I attended a water summit on Monday presented by Sustainable Silicon Valley at the NASA Ames Research Center at historic Moffett Field. Although attended by 250 people, there was nary a venture capital investor in the crowd. If you go to a solar, smart grid or biofuel event there are typically packs of VCs (what's the word for a group of VCs? herd? school? flock?). Anyway, I did bump into Drew Clark of IBM Ventures, and I'm pretty sure he was the only corporate or venture investor in the hall. Drew has been looking at the water market for years on behalf of IBM and has often mentioned the similarities between information networks and water networks.

Drew recently returned from an enormous water conference in Israel, Watec, attended by thousands of people  Mr. Clark suggested we look to Israel for the an example of an innovative, emerging water ecosystem. According to Neil Fink of Worrell Water, Israel recycles 75 percent of its water compared to Los Angeles' 3 percent. Meanwhile, David Zetland, a political economist, water expert and the author of the Aguanomics blog, said that "over 50 percent of potable water in Southern California is used for landscaping." 

"The economics of water are simple," Zetland added, continuing to say that "abundance is over." He suggested that one way to change attitudes about water is to "get peoples' attention with higher prices – the price has to be so painful that it affects demand," he said, adding, "Remember that water is always a local issue. There are 54,000 water districts in the U.S., more than energy districts."

The U.S. obviously has a long way to go in managing its water resources. I will look into water issues and startups in upcoming posts.

Anyway back to venture capital. VC lore has it that you can't make money in water; it's too long a design cycle, too regulated and too fragmented a market. Flying in the face of this faulty reasoning is the fact that Energy Recovery had one of the few Greentech IPOs last year. Additionally, I did a little research and discovered that VCs are indeed investing in water across a variety of water sectors. Here's a quick list of water investments just in the first three quarters of this year. Note that while Israel has its share of water startups, U.S. VCs seem to be waking up to the water market as well. Watch out for a surge in water investments in 2010 and 2011.

The U.S. currently gets about 50 percent of its electricity from coal. And coal isn't going anywhere – it's cheap, abundant and politically entrenched. In fact, the Electric Power Research Institute (EPRI), essentially a research arm of the utility industry, predicts that our dependence on coal will grow in the coming decades.

Coal has enabled our current industrial world, but it's dirty. If we're going to need to clean it up – we need to capture and sequester the emitted CO2 (and other emitted poisons). So, just in time for Christmas and Copenhagen, Energy Secretary Stephen Chu announced three new projects with a price tag of $3.18 billion to ramp up the development of advanced coal technologies with carbon capture and storage at commercial-scale. Up to $979 million will come from the American Recovery and Reinvestment Act, leveraged with more than $2.2 billion in a private capital cost share as part of the third round of the Department’s Clean Coal Power Initiative (CCPI).    

The governor of coal state West Virginia, Joe Manchin was in on the announcement.

The projects announced today:

American Electric Power Company, (Columbus, Ohio)
Project Title: Mountaineer Carbon Dioxide Capture and Storage Demonstration
American Electric Power (AEP) will design, construct and operate a chilled ammonia process that is expected to effectively capture at least 90 percent of the CO2 (1.5 million metric tons per year) in a 235-megawatt flue gas stream at the existing 1,300 megawatt Appalachian Power Company Mountaineer Power Plant near New Haven, WV. The captured CO2 will be treated, compressed, and then transported by pipeline to proposed injection sites located near the capture facility. During the operation phase, AEP plans to permanently store the entire amount of captured CO2 in two separate saline formations located approximately 1.5 miles below the surface. The project team includes AEP, APCo, Schlumberger Carbon Services, Battelle Memorial Institute, CONSOL Energy, Alstom and an advisory team of geologic experts. (DOE share: $334 million; project duration: 10 years.)

Southern Company Services, (Birmingham, Ala.)
Project Title: Southern Company Carbon Capture and Sequestration Demonstration
Southern Company Services (SCS) will retrofit a CO2 capture plant on a 160-megawatt flue gas stream at an existing coal-fired power plant, Alabama Power’s Plant Barry, located north of Mobile, AL. The captured CO2 will be compressed and transported through a pipeline, and up to one million metric tons per year of CO2 will be sequestered in deep saline formations. Southern Company Services will also explore and utilize potential opportunities for beneficial use of the CO2 for enhanced oil recovery. In addition to SCS, the project team includes Mitsubishi Heavy Industries America, Schlumberger Carbon Services, Advanced Resources International, the Geological Survey of Alabama, EPRI, Stanford University, the University of Alabama, AJW Group and the University of Alabama at Birmingham. (DOE share: $295 million; project duration: 11 years.)

Summit Texas Clean Energy, LLC (Bainbridge Island, Wash.)
Project Title: Texas Clean Energy Project (TCEP)
Summit Texas Clean Energy will integrate Siemens gasification and power generating technology with carbon capture technologies to effectively capture 90 percent of the carbon dioxide (2.7 million metric tons per year) at a 400-megawatt plant to be built near Midland-Odessa, Texas. The captured CO2 will be treated, compressed and then transported by CO2 pipeline to oilfields in the Permian Basin of West Texas, for use in enhanced oil recovery (EOR) operations. The Bureau of Economic Geology at the University of Texas will design and assure compliance with a state-of-the-art CO2 sequestration monitoring, verification and accounting program. (DOE share: $350 million; project duration: 8 years.)

Senator Robert C. Byrd, the still ambulatory senator from West Virginia (since 1959), was quoted as saying: "Clean coal can be a green, competitive 21st century fuel."

There are a few CCS pilot projects in the world but none at full commercial scale and none at market price.