Monday, January 26, 2009

Lower Oil Prices = Increased Renewable Energy Investment?

I came across this article (see pages 4-6, feel free to see the others, but I thought these were the prettiest and most informative) via one of my Twitter pals (apparently if you're not Twittering, you're not cool) and thought the discussion on the incremental cost for new oil supply had some severe implications for the renewable energy industry. While the current severe recession and the subsequent drop in demand have led to a precipitous drop in the price of oil, the cost of tapping into non-producing sources of oil (e.g. oil sands, oil shale, etc.) has risen dramatically over the past five years. What this means (at least in my humble, yet genius, opinion), is that projects that would have moved forward just six months ago no longer have the price support to continue. The energy and labor intensity of these extraction projects means that they are no longer viable. Further, with these new incremental supply projects off the table, the potential world wide supply of oil is now lower (at least in the short term). The recession theoretically cannot last forever (at least my new consulting business is hoping that is the case). Once the recession has peaked (or should I say valleyed), demand and production should reboot leading to increased demand for oil (and more money for my favorite 3-6 hour show). The price of oil will eventually rise to the threshold that will make higher cost oil extraction projects viable, but by the time this oil reaches market, we may be in for some bad times in regards to energy prices.

Not to worry my friends, all is not lost (c'mon cheer up, USA! USA!USA!, there, feel better?). The current low price of oil is an OPPORTUNITY for my (and hopefully your) new world savior, renewable energy. There are those that are trumpeting the lower prices as an obstacle to the growing renewable energy movement. I agree, but only to a point. Those who are short-sighted and do not see the freight train coming through their coke-bottle sized glasses are withdrawing or decreasing investment in renewable fuels. It is well reported that hedge and venture capital funds have decreased their investments into the "green" industry sector. This is somewhat due to the lack of credit and funds, but is also partially due to a short term outlook. Some of these individuals are taking the last of their joyrides in their Hummers, but are refusing to see the green sunrise of the future (how's that for some cheesy imagery). Oil is limited, not only by the amount in the ground, but by the market forces that allow it to emerge from it. While some renewable energy is currently bounded by scale, new investments can eventually make scarcity scarce. These investments in renewable energy are being made not because of what is (the market price of oil), but what will be (limited dependence on oil). There is no better time than now (just like the Toyota commercials say) to invest in biofuels and renewable energy sources, because once the demand for energy rebounds, someone needs to be there, and why not our little green friend (no, not Gazoo), renewable energy. As scale becomes reality, and cost of production is driven down, renewable energy sources will not only be viable at a lower oil price, but may make the price of oil less of a factor in the overall U.S. economy. Is this reaching a bit? Maybe, but the opportunity is there. Let's hope that we have the will (and our government does to) for this new way. Now if we just had a president who wanted to create infrastructure...

One other thought...if you have not heard or read enough on the recession, here is another article to get you all riled up. I thought it summarized the causes of our current crisis quite nicely, while at the same time, tempered the feelings of socialization, I mean nationalization, that seem to be sweeping into Washington. Be careful what you wish for kids, you just might get it.

Monday, January 19, 2009

No, Arnold, No! Bad Arnold!

As most trends begin in California (e.g. jams, pocket sized dogs with fancy clothes, gangsta rap, etc.), this article has me a wee bit worried. It is starting to become apparent that the environment will once again be put on the back burner because of the antiquated disconnect that some individuals with power have between sustainability and profitability. The need for scalable renewable energy and a very visible project that is both sustainable and profitable (hey GM, are you listening?) is becoming more and more apparent.

On a separate note, I was able to finally catch up on some DVR this weekend and watched a 60 minutes episode from last weekend (along with some Desperate Housewives, we all have our shameful secrets). It was in regards to the price of oil and what influenced the tremendous spikes over the course of 2008. While I was happy to see the price go up for renewable energy's sake, the cause was quite disconcerting. Can you say needed regulation?

Thursday, January 15, 2009

It's Not Easy Being Green

At the carbon and renewable energy focused conventions I attended last year, the slogan could have been "We can't wait until 2009." Everyone seemed to be in agreement that with a new year and a new president, a "green" United States would be right around the corner. Undoubtedly, new policies, technologies, and businesses will lead us into that neon green future. Before we head off into our beautiful future, I think it may be a tad bit important for all involved in this great green push to define what the heck it is that we are talking about. Green has become a ubiquitous term being utilized in everything from products to services to everyday living (even some geniuses are putting it in their company name). The word green has been turned into a marketing tool, an option that you can include in the product or services you purchase (sort of like opting for airbags or "con queso.") So what does it mean to be green? Is it a means to and end or simply the ends itself? These are two stark viewpoints, the former I will call the hippie view and the latter I will call the capitalist view (I know, "hippie" may have some negative connotation attached to it, but my mom was a hippie, so I have a soft spot for that word, got a problem with that?).

If one takes the hippie view and defines being green as a means, then taking any and all steps to conserve and create a sustainable future would be the ultimate goal. Green is in the details and everyday action. Anyone can be green simply by taking minor actions that, when put together, create a great force that will undue all the damage mankind has done (kind of like Voltron). This is the view often times endorsed in the media because it is very tangible. People feel good when they recycle or conserve, like they are "Captain Planet" (which was quite possibly the WORST cartoon in the history of television, I mean, who wears a belly shirt if they are a superhero). In fact, if you feel the need to take more action, just go to Amazon and buy any one of the 7,615 books that are available to make you feel more "green." The problem with viewing being green as simply a means is that you get caught up in often times meaningless microaction. I would love to live in a utopia where everyone sat on his/her sustainable hemp chair eating some locally grown produce while reading a copy of 50 Plus One Tips for Going Green (because that "Plus One" is the one that will make all the difference) made of recycled paper that was originally from a sustainable forest under a solar powered light while Cat Stevens played in the background. But that scene is fiction as Cat Stevens is now Yusuf Islam and not everyone (with the exception of Matthew McConaughey) has the time, the resources, or the willingness to care that much.

At the other end of the spectrum is the capitalist view. The market will sort out the best way to achieve sustainability, but the details are not what matters, where the world ends up in 2050 is what matters. I called this the capitalist view, but I think the Clark Griswold view would be more appropriate. When Clark wanted to go to Wally World, he did not care how he got there or who rode on the car roof along the way. Wally World was, in his words, "a quest," similar to how some politicians and world leaders view being green. They want the U.S./World to get to that greener pasture and feel so good when we get there that we will be singing 'Zip-A-Dee-Doo-Dah' out of our...well you get the picture. It does not matter how we get there, just so long as we do. Whether we use offsets, renewable energy credits, clean coal, nuclear, hamster wheels, electric go-carts, etc., all that matters is that we feel the world is more sustainable and cleaner than it was before. What we produce and what we accomplish in the next 40 years is not important. What is important is some arbitrary 2050 goal that no one can quite wrap his/her head around as long as it is based on good science. But the devil is always in the details. As I read in a fortune cookie, the problem is that when you look simply at the horizon, you miss the journey.

I often define myself as a fine whiskey blend of both viewpoints, a hippie capitalist if you will. With that business attitude often comes opposing viewpoints battling for supremacy in the very limited space that I call my brain, and defining what it means to be green has been no different. I believe the best way to define being green is to use the cop out phrase, "it depends." It depends on the location, industry, or products you use. It depends on the time, resources, and passion you have. It depends on what the "invisible hand" of Adam Smith (not to be confused with the "Invisible Touch" of Genesis) does in the renewable energy and general markets. It depends on whether you are planning for the short term or the long term. Being green involves both the means and the ends. Certainly, there is a place for recycling and conservation and all those other after-school show messages, but we need not get caught up in using all our efforts in completely recreating existing markets. In turn, a goal is a must have, but it can not be the only part of our efforts. The technologies, tools, and methods that are used to go green matter as well. A good "being green" policy will blend sound economic policy with sustainable action, one part Alan Greenspan, one part Matthew McConaughey (come to think of it, that's how I think of myself).