by Richard T. Stuebi

One of the more contentious questions in the cleantech community is the role of coal in the energy sector of the future. There’s a lot of coal in the world — many decades of supply left — including here in the U.S. It’s pretty darned cheap to mine. So, it would be great to figure out a way to use it in non-harmful ways.

And there’s the rub: it’s a pretty nasty fuel. Putting aside the issue of how to mine coal in an environmentally-acceptable manner, coal is one of the most highly carbonaceous of hydrocarbons, meaning that it generates a lot of carbon dioxide per unit of energy released when burned — much more so than oil or natural gas. As a result, the worldwide use of coal — primarily for power generation — is the largest component of global carbon dioxide emissions, which in turn is the most important of the greenhouse gas emissions contributing to climate change.

In the arena of climate change, coal is therefore the main culprit. Not the only culprit, to be sure, but the main one.

For coal advocates, the first line of defense is to dismiss the climate change issue outright. That tactic is still used, but is becoming increasingly untenable under the Obama Administration, which appears to be remaining steadfast in pushing for climate change legislation.

That leaves the coal industry in the position of promoting new approaches for coal utilization wherein the carbon dioxide produced from combustion is somehow prevented from being released into the atmosphere. The most well-known of these approaches is termed carbon capture and storage, or CCS.

The idea behind CCS is intellectually appealing, if a bit fantastic: extract the carbon dioxide from the exhaust stream of a powerplant, and inject the carbon dioxide underground in such a way that it stays entrained in the earth. The technological concepts are pretty well-understood.

Alas, as this article in the March 7 issue of The Economist shows, the main challenge associated with CCS is the cost. CCS has never been undertaken at a large-scale at any powerplant, much less attempted for a fleet of powerplants, because the capital and operating costs of a CCS system are seen to be so high as to be daunting.

As with many things in life, a half a loaf is better than none, and so may be the case with CCS. As indicated in this article in the March/April issue of Technology Review, perhaps the economic challenges can be tackled by biting off something less than 100% carbon capture and storage.

Many environmental advocates can’t stand the concept of coal utilization in any guise, and decry the use of the phrase “clean coal” as an oxymoron. I don’t think we can afford idealistic dogma, but neither do I think we can afford the environmental cost of unlimited conventional coal use. There’s got to be a middle-ground somewhere.

In the energy and environmental realm, I have consistently found in my 23 years of experience that there is rarely a perfect solution to any situation, and everything involves tradeoffs. Partial CCS might yield an outcome in which neither the green community nor the coal/power industry get all of what they want, but produces a far better result than the “worst-case” scenario each side fears.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director at Early Stage Partners.

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The cleantech crunch is on. And a few juicy tidbits are coming to light.

Optisolar - Crunched. Several 9 figures into it, what do we find? The only thing of real value are the development deals in a post subsidy boom year. Is it a “financial market” issue? Only if manufacturing and technology development are “financial market issues”. Several of my long time clients have deep pockets actively looking to finance “financial market issues” for renewable power plants - assuming the numbers actually stack up on the project, that is. Actual returns have proven to be quite skinny in many cases. Buyers from the energy sector looking under the hood can be such a downer.

Tesla - for all intents and purposes looking for a bailout. But at least they’re shipping now, sort of. 100 cars I think? Good money, if the margin is positive. Keep this up and they should be at several percent of tiny little Jaguar’s US sales volumes with a year or two. Why do sane people want to be in the automotive business again? Oh - that’s right, because it’s not really the automotive business - it’s the ELECTRIC automotive business, and we can really outcompete those dinosaur automotive companies in EVs. And I’m sure the new batteries will just solve everything. I wonder who will sell us the materials for those new batteries, maybe the oil companies, here, and here whom we are going to replace and our automotive competitors? Wow. That’s a business plan that gets me really, really excited. Not.

Solyndra - the bailout came through. Yippee! Will it be enough? I’m sure coating CIGS on 1,000s of cylinders is a brilliant way to be cheaper than CdTe and A-Si on large scale glass. The sounds like a great way to make replicable, scalable 30 year devices.

VeraSun - the deal that helped build the investor craze for ethanol - finally sold off in pieces in bankruptcy. To whom? A Texas refiner known for picking up refining assets on the cheap. Note to Vinod, yes, ethanol is much, much more expensive than gasoline, any way you cut it. And no, refining feedstocks into fuel is not a wonderful new business that should trade at tech multiples. Way to go Valero (VLO)! But don’t worry, all the “good” deals are doing cellulosic ethanol - you know the btu poor, hard to transport, pain in the rear to refine feedstock which we don’t own using technology currently at 0.25% of the scale of the average oil refinery. That’s where we’ll make our “smart” money.

MMA - Along with SunEdison one of two companies to create the solar PPA model. Sold off.

What are we learning? Energy - and yes, I’ll say it again, cleantech is energy - is all about owning the resource. Not the technology. In energy technology follows resources, not the other way around.

And lots of deals and money are there to be had, maybe just not for the cleantech venture capitalists who insist it’s all about the technology and the startup, not the resource. I guess it is if you like to gamble.

Learn people, learn. Or you could just follow Kleiner into their next Energy Bloom.

Neal Dikeman is a Partner at Jane Capital Partners LLC.

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People and fleets that use vehicles with the lowest greenhouse gas emissions per mile are rewarded with making our future a little better and with their fuel costs being much lower. The following cars, wagons, and SUVs have the lowest greenhouse gas emissions per mile of any vehicles available for volume commercial sales in the United States in 2009. All can achieve freeway speed. In many cases, they also have the best fuel economy. Most are already selling in quantity.

From California to Capitol Hill to Copenhagen, plans and incentives are being created for a cap-and-trade of emissions. Passenger vehicles can get up to a $7,500 per vehicle tax break for being zero emission. The rewards for buying and selling low emission vehicles will increase. The incentives will be paid for, in part, by higher costs for gas guzzlers.

Reduced greenhouse gas emissions are becoming a priority with fleet managers and millions of conscientious consumers. These Clean Fleet Top 10 Low Carbon Footprint Passenger Vehicles are listed from lowest to highest in carbon footprint.

1. Toyota Prius
2. Honda Civic Hybrid
3. Honda Insight
4. Ford Fusion Hybrid
5. smart fourtwo
6. Nissan Altima Hybrid
7. Honda Civic CNG
8. Toyota Camry Hybrid
9. Ford Escape Hybrid
10. Mini Cooper and Clubman

This list was developed by first searching the U.S. EPA and DOE’s valuable fueleconomy.gov, with its extensive search capabilities. The EPA combined miles per gallon rating is based on 45% highway and 55% city driving. The carbon footprint is carbon dioxide equivalent (CO2e) based on 15,000 miles of driving, using the GREET 1.7 model.

Fleets are also early adopters of vehicles with even less emissions including electric vehicles, hydrogen fuel cell, plug-in hybrid conversions, and diesel hybrid concept cars. Because these are not offered for commercial volume sale, they are not part of this 2009 list. Electric and alt-fuel vehicles are also covered in detail at Clean Fleet Report.

The Toyota Prius continues to lead the four-door sedan field in fuel economy and lowest lifecycle greenhouse gas emissions. This perennial favorite midsize is lowest on the list with 4 tons of carbon dioxide equivalent for the EPA annual driving cycle; combined fuel economy is 46 mpg. Yes, 4 tons of CO2e is a lot; but many cars, light trucks, and SUVs create three times that emission. At the North American International Auto Show, Toyota announced the 2010 Prius with an expected 50 mpg combined and an optional solar roof option to power accessories and thereby boost mileage.

The Honda Civic Hybrid compact rates at 4.4 tons of CO2e for the EPA annual driving cycle and a combined 42 mpg.

The new Honda Insight four-door sedan with an Ecological Drive Assist System is priced for thousands less than the Prius. The Insight will deliver 41 mpg combined, with annual emissions of about 4.5 tons of CO2e.

The Ford Fusion Hybrid midsized sedan has an EPA certified 41 mpg rating in the city and 36 mpg on the highway. Clean Fleet Report makes an unofficial estimate that emissions will be 4.8 tons of CO2e for the EPA annual driving cycle. The Fusion Hybrid and Mercury Milan Hybrid may travel up to 47 miles per hour in pure electric mode. The Advanced Intake Variable Cam Timing allows the Fusion and Milan hybrids to more seamlessly transition between gas and electric modes.

Complete Report

John Addison publishes the Clean Fleet Report and is the author of Save Gas, Save the Planet.

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by Heather Rae
for cleantechblog.com

The term came up over lunch. A group of home energy evaluators convened at King Eider’s pub in Damariscotta. That morning, we had completed filming of an energy evaluation with the film crew from Maine Public Broadcasting Network. We were talking about the future of the country and the economy and our children; these topics, with this group, erupt out of discussions about energy and oil and staying warm in Maine. Curry Caputo, principal at Sustainable Structures, Inc. was one of the energy evaluators. He said his uncle, a therapist, uses a term to describe the end of cheap oil in America: Ontological Shock.

Everything as you know it and believe it to be true — will come into question. After an evening of “Googling” ontological shock, and watching the indie film, Crude Awakening/The Oil Crash, (a chillingly calm alarm) it occurred to me that we in Maine are getting a taste of what’s to come as the age of easily accessible and cheap oil comes to a close.

February’s storms put a stranglehold on mid-coast Maine. First, there were the power outages. Wide swathes of mid-Coast Maine remained without power for days. Which meant many were without heat. Which meant water pipes were a-freezin’ and a-crackin’. The toilets didn’t flush. Parents shuttled their broods to coffee shops and YMCAs and college gyms to find warmth and hot showers.
Generators rumbled throughout the neighborhood and town. The regulator on the propane tank froze somewhere around 5am. (For a minute, it appeared that the silencing of the generator’s roar meant the resumption of grid power, but no.) The 90-year old great-aunt in the apartment unit was out of power and heat and hot water. Schedules were scrambled; meetings were canceled and offices closed.
As if we were living in a third world — struggling to engage in a first world economy — we shoveled snow from roofs, walkways, driveways. And then we were hit with back-to-back storms. Construction workers removed the sky’s deluge before they began repairs. Snow plows plied the roads throughout the night long, their drivers appearing bleary eyed at the local Irving station to down coffee and donuts…or as the day became night, they joined the plumbers at the local bar, on emergency call for bursting pipes and flooded basements, smelling of oil in their insulated overalls, taking in a beer or two before the next call. The hair is greasy and the clothes aromatic. For all of us. A giant yellow DOT plow had stuck in a towering bank of snow, and the plow itself had cracked into threes. The tips of trees bowed into roads, cracking huge limbs, strewing twigs and draping power lines.
My drive to town was glistening and beautiful. We settled in to simply getting by.
And, I couldn’t help but wonder, what if there were no fuel for the furnaces and boilers and DOT trucks…or it were so expensive to operate snowplows and heat homes that we could only wait for the sun to melt us into recovery?
Spring is officially here, event if the snow lingers. Trees remain bent to the roads, and the memory of this winter will be forced upon us for a while.

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First of all, let’s get a few things straight. When it comes to protecting the environment and harnessing market forces to that end, Fred Krupp is a god. Maybe I should even capitalize that description. There is nobody who has done remotely as much for that particular cause—including our Nobel Prize winning inventor of the Internet—as Fred Krupp. I have been a regular and long-standing contributor to the Environmental Defense Fund (EDF), even during the unfortunate period when their abbreviated acronym likely confused a fair number of Viagra seekers on Google. The staff there is analytical, innovative and ferociously dedicated to their cause. They’ve gotten their viewpoint into the inner workings of many of the US’s mega corporations, generally at the CEO or Board level. They basically investment-banked the biggest private equity deal of all time—the KKR takeover of TXU - mainly to stop a massive planned expansion of coal-fired power. Calling EDF and Fred the father of environmental markets is not remotely an exaggeration.

While to my regret I don’t know Fred personally, we did actually once spend the better part of an afternoon together, though I doubt he would remember it. It was in the lovely city of Kyoto, Japan, on a Sunday in the middle of the 1997 namesake climate conference, and our Japanese hosts had arranged a series of different tours around that historic city. Coincidentally, I ended up on the same tour as Fred, and for at least one portion of the tour, we ended up chatting as we walked down a small winding street together with a multi-star admiral from the Defense Department who was part of the US delegation. At the time, EcoSecurities was less than a year old, still had a grand total of two employees and to say we (and therefore me) were nobodies would be a gross exaggeration; we had several steps to climb before we would even register at the “nobodies” level. Fred, on the other hand, was already a superstar.

At Kyoto, the CDM was hardly born of unanimous acclaim, and EDF had no small role in getting the negotiating buy-in on market based approaches that helped convince a number of skeptical countries. In 2001 when the US largely disappeared from the international climate world, it’s not an exaggeration to say that EDF also took a hiatus from the dialogue about the operational aspects of the CDM. Fair enough—EDF’s main constituency is the United States and US policy (though they also run an extensive China program). But to be frank, it was very unfortunate to lose their rationality and capability in the process, and I would argue that some of the maddening aspects of the current CDM—from a business perspective—are a direct consequence of losing the US (and by association, EDF) influence on its development in those crucial startup years.

So, when phrases like “should be quickly phased out” get bandied about, my first question (after my blood pressure settles) is: exactly how has the CDM has failed so much that the father of environmental markets believes it to be beyond saving? Let’s take a look at the results. The first CDM project was registered at the end of 2004, just a little more than 4 years ago. Today there are 1,500 projects registered (representing some 1.5 billion tons of emission reductions through 2012) and at least another 2,500 in the pipeline. Billions of dollars have been raised in the capital markets and there are methodologies covering at least 100 different project types. A sector dedicated to financing global environmental improvements has emerged. Projects are distributed across some 68 countries around the world. When you’ve tramped across a landfill in Brazil, a piggery in Mexico, a steelworks in China and a refinery in Ghana, all of which are linked by the single commonality that their management wants to become more climate friendly (and get paid for it), you know that a sea change in global business attitudes has occurred. Maybe Fred and the guys from EDF need to get a bit more mud on their boots and see what what’s actually happening out in the field at the micro-level.

There are many indisputable shortcomings of the CDM. First, far too many first-generation CERs came from HFC-23 reductions, rather than from changeovers to renewable energy and energy efficiency. Second, the process of assessing the “additionality” of certain clean energy assets that were at various stages of development has been deemed questionable by some outside observers. Third, an overwhelming preponderance of CDM capital flows have gone to China. And fourth, the regulatory process that oversees the CDM often seems to have been designed by Kafka, with a helping hand from Dante.

There are answers to all of these critiques, not the least of which is that we’ve barely passed the fourth year of what should be a many decade process of “learning by doing.” The main issue is that you cannot set up a legitimate market system that only lasts a few short years, sunsetting almost as soon as it starts. Of course in these conditions projects that paid the highest immediate returns were identified and executed first. Of course in these conditions clean energy projects that were at some stage along the development pipeline were the most likely to try to engage the CDM financing instrument. And of course China grabbed the lion’s share of projects—half the developing world’s emissions are there, they can be found in large concentrations, and the Chinese government has made a regulatory system that was rational and workable through which to tackle them.

We Americans who basically went offshore about eight years ago to actually buikd the CDM “business” that was vaguely envisioned by the US and EDF are now coming home. We think our experience to date has some relevance and should be heard in the US policy debates. Though it’s been a never ending challenge, I can’t think we didn’t succeed at some important levels. Just for one, that two person company I was half of at Kyoto now has some 300 employees, offices throughout the world and has registered more than 150 projects within the CDM system representing 100 million odd tons of potential reductions by 2012. Anybody who thinks this is so easy is welcome to join our staff on one of several exciting field trips—climbing a 200 foot smokestack to check the calibration on flow meters, negotiating coalmine gas royalty agreements with provincial officials over endless baijiu, or trying to dry clean the stench of pig feces from biogas plants out of your clothes are all popular options. It’s not easy, it’s not always fun, but if you want a market instrument that’s going to work in the developing world, this is where you have to go. Blithe statements about failure are frankly a bit insulting to those of us who actually followed up on the promise and trajectory that was laid out a dozen years ago.

The latest concept that EDF is promoting around global carbon market solutions has been dubbed “ClearPath.” Though sparse in detail, the basic idea involves developing countries taking on voluntary caps that are somewhat greater than their current emissions, so they can sell excess emission rights today and use the proceeds to finance transitional energy technologies to move their emissions downward. EDF estimates that this will raise some $250B to $1.5T over the first decade of operation—a fairly substantial range, to say the least. In principal, it’s an admirable concept, and it is undeniable that covering the broadest possible sweep of countries with hard caps is something to which we should aspire.

However, the idea that it’s going to be easy to come up with the “right” amount of extra emissions allocation for any sizable number of countries is ludicrous. A simple observation of developing country emissions profiles should immediately raise the question of how to construct something even remotely equitable. On a GHG per capita basis, South Africa is at 50% compared to the US, China is at 25%, Mexico is at 20% and India is at about 10%. It is already hard enough to get industrial countries to seriously talk about hard caps – now we need to layer this variable into the equation and create a reasonable supply and demand balance that will be both politically palatable and still incentivize serious reductions ? And this is assuming we can get the necessary monitoring, reporting and verification of GHG emissions data for developing countries in place to ensure that ClearPath could distribute credits accurately and appropriately.

I’m not against the ClearPath – far from it – and if EDF and its negotiator allies can convince a sweep of key developing countries to take this up (while not just flooding the market with a next generation of “Hot Air“), my hat is doffed with genuine admiration. But in my heart, I don’t think that’s realistic. And to be honest, I’d like to know what Plan B is, in case ClearPath is greeted with the skepticism I expect.

As far as I’m concerned, Plan B must involve fixing the CDM so that it can continue mobilizing capital, incentivize emissions entrepreneurs and technologies, and slowly push the global supertanker of emissions slightly away from its current trajectory. There are many ways to fix the CDM to keep it moving, and to make it more environmentally credible, transparent and predictable for capital allocation and project development. Perhaps we can indeed get a small handful of countries to experiment with ClearPath. But as a colleague is fond of saying, climate change will have no silver bullet; rather, will require multiple rounds of silver buckshot.

I guess my problem with a throwaway quote like Fred’s regarding the CDM is that it feeds a (very ironic) attitude encapsulated in the US policy debate about international offsets—the “not made in America” issue. Ironic, because the CDM, emissions trading—and the whole idea of environmental markets in general—sprouted from American soil. In coming back to the global negotiating table, the US can make a real difference by addressing the various shortcomings of the CDM, and by coming up with constructive solutions that actually learn from past experiences. The essentials would be to make the regulatory process simpler and more conservative (by endorsing real technology benchmarks across sectors, avoiding the project by project system of the CDM) and creating a longer time horizon for achieving emissions value, (so that the benefits of emissions savings can correlate with project finance timelines). To be frank, what we have accomplished—given those shortcomings of the Kyoto/Marrakech architecture—is to my mind remarkable.

In 2008, Fred wrote a book called “Earth: The Sequel.” Disappointingly, it was not a sci-fi thriller about moving to another, hipper, planet, but rather about how we fix our relationship with this one through emerging markets for new energy technology. I’d like to think the CDM deserves the same kind of consideration for a sequel, and I don’t think it’s unfair to ask exactly which particular shortcomings of the CDM have convinced Fred that we exclusively need to tread a radically different path. CDM is far from perfect—few have ever claimed otherwise – but it has indeed lit a wildfire of enthusiasm for emissions reductions that we will not rekindle easily if it is summarily doused with a bucket of “been there, done that” cold water. ClearPath is an admirable idea, but fraught with complexities that make the CDM look like a crayon maze on a kid’s meal menu at Denny’s. If we can get five or ten countries with different profiles to sign up and work out the kinks for the next decade, that’s a triumph right there. In the meantime for the other 150+ countries in the world, let’s discuss the strengths and weakness of CDM and international credit systems rationally, with some nuance and with aims of improvement—and not just pander to popular misconceptions.

Marc Stuart is the Co-Founder and Director of New Business Development for EcoSecurities, a global carbon trading firm. The views expressed are his own and do not necessarily represent the view of EcoSecurities.

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by Richard T. Stuebi

My colleague Carter Williams, formerly CEO of Gridlogix, which was bought recently by Johnson Controls (NYSE: JCI), invited me to participate in a panel in last week’s GridEcon conference in Chicago. Because it had been awhile since I had plugged into (so to speak) the Smart Grid discussions, I accepted Carter’s offer so that I could get more up-to-speed.

If you are one of the seven people in the U.S. who haven’t pored over the American Recovery and Reinvestment Act of 2009 (better known as the Obama Economic Stimulus package), you may not know that a large pot of money — $4.5 billion to be exact — has been allocated to the Smart Grid, plus other pockets of money may also be accessible for Smart Grid development. The Smart Grid is thus going to be the subject of a lot more attention than it has been so far. The national TV ads about the Smart Grid products from GE (NYSE: GE) are only intensifying that interest.

What did I learn from the GridEcon conference? I was hoping to crystallize my thinking about the Smart Grid, but unfortunately I walked away with my thinking just about as muddled as it had been. Joe Miller of Horizon Energy Group did provide a fairly good primer on the Smart Grid, grouping innovations into five technological areas: (1) grid condition sensing/measurement, (2) grid controls, (3) decision-support tools (for both electricity companies and users), (4) advanced customer-sited components, and (5) communications to/from and/or between any of the first four areas.

Probably most intriguingly, I discovered that Google.org, the philanthropic arm of Google (NASDAQ: GOOG), has recently begun toying with a Google PowerMeter, which is aimed to allow just about anyone to be able to assess their electricity consumption over the web (or over their BlackBerry or iPhone) on a real-time basis. Of course, the real question is: how many people will be interested in watching their electricity use the way they text their friends or surf Facebook?

Beyond Google’s presentation (by David Bercovich), I was a little underwhelmed by the insights offered by the speakers. Candidly, many of the topics discussed — wholesale power market structures, electricity pricing — seemed to me like they were lifted straight out of the late 1990’s. And, the discussions of the carbon markets did not seem cutting-edge or particularly illuminating.

At least the second day of the conference was more energized (again, no pun intended, or maybe it was, I don’t know) than the first. No doubt, this was because of the provocative comments of Marc Levinson, an economist from JPMorgan Chase (NYSE: JPM), who had the gall of asking the uncomfortable question: does the Smart Grid really provide that much value, and if so, who really ought to be willing to pay for it? This hand-grenade punctured what had been a quiet, polite and therefore mostly dull set of sessions.

The panel on which I sat — including Carter, Jamie Wimberley of Distributed Energy Financial Group and John Moore of Acorn Energy — did our best to keep up the heat. The general perspective I offered was that the Smart Grid wasn’t going to happen anytime soon, no matter how good the intentions. This is mainly because of the complex tussle of jurisdiction between Federal and State authorities to which the grid is beholden, which is unlikely to be eliminated by fiat notwithstanding the comments of observers that ought to know better, such as Senator Harry Reid (D-NV). This is further amplified by the fact that electric utilities will remain the primary implementor of Smart Grid technologies on the grid assets that they own and control, and utilities just don’t move very fast even when all of the forces are aligned.

My overall take is that the Smart Grid community is still self-organizing and finding its footing. Now that it’s much more in the bright spotlight, I expect that leaders will emerge to help better coalesce the thinking and dissemination of information. Their mission will be to cut the Gordian knot that strangles the current not-so-smart grid.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director at Early Stage Partners.

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I had the chance to catch up with Robert Dornau, an economist who is Vice President of SGS Climate Change Programme, one of the leading verifiers of carbon credits, just as SGS verified the first carbon credits under the Voluntary Carbon Standard.

Robert, I saw the press release on the first verified VCUs by SGS. Can you tell me a little bit about what VCS is and how it’s different?

I am happy to tell you that SGS also validated the first projects registered under the Voluntary Carbon Standard (VCS). The VCS provides a rigorous, trustworthy and innovative global standard and validation and verification program for voluntary emission reduction projects. It ensures that carbon credits generated from those projects can be trusted by business and consumers and have real environmental benefits. The VCS was initiated by the Climate Group, the World Business Council for Sustainable Development (WBCSD) and the International Emissions Trading Association (IETA). What sets the VCS apart from other voluntary standards is not only this prestigious group of founding fathers, but the fact that it has undergone two rounds of global stakeholder consultation and was developed under guidance of an international steering committee from the business, industry and non profit sector (including SGS).

The VCS provides innovative approaches to a credible and diligent approval of new methodologies especially for the forest sector. Another element that sets the VCS apart is the recently launched registry system.

We’ve heard the VCS discussed for some time now – are these really the first carbon credits from VCS? Why did it take so long? Are we going to see more of these?

The first version of the VCS was released on 28 March, 2006. Soon after, first projects were validated and verified against this standard. Until the recent launch of the registry system, the credits generated were only traded on the back of certificates issued by verification companies like SGS. Having a registry system that lives up to the high standards of financial registries was a number one goal of the VCS from the start. Unfortunately it took a bit longer than expected to develop this system. It now consists of three independent registries and the VCS database. I am absolutely certain this was the final launch pad for the VCS to establish itself as the standard of choice for any credible market participant.

What can you tell us about the differences between validation and verification of projects under VCS as compared to CDM and the Kyoto carbon project markets?

In principle there are not many different ways to conduct a proper validation or verification of a GHG project. The VCS relies on the principles for validation and verification of GHG projects established by the International Organization for Standardization (ISO). The new set of standards for the Carbon Market (ISO 14064 family) was develop taking into account best practice and experience from a number of global programs while being in itself program neutral.Two of the main differences are, that 1) the aim of the VCS is to assure that the emissions reduced by a project are measured, reported and verified correctly. If a buyer is interested in additional sustainability criteria, he/she can add those by applying a different add on standards like the Gold Standard for energy efficiency projects or Forest Stewardship Council (FSC) for forest projects. 2) Project developers can rely on methodologies approved in other accepted GHG Programs (like the CDM) to establish baselines, additionality and monitoring procedures. However, if the project developer wants to use a new approach towards additionality or a new methodology for baseline and monitoring of project emissions, this has to be approved by two verifiers (Double approval process). We expect this process to be a lot quicker than the current CDM process while delivering results of similar environmental integrity.

You’ve mentioned 3rd party verification. Is this similar to getting a CPA’s financial audit of a company? What role do you think 3rd party verification will play in the voluntary and US carbon markets going forward?

Market credibility requires that data used for emission trading is reliable, true and fair as well as credible. The third-party verification model has played an integral role in providing this credibility, and it has been accepted in major established markets. Third-party verification has been important in relation to both emission offsets, such as CDM and JI projects, and organization GHG emissions such as EU ETS, JVETS,.UK ETS, The Climate Registry, Western Climate Initiative. As emission allowances, related to the verified emissions, have the status of a financial commodity, it is a requirement that its verification and assurance meet financial market needs. In this regard, the third party verification model involves assessment of an organization’s internal control system including calibrations and QA/QC checks as well as actually data checks. It is also common in existing GHG programs for the verifier to assure the market risk of misstatements or omissions in any GHG emissions report and hence allowances or credits traded. We sincerely hope that a similar approach will finally be taken in the US for inventory and project emissions to assure that this market can be linked with other markets on the basis that “a ton is a ton” and the allowances traded have the same environmental and financial integrity.

I know that your main competitor in the global carbon markets, DNV, has also been growing it’s US presence.

Are we seeing a new wave of European carbon expertise moving into the US?
SGS is in the very fortunate position to be able use extensive global expertise in the development of our internal procedures. We of course always adapt those to local GHG program requirements. We bring in expertise from Europe in key technical quality management positions in the beginning of any new market. But the aim is and will be to run a local program with local capacity. I encourage everybody interested in the interesting job of a GHG auditor to apply with SGS an join our international team of experts.

You’ve told me that SGS has been hiring in the US for climate change, where is your office and what plans can you share?

SGS has offices in most US states and employs a staff of more than 3000 in the US working in all kinds of industry sectors. Our climate change program is headquartered in Ontario, California, but we are already in the process of training auditors across the country. SGS has been a first mover in all GHG programs globally and we understand that we have to develop expertise and manpower before the market is actually there. As such, SGS has been an active verifier under CCAR for years and is one of only six entities that achieved ANSI accreditation for ISO 14064 verification of TCR and CCAR. DNV by the way is not ANSI accredited.

And finally, you’re an economist by original training, so can you share a personal opinion on the causes of recent carbon price collapse and the recent article by Point Carbon suggesting that prices should rise by 2012?

The recent price collapse is a result of the international credit crunch and economic crisis. Decreasing industrial production resulted in lower emissions, which had an immediate effect on the demand for allowances in the EU. In addition companies were cash strapped and were selling EU allowances. 2012 is the final true up for phase II emissions in the EU ETS, until then companies will be able to borrow from next years allocation of allowances to meet last year compliance requirements, so that we should see the true demand and supply balance only towards the end of the period. Another result of the credit crisis is that less energy efficiency measures are being undertaken at industry and household level now, so that while the crisis caused relatively less emissions in the short run, it might cause relatively higher emissions in the medium and long run.

As EU companies can meet their compliance targets also with CDM credits, CDM supply also has an influence on the equation. The credits crisis results in less CDM project being started, meaning less supply of CDM credits. New GHG Markets in Australia, New Zealand and the US will compete for this reduced amount of credits. This will result in a decoupling of the CDM price from the EU ETS price, which has basically been the benchmark to date. So when you talk about the price of carbon, I don’t think that there will be a uniform price by 2012 yet.

So, depending on how deep and lasting the cuts in industrial production are, you will see an upward trend in prices towards the end of the Kyoto phase. So much for the different economic developments that will influence carbon prices, but as you know, the econometrician in me will simply say: the best forecast for tomorrow’s price is the price of today…

Thanks Robert, always good to catch up.

Neal Dikeman is Chairman and CEO of Carbonflow, providing software services to carbon developers and funds cut the cost of carbon abatement, including managing the validation and verification processes. Carbonflow is partnered with both SGS and DNV.

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‘Growing world population will cause a “perfect storm” of food, energy and water shortages by 2030′. That is what a UK Government chief scientist told attendees at the Sustainable Development conference in London yesterday. Prof. Beddington told the group that demand for food and energy will jump 50% by 2030 and for fresh water by 30%, as the population tops 8.3 billion.

Despite this, investment in water deals represented just 1.8% of the total investment in the Clean Technology area in 2008. There are number of reasons for this and also signs that this is changing.

The Venture Capital Community has been slow to invest in the water sector. Last year out of a total investment of $8.4 billion into clean technology ventures, just $148million (1.8%) is reported by the Cleantech Group by having been made into water. Why?

Some companies are not convinced that there is enough activity in the sector. Others feel it is a conservative market. However DFJ just made their first investment in water by investing $10M into Oasys Water, a US company with a forward osmosis technology.

The Artemis Project is running a ‘Water Top 50’ to identify companies with game changing strategies in the water sector and to demonstrate to the VC community that there are quality opportunities in this space. Global Water Intelligence has number of potentially disruptive technologies as entrants in their ‘Water Idol’ competition and overall several Water Indices, while showing losses, are still outperforming major stock indices.

One of the problems with water is that we only use it once. Of the wastewater which is collected globally, 38% is actually treated and only 5% of that is actually re-used. Michael Braungart, the author of ‘Cradle to Cradle – remaking the way we make things’, is addressing this issue at the Water Meets Money Conference in Zurich with a talk entitled ‘The End of Wastewater’.

So yes, it may be a perfect storm in terms of water shortages, but it may also be a perfect storm which will see innovation, the end of wastewater and new ways of using and managing this resource.

This post is submitted by Paul O’Callaghan founding CEO of O2 Environmental .

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by Richard T. Stuebi

One of the bummers of having been in the energy/environmental field for so long is that rarely do I read or learn something I haven’t heard of before. It’s hard to for me get excited anymore.

Perhaps one of the silver linings of the current economic malaise is that thought-leaders are coming with novel and interesting ideas for the public sector to raise revenues. Yes, that’s right, new taxes.

Two recent examples. First, an intriguing idea put forth by Ian Ayres and Barry Nalebuff in the March 16 Forbes: a voluntary gas tax. This brings back, in different clothing, the concept of war bonds that could be marketed as a matter of patriotism to promote energy independence: citizens can optionally buy an advance tax rebate in exchange for paying an extra amount per gallon of gas purchased at the pump. If you drive little, or drive a fuel-efficient vehicle, you can actually profit from this transaction.

Second, Seattle city officials are considering a $0.20 charge per plastic or paper shopping bag. The idea is up for referendum in August, but unfortunately, it seems that the idea is on the ropes. It’s too bad, because the same idea has been in place (unbeknownst to me) in Ireland since 2002, and appears to be working well.

Although four-letter words are considered nasty, there’s no worse word in the American lexicon than that little three-letter devil. No politician can afford to raise the specter of new taxes, even when they’re desperately needed to balance budgets while encouraging more responsible behaviors.

The cap-and-trade legislation is being threatened by opponents who claim it is nothing but an energy tax (see, as an example, the March 9 editorial by the Wall Street Journal). The dirty little secret is that they’re right: cap-and-trade is a tax. Does the mere fact that something is a tax mean that it shouldn’t be adopted?

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Later in 2009, he will also become a Managing Director at Early Stage Partners.

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