Australian-American Energy, a subsidiary of energy giant Australian Energy Co, has signed a $7 billion with the Crow Nation to build the United States' first coal-to-liquids plant. The 50 year agreement will cede close to 50 percent of annual revenue to the Crow Tribe, whose reservation in Big Horn County, Montana is one of the poorest areas in the country. It is expected that annual revenue to the tribe could top $1 billion annually. Construction on the Many Stars project won't get going for another few years, and initial production capacities at the plant will start at close to 50,000 barrels per day of synthetic fuels. Production capacities of 125,000 barrels per day are likely in the long-term. Coal analysts estimate the tribe is sitting on top of close to 9 billion tons of coal, making the land under the Crow reservation one of the largest coal repositories in the world. Australian-American and the Crow Nation are expecting to encounter opposition to the project, which is planned for mostly undisturbed land, and is similar in its extent and ambition to the oil shale and tar sands projects currently under way in Northern Canada. According to the tribe, the Many Stars project will be equipped to capture 95 percent of its carbon dioxide emissions. Plans are under to store the CO2 in underground formations or to broker long-term contracts with oil producers who use the gas to increase production at declining wells. Coal to liquid fuel technologies were perfected by Nazi Germany and Apartheid South Africa after the global community shut off access to oil for those regimes. There are two basic ways of liquifying coal - either directly or indirectly. In indirect liquefaction, a hydrogen and carbon monoxide-based synthetic gas is created from heated and pressurized coal. The syngas is then converted into liquid fuel form through Fishcer-Tropsch synthesis. Direct liquefaction creates synthetic crude oil through the pressurized combination of oil, hydrogen, and coal. South Africa hosts the world's only commercial-scale coal to liquids plant. The development of coal to liquids in the U.S. is driven largely by rising oil prices. Coal is cheap and abundant in the U.S. and, proponents claim, liquid fuels created from coal to liquids processes are cleaner than comparable fuels, like diesel. Countries like China and Australia, both of which have coal surpluses and must import oil, have done some pioneering work in this area. The trick for continuing development of coal to liquids in the U.S. is to make clear these technologies are cleaner and cheaper then options currently being pursued by oil companies to expand their dwindling reserves. Increasing reliance on coal for fuel, however, may create long-term supply pressures for the coal-reliant electricity industry. Luckily, for every Many Stars project, there's a Native Energy to balance it out.

Here's a fun stat: it takes about three tons of pellets to heat a 3,600 square foot home and provide the residents with hot water for the winter. With pellets going for $325 a ton, that puts the home heating bills at around $1,000, or far less than if the homeowner used an oil-based system. That's from Ger Cross, CEO of the somewhat eponymous Gerkros, an Irish company that builds pellet stoves for home heating. Gerkros is bringing its Woodpecker stoves, which it has sold in Europe for 30 years, to the U.S. Fans of pellet stoves, such as CNET reporter Martin Lamonica, swear by them. Like most other pellet stove makers, the company will target the Northeast where oil burners, and cold winters are more common. Some models will be standard, while fancier versions will have scrapers that automatically clean off any baked-on crud. Cross says his stoves differ from competitors by overall performance and efficiency. In recent tests conducted in the U.K. Gerkros stoves achieved a heat-to-water heat transfer rate of around 86.7 percent. The stoves also burn clean. It's not like heating your home with an old wood stove or a dung fire. Cross also adds that you don't have to worry about running out of pellets. A lot of stores like Sam's Club carry them. Canada also produces a lot of pellets. Now, they ship a large percentage of the output to Europe.

General Electric's had a pretty tough year. The company's financial services group took a big hit from exposure to subprime loans, and an unnannounced and unexpected six percent drop in its first quarter earnings sent GE's stock price down 10 percent in a single day, taking the markets along with it. Last week General Electric sold of its struggling Japanese consumer finance business, while the company has yet to find a buyer for its consumer electronics business. Rumor has it China's Haier is interested in becoming the Lenovo to GE's IBM. And, to add insult to injury, ex-CEO Jack Welch came out swinging against current CEO Jeff Immelt, telling CNBC audiences Immelt "has a credibility issue" and that "he's getting his ass kicked." The company's stock is  trading 14 points off the $42.15 high it reached on October 27, with only a single bump cutting through the long, downward slog. Just today, GE received the public company's kiss of death - the Jim Cramer endorsement. So maybe it's a good thing the conglomerate is getting back into what it does best - building really, really big stuff. Earlier this week GE announced it was forming a joint venture with Mubadala, Abu Dhabi's sovereign wealth fund. The $8 billion commercial finance and R&D joint venture will focus on a number of GE's strong suits, including water tech, greentech, industrial construction, and aviation. Through the JV, GE will gain access to expanding markets in the Middle East and Africa, where the majority of its revenue came from in the last quarter. Mubadala will gain access to GE's commercial finance experience, as well as some $50 million of GE's money to put to work in its second Masdar Clean Tech Fund. Credit Suisse, the manager of the first Masdar fund has, apparently, been shown the door. While the JV gives GE access to expanding markets - the $8 billion fund could be refinanced on debt at least five times, giving it a book value of $40 billion - the smaller Masdar 'contribution' buys GE an Economagination center in the new, zero emissions Masdar City currently under development in Abu Dhabi. This puts GE in good company - Applied Materials has been contracted to build out a $2 billion PV manufacturing center for Masdar, while Mubadala just acquired metal and petroleum recycler DuraTherm. Of course, Mubadala's plan to eventually own 10 percent of General Electric  - approximately $3.5 billion - give GE a lot of insurance going forward. But where is that forward? In a lot of ways, GE's future is linked to its past. Greentech - represented primarily through its wind and desalination divisions - have been a boon to the company in period of falling expectations and problems related to its non-core business, Deal or No Deal notwithstanding. GE should continue pursuing these kinds of partnerships, especially in markets where the company can put its technology to work directly. Revenues from the Middle East were up 50 percent between 2006 and 2007 - that's a lot of desalination plants. The trick now is to figure out how to sandproof the TH!NK. Oh, and just for good measure, Mubadala is now actively seeking to acquire a number of unnamed German renewables companies.

Tesla Motors chairman Elon Musk is serious about getting beyond sports cars. At a press conference with California Governor Arnold Schwarzenegger, Tesla co-founder and chairman Elon Musk said the company has an ongoing program to produce an all-electric car that will cost under $30,000. It probably take "four years at most" to get such a car out, he said. "This is not about addressing a sports car shortage," he said. Tesla has talked about doing moderately-priced cars since the beginning, but the company now is getting firmer on their plans, which in turns means they are serious. Getting out an electric car out for less than $30,000, though, won't be easy. Batteries still cost quite a bit and battery technology doesn't improve as fast as semiconductor technology. You get about a six percent improvement in performance every year. With chips, it's closer to 60 percent. Electric car companies also need component suppliers to start ramping up parts for them. Additionally, Tesla has had to face delays before. The company today announced that it would come out with a $60,000 sedan in late 2010. (It will be built in California, thanks to about $10 million in incentives. That's why Arnold was there.). Still, the sedan, once called White Star and now called Model S, was originally due to come out in late 2009. It was delayed because of delays to the Tesla Roadster, which started dribbling out of the factory this year. As a result, the Model S will come out at about the same time as the Chevy Volt, which will use a little gas and cost $30,000. (Tesla will also do a gas-electric car like the Volt.) But, on the optimistic side, a few years ago electric cars were novelties. They are clearly moving into the mainstream now thanks in large part to Tesla. And companies like Nissan with a lot more expertise in buildings cars in large volumes are bent on coming out with electric cars.

Despite the near daily hum telling us that we're in big trouble, sometimes we read something that makes us think: wow, we're in big trouble. An Ernst & Young report released yesterday profiling 40 benchmark oil exploration and production companies in the U.S. found oil production has remained flat at 1.2 billion barrels per year since 2004, after declining from 1.3 billion barrels per year in 2003. The benchmark companies represent 74 percent of U.S. oil reserves, which have also remained flat since 2006 at 16.1 billion barrels. Actually, to break that down a little more, proven reserves from independent oil companies were actually up seven percent over the last year. Proven reserves from the integrated companies - Exxon, Chevron, etc. - were down two percent over the same period. But maybe things aren't as bad as they seem. Surely the oil companies must have cut production to reflect some other market variable, like bottlenecking through our nation's inadequate refining capacity. How else do you explain those margins? Actually, the oil companies are pretty much screwed. Exploration costs - the amount companies spend to find oil - increased 165 percent between 2003 and 2007 to $12.8 billion. Development costs - the amount companies spend to take petroleum out of the ground - grew by 180 percent to $18.4 billion over the same period. Growing demand pushed up revenue 12 percent to $141.5 billion on the year, despite the fact that the price per barrel actually declined slightly from January 1, 2006 to January 1, 2007. Significantly, however, net revenue increased only four percent "due to rising production costs and increases in depletion, depreciation, and amortization." The cost of finding and extracting oil is growing at an obscene rate, while revenues have been propped up by high demand. As prices rise to reflect market tightness, we can expect income to continue falling as exploration and production costs continue their meteoric rise. Falling demand, at least in the U.S., can't be far behind. Someplace, somewhere Denis Hayes is smiling. Actually, it's right over here. As Hayes takes the latest cap-and-trade bill to die a miserable death in the Senate to task, he also outlines an effective policy proposal that may find some support among U.S. oil exploration and production companies. Hayes argues "the backbone of any comprehensive policy to limit greenhouse gas emissions must cap carbon at the places - coal mines, oil fields, pipelines, ports - where it enters the economy." The proposals in Lieberman-Warner, as with those about to come into force as part of RGGI and currently in force in the European Union, place a cap on carbon at the points where it enters the atmosphere. Regulating the latter would proved to be nearly impossible. In 2006 there were 336,000 factories in the United States, more than 10,000 coal, natural gas, and petroleum generators, and roughly 150 oil refineries. By comparison, Hayes estimates there are 2,000 points in the U.S. where carbon dioxide enters the economy. Given that oil production has remained flat since 2004, and is likely declining based on historical trends, it may actually be to the benefit of oil companies to hop on board with Hayes's proposal. With the number of point sources for carbon dioxide entering the economy likely to fall, oil producers would feel the pinch less in the long-term than if the suddenly saw a policy-influenced demand drop as factories are forced to switch to cleaner power sources or it automakers are forced to internalize the carbon cost of the cars they produce. Furthermore, capping carbon dioxide at its emissions source would serve to regulate the amount of oil or natural gas or coal allowed to enter the economy. This would let these companies internally regulate their production to match their carbon allowances, extending out their shrinking supply while charging a much higher price. Not only would this save on further exploration costs - there's no need to develop heavy oil or bituminous sands if you know last year's exploration can stay in the ground for another year or two - but it may even help prop up that flagging net income rate.

A resolution to separate the chairman and CEO positions at ExxonMobil failed to receive a simple majority today at the energy company's annual shareholder meeting in Dallas. The resolution was one of four promulgated by descendants of Standard Oil founder John D. Rockefeller aimed at getting ExxonMobil to focus on energy portfolio diversification and environmental conservation. Needless to say, all four resolutions were voted down at the meeting. The Rockefeller descendants collectively own only 0.006 percent of the company's 5.4 billion shares - this relatively small shareholding was likely part of the reason behind the resolution's failure. The resolution was aimed at diminishing the power of chairman and CEO Rex Tillerson who has been loathe to move the energy giant from its base in fossil fuel exploration, development and production. At last year's shareholder meeting, Tillerson famously told the assembly if they were interested in renewable energy, they should move their cash over to Shell. Only 39.5 of the proxy voters voted in favor of the resolution, down slightly from 40 percent on a similar resolution last year. The question remains, however, if separating the two positions would have resulted in a strengthened focus on portfolio diversification. While Shell and BP have separate spots, neither Chevron nor ConocoPhillips have made that step. The former two companies have made more substantial gains in renewable energy investment and development, while the latter two have largely stayed in the background developing biodiesel joint ventures or investing in pure-play ocean power companies, for example. Still, their contribution has been much more noticeable than ExxonMobil's. Florida Power & Light is another company with a unified chairman/CEO position. Lewis Hay III, who occupies those positions at FP&L, announced yesterday the company would invest between $16 billion and $20 billion over the next five years in developing renewable capacity. FP&L has the second largest installed renewable capacity under management in the world, trailing leader Iberdrola by about GW, though it has roughly 22 GW in its development pipeline, mostly in wind power. This brings us to a larger point - whether internal, internecine board warfare is really the necessary component for portfolio diversification. It's possible that the scale of ExxonMobil's market share is really what's preventing it from getting involved in renewables. It's king of the hill status among non-state oil companies will allow it weather the peak oil and declining margin storm more ably than some of its smaller competitors. So, really, what's the point? A similar effect was highlighted this morning with Indonesia's announcement that it will drop out of OPEC. The cartel's only Asian member and only member who's also a net importer of oil, dropped out to protest the cartel's refusal to rise production in a bid to drop prices. Similarly, as the margin squeeze in the oil industry continues to affect company stock performance, it's possible we can expect more than a few of the smaller oil companies to become more aggressive in their pursuit of renewable capacity. If we take the assumption that boards of directors are ultimately responsible to their shareholders - the SEC certainly does - then we must also assume one of the only things that will get boards to respond to demands for increased diversification is poor performance. This was demonstrated recently with BP's announcement to shed its investment in renewables because of declining company profits. Soon, this effect will start moving oil companies - including ExxonMobil - in the other direction.

A colleague of mine recently told me of a conversation he had with a friend of his in the investment community. Greentech is more concept than reality, the investor said, and the market is bound for a drastic shift once investors figure that out. A lot of the focus in the greentech market is on startups and hot technologies and innovations that drive comparisons between greentech and the Internet and, to a lesser extent, telecom. This emphasis has, in a lot of ways, skewed our understanding of what the greentech market really is and what it seeks to accomplish. For example, the rush of IT entrepreneurs into the greentech space leads many to the conclusion that technologies developed in this market may scale as cheaply and easily as, say, the latest Facebook widget or may be as highly targeted for a buyout as the fastest optical switch. Such an understanding creates the impression that greentech appeared out of nowhere as a series of disruptive innovations that created a market where none previously existed. This impression is false. Instead, it's possible to think about greentech as part of the world's third oldest profession - after prostitution and espionage. Since Mel Brooks invented fire, humans have worked tirelessly to make energy scalable, cheap and efficient. The energy industry is one of the world's largest and, while it may seem uncool to lump A123 or First Solar together with ExxonMobil or Chevron, such a classification is not only apt, it is essential. The task greentech companies face is not the one that makes day traders squirm over short-selling on the pink sheets and tech bloggers gush about the latest personal carbon footprint monitor. Soy-based foam and zero carbon drywall aside, the name of the game in greentech is energy portfolio diversification. This is the same strategy major energy companies have focused on for years - the switch from whale oil to kerosene in the United States, the move from coal to natural gas in the United Kingdom, and the dominance of nuclear power over égalité and fraternité in France are all good examples. But don't get me wrong here. Innovation is a prime mover in this industry. Consider the current bidding war between Halliburton and Candover Partners for Expro International. Expro is a leader in deep water drilling, and has developed an innovative technology for improving the flow and control of oil from deep water wells. Over the weekend Candover announced a new bid that values Expro at $3.4 billion, an eight percent premium on the company's valuation. As easily available oil runs out, deep water exploration and production will prove to be among the most lucrative aspects of the energy industry. Tristone Capital energy analyst Waqar Syed hit the nail on the head, saying "any ways you can find to cut costs through technology are successful." If Bloom Energy or Ausra could figure out a way to produce that much energy for a smaller amount of risk or cost than the deep water drillers, we wouldn't be having this conversation. This brings me back to the prescient investor discussed in the first paragraph. By thinking about greentech companies in isolation or as part of a distinct market, we run the risk of failing to accomplish our overall goal. In 2007, we achieved 2.3 GW of installed solar capacity, representing decades of hard work and billions of dollars in investments. One $4.2 billion, 4 GW coal plant under construction in India will trump this number when it comes online in 2011. As yet, only one sector of the greentech market has the potential to make a dent in the global energy infrastructure, but because of its relatively low level of startup buzz and VC activity it has escaped the attention of those that cover this market. The wind power industry straddles the divide between greentech and industrial energy and provides a glimpse into greentech's possible future. Take for example the recent $473 million deal Iberdrola, a Spanish utility, signed with Alstom to buy wind turbines capable of producing a combined 300 MW, General Electric's $12 billion order backlog for wind turbines that was recently buttressed by a 667 turbine order from T. Boone Pickens, or the $1.8 billion deal Fluor and Siemens signed with Scottish and Southern Energy to develop a 504 MW wind farm in the United Kingdom. The companies involved in these deals are all old school industrial conglomerates, not startups coming off their A round. Believe it or not, this is the future of greentech. These are companies that are used to thinking big: big capital, big projects, big output. As such, even if the future of greentech is a distributed one, it will follow the model of GE light bulbs, not Nokia cell phones. The big energy companies are pros at producing energy that is scalable, cheap, and efficient. If the goal of the greentech market is to put a solar panel on every roof and an LED in every socket, we cannot be afraid to work with these companies, we cannot dismiss them because they represent an outdated energy paradigm, and we cannot ignore them because their money is coated with the blood of a thousand baby seals. This is not to say that greentech companies should accept the dominant global energy infrastructure. Indeed, this market came about to challenge that paradigm. In terms of investor focus, however, it is important to always consider how funding a given company or technology will add to the potential for changing the global energy infrastructure for the better. Backing companies just because their technology is innovative or cool does little to promote change. And it does little to drive the energy industry forward.