Energy 2010

As the BP oil disaster continues to unfold, Americans are reminded of the necessity to phase out old, dirty fuels, and begin to use clean, domestically produced renewable fuels - fuels that can last forever without compromising our air or water. Never has there been a more opportune time to advance our biofuel investment and technology.

It's been a busy week in the world of biofuel news, with rumors of a Low Carbon Fuel Standard possibly becoming part of an energy and climate package on the senate floor next week. Also, the biofuel community has been buzzing about a recent Congressional Budget Office report, and either applauding or reaming the results of the study. The study calculates the true costs of corn ethanol in light of tax credits and subsidies. This has directly led to the other big piece of news: the Volumetric Ethanol Excise Tax Credit (VEETC) looks like it will probably be allowed to run out in 2010, which is disappointing news for ethanol producers. This tax credit subsidizes blenders (read: Big Oil) to purchase ethanol. Paradoxically, this blending is already mandated by law, and so we are paying oil refiners to do something they are already required to do. The ethanol industry might lose a small portion of its market share without these tax credits, and they are still fighting to keep these antiquated credits in place.

Through all this hubub, it's the 11th hour of trying to get a new national energy policy passed through Congress, and Friedman does a good job of showing us why this is cause for concern. Biofuels will continue to exist and receive investment as long as AB-32 exists in California and is modeled in other states. However, we need the US to recognize that new, domestic energy might require some upfront investments. Sadly, it's looking grim for the sweeping changes we need, and we might have to settle for Reid's push in the fall.

This week the pundits are all equally disappointed in the lack of energy policy changes. With a democratic majority and a massive environmental disaster, there could not be better timing for a paradigm shift. However, Obama's pre-election rhethoric has not been matched by post-election action. Energy policy has simply been a lower priority than healthcare or Afghanistan. I agree that these other issues are pretty hot fires, but these are also symbolic of remarkably shorter-term thinking. Long-term, strategic planning would make us consider our position as a slipping world leader. How can we secure our national economy, security, and have the money to fix our healthcare system? We need to stop sending our money overseas for our growing energy needs. We need to invest in existing sources of energy (both electricity and fuel) that will never run out, and that do not pollute our air or water. We can do this by investing in renewable fuels and energy sources that create jobs here, now. We can invest in a new grid system, renewable energy, our public transportation system, and demand more efficient vehicles and fuels. And yes, all these cost money. Quite a bit, in fact. But that's exactly where the problem lies. We can all agree that we need domestic energy, but we won't pay for it. Well, if we don't put our money where our mouth is, then we can't start investing, creating jobs, recirculating money inside the country, putting money back into our healthcare or schools. We will just keep sending our money overseas. Consider that energy policy could be part of the solution to the other issues.

Energy policy could be the key. It could be the pivotal issue that tips the scales in our favor on all other issues, and secures our stronghold as the world power. It can stabilize our economy. Our legacy could be defined based on this single issue. I still hold out hope that we might see the energy policy we need push forward this fall. But is it too late?

Replacing oil with sugarcane

Following up last week's post, I'd like to highlight some biofuel companies that make scientists in lab coats look sexy. First of all, you should know the difference between a biodiesel and a renewable diesel. Biodiesel indicates that some sort of engine conversion is necessary, while renewable diesel alludes to a drop-in fuel. Drop-in fuels are able to go directly into your traditional fuel-combustion engine, no conversion needed. Genius.

Secondly, you should know that many of these biofuel companies believe that as the electric grid goes renewable, personal transportation is likely to go electric, too. Most of us can get to work and run our errands on an average electric charge. However, fuels that will stay liquid for the forseeable future include shipping, military, and aviation. Liquid fuels provide more energy and greater range, and are indispensible for these uses. (Yes, I did see the plane that flew 24 hours on solar, but even they don't have any grandiose plans to make the Air Force go solar) With all this in mind, many biofuel companies are targeting diesel & jet fuel as their fuels of the future, since these will not be outdated with advances in personal transportation.

Bearing this in mind, I'd like to introduce you to Amyris Biotechnologies. Amyris is located here in Northern California, and is perfecting its substitution of petroleum. A few Berkeley PhDs started a project to create a low-cost anti-malarial drug, artemisinin. Once they accomplished this goal, they decided to look further. This, and a common love of beer, made the three founders develop a special fermentation process that they realized could be modified to replicate countless chemical compounds. Using a sugarcane input, the fermentation process can yield nearly anything oil can: a cosmetic base (they recently partnered with Proctor & Gamble), plastics, fuels, and plenty more. Their facility is one huge laboratory after another, showing that as soon as they nail one product, they are off and testing another. They are currently showing the functionality of their distribution system by selling third-party ethanol. According to Amyris, this is a short term solution to get some revenue in the door, and get their relationships with suppliers and distributors on solid ground. They hope to be a full scale producer as early as next year. With a recent minority-share purchase by Total, they seem to be positioned and ready.

Amryis has plenty of challenges in the short term: finding a sustainable source of sugarcane, demonstrating it can produce its fuels at scale, deciding whether or not to go public, and doing this all while keeping beer & burritos a Friday tradition.

It's companies like this that give me hope for the future. Amyris provides jobs, is producing fuel domestically, and has an environmental conscience. While adding to our economic, social and environmental bottom line, they also stand to gain through California's climate legislation - AB32. I support this legislation, and any company that will benefit from AB32 is a company I want to see flourish in California. There are dozens of other fascinating biofuel companies like Amyris out there, and I will continue discussing more next week.

Fuels for the Future

How much do you know about biofuels? Do you have a vision of an old converted VW, spurting around to different restaurants and siphoning their grease? Have you heard the old arguments about rising corn prices, and wondering about the long-term utility of such fuels?

If this is your image, it's time to get up to date. My long hiatus from blogging can be attributed to several life changes, and a significant amount of time getting up to speed on this very topic. After countless hours of research, meetings and conversations, I can attest to the promising future- both environmentally and economically- of biofuels in our world.

Let me start by introducing you to a piece of legislation. It's called the Low Carbon Fuel Standard (LCFS), a quiet little piece of regulation with significant impacts. It's being implemented in California, and other regions will likely follow soon. The LCFS mandates that all fuel sold in CA must achieve a 10% reduction in carbon intensity by 2020. The LCFS is an economically sensitive piece of legislation because it does not mandate how oil refineries and importers must achieve this - they may blend any variety of biofuels into existing fuels, they may alter their own production processes, or purchase LCFS credits. Biofuels' carbon intensity will be analyzed on a case-by-case basis, and the lowest carbon intensity will have the highest market appeal. Essentially, "make the most environmentally sensitive product, and you will be guaranteed a huge market." That simple.

This is a win on many levels:
1) this encourages investment in clean technology, which is quickly becoming large provider of jobs in California.
2) Clean technology is a shift from old petroleum, which most people can agree has negative national security and pollution consequences.
3) Biofuels are most effective when produced local to consumption. This means thriving local economies.
4) The LCFS does not discourage a shift to electrification of vehicles
5) This regulation does not deny the inevitability of increased population and increased energy use in the future; it only ascertains that we begin sourcing this energy from a more secure source.
6) The LCFS indicates that any use of food sources to create biofuels is NOT the fuel of the future. Fuels from corn or soy barely have lower carbon intensity than petroleum, and will not result in that needed 10% reduction. New fuels are encouraged.

It's already working. The investment dollars are flowing in California, and the scientists are busy in their labs, trying to create the best fuel out there. Over the coming few weeks, I'm going to highlight a few different companies that are making significant progress towards producing incredible new fuels. They are farther along than you might think.

Microsoft Hohm: Home Sweet Home

Microsoft Hohm just posted another blog I wrote about greening a home. I find this especially difficult in the face of so much conflicting information out there, and discoveries of harmful chemicals in common products.

And the pendulum swings

Over some homemade peach pie, my father and I were recently discussing 'what's wrong with America.' (Light topics over the holidays at my house.) My father is concerned with the cultural gaps, and lack of common culture for younger Americans. See this NPR story, which explains the side effects of mass media. If there is SO much media available from so many sources, all the time, how can any generation share common knowledge and references? The grim reality of these implications is hammered home in this short video by Kansas State students, showing the massive differences in communication and education between 'the millennials' and older generations.

I think this is certainly a cause for concern, especially as it applies to professional communication standards. Inter-generational differences are acceptable in most forums, but in business settings, the same standards apply to all people, regardless of age. Check your email. Read the whole thing. Reply carefully, in a timely and professional manner. Multi-tasking shows lack of interest. Arrive on time, and concentrate on the task at hand. As long as everyone is held to the same business standards, I believe that outside of work, cultural differences can have minimal consequences.

To counter my father's opinion, my greatest concern is the two-party, donation based political structure in the United States. I think we should abolish party donations, and make politicians work for something besides donor dollars. This would completely change the game for interest representation, lobbyists, and general inefficiencies.

Once political donations are outlawed, there would be a fighting chance for another political party in the United States. I detest the stronghold and constant bickering of the two-party, Us vs. Them. It causes severe clashes between the two parties, and creates this pendulum effect after each election. (See today's EPA smog standards update) Little new legislation can be created, because we're working so hard to change back everything that predecessors just changed two or four years ago. If just one other party existed, with substantial share in the system, suddenly NO party would have over 50% majority. For every single bill and policy, parties would constantly be forced to work together on their initiatives, instead of bullying their way to passing bills. As parties are forced to work together instead of constantly fighting, they will discover the large amounts of commonalities they share. They can use these commonalities, which are also present in the general population, to create substantial and meaningful legislation that would not simply be altered into obsoleteness in four years. Now, I do vote for one of the two major parties currently, but I'm anxiously awaiting a time when I have a third (or even fourth!) viable alternative.

What an effective use of a slice of peach pie.

And into the future

According to my childhood diary, at 2010, I officially enter 'The Future.' Here I am, Future! Bring on that flying car and inter-space travel. Although we might not have reached the sci-fi future visualized by some, we have made surprising progress in some unexpected directions.

In just the past ten years, as we've moved from a new millennium to this new decade, we've made considerable strides. Instead of paranoia about Y2K, we just live in fear of strangers sneezing virus strands on the subway. No, but seriously, in 2000, how many of you out there might have guessed we would ring in this year with a minority President? How many thought we would be talking about climate change in every single living room (no matter what is actually said about climate change), and factoring it into many major business decisions? I certainly never would have guessed the various bends my own life has taken, much less the market shift back to organic foods - a new name to a very old concept. We've shifted from globalization back to localization. The internet has become fast and accessible in almost any corner of the world, and drastically changed our culture. Unfortunately, we've also seen the rise of terrorism and natural disasters in the last ten years. In many ways, we have more challenges now than ever before. But this is why I keep reading. And I keep listening, and thinking. We need constructive steps and methods to solve the financial crisis BY solving the environmental crisis.

It was 2000 that I first went to work in Yosemite National Park, which steered me down a new course in life altogether. I'm so pleased with where I am in life at the start of 2010 - fresh MBA in hand, and the rest of my life ahead of me. I'm also encouraged with the difference I see in our thoughts and conversations in the last ten years, and I can't wait to reflect on the accomplishments we will make between 2010 and 2020. While I don't normally get too excited for New Years Eve - it is just another night, after all - I have enjoyed thinking back on the important moments to me in the last ten years. Whether it's your team's Superbowl victory or new people in your life, it's fun to think about how far we've all come.

So on the eve of the Future, although I am not exactly hurdling through space on my work commute, I do think we have laid the groundwork towards a paradigm shift. And that gives me reason for hope as I prepare to begin again.

My career is calling

My last week of graduate school, we were asked to write a paper on 'our calling.' This calling should culminate our personal goals with career ambitions and the lasting legacy we want to leave on the world. After three years of introspection and growth in my MBA program, I was happy to put a stake in the ground, and announce my calling.

My calling is to continue to develop my entrepreneurial ideas with a strong emphasis on social equity, economic prosperity and environmental sensitivity. At this point, my entrepreneurial ideas are not directly related except for these underlying principles of 'a new way to do business'. While I am currently searching for a long-term job or consulting role, my 10 year plan does include launching my own venture.

I have relished the opportunity to use my cumulative knowledge from graduate school, and apply these principles to a business plan. Most importantly, I now have the skills to turn these ideals into quantifiable metrics and lucrative opportunities, based on sound economics. Prior to grad school I was biased to consider environmental benefits before social implications. My time at Presidio has shown me the interwoven elements of these pursuits, and I realize now that a business cannot have one without the other.

When I began school, I had a direction for my career, but I also stated that I was excited to change my plans as I developed and learned. Reflecting now, I realize I decided against that original career path within my first semester. I was deeply influenced by Presidio, and I changed my life to be able to embrace school’s opportunities more whole-heartedly. Presidio has given me some truly key pieces of knowledge which inform my decisions, relationships and career:

• Social Impact. A speech by Van Jones was very effective at driving home the importance of including the bottom-of-the-pyramid domestically. I have been concerned with international issues for years, but Van’s speech really highlighted the impact that needs to happen here in the United States as well.
• Commitments. Throughout my time in Presidio, I have learned how to properly commit myself. I only pursue endeavors to which I can dedicate myself, and complete to the best of my ability.
• Collaboration in favor of competition. My past training embraced cutthroat competition. I spent two years adjusting to, and learning to reap the benefits of collaborative work.
• Statements are most effective with passion, not emotion. Plenty of times in the past, I have been guilty of reacting out of emotion, and not making deliberate and grounded statements. I have learned the effectiveness of using passion to make an argument that is well grounded in reality.
• SROI (social return on investment). One of the best classroom learning components was the ability to apply financial metrics to the fuzzy, environmental and social returns to society of a particular venture.
• Development, not growth. We, as people, as a society, and as business leaders, need to develop, but we do not need to grow. We're big enough, but are we good enough?
  
• I have enough. I felt this most acutely at my summer internship in Nicaragua. Don’t spend too long yearning for things out of reach. I have enough already. Cherish it.

I’ve learned the hard way that most things in life, at least, the important things, cannot be planned. Networks, strategies and backup plans can all be integral to success and one’s ability to rebound from unplanned failures. However, ultimately, life is about being in the right place at the right time. So as much as I stack my own deck, make my plans and try to follow my calling, I still try to lead my life with another guiding plan. I plan to be surprised.