Category Archives: Alternative Energy

Navajos Hope to Shift From Coal to Wind and Sun

By MIREYA NAVARRO
Published: October 25, 2010

BLUE GAP, Ariz. — For decades, coal has been an economic lifeline for the Navajos, even as mining and power plant emissions dulled the blue skies and sullied the waters of their sprawling reservation.

But today there are stirrings of rebellion. Seeking to reverse years of environmental degradation and return to their traditional values, many Navajos are calling for a future built instead on solar farms, ecotourism and microbusinesses.

“At some point we have to wean ourselves,” Earl Tulley, a Navajo housing official, said of coal as he sat on the dirt floor of his family’s hogan, a traditional circular dwelling.

Mr. Tulley, who is running for vice president of the Navajo Nation in the Nov. 2 election, represents a growing movement among Navajos that embraces environmental healing and greater reliance on the sun and wind, abundant resources on a 17 million-acre reservation spanning Arizona, New Mexico and Utah.

“We need to look at the bigger picture of sustainable development,” said Mr. Tulley, the first environmentalist to run on a Navajo presidential ticket.

With nearly 300,000 members, the Navajo Nation is the country’s largest tribe, according to Census Bureau estimates, and it has the biggest reservation. Coal mines and coal-fired power plants on the reservation and on lands shared with the Hopi provide about 1,500 jobs and more than a third of the tribe’s annual operating budget, the largest source of revenue after government grants and taxes.

At the grass-roots level, the internal movement advocating a retreat from coal is both a reaction to the environmental damage and the health consequences of mining — water loss and contamination, smog and soot pollution — and a reconsideration of centuries-old tenets.

In Navajo culture, some spiritual guides say, digging up the earth to retrieve resources like coal and uranium (which the reservation also produced until health issues led to a ban in 2005) is tantamount to cutting skin and represents a betrayal of a duty to protect the land.

“As medicine people, we don’t extract resources,” said Anthony Lee Sr., president of the Diné Hataalii Association, a group of about 100 healers known as medicine men and women.

But the shift is also prompted by economic realities. Tribal leaders say the Navajo Nation’s income from coal has dwindled 15 percent to 20 percent in recent years as federal and state pollution regulations have imposed costly restrictions and lessened the demand for mining.

Two coal mines on the reservation have shut down in the last five years. One of them, the Black Mesa mine, ceased operations because the owners of the power plant it fed in Laughlin, Nev., chose to close the plant in 2005 rather than spend $1.2 billion on retrofitting it to meet pollution controls required by the Environmental Protection Agency.

Early this month, the E.P.A. signaled that it would require an Arizona utility to install $717 million in emission controls at another site on the reservation, the Four Corners Power Plant in New Mexico, describing it as the highest emitter of nitrous oxide of any power plant in the nation. It is also weighing costly new rules for the Navajo Generating Station in Arizona.

And states that rely on Navajo coal, like California, are increasingly imposing greenhouse gas emissions standards and requiring renewable energy purchases, banning or restricting the use of coal for electricity.

So even as they seek higher royalties and new markets for their vast coal reserves, tribal officials say they are working to draft the tribe’s first comprehensive energy policy and are gradually turning to casinos, renewable energy projects and other sources for income.

This year the tribal government approved a wind farm to be built west of Flagstaff, Ariz., to power up to 20,000 homes in the region. Last year, the tribal legislative council also created a Navajo Green Economy Commission to promote environmentally friendly jobs and businesses.

“We need to create our own businesses and control our destiny,” said Ben Shelly, the Navajo Nation vice president, who is now running for president against Lynda Lovejoy, a state senator in New Mexico and Mr. Tulley’s running mate.

That message is gaining traction among Navajos who have reaped few benefits from coal or who feel that their health has suffered because of it.

Curtis Yazzie, 43, for example, lives in northeastern Arizona without running water or electricity in a log cabin just a stone’s throw from the Kayenta mine.

Tribal officials, who say some families live so remotely that it would cost too much to run power lines to their homes, have begun bringing hybrid solar and wind power to some of the estimated 18,000 homes on the reservation without electricity. But Mr. Yazzie says that air and water pollution, not electricity, are his first concerns.

“Quite a few of my relatives have made a good living working for the coal mine, but a lot of them are beginning to have health problems,” he said. “I don’t know how it’s going to affect me.”

One of those relatives is Daniel Benally, 73, who says he lives with shortness of breath after working for the Black Mesa mine in the same area for 35 years as a heavy equipment operator. Coal provided for his family, including 15 children from two marriages, but he said he now believed that the job was not worth the health and environmental problems.

“There’s no equity between benefit and damage,” he said in Navajo through a translator.

About 600 mine, pipeline and power plant jobs were affected when the Mohave Generating Station in Nevada and Peabody’s Black Mesa mine shut down.

But that also meant that Peabody stopped drawing water from the local aquifer for the coal slurry carried by an underground pipeline to the power plant — a victory for Navajo and national environmental groups active in the area, like the Sierra Club.

Studies have shown serious declines in the water levels of the Navajo aquifer after decades of massive pumping for coal slurry operations. And the E.P.A. has singled out the Four Corners Power Plant and the Navajo Generating Station as two of the largest air polluters in the country, affecting visibility in 27 of the area’s “most pristine and precious natural areas,” including the Grand Canyon.

The regional E.P.A. director, Jared Blumenfeld, said the plants were the nation’s No. 1 and No. 4 emitters of nitrogen oxides, which form fine particulates resulting in cases of asthma attacks, bronchitis, heart attacks and premature deaths.

Environmentalists are now advocating for a more diversified Navajo economy and trying to push power plants to invest in wind and solar projects.

“It’s a new day for the Navajo people,” said Lori Goodman, an official with Diné Citizens Against Ruining Our Environment, a group founded 22 years ago by Mr. Tulley. “We can’t be trashing the land anymore.”

Both presidential candidates in the Navajo election have made the pursuit of cleaner energy a campaign theme, but significant hurdles remain, including that Indian tribes, as sovereign entities, are not eligible for tax credits that help finance renewable energy projects elsewhere.

And replacing coal revenue would not be easy. The mining jobs that remain, which pay union wages, are still precious on a reservation where unemployment is estimated at 50 percent to 60 percent.

“Mining on Black Mesa,” Peabody officials said in a statement, “has generated $12 billion in direct and implied economic benefits over the past 40 years, created thousands of jobs, sent thousands of students to college and restored lands to a condition that is as much as 20 times more productive than native range.”

They added, “Renewables won’t come close to matching the scale of these benefits.”

But many Navajos see the waning of coal as inevitable and are already looking ahead. Some residents and communities are joining together or pairing with outside companies to pursue small-scale renewable energy projects on their own.

Wahleah Johns, a member of the new Navajo Green Economy Commission, is studying the feasibility of a small solar project on reclaimed mining lands with two associates. In the meantime, she uses solar panels as a consciousness-raising tool.

“How can we utilize reclamation lands?” she said to Mr. Yazzie during a recent visit as they held their young daughters in his living room. “Maybe we can use them for solar panels to generate electricity for Los Angeles, to transform something that’s been devastating for our land and water into something that can generate revenue for your family, for your kids.”

Mr. Yazzie, who lives with his wife, three children and two brothers, said he liked the idea. “Once Peabody takes all the coal out, it’ll be gone,” he said. “Solar would be long-term. Solar and wind, we don’t have a problem with. It’s pretty windy out here.”

 

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In Kansas, Climate Skeptics Embrace Cleaner Energy

By LESLIE KAUFMAN
Published: October 18, 2010

SALINA, Kan. — Residents of this deeply conservative city do not put much stock in scientific predictions of climate change.

“Don’t mention global warming,” warned Nancy Jackson, chairwoman of the Climate and Energy Project, a small nonprofit group that aims to get people to rein in the fossil fuel emissions that contribute to climate change. “And don’t mention Al Gore. People out here just hate him.”

Saving energy, though, is another matter.

Last Halloween, schoolchildren here searched for “vampire” electric loads, or appliances that sap energy even when they seem to be off. Energy-efficient LED lights twinkled on the town’s Christmas tree. On Valentine’s Day, local restaurants left their dining room lights off and served meals by candlelight.

The fever for reducing dependence on fossil fuels has spread beyond this city of red-brick Eisenhower-era buildings to other towns on the Kansas plains. A Lutheran church in nearby Lindsborg was inspired to install geothermal heating. The principal of Mount Hope’s elementary school dressed up as an energy bandit at a student assembly on home-energy conservation. Hutchinson won a contract to become home to a $50 million wind turbine factory.

Town managers attribute the new resolve mostly to a yearlong competition sponsored by the Climate and Energy Project, which set out to extricate energy issues from the charged arena of climate politics.

Attempts by the Obama administration to regulate greenhouse gases are highly unpopular here because of opposition to large-scale government intervention. Some are skeptical that humans might fundamentally alter a world that was created by God.

If the heartland is to seriously reduce its dependence on coal and oil, Ms. Jackson and others decided, the issues must be separated. So the project ran an experiment to see if by focusing on thrift, patriotism, spiritual conviction and economic prosperity, it could rally residents of six Kansas towns to take meaningful steps to conserve energy and consider renewable fuels.

Think of it as a green variation on “What’s the Matter with Kansas?” Ms. Jackson suggested, referring to the 2004 book by Thomas Frank that contended that Republicans had come to dominate the state’s elections by exploiting social values.

The project’s strategy seems to have worked. In the course of the program, which ended last spring, energy use in the towns declined as much as 5 percent relative to other areas — a giant step in the world of energy conservation, where a program that yields a 1.5 percent decline is considered successful.

The towns were featured as a case study on changing behavior by the Department of Energy’s Lawrence Berkeley National Laboratory. And the Climate and Energy Project just received a grant from the Kansas Energy Office to coordinate a competition among 16 Kansas cities to cut energy use in 2011.

The energy experiment started as a kitchen-table challenge three years ago.

Over dinner, Wes Jackson, the president of the Land Institute, which promotes environmentally sustainable agriculture, complained to Ms. Jackson, his daughter-in-law, that even though many local farmers would suffer from climate change, few believed that it was happening or were willing to take steps to avoid it.

Why did the conversation have to be about climate change? Ms. Jackson countered. If the goal was to persuade people to reduce their use of fossil fuels, why not identify issues that motivated them instead of getting stuck on something that did not?

Only 48 percent of people in the Midwest agree with the statement that there is “solid evidence that the average temperature on earth has been getting warmer,” a poll conducted in the fall of 2009 by the Pew Research Center for the People and the Press showed — far fewer than in other regions of the country.

The Jacksons already knew firsthand that such skepticism was not just broad, but also deep. Like opposition to abortion or affirmations of religious faith, they felt, it was becoming a cultural marker that helped some Kansans define themselves.

Nevertheless, Ms. Jackson felt so strongly that this opposition could be overcome that she left a job as development director at the University of Kansas in Lawrence to start the Climate and Energy Project with a one-time grant from the Land Institute. (The project is now independent.)

At the outset she commissioned focus groups of independents and Republicans around Wichita and Kansas City to get a sense of where they stood. Many participants suggested that global warming could be explained mostly by natural earth cycles, and a vocal minority even asserted that it was a cynical hoax perpetrated by climate scientists who were greedy for grants.

Yet Ms. Jackson found plenty of openings. Many lamented the nation’s dependence on foreign oil. Some articulated an amorphous desire, often based in religious values, to protect the earth. Some even spoke of changes in the natural world — birds arriving weeks earlier in the spring than they had before — leading her to wonder whether, deep down, they might suspect that climate change was afoot.

Ms. Jackson settled on a three-pronged strategy. Invoking the notion of thrift, she set out to persuade towns to compete with one another to become more energy-efficient. She worked with civic leaders to embrace green jobs as a way of shoring up or rescuing their communities. And she spoke with local ministers about “creation care,” the obligation of Christians to act as stewards of the world that God gave them, even creating a sermon bank with talking points they could download.

Relatively little was said about climate.

“I don’t recall us being recruited under a climate change label at all,” said Stacy Huff, an executive for the Coronado Area Council of the Boy Scouts of America, which was enlisted to help the project. Mr. Huff describes himself as “somewhat skeptical” about global warming.

Mr. Huff said the project workers emphasized conservation for future generations when they recruited his group. The message resonated, and the scouts went door to door in low-income neighborhoods to deliver and install weatherization kits.

“It is in our DNA to leave a place better than we found it,” he said.

Elliot Lahn, a community development planner for Merriam, a city that reduced its energy use by 5 percent, said that when public meetings were held on the six-town competition to save energy, some residents offered their view that global warming was a hoax.

But they were very eager to hear about saving money, Mr. Lahn said. “That’s what really motivated them.”

Jerry Clasen, a grain farmer in Reno County, south of Salina, said he largely discounted global warming. “I believe we are going through a cycle and it is not a big deal,” he said. But his ears pricked up when project workers came to town to talk about harnessing wind power. “There is no sense in our dependency on foreign oil,” he said, “especially since we have got this resource here.”

Mr. Clasen helped organize a group of local leaders to lobby the electronics and energy giant Siemens to build a wind turbine factory in the area. When the company signed a deal in 2009 promising to create as many as 400 local jobs, it stirred a wave of excitement about the future of wind power.

Now, farmers expect to lease some of their land for turbines and rely on wind power as a stable source of income, he said, and land prices are rising as result.

“Whether or not the earth is getting warmer,” he said, “it feels good to be part of something that works for Kansas and for the nation.”

 

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An energy-independent future?

John Stewart’s take on President Obama’s speech urging America to become energy independent.

The Daily Show: June 16, 2010

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H2Oil: exposing Canada’s oil industry

by apasolini on April 12, 2010

Source: H2Oil
Let’s start Monday with a trailer of a documentary about the plight of the people who live in the Canadian province of Alberta, where Big Oil is destroying the environment and depleting water supplies. It’s yet another reminder of why fossil fuel is a disaster for the planet and the all the living beings who inhabit it.

(From the film’s website):

Ever wonder where America gets most of its oil? If you thought it was Saudi Arabia or Iraq you are wrong. America’s biggest oil supplier has quickly become Canada’s oil sands. Located under Alberta’s pristine boreal forests, the process of oil sands extraction uses up to 4 barrels of fresh water to produce only one barrel of crude oil.

It goes without saying that water — its depletion, exploitation, privatization and contamination — has become the most important issue to face humanity in this century. At the same time, the war for oil is well underway across the globe. A struggle is increasingly being fought between water and oil, not only over them.

Alberta’s oil sands are at the centre of this tension. As the province rushes towards a large-scale extraction, the social, ecological and human impacts are hitting a crisis point. In only a few short years the continent will be a crisscross of pipelines, reaching from the arctic all the way to the southern US, leaving toxic water basins the size of Lake Ontario, and surface-mines as large as Florida.

H2Oil follows a voyage of discovery, heartbreak and politicization in the stories of those attempting to defend water in Alberta against tar sands expansion. Unlikely alliances are built and lives are changed as they come up against the largest industrial project in human history.

Ultimately we ask what is more important, oil or water? And what will be our response?

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Sugarcane Ethanol Offers Clean, Affordable & Secure Alternative Energy

Brazilian Sugarcane Industry Launches Education Campaign on Fuel’s Benefits

WASHINGTON, April 12 /PRNewswire-USNewswire/ — As Earth Day approaches and Americans seek out environmentally friendly energy sources, the Brazilian Sugarcane Industry Association (UNICA) today launched an expansive national awareness campaign to explain sugarcane ethanol’s benefits. UNICA’s education campaign will include a new website, SweeterAlternative.com, online, print and radio advertising, new research and a high-profile partnership with the Indy Racing League.

“We hope the Sweeter Alternative campaign will help Americans understand how sugarcane ethanol is a clean and affordable renewable fuel that could help them save money at the pump, cut U.S. dependence on Middle East oil and improve the environment,” said UNICA’s Chief Representative in North America, Joel Velasco.

Sugarcane ethanol is a renewable fuel produced from sugarcane, which is grown in the United States, Brazil and more than 100 countries. Like other forms of ethanol, it can be added to gasoline and used in all American vehicles at blends up to 10 percent ethanol. The Sweeter Alternative education campaign will highlight three key benefits of sugarcane ethanol:

•Energy Security. Sugarcane ethanol is one more good option for diversifying energy supplies and improving U.S. energy security, so Americans are not reliant on any one source or country.
•Economic. Americans could save about a dollar per fill-up off the price of regular gasoline by expanding the use of sugarcane ethanol. At an average price of $0.50 less per gallon than corn ethanol, sugarcane ethanol is one of the least expensive renewable fuels available.
•Environmental. Sugarcane ethanol cuts greenhouse gases by at least 60 percent compared to gasoline – better than any other biofuel widely produced today. The Environmental Protection Agency confirmed sugarcane ethanol’s superior environmental performance earlier this year by designating it an “advanced renewable fuel.” This important category of biofuels will make up 21 billion gallons of America’s fuel supply by 2020, or about 15 percent of today’s gasoline market.

Most sugarcane ethanol is currently produced in Brazil, a South American country with a democratically elected government and a long-standing trade relationship with the United States. Brazil has replaced more than half of its gasoline needs with sugarcane ethanol – making gasoline the alternative fuel in that country. Many observers point to Brazil’s experience as a case study for other nations seeking to expand the use of renewable fuels.

“Unfortunately, Americans cannot fully benefit from this clean, less expensive alternative while Congress continues to maintain trade barriers against imported ethanol,” Velasco continued.

The U.S. government currently imposes a $0.54-per-gallon tariff on ethanol from most foreign countries, making sugarcane ethanol practically unavailable in the United States. By contrast, imported oil enters America duty free. The 54-cent import tax on ethanol will expire at the end of this year.

Last week, Brazil took an important first step to build an open and global biofuels marketplace by eliminating its tariff on imported ethanol through the end of 2011. UNICA is asking the Brazilian government to make the tariff elimination permanent if Congress will do the same and drop the U.S. tax on imported ethanol.

“Consumers win when businesses have to compete in an open market, because competition produces higher quality products at lower costs. The same principle holds true for the renewable fuels market where competition will create a race to the future and generate better alternatives for consumers. Americans will benefit from having the sweeter alternative – sugarcane ethanol – available as an option at the pump,” Velasco concluded.

The Brazilian Sugarcane Industry Association (UNICA) is the leading trade association for the sugarcane industry in Brazil, representing nearly two-thirds of all sugarcane production and processing in the country. UNICA’s priorities include serving as a source for credible information and analysis about the efficiency and sustainability of sugarcane products, particularly its biofuels. The association works to encourage the continuous advancement of sustainable practices throughout the sugarcane industry and to promote biofuels as a clean, reliable alternative to fossil fuels.

SOURCE The Brazilian Sugarcane Industry Association

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The Differences Between Clean Energy, Renewable Energy, and Alternative Energy

To many people, the differences between “alternative energy,” “renewable energy,” and “clean energy,” might not be obvious. But each term is unique and has its own individual definition. These three terms are not all exactly the same.

Alternative Energy

When we speak of alternative energy, we refer to sources of usable energy that can replace conventional energy sources (usually, without undesirable side effects). The term “alternative energy” is typically used to refer to sources of energy other than nuclear energy or fossil fuels.

Throughout the course of history, “alternative energy” has referred to different things. There was a time when nuclear energy was considered an alternative to conventional energy, and was therefore called “alternative energy.” But times have changed.

These days, a form of “alternative energy” might also be renewable energy, or clean energy, or both. The terms are often interchangeable, but definitely not the same.

Renewable Energy

Renewable energy is any type of energy which comes from renewable natural resources, such as wind, rain, sunlight, geothermal heat, and tides. It is referred to as “renewable” because it doesn’t run out. You can always get more of it.

People have begun to turn to this type of energy due to the rising oil prices, and the prospect that we might one day deplete available sources of fossil fuels, as well as due to concerns about the adverse effects that our conventional energy sources have on the environment.

Of all the different types of renewable energy, wind power is one which is growing in its use. The number of users who have some form of wind power installed has increased, with the current worldwide capacity being about 100 GW.

Clean Energy

“Clean energy” is simply any form of energy which is created with clean, harmless, and non-polluting methods.

Most renewable energy sources are also clean energy sources. But not all.

One such example is geothermal power. It may be a renewable energy source, but some geothermal energy processes can be harmful to the environment. Therefore, this is not always a clean energy. However there are also other forms of geothermal energy which are harmless and clean.

Clean energy makes the less impact on the environment than our current conventional energy sources do. It creates an insignificant amount of carbon dioxide, and its use can reduce the speed of global warming – or global pollution.

As you can see, alternative energy, renewable energy, and clean energy are very similar. But it is important to know that there are differences.

There are many actions which can be taken, to help reduce the greenhouse gases in our atmosphere. Some of these steps can be taken in your own home. Many clean energy solutions can can be easily installed, and some kits are quite affordable.

Carbon emissions and other forms of pollution are not only created by heavy industrial factories. They are created in the common household as well. Energy efficiency has become an important aspect of our lives.

It’s important to start making changes now; if we want to save our planet for our children, for the flora and fauna of the Earth, and for the future of mankind. Clean energy, to be exact, can make a big difference.

Learn more about clean, renewable, and alternative energy forms at Alternative Energy.

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Will Plug-in Vehicles Be Obsolete Before They’re Profitable?

Will Plug-in Vehicles Be Obsolete Before They’re Profitable?
John Petersen
http://www.altenergystocks.com/archives/2010/03/will_plugin_vehicles_be_obsolete_before_theyre_profitable.html

Last week I did a 40-minute interview for Hedge Fund Radio, a weekly investment program hosted by John Thomas, the Mad Hedge Fund Trader. While our conversation focused on the unassailable mathematics supporting my contention that plug-in vehicles are wasteful, I was fascinated by John’s description of his recent conversations with Toyota Motors (TM) where Toyota confirmed its commitment to NiMH battery technology for hybrid drive and fuel cell technology for electric drive. Its somehow comforting to know that the world’s most successful automaker agrees that the first modern plug-in, GM’s EV1, died from congenital birth defects and the same flaws will almost certainly doom the next generation of cars with plugs.

The best part of the interview was that it gave me a chance to clarify and crystallize my thinking on the basic problem of using batteries to replace the fuel tank for an average American who drives 12,000 miles per year and would normally buy a fuel-efficient car with an internal combustion engine. The quick and dirty summary is:

•In a conventional fuel efficient car, a typical user will burn 400 gallons of gas per year;

•In a $22,500 Toyota Prius, a 1.3 kWh battery pack will save 160 gallons of gas per year, or 123 gallons per kWh;
•In a $40,000 GM Volt, a 16 kWh battery pack will save 340 gallons of gas per year, or 21 gallons per kWh;
•In a $44,000 Nissan Leaf, a 24 kWh battery pack will save 400 gallons of gas per year, or 17 gallons per kWh; and
•In a $110,000 Tesla Roadster, a 53 kWh battery pack will save 400 gallons of gas per year, or 7.5 gallons per kWh.
Economists would call that a rather shocking example of the law of diminishing returns.

The fundamental problem is that we live on a resource constrained planet and it is the epitome of foolishness to believe that wasting one class of natural resources (battery materials) in the name of conserving another (oil and gas) can ever make sense. It all comes back to the premise that sensible industrial policy will rely on currently available technology to harvest the low-hanging fruit and slash fuel consumption with HEV and stop-start systems while emerging technologies like fuel cells that are better suited to high-hanging fruit evolve and mature. In other words, we need to take baby steps.

I’m often accused of being a Luddite for my cynicism over the electric-drive dream. The truth is I’m an incurable optimist who sees no limits to human ingenuity and creativity. I’ve lived through one of the most transformative periods in history and know that the rate of technological change is accelerating. Therefore, I don’t even question the idea that humanity is likely to see twice as much technological change in the next twenty years as it did in the 20th century. Most of us baby boomers bought 45 RPM vinyl, reel-to-reel tape, 8-track tape, cassette tape, digital audiotape, compact disks and MP3 files. In their respective eras, which were usually short-lived, each of these innovations was the latest and greatest thing until something better changed the game. Given the change I’ve lived through, I have a hard time putting much faith in anyone who believes 10 to 25 year forecasts are possible, much less reliable. There is simply no way to predict what the disruptive changes will be or when they will occur. After all, if changes were predictable, they wouldn’t be disruptive.

Lithium-ion battery developers like A123 Systems (AONE) and Ener1 (HEV) are charging forward with their plans to spend hundreds of millions of dollars on new manufacturing plants that will make batteries for electric cars. While the timing of its IPO isn’t clear, Tesla Motors just filed an amendment to its SEC registration statement and will probably make a big splash sometime this spring. When you cut through the fog, however, all of the business models foresee nothing but losses for years to come. The factories won’t be built till 2012. Once the factories are built, it will take a couple years to work out the manufacturing glitches and bring and quality control up a level that’s competitive with the Japanese and Koreans. Once the quality’s in place and the products are dependable, it will take additional time, perhaps a long time, to convince a meaningful number of consumers that electric vehicles, which promise cheap fuel from the grid but cost $3,500 per gallon of gas equivalent in ‘fuel tank’ capacity, make economic sense. I hope someone packs a lunch.

If battery-powered vehicles offered a decent natural resource balance, the promised “economies of scale” were assured and there were no potentially disruptive technologies on the horizon, I might have a different view about the long-term potential of plug-ins. My experience, however, tells me that something better will almost certainly arrive on the scene before the current A-list of electric-drive supermodels turns the corner to profitability.

Products that become obsolete before their manufacturers become profitable are never kind to investors.

Currently the market is valuing battery companies that won’t be profitable for years at nosebleed levels while it values the first clear beneficiaries of the cleantech revolution at embarrassingly low prices. I don’t know how long it will take for A123, Ener1 or Tesla to turn the corner and report a profit, but I know that Johnson Controls (JCI) and Exide (XIDE) will be selling millions, if not tens of millions, of stop-start batteries per year within a couple of years and nothing boosts profitability like selling higher value products to existing customers without increasing unit volumes. While I can’t be certain until ongoing testing by several first tier automotive OEMs is completed, I’m increasingly confident Axion Power International (AXPW.OB) will play a critical role in the emerging stop-start market.

Every industrial revolution in history has been driven by innovations that have proven their ability to do more valuable work with lower inputs of raw materials, capital and labor. Despite lofty aspirations, consumers are far more motivated by the green in their wallets than the green in their cocktail party conversations. Try as they might, governments are never good at planning economic growth or driving uneconomic technologies into the market. I’ve long advocated the proposition that a business model that does not make sense without government subsidies does not make sense. I’ve also been forced by experience to shorten my investment horizons from a couple of decades to a few years. While I haven’t yet reached the point in life where I refuse to buy green bananas, I don’t have a great deal of interest in carving a new plantation out of raw jungle.

Disclosure: Author is a former officer and director of Axion Power International (AXPW.OB) and holds a substantial long position in its stock. He recently sold his other holdings in the energy storage sector for significant gains.

Posted by John Petersen on March 30, 2010 05:30 AM | Will Plug-in Vehicles Be Obsolete Before They’re Profitable?

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