This past week I and several senior cleantech private equity investors were invited to DC for meetings with Administration and legislative staff to discuss climate and energy legislation.  We were there to provide input in meetings with Valerie Jarrett and Austan Goolsbee at the White House and also to connect with DOE staff and the staff of several Senate offices that are working on various alternative climate bills.

I've participated in such swings through DC in the past, but this one was particularly educational, and I thought I would pass along a few takeaways in case they're useful intel for any readers, since these things have a significant impact on the industry, no matter what side of the climate / energy debate they're on (note that these are just one man's impression of where things stand in regards to national climate and energy policy, I can't promise my impressions are right or even shared by my fellow investors in these meetings):

1.  Climate and energy legislation (CEL) is "next"... maybe.  By all appearances, the Obama Administration is gearing up to start making a push on this once health care is done, and as of tonight that appears to be the case.  However, there's also financial reform, economic stimulus/ jobs, schools, and a host of other issues that will also press for attention.  While climate and energy have been getting a lot of rhetorical attention from the Administration (they were quick to cite numbers about the number of times the President has talked about it publicly), it's clear that the White House's "A-Team" has been focused on health care instead of anything else for the first year-plus of the Administration.  But the early signals so far are that the next big push for this high-level group will be CEL.  We'll have to wait and see.  If we learned anything from watching the health care reform effort, it's that nothing is going to get through the current legislature unless the Administration gets actively engaged and even puts out their own legislative suggestions.  My impression from meetings at the White House is that they are now gearing up for such a role, but are still very much in the early stages.  In short, when you start seeing top Administration advisors on the Sunday talk shows talking about CEL, that might be the advanced signal that they're actually going to start pushing it.

2.  It probably won't happen this year.  Had a positive meeting with staff involved with Kerry-Lieberman-Graham, the emerging front-runner for CEL.  Not to say everyone we met with was a fan of that proposal, and in fact there was criticism that the language hasn't been released yet.  In this one meeting with someone actually involved in writing that bill, it came through that the effort is real and thoughtful and that there's a lot of work going on behind the scenes ahead of any language being released.  However, in that same meeting, in trying to figure out a pathway where the bill could jump through all the necessary hoops and get passed this year... Well, it was possible, but to my ears highly improbable, to expect anything to happen before midterm elections.  So my guess is most of the CEL discussion this year will actually be positioning ahead of a push in 2011.  Of course, that'll be after the elections, so who knows...

3.  "Revenue-neutrality" is going to be key to any proposal that moves forward.  Regular readers will know this is something I've pushed on this site in the past.  We met staff from 3 different senate offices, each of which were working on separate competing versions of CEL -- all three of which included some type of dividends back to taxpayers from the government revenues from credit auctions or from a carbon tax (as opposed to all the fees going straight into other government spending programs).  So I'm gratified personally to see that the idea has some legs.

4.  Expect "death by a thousand alternatives" in the CEL debate.  In addition to Kerry-Lieberman-Graham, there's also Cantwell-Collins, and we confirmed the rumors of Murkowski's staff working on a revenue-neutral carbon tax idea.  And none of them are going away quickly, it was clear.  Plus, Waxman-Markey did pass last year of course, setting up the same kind of Senate-House conflict down the road that marked the health care reform debate. 

I hope that's a helpful download for anyone wondering what's going on in terms of CEL in Washington, DC.  Many thanks to the good folks at the Clean Economy Network for arranging the day, and to the team at the Administration that invited us to provide our input.

I'm not one to flog corporate green marketing stuff, but in this case I'll make an exception.  I can't attest to the validity or accuracy of the presentation, but I've found the numbers being shared by Exelon, and their general attitude about green energy and stakeholder engagement, to be encouraging.  You can see a good example here (note: link opens a large pdf).   I'd be curious to hear what Joel Makower thinks about it...

I'm intrigued by two things in particular in this report:  First, I'm pretty interested in their presentation of their carbon abatement cost curve (pages 3-4).  I think they've done it in a funny way, and not necessarily the way I'd like to see (for example, they put some green power techs way down the curve but a closer look shows that net of incentives they should actually be much further up the curve).  And as I noted to a colleague at the event, it's a bit funny that utilities like Exelon spent years talking about how cheap nuclear power is, but now that the government is actually willing to throw money at it, they talk about how expensive nuclear is, and gimme gimme gimme.  But with those kinds of caveats, I really like this kind of cost curve analysis and wish it was a requirement for all major utilities.  And note how crucial energy efficiency, existing nuclear plant improvements (not new-build), new natgas plants, and wind power (net of incentives) are for this utility.

Secondly, on their website, I'm gratified to see a clear indication that they see environmental strategy as an area where they can actually create a competitive advantage, not just something to be managed to avoid downside risk.  I can't tell you if they truly believe that and act that way, but the message itself is very much in line with arguments we were making a decade and a half ago in the business sustainability movement.  And it still holds true today.

John Rowe of Exelon spoke at the MIT Energy Conference, which is what drew my attention to the above literature.  But Rowe's speech was also pretty interesting, coming out strongly for pricing carbon and against renewable energy standards.  Below are some quotes I jotted down (apologies for any scribble-induced inaccuracies):

"Every $10/ton in the price of carbon to us is an extra penny per kwh we'll have to charge.  It would cost us an additional 5-10 cents, from our current 11 cents per kwh average, if we were asked to do all new nukes, wind and solar [under a renewable energy standard, for example].  The public is willing to believe the [climate change] problem is real.  Most people polled, however, didn't like carbon tax or cap and trade because they thought it would cost them money.  But they loved the renewable energy standard, because they thought it was free."

"I support the renewable energy standard of Bingaman, but that's because he recognizes the limits of how far we can go.  You run real risks when setting energy policy by mercantilism, we're not good at having Congress pick technologies.  We need carbon cap and trade and a moderate level of support for specific policies.  We need to harness the market.  It's better at correcting mistakes than government is.  But the market needs to be constrained by policy as well."

"The EPA has clear mandates to regulate carbon, mercury, coal ash, and new source performance.  Coal-burning power plants have to navigate a labyrinth, it's an endless series of hammer blows on existing coal fleets.  The EPA is frustrated that they can't synchronize these regulations, to shut down smaller less efficient plants and do more with newer cleaner coal plants, but they don't have the authority to do so.  It's an expensive mess, which will reduce carbon, but neither effectively or efficiently."

"We can't make sense of nuclear with $5 natural gas.  We need $8 gas and $25/ton carbon in the forecast for it to make sense... The key driver of change is the cost of natural gas.  Gas you use to back up wind power became cheaper -- that's what made wind cost effective."

"Some significant portion can be solved by efficiency and upgrading nuclear plants.  After that, the next thing is natural gas, replacing inefficient gas or coal.  It's much cheaper than sexier things we would want to do.  After that, wind, then new nuclear.  Solar is still very expensive."

"One advantage these new technologies have is that they can be implemented smaller scale.  As innovation happens, it's not as big of a problem for the utility.  Nuclear plants take so long to build that the utility is really worried about picking a wrong technology.  Nuclear's problem is that it's big and chunky."

"Every month or so I call up my friend Rahm Emanuel and ask him if it's time to push for a carbon tax yet.  [He makes it clear it's not going to happen.]  So it looks like cap and trade, if anything.  In order to get to a bill that could work, you'll need to put in a price cap, some kind of $10-20/ton collar, with a real escalator in place.  Need to put in a renewable energy standard like Bingaman's, with something similar for nuclear, and then you have a good start."

......

It's always fun to wander the exhibit halls and poster boards at tech-driven conferences like MITEC and ARPA-E.  Here are some tech development efforts that caught my attention:

Low temperature solid oxide fuel cells -- research at the University of Maryland, to bring SOFC operating temps to around 400C.  High conductivity electrolytes, and novel electrode materials.  ...Although now that Bloom has solved all problems for SOFC forever, you have to wonder what the point is...

Geothermal electricity coupled with CO2 sequestration -- being researched at the University of Minnesota.  Essentially using CO2 as the working fluid.  I'm not sure how restrictive the geological and geographic requirements would be, however...

Nano-dipole PV -- research at the University of Toledo.  This ARPA-E finalist is pursuing "fourth generation PV" in the form of "junctionless PV."  This nanoparticle approach is at the very early stages, but they will be testing it with existing thin-film PV materials as well as some new systems like liquid PV, and enhanced photoelectrochemical cells.

Thermoacoustic cooling technology -- research at PARC looking to more than double the efficiency of traditional vapor compression systems for air conditioning.

Carbon labeling -- the Carbon-Efficient Supply Chains Research Group at MIT is working on developing methodologies and labels to be able to help consumers better understand the carbon impact of products they buy.  First off?  A banana!  Why?  I don't know...  But it would be interesting to see some rating system that could be broadly applied at the retail level.

Microchannel reactors for Fischer-Tropsch -- We're seeing more efforts to capture syngas from distributed waste streams, but what to do with it when F-T based plants to generate liquid fuels are typically so big and expensive?  New research into microchannel reactors might be able to bring economically-viable FT reactor scale down by 80-95%.

Higher power density flow batteries -- While flow batteries remain too expensive for broad use as a grid-scale energy storage technology, United Technologies Research Center is working on technologies brought over from PEM fuel cells to bring flow battery power density up 4x or better, which would thus significantly reduce system cost.

 

I've stolen the title of this post from a very funny line delivered by Daniel Nocera (MIT, SunCatalytix) at the ARPA-E Summit in DC this morning.

Yes, I'm attending the first ARPA-E Summit, and I'm glad I did.  It's proving to be one of the best events of the year, in the cleantech sector.  A who's who list on stage and amongst attendees, a great mixing bowl for researchers and practitioners and investors, and some really impressively innovative ideas.  Kudos to the organizers at the DOE and CTSI, among others.

The idea of ARPA-E, of course, is to try to get the energy landscape shift Nocera was referring to, to happen more quickly.  To fund breakthrough, but practical innovation, that otherwise wouldn't get funded.  It hits directly at one of the capital gaps I've described before, at the very early stage, where VCs and angels and other private sector funders aren't fully able to get involved, for reasons I laid out a while back.  So it's an important effort.  In many ways, ARPA-E is just following in the footsteps of DARPA, another successful government program, and one that typically gets very strong support amongst legislators.

But while you can sense the optimism in the crowd here at the summit about this program and what it's doing, ARPA-E is going to face quite a few challenges going forward.

1. Demonstrating economic impact:  The work being sponsored by ARPA-E is necessarily forward-looking.  It's about investing in technology and commercialization efforts that are too far out or risky for the private sector to fund.  In theory.  But in this economic climate, the pressure will be on all programs to demonstrate economic impact, specifically jobs.  These technology development efforts don't lead to too many jobs being directly created.  Perhaps the funding helps hire another engineer or two at each company, but realistically, it's a bank shot to get to jobs growth -- we innovate and commercialize something that then eventually creates jobs once it starts being rolled out.  But here's the crux of the challenge -- many of the manufacturing jobs that get created via this innovation, when it happens, will be overseas.  This is just the way the world works, I'm not criticizing ARPA-E for this.  But my guess is others will, at some point -- and specifically when an ARPA-E recipient outsources manufacturing and gets visibly "outed" for it.

 

2.  Demonstrating additionality:  "Additionality" means a very specific thing in the carbon world.  It means proving that carbon emissions reductions wouldn't have already happened under the status quo.  ARPA-E is going to face a similar challenge.  Among the ARPA-E grant recipients are several startups that were already pretty well-funded by VCs.  It raises a critical question:  Is the role of ARPA-E to fund projects that wouldn't have been funded otherwise?  Or is it simply to accelerate development of ideas, regardless of how or if they've been funded to date?

If ARPA-E is only supposed to fill the capital gap, then there's a problem when it provides additional capital to a high-profile venture-backed startup.  The private sector had already demonstrated its willingness to put money into the development effort, so what's additive about ARPA-E's role, and why wouldn't they have better-deployed the money into something else with breakthrough impact potential but no venture funding to date?

On the other hand, if ARPA-E is only to fund efforts that haven't been able to get venture funding yet, doesn't that create a selection bias issue, where the agency is only funding ideas that the private sector has rejected, perhaps at times for good reason?  And why shouldn't the agency support really important ideas regardless of their funding status, because additional capital and visibility still helps?

Again, my point isn't to criticize ARPA-E, which I believe has done a great job to date.  But I do think the conundrum posed by these questions will be a challenge that the agency will continue to wrestle with going forward, and will likely face some scrutiny over at some point.

 

3.  Demonstrating good selection judgment:  This dovetails with the second point from above.  ARPA-E has been flooded with requests and applications for funding.  It will continue to be so, and many worthwhile efforts therefore won't get selected, it's impossible to back every deserving project.  And so as the agency staffers choose one recipient over another, it raises the likelihood of the agency getting criticized for their choices -- either as being wrong, or as showing favoritism.  The agency, as far as I've seen, has worked hard to help avoid this, bringing in a significant number of outside reviewers as part of the process, and now also reportedly providing a lot more transparency to the process.  This is very good.

But still, sooner or later one of these efforts will utterly and visibly fail.  VCs are used to this, but elected officials are not.  So sooner or later, competency of selection will be a debate that arises, whether justified or not.

And, sooner or later, someone is going to ask why a wealthy VCs' portfolio company just got more "free money" from the government.  This goes to that second point above, and has already been the subject of some external criticism.

Finally, sooner or later there will be an example of where the visibility inferred upon an ARPA-E grant recipient is perceived as having disadvantaged some other startups in the same subsector.  Government intervention affecting the competitive landscape, in other words.  There's a legitimate counter-argument to be made that any legitimacy for one player in a subsector generally helps all players in the subsector, but still, I know from talking with contacts at the DOE that they're already being bombarded with complaints from elected officials whose constituents were denied in their grant applications, etc.

 

I'm a big fan of the ARPA-E effort.  And, knowing some of the people involved, and knowing some of the major process overhauls they've been going through to try to get it right, I think we'll look back on the early days of ARPA-E as a really standout effort in terms of the level of execution of this versus other government programs in other policy areas.  I just also know that nothing is ever executed flawlessly, and thus ARPA-E will likely eventually face some of the criticisms I've described above. 

I hope that when that time comes, members of the cleantech research and investment communities will stand up and support it as the very valuable program it is.

I've picked up on a couple of mentions lately of Senators on both sides of the aisle starting to work on revenue-neutral alternatives to the Waxman-Markey type of cap and trade climate legislation that has been the focus of attention ever since Obama came into office.

There's been talk of the GOP staff on the Energy and Natural Resources Committee, reporting to Sen. Murkowski of Alaska, possibly working on a revenue-neutral carbon tax proposal.

And Cantwell and Collins are proposing a "cap and dividend" plan, also to be revenue-neutral.

Gee, sounds familiar.

Frustratingly, I could probably have just cut-and-pasted my entire May 2009 column on this topic into a new post with no changes, and none of you would have realized it.  Because that's how little things have moved forward over the past nine months.

Hopefully by now, however, it's becoming more clear to politicians that any climate change legislation, if it's to have a chance of passage at all, must be perceived as something other than just another tax-and-spend proposal. It has to be simple, and it should be tanglibly revenue-neutral. 

Leaders of the U.S. cleantech industry always claim they need a national price on carbon, first and foremost, so it's nice to see some legislative efforts refocusing on just that.  Even if they're not centerpiece efforts quite yet... 

 

Warning:  The following is just one man's long-winded opinion on goings-on, and while I have been spending a bit of time engaging on these topics lately, I'm far from being an insider, so read accordingly

My guess is that we won't see any major climate change legislation signed into law this year.  There's a decent chance, but less than 50%.

I come to that conclusion after observing a lot of "strategy discussions" among proponents, and listening to a lot of political rhetoric over the past few months.  And it's becoming clear to me that the way climate change legislation is being tackled is likely doomed to failure.

And that would be a big shame.  Because we need to address climate change and energy independence as quickly as possible.  And if we can't get something useful done that's market-based by design, then we will see yet another big prolonged battle between those espousing "do nothing" and those espousing "command-and-control" approaches.  Paul Krugman touched on the cost-effectiveness of market-based solutions like cap-and-trade in an op-ed over the weekend.

But let's go back to 2006, when California's Prop 87 was on the ballot.  This would have imposed a tax on California oil producers, with the explicit goal of significantly reducing the state's oil consumption, and with the revenues being directed in part into a program of subsidies for alternative energy research.  It would have represented a pretty moderate tax of 1.5-6% per barrel on oil producers.

Prop 87 had some major endorsers (Al Gore, Bill Clinton, and Vinod Khosla, to name a few) and, it being an off-year for elections, it got a lot of attention and positive donations.  A major ad push was undertaken.  If any state would pass such a measure by popular vote, you would think it would be California, a state that prides itself as being at the forefront of green living and green energy. The prop started out with a lot of positive public momentum.

And it was defeated.

At the time, I was living in California, and I vividly remember the massive ad campaign -- almost entirely and overtly funded by oil producers -- against Prop 87.  Opponents pulled out the stops.  The proposal was attacked as tax and spend.  The use of the tax to fund subsidies for green power technology was assailed as imposing a new massive bureaucracy on a public already tired of big government.  A firefighter in full fire-fighting regalia was put on camera to argue that the tax would lead to higher gas prices, hurting firefighter budgets, and therefore making it harder for firefighters to fight fires.

The lessons that should have been learned are that a) when voters perceive something as being a "tax", they don't really care about (or in many cases, understand) the relative burden of that tax, they just react negatively no matter what price it is; and b) if that tax money is taken and spent by the government on new programs, no matter how popular those programs might be, it's easy to attack the whole thing as "tax and spend bureaucracy".

So what's going on in DC right now?  The very same thing.  And this time in the middle of a recession.

At a high level, the approach being touted for passing cap-and-trade suffers from the very same flaws as Prop 87.  It may not be called a "tax", but as most will admit, cap-and-trade is simply an alternative way to price carbon emissions.  It's already being labeled as a "tax" by opponents.  After a few months of massive negative ad campaigns (we're already all starting to see them on TV), I would bet that most voters will believe that "cap-and-trade" is a synonym for "tax".

That by itself is not a bad thing, if the message was better controlled.  If was "a tax on big polluters," for example, people might be more sympathetic.  But more on that below.

The other strategic mistake being made is that the proceeds of any auction are already being tapped for budgetary purposes.  Green energy proponents and producers are already arguing over who's going to get what slice of the revenues for subsidizing their businesses.

I'm not at all against subsidizing alternative energy technology development, commercialization, and adoption.  But that's a very separate concept from pricing carbon appropriately.  If you price carbon appropriately, then in theory consumers will make their own personal decisions about the trade-offs between green energy, efficiency and traditional energy sources.  In theory.  In reality there are market adoption reasons (not to mention the important goals of technology leadership and energy independence) for separately and additionally subsidizing alternative energy technologies.  But that should be left out of the climate change legislation, it should be part of a separate Energy Bill conversation.  Let's address the price for carbon.  Then let's have a different conversation about supporting one technology over another.  Conflating the two is confusing for voters, and also makes it tougher for them to support the overall proposal.

Because, I believe, in order to get voters (and their representatives in DC) to support even a moderate "tax on big polluters", it has to be revenue-neutral.  In other words, every single dollar of proceeds has to be kept out of the budgetary process.  And it has to be returned to each household in the form of a per capita rebate check.

I'll never understand why some politician hasn't stood up and declared:

"I want to propose an income tax reduction!  We're going to put money in the hands of average American households who need it so badly right now!  And the way we're going to pay for it is by charging a fee on big polluters.  We'll set up a separate account that the politicians aren't allowed to touch, and every dollar paid for by the big oil and coal producers will be sent back to the American public.  You'll get your share of the proceeds as a rebate check every year!"

Alas, those writing the current legislative proposals are following the Prop 87 script pretty closely instead.

Polling done with Americans suggest that they are very sympathetic to the goals of fighting climate change, growing "green energy jobs", and moving toward energy independence.  They claim to be willing to make sacrifices.  But once again, when asked about even the most minor of cost increases on their electricity bill or at the pump, they balk.  They're willing to make sacrifices like changing lightbulbs and driving smaller cars, but they're not willing to pay any higher prices during a recession.  And they simply don't trust the promised "payback" in terms of the benefits of green collar jobs growth, avoided climate change damage, etc.  Unless it's a protected rebate check delivered right to their door, they will never believe the benefits are net positive.

But from what I can see, the inside-the-Beltway horsetrading seems to be focused on two things:  Arguing over what the price of carbon should be (via the proxy argument of how much of the available pool of emissions should be auctioned vs. granted to utilities, etc.); and trying to pile additional spending proposals into the major bills or auxilliary bills being proposed over the next few weeks.

When I talk with proponents of climate change legislation, many of them appear to recognize that this is likely a flawed strategy, at least in terms of getting something done this year.  Symptomatic of this kind of active denial is the emphasis being put on the Waxman-Markey bill in the House.  But everyone agrees that the Senate (with its 16 or so skeptical Democrat senators) will be the really tough place to pass anything.  So why fight so hard about the specifics of Waxman-Markey?  Because that's the way to get something meaningful passed in the House.  And then, hopefully, that will lead to some momentum going into the Senate.

The other hope I've heard expressed is a "backup plan" of pushing for a National Renewable Energy Standard.  This would require all states to make sure that a certain proportion of their energy supply comes from renewable resources by 2025 or so.  The hope is that, even if a cap-and-trade scheme is defeated, much of the same objectives could be achieved by mandating this kind of supply mix.  But now I hear of strong objections to this kind of scheme as well, from those states (such as the Southeast) who don't believe they have good access to renewable resources.  And besides, it gets us away from the most efficacious solution:  Pricing carbon.  It's closer to command-and-control than it is to market-based solutions, and thus probably costlier in the end for power suppliers.

Those groups hoping to forestall any real carbon pricing or renewable energy standard are probably pretty happy with their position right now.  The dollar advantage they enjoy is pretty significant, and that will start to play out in the ad and lobbying campaigns.  And even before that really kicks into full swing, the schisms and strategic choices of the proponents of climate change legislation are making it difficult to see a clear path to getting something meaningful passed in this economic situation.

On the other hand, let's not forget what the ultimate alternative for action is:  Forced technology adoption, the ultimate command-and-control approach.  So called "Best Available Control Technology" has long been a fact of life for power generators in terms of other pollutants besides carbon.  Now we're seeing, in the UK, proposals for what are essentiall "Future BACT":  A requirement that any new power generation facility must promised to adopt carbon capture and sequestration technology as soon as it is commercially available.

That could end up being a lot more costly for utilities than any cap-and-trade or carbon tax.  And the threat of that kind of thing may be exactly why some utilities like Duke Energy have been publicly supportive of climate change regulation... if it isn't too punitive on them in the near term.

So there's still a chance that something gets passed that would have a meaningful "Phase 2" in its implementation.  A cap-and-trade scheme where Duke Energy, et al, can see enough other benefits (from CCS research and commercialization subsidies, and the inclusion of energy efficiency as a source of near-term offsets, for example) where they can support it.

I've long said that if you want to pass climate change legislation, it has to be something that Duke Energy's Jim Rogers would be able to endorse.  And it might not be perfect, but it would be better than nothing.

Stay tuned.  The next few months will be fun to watch.  Often frustrating for all sides, I'm sure.  But fun to watch.

*PS: Yes, I spelled it right. Apologies for a dorky pun.

I spent a couple of busy days in Washington, DC this week, meeting with old colleagues and making some new connections.  (And I drove all 1,000 round-trip miles instead of taking the train, how do you like me now, Xconomy!)  One thing that was impressively clear in DC is how front-and-center energy technology is among staffers on the Hill.  A lot of very important things being worked on there right now, and minds seem to be pretty focused.  Great to see.  Unfortunately, it's also clear that the entire cleantech venture and startup community is gearing up to bombard the Hill and the DOE with funding requests... Meanwhile, outside of the Beltway, it's starting to feel like maybe some cleantech VCs are starting to get back in the game.  It's just anecdotal, but I see my colleagues in the industry getting more serious about doing deals, after a hiatus of a few months. For a while there, even VCs with capital left in their funds were sitting on the sidelines.  The limited partner community just wasn't making commitments to funds.  So VCs were forced to consider that it might be a long time before they could raise additional capital.  And thus, even if they still had capital left in their existing funds, they needed to hoard their resources and a) make sure they had enough in reserve to fully back their existing investments; and b) make sure that they stretched out their remaining new deals, so doing fewer deals over the course of 2009 than they had originally anticipated. Of course, many funds are still in this situation, so it's not like dealflow is coming rushing back.  It's still a very difficult time for VCs to raise capital from limited partners, and thus it's still a very difficult time for startups to raise capital from VCs.  But I do see some faint stirrings of life out there. Naturally, however, that won't be reflected in recent deal announcements, since there's a significant lag between VC interest and then deals and then the eventual press releases...  So here are the few announced deals from the past week:

• Lightscape Materials, an LED phosphor spinout from Sarnoff Corp., has raised a $3mm Series A from Wisepower Co. LTD and Foosung HDS Co. LTD.

• Nordic Windpower has raised $3.5mm in convertible notes from new investors I2BF Venture Capital and Pulsar Energy Capital, alongside existing investors Goldman Sachs and Impax Asset Management.

• New Leaf Paper, offering "environmentally responsible papers", has taken in a $5mm round of financing led by Pacific Community Ventures.

• Cleantech investors in the news:  Redpoint Ventures has added a cleantech CTO, Dr. Nety Krishna...  and Robeco is teaming up with China's TEDA International to launch a new sustainable private equity fund.

Other news and notes:  REBN continues to grow, with another great REBN-MidAtlantic event in Philly, and a new chapter being launched in North Carolina...  If you're reading the NYT Mag article on Freeman Dyson today, here's Hansen's reply...  A good catch-up on cleantech in the Pacific Northwest...  Here's a cogent critique of efforts to focus on breakthrough R&D efforts in energytech instead of driving adoption of already-commercialized energy efficiency technologies...  You heard it here last -- Al Gore is planning a new book timed to impact the upcoming climate legislation debate in Washington...  Finally, the Conspicuous Consumption Award has to go to this vacuum, which nature must certainly abhor -- if you can afford to buy it, I'm guessing you're not using it yourself.

Perhaps I'm just a hopeless policy wonk, but I was very excited to see the news that the EPA has proposed that major sources of carbon emissions should have to report what and how much they put out their smokestacks. Information is an undervalued but critically important regulatory tool.  If information gathering and reporting programs are well-designed, they can drive powerful market forces at minimal costs, with maximum flexibility. When policy pundits talk about regulating a pollutant like carbon emissions, what you hear most of the time are arguments for either "market-based" regulations (like cap-and-trade or carbon tax) or "command-and-control" regulations (like "best available control technology", where everyone is required to achieve the same performance with the same technology).  But few talk about "information-based" regulations. Yet back in the 1980s, Congress' implementation of the Toxics Release Inventory as part of a "right to know" law turned out to be a very important illustration of the potential usefulness of information as a regulatory tool.  The thinking was simple:  Require companies that were putting toxic pollutants into the environment (even if at legally-allowed levels) to report it into a simple database that the public could get access to.  If you want to see what the data looks like, check out Planet Hazard, a great web-based interface. The impacts were significant and immediate -- companies started reducing their emissions of toxics (with total reported emissions dropping 48% from 1988 to 2000).  In some cases companies were embarrassed by local news reports identifying the biggest polluters in certain regions.  And in other cases I've seen, some CEOs had never been forced to acknowledge the amount of toxics being emitted out of their factories, and they recognized that pollution is very often a form of wasteful cost, so TRI spurred waste-reduction efforts that improved profitability. I emphasize that last point because it shows that not only was making the data available a relatively low-cost way to get significantly reduced emissions, the information also became a useful business tool for businesses that were looking to lower their costs and environmental impact. TRI has come under attack for putting reporting burdens on companies, costs which have been measured in the hundreds of millions of dollars by some accounts.  But of course, that misses the point entirely -- this is information these companies should be gathering anyway, if they're run by profit-maximizing businesspeople.  And it's certainly a less-costly alternative to BACT standards or other more active regulations that could be placed on emitters of toxic waste, in any attempt to achieve the same reductions.  So it was a great win to see Obama already signing legislation strengthening TRI reporting requirements. So now we have the EPA proposing greenhouse gas emitters be put into a somewhat similar system.  And I think it's a terrific idea. Again, this is information that major GHG emitters should already be tracking.  Because carbon out the smokestack represents some form of waste, potentially avoidable.  Companies like eQuilibrium have already been signing up corporate customers who want to use their carbon emissions tallies to help them identify places where they are wasting energy.  There are efficient ways to gather this information now, it shouldn't be a huge administrative burden. But as the example of TRI showed, such information gathering and reporting can have a major impact on corporate performance.  Information is a powerful regulatory tool, and it's great to see it start to be deployed in the fight against climate change. A TRI equivalent for carbon emissions could be a lot more important than most people realize. . . .