The forgotten summit

Climate summit? When? Where? Now? Yes, the COP 16 UN climate summit just ended this weekend and if it hadn’t been for my interest in climate changes and solutions I would not have known that high profiled politicians from all over the world had gathered in Cancún to come up with an agreement to save the environment. Actually it was quite difficult to find news and updates on the summit and most news organization didn’t even mention it.

Compared to the coverage of COP 15 in Copenhagen last year the poor coverage of this summit really surprises me. I wonder if it’s because journalists and people in general have stopped to care about future agreements in relation to the environment or it’s because something completely different.

COP 15 was surrounded by not only high media coverage, but also really high expectations. The high expectations were not met and the horde of journalists that went to Copenhagen to cover the summit could report about only disagreements and the prospects of a warmer climate. Maybe the press actually played a role in the disappointing outcome last year and maybe more sparse media coverage this time around would leave the politicians not to worry about journalists, but to worry about getting signatures on a climate agreement. A much needed agreement as the Kyoto Protocol expires in 2012.

It actually seems as if the absent media coverage had a great impact on the negotiations for a greener future. Last Saturday, a day after the summit was scheduled to end, COP 16 President Patricia Espinosa could announce that the United Nation countries almost had reached an agreement. Only Bolivia voted against the agreement, but eventually Espinosa gaveled down its objections. Just reaching an agreement, even if it’s a compromise, makes this summit more successful than the Copenhagen summit last year.

In general the outcome falls short in emphasizing how dangerous climate change can be in the future and the decisions agreed upon will have to be adopted and confirmed at a future summit. But with that said, the points agreed upon are still overly important.

First of all, the countries worked out a plan to extend the Kyoto Protocol that is more wide ranging that the original protocol and calls for deep cuts in emissions. Furthermore, the UN agreed upon for the first time that temperatures should be prevented from rising more than two degrees Celsius.

Second of all, the summit agreed to establish a Green Climate Fund to channel money into poor countries to improve their climate defense, help them tackle global warming and compensate countries that desist from felling their forests. That solution is actually in accordance what with what the Danish scientist Bjørn Lomborg pointed out in his latest book “Smart Solutions to Climate Change: Comparing Costs and Benefits”. Lomborg suggests that $50 billion should be put into adaption to the effects of climate change and $99 billion spend on clean drinking water, healthcare, education etc. in poor countries to help them improve their climate defense.

So even though no one knows about the agreements that were made in Cancún the COP 16 has turned out not to be the disaster that you could have feared.  Agreements were made and the countries have set their minds on trying to fix the climate challenges. They’re taking the right path, but there is still a long way to go. We’ll wait in excitement for COP 17 in South Africa in December 2011.

Can the price of a green revolution get too high?

I was doing some research for an article about a relatively new green energy phenomenon the other day and talking to various sources I started to think about the price of a greener world.

The technology I was writing about is called Bloom Energy and converts fuel cells “into electricity through a clean electro-chemical process rather than dirty combustion”. A lot of industry spectators have announced Bloom Energy as a revolution in green energy and major companies such as Coca-Cola, Google, Adobe and FedEx have already installed the so-called Bloom Boxed that works as the energy servers.

Bloom Boxes are independent of natural phenomenon like sun and wind and that makes a huge competitive advantage in comparison to wind power and solar plants. Furthermore, it is an on-site energy server so it is more reliable and can be used 24 hours a day.

It all sounds really good and maybe it is too good to be true as well. Not that the technology behind the Bloom Boxes isn’t efficient, but the costs for this new green tech revolution seems to be an exorbitant price.

Electricity cost with a Bloom Box is $0.13/kWh to $0.14/kWh according to strategic advisor Lux Research, which is a high price to pay for energy when then average electricity costs in the U.S. are approximately $0.11/kWh.

Furthermore, the price of a Bloom Box of 100 kW is $750.000 whereas a diesel engine that produces the same power costs $50.000. Of course there’s an environmental advantage in Bloom Energy, but there has got to be just a tiny economic incitement as well. Or just a more competitive price.

All but one of the Bloom Boxes are installed in California where the price is subsidized both on a state and federal level and that makes the energy type more affordable. The founder KR Sridhar estimated according to Gigaom.com that customers get payback on their investments in three to five years in energy saving costs, but that the payback is calculated based on both subsidies.

So in order to spread the boxes to other states with fewer incentives Bloom Energy needs to be able to drive the prices down. The company has announced that it will be able to significantly reduce the costs over the next five years and maybe that can help the revolution move along. Otherwise the revolution will be too expensive.

What does 500,000 actually mean?

In just about one month the first affordable electric car for the masses will hit the markets all over the world. The much talked about Nissan Leaf is finally getting out to customers and last week Carlos Ghosn, Chief Executive Officer of the Renault-Nissan alliance behind Leaf, said that electric car would hit 500,000 sold units a year in three years.

I’ve always thought of the Leaf as a great alternative to a gas consuming car and I think I kind of expected every environmental responsible individual to sell his or her old fashioned car for the benefit of a green, electric car. That is, of course, a naïve thought, but a nice one at least.

So I thought about the 500,000 cars that Carlos Ghosn expects to sell every year for the next three years. Is it a lot of cars? Is it what you could expect or is the number disappointing?

Ghosn has earlier sad that he expected to sell a million cars a year, so compared to his previous forecast the 500,000 seems like a low number. Furthermore, I tried to compare the number to the total car sales in the U.S and the total global sales. The year to date car sales in the U.S. in 2010 is 9,570,721 and globally automakers are on track to sell about 74 million cars before this year is over. In comparison to those numbers 500,000 cars a year seems like drops in the ocean.

Maybe the electric cars will beat the estimates and more Leafs will be rolling on the street within the next couple of years. The development in the electric car industry is sure an interesting thing to watch. 

Uncommon approach by Vestas-boss

I must say I was really surprised by the press release Vestas send out yesterday. The CEO, Ditlev Engel, called on all the G20 leaders that will meet in Seoul in a couple of days, to meet him for an hour to offer them specific solutions on how to create sustainable solutions in their countries. It’s a very uncommon approach, but I think it’s pretty cool to have the guts to ask world leaders like Barack Obama, French Nicholas Sarkozy and Saudi Arabia’s King Abdullah for a “date” like that.

The COP15 last December definitely showed that is it almost impossible to get every UN nation to sign the same climate agreement, so offering each country a solution that is custom-fit might not be such a bad idea. If he can get the leaders to listen. And to participate, which might be one of the more difficult tasks.

Engel is the head of a working group for creating green jobs and the group wants the G20-leaders to commit to four actions in order to increase renewable energy solutions.

First of all the group suggests to set a robust price on carbon and create certainty and longer horizons. It believes that “even without a global climate deal or a global carbon market, much can be done on a national and regional level in G20 countries.” Wouldn’t that just be great if the group and Engel could convince the leaders that combating carbon emission on a local level makes sense?

Second, it calls for increasing the R&D spending by a factor of four to get to an optimal level. Actually, that is what Bjørn Lomborg, the Danish political scientist, is arguing for in his movie “Cool it”, where he suggest to stop spending billions on dollars on policies that won’t work and instead pour the money into R&D in new technologies to deal with climate change. It just seems that in a world where the financial markets are still unstable and people call for better health care and just clean water, it will be a difficult task to convince leaders to scale up research and development spending by a factor of four. But I’m sure the intentions are good, and maybe raising the question can change something.

Thirdly, the G20 leaders need to end fossil fuel subsidies with the shortest possible time frame and no later than in five years. In 2008 $557 billion were spent annually on fossil subsidies and even though the leaders are already phasing out some of the subsidies it seems like a pretty ambitious goal. Just think about how strong the oil industry lobby is.

Finally the green working group addresses that is it necessary to eliminate tariff and non-tariff barriers and environmental goods.

So far, I haven’t seen if any of the world leaders have responded on the invitation for the one-hour rendez-vous with Ditlev Engel, but I’m really interested in finding out. If he gets through with some of the points I hope we’ll see more renewable energy in the future.

How the midterms will affect green energy

With the Democrats losing 60 seats in the House and thereby the majority and losing six seats in the Senate, Tuesday’s midterm elections were almost as predicted. With the new grouping in Congress a lot of new predictions have already been made in terms of future policies and I think it’s particularly interesting to focus on the environment and sustainable energy.

Attempts to address the issues of global warning and get a clear sustainable energy policy with a Democratic-controlled Congress were met with resistance and now with more Republican filling up the seats it will probably get even more difficult to focus on sustainable energy.

The Washington Independent describes it as “common knowledge that it will be next to impossible to pass comprehensive climate legislation in the next two years.” Instead GOP is more likely to upset environmentalists by pushing nuclear power plants and coal.

Well, nuclear power has some places had a comeback from the 70’s protest campaigns as a renewable energy sources, but is it really necessary to go down that road again when several companies have figured out a way to make energy out of almost all the four elements?

Apparently the Obama administration isn’t as supportive of the alternative energy sources as before the midterms. Last Wednesday, just a day after the elections, the top advisers recommended cutting off funding for a federal loan-guarantee program for alternative energy projects with a budget of $2.5 billion, down from the $6 billion Congress approved for it in 2009. If the sudden urge to cut of the loan-guarantee has anything to do with the new grouping in Congress is uncertain, but overall it is bad news for sustainable energy projects.

What it takes to cut carbon emission is certainly not to cut of funding and having more oil, gas and nuclear advocates to control Congress. The major wind turbines manufactures have already had immense problems on the US market and I don’t expect the recent chain of events will make outlooks any better. 

BMW and the green car race – is it too late to join?

The German car manufacturer BMW seemed to be the “it” car company this Friday afternoon. Not only did it unveil that it will invest $746 million to set up production for the electric vehicle Megacity and put $560 million into expanding its Leipzig factory where the new car will be produced. BWM also announced that it would begin selling its first hybrid supercar by 2013.

All in all it looks like a pretty good day for luxury car fans and fanatics. But before everyone gets too exited I think it’s worth thinking about the time perspective in this green wave from BMW. The Megacity car, which is the first battery-powered vehicle from the Germans, will not hit the showrooms before 2013 the company said. That’s only two years before the European Union’s new emissions targets of 4.6 ounce of CO2 per kilometer is to be met.

In comparison to competitors as Japanese Nissan, which is launching its first electric car Leaf in December, BMW is lagging behind in the green car race. That fact was actually pointed out yesterday by the European Federation for Transport and Environment that accused BMW, Daimler and Volkswagen for not trying hard enough to meet the CO2 emissions targets.

But I guess that overall, even if it is a little late, that this new major investment in the Megacity is a good thing for a greener car industry and shows that BMW is changing.

What I don’t get though, is that BMW waited until now, or more precise 2013, to introduce their first hybrid car. The hybrid autos were supposed to be a transition vehicle before going all in on the all-electric cars and BMW will be 13 years behind Toyota’s Prius that in 2000 the was the first to introduce a hybrid four-door sedan to the US market.

I know that if I’d already made a decision to skip the fossil-fuel consuming car in favor of a greener alternative I would go for the electric car and not “just” the hybrid. I guess we’ll see how both cars do in three years.

More decline in wind power slashes Danish jobs

Since I’m both Danish and following the green business beat, yesterday was an important day for me in terms of industry news. The world largest wind turbine manufacturer Vestas reported its third quarter earnings and after a horrible second quarter with a $164 million loss it was quite interesting to see what numbers the company could pull out the hat this time.

The earnings report had both good and band numbers. The good numbers were the actual profit of 126 million euro, $175 million, that was higher than the average estimate of 80 million euro in Bloomberg survey of 13 analysts. At the same time the giant wind company reported an order intake of 6,567 MW in the first nine months of 2010, which is the highest ever for the Danish company.

So much for the good news. At the conference call the CEO Ditlev Engel admitted that the administration had been too optimistic in terms of growth in the European wind power market and has to lay off 3,000 people, primarily in Denmark. To US companies 3,000 workers might not sound like a lot, but for a country like Denmark with a population of only 5.5 million a firing round like that can ruin whole regions for good.

In a sense it is also really bad news for the whole wind industry. Vestas predicts a decrease in demand in the European market to 7,000-8,000 MW from 8,000-9,000 MW primarily because the debt crisis has limited the prospects for economic growth.

The job reduction is a direct outcome of the weakened demand in Europa and to Vestas it made sense to cut the jobs where the expenses were highest, the home country. The expenses in Denmark are so high that it cost as much for Vestas to produce a wind turbine in China and having it shipped to Sweden, as it would cost to manufacture the turbine in Denmark and ship it to one of the neighboring countries.

Again it seems like China has great influence on the whole industry and from a green point of view it raises quite a paradox. The carbon emission in relation to shipping a wind turbine halfway around the globe is probably noticeable and not really in tune with what a green company preaches.

Nevertheless, the announcements from Vestas prove once more that China effects both prices, competition and now also the number of people working in high wage countries.