When life gives you lemons, make chocolate cake. Iberdrola has announced plans to invest $8 billion over the next three years in the U.S. renewable energy industry. Though the Spanish utility's main goal is to gain 15 percent market share in the U.S. wind sector by 2010, it is said to be casting its eye on other energy investments, such as the $285 million gas storage facility it picked up this morning. CEO Ignacio Galan has said the U.S. is company's largest growth market, and that by the end of this year, his company's American wind capacity will expand from 2.4 GW to 3.6 GW, mainly on the back of project development completions near the Great Lakes. But things aren't as easy back in Europe. Power system integration - where companies control generation, transmission, and distribution (this may end soon, but only in the gas sector) - has prevented Iberdrola from expanding past the Pyrenees. Minimal expertise in nuclear energy may have cost Iberdrola the British Energy deal, despite a rumored partnership with RWE. Expansion in the U.S. may be its best option. "But Doc, all the best stuff is made in Japan." Nissan and NEC Corp. announced this morning they will begin mass production of lithium-ion batteries in 2009. The companies have formed a joint venture - Automotive Energy Supply Corp. - with initial production targets of 13,000 units in the first year, ramping up to 65,000 units annually by 2011. It is likely the $220 million joint venture will serve as the battery platform for both the Nissan-Renault EV under development for Project Better Place and the Nissan EV destined for super market shelves in the U.S. by 2010. Nissan plans a 62 mile range battery that's half the size of a standard NiMH battery, with twice the power output. Though Nissan introduced their first hybrid vehicle in 2006 - six years after competitors and Honda and Toyota - it may win out on the race to bring an EV to market. Although the company is assured of markets in San Francisco (maybe? Gavinator?), Japan, and Denmark through Project Better Place, it may have problems selling into markets without integrated EV charging networks. Maybe until oil hits $200 a barrel. Speaking of... After Saudi King Abdullah told President Bush to "get down on your knees and tell me you love me", the desert potentate agreed to raise oil production in his country to 300,000 barrels per day - the highest production increase in two years. However, it looks like the obliging response might be a one off, with Saudi oil minister Ali al-Naimi now saying "supply and demand are in balance today. How much does Saudi Arabia need to do to satisfy people who are questioning our oil practices and policies." In other words, it's unlikely Saudi Arabia will continue to raise production just because the President comes a-groveling, but may only do so when it thinks rising demand requires it. Analysts at UBS think U.S. oil demand will fall off by 1.1 percent this year, running even with 2004 levels, on the back of rising oil prices.

Germany's Christian Democratic Union (CDU) party has put forward a proposal to slash that country's solar energy subsidies by nearly 30 percent. The CDU, which is the party of German Chancellor Angela Merkel, found support in a report issued by Rheinisch-Westfaelischse Institut fuer Wirtschaftsforschung, a economics research institute, that argued in the absence of a reduction, the country's subsidy obligation would rise to €120 billion by 2035. The feed-in tariff program has accelerated capacity installation, thus speeding cost reductions in technology and installation, faster than the subsidy rate has fallen. As such, the feed-in tariff rate is beginning to diverge from technology costs faster than most policy makers had expected. The feed-in tariff currently adds €1.01 a month to the average utility bill. The German Solar Energy Association expects this to rise to €2.14 a month by 2014. However, Joachim Pfeiffer, a member of parliament from CDU, argues that costs may rise to €8 a month by that time. Pfeiffer, who has introduced legislation aimed at reducing the feed-in tariff said “We don’t want to slaughter the solar industry; we think photovoltaic technology will have a great future. But to have that future, we can’t have overkill now.� While Germany is struggling with the future of its subsidy program, San Francisco is struggling to get one started. At the end of March, a surprise move by city Supervisor Jake McGoldrick tabled a proposed $3 million installation subsidy program aimed at homeowners and businesses. This week, the SFPUC approved a plan to buy electricity from Recurrent Energy under a 25 year PPA involving city-owned buildings. The 5 MW plan is much less ambitious than the original $3 million, 55 MW program, though it also less controversial. McGoldrick objected primarily to what he considered would be direct subsidies to affluent homeowners paid for by the city. The Recurrent plan significantly reduces upfront costs to the city while also halting subsidies to private individuals. A piece of compromise legislation introduce by Supervisor Ross Mirkarimi would cut the original $3 million subsidy to $1.5 million, with half of that directed entirely towards non-profits and low income homeowners. You want exits? We got exits. Energias de Portugal is moving ahead with plans to IPO 25 percent of its renewable energy division, in what may be the biggest float in Europe this year. EDP Renováveis is the world's third largest renewable energy company, and joins the pattern of major European utilities spinning out their renewable arms as separate business entities. Iberdrola and EDF have both done so, and Italian energy company Enel has plans to follow suit in 2009. The IPO will be worth close to $3 billion, though EDP is offering its renewables arm at a 20 to 35 percent discount in a bid to incentivize investors to take up the offering under volatile market conditions.

CSP company BrightSource has pulled in a $115 million C round led by Google, VantagePoint, BP Alt Energy, and Statoil Hydro. The company recently signed a $2-$3 billion, 900 MW project deal with PG&E, though from the statements and investor list, it's possible BrightSource may be looking to expand abroad. BrightSource CEO John Woolard said, regarding his investor list, "they have a global presence and the ability to work to develop markets internationally." Originally based in Israel, BrightSource may be looking to deploy their towers of power in other glaringly sunny climes - though few come to mind, except perhaps the Germans' plan to cover North Africa with mirrors. This is the second major solar thermal investment for Google, which recently led a $130 million round in eSolar, further solidifying the company's commitment to its RE<C project. If only they could site a solar plant near one of their data centers. Other investors in the BrightSource round included Morgan Stanley, DFJ, and Chevron Technology Ventures. Fluor, an oil and gas construction company, has won a $1.8 billion contract from Scottish & Southern Energy to build a 500 MW wind farm off the English Coast. The wind park, which SSE is calling the world's largest, will use 140 Siemens turbines and will begin construction in 2009. Whether SSE is counting out the London Array, or if they know something we don't about the Shell departure causing the project to collapse, remains to be seen. As part of the deal Fluor has sold its 50 percent stake in the project to Airtricity, an SSE subsidiary, for $80 million. SSE, in turn, plans to sell this 50 percent stake to continue financing the project. The move by Fluor to sell its stake signals the company's desire to focus more on the project development and construction sector, and not move into the power production and resale business. A few weeks ago I wrote about a ruling by a federal judge in California compelling the Bush administration to decide whether the polar bear was an endangered species. Well, Dirk Kempthorne, our adultering, gun-toting, Secretary of the Interior has decided the screw the bears with their pants on, so to speak. Interior has listed the polar bear as a "threatened" species, meaning "listing the polar bear as threatened... should not open the door to use [endangered species laws] to regulate greenhouse gas emissions from automobiles, power plants, and other sources," says Kempthorne. The government's decision would allow oil & gas developers working in the arctic to sidestep endangered species laws, since Kempthorne has decided he will apply separate rules for marine mammal protection, and continue exploring and drilling in sensitive arctic areas.

The House and Senate voted separately yesterday to halt daily shipments to the Strategic Petroleum Reserve. The reserve was created in 1973 in the aftermath of the OPEC embargo, and stocks today stand at close to 727 million barrels. Estimates of the effects the removal of 70,000 barrels per day moving into the reserve will have on gas prices are varied. Energy analyst Kevin Book doesn't think it will have that much of an effect, saying "70,000 barrels is a rounding error. It is not material in an 85.7 million barrel per day market." He echoed a U.S. Energy Information Administration report saying the reduction would cut four or five cents from the price of a gallon of gas. House Speaker Nancy Pelosi was more hopeful, saying the gas prices would drop $0.24 per gallon. But enough about Nancy. How did the markets respond? "In the hour after the Senate passed the measure nearly unanimously the price of crude jumped by a dollar." Right. Time to try a little harder. FloDesign, a wind startup from Wilbraham, MA has won the MIT Clean Energy Entrepreneurship Prize. The company, which is developing a "shrouded" wind turbine (that may look something like this, though details are sparse), picked up $200,000 at the ceremony last night, adding to the $50,000 it picked up on Monday from winning the Ignite Clean Energy Competition, and a $500,000 convertible loan it received from the Massachusetts Technology Collaborative. Other winners included Covalent Solar, an MIT startup that recently won the Energy Track at the MIT 100K. More than 90 teams entered the first round of the MIT CEEP, while 40 teams entered the first round at ICE. So, you know, that's where all the entrepreneurs are hiding. Just in case you were looking. Greentech is a line-blurring industry. But, unlike the manbearpig, it's not something we should be terribly afraid of. Unlike that weird exhaust that comes out of the Genzyme building in Kendall Square. Genomatica, a chemistry startup founded by chemists from Dow, has raised $20.4 million in a B round. The company is developing custom-made organisms capable of making chemicals at a reduced energy intensity and with less polluting inputs and materials. Genomatica thinks it will be able to use a variety of feedstocks, ranging from carbon dioxide to plant matter to syngas, to clean up the process of manufacturing chemicals.

John McCain: Maverick, POW, environmentalist, old man. Which of these is not like the other? It's actually unimportant, because the best thing about John McCain's environmental policy blitz through Oregon are the zingers that Carl Pope, executive director of the Sierra Club, keeps sending his way. Yesterday Carl had us rolling in the aisles with this gem:

"He's certainly better than Bush, and ... the average Republican senator," but "dramatically worse than the average Republican governor.

And today he makes fun of McCain for being old:

"The science on global warming has changed dramatically over the last five years and Senator McCain's previous bill and current proposals are outdated and fail to provide the big changes Americans are demanding."

But before you start thinking Ole Carl has been hitting the haterade pretty hard these days, let's take a look at some of McCain's more daring proposals. First, McCain's come out in favor of a cap-and-trade in the vein of the early EU ETS, i.e., McCain wants to give away carbon dioxide permits instead of requiring companies to buy them. This is tricky, because when you give something away for free, it typically isn't worth anything. Good thing we have "the purchasing power of the United States government," which right now is about the same as the purchasing power of Canada. McCain also came in in favor of nuclear power - at least he pronounces it like someone who wasn't dropped on their head as a child - arguing that "it doesn't take a leap in logic" to think nuclear power will make us as cool as Belgium. But, with nuclear power plant costs doubling or quadrupling in the past eight months to a record $12 billion, even the generous subsidies lopped onto nuclear plants won't be able to guarantee a price-competitive electricity rate. But enough about McCain, what does Carl Pope have to say?

"it's a bit hard to reconcile the profile McCain hopes to project with McCain's statement last week that the federal government ought to bribe states like California and Florida to open up their coastal waters to the oil industry by offering them richer royalty payments."

Zing!

When José Ignacio Sánchez Galán woke up yesterday morning, he looked in the mirror, saw what he had to put on, and then he went to the gym and put it on. With the bid deadline looming, Galán's Iberdrola is reportedly putting the final touches on its proposal to acquire 35 percent of British Energy. And it looks like it's moving in alone. Despite reports that Iberdrola would partner with Centrica, the owner of British Gas, to take on French nuclear giant EDF, late breaking news this morning has Centrica jumping ship. The UK utility has reportedly signed on to a joint bid with EDF as a junior partner in a 75/25 joint venture. This surprise doesn't necessarily leave Iberdrola in the lurch. Though the company had said it wouldn't consider an independent bid as late three days ago, it may have seen the writing on the regulatory wall and imagined an opening for itself on the Continent. EU lawmakers voted on May 7 to push ahead with unbundling regulations, which will lead to a break up of transmission and generation capacity throughout Europe. Unfortunately, some of our lawmakers in the Senate appear not to have been inspired by Galán's intestinal fortitude. The Lieberman-Warner climate bill, a mildly lame attempt to regulate emissions is becoming lamer, and may eventually pass into obscurity. As Sen. Barbara Boxer (D-CA) struggles to wrangle up the 60 votes she and her supporters need to move the bill through the Senate, many worry that the climate bill will become watered down, limiting severely its already limited effect. A proposal meant to appease moderates currently on the table would allow the president to, in the words of John Warner (R-VA), "pull back the throttle" if emissions targets weren't getting met by current technology or if consumer prices increased sharply. Kind of like now. Perhaps because we were a little bit jealous of ethanol's very special episode, Greentech Media has decided to have one of its very own. Today we learn about the importance of community and openness as we welcome aboard Mike Kanellos - pro blogger, technologist extraordinaire, media guru, and greentech analyst to the stars. Mike joined us on Monday after a 12 year stint at CNET and has been blogging on Green Light for the past few days - his are the posts without typos. We're happy Mike's here and are sure you'll be too.

Global carbon market trading volume and project development financing more than doubled in 2007 to $64 billion, up from $31 billion in 2006, according to a report released this week from the World Bank. (pdf) The cash value of trading alone had a near identical trajectory, moving up from $24.6 billion in 2006 to $50.3 billion this year. Significantly, the volume of MtCO2e avoided increased, though by less than half, from 1,745 to 2,983. The report tracked transactions across the three leading carbon markets - the EU ETS, the New South Wales exchange, and the Chicago Climate Exchange, though transactions at on the EU ETS dwarfed those of the latter two by several orders of magnitude. While the pace of trading expanded significantly, that for project development, primarily through the clean development mechanism, has slowed. According to the report, "[o]ut of the 3,188 projects in the current pipeline, 2,022 are at the validation stage." Finger pointing abounds. The United Nations is responsible for validating carbon reduction schemes, which involves ensuring the project results in a net carbon dioxide reduction equivalent to the value of certified emissions reductions credits (CERS) traded and certifying that the project would be impossible without financing from the carbon markets. The U.N's verification chief, Kai-Uwe Barani Schmidt, says there is conflict between "private-sector ambitions and the environmental integrity of the system." Schmidt's office has looked increasingly at the dealings of project developers and independent verifiers, such as EcoSecurities and Det Norske Veritas. EcoSecurities made news last year after it announced it would need to write down nearly one quarter of the credits derived from its projects, knocking 70 percent of the company's stock value. A number of those projects were questioned by U.N. authorities only after the verification stage. Still, a verification bottleneck exists. The World Bank reports "[p]rojects are currently taking an average of 1-2 years to be issued from the time they enter the pipeline." Significantly, more than "70% of issued CERs come from industrial gas projects, with the vast majority of energy efficiency and renewable energy projects remaining stuck somewhere in the pipeline." Have tightening standards for project verification slowed down interest in more ambitious project development? The value per MtCO2e of a gas project compared to a renewables project is much lower, which makes these more attractive than easily certifiable wind farms or PV arrays. Also, CERs trade at a discount to the market price for carbon dioxide. CERs typicaly trade in the €8-€10, though that price can reach €17 on the spot market. Carbon dioxide on the ETS traded between €20-€25 in 2007. The discount allows super emitters to pick up reductions on the cheap, protecting them from a slamming on the actual trading markets. The solution here is clear. Raising the CER price would encourage developers to pursue higher value renewables projects, which would move through the verification faster than an industrial gas project both for its obvious green credentials and for its clear reliance on market support for construction and installation.