The Honda Insight is coming back from the dead, and at just under $20,000, or a smidge less than a Prius. The Insight, Honda's take on a sedan hybrid, will make a return on March 24. The new version will get 43 miles per gallon on the highway and 40 in the city for a blended 41 miles per gallon. The new Insight is based around the design of the FCX Clarity, a hydrogen car that will likely never go into mass production. (But now you know at least those millions of dollars in research weren't wasted.). The LX version starts at $19,800. The EX versions sell for $21,000 to $23,000. The Prius starts at $22,000. Honda first released the Insight in 2000. However, the car -- which sort of had the Art Deco lines of a space ship from the golden age of Hollywood -- was quickly outpaced by the ever-improving Toyota Prius. In 2006, Honda took it to a farm where it could play with the Studebaker Avanti and other cars.

The selling point for carbon software companies is going to be confusion. The carbon financial market one day could grow to $1 trillion, making it bigger than solar and wind combined, according to Stephen Mooney, VP of Carbonetworks, and Joseph Kwasnik, Group Head of Climate Change, National Grid. But being able to control and maintain an overview of the carbon management process is going to be a major problem for most institutions. "There is a lack of full inventory of GHG [greenhouse gas] data. You can't bring the data together. In many cases, probably 80 percent of the time, the system used is often spreadsheets," said Stephen Mooney during a presentation on the topic this morning. "Many organizations on the executive level are not aware of the optimal reductions." Carbonetworks, of course, wants to take that problem off of your hands -- for a fee. The company's software can automate accounting or planning. While only a handful of carbon software companies existed a few years ago, more than 40 are out there now touting their wares. And more are entering the market on a quarterly basis. An influx of products from established software outfits along with a slew of acquisitions likely await in the future. So, how does one avoid taking a "wait and see" approach where one is afraid of doing things too early, too big and too expensive? The first step is preparing the boardroom for change, Mooney said. Organizations also have to come up with a comprehensive strategy. Right now, it's mostly cobbled together between departments. One solution is putting a price tag on it. Mooney also suggests creating a climate change task force within the company that should incorporate individuals from marketing, IT and finance where they can come together and understand the issues from all aspects of the business. National Grid, the largest utility in the U.K. and the second largest in the U.S., has embedded a target of 80 percent greenhouse gas reduction against the Kyoto 1990 baseline by 2050. One of its strategic objectives is also how to get its money back from investing millions of pounds in new technology and reshaping markets. The company also wants to help others to meet the climate change and embrace energy efficiency, which is kind of odd for an electric company. "We're moving to a phase where we will not pay for how much gas we use, but for the service," said Joseph Kwasnik, Group Head of Climate Change, National Grid. So how will National Grid do it? Among other things, reducing emissions is important, but so is protecting its assets during the change in the next 40 to 50 years. The company is also redesigning equipment and utilizing fleet vehicles. "The dirty little secret is that 1 [percent] to 2 percent of the gas we move through the system leaks through old piping. That's an area we're focusing on in the U.K. and in the U.S. to reduce emissions over time," Kwasnik said. The company will begin by rolling out a five-year carbon budget for each line of its business, while its executive bonus plans will be linked to how they meet those corporate targets. National Grid has also assigned a monetary value to carbon to be used in investment appraisal. "We're using a number developed by Defra. Twenty-six pounds per ton of carbon emissions. We're investigating using shadow prices on carbon," said Kwasnik.

Well, it was fun while it lasted. Crude oil and natural gas prices plummeted with the global economic collapse, one of the few bright spots of that debacle. West Texas Intermediate dropped from an average of $100 a barrel in 2008 to an expected $42 a barrel in 2009, according to the short-term outlook published by the Energy Information Agency. But prices are going to rebound as demand and the economy recover. The average price for a barrel of oil will rise to $53, slightly lower than earlier forecasts but still an upward trend. Gas prices dropped to $1.69 a gallon in December, the lowest price since February 2004. Last month, however, they rose to $1.92. For 2009, the average will likely come to $1.96. For 2010, expect to see average prices of $2.18. The same is occurring with natural gas. The average price for a thousand cubic feet dropped from $9.13 in 2008 to $4.70 this year, but it will rebound to $5.90. The EIA is working off an assumption that the GDP will decline by 2.8 percent this year and grow by 1.9 percent in 2010. A rise in prices, of course, makes those biofuel investments look that much better.

There's another greenhouse gases to worry about — and perhaps an opportunity for somebody who can come up with a replacement. A new study has found that sulfuryl fluoride — a fumigant used in agriculture and for killing termites in buildings — sticks around and contributes to global warming about eight times longer than previously expected. That would make it "a greenhouse gas of some importance if the quantity of its use grows as people expect," Ron Prinn, director of the Massachusetts Institute of Technology's Center for Global Climate Science, said in a Tuesday news release. Prinn co-wrote a paper on the fumigant to be published in the Journal of Geophysical Research this month as a joint project of MIT, Scripps Institution of Oceanography and other organizations. Right now the gas is in the atmosphere at concentrations of only about 1.5 parts per trillion — a miniscule amount compared to carbon dioxide's atmospheric concentration of roughly 379 parts per million in 2005, according to the Intergovernmental Panel on Climate Change (see IPCC Report Forecasts More Trouble Ahead and Can Technology Save the World?). But the fumigant's use is growing at a rate of about 5 percent a year, partly because it's being used as a replacement for ozone layer-depleting methyl bromide, the report said. Because sulfuryl fluoride is about 4,800 times more potent at trapping heat than is carbon dioxide, the fumigant could grow to be a serious global warming contributor, Prinn said — and he would like the companies that make it find other alternatives. Add the suggestion to the laundry list of steps needed to combat global warming. The International Energy Agency said in June that the world needs about $45 trillion in clean energy investments to cut carbon dioxide emission in half by 2050 (see Can You Spare $45T to Curb Global Warming?) Interestingly, another gas used in some thin-film solar cell manufacturing processes (as well as in flat-panel displays and microcircuits) has also been targeted by researchers because of its global warming potential (see Could Gas Tech Cut Solar Costs?). Nitrogen trifluoride, which is about 17,000 times more potent at trapping heat than carbon dioxide, was found to have four times the atmospheric concentration as expected, according to a study by Scripps Institute of Oceanography released in October. That's about 0.454 parts per trillion in 2008, if you want to know — an even tinier concentration than sulfuryl fluoride. (Both studies used NASA's Advanced Global Atmospheric Gases Experiment (AGAGE) network of ground-based research stations, by the way — a system that could be supplanted with satellite monitoring in the near future). Despite the low concentrations, researchers have said that both gases should be added to the list of greenhouse gases regulated by the Kyoto Protocol, or the treaty meant to supplant it that will be hashed out in a United Nations Framework Convention on Climate Change (UNFCCC) meeting in Denmark this year (see U.N. Climate Talks Pose Big Impact on Greentech) Dow Chemical Co., which developed sulfuryl fluoride in the 1950's, is also the main manufacturer of it today. Pninn called finding a substitute for the gas a "new frontier for environmental science." Whether anyone takes him up on the challenge remains to be seen.

The climate picture, at least from where I sit, isn’t pretty: Developing a sustainable global energy system will take time and the clock is running out. I attended the MIT Energy Conference, subtitled Accelerating Change in Global Energy, this past weekend. The conference gave a broad view of energy in today’s environmentally and economically constrained world and conveyed the magnitude of the challenge. I didn’t sense much doom and gloom at the conference, however. The feeling was more of a recognition of the hard realities and a girding for a difficult battle. Rep. Jay Inslee attempted to rally the troops with his keynote speech. He reiterated the need for Apollo Project-like renewable energy funding, and he offered a vision of American ingenuity once again leading the world to a brighter future. He also made it clear, however, that congressional Democrats are solidly behind the administration’s cap-and-trade initiative and there won’t be a serious push for a carbon tax anytime soon. Automotive industry analyst John Casesa and financier and environmentalist Theodore Roosevelt IV separately raised the specter of the recession sparking a bout of protectionism that could hinder efforts to tackle the climate crisis. “We have to resist at all costs economic nationalism,� said Roosevelt. “It’s the fastest route to mutually assured destruction.� One idea I heard in the biofuels and energy storage sessions is the need for emerging energy technologies to have multiple “value streams� in order to be economically viable, at least until a firm price on carbon emerges. In the case of biofuels this means getting more out of biomass than just biofuel, and in the case of energy storage this means using the storage for multiple purposes like grid support, bulk storage for renewables, and frequency regulation. Another highlight was American Electric Power’s Ali Nourai describing the utility’s Community Energy Storage pilot project. The company plans to put batteries in neighborhoods, each capable of supplying several hours of electricity to four to six houses. The batteries will have the same aggregate capacity as the utility’s recently deployed centralized storage units, but distributed storage improves security and makes it easier for the utility to respond to local outages. The cost of the batteries should go down because the technology is the same as batteries being developed for electric vehicles. For a lengthier take on the story, see Martin LaMonica’s post on CNET. On the research front, Ford’s John Viera said the company is devoting more of its R&D toward electric vehicles than hydrogen. The company is also, not surprisingly, providing less money to universities and other outside researchers. The company is also telling universities what it’s looking for rather than perusing the available research, he said. At the same time, the company is planning to collaborate more on its advanced R&D, which it used to keep in-house. Neha Misra of The Energy and Resources Institute probably summed things up best during the Energy in Emerging Economies session: “Renewable energy will scale,� she said. “The question is by when. Putting a price on carbon is very important.� Eric Smalley is the editor of Energy Research News. He has written about technology since 1987 and has freelanced for many publications including Discover, Scientific American, Wired News and The Boston Globe on topics ranging from quantum cryptography to global warming.

I clearly remember a very interesting debate I was involved in while at Tesla. The debate was about the manufacturing strategy for the WhiteStar (now known as the Model S) sedan. The plan had always been to manufacture the car in the U.S., but the new CEO was challenging our thinking on that plan. Michael Marks had built an extraordinarily successful company in Flextronics by providing outsourced electronics manufacturing services for its customers. Michael was one of the more knowledgeable people in business when it came to high quality manufacturing in China. The debate took place at the table in a hotel bar in Detroit with several members of the Tesla team. In order to achieve the necessary cost targets for the car, Michael had concluded that the only solution was off-shore manufacturing, preferably China. Alternatively, he said, you could consider near-shore manufacturing in Mexico, but the cost advantages of Chinese manufacturing were so great that it made the most sense. And the kicker: According to Michael, there would be no trade-off in quality or safety. The debate at the table was whether it made a difference if we manufactured and assembled the car in China. When Michael posed the question to me, I recall I answered one way and then immediately contradicted myself in the course of the same sentence. What was happening was the logical mind and the emotional mind were colliding in my head. I accepted the logic that low-cost, high-quality manufacturing in China would be the best solution to achieve our cost target. The problem was I also knew that the prevailing American consumer sentiment was (and still is) that cars made in China are low quality and unsafe. The part causing the most conflict was that it was clear in the world of consumer electronics and chip manufacturing that low-cost manufacturing had been achieved while also maintaining the highest standards in quality. Why couldn’t this be the same case for automobiles? Today, I find myself concluding that not only can it be the answer, it may well be the best answer that allows for competitively priced xEVs (BEV, PHEV, etc.), which is a pre-requisite for mass market adoption. This is particularly true for xEVs because manufacturing cost pressures are exacerbated by the very high cost of batteries. One need only look to the developing landscape of Electric Vehicles and Plug-In electric vehicles to realize that the cost issues are still problematic. The highest volume prospect is the Chevy Volt, which GM plans to produce in the hundreds of thousands. Even at that volume, and sharing platform costs with the Chevy Cruze which is planned in the 300,000+ unit volume range, the Volt will still be priced at or above $40,000, making it one of the more expensive Chevy’s ever produced (I consider the Corvette a special case, and essentially a brand of its own). Another aspect of the Chevy Volt that keeps price lower is the smaller, 16 kilowatt per hour battery associated with the series hybrid setup, which offers only 40 miles electric range. Tesla Motors and Fisker Automotive, both aspirants to the xEV sedan market are targeting price points that are even higher. This is the right business strategy to cover vehicle costs, overhead and distribution, but the total volume of cars at the price points they will compete at is small and dwindling. (Fisker has announced a target price of $87,000 for the Karma, which is to be contract manufactured in Finland by Valmet. Tesla has boldly communicated $57,000 as the price for the Model S as they try to position themselves as a mainstream manufacturer, but in reality I expect that price to be close to where Fisker is when all is said and done. Tesla plans to manufacture the car in the U.S.) Other manufacturers are dealing with the cost issue by targeting the “City Car� segment, with cars that are less full featured and intended for sale in urban commuter markets. The lower range, smaller size and lower expectations for utility of this vehicle format achieves a lower price point, but these cars will still be very expensive from a “total cost of ownership� perspective relative to similar ICE cars (excluding the effects of unusual tax and credit schemes). The only company I am aware of that plans to offer a full-featured EV sedan at a more mainstream price is Miles EV. Their strategy -- Chinese manufacturing for both the chassis and battery, with engineering and safety testing managed out of their headquarters in Los Angeles. Recently, we have seen announcements from Chinese car makers, including BYD and Chery, indicating that they will plan to enter the fray with low cost xEVs in the US in the next few years. These announcements have been greeted in the U.S. automotive press with a very healthy dose of skepticism. The key challenges raised are whether China can produce a car that meets U.S. safety standards or meet the quality expectations of the U.S. consumer. This perception is not based on any cars that have been built for the U.S. market by U.S. companies using outsourced manufacturing. These perceptions are from existing Chinese cars built for the Chinese market, where safety and quality expectations (and regulations) aren’t at a similar level. But surely people don’t think that the Chinese are incapable of manufacturing cars and batteries to a high-quality spec? In reality, a U.S. or European car manufacturer could manage the engineering and quality of a vehicle and manage the manufacturing implementation to a high quality spec using a Chinese partner. In consumer electronics, this happens all the time. For example, look at the back of your iPhone and you will see the words “Designed by Apple in California. Assembled in China.� And what of the perception of poor quality and safety? This is a very real issue that needs to be overcome by companies that plan to go the route of high quality Chinese manufacturing. A very carefully planned and executed communications strategy can help address the product specific issues that will be raised in the media and among consumers, and can also attempt to influence the overall perception. But the iPhone example is informative here too. There was once a time when “Made in China� was bad for marketing consumer electronics. Now, the manufacturing origin of electronics is not a significant issue in and of itself. The market for iPhones has not suffered from its manufacturing origins, since the quality and brand appeal is associated entirely with Apple brand. Importantly, Apple protects this brand by closely managing their manufacturing partners in China (and elsewhere) thereby managing the quality of the end product. And the cost? It is estimated that using Chinese manufacturing, Apple is able to manufacture each iPhone at a cost of just $173. I can’t even guess what that number would be if the iPhone was domestically manufactured. The car industry is just a few decades behind in taking advantage of this opportunity. While the business environment might drive some innovation in this direction to reduce costs, the political environment may prevent any real progress. Outsourcing car manufacturing will translate into less domestic manufacturing jobs, which will be a very sensitive issue for incumbent automakers being bailed out by U.S. taxpayer dollars. Even the startups have heavy incentives through the DOE ATVM loan program to manufacture domestically. Regardless, the significantly lower cost of Chinese manufacturing is too important a factor to prevent an inevitable shift in that direction. With the added cost pressures of xEVs and their batteries, perhaps we will see this shift come first in the market for xEVs. Darryl Siry is the Senior Analyst for Cleantech at Peppercom Strategic Communications. He is also the former chief marketing officer for Tesla Motors. You can read more at his blog at http://www.darrylsiry.com or email him at djsiry@gmail.com.