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What do the EPA’s proposed new rules mean for cleantech?

Sheeraz Haji

You’ve most likely heard the big news: on Monday of this week, the US EPA proposed new rules to reduce carbon dioxide emissions from existing power plants. Since the EPA is using the Clean Air Act—specifically Section 111(d)—as its framework for the proposed regulations, it’s no surprise that these rules focus on a specific pollutant (CO2) emitted by facilities already in operation. In an interesting twist, however, the rules give states significant latitude to figure out how they will reduce their emissions.

Will these new rules drive investment in cleantech? Yes, I believe they will. First a bit of background… while we have seen a number of success stories (e.g., Tesla, SolarCity, Nest, Opower), overall investment in cleantech innovation has declined these past couple of years. According to i3, investment in cleantech declined by 15% from $8.3 billion in 2012 to $7.1 billion in 2013.

When we explore the macro challenges with our clients, we often hear concerns about US policy: “Too much uncertainty”, “there is no national policy” or “policies are prescriptive” are all common refrains. While the new rules are a long way from law, they represent an important step in addressing these …

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#techbuild: Buildings+Users Getting Smarter – San Francisco DOE

Natalie Volpe

On January 21-22, Cleantech Group is hosting — in San Francisco — the “Buildings Get a Brain” senior executive summit on the future of intelligent commercial buildings. In the lead up to the summit, Cleantech Group is chatting with leaders across the commercial real estate space to learn more about what the rise of building innovation means for start-ups, corporates, investors, buildings, and tenants. Click here to learn more about Buildings Get a Brain and request an invite.

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Rich Chien, Sr. Environmental Specialist, SF DOE

What has the Department of the Environment been doing to address the issue of commercial building efficiency?

The city has goals to reduce our community wide greenhouse gas emissions 25% below by 1990 by 2017, and 80% below 1990 by 2050. 53 percent of our emissions come from the building sector, and a great majority of that from existing buildings. So this is a very important sector for us. For the past eight years, we’ve been managing an energy efficiency incentive program called SF Energy Watch, which is a partnership with PG&E; it currently has a budget of about $7 million a year for rebates, technical assistance, and quality assurance and has …

The Impact of Government Grants in the Clean Energy Sector

Sabrina Howell

Key takeaway: In a research project, I[1] am relying on i3 data to understand the impact of Department of Energy grants to cleantech startups. This research, and accompanying report, should be completed towards the end of 2014.   

In the clean tech world, everyone has a different opinion about what role, if any, government should play in energy innovation. Regardless, the fact on the ground is that the government has invested significant sums in university research, new energy technology procurement, and research grants to private sector firms.[2] Do these programs work? Do they generate inventions and commercial success that would not have happened if the private sector were solely responsible for energy R&D? The answer for most of the basic research programs is unambiguously yes.[3]  It’s very hard for private actors to capture the benefits of basic research, so they don’t do very much of it on their own.

The answer is muddier when it comes to government grants to private firms to do later-stage research and commercialization. The argument for the programs is that the energy sector and small startup firms both suffer from market failures. The carbon costs of fossil fuels are not included …

EPA Proposed RFS Changes + Impact on VC Investments and Partnerships

Leo Zhang

In November 2013, the US Environmental Protection Agency (EPA) issued a volumetric reduction proposal for renewable fuels under the agency’s Renewable Fuel Standards (RFS) for 2014.  Specifically, EPA has proposed to reduce the mandate for cellulosic biofuel from 1.75 billion gallons to 17 million gallons. The agency cited two main reasons for the drastic reduction for 2014 (click here to view EPA’s official announcement):

  1. Limitations in the volume of ethanol that can be blended into existing gasoline supply (currently capped at 10%), especially as new vehicles have increasing fuel efficiencies, which reduces overall liquid fuel demand.
  2. Technological limitations from the industry to produce sufficient volumes of renewable fuels.

Despite the announcement of the proposed policy amendment, we saw multiple events occur in the Biofuels & Biochemicals sector, predominantly in two major areas:

  1. Scale-up efforts: Amyris, the California-based developer of a synthetic biofuel platform, formed a joint venture with Total Energy to commercialize renewable fuels from Amyris’ technology platform.

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  1. Shift towards biochemicals: Greenlight Biosciences, the Massachusetts-based develop of sustainable chemicals, received a follow-on Series A investment of $1 million from Khosla Ventures and Kodiak Venture Partners.

You can download our latest Biofuels & Biochemicals sector trend report for free.

EPA’s proposed …

Obama Executive Order: Triple Renewable Energy Usage

Mosaic

[originally posted on Mosaic's blog]

President Obama used to campaign on his theme of hope and change.  Despite numerous political hurdles and geopolitical events that have diverted his attention since his 2008 election, it can proudly be said that the president has taken another step towards bringing about positive change. In his second State of the Union address, President Obama lifted the hearts of environmentally-conscious people everywhere with his bold statement “For the sake of our children and our future, we must do more.  But if Congress won’t act soon to protect future generations, I will. I will direct my Cabinet to come up with executive actions we can take, now and in the future, to reduce pollution, prepare our communities for the consequences of climate change, and speed the transition to more sustainable sources of energy.”  Though the rhetoric was there, actual change was certainly slower in coming to fruition.

Today, President Obama issued an executive order (bypassing the inefficiency of Congress) to mandate that the federal government (including the military) triple its use of renewable energy by 2020, at which point renewable power would provide 20 percent of the government’s energy.

Setting a good example

According to …

To Do China Right, Enjoy the Food: 12 Gems For Growing Your Business in China

Josh Seidenfeld

Last Friday, Cleantech Group, Silicon Valley Bank, and Wilson Sonsini Goodrich & Rosati convened an intimate group including investors (Dow Venture Capital, Keytone Ventures, Khosla Ventures, The Westly Group), corporate innovation leaders (ABB, Applied Materials, Siemens), and startups (Efficiency Exchange, Gridium, NexSteppe, Scoot Networks) for a Power Breakfast focused on strategies for working in China. A panel of investors, bankers, attorneys, and startup CEOs with deep experience working in China led the conversation, moderated by Cleantech Group’s CEO, Sheeraz Haji (see a couple interesting slides from Sheeraz’ presentation at the end of the post.)

We promised not to attribute quotes so participants would feel more comfortable speaking their minds, but here are a dozen highlights from the experts:

  1. Enjoy the food. Personal connections drive business in China. One panelist mused, “Once you start enjoying food with people you really start to get to know one another.”
  2. Wear the mandarin hat. One seasoned investor recalled how he was advised to make clear to Chinese counterparts “what’s in it for them.” But, he added, the euphemism “wear the mandarin hat” sounds better. The need to align partnerships

The Continued Rise of Energy Efficiency

i3 Research Team

On June 25th, President Obama addressed a crowd at Georgetown University to lay out his long-awaited plan to combat climate change. In his speech, the President spoke of bypassing congressional gridlock through executive orders to support green technology and renewable energies. The White House’s goal will be to reduce carbon pollution by a total of three billion metric tons by 2030. The President stressed the potential of appliance and building code standards to reduce emissions, and pushed for federal agencies to derive 20 percent of their electricity from renewable sources by 2020.

As a result, the Department of Energy (DOE) published new regulations that require all new federal buildings to meet more strict energy efficiency standards. Effective July 2014, these new requirements expect to save 18.2 percent more energy than previous regulations and cut energy costs by an estimated $1.74 billion over 30 years. Obama conceded that these standards may not sound “all that sexy” but the potential benefits and savings will benefit everyone. “It is a great deal, and we need to be doing it”, the President concluded.

What does this mean for the cleantech world? Energy efficiency has been a strong sector in past quarters, and …

What is Innovation? And Why The Question Matters.

Greg Neichin

What types of “innovation” should markets and society value?

What types of products, services, and businesses can justifiably be labeled as “innovation”?

I mindlessly use the word “innovation” tens of times every single day without pausing enough to ponder these fundamental questions.  Heck, I’ve helped architect a product called i3 for “insight into innovation”, regularly assist clients build “innovation sourcing” teams, and help host a conference with an “innovation showcase” (don’t forget to join us in San Francisco on March 26-28th!).  I really should have a thoughtful opinion here.

On one hand, having spent most of my career as an entrepreneur, I think that there is a fair argument to be made that the answer to the question, “what is innovation?” should be “who cares about semantics!”  Let’s go out and build new stuff.  If it replaces the old stuff, makes for a profitable business, and nets a good return for investors, we can call it whatever we want.

On the other hand, I think we, especially in some corners of the U.S. entrepreneurial community, have forgotten what innovation truly looks like.  Jon Gertner presents his case for a definition of “innovation” in this …

Guest Analysis: Obama Cleantech Stimulus: Bad Policy, Bad Politics and Bad for Cleantech

Guest Analyst: David Gold

The Solyndra debacle is no surprise to this cleantech venture capitalist. The inherent conflict between trying to get money out of the U.S. Treasury as quickly as possible to stimulate the economy and, at the same time, have government agencies that are ill-suited at making business decisions do just that was nothing other than a recipe for disaster.

Anytime a government program is giving money to the private sector with the intent of getting the money back, the program is doomed to failure.  Bureaucracies, politics and the lack of a profit motive simply don’t allow government to succeed in business.   Anyone who was surprised that politics played a role in the loan decision for Solyndra (and almost certainly other awardees) is very naïve.

Even if, by some miracle, the government could make good business decisions void of political influence, such programs are still doomed to failure because the public and media won’t allow for even one loan or investment to fail. In venture capital we make investments that don’t succeed and we fail often.  Yet, we are still successful on the whole.  Our successes more than compensate for our failures.  The government has no ability to operate this way.  Even if a program like the DOE …