Reality Check for US Commerce Secretary – USA is already far behind China in Clean Energy

22 May, 2010
China,Goldwind,Sinovel,Solar Energy,USA,Wind Energy

The United States could fall behind China and other countries in clean energy technology unless Congress passes energy legislation, U.S. Commerce Secretary Gary Locke said on Saturday- Reuters

While the Commerce Secretary is “only thinking” that the US could fall far behind ,The Reality is that US is already far behind in the Solar and Wind and is at risk of falling behind in the other newer sectors of the Green Industry as well.

USA is far behind China in Solar

USA has fallen far behind China in solar manufacturing despite Silicon Valley being the hotbed for technology innovation in solar . If it was not for First Solar, no US company would figure in the top 10 rankings by 2011 as the Chinese and Taiwanese use their low cost and processing skills to tighten their grip on the world market. Numerous startups like Miasole,Nanosolar,eSolar are in the process of moving from pilot to commercial production but the support from the government does not measure up . Evergreen Solar has  given up on the US and shifted its manufacturing base to China  while other technology innovators like Energy Conversion Devices are on their “deathbed”.Sunpower and First Solar the other major companies are trying to compete by expanding their facilities in Asia, retaining only a  token presence  in the US (less than 10% of their future capacity will be located in the US). Technology giant Applied Materials has shifted its manufacturing and R&D base  to China as well. While all this is going on, US continues its petty politicking over the climate bill which ironically has support for “offshore drilling”

In Wind US is in a more pathetic condition

Except for GE , US does not have a single company in the top 10 turbine makers for wind. There does not exist a single large pure play wind turbine maker in the US. Despite US being the world’s largest wind market in 2009 , US hardly manufactures even 10% of the world’s wind turbines.In contrast Chinese wind makers like Sinovel,Goldwind ,APower are planning big foreign expansions making the dominant European companies like Vestas  go into the red.

Energy Efficiency,Storage and other forms of Renewable Energy a  Saving Grace

In the still nascent markets of Energy Efficiency ,Energy Storage and other forms of renewable energy like geothermal ,tidal ,biomass and nuclear energy the US still leads along with Europe, but the Chinese government has been proactively seeking investment in these areas as well. Its a matter of time that once these technologies cross the early adopter curve, companies in Asia will actively look to attain leadership here as well.Innovative companies like Ormat, Comverge,EnerNoc , Johnson Controls,A123 systems still give the leadership to the US in these areas.But unless they are given more government support and subsidies , you can see them moving off to Asia like the solar and semi companies like Evergreen,Applied Materials.

Summary

US is still the leader in technology innovation and R&D in the green technology area,however it is way behind in the manufacturing area.Its only a matter of time that the Asian countries develop the technology once they move further along the experience curve.Companies in the US like IBM,Applied and others have already shifted a large part of R&D to these countries.Unless US soon implements on  a coherent long term policy to mitigate climate change and develop clean energy , it would fall too far behind to matter at all

US wants a piece of China’s Clean Energy Boom;But China only Wants Technology

16 May, 2010
China,First Solar,Solar Energy,USA,Wind Energy

US wants the booming China clean energy sector to help boost its exports to meet Obama’s mission of doubling exports in the next 5 years.However the implicit trade barriers are too high for the foreign companies to surmount.China has managed to dominate the world’s solar industry and is on its way to doing it in wind also.Foreign competition faces formidable hurdles in competing in China as they have to fight huge subsidies and support both explicit and implicit in China.Foreign share of China’s wind market has come down  from 70% in 2005  to 12% as China put high local content requirements and transfer of technology to support local companies.The government only awards contracts to selected foreign companies like First Solar and  eSolar which have truly path breaking technology.The policy of the government is very simple – “Give Technology to Get Access” .

US, Europe look to China for clean energy sales – AP

U.S. leaders want China’s clean energy boom to drive technology exports and are sending a sales mission to Beijing this week. But Beijing wants to create its own suppliers of wind, solar and other equipment and is limiting access to its market, setting up a new trade clash with Washington and Europe.

China passed the United States last year as the biggest clean power market, stoking hopes for Western sales of wind turbines, solar cells and other gear. But U.S. and European companies find that while Beijing welcomes foreign technology, it wants manufacturing done here and know-how shared with local partners. In the wind industry, foreign suppliers with factories in China say they are shut out of major projects.

The biggest impact of China’s industrial curbs has been in wind. Beijing has declared it a strategic industry and wants to build local turbine producers such as Goldwind Science & Technology Ltd. and Sinovel Wind Co. into global players. Chinese companies also get grants and tax breaks to develop solar, biomass, fuel cell and other technology.

The foreign share of China’s wind turbine market plunged from 70 percent in 2005 to 12 percent last year, according to the European Union Chamber of Commerce’s Renewable Energy Working Group. The chamber complains that Chinese authorities help local companies by basing purchases on upfront prices and ignoring a project’s lifetime cost, where more durable foreign equipment wins.

USA doing precious little on climate change

30 Apr, 2010
Climate Change,Renewable Energy,USA

With Obama’s election there were lots of hope on the climate change issue with regards to the USA. Under the previous Republican administrations US was actively trying to kill each and every initiative on climate change , so it was assumed that Obama would change that . But except for token measures under ARRA , there has been no significant long term commitments being made towards climate change. The administration has been so busy with other issues that it has stopped paying attention to one of the biggest threats to our world right now. With the US not paying enough attention to mitigate climate change , you can’t expect other developing countries  in the world to make major contributions either . Think that only a major environmental disaster will get US to move forward on this issue.Until then expect the politicians to play the their useless political games as you  can see in interview with Republican Lindsey Graham who is one of the co sponsors of the climate change bill .

Sen. Lindsey Graham: ‘I care equally about immigration and climate change’ – Washington Post

EK: So what allows climate to move forward now? What do you need to hear from Reid?

LG: Here’s the problem with climate. Do you have any chance of bringing it up and getting 60 votes in this environment? There’s a controversial provision in the transportation section. We have done as good a job as we can to get oil and gas companies to pay for their pollution. Some of that cost will be passed onto consumers. But it’s not a gas tax. I need Harry Reid to say I agree with you. I support that. I won’t introduce a bill and have the majority leader, who I have less than a strong bond with, say, “I can’t support that gas tax.” There was also a Fox News article where the White House said they couldn’t support Graham’s gas-tax gambit. I will not let this get blamed on me. It would be the worst thing in the world to take the one Republican working with you and make him own the one thing you don’t like.

EK: So what you need isn’t just an assurance on immigration. It’s an assurance that if you’re going to do the dangerous things on climate reform, you won’t be hung out to dry on it.

LG: Right. Ask yourself: Why did they leak the story to Fox News? That told me they weren’t committed to this issue. Why let a story start on a venue that would hurt your partner the most?

EK: Have you asked the White House?

LG: Yeah. They say, “Oh, we didn’t do it.” And it’s true: Rahm and David didn’t. But somebody involved in energy and climate there did. They’ve always worried about being in a bad spot on this. So someone pretty clever said, “Okay, we’re going to get on the record against this.”

EK: Do these assurances go in the other direction, though? You want to make sure the Democrats don’t leave you hanging on this. But they’re worried that this bill comes out, and you’re with them, but 40 other Republicans are hammering them for supporting what they’ll call a gas tax, cap-and-tax.

LG: This is exactly what they’re going to say. I have never suggested they won’t. And they’ll say it about me, too. So we have to hold hands so I can make a credible argument, alongside business, saying it’s not a gas tax. But you can’t make this into my idea alone. It wasn’t my idea.

Pseudo Green company Codexis Manages to Close up 8% from IPO price

25 Apr, 2010
Biofuels,Green IPO,Oil,USA

Pseudo Green company Codexis which makes enzymes for use in the pharma and biofuel industry managed a strong performance on Friday to close up 8% higher from its IPO prices of $13.

Like the other green IPO A123 Systems this company does not have great financials with losses in the last 2-3 years and prospective losses for the next 2-3 years as well. Both of these companies claim to have great technology to solve critical problems in the fields of transportation in a clean manner.

Note after the initial euphoria A123 system stock price languishes at its IPO prices down almost 60% from its peak as there is little near term prospects of profits as investors cashed in after the initial 1 year lock in period.

While Codexis received a tepid response compared to A123 systems , the current market cap of $477 million seems too high given its super high risky character.Company seems completely dependent on Shell which remains a major investor and its main customer.I don’t have expertise in understanding it core business whether it is a truly path breaking technology. However the main factor supporting the Codexis story is Shell .If Shell continues to support Codexis and its partnership with Brazilian sugar company Cosan uses Codexis technology to make a big biofuel commitment then this stock would be a great one.However I would wait since some of these companies can take a long time in translating promises into reality.

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