Archive for the ‘Energy’ Category

Gas tax increase pits economists against politicians

Friday, June 10th, 2011

kyle_alspachBy Kyle Alspach

It’s a proposal that’s had plenty of test drives in the public sphere before, though not necessarily because of someone like General Motors CEO Dan Akerson: Raise the gas tax to cut our country’s oil consumption.

This week Akerson told the Detroit News that the federal government ought to raise the gas tax by up to $1 a gallon. The move would lead to a cut in carbon emissions and air pollution, not to mention helping the U.S. with its foreign-oil dependency problems. It could also stimulate demand for electric-powered cars (not coincidentally, Akerson’s statement comes as one of the early mass market options hits the market — GM’s plug-in hybrid, the Chevy Volt.)

With gas prices already in the $4 range (though currently falling), the statement resurrected a major debate. Interestingly, it’s not a left-wing vs. right-wing debate at all. It’s more like, economists vs. politicians.

In 2007, a study in the Journal of Economic Literature found that the ideal average gas tax for the U.S. would be $2.10 a gallon. At the time, the average tax was 40 cents a gallon — 18.4 cents for federal and 22 cents for state (it’s currently 23.5 cents in Massachusetts).

The $2.10 figure takes into account greenhouse gas emissions, local pollution and oil dependency, along with the costs of congestion and accidents.

To make the tax palatable, economists say the government could cut taxes in other areas — say, the income tax for consumers or corporate taxes for businesses.

The common sense of it is this: Instead of taxing things that are good (business profits or hard-earned income, for instance), why don’t we tax things that are bad (like burning fossil fuel)?

However, according to the Harvard Political Review, the issue quickly moves from the realm of economics to the realm of politics. And “since 1993, no prominent American politician has seriously supported a major increase in the gas tax. Virtually everyone agrees that supporting the gas tax is political suicide.”

And yet:

Economists from across the political spectrum — Freakonomics author Steven Levitt, Nobel laureate and New York Times columnist Paul Krugman, and even the chairman of George W. Bush’s Council of Economic Advisors, N. Gregory Mankiw — have come out in support of raising the gas tax.

Still, Americans love to drive a lot more than they love economic theory, and the psychological barrier is formidable. Working out an equitable tax-swap would be no easy task either.

But I for one would rather be taxed for a luxury (driving) than for a necessity (working.) Especially if I know our environment and security are getting important benefits too.

Obama pushes to break Americans’ oil-focused trance

Wednesday, March 30th, 2011

By Kyle Alspach

George W. Bush famously described America’s relationship with oil as an addiction.

Today, President Obama added his own metaphor: Americans are in an oil-fueled trance.

And we need to snap out of it, the president said.

“We cannot keep going from shock — when gas prices go up — to trance when they go back down,” he said during a wide-ranging address on America’s energy challenges. “We can’t afford to bet our long-term prosperity and long-term security on a resource that will eventually run out.”

The centerpiece of his address at Georgetown University was a new goal to reduce U.S. oil imports by a third by 2025. Key to making that happen, as laid out by Obama: increasing the production of domestic oil, natural gas and biofuels, increasing use of more-efficient (as well as electric) vehicles and better mass transit options.

The president also touted clean energy for electricity (to power the vehicles) and more energy efficiency upgrades for buildings.

To lead by example, the president said he’s ordered the federal government to buy only alternative-fuel vehicles by 2015.

For the scores of Massachusetts companies working on some aspect of clean technology, it’s good news that Obama isn’t dropping the energy issue, despite all the setbacks his plans have suffered.

But as always, American consumers will determine so much of how this plays out. As Obama told the college students watching the address, “you’ve got power in this process.”

Whether consumers are willing to pay more for energy independence and environmental benefits is a major uncertainty. Getting off an addiction, or out of a trance, is not an easy thing.

Questions linger around Evergreen Solar’s Devens decision

Friday, January 14th, 2011

By Kyle Alspach

A final thought or two for the week on Evergreen Solar (Nasdaq: ESLRD) and the Devens doomsday announcement. Or rather, some questions: How hard did Evergreen really try to keep jobs here in Massachusetts? And how long were they planning this?

I haven’t found definitive answers, but I do know what the company’s CEO was saying as recently as November.

“Devens continues to improve its cost structure,” CEO Michael El-Hillow said during the company’s third-quarter earnings call on Nov. 2, adding “we’re generating cash in the United States.”

He then made this statement: “We’re trying to keep jobs here, so we’re not going to push things over there (to China) as long as we continue to generate cash in the United States.”

That was not even three months ago. I’m not sure what has changed for the company since then, forcing Evergreen to decide to close the Devens factory by the end of March and cut 800 of the company’s 925 workers in Massachusetts.

I’d hoped to ask El-Hillow, but Evergreen said he wasn’t available. I did get to talk with investor relations VP Michael McCarthy and company spokesman Chris Lawson yesterday for nearly an hour. However, they wouldn’t say how long ago Evergreen made the decision to pull out of Devens.

They also didn’t offer any hints on what makes circumstances now so different from those in November, when Evergreen was already in the thick of its stiff competition with Chinese solar manufacturers.

Among those most stunned by Tuesday’s announcement were the people on the ground — the workers at the Devens factory, who had been encouraged to feel confident about their jobs by statements like the one I just cited from El-Hillow. One employee told me she thought her job was secure because she worked in solar wafer fabrication, which the company had never hinted would be sent to China.

Another worker, who I connected with on Facebook, lamented that he has no idea how he’ll pay his bills once he joins the already large pool of job seekers in Massachusetts.

Yet corporate decisions like this one — while devastating for low-on-the-totem-pole working people and local economies — are often well-received by shareholders, impatient to see some profits. And Evergreen is unquestionably looking to please its shareholders these days.

Along with the obvious goal of keeping the share price afloat (the stock was in de-listing danger until a recent reverse split), Evergreen also needs shareholder approval on Jan. 31 for a major recapitalization plan. The plan would cut the company’s debt and interest costs, but it would also be very dilutive for shareholders.

McCarthy and Lawson, however, said there are plenty of reasons why shareholders might want to approve this plan regardless of any other factors — namely the lack of other good alternatives for cutting company debt.

Clearly, a lot is coming up in coming months for the struggling Evergreen, which could succeed or fail based on what happens in that time.

But after this week, at least one other thing is clear: Massachusetts will have little at stake in the outcome either way.

Evergreen Solar layoffs surprise Devens, Marlborough employees

Wednesday, January 12th, 2011

By Kyle Alspach

“Nobody was expecting it.”

That’s what I heard today from a 45-year-old employee of Evergreen Solar, one of the 800 who will lose their jobs by the end of March as Evergreen shutters its factory at Devens.

Sure, Evergreen (Nasdaq:ESLRD) had announced it would outsource its solar panel assembly to China by the end of this year. But this employee — who declined to have her name published, saying she didn’t want to put her remaining time at the job at risk — doesn’t do solar panel assembly. For nearly three years she’s worked in Devens as a fabrication operator for solar wafers, the building block for panels.

“That was the part that was supposed to be staying,” she said. “We thought we were all set…Now we’re sinking.”

High on the list of her reasons for worrying: her job provides the health insurance for her husband and two sons, ages 18 and 20, who live at the family’s Central Massachusetts home. She also just bought a new car, and her husband, a machinist, recently took a 10 percent pay cut due to weak economic conditions.

Not to mention the poor prospects for getting another job.

“There’s nothing out there that pays what I’m making,” she said.

She admits that she did suspect that Evergreen might pull out of Devens eventually, with the company struggling to compete with solar manufacturing in lower-cost regions such as China.
But not this soon.

“We figured we had at least couple more years in there,” she said.

It’s not just the Evergreen employees at Devens that were likely taken by surprise on Tuesday. The company’s headquarters, in Marlborough, will also experience layoffs, said Evergreen spokesman Chris Lawson. “Some of the cuts will come from Marlborough but beyond that I don’t have any finite numbers yet. That will all be determined in the coming weeks,” Lawson said in an e-mail.

Evergreen says the move is necessary to preserve cash and put the company on more solid ground in the highly-competitive solar industry. The plan is for the company to evolve into a producer of standard-sized solar wafers, which can be sold to solar panel manufacturers. The company so far has been forced to make its own panels because its wafers aren’t the industry standard size and aren’t in demand.

As a reporter following Evergreen Solar, however, what’s struck me most about this plan is the severity of the job cuts.

In 2007, when the company struck a deal with the state to receive $58 million in connection with the new Devens plant, the grant agreements show that Evergreen employed 310 people in Massachusetts.

But subtracting 800 jobs from the company’s 2010 headcount — 925 — would leave Evergreen with just 125 jobs in Massachusetts after the plant closure, not even half of the 2007 staffing levels.

That means that this move isn’t just about Evergreen leaving Devens. Arguably, it’s about Evergreen pulling up stakes in Massachusetts altogether, as the company’s presence in the state reverts to what it was well before all of this began — when Evergreen was just a promising startup.

U.S. Energy Sec. Chu hopeful ARPA-E funding will continue

Friday, December 3rd, 2010

By Kyle Alspach

Despite the national mood against things like “government spending,” “climate science” and also “science,” top U.S. energy official Steven Chu is optimistic that a major clean energy research program, known as ARPA-E, will get funding for another year.

Maybe that’s not a surprise. But with the House of Representatives soon to be the House of Republicans, many have doubted that money for ARPA-E would show up in the Department of Energy budget for 2011.

You see, ARPA-E — which has given $63 million to Massachusetts cleantech firms with promising but risky technology — got its funding from the one-shot deal that was the stimulus. And the new members of the incoming Congress don’t like the stimulus, we are told.

On Thursday, DOE Secretary Chu took a tour of one of the ARPA-E companies, Lexington solar technology developer 1366 Technologies. When asked during the event about the likelihood that ARPA-E will continue, Chu said he believes the chances are actually good. “I think Congress has recognized what a value this is,” said Chu, a Nobel laureate in physics.

While ARPA-E dished out $400 million in its first year, some business groups — including Bill Gates’ American Energy Innovation Council — have actually recommended increasing the program to $1 billion or more, Chu noted.

Executives at 1366 say the $4 million in ARPA-E funding was crucial. It helped the company to rapidly develop an efficient new process for making solar wafers from silicon and also aided in attracting $20 million in new venture money, the execs say. The big picture: the technology could slash the cost of wafers by up to 80 percent and be a powerful tool in making solar power competitive with coal, according to the firm.

Companies like 1366, Chu said, show not only that ARPA-E is valuable, but also that it’s not inevitable that China will dominate America’s clean energy industry in coming years. The company’s progress helps to prove that the American cleantech industry “need not be afraid of any country” or “any other outside technology,” he said.

There’s no question that ARPA-E matters a lot to Massachusetts, or at least to the growing clean technology sector. Sixteen companies in the Bay State took home awards, representing 17 percent of the total dollars given out.

But do other states, which got no funding and have no prospects of getting any in the future, really care about the program? Or more importantly, do their lawmakers?

I guess Chu is not terribly worried about this. We’ll find out soon enough whether he’s right.

Ex-Google energy director Reicher maps out future energy initiatives

Friday, December 3rd, 2010

By Kyle Alspach

At Google, progress on company initiatives is measured in months. But in the world of energy, progress is measured in years — or even decades.

“The energy technology area is very slow to advance,” said Dan Reicher, who until Tuesday was the director of climate change and energy initiatives at Google. “Part of the reason is that even when there are good technological advances, there aren’t policy signals or adequate capital to make changes.”

Speaking to me before an address at UMass-Boston on Wednesday, Reicher said he’s done what he could in his four years at Google. Earlier Wednesday, he began in his next role, heading up a new energy center at Stanford University. Reicher said the Steyer-Taylor Center for Energy Policy and Finance, housed by Stanford’s business and law schools, is the perfect place for him to work at connecting what he calls “all three points of the triangle” in clean energy — technology, policy and finance.

“What we’ve been doing at Google, I’m hoping to accelerate at Stanford,” he said.

Accomplishments at Google included the rollout of the Google Power Meter, an online application that works with a home’s smart meter to provide data about electricity use.

Reicher also led Google’s participation in a $5 billion deal to create a wind power “superhighway” along the mid-Atlantic coast, announced in October. The project aims to make offshore wind projects easier to build, by laying undersea electrical cable from Virginia to northern New Jersey.

Reicher said that like the interstate highway system, the line could be extended to other areas — including New England. But New England wasn’t considered as financially feasible for offshore wind turbines as the mid-Atlantic, which has a shallower shelf than in the Northeast, said Reicher, who earlier in his career worked at Vermont wind power firm Northern Power Systems.

One area that promises to get a lot of focus from Reicher is efficiency, which he called a great example of the problem in making energy progress. Energy efficiency technology is very cost effective, but still has seen only limited deployment, he said.

“Unless we make progress at all three points in the triangle,” Reicher said, “the great hope for a clean energy revolution isn’t going to happen.”

Cape Wind cheers Google’s clean energy ’superhighway’ plan

Tuesday, October 12th, 2010

Google won’t be helping Cape Wind Associates, or anyone else, with making offshore wind power happen in New England.

Not directly, at least. But wind advocates are excited just the same about Google’s $5 billion plan to lay undersea electrical cable along much of the East Coast, in a bid to make offshore wind projects faster to build.

Among those cheering is the team at Cape Wind. Amid the endless debate over the Nantucket Sound project – currently raging about the cost of the power – the company will take all the good news it can get about offshore wind.

“Every bit of forward momentum like this really sends a market signal that this industry is for real. In that way, I think it does help Cape Wind,” said Mark Rodgers, spokesman for the Cape Wind project.

Google’s 350-mile “superhighway for clean energy” wouldn’t reach New England, or even New York state. It would instead run from Virginia to northern New Jersey and be able to carry enough electricity to power about 500,000 homes.

If built, the project would almost certainly make a difference for the nascent offshore wind industry. By way of example, Cape Wind’s two 18-mile transmission lines would represent a “significant” part of the construction, Rodgers said. Not to mention the time it took to permit the lines.

So it might not be a bad idea for New England wind supporters to start thinking about how to bring a wind superhighway here. If it could be pulled off, the projects that would inevitably follow Cape Wind might find fewer cost issues – and PR nightmares.

Chiang’s cleantech firms A123 and AMSC get Obama OK

Friday, July 16th, 2010

By Kyle Alspach

Every ambitious company has its milestones – the first financing, the break-out quarter, the IPO.

But for the two cleantech companies co-founded by Yet-Ming Chiang of MIT, one of those milestones is a little less traditional: the presidential shout-out.

Sure, it’s not what the two companies – A123 Systems Inc. of Watertown and American Superconductor Corp. of Devens – have been aiming for.

Speaking at an event for an electric-vehicle battery maker in Michigan on Thursday, President Obama mentioned just one other battery company – A123. With the help of $249 million in federal funding, A123 plans this fall to open a battery manufacturing plant in Livonia, Mich., and is also pursuing a second plant in the state.

Meanwhile, American Superconductor was highlighted by Obama in a weekly address last November. The company does most of its business in designs and controls systems for wind turbines, and Obama spoke about the company’s creation of U.S. jobs through exports to Asia.

The two companies have yet to get a visit by the president. Maybe that’s the next milestone. But in any case, the mentions by the president do prove one thing – that Massachusetts cleantech companies are getting attention at the highest levels of government.

Chiang, who spoke with me on Friday, said he’s been much more involved with A123 in recent years than with American Superconductor. He says he’s just glad to see the companies succeeding and isn’t reading too much into the shout-outs.

Still, he said, “It made me smile.”

Women to Watch: What makes them special

Friday, March 19th, 2010

Jim ConnollyBy James M. Connolly

Intelligence, dedicated, leader, innovative, hard-working — they’re all words associated with the 11 women recognized with the Mass High Tech Women to Watch awards this morning. But back at the office we were talking how commonly another word has to be applied to the 2010 honorees and their 60 predecessors.

It’s their humility. It’s so striking. We at Mass High Tech see it over and over again. We contact them in January to tell them they have been selected, and their total surprise is genuine. When we interview them for profiles, they talk about other women who would be more deserving, or how they can’t believe they are in the same ranks with certain women tech leaders that they admire.

2010 MHT Women to Watch

These are inventors, heads of huge development teams and CEOs. They’ve earned the right to brag.

Instead, they stand up at a podium and praise other women. They are grateful to their parents and the members of their teams. They talk about how it just makes sense for them to give back, to help and mentor young people.

Be sure to check out their profiles in this week’s Mass High Tech or on MassHighTech.com. There’s something special about them that goes beyond bits, bytes and biotech. The 250 people who came out to honor them this morning understand it. It’s their humility.

Sustainable energy panel breaks out at Winter Classic

Thursday, January 7th, 2010

By Patrick H. Brown

So, you’ve probably heard that old phrase “I went to a fight and a hockey game broke out.” That joke usually accurately describes the knockdown, drag-out viciousness of old time NHL events. However, for guests at a Jan. 5th green-energy happening, a fascinating sustainable energy discussion broke out at a hockey event.

Hosted at the exclusive and lavishly appointed EMC Club, high up in Fenway Park, the event was, at first glance, a tad odd. After all, why would the National Hockey League sponsor a panel discussion titled: “Sustainable Success: A Discussion on Business and the Environment”? The answer was actually delivered as directly and potently as a slapshot into a goal by a group of scientists, corporate and organizational leaders, professors, and athletes.

The panel was, to say the least, impressive. The speakers included Professor John Sterman, of the MIT Sloan School of Management, or Allen Hershkowitz, senior scientist at the Natural Resources Defense Council. Joining those two gentlemen were Kathrin Winkler, chief sustainability officer at EMC Corp, Fred Krupp, president of the Environmental Defense Fund, and Mike Richter, the legendary goalie who helped the U.S. team win silver in the 2002 Olympics and who lead the New York Rangers to a Stanley Cup victory in 1994. Moderating the whole show was the witty New York Times columnist, David Brooks. Of course, where would an NHL event hosted at the Winter Classic venue be without the commissioner of the entire NHL, Gary Bettman played host. (more…)

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