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The importance of oil independence may soon be underscored in the latest World Energy Outlook report from the International Energy Agency (IEA), which is expected to suggest that oil production could decline more rapidly than previously thought unless new investment is made. The importance of renewable energy to the United States is already reflected by government involvement in renewable energy, including state and federal mandates for alternative-energy use, as well as subsidies and tax credits.
Charles Gassenheimer, chairman and CEO of Ener1, which makes lithium-ion batteries for the car market, says that his firm had planned to expand the capacity of its Indianapolis plant to meet growing demand. "All the major car companies have made the strategic decision to move forward [with battery power]," he says. That should make his firm a low lending risk, compared with other alternative-fuel companies. But since the credit market has dried up, Ener1 will instead use a loan program sponsored by the Department of Energy.
It might not be an easy few months for any alternative-energy company, especially those that have reached the stage where they need a few hundred million dollars of investment, but this doesn't mean that things will come to a standstill. "The best projects will get done," says Erik Straser, a general partner at Mohr Davidow Ventures, "but with tremendous scrutiny."
Even the more established solar-energy industry is expected to run into problems. Zindler says that large-scale solar projects have tended to be financed via tax equity, which means that banks have invested in exchange for tax credits to offset their profits. But banks that aren't making profits don't need these tax credits. So Zindler expects a "temporary disruption" in the market until other firms start funding solar projects.
One consolation is that renewable-energy firms aren't the only ones facing financing troubles. "If you want to build a coal plant, you have the same problem [getting capital]," says Ron Pernick, founder and principal of Clean Edge, a clean-technology research firm based in San Francisco.
"This is not the end of the world," adds Zindler. "It's a market disruption, and the smaller guys will sell their projects or themselves to the bigger guys."
Venture-capital investing remains slim, but some momentum is building.
Falling oil prices could cause some alternative-fuel startups to fail.
But some financial experts believe that the economic crisis could also create new opportunities.
As oil prices are down and incentives for green projects decrease, it is a great opportunity to internalize environmental costs to economies at the global level. The idea is to transform the global economy from the OLD fossil fuel based economy to the NEW digital economy.
Such transformation (a paradigm shift) does not depend only on largely developed resources of the supply side, but to a great extend on small ones that require the development of the highly undeveloped resources of the demand side. To understand such an approach, readers are advised to take a look at the EWPC article U.S. Presidential Elections and the Need for a Global Energy Deal
soon as the recession ends and demand picks up, watch for the price of oil to return close to its pre-recession level. It may be a bit lower b/c of the speculator element being gone but certainly above $100
Manufacturing in the United States is in trouble. That's bad news not just for the country's economy but for the future of innovation.
Our list of the 50 most innovative companies, including the following:
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RD
212 Comments
More Biofuel Problems
There are more reasons alt energy is suffering than stated in the article. Food-to-fuel is a disasterous concept and even without our fiscal crisis shouldn't be pursued. Ethanol is a terrible choice of alternative fuels because it is corrosive, absorbs water, destroys fuel system component, and has less energy than gasoline. Developing propanol or butanol would have been a better choice. And I hope algal or other 3rd and 4th gen fuels prove cost effective. Our fiscal crisis was brought on in part because of our failed energy policy, which included subsidizing the ag industry to grow fuel crops. For 3 decades Congress has prevented the US from developing its own resources. This has devalued our dollar, sent trillions of dollars overseas which otherwise might have been used for alt fuel investment, lost the US tens of thousands of good paying jobs, and funded our enemies. Remember that ANWR alone represents $1 trillion of recoverable assets. Shale oil is higher with up to $80 trillion. Environmentalists have pursued a failed strategy of demonizing oil, instead of working towards a slow transition with the best alternatives. Many of the biofuels are far from green. Fertilizers to grow ethanol feedstock release N2O, which is 296X worse than CO2 as a GWG. These same fertilizers are killing offshore waters with runoff. Ethanol creates ozone, which in Seattle is causing ozone attainment not to be met. And yet our legislature continues to up the mandate. Ethanol is blamed now for 40% of small engine repairs according to MSNBC poll, which means more equipment replacement added cost. Government has overreacted and doesn't consider best science and best economics. But what can you expect with the high proportion of lawyers who value their reelection more than common sense.
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iWonder
1 Comment
Re: More Biofuel Problems
There are several countries profitably using biofuels... cars can be designed to run effectively and efficiently on ethanol... although corn is impractical as a source of ethanol, there are other sources (celluloid) that shows plenty of promise and require no fertilizers and, in fact, have a zero-net carbon imprint due to their utilizing CO2 in growth cycle. It takes a gallon of petro to make 1.3 gallons of corn ethanol... it takes 1 gal to make approx 10 gal of switch grass ethanol... the special interests groups have caused this and, hopefully, the next president will do what's right for the people.
Although any carbon based fuel will not fully solve the problem, this sounds like a good "bridge" until new technology becomes feasible.
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Guest (Britt Borden)
Re: More Biofuel Problems
Yes, food to fuel has had it's problems. We should invest money into food science to help solve this problem; this would also create food science jobs which would help the faltering economy to recover.
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