Suisse, the firm was forced to suspend fundraising for its second round, which was originally expected to raise $1.5 billon, the Wall Street Journal reported.

The firm already has stakes in Solopower, a manufacturer of solar cells and modules, and Silicor, which makes solar silicon. Hudson has sold a number of its original holdings, including Recurrent Energy, which specialized in distributed solar power. The firm purchased Recurrent in 2008 and sold it in 2010 to Sharp Energy Corporation in Japan for $300 million, according to Hudson’s website. In 2010 Hudson invested in Landis+Gyr, an electricity metering and energy management company. By July 2011 Landis+Gyr was sold to Toshiba Corporation for $2.3 billion in cash, according to a press release.

The Carbon Tax Lives! Sort of

Two days after President Obama urged Congress in his State of the Union speech to do more on climate change, Sens. Barbara Boxer (D, Calif) and Bernie Sanders (I, Vt.) introduced a bill that would tax carbon emissions and use the revenue to pay down the debt and invest in clean energy programs.

The proposed legislation would tax carbon at $20 per ton, increasing at 5.6 percent annually over the decade after passage, and raise $1.2 trillion in revenue over that time, according to a press release by Sanders’ office. It also includes a provision that would force natural gas drilling companies to disclose the contents of their fracking fluid, which they have guarded as proprietary information.

The proposal is most likely dead on arrival, the Wall Street Journal reports, since Republicans joined with Democrats from coal-producing states to kill similar legislation in the Senate in 2009. “It’s not just energy prices that would skyrocket from a carbon tax, the cost of nearly everything built in America would go up,” Sen. David Vitter (R, La.), the ranking Republican on the Environment and Public Works Committee, said in a press release.

Still, Boxer and Sanders may win points for firing the first salvo in Congress in what likely will become a major fight over climate change legislation. Their proposal landed the same day as the first official confirmation from the Government Accountability Office that climate change poses a “high risk” to the federal government’s finances.

Tesla and NY Times Tussle Over Tow Truck

Hell knows no fury like Elon Musk scorned. The PayPal billionaire has sunk much of his fortune and his reputation into Tesla Motors, and especially the company’s new, sleek, all-electric Model S sedan. And that reputation was called on the carpet last week in a stinging review by New York Times writer John Broder, who got stranded in suburban Connecticut when the Model S unexpectedly ran out of power.

What followed is a still-unfolding battle royale between the Times and the billionaire. In a scathing blog post, Musk accused Broder of deliberately killing the car because of Broder’s allegedly pre-existing “outright disdain for electric cars,” Musk wrote. “When the facts didn’t suit his opinion, he simply changed the facts.”

Over the course of the incredibly arcane argument, Broder, Musk and a host of bloggers pored over hours and hours of digital logs from the car during Broder’s ill-fated drive. Was Broder “limping along at 45 m.p.h.” as he wrote, or at a slightly less grandmotherly pace of 53 m.p.h.? Was the car charged for 58 minutes in Milford, Connecticut, or merely 47?

On one level, the entire debate seems picayune. Cars die on the highway every day, ho hum. But Musk understands that a review in a high-profile publication like the Times that ends in his beautiful new sedan being carted away on a flatbed truck could spell trouble for Tesla, especially since the manufacturer has received extensive government support including a $465 million loan from the Department of Energy.

Despite the high stakes, Rebecca Greenfield of The Atlantic says that after her own careful review of the logs, Musk appears to be overplaying his hand.

“Broder may not have used Musk’s car the way Musk would like, but Musk is, for now, overhyping his case for a breach of journalism ethics,” Greenfield wrote.

World Wind Market Bucks American Investor Pessimists

American investors may be fretting about a major dropoff in wind project financing projected for 2013, but the global picture for the wind industry appears far brighter. In Great Britain, Greencoat UK Wind announced plans to raise $321 million (£205 million) through an IPO on the London Stock Exchange. Greencoat Capital, which is managing the infrastructure fund, has an option to grow the size of the offering by up to £55 million, Reuters reported.

Part of the money will be used to buy wind farms from SSE PLc and RWE AG, according to Bloomberg. The fund will have money left over to buy into a fund expected to reach £40 billion, raised by the U.K. government and private investors, according to Bloomberg. Investors will receive dividends of 6 percent, compared to government bonds that typically yield about 2.2 percent.

Some of the good news does involve American wind facilities. General Electric surpassed the Danish manufacturer Vestas as the largest wind turbine maker in the world, up from the No. 3 spot in 2011, according to a new report by Navigant Consulting Inc. The surge was driven by the upswing in American installations in 2012 ahead of the predicted lapse of the Production Tax Credit for renewable energy, the Financial Times reported.

Meanwhile AMP Capital, an Australian investment group, announced it will invest $100 million in Capistrano Wind Partners. Capistrano owns five operational wind farms in Nebraska, Wyoming and Texas with a combined 413 MW of capacity, and it was initially funded by Edison Mission Energy, TIAA-CRFF and Cook Inlet Region.

“The U.S. wind energy market is already well established and is a rapidly growing sector of the energy generation market,” Boe Pahari, AMP’s head of infrastructure in Europe and North America, said in a press release.

Such bullishness on wind may be supported by the 20-percent jump in global wind capacity in 2012. According to a report by the Global Wind Energy Council, there is now 292 gigawatts of available wind power worldwide.

A record number of installations in the U.S plus a market slowdown in China meant the two superpowers nearly tied for No. 1 in wind installation in 2012, according to the council.

“Asia still led global markets, but with North America a close second, and Europe not far behind,” Steve Sawyer, the council’s secretary general, said in a press release.


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