Today’s New York Times covers the news that the United Steelworkers union plans to file a case with the Obama Administration accusing China of violating free trade rules in its subsidies for exports of clean energy equipment. Here’s a taste:

“The union says the violations have helped Chinese companies expand their share of the world market for wind turbines, solar panels, nuclear power plants and other clean energy equipment, at the expense of jobs in the United States and elsewhere. The filing asks the Obama administration to begin formal proceedings at the W.T.O. in Geneva to force China to repeal the subsidies.

“Unless China’s policies are urgently addressed, the U.S. may never get a fair shot at making the green technologies of the future,” the filing says.”

Yesterday’s Washington Post ran a business opinion column by Steven Pearlstein that looks at the structural dilemmas behind high unemployment in the U.S. and hits on a similar trade theme:

“The reason there were 8 million additional jobs back in 2007 is that demand for goods and services was artificially – and unsustainably – inflated by cheap, plentiful credit.

“Bringing down our trade deficit “either by producing more of what we consume (fewer imports) or more of what other countries consume (more exports) – represents the path toward sustainable, long-term job creation.

“The problem with that strategy is that for the past two decades we have allowed our industrial and technological base to deteriorate as talent and capital were grossly misallocated toward other sectors of the economy, even as other countries were able to attract the investment, the technology and the know-how to serve the U.S. and global markets.”

AND, he writes, “our companies are disadvantaged by an overvalued currency or unfair trading practices.”

Also in yesterday’s Post, a must-read example of a factory shut-down that will result in 400 lost jobs in spite of U.S. clean technology innovation. Where the author writes “lighting industry” one could easily substitute “solar industry” or “battery industry.”

“During the recession, political and business leaders have held out the promise that American advances, particularly in green technology, might stem the decades-long decline in U.S. manufacturing jobs. But as the lighting industry shows, even when the government pushes companies toward environmental innovations and Americans come up with them, the manufacture of the next generation technology can still end up overseas.

Renewable Crude by KiOR, Credit: KiOR

First I need to go back in time a little bit (to Aug. 17) and commend Range Fuels on getting its commerical cellulosic biofuels plant up and running near Soperton, GA. Range Fuels uses thermochemical processes (heat, pressure and steam) to convert woody biomass to synthesis gas (often called syngas). The gas is passed over a catalyst to produce mixed alcohols. The current product of the Soperton plant is methanol, which will be used to produce biodiesel. The plant will also have ethanol output beginning in the third quarter, according to the company.

Its been a long road for Range. (Though the commerical-scale biofuel road will be even longer for most other firms, as commercial facilities are as rare as ice in the Sahara [or you can insert your own lame metaphor]) Originally, the firm was to be on stream in 2008. By April 2009 they’d pushed the date back to the second quarter of 2010. The plant was ‘sposed to be making ethanol at the get-go – 40 million gal per year at full steam, with the ability to scale up to 100 million gal. The company plans to begin its first expansion – to 60 million gal – next summer. The slow and small start of commerical-scale ethanol facilities has been a thorn in the side of the EPA’s efforts to set targets in the nation-wide renewable fuels standard.

And yesterday, Mascoma said it has acquired SunOpta Bioprocess Inc. (SBI) in a vertical-integration move for its cellulosic ethanol activities. SBI has expertise in fiber preparation and pretreatment of cellulose. Mascoma’s focus is on a yeast/bacteria process that breaks down digestible cellulose into sugar. (The consolidated process competes with the normal bio-routine which uses biologically derived enzymes to break down the cellulose and yeasts to ferment it.) SBI’s parent company SunOpta says it will get about $51 million worth of Mascoma shares in the transaction.

Speaking of cellulosic feedstocks, the state of Miss. added a $75 million loan sweetener to its development package for KiOR, a renewable oil start up. The firm says it will build 5 plants in all where woody biomass will be converted into a type of crude oil that can be further processed into various transportation fuels. The first three plants are expected to come online by 2015, and employ 1,000 Mississippians.

In a non-Khosla bit of news, waste-to-fuels firm Enerkem began construction of an $86 million plant that will consume non-biodegradable municiple waste from the city of Edmonton, Alberta. The facility will produce enough ethanol to fuel over 400,000 cars per year running on a 5% ethanol blend, according to the company. Its 25-year pact with the city will bring 100,000 tons of solid waste to the plant annually. The idea is that feeding the plant would be cheaper than landfilling the garbage.

Alberta’s Premier Ed Stelmach, who was present for the groundbreaking ceremony, reminded the audience of the province’s $15 per ton carbon levy that is paid by the largest CO2 emitters. The money goes in to a fund to support R&D research for renewable energy. Alberta, as you’ll recall, is the home of oil sands, natural gas, and coal. Producing energy is a way of life up there.

And yet they are extraordinarily important in the making of technologies in the computer, electronics, transportation, energy, and defense industries. Many cleantech advances like windmills, hybrid cars, and compact fluorescent lights depend on the rare earths.

Though not technically “rare,” the rare earths are getting harder to source in countries outside of China, as China has the lion’s share of deposits and has a lock the on economic production of pure materials. In addition, China has been lowering export quotas to keep more of the rare earths at home.

Recently, W.R. Grace said it would add a rare earth surcharge to fluid catalytic cracking catalysts and additives for the petroleum refining industry, which shows that rare earths are also used in some older industries.

Back in 2008 I wrote about a Chinese project that Arkema is part of that is similar to the projects under review. To my knowledge, however, the Arkema effort has not been singled out.

Basically, HFC 23 is a waste gas made during the production of a refrigerant, HCFC 22. With the help of investors and technology experts in the developing world, factories in places like China, India, and South Korea can destroy this waste gas in exchange for carbon credits, which are worth real money, and are traded on a European exchange.

While no one disagrees that without some sort of financial reward, the waste gas would be released into the atmosphere (because the developing nations do not regulate HFC23 emissions), critics allege that companies are manufacturing the HCFC 22 in the maximum quantities allowed – more than the marketplace needs – in order to earn the valuable carbon credits.

Making HCFC 22 for the sole reason of making, and then destroying, HFC 23 for carbon credits is what economists would call a perverse incentive.

Wikipedia defines a perverse incentive as one “that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Perverse incentives are a type of unintended consequences.” As an example, the site gives the case of French colonial rulers in Hanoi paying a bounty on rat pelts to eradicate rats. Instead, the locals began farming rats.

So are the HCFC 22 manufacturers just farming rats for the bounty? According to a report by CDM Watch, a European consortium of environmental groups, HCFC 22 production appears to be driven by the quest for carbon credits, and is likely resulting in more refrigerant production than market demand would otherwise dictate.

The carbon credits are worth about $16 on the spot market (the main exchange is based in Europe and is conducted in Euros). Which doesn’t sound like much, but because HFC 23 is so potent – one ton is equivalent to 11,700 tons of CO2 – destruction of it racks up millions of credits. In fact, the six projects under review (five in China, one in India) have together requested issuance of carbon credits worth about $150 million on the open market.

In reality the project owners have already negotiated a selling price for their credits with European-based financial firms, which is likely lower than the spot rate, but the credits are extremely valuable. If you’re really curious, you can browse all the projects that are registered to earn carbon credits under the Kyoto protocol.

Sugar cane, minus the sugar, may still yield ethanol. Credit Shutterstock

Royal Dutch Shell has advanced its plans for a $12 billion joint venture with Brazilian sugar cane processor and ethanol producer Cosan. The main thrust will be making ethanol from sugar in the time-tested way (which Brazil began producing for transportation since the 70s and now uses for about half of its liquid fuel needs). But in among a raft of other assets, Shell will kick in its 16% share of recently IPO’d cellulosic ethanol firm Codexis.

Lynn Christenson, communications director for Codexis, explains that this JV is a big deal that will put some fuel behind the firm’s commercialization plans.  She points out that Codexis has been working with Shell since 2006 when the two firms started a pilot program for cellulosic ethanol. The agreement was expanded twice before Codexis went public. But it’s Cosan that has the huge amounts of sugar cane agricultural waste for feedstock – the company is the third largest sugar producer in the world and has the capacity to crush 60 million tons of sugar cane a year.

The deal “gives us access to a very large supply of agricultural waste – a very large supply of raw material. We will be able to work with Cosan to develop next generation non-food based ethanol,” says Christenson.  She acknowledges that there are no specific time frames for cellulosic scale-up, but says “our technology will be a significant part of the joint venture and we believe it will accelerate time to commercialization.”

Meanwhile, in a smaller deal, Brazilian firm Petrobras (or rather it’s U.S. arm) has signed a development agreement with South Dakota-based KL Energy. KLE focuses on thermal and chemical pretreatment steps followed by enzymatic hydrolysis to sugars. The company is currently cooking up Ponderosa Pines at its demonstration plant in Upton, Wyoming. But as you may have already guessed, Petrobras is more interested in what KLE can do to those squeezed out sugar canes. The oil company is pledging $11 million to the cause.

Ethanol from cane sugar has better economics (and a better CO2 return) than ethanol from corn kernels. It will be interesting to see if the cellulosic components of the two crops follow the same pattern. But then again, the world still awaits the first commercial-scale cellulosic facility of any kind.

Ecovative Design's filimentous fungi packaging material

The era of renewable packaging is upon us, but a few details remain to be worked out. For example, Frito-Lay has been making noise (while irritating snackers) with its very loud – but compostable – plant-based polylactic acid bag for Sun Chips. Meanwhile, a quieter innovation is growing near the campus of Rensselaer Polytechnic Institute in upstate New York.

Ecovative Design grows its EcoCradle packaging material by adding filamentous fungi to buckwheat hulls inside a plastic form. The result is a composite material that the company markets as a competitor to expanded polystyrene. If you’re having trouble picturing this, take a moment to view the video linked at the end of this post.

The company has been improving its material since it started in 2007, the brainchild of two recently graduated (undergrad!) students in mechanical engineering at Rensselaer. According to founder Eben Bayer, he and co-founder Gavin McIntyre considered a number of potential business ideas while in school. A professor encouraged them to pursue the mushroom material plan by starting their own company, which they did, even though they had actual job offers in hand at graduation.

The fungal packaging, made of material Bayer dubs a self-assembled chitinous polymer material, is biodegradable in both composting (aerobic) and landfill (anaerobic) environments. Unlike starch-based renewable packaging, he points out, the use of agricultural waste products mean no food feedstocks are sacrificed. The composite material is more fireproof than petroleum-based polystyrene, but is denser (heavier) than many forms of the ubiquitous foamy stuff. The company also has an insulation product in the pipeline called Greensulate.

Bayer says being young and clueless was actually helpful in getting assistance for the business. “Both of us are very aggressive learners – since we didn’t know anything we asked a lot of questions. People are happy to tell you things when you are young.” The founders took a crash course in starting a business and raised seed money almost entirely from business plan competitions. “We didn’t win all of them which was okay because we got a lot of critical feedback.”

So far, the firm is still closely held and has just started commercial production (packaging for a line of Steelcase products). But Bayer says he hasn’t ruled out the possibility of bringing in venture capital funding or other backing to help the firm expand.

The National Science Foundation, which has awarded Ecovative a small business grant, has helpfully posted a video of how the material grows.

Hat tip to Greenbiz.

Credit: Solazyme

This week two algae-to-fuels firms took different pathways to raise new capital while they work out how to commericialize their technologies. The hundreds of start-ups looking to cash in on the little green organisms are likely watching closely.

San Francisco-based Solazyme has raised an impressive $52 million in its fourth round of venture capital funding. Unfortunately for the algae industry, the round does not signify that new investors are flocking to this corner of cleantech – there was only one new investor, Morgan Stanley, participating. Oil company Chevron has stayed on as a strategic investor through its venture capital arm.

Solazyme takes an unusual approach to the science* of growing algae for commercial oils – it grows microalgae in the dark in large fermentation vessels. Instead of feeding photosynthetic algae sunlight and CO2, the firm fattens its microalgae on cellulosic materials. Then it processes the algae to extract the oil. Currently, the firm is selling the oil into the cosmetics and food industries, but it still sees its largest market as biofuels.

PetroAlgae, a less well-known start-up, has filed for a $200 million IPO. The firm plans to license its technology to grow photosynthetic algae in flexible plastic bags. Unlike the big bucks raised by Solazyme, however, industry watchers suspect this play will flop, possibly souring the investment community on the whole algae idea.

The timing of PetroAlgae’s IPO does seem premature. I wrote about the nascent algae industrya year and a half ago, at the time, company leaders were working to bring down the engineering and processing costs to make algal oil. At the time, costs would need to come down by about a factor of ten – which has not likely happened since then.

The soft-bodied cells are attractive for biofuel production because they don’t contain tough lignin and hemicellulose that are hard to break down into fuel feedstocks. But instead, algae need to be fed and housed – at considerable overhead. And then the oil must be separated from the algae cells as well as from the water the algae grow in.

Cleantech investing by venture capitalists, especially the ones who are already backing cleantech firms, seems to be rolling along despite the lackluster economy. But a busted IPO could cast a shadow over the many firms still working on their algal engineering.

* Congratulations, intrepid keyword hunters! You’ve found one of the six for the contest.

I was reminded about flow batteries when I read that the last set of Recovery Act funding from DOE’s ARPA-E program would go to energy storage technologies. Three of the projects will be working on flow batteries, one of which will be led by Lawrence Berkeley National Laboratory.

But what is a flow battery? Basically, it’s a battery where the voltage differential is stored outside the cell in two separate tanks of electrolytes. Pumps circulate the two fluids into a cell chamber where they come together separated by a membrane that prevents them from mixing, but does allow select ions to pass through. Electrodes in the cell convert the chemical energy to electric current.

The benefits of flow batteries are that they are highly rechargeable – they can be recharged to 100% of capacity fairly quickly. They are “deep discharge” capable, which means you can deplete the battery charge completely without damaging it. These two characteristics allow you to use an external power source like a wind or solar farm to charge the batteries during the day and tap the batteries on a daily basis when those sources are off-line (i.e., at night).

The Berkeley Lab folks, led by researcher Venkat Srinivasan (who authors the This Week in Batteries Blog) will be working on a proof of concept flow battery using hydrogen-bromine chemistry. They have commercial partners on board as well, including DuPont, which will contribute membrane know-how, and the Bosch Group for catalysts.

There are a few technology firms already out there with flow battery technologies. They promote their products as useful for off the grid energy storage (for example to store energy from diesel generators) as well as for smoothing the supply of electricity derived from renewable sources like solar and wind. Deeya Energy is probably the most well-known; it uses an iron chromium chemistry to power its redox flow batteries. The company raised $30 million in its third round of venture financing in 2009 and has one battery product on the market, aimed at powering remote cell phone towers.

On Tuesday, August 24 at the ACS Boston National Meeting there will be a full-day symposium titled “Gulf Oil Spill: Tackling the chemistry and food science implications.”

Scientists from government, academia, and non-profits will review what is already known about the impacts of past spills on marine ecosystems and economically important seafood industries. The afternoon sessions will look deeply at the science of characterizing the components of crude oil as it breaks down in the gulf. After the talks there will be plenty of time for discussion.

The symposium is being cosponsored by the ACS Committee on Science, Multidisciplinary Planning Group, and the Green Chemistry Institute. A schedule has been posted to the ACS Community Network website: https://communities.acs.org/docs/DOC-3106

The Chevy Volt's electric drive train will be powered by LG Chem batteries produced in Holland, MI

The U.S. will soon be awash in lithium-ion batteries for electric cars. But how many are too many?

The other day I observed a rush-hour traffic jam of Toyota Prius’ on a major artery that leads into Washington, DC. The particular stretch of road is restricted to high-occupancy vehicles and hybrids. So Prius-driving commuters have an edge getting to work in the mornings. Seeing hybrid after hybrid, I mused on the likely demand for the first generation of mainstream electric vehicles like GM’s Volt and the Nissan Leaf. Federal and local government incentives and restrictions, like the rush-hour one, really muddy the waters when experts try to forecast how many of these cars will be sold.

One whopping market-muddier is the Federal government’s support of U.S. electric-car battery manufacturers.

Yesterday afternoon, President Obama visited the site of what will be an LG Chem manufacturing facility for lithium-ion car batteries in Holland, MI. The plant has received a $151.4 million Department of Energy grant as part of the Recovery Act of 2009.

The President’s focus was to tout the administration’s efforts to create manufacturing jobs in the U.S., and to promote domestic electric-car battery making as a brave new industry for the nation.

Analysts I talk to say the effort will help get a domestic industry off the ground. And as my colleague Marc Reisch points out, auto makers have a large pipeline of electric cars on the way, which feeds demand for batteries. But on the other hand, many question whether the rush to take advantage of funding may so distort the balance of supply and demand as to create a huge overhang of unused batteries.

There will clearly be an initial demand from auto makers, but at some point, the end consumer has to enthusiastically adopt electric cars in order to move the expected amount of production.

Lux Research senior analyst Jacob Grose estimates that in 2015 global sales of lithium ion batteries for electric car or grid applications will be 11 billion watt hours. That’s the demand side. On the capacity side he predicts manufacturers will make 18.2 billion watt hours worth of batteries. That difference of 7.2 watt hours will be oversupply.

Grose says the over supply will be due to subsidies for the factories, as well as a moderate uptake of electric cars by consumers, mostly due to the high price tag.

“In our best estimates for electric vehicles, unless gas prices unexpectedly spike, car sales won’t scale up at the rate needed to use all these batteries,” he says. A temporary glut could be good news for consumers though. Grose anticipates that the oversupply along with a continuing slow recovery would put downward pressure on prices