Green Wombat

originally uploaded by victor solanoy

San Jose bills itself as the capital of Silicon Valley. Now the California city is making a bid to become a green tech hub by selling itself as a startup friendly town that has embraced sustainability. Home to Adobe, (ADBE), Cisco Systems (CSCO), eBay (EBAY) and other tech giants, San Jose in December scored its first big green tech player when Nanosolar agreed to build the world’s largest solar cell manufacturing plants in the city. (Showing its commitment to tech recycling, the Nanosolar plant, shown at right, is the site of a former Cisco manufacturing facility.)
Green Wombat recently talked to Paul Krutko, director of the San Jose Office of Economic Development, about the competition to lure renewable energy companies and other green firms. San Jose, of course, starts out with a few advantages over, say, Austin, Boston or Bangalore.  The valley boasts a well-educated, tech savvy workforce and the capital of venture capital is but a short Beemer ride away, as are the idea factories at Stanford and the University of California, Berkeley. The downsides are the region’s $700,000-for-a-tract-home housing market and not-so-green clogged highways. "We are very focused on how we can leverage our assets as a center of
innovation in the United States," says Krutko. "We’re tying to forge a
cluster of companies and institutions that are actively advancing clean
technologies."

But Krutko says when competing for clean tech companies, cities need to show their green cred as well as the green startups will save in the form of tax breaks and other financial incentives. So San Jose touts its green building initiatives – it opened the world’s first LEED (Leadership in Environmental Design) certified public library – and
cites local companies’ efforts to fight global warming. Software maker Adobe’s downtown San Jose headquarters, for instance, has been rated the greenest corporate building (photo by twisesq at left) in the United States. And it probably doesn’t hurt that Al Gore drops in now and again to meet with area tech leaders. Green tech companies, says Krutko, are "looking at communities that have an approach to sustainability. It is very much a competitive advantage in having a community that really gets it in dealing with the global issues we’re facing in terms of climate change and global warming." A point validated last week by oil company BP (BP) when it chose to locate a $500 million biofuels research center at UC Berkeley, in part, because of California’s leading-edge efforts to fight global warming.

To lure Nanosolar, which has bankrolled $100 million in venture capital funding, San Jose officials offered $1.5 million in tax breaks and other incentives. "The state of Nevada and the state of Arizona were attempting to lure this facility with large amounts of public money,"  Krutko says. To fend off out-of-state competition – as well as other Silicon Valley cities – San Jose has taken a venture capital approach and invested in a Pacific Community Ventures fund that will finance local companies. Krutko says San Jose is also streamlining the permitting process and changing development regulations as green tech startups move into office parks and tilt-ups – those sprawling one-story buildings that were occupied by first-and-second generation tech companies.  "The currency in the valley is not about what you do with tax incentives or a grant," Krutko notes. "Our currency is really about time to market. Market entitlements and the ability for a company to find space and quickly occupy that space and move forward."

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In a big boost for hybrid cars and ethanol producers, California Governor Arnold Schwarzenegger today signed an executive order implementing the state’s landmark Low Carbon Fuel Standard to cut greenhouse gases produced by cars and other vehicles.  The order mandates that transportation fuel sold in California must be 10 percent less carbon intensive by 2020. That means oil companies like Chevron (CVX) and Exxon Mobil (XOM) must lower the carbon content of the fuel they sell in the Golden State by blending ethanol, improving their production processes or buying emission credits from utilities like Pacific Gas & Electric (PCG) and others that supply cleaner electricity or biofuels to power vehicles. PG&E has been an enthusiastic backer of the fuel standard and efforts to develop plug-in hybrid cars. The executive order directs the California Public Utility Commission to consider ways the state’s utilities can help fight global warming by reducing greenhouse gases from vehicles. In his executive order, Schwarzenegger noted that California’s 24 million registered cars consumed 16 billion gallons of gasoline in 2005 – exceeding the fuel consumption of Japan, which has four times the population. Only 1.3 percent of California cars are hybrids or flex-fuel vehicles – a number the new fuel standard aims to increase. "Right now, entrepreneurs from around the world are investing billions of dollars in clean technologies and alternative fuels. With this initiative, we are saying invest in California," said Schwarzenegger, surrounded by alt fuel cars at a signing ceremony at the Capitol. The order directs state environmental agencies to propose draft fuel standard regulations by June 30 but some old-line industrial heavy-hitters already are rushing to embrace the governor’s green dream. PG&E, not surprisingly, issued a statement today in support of the low carbon fuel standard, but so did East Coast chemicals giant DuPont (DD), which is developing biofuels. "We commend Gov. Schwarzenegger and his administration for taking steps to cost effectively reduce greenhouse gas emissions from transportation fuels and reduce the global dependence on fossil fuels," said Thomas M. Connelly, DuPont’s chief innovation officer.

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photo originally uploaded by BinaryLA

While Steve Jobs sent the tech world into a tizzy on Tuesday when he unveiled the iPhone in San Francisco, up in Sacramento California Governor Arnold Schwarzenegger was wowing green techies by ordering Big Oil to slash the amount of greenhouse gases produced by transportation fuels sold in the Golden State. (The governor from Hollywood was not about to try to share the media stage with the Apple (AAPL) chief’s carefully choreographed extravaganza so the Low Carbon Fuel Standard was strategically leaked to the press a day earlier). Green Wombat was off the grid in the Australian bush when the news broke, but the new standard – the first of its kind – looks to be a bonanza for biofuels producers and will boost efforts to develop plug-in hybrid cars and a new generation of all-electric vehicles. Schwarzenegger’s green team will let the market determine how the Low Carbon Fuel Standard is met, creating new opportunities for green tech startups. Given that 40 percent of greenhouse gases produced in California come from cars and other vehicles, the new standard is a significant step to meet the state’s efforts to reduce global warming emissions 25 percent by 2020. According to the governor’s office, the Low Carbon Fuel Standard will more than triple the market for alternative energy fuels while putting more than 7 million hybrids and other renewable energy vehicles on the road.

In a nutshell, the new standard means the carbon content of the total mix of fuels used in California must decline by at least 10 percent by 2020 as measured in CO2-equivalent gram per unit of fuel energy sold. Given that oil provides 96 percent of the state’s transportation fuel, Shell and Chevron are going to be in the market for alt energy sources. The nitty gritty of the regulations remains to be worked out and fought over, but to meet the standard fuel producers can blend more ethanol into gasoline, produce hydrogen for fuel cell cars or purchase credits from utilities that sell power for electric vehicles. Details on how the latter would work are hazy at the moment but a carbon credit program would provide further incentives for Big Oil and Big Power to push for a new generation of electric cars. Another possible consequence of the carbon fuels standard was floated by the green group Environmental Defense yesterday:  An expansion of California’s nascent cow power efforts – which extracts the potent greenhouse gas methane from manure and uses it to generate electricity – to provide a renewable energy source to produce ethanol.

Over the decades, the oil and auto industries have fiercely resisted California’s cutting-edge efforts to reduce air pollution, and they essentially gutted a regulation requiring 10 percent of the state’s cars be electric-powered by the end of this decade. But the green tech boom and global warming worries has created a constituency that will fight efforts to do the same to the new low carbon fuel program. The ethanol industry – backed by big Silicon Valley players like venture capitalist Vinod Khosla – and PG&E (PCG) – one of the country’s biggest utilities – immediately threw their support to Schwarzenegger. "PG&E applauds the governor’s new Low Carbon Fuel Standard and his bold leadership in addressing alternative fuels as a way to lead the nation to a climate friendly future," said Pacific Gas and Electric chief executive Thomas King in a statement. "We are committed to doing our part and have seen first hand the significant benefits of alternative fuels on reducing carbon intensity."

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Green Wombat has been holidaying in Australia for the past couple weeks, observing the Schwarzenegger Effect on state politics. Just like the Republican California governor trumped pro-environment Democrats by embracing global warming legislation and other environmental laws backed by Silicon Valley’s tech titans, Australia’s conservative politicos are starting to play the green card. The long-entrenched Labor Party government in New South Wales – Australia’s most populous state whose capital is Sydney – has called an election for March. In recent weeks, left-leaning Labor has found itself battered by the right-wing Liberal Party on environmental issues. The pro-business New South Wales Liberal leader has promised, if elected, to cancel a controversial coal mine slated for the central coast that locals fear could contaminate the region’s water supply – prompting area enviros to urge a vote for the Liberal candidate in the upcoming elections. Meanwhile, conservatives have challenged plans to build temporary desalinization plants on some beaches rather than encourage greater water conservation as Australia endures its worst drought in memory. The Libs have also pledged to dramatically expand a state program to subsidize urban residential rainwater tanks. Standard-issue in dry rural areas, the tanks collect rain – nearly all of which percent runs off into the ocean – to flush toilets, water gardens and supplement drinking water. The national Liberal Party, which controls the federal government in a conservative coalition, is decidedly brown on green issues. But as global warming and other environmental issues come to dominate the Australian consciousness and appear on the corporate agenda, savvy state conservatives, like their California  counterpart, see an electoral payoff in out-greening the greens.

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photo originally uploaded  by mrs lala

Peter Garrett, the Midnight Oil front man turned Australian Labor Party politico, has moved to the frontbench in Parliament as the opposition’s shadow minister for climate change and the environment.  The post gives Garrett, a veteran greenie, a high-profile perch as global warming becomes a key campaign issue in the upcoming 2007 Australian federal elections. One of Green Wombat’s favorite bands, Midnight Oil’s in-your-face post-punk agitprop kept the
beat on environmental destruction, nuclear disarmament and Aboriginal rights for 26 years. Garrett, the former head of the Australian Conservation Foundation, left the band to run
for Parliament and was elected in 2004 to represent Sydney’s eastern beach suburbs, including Green Wombat’s old stomping grounds in Coogee. Garrett’s rapid rise owes to a shake-up last week in the Labor Party’s leadership. It should be an interesting ride. As a political activist, Garrett was hardcore on enviro issues. But now the man who once sang "Sometimes you’ve got to take the hardest line," and "It’s better to die on your feet than to live on your knees," has to toe the party line. Still, Garrett isn’t one to back down. At the closing ceremonies for the 2000 Olympics in Sydney, Midnight Oil performed "Beds are Burning," their Aboriginal land-rights anthem. Sitting in the audience was conservative Prime Minister John Howard, whose steadfast refusal to apologize to Australia’s Aborigines for the genocidal polices of the past had become a hot political issue. As the Oils took the stage before a worldwide television audience, they ripped off jumpsuits to reveal shirts emblazoned with "Sorry." The video is below.

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photo uploaded by Phil Ming

On Sand Hill Road in Silicon Valley it’s the "S word," mumbled apologetically whenever green tech VCs and entrepreneurs gather to confab about the solar energy boom. "I don’t like subsidies," declared  Innovalight CEO Conrad Burke at yesterday’s ThinkEquity Greentech Summit in the now-ritual denunciation of government incentives that have helped jump-start solar and other renewable energy businesses. Part of the enduring mythology of Silicon Valley is that world-changing technology sprang sui generis from Palo Alto garages, Washington’s creation of, say, the Internet  a minor detail.  But as was apparent Thursday at the green tech event, there seems to be a realization, increasingly vocalized, that when it comes to competing against Big Oil, Big Nuclear and Big Coal, perhaps it’s not quite such a free market after all. "I see as our main competition as the brown rate, the electricity rate we get from dirty coal in places like Texas," said Martin Roscheisen, CEO of solar startup Nanosolar. "It’s an uneven playing field. They utilize an existing infrastructure other people created for them and are harmful to the environment." Later in the afternoon, SunPower president Richard Swanson had this to say: "Do yourself a favor one day and study the oil and gas depletion allowance. Be sure to have a (barf) bag nearby." He was referring, of course, to the multi billion-dollar tax

break that allows the oil industry to basically write off much of the cost of drilling for oil. It’s hard to imagine ExxonMobil’s chief appearing at a fossil fuels conference and expressing remorse about the fact that Congress last year granted his industry more $6 billion in tax breaks for oil exploration or that the oil and gas industry has avoided paying billions in royalties for drilling on public lands. "Once we’re bigger, we’re going to pay more for lobbying," joked Roscheisen. But a Greentech Summit audience member suggested during the Q&A that waiting until then would be too late. The time is now, she said, for green energy proponents on Sand Hill Road to head to K Street in Washington and start an alt energy lobby to get actively involved in the policy debate – especially given that the Democrats are now setting the energy agenda.

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