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1. Detroit Execs' Hybrid Parade to D.C. Too Little, Too Late
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2. GREEN GIFT GUIDE: For Her
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3. How Risky Is Tesla's Bet on a DOE Loan Guarantee?
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4. Swedish Chemrec Raises $20M for Paper Mill-to-Biofuel Tech
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5. Hawaii Says Aloha to Better Place
Detroit Execs' Hybrid Parade to D.C. Too Little, Too Late
Josie Garthwaite - Automotive
In the interest of avoiding another Jetgate, Detroit’s Big Three auto executives are leaving their leased corporate aircraft on the ground this week. All three will drive to Washington, D.C. to present “viability plans” as part of their second bailout plea. Ford CEO Alan Mulally set off on the roughly 520-mile trip yesterday in an Escape Hybrid, and General Motors chief Rick Wagoner plans to drive most of the way today in a Chevy Malibu Hybrid (he may also hop into a Chevy Cobalt XFE or Buick Lucerne for part of the trip), the companies announced yesterday. Chrysler also decided to join the hybrid parade, saying CEO Robert Nardelli would drive a hybrid vehicle (no model named) to congressional hearings on Friday.
The idea of legislators ridiculing millionaire executives into traveling like ordinary folks has generated no small amount of buzz (just a few examples: New York Times, LA Times, Reuters). But if the Big Three want to demonstrate commitment to innovation and fuel-efficient vehicles (aka viability), the models they’ve chosen offer too little evidence, too late.
Take the Chevy Malibu Hybrid, which GM lists on its web site as having “very limited availability.” The EPA rates it at just 34 mpg for highway driving — an underwhelming 2 mpg improvement over the regular Malibu. For comparison, the 2009 Toyota Prius and Honda Civic Hybrid get 45 mpg on the highway. Even the regular Civic, rated at 36 mpg for highway driving, has better fuel economy than the hybrid Malibu.
The 2009 Ford Escape Hybrid, on the other hand, has better fuel economy (31 mpg highway) than any other SUV. But a shining example of forward thinking it is not. As New York Times car reviewer Christopher Jensen put it earlier this year, “When Ford introduced the 2005 Escape Hybrid it broke new ground. Unfortunately, the automaker didn't continue that tradition with the 2008 update, which comes across not as hot stuff, but as barely warmed-up leftovers.”
Part of Mulally, Wagoner, and Nardelli’s goal on this trip is showcase their cars. That much seems doable. But if they had put this kind of spotlight on improving fuel-efficiency when the Malibu, Escape, and other vehicles were in development, their industry could be on a very different road today.
GREEN GIFT GUIDE: For Her
Olivia Chen - 2008 Holiday Gift Guide
Eco-savvy ladies should be able to enjoy the finer things in life without having to compromise their environmental ethics. There are plenty of places out there to find glamorous green gifts for that special lady in your life, if you know where to look. Read on for our top picks for green goodies sure to please any discerning eco-chick.
How Risky Is Tesla's Bet on a DOE Loan Guarantee?
Josie Garthwaite - Automotive
Electric car startup Tesla Motors claims that all it needs to begin construction on a manufacturing plant in San Jose, Calif., is a $200 million loan guarantee from the federal government. CEO Elon Musk has described the loan guarantee as a “when, not an if,” adding that, “We’ll do what we need to get approval.” So what would securing a loan guarantee entail, and does the green automaker really have this one in the bag?
The short answer is that Tesla — which has already raised some $185 million, plus deposits from at least 600 would-be Roadster owners — has reason to be confident in the guarantee. But the company’s future as anything but a niche luxury green car maker is at risk if the guarantee is as critical as Musk suggests. As he explained in a blog post in October, the planned factory represents Tesla’s key to high-volume production and a long-awaited sedan.
So what are all the steps involved in a loan guarantee from the Department of Energy? Tesla began the process about two years ago, submitting a preliminary application under a program created in the Energy Policy Act of 2005 aimed at encouraging innovative green technologies. More specifically, the program backs new or “significantly improved” technologies that prevent, reduce or capture greenhouse gas emissions. For projects meeting those criteria and one more — a reasonable prospect of repayment — the DOE agreed to assume financial risk that might otherwise scare off lenders.
Unlike the $25 billion direct-loan package approved specifically for fuel-efficient vehicle development, the loan guarantee program is open to a range of energy technologies, is not meant for research and development, and requires borrowers to pay the the government’s expected long-term liability for issuing the guarantee, or subsidy cost.
Tesla sought a guarantee on loans for its sedan factory (then planned for New Mexico) by arguing that an affordable electric car could replace today’s gas-guzzling, emissions-belching vehicles, thus preventing greenhouse gas emissions. Congress authorized the program to guarantee up to $4 billion in February 2007, and later that year, the DOE invited 16 pre-applicants, including Tesla, from a pool of 143 to submit full applications.
No other vehicle technology made it that far. Diarmuid O’Connell, Tesla’s V-P of corporate development, told us last week that Tesla’s application is among the three “most progressed” in the evaluation process, although that doesn’t mean it’s first in line for a guarantee. The program has a set amount for which it can vouch, not an allotted number of guarantees it can hand out.
According to DOE spokesperson Bethany Shively, the $4 billion approved for Tesla’s cohort of applicants “remains available until used.” That means Tesla can rest assured that the authorization won’t lapse, but the notoriously slow-moving program may not approve guarantees until well after the company’s planned mid-2009 groundbreaking in San Jose. And even if Tesla’s loan guarantee wins approval from the DOE, federal regulations say it can’t go through until the company completes a report on the project’s environmental impact, as CEO Elon Musk has noted in his blog.
Musk has remained mum, however, on a number of other hurdles that need to be overcome as well. Shively told us this week that several steps remain in the evaluation process, including technical, market and legal reviews. And beyond that, Congress has not approved the DOE’s FY 2009 budget requests (appropriations for most federal programs have been delayed until March), including funds for rising administrative costs in the loan guarantee office, which has solicited two more rounds of applications since Tesla first entered the system. According to O’Connell, the program has been understaffed and lacked full support from the Bush administration. As Office of Loan Guarantees Director David Frantz told reporters last spring, “It takes us months and years on these larger projects to do our credit underwriting and due diligence process.”
The backup plan for Tesla consists of more government investment, in the form of up to $400 million in low-interest loans. O’Connell, a veteran of D.C. politics, said government advisers recommended the company apply for the loans, in addition to the guarantee, because they fall under a program designed specifically for fuel-efficient cars that offers more favorable terms (it covers those subsidy costs, for one).
Last year, Tesla founder and then-CEO Martin Eberhard, in testimony before the Senate Finance Committee, observed that the Energy Act passed in 2005 included “incentives for practically every type of alternative automotive technology except electric cars. Why? Did somebody really kill the electric car?” We’ll know early next year what happens with Tesla and the DOE, but either way, we suspect the electric car will manage to survive.
The bottom line is without the manufacturing plant and the loan guarantee Tesla has a very slick, very fast, zero-emission, low-volume electric vehicle, a nascent powertrain supply business — and heavy reliance on funding from its CEO. This represents a major accomplishment on the spectrum of green car innovation, but it’s not everything the company has promised.
Swedish Chemrec Raises $20M for Paper Mill-to-Biofuel Tech
Katie Fehrenbacher - Startups
Pulp and paper mills produce a dark, inky byproduct known in the industry as “black liquor,” which is often burned in standard boilers to produce modest amounts of electricity and plant stream. Chemrec says its technology can turn the black liquor into syn gas and then into a biofuel or biochemical, and claims its process is more efficient than producing electricity via the traditional boiler system. Chemrec also says its technology is currently being used at two mills — Weyerhaeuser's New Bern mill in North Carolina (see photo), and Chemrec’s own development plant in Pitea, Sweden. It also says it’s working with “leading” pulp and paper mills in the U.S. in Sweden to implement the technology commercially.
The black liquor can be turned into biofuels, biomaterials or electricity. But Volvo is interested in how black liquor can be made into bio dimethyl ether, or DME. Volvo is also working on developing 14 prototype trucks to run on DME. The Swedish Bioenergy Association told the UPI that if there was a DME plant at every paper mill in Sweden, enough biofuel could be made to replace a third of the country’s diesel fuel. Chemreq says DME from black liquor has one of the highest land use efficiencies of second-generation biofuels.
Hawaii Says Aloha to Better Place
Katie Fehrenbacher - Automotive
The Bay Area might have managed to eke out news of the first network, but it actually makes a lot of sense for Hawaii to turn to the widespread adoption of electric vehicles. Hawaii has some of the highest gas prices in the U.S. and has been aggressively courting ways to reduce fossil fuel consumption. The state has its Hawaii Clean Energy Initiative (HCEI), which is aiming to have 70 percent of the states electricity from renewable sources.
Hawaii’s deal with Better Place plans to start permit work for the network next year, with electric vehicles first appearing in 18 months and becoming widely available by 2012. The startup didn’t put a price on the network investment, but the company tells us it will be similar to the planned investment in Israel and Denmark; Israel is supposed to cost around $200 million to buildout. Hawaii utility Hawaiian Electric Company has also signed on, in what it says is the first Better Place utility deal, to collaborate on infrastructure and energy production.
Hawaii has been trying to spur its cleantech industry over the past year and has used state incentives and purchases to help the market grow. Solar thermal startup Sopogy has said the state legislature has approved up to $35 million in special purpose revenue bonds for Sopogy to build and operate a solar plant locally. For the deal with Better Place, Hawaii plans some sort of public-private partnership; we’ll update with more on that after the media event.
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