Wednesday, January 02, 2013
Silicon Valley's Green Energy Mistake
Political venture capital turns out to be a loser
Silicon Valley's investment wizards are fleeing the so-called green economy, and not a moment too soon for American prosperity. As painful as the era of enviro-investing has been for taxpayers and shareholders, there's an emerging silver lining. It's likely that in 2013 fewer people will spend their time trying to turn political projects into companies.
A recent survey from our corporate cousins at Dow Jones VentureSource and the National Venture Capital Association finds that "clean technology" is inspiring pessimism among venture capitalists. Fully 61% expect less clean-tech investment in 2013 compared to 2012. On the flip side, a majority expect more investment next year in business information technology, a traditional U.S. economic strength.
Fisker Automotive co-founder Henrik Fisker, left, and CEO Tony Posawatz in Los Angele in November.
The survey reflects a natural and healthy shift in Silicon Valley. Talent and resources are moving back to the technologies that gave the valley its name—and away from trendy eco-projects that failed.
When Silicon Valley was committed to addressing market needs, it enriched the world with Intel, Apple, Google GOOG +1.05% and Cisco. When venture investors tried to profit from political agendas, they saddled taxpayers with stinkers like Abound Solar, Range Fuels and the infamous Solyndra, which went bust last year after receiving more than half a billion dollars in federal loans.
Success has proven elusive even for the smartest guys in the solar-heated room. Five years after Al Gore joined the prestigious venture-capital firm Kleiner Perkins to back environmentally correct companies, the collaboration has yielded few successful exits for Mr. Gore and his partners, along with some spectacular disasters.
This week brought further embarrassment for a Kleiner-backed and taxpayer-subsidized project called Fisker Automotive. In an interview with Delaware's News Journal, the head of the state's economic development office, Alan Levin, discussed the $21.5 million that was provided by the state in return for a Fisker promise to build green cars there. "All we want are the jobs or our money back," Mr. Levin told the newspaper.
Fisker, an electric-car maker, is currently not making any cars due to various design and production problems. Last year the Department of Energy stopped lending money to Fisker after the company missed development deadlines, but federal taxpayers were already on the hook for more than $190 million. Fisker's problems have lately been exacerbated by the October bankruptcy of a key supplier, A123 Systems, AONEQ -10.00% which also received federal loans.
Last week another green company backed by Kleiner, Glori Energy, withdrew its plans for an initial public offering (IPO), blaming poor market conditions. Perhaps Glori will be able to go public next year, and IPOs are a great way for venture investors to cash out of an investment, but Kleiner has enjoyed very few of them in its clean-tech portfolio.
And what appeared to be a true success earlier this year is looking, well, less so. On Wednesday the Journal pronounced Enphase Energy, ENPH +1.39% a Kleiner-backed company that went public in March, the worst IPO of the year. Shareholders who bought at the opening lost about half their money in nine months. The shares of Kleiner-backed Amyris Inc., AMRS +27.35% a biomass company, have lost more than 80% of their value since the firm's 2010 IPO.
VentureSource counts more than 60 companies engaged in "clean tech" that have received investments from Kleiner Perkins. Kleiner calls its environmental investments "greentech" and says that among the green firms receiving Kleiner equity investments, three have been acquired or merged into other companies. The assets of another company were sold. But since Mr. Gore joined up in 2007, Enphase and Amyris are the only two Kleiner green companies to go public, and their performance doesn't leave investors begging for more.
Their rough ride might be among the reasons that another green energy firm, SolarCity, SCTY +3.11% offered shares at its recent public debut about 40% below the expected price. Yuliya Chernova of Dow Jones VentureWire reports that "solar investors lost massive amounts of money over the past two years by betting on manufacturers that overbuilt factories and saw prices for their products fall." She quotes a fund manager who notes that "there aren't a lot of people going to investment committees saying, 'This one is different.'"
Back at Kleiner, the biggest headaches probably don't come from the ones that have gone public, but from the green ventures that haven't yet been sold to other investors. Among the biggest in that category is Fisker. Kleiner and other investors have sunk more than $1 billion into the firm, a huge sum by the standards of venture capital, which has traditionally funded small start-ups.
Like many venture firms, Kleiner doesn't disclose much detail about its investments, and the firm says that information on investment returns is confidential. In a recent interview with the Journal, Kleiner partner John Doerr said that the revenues of companies in Kleiner's green portfolio are rising rapidly. But it's not clear where Kleiner will generate green home runs to offset struggling firms like Fisker.
Mr. Doerr made another claim in his Journal interview: "Our green investing doesn't depend on government policies. It's about basic supply and demand."
If even Al Gore's partner John Doerr is now on record questioning the need for government assistance, we'd say it's well past time for Washington to turn off the subsidy spigot. Many of the potential beneficiaries are already moving on to more worthwhile pursuits.
Costa Rica: Climate change affects frequency of volcanic eruptions?
A study that was carried out in the Central American Pacific revealed that the increase in temperatures caused by climate change has an influence on volcanic activity.
The investigation was carried out by the Geomar Helmholtz Center and Harvard University.
Geologists have studied the effects of eruptions on the Earth’s temperatures for years; however, this team decided to study the contrary effect. In order to do so, they analyzed various volcanoes in Central America over the course of 10 years, and in doing so, were able to reconstruct the volcanic history of the past 460,000 years.
The result was that there are significantly longer periods of volcanic activity that coincide with the increase of global temperatures and melting glacial ice.
Marion Jegen, one of the investigators, explained that in times of global heating, the weight of the continents decreases because the glacial ice melts, whilst the weight on the oceans’ tectonic plates increases. This causes the magma to be under increased pressure under the tectonic plates, and is therefore more capable of finding its way through routes that raise it to the surface.
The cooling process after this phenomenon is much slower than the heating, according to the researchers.
According to the researchers, the Earth is approaching the peak of a hot climate cycle, however, the researchers did not say whether the peak of this cycle has been accelerated due to human activity.
Comment from Don Easterbrook [email@example.com]:
This just utter nonsense! Short-term warm cycles are typically only about 30 years (27 in the last 500 years), not even close to the response times needed for crustal adjustments, and the change in stress is less than a flea on an elephant. Longer term warming (e.g. the Holocene, 10,000 years) has no clear increase in volcanism, nor has the Pleistocene shown any decrease in volcanism. Even with isostatic adjustment under the huge ice sheets shows no change in volcanic activity. Even if there was a correlation between climate and volcanic activity (and there isn't!), that doesn't prove that climate affects volcanic activity.
Greens confront own need for diversity
The Republican Party isn’t the only political force that has a diversity problem.
Environmental activists say their own movement needs to step up its game if it wants to play much bigger in Washington.
The green movement dreams of pushing major bills through Congress on the scale of President Barack Obama's health care reform law and the immigration overhaul expected to begin next year.
But those issues enjoy something the green movement does not: wide and deep support across key Democratic groups, including Latinos and African-Americans.
“You should fish where the fish are biting,” said Van Jones, the former green jobs adviser to Obama. “All causes that want longevity need to look to influence the emerging majority, which will be a nonwhite majority.”
The greens say their plight is less dire than the GOP’s, insisting that diversity exists in environmentalism, especially at the local level. It's nationally that environmental organizations — and the face they present to the country — too often drive the perception that green issues are the purview of white liberals
Some activists think the problem is already hurting their causes.
Just look at the issues that have caught traction during Obama’s presidency versus those that haven’t, said Daniel Kessler, spokesman for 350.org, the climate activist group that staged mass sit-ins and arrests outside the White House last year to protest the Keystone XL oil pipeline.
“We’ve seen stuff move over the last couple years since Obama’s been elected, where you had a broad rainbow of people come together and you have seen legislation move,” Kessler said. “The health care bill comes to mind. I think immigration reform, in this coming year, will be another example of a diverse set of people getting together, primarily led by the immigrant community in this country — Hispanic Americans. I think we’re going to see progress there too. But the climate bill didn’t have that kind of support behind it, and it crashed and burned.”
People have offered many reasons why the cap-and-trade bill died in 2010. But opponents’ message that the legislation would close plants and wipe out jobs undoubtedly hurt, supporters say.
“The opposition said, ‘This is going to hurt low-income communities of color,’ and it created a case of divide and conquer,” said Vien Truong, director of environmental equity at the Greenlining Institute, a California-based think tank.
Longer term, it's been four decades since Congress passed landmark environmental protection bills like the 1972 Clean Water Act and 22 years since the 1990 Clean Air Act amendments — and addressing problems like climate change will require legislation with the same wide-reaching effects. Many activists say there’s no chance of a climate bill passing Congress unless they get support from more people within communities of color.
“If we’re going to be successful, we need to reflect the population,” said Adrianna Quintero, founder of Voces Verdes, a coalition of Latino environmental leaders.
That means green groups need to change, she said. “They need to diversify their leadership, the membership and their staff at all levels,” Quintero said. “But mostly, the vision needs to look toward a world that looks more diverse, that takes into account cultural nuances and different life experiences.”
Right now, the images people see when environmental causes rise to the top of the national agenda often have one thing in common: They’re white images.
Rising leaders such as Bill McKibben, the 350.org founder who was named one of Time’s “People Who Mattered” in 2011 — white. Eco-celebrities such as Mark Ruffalo and Daryl Hannah — white. Leaders of the big environmental organizations, such as Sierra Club Executive Director Michael Brune — also, for the most part, white. (On the other hand, Sierra Club President Allison Chin, who serves on the group’s board of directors, is the first person of color to hold the top post in the 120-year-old organization.)
A sermon on the morality of climate change
More evidence that we are dealing with a cult
The following video is a compact and emotionally moving overview of the problem and solutions to climate change. It is designed to be a quick and compelling way to get up to speed on the issue and help others do the same.
In 2012 the dangers of human-caused climate disturbance became undeniable, making this the fundamental moral issue of our time. The following features clips from the world's most respected climate scientist, NASA's James Hansen, and two key advocates for systemic change: Bill McKibben and David Roberts.
This 49-minute video teaches the basic science and explains key climate dynamics of lag time and tipping points in ways that all age groups can grasp. Richly illustrated with images of this year's unprecedented retreat of Arctic sea ice and the near-total surface layer melt of the Greenland ice cap, this video also includes footage of the Colorado Springs wildfire, the midwestern drought, the mile-high Arizona dust-storm, Hurricane Sandy, and other climate turning points frighteningly evident in 2012.
The call-to-action excerpts by Hansen and McKibben are overlaid with compelling images of civil resistance (including Hansen's three arrests) and enthusiastic public participation in 350.org events: worldwide rallies to voice support for reducing CO2 in the atmosphere back down to 350 ppm and McKibben's autumn 2012 "Do the Math Tour" (which spread the news that there is five times more carbon in fossil fuel reserves already discovered than could be burned without exceeding the 2 degree C threshold of additional warming that is widely regarded as the maximum "safe" limit).
My wife, Connie Barlow, a science writer, and I introduce each of the clips and share our experience of "waking up" in December 2012 to the terrifying prospect of climate catastrophe, which is happening faster than scientists had projected only a few years ago. (I refer to it as my "climate change come-to-Jesus moment".)
Higher CO2 Concentrations Will Feed A Billion More People
So, what should we do about CO2 emissions? The answer is: nothing. The evidence that Co2 is harmful, that it is raising the earth’s temperature dramatically, has been largely fabricated, and at the least, overblown. Surprisingly, when all the facts are in, CO2 is beneficial! It is an essential trace gas, and a fertilizer. The current increase has boosted growth rates of vegetation worldwide by 13 to 15% (see here).
CO2 is used as a supplement in greenhouses. In a closed greenhouse, growth slows or stops if the plants use it up and CO2 drops below 200 ppm as the plants absorb it. CO2 supplement systems are sold to greenhouse farmers to supply supplemental CO2. Levels up to 1000 ppm or more are often used (see here). Extra CO2 also reduces a plant’s need for water by closing the leaf stomata (see here). Leaf stomata are the ports on the lower side of a leaf that lets plants breath.
One of the most important crops in the world is rice. Studies have been done on Co2 enhancing rice production. If CO2 is increased 200 ppm above the current levels, (which have already increased production by the 13 to 15% cited above) production will increase by another 13 to 15% (see here and here).
Here is an illustration of growth over a range of CO2 levels:
Rice and a wild grass that is the antecedent of Foxtail Millet. Source: Susanne von Caemmerer, W. Paul Quick, and Robert T. Furbank (2012). The Development of C4 Rice: Current Progress and Future Challenges. Science 336 (6089): 1671-1672.
C3 and C4 refers to the chemical pathway used by the chlorophyll in plant leaves to produce sugar. C4 plants include many grasses and corn. It has been argued that C4 plants are immune to changes in CO2, but as you can see in the illustration above, this is clearly not true. They just don’t respond as dramatically as C3 plants. They do, however, become more drought tolerant due to the stomata response reducing water vapor loss.
Plants need 3 major inputs to grow: water, CO2, and nitrogen. From these they produce sugar for energy and proteins and cellulose for structure. Some have argued that increased CO2 produces protein-poor plants. This is true only if increased nitrogen is not supplied along with the increased CO2. A plant needs both in balance. Any greenhouse farmer knows this. But still, this increased growth with increasing CO2 assumes no improvement from fertilization, genetic engineering or plant breeding.
The experiments have been done holding all factors except CO2 constant. That increase from CO2 alone is about 100 million metric tons for each 15% increase in yield per year. That feeds about 700 million more people if one assumes 150 kg of rice per person per year. Imagine the gain if additional fertilizer was supplied along with the increase in CO2. Wheat production with double the current levels of CO2 increased by up to 38 percent (see here). Corn responds to elevated CO2 by needing less water (see here). It is clear that CO2 increases will greatly improve our ability to feed a growing world population.
If we try to limit CO2, we will dramatically limit the economic growth of the world with no effect on the climate. This is already happening in Europe. Taxing CO2 in efforts to limit production of it only makes money for the Al Gore’s of the world. It limits our use of the energy we need for economic growth and the CO2 that our crops need to flourish. Limiting CO2, even if we could, would literally mean the starvation of a billion people in the next 50 years.
What is more important? Feeding and lifting most of the world from poverty orr preventing a questionable slight temperature rise which would lengthen the growing season? The Global Warming crowd is trying to snatch defeat from the jaws of victory.
A great (if evil) empire flourished during global warming
While we’ve been deluged with the fear-mongering eco-propaganda of global warming doom for several decades, history and recent science tells us that not all climate change is, or has been, bad. In the early 13th century the Mongol Emperor Genghis Khan prospered during a time of global warming according to tree-ring temperature data presented at this month’s San Francisco meeting of the American Geophysical Union.
Yes, the world’s greatest land empire was probably enabled by climate change -- allowing Genghis Khan and his horde to conquer half of Eurasia. The great Khan rose to power in 1206, the year he united Mongolia’s tribes behind him in empire stretching from Japan to Turkey and encompassing much of Russia, India, China, and the Middle East. Researchers Hessl and Pederson have tree-ring data which seem to show that from 1208 to 1231 Mongolia enjoyed a string of wetter-than-usual years which was longer than any other such period in the past millennium. Previous tree-ring studies show the same period was also unusually warm.
The extended warmer climate provided richer grazing than normal. Richer animal fodder means more and fitter horses necessary for medieval Eurasian conquests. Khan’s strategic genius might today be seen as less impressive if the climate and environment had not warmed.
Other researchers want to look at Eurasian lake sediments. By counting spores from ancient fungus they hope to find out whether there really was an animal-population boom at the time of Genghis Khan. And they would like to extend their records and ecosystem modeling back to the first millennium AD. Khan’s was not the only empire to rise from the warming and lush grasses of Mongolia. The researchers want to know how climate influenced the Inner, Central and Eastern Asian Turkic empires of the sixth to ninth centuries.
Historians and archaeologists want to know how climate change plays a role in the rise and fall of nations. These retrospective climate change studies raise fascinating questions about the degree to which history can be enriched when nonpartisan science reveals climate change correlated to history. And more importantly, the studies may give us much-needed clarity about the controversial projections of climate impacts in our 21st century.
For more postings from me, see DISSECTING LEFTISM, TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL and EYE ON BRITAIN. My Home Pages are here or here or here. Email me (John Ray) here.
Preserving the graphics: Graphics hotlinked to this site sometimes have only a short life and if I host graphics with blogspot, the graphics sometimes get shrunk down to illegibility. From January 2011 on, therefore, I have posted a monthly copy of everything on this blog to a separate site where I can host text and graphics together -- which should make the graphics available even if they are no longer coming up on this site. See here and here
Posted by JR at 12:46 PM