2011 clean economy roadmap

CLEAN ECONOMY
ROADMAP
CHARTING A COURSE FOR THE GROWTH OF THE CLEAN ECONOMY

PROCEEDINGS OF THE CLEAN ECONOMY SUMMIT
January 24–25, 2011
Washington, DC

Photo courtesy of BrightSource Energy

Table of Contents

Introduction by Jeff Anderson 1
Executive Director of the Clean Economy Network Education Fund

The Clean Economy Roadmap
Introduction 1
Transportation and Infrastructure 5
Deployment, Manufacturing and Commercialization 11
Electricity 19
Clean Economy Markets 25

Clean Economy Network Education Foundation 32
board of directors and staff

Acknowledgments Inside back cover

INTRODUCTION
CLEAN ECONOMY ROADMAP
The Journey Begins Here
JEFF ANDERSON, Executive Director, Clean Economy Network Education Fund

What would happen if you put clean economy business leaders in a room with policy makers from the Hill
and Administration, and asked them to discuss some of the burning questions facing this community with no
media present? What if you told them there would be no PowerPoints, no speeches, and no presentations?

What if you gave policy makers the opportunity to listen to the unfiltered experience of business leaders who
are trying to deal with federal, state and local policies and programs? What if you gave business leaders the
opportunity to hear directly from policy makers about the challenges of developing innovative policies to
support the clean economy? What would happen?

I’ll tell you what would happen—rich, thoughtful conversation, dialogue and sharing of ideas.

All that, and much more, took place at CENEF’s inaugural Clean Economy Summit in Washington, DC on
January 24-25, 2011.

The conversations that took place about transportation and infrastructure, deployment, manufacturing and
commercialization, electricity and clean economy markets have been captured and summarized here in the
Clean Economy Roadmap.

The Roadmap is not a set of specific policy prescriptions for the clean economy. Every journey needs
a starting point, a point of departure. This inaugural Roadmap is just that. It sets the stage and lays the
groundwork for further discussion and exploration of policy issues.

I encourage you to use this Roadmap as a starting point for your own path to policy development and
formulation. I hope you will share with us your thoughts and experiences as we move forward so that at next
year’s Summit, we can look back at where we started and continue to chart a course—a map, if you will—to
a clean economy future.

INTRODUCTION
On January 24-25, 2011 in Washington DC, the Clean
Economy Network Education Fund (CENEF) held the
first annual Clean Economy Summit, an invitation-only
convening of the existing and emerging leadership of
the clean economy business community from across
the nation. Over the course of two days, the Summit
engaged these leaders in a structured dialogue with
top policymakers, opinion leaders and issue experts.
From their facilitated conversations on a strategic set
of issues, CENEF has begun to map some of the most
critical policy pathways for the rapid expansion of a
clean economy, which has been captured in this Clean
Economy Roadmap.

CLEAN ECONOMY ROADMAP • www.ceneducationfund.org/clean-economy-summit 1

INTRODUCTION

THE CLEAN ECONOMY SUMMIT: subject area in order to ensure knowledgeable facilitation
Unleashing innovation, economic of each session. The participants brainstormed ideas,
growth and job creation then evaluated and prioritized the potential policy and
The creation of a clean economy requires long-term and program solutions that emerged.
consistent public policy, which is essential to the creation
of market clarity and certainty. Implementation of such
consistent policies requires sustained engagement by THE CLEAN ECONOMY ROADMAP:
the clean economy business community in the policy Charting a course for the growth
development and political process. To that end, CENEF of the clean economy
launched the annual Clean Economy Summit in order to The main themes, issues and topics that surfaced
explore this intersection between business and policy during the conversations at the Summit have been
and the impact each has on the other. summarized below in the Clean Economy Roadmap.
While by no means comprehensive, the Roadmap
To be effective, this examination required high level identifies four critical sets of policy issues impacting
interaction among opinion leaders, policy-makers, the clean economy that correspond to the four tracks
business leaders and other thought leaders who have at the Summit. To ensure continuity, CENEF intends to
demonstrated the substantive expertise necessary use these same categories of issues as the basis for
to drive the clean economy sector forward. Business subsequent Summits and the resulting Clean Economy
community participants in the 2011 Summit came from Roadmap documents. The issue areas were:
CEN’s Leadership Council (which includes the CEOs of
CEN’s corporate members), CEN executive members, Transportation and
CEN chapter steering committee members, CEOs of Infrastructure
allied organizations, and the CEN and CENEF boards of The availability of cheap oil has defined
directors. Their partners in the ensuing policy dialogue and shaped America’s transportation
were key federal legislative, administration, and agency policy. From hybrid and electric cars and trucks to
staff. advanced fuels and efficiency technologies, new and
underutilized technologies are already available to
The primary goal of the Summit was to surface and greatly reduce our dependence on oil. The global race is
prioritize those policy proposals with the greatest on to bring these technologies to the marketplace, and,
potential to unleash innovation, economic growth and job if America does not attempt to compete, we will fall even
creation. Taking advantage of the political reset of a new further behind. A revitalization of the declining US
Congress, the Summit used the opportunity to evaluate transportation industry, a major domestic employer,
the landscape that lies ahead, both in terms of business could come about if government would move quickly
opportunities and policy possibilities. By integrating to implement policies that stimulate demand for and
business and political perspectives and drawing on the encourage investment in cleaner forms of transportation,
rich expertise of both communities, Summit participants thereby creating jobs, spurring the economy, and
identified key challenges and issues impacting the clean reducing our dependence on oil.
economy and began to investigate the possible pathway
to solutions. Deployment,
Manufacturing and
On the first day of the Summit, clean economy leaders Commercialization
met for a facilitated interactive dialogue aiming to surface The innovation cycle is a complex web
critical policy themes and ideas. Participants were of actors and investments that all play a critical role
divided into four systems-based tracks that brought in each stage of a technology’s development, from
together business leaders, leading NGOs, key Hill and concept through deployment and commercialization.
agency staff, and other thought leaders with expertise in Each step of the process comes with a set of risks
an assigned topic area. The resulting conversations were and challenges that public policies can influence, both
moderated by a career professional familiar with the positively and negatively. If correctly formulated, policy

2 CLEAN ECONOMY NETWORK EDUCATION FUND • www.ceneducationfund.org

INTRODUCTION
can create an environment that drives innovation, efficient domestic markets, it is critical to determine the
encourages investment, and ultimately facilitates the best means by which to set the appropriate long-term
entry and expansion of clean technologies into the signals and find the correct mix of standards, incentives
domestic marketplace. Deploying clean technologies in and mandates through policy at the federal, state and
turn assists their commercialization, grows a domestic local levels to balance with the needs of a free market.
manufacturing base, and supports the expansion of
such technologies in domestic and foreign markets. The goal of the Roadmap is to shed light on some of the
top policy issues broadly impacting the clean economy
Electricity sector through the lens of the experiences of those
During the majority of the 20th century, the business leaders who are even now building the new
United States had the most sophisticated clean economy. Each track report below includes a full list
energy grid and infrastructure in the of the participants in the conversations to demonstrate
world. However, it has failed to evolve to meet the needs the depth and breadth of the expertise, knowledge
of a changing age, and the electricity grid remains the and points of view represented in the conversations.
only large-scale analog system in operation in today’s As you will see, what sets the Roadmap apart is that
digital world. The U.S. must begin to deal with the the participants are overwhelmingly from the business
numerous structural and policy deficiencies of the community, which helps to provide a more accurate
sector, including outdated and inefficient grids, inflexible sense of the issues from the business point of view. We
pricing rules, lack of interconnectivity, and consumer have included in each section a brief profile of two of the
education. The solution requires a mix of policy changes businesses whose executives participated in the track to
and technological innovations at the national, state, and illustrate the innovation and cutting edge technologies
local levels. that clean economy companies are already bringing into
the marketplace.
Clean Economy Markets
While clean economy markets have been
slowly developing for decades, they have HOW TO USE THE ROADMAP
yet to fully hit their stride in the U.S. for The Roadmap is designed to foster a better
a variety of reasons, including a lack of commitment by understanding of the complexities we face in building
government to develop the environment necessary for a clean economy, while simultaneously driving into the
long-term certainty in the marketplace. In order to build policy arena those informed, innovative ideas that are


INTRODUCTION

based upon the actual expertise and knowledge of clean and transcripts of the contemporaneous recordings
economy business leaders. However, the contents of made of each session. Each of the sections was peer
each of the sections below are not meant to serve as reviewed by the participants themselves to ensure that
a comprehensive analysis of every policy issue facing the content, themes and tone of the conversations were
the sector. Rather, the Roadmap lays the groundwork for accurately captured and represented.
further policy development by exploring specific topics
within each area that are the most relevant and current Finally, it is important to note that the sessions were
in 2011. Future Roadmaps will undoubtedly address closed to the media in order to facilitate a fully open and
other topics in more detail as both business and political honest dialogue. While the participants in each discussion
circumstances change over time. session are listed, no observation, recommendation or
opinion may be attributed to any specific participant;
Each section provides an overview of the discussions neither can any conclusion or idea be deemed one that
that actually took place during the 2011 Clean Economy is shared by all of the participants.
Summit and presents some of the key outcomes and
conclusions articulated by the participants. At the CENEF is publishing this Roadmap so it can be put
Summit, each track operated independently from the to good use by those who read it, whether that use is
others and the outcomes described below mirror the learning more about the structural barriers faced by the
unique dynamic of each discussion in both structure and clean economy business community, formulating policy
content. proposals to address those issues, or stimulating your
own thinking and innovative ideas. We look forward to
From a process standpoint, each section of the continuing the dialogue and working together to unleash
Roadmap was created using a combination of notes the vast potential of the clean economy sector to create
taken during the discussion by the moderators and staff jobs and economic growth across the nation.


TRANSPORTATION AND
INFRASTRUCTURE:
PETROLEUM DISPLACEMENT IN LIGHT DUTY VEHICLES

INTRODUCTION
America’s appetite for petroleum endangers our national security,
exposes our economy to a volatile global oil market, and threatens the
sustainability of our environment. The transportation sector consumes
72% of the country’s petroleum supply, a significant portion of which is
utilized in light duty vehicles.

While government can assist the development of advanced, cleaner
vehicle technologies, it is the private sector that will bring those solutions
to the marketplace. This section of the Clean Economy Roadmap
articulates the state of these technologies and investigates what kinds
of policies will best advance their commercial deployment.

The following discussion focuses specifically on displacing petroleum
use in light duty vehicles. The Clean Economy Network Education Fund
has identified vehicle efficiency, electrification, and advanced biofuels
as three of the most viable solutions for achieving this goal.


TRANSPORTATION AND INFRASTRUCTURE

TRACK PARTICIPANTS THE PROBLEM
Dependence on oil is the problem. Petroleum fuels 95%
Laura Lovelace, Co-Founder, Welford Energy Advisors of the energy consumed by the transportation sector.
(Moderator) Accordingly, the cost of personal mobility is closely tied
Rohit Aggarwala, Advisor, Bloomberg Philanthropies to the cost of petroleum, a price that is determined by
a global market characterized by rapid, unpredictable
Justin Ashton, Co-Founder & Vice President, XL Hyrbids fluctuations. An increase in the cost of oil drives up the
Carrie Atiyeh, Director—Public Affairs, ZeaChem price of gasoline, which adversely impacts American
Josh Becker, Founder, New Cycle Capital consumers and the economy. The price of oil also has a
ripple effect on the price of other products, such as food
Michael Brylawski, Executive Vice President, Bright
and consumer goods, that rely upon it for production
Automotive
and transport. These factors pose a continuing threat to
Kelly Carnes, President & CEO, TechVision21 the health of the recovering economy.
Aimée Christensen, Founding Principal, Christensen
Global Strategies Twelve countries control 80% of world’s proven
Robbie Diamond, Founder, President & CEO, Secure oil reserves and 40% of annual production. Those
America’s Future Energy (SAFE) countries—Algeria, Angola, Ecuador, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates,
Honorable Suzanne Kosmas, former member of the
U.S. House of Representatives and Venezuela—are members of the Organization of
Petroleum Exporting Countries (OPEC) and together
Martin Lagod, Managing Director, Firelake Capital
have the ability to influence the price of oil to suit their
Jim Lyons, Chief Technology Officer, Novus Energy Partners interests. As the recent violence in Libya illustrates, some
Bill Mitchell, Executive Vice President, A123 Systems of these nations are politically unstable or do not share
U.S. interests. Therefore, the federal government must
Erik Olbeter, Senior Research Analyst—Government
devote financial and military resources to discourage
Technology, Pacific Crest Securities
instability and secure the oil supply, which adds a
Sunil Paul, Founding Partner, Spring Ventures significant national security cost to our oil dependence.
Graham Richard, Principal, Graham Richard & Associates
LLC These two factors—oil’s dominance among
Naveen Sikka, CEO, TerViva transportation fuels and OPEC’s near monopoly on oil
supply—give foreign nations incredible influence over
Luke Tonachel, Senior Policy Analyst, Natural Resources
Defense Council (NRDC)
America’s economy and national security and expose
the nation to unnecessary risk.
Jonathan Wolfson, CEO & Co-Founder, Solazyme
R. James Woolsey, Chairman, Woolsey Partners LLC &
former Director of the CIA


This dependence derives from the lack of readily warrant further discussion in other forums. Furthermore,
available, viable fuel alternatives. A number of factors adoption of alternative transportation and communication
have prevented the emergence of such technologies. behavior—public transportation, telecommunications,
First, the federal government spends significant vehicle sharing—could also drastically decrease the
amounts of taxpayer dollars on tax breaks and subsidies need for petroleum.
for oil companies. While oil companies argue that these
programs are necessary to keep the price of oil down, the
result of these interventions is that oil alternatives must STATE OF THE TECHNOLOGIES
compete on an uneven playing field because the price of No “silver bullet” technology will solve our reliance
their established competitor is kept artificially low. upon oil. Even with the possibility of as-yet unknown
technological breakthroughs, it is more likely that
Furthermore, fuel prices don’t reflect the full cost of oil a combination of technologies will reduce U.S. oil
dependence and consumers lack perfect information consumption. In the current landscape, advances
about future prices. Market barriers inhibit technology in three areas of technology have great potential to
adoption, including consumer acceptance, time displace petroleum use: fuel efficiency, electrification,
necessary for technology development, and time and advanced biofuels.
required for new technologies to enter the marketplace.
Fuel Efficiency
1. Consumer acceptance: While “early adopters” While alternative fuel technologies mature, improving
have taken to advanced vehicle technologies, such the fuel efficiency of internal combustion engine (ICE)
as hybrids (HEVs) and electric vehicles (EVs), many vehicles will play a crucial role in reducing petroleum
consumers lack familiarity with new technologies and consumption. Recent advances include more efficient
assume that such vehicles will not provide a satisfying internal combustion engines that use high pressure fuel
driving experience. Furthermore, consumers lack the injection, downsizing and turbocharging, hybrid-electric
information necessary to calculate the full payback drivetrains and lighter, stronger structural materials, such
over the lifecycle of the vehicle. as lightweight high-strength steels, magnesium alloy
and carbon fiber composites. An additional benefit of
2. Technology development: New clean technologies these technologies is that they can carry over to other
require significant time to reach the market. While many vehicle applications. ICE improvements can be applied
Internet technology companies can commercialize to a vehicle burning non-petroleum fuel, while advanced
very quickly, clean economy technologies generally materials can be used for any light duty vehicle.
require more time for testing, capital investment, and
scaling. Even if the technologies exist now, it may There are tremendous potential gains from efficiency—
take years for them to deploy to the marketplace. some estimate that conventional non-hybrid vehicle
technologies can nearly double efficiency and cut fuel
3. Technology penetration: Deployment is also further consumption by 45% from 2008 levels. Further, these
inhibited by the slow turnover of the American technologies result in fuel savings that far exceed their
automobile fleet. It takes the national fleet as many cost. And perhaps most importantly, the automobile
as 15 years to cycle in new vehicles, which slows the industry is already capitalized and could be ready to
adoption of petroleum displacing technologies. make these improvements within a short timeframe,
which is not the case with electrification and advanced
While not discussed in the Roadmap. there are three biofuels.
additional possibilities for achieving significant reductions
in petroleum use: use of liquid natural gas (LNG) as an It should also be noted that advanced diesel engines are
alternative fuel; the development of new, unpredictable inherently more fuel-efficient than gasoline vehicles and
vehicle technologies; and changes in consumer are cost-competitive today. The total cost of ownership
behavior. LNG and other disruptive technologies have (TCO) for advanced diesel vehicles is currently lower
significant potential to displace petroleum and certainly than advanced gasoline vehicles at all oil prices.



Improvements can also be made petroleum fuels. Lignocellulosic biofuels, in particular,
in the 240 million vehicles already have experienced cost declines, and algae-based oil and
on the road. New lubricant and syngas have made significant technological advances.
tire technologies can greatly
increase the fuel efficiency of As a direct substitute for petroleum-based fuels, advanced
existing vehicles. Given that many biofuels must be cost competitive with oil. Technological
of these vehicles will continue to barriers to competitiveness include the cost of enzymes,
be on the road for the near future, feedstock yield and quality, and scalability. Should
these efficiency gains will be these technological issues be addressed, there are still
crucial to petroleum displacement concerns regarding fueling infrastructure, storage, and
and consumer savings in the short combustion engine conversion.
term.

Electrification THE POLICY LANDSCAPE
Decades after they were first proposed for the The federal government has enacted a multitude
modern fleet, electrific vehicles (EVs) are entering the of policies to address oil dependence. The U.S.
marketplace. In 2010, Chevrolet and Nissan introduced Department of Energy invests in electric vehicle
a plug-in hybrid electric and battery electric vehicle technology development, the Department of Agriculture
to the American marketplace, and other automobile encourages biofuels from farm-based resources, and
manufacturers are poised to do the same. the Environmental Protection Agency and National
Highway Transportation Safety Administration oversee
The price of batteries remains the single largest obstacle fuel economy standards. This Roadmap seeks to work
to the deployment of electric vehicles. While the cost within the Federal government’s policy framework to
of batteries for electric vehicles continues to decline, articulate a path forward.
significant investment in research and development is
still needed to produce smaller, safer, cheaper batteries Above all, the Clean Economy Network Education Fund
for electric vehicles. identified three characteristics of a sound petroleum
displacement policy:
Studies have shown that 60-70% of vehicles on the road
today could be electric before new power plants are 1. Long-term in duration
required. This is a distinct advantage of electrification— 2. Technology agnostic
the energy infrastructure already exists. That being 3. Outcome-driven
said, access to the grid remains a point of concern, and
significant charging station infrastructure needs to be These requirements are crucial to ensuring efficient
installed to give consumers confidence about having outcomes and investment in innovative technologies.
adequate access to vehicle charging opportunities.
Long-term Duration
At this point in time, plug-in hybrid electric vehicles Policy certainty encourages investment. As shown by the
(PHEVs) are technologically promising and stand experience of E.U. countries, long-term fuel economy
to benefit from many vehicle technology advances, standards and oil taxes can unlock significant financing
including electrification (batteries), fuel efficiency for advanced vehicle technologies. American auto
(advanced structural materials), and advanced biofuels manufacturers are now taking similar actions, mainly
(burned in the ICE). due to increasingly higher U.S. fuel efficiency standards
they must meet. Fuel economy standards in Europe
Advanced Biofuels and the U.S. have long time horizons, providing auto
2010 saw the opening of the first commercial advanced manufacturers and investors sufficient time to invest in
biofuels plant, and other advanced biofuels are steadily innovative technologies that will enable them to meet
moving down the cost curve to be competitive with those standards.


Technology Agnostic SOLAZYME, INC.

COMPANY PROFILE • SOLAZYME
Government is frequently criticized for picking technology www.solazyme.com
winners. The Synthetic Fuels Corporation, established
by Congress in response to the 1970s oil crises, ended Founded in 2003 and headquartered in South San
in bankruptcy. Corn ethanol and hydrogen fuel were Francisco, Solazyme is a privately held industrial
politically popular at different points during the last biotechnology company producing renewable oils and
decade but have not yielded anticipated results despite bioproducts using microalgae.
relatively large subsidies in the case of corn ethanol.
Most recently, the Federal government has provided Solazyme’s renewable oil production technology allows
significant tax incentives to promote the purchase of them to do in a matter of days what it took nature millions
electric vehicles. of years to do. The company renewably fabricates a wide
range of products quickly, cleanly, cost effectively, and at
The most technologically agnostic approach is to large scale standard fermentation facilities. It offers fuels,
address the price of oil. All clean vehicle technologies including microbial-derived jet fuels, bio-diesels, and
compete with it, and the higher the price of oil, the more renewable diesels. They also offer marine and microaquatic
viable investments in those technologies become. While compounds for health and wellness products.
no one policy alone can resolve the problem, there are a
variety of policies that undertaken together can address Its products are used for biofuel production, replacements
price volatility and increase investor confidence. These for fossil petroleum, and plant oils in various products
policies include lowering subsidies and tax breaks for ranging from green household cleaning supplies to
the petroleum industry, setting a price floor on the cost cosmetics and foods. The company serves renewable
of oil, and taxing oil consumption. While Congress has energy and industrial chemicals markets, as well as
spurned such polices in the past, these policies are specialty ingredients markets in cosmetic, nutritional, and
technology-neutral and allow the market to determine pharmaceutical products.
which technologies to pursue.
Solazyme’s oils and fuels provide compelling solutions to
Furthermore, government incentives should encourage increasingly complex issues of fuel scarcity, energy security
and environmental impact while fitting cleanly into the pre-
the development, deployment, and consumer purchase
existing multi-trillion dollar fuel infrastructure.
of the most fuel-efficient transportation solutions,
regardless of their technology platform. For example,
Co-founders Jonathan Wolfson and Dr. Harrison Dillon
instead of providing a tax credit only to newly-purchased
started Solazyme in Palo Alto at a time when few in Silicon
electric vehicles, the credit could be applied to all
Valley had heard of the concept of biofuels. Mr. Wolfson
advanced technology vehicles that dramatically increase
is the Chief Executive Officer, Chief Operating Officer and
fuel efficiency and pro-rated so that the most efficient
Director, where he oversees the management and strategic
vehicles receive the greatest credit.
direction of the company. Dr. Dillon serves as the President,
Chief Technology Officer and Director.
Outcome-driven
Legislation that tells the private sector how to innovate—
in other words, means-driven policy—will not be as
successful as policy that is ends-driven and focused on
outcomes. Currently, there are a multitude of laws that
aim to displace petroleum but do so by encouraging
different, and often competitive, technologies. While
ends-driven, technology neutral policy will motivate
private sector innovation, the Federal government should
not skew markets with carve-outs and quotas to satisfy
special interests or with incentives that favor a particular
technology solution.


A123 SYSTEMS, INC. A better, more market friendly means by which to achieve
COMPANY PROFILE • A123 SYSTEMS, INC.

www.a123systems.com that end is to set a performance standard, such as one
based on efficiency and/or greenhouse gas emissions
A123 Systems (NASDAQ: AONE) develops and manufactures reductions, and require the private sector to meet it.
advanced Nanophosphate® lithium ion batteries and A long-term, performance-based vehicle standard
energy storage systems for the transportation, electric that does not pick technology winners will unleash the
grid and commercial market. The company was founded greatest innovation and achieve the greatest reductions
in 2001 based on novel nanoscale technology initially in petroleum use.
developed at the Massachusetts Institute of Technology
and currently employs more than 2,200 people globally.
CONCLUSION
A123’s high-performance Nanophosphate lithium ion Leadership from policy makers is necessary to implement
battery technology delivers high power and energy density these recommendations. It is crucial that the President,
combined with excellent safety performance and extensive Members of Congress, and other thought leaders use
life cycling in a lighter-weight, compact package. The their bully pulpit to advance petroleum displacement. Not
company’s solutions have low capacity loss and impedance only is this essential for improving policy, it is necessary
growth over time, allowing customer applications to meet for cultivating support among the American public for
end-of-life power and energy requirements with minimal new technologies, which is crucial to their adoption.
pack oversizing.
The economic and national security threats of continued
A123’s growing list of blue-chip customers in the reliance upon petroleum should compel the US
automotive market includes leading passenger car makers government to incorporate these principles into existing
(including Fisker Automotive, BMW, GM and SAIC, the and new policies. As gas prices rise and instability in oil-
largest automaker in China) as well as companies focused producing regions persists, it is important—now more
on the truck/bus market (including Eaton, Navistar and than ever—to achieve petroleum displacement.
BAE Systems).

A123 is also the leading producer of lithium ion battery
energy storage solutions for the electric power grid,
where its technology is helping to make ancillary services
more efficient and cost-effective while also addressing
enabling the increased penetration of renewable energy
by addressing the variability of wind and solar power.
Customers include AES, Southern California Edison, DTE
Energy and Vestas.

Led by President and CEO David Vieau, A123 Systems is
headquartered in Waltham, MA and operates manufacturing
facilities in Massachusetts, Michigan, China and Korea,
as well as offices in St. Louis, Germany and Japan. In
September 2010, A123 opened the largest lithium-ion
battery manufacturing plant in North America in Livonia,
Michigan, which has the potential to supply systems to the
equivalent of 30,000 battery electric vehicles when the plant
is fully operational. With this facility and A123’s additional
planned expansion, the company expects to have 760MWh
of global manufacturing capacity in place by early 2012 to
meet increasing demand for its Nanophosphate lithium ion
battery technology across its target markets.


DEPLOYMENT, MANUFACTURING,
AND COMMERCIALIZATION:
FINANCING THE COMMERCIALIZATION GAP

INTRODUCTION
Deploying innovative clean technologies at commercial scale in
the United States faces numerous barriers that slow job creation,
investment, and innovation.

The global economic downturn has reduced capital investment across
the board, hitting young companies and new technologies hardest.
Failure to pass any form of comprehensive climate and energy legislation
has increased uncertainty in energy markets, and fostered confusion for
investors about the longevity and stability of clean economy markets.
Capital availability for project finance has been hurt by the collapse of
tax equity markets that accompanied the banking crisis and mortgage
industry meltdown. Stronger policy support for clean energy products
and services in Europe and Asia attract the limited dollars available for
manufacturing of advanced technologies. At the same time, a host of
information failures, misaligned incentives, and structural barriers in U.S.
markets for both electricity and real estate have continued unabated,
slowing commercial adoption of otherwise economically viable clean
technologies.


DEPLOYMENT, MANUFACTURING, AND COMMERCIALIZATION

Overcoming these barriers to deployment, manufacturing,
TRACK PARTICIPANTS and commercialization of clean technology in the United
States will require a coordinated strategy by technology
Bracken Hendricks, Senior Fellow, Center for American
Progress (Moderator)
companies, financial investors, and policy makers. Such
a shared blueprint for a sustained national commitment
Benjamin Abram, Lorax Capital will drive new investment and strengthen American
Jason Anderson, CleanTECH San Diego competitiveness, job creation, and long-term prosperity.
Carter Bales, Chairman and Founding Partner, New World
Capital; Chair, CEN Leadership Council The Deployment, Manufacturing, and Commercialization
(DMC) track focused specifically on addressing these
Chris Chafe, Executive Director, Clean Economy Development
Center cross-cutting challenges, which are fundamental to the
mass adoption of innovative business models and clean
Will Coleman, Partner, Mohr Davidow Ventures technologies at a large scale across the entire economy.
Marc Cummings, Director of Policy and External Affairs, For purposes of the roundtable discussions, each term
Battelle/PNNL was defined as follows:
Luka Erceg, President and CEO, Simbol Materials
• Deployment describes the task of moving beyond
Mark Fulton, Climate Change Strategist, Deustsche Bank
basic science and early phase research to building
Ashok Gupta, Natural Resources Defense Council markets and promoting the widespread adoption of
Monty Humble, Cavallo Energy proven tools.
Reed Hundt, CEO, Coalition for Green Capital
• Manufacturing is central to extending the innovation
Danny Kennedy, CEO, Sungevity process beyond the lab. It includes the development
Erich Klawuhn, Vice President of Business Development, of intellectual property and engineering practices
Soladigm that increase the efficiency of production, drive down
Steve Miles, Partner and Energy Sector Chair, Baker Botts LLP costs, and sustain market growth.
John Mizroch, Of Counsel, Wilson Sonsini Goodrich and Rosati
• Commercialization describes the process of building
Marc Porat, Chairman and CEO, GreenCube strong profitable companies, scaled production of
Brian Sager, Co-founder and Vice President of Corporate new products, and commercially viable business
Development, Nanosolar models, to serve both emerging U.S. and growing
Joel Serface, Founder, Clean Range Ventures global demand.

Shannon Smith, Founder and President, Abundant Power
Group
Silda Wall Spitzer, Managing Director,
Metropolitan Capital Advisors


DEVELOPING A ROADMAP FOR
CLEAN ENERGY DEPLOYMENT,
MANUFACTURING AND
COMMERCIALIZATION
The discussion within this track strongly emphasized
the connection between clean technology and jobs,
American competitiveness, and economic recovery. It
identified commercial scale deployment of a domestic
industry as the key challenge for broadening markets,
developing new products, and fostering the growth of
productive new companies.

The goals of the DMC session were:

1. To identify key policy needs for building a strong
domestic clean economy industry and increasing
penetration of clean technologies in energy markets,

2. To begin the development of a shared blueprint and technology industry faces significant market barriers to
common priorities for unlocking greater flows of both achieving broad deployment, including:
public and private capital investment to scale the
industry, and • Insufficient capitalization of early stage companies as
they try to cross the ‘valley of death’ combined with
3. To bring together clean economy business leaders, frozen debt markets have slowed capital investment
relevant thought leaders, and key Congressional, in projects
Administration and Agency staff to explore strategies
for more effective public outreach and deeper • Artificially high perception of policy, technology, and
alliances. lack of operating history risks have increased the cost
of capital and created a barrier to investment
Participants in the DMC discussion stressed the close
connection between overcoming market barriers and • Transparency, longevity and certainty in both
strong economic performance for the industry. They economic incentives and market rules is needed
identified a range of strategies for overcoming these to demonstrate sustained demand for projects and
barriers, seeking to find opportunities both for direct attract needed investments
action by companies and investors requiring no new
policy, as well as for opportunities to use new policy at • Lack of sustained demand for clean energy due to
the federal, state and local level. the absence of market-creating policies such as
a national renewable or clean energy standard or
stronger incentives in utility policy
SPECIFIC BARRIERS TO
DEPLOYMENT OF • The sun-setting of effective ARRA (American
CLEAN TECHNOLOGIES Recovery and Reinvestment Act) funding programs
The commercial adoption of clean technologies— and threats to other public investment programs
emerging from laboratories, breaking into existing
markets, and competing with traditional energy sources • The failure of the clean technology industries to
at scale—has been slower in recent years than is create a unified and strong policy and political voice
warranted on a technical or economic basis. While this is that rivals that of existing energy producers
not the case for every technology or company, the clean



d. Federally backed warranty insurance products that
could increase developer investment by reducing
perceived risk, including the lack of operating history
of clean technologies.

e. Promoting standard offer contracts or CLEAN
Contracts that address the cost of capital by
increasing transparency, longevity, and certainty.

2. Regulatory Tools
Can help send market signals, drive demand, and
enhance predictability. Participants suggested:

a. Passing a national Renewable Energy Standard (RES).
Many but not all participants supported expanding
RECOMMENDATIONS FOR the concept of a renewable energy standard to
OVERCOMING MARKET BARRIERS include nuclear and other forms of low carbon energy,
AND SCALING INDUSTRY potentially through a broader Clean Energy Standard
Participants discussed various solutions to the above (CES).
barriers. Their recommendations clustered around six
areas. These included three specific federal policy issues: b. Raising national energy efficiency building codes and
1) finance policies, 2) regulatory tools, and 3) tax reform, establishing a national energy efficiency resource
as well as three major cross-cutting themes, including: 4) standard.
communications and messaging to shape public opinion
and build public will, 5) re-engaging the issue of industrial c. Adopting stronger national appliance standards for
policy, and 6) regionally based economic development energy efficiency that would also drive markets for
strategies. Their suggestions were as follows: advanced manufactured products.

1. Finance Policies d. Pursuing utility reform measures that would better
Can lower the cost of capital, reduce perceived risk, align incentives for utilities to act as partners and
encourage investments in clean technologies, and create better reward shareholders for reducing load and
market demand for new projects and new technologies. deploying renewable energy sources.
Specific policies could include:
e. Continuing the implementation of stricter emission
a. A federally chartered financial mechanism, such as standards to encourage decommissioning of the
a Clean Energy Deployment Administration (CEDA), most inefficient plants and to promote greater energy
that can address commercialization challenges faced diversity.
by early phase technologies as they begin to scale.
3. Tax reforms
b. An Energy Independence Trust that can offer low Can encourage private capital investment in clean
cost capital for deployment at low or zero cost to the technologies while leveling the playing field with existing
Treasury. Such federal backing can also be offered to energy interests.
encourage the development of state green banks.
a. Extend the availability of Master Limited Partnerships
c. Aligning capital market structures to match project (MLP) to renewable energy and efficiency projects to
finance mechanisms needed by clean technology greatly increase the pool of potential investors that
industries. will finance the growth of clean technologies.


b. Connect energy saving behaviors to personal SIMBOL MATERIALS

COMPANY PROFILE • SIMBOL MATERIALS
economic incentives. (For example, linking certain www.simbolmaterials.com
financial instruments related to the clean energy
economy to IRAs and 529 plans.) Simbol Materials (formerly Simbol Mining) is a US-based
company focused on producing critical materials, such as
c. Eliminate wait time on tax credits and other lithium and manganese, for the next generation of energy
enhancements to allow small companies to sell storage technologies, by co-producing from the brines
credits and drive tax benefits more deeply into the of geothermal power plants. Their co-founder, President,
economy. and CEO, Luka Erceg has 12 years of experience in the
energy space. Prior to founding Simbol Materials, he was
d. Investigate a partial tax holiday targeted to clean largely involved in private transactions related to power
economy investment that would allow large development and generation, natural gas gathering and
corporations to repatriate billions of dollars distribution, and oil and gas field telemetry.
domestically in profits from overseas operations.
Simbol Materials will produce lithium, manganese, zinc and
e. Expand the accelerated depreciation schedule for other key compounds using clean, zero waste production
clean energy. processes in the United States. As geothermal power
plants pump geothermal brines and effluent streams from
4. Communications and Messaging 10,000 feet below the earth’s surface, Simbol Materials
Can shape public opinion and build political will. There uses proprietary processes to extract the valuable
was general consensus that the industry needs a forceful, minerals and metals from the water for use in EV batteries,
expansive, and well-funded messaging campaign to consumer electronics, agriculture and other industrial clean
educate opinion leaders, policy makers and the general technology applications.
public. Specific recommendations included:
Lithium has become an increasingly valuable commodity
a. Develop a central vision and accompanying narrative due to the increased market for rechargeable batteries
that focuses on the many advantages of the clean in consumer electronics, tools, and electric vehicles.
economy, including job creation, competitiveness, Most electric vehicles and electricity storage devices are
innovation, entrepreneurship, nationalism and designed to use batteries built with lithium and manganese.
national security. Simbol Materials seeks to create a supply chain that
sustainably supports the entire electronics industry and
is on track to be a leading supplier
of lithium carbonate, lithium
hydroxide, and manganese
compounds. The process Simbol
Materials employs will ensure
the company is the lowest-cost
producer of lithium in the world,
bringing a vital part of the EV
battery supply chain to the U.S.

Simbol Materials is a late
stage venture capital funded
company. Their funders include
Mohr-Davidow Ventures, Itochu
Corporation, and Firelake
Capital Management.


b. Produce concrete empirical data to document the
COMPANY PROFILE • SUNGEVITY

SUNGEVITY successes already achieved within the sector, and
www.sungevity.com outline the potential growth of the sector that would
result from the implementation of specific policy
Founded in 2007 by Danny Kennedy, a former activist,
recommendations.
Andrew Birch, a photovoltaic economics expert, and Alec
Guttel, a serial entrepreneur, Sungevity uses an internet-
c. Create broader alliances based on common interests
based approach to make the transition to solar power
with other industries and sectors, including nuclear
as simple as possible. At its inception, Sungevity’s team
energy, natural gas, utilities, and energy intensive
concluded the high initial cost of solar panel sales and
manufacturing industries.
installation is the major deterrent to homeowners.

Using the power of the Internet—satellite-powered maps
5. Industrial Policy
There was a strong consensus in the DMC session
and algorithms to determine household energy output—the
that America needs to clean up its tangle of existing
Remote Solar Design Team at Sungevity can put together
contradictory industrial policies and formulate a
an iQuote at no cost to the customer. Customers receive
comprehensive industrial and manufacturing strategy
designs of fully realized virtual arrays and can choose
whatever system best fits their needs. The company that focuses on performance metrics such as emission
explains it as being the Netflix of home solar, tapping into reductions and efficiency. Key features of such a strategy
the convenience of the Internet to serve up solar savings. should include the following:

Although Sungevity is located in the Bay Area of California a. U.S. industrial policies should not operate in a
and its market has been mostly in the Southwestern vacuum, but should take into account the market
United States (CA, AZ, CO), the company is focused on conditions created by the policies of other countries,
expansion. In December 2010, Sungevity announced a $15 such as the recent Chinese five-year plan for clean
million round of financing that has allowed the company to energy, as well as industrial policies in Germany,
expand to five north eastern states—MA, NY, NJ, MD, DE. Japan, and South Korea.

In their first year, 2008, the company sold 164 systems and b. A comprehensive strategy should be designed
in October 2010 did the same number with 1 megawatt of to create long-term stability, include domestic
solar deals. In May 2010, Sungevity partnered with US Bank content requirements, and address cars, fuels,
to offer a 10 year Solar Lease, which allows homeowners electricity generation, and building efficiency as key
to install solar arrays for no money down. Sungevity more manufacturing and industrial sectors.
than tripled its staff in 2010 and is expecting to grow to 175
full-time employees by late 2011.

Sungevity also ran a campaign to install solar panels on the
White House. At a White House Earth Day event, Danny
Kennedy made the offer in person to President Obama. The
White House recently announced that they would indeed
install solar panels in 2011. In the meantime, Sungevity
has expanded its offer to include other world leaders. In
October 2011, the team installed a solar array on the home
of President Mohamed Nasheed of the Maldives.

Despite its incredible growth, Sungevity is an early stage
company.


c. It should include the finance, tax, and regulatory of clean energy deployment in order to align existing
policies outlined above. For example, a CES can incentives and financial resources at the federal, state
determine incentives for developing domestic supply and local levels.
chains.
b. Track participants expressed concern about
d. Industrial strategy should not be based on specific fragmented electricity markets, and supported the
technologies, but on the various stages of the development of regionally based strategies for market
commercialization process. In particular, industry and regulatory reform.
and government should target policies to address
the special challenges in moving from innovation to c. Productive partnerships could be established
deployment. through working directly with state regulators, as well
as by identifying and working with state and local
e. Many existing policy tools, like manufacturing governments with similar or complementary plans.
extensions, small business lending, workforce
investment, and other forms of economic d. A federal CES should incorporate regional differences
development, should be included and systematically in clean energy targets and credit regionally
expanded to cover the clean economy sector. appropriate clean energy resources in order to build
interest and support for its enactment at the federal
6. Regional Innovation level.
Strategies can help promote clean technology
deployment on a regional, state and local basis. e. Strategies should encourage regional competition on
tax and land policy, and through existing economic
a. “Race to the top” approaches that have worked in the development subsidy programs, to encourage more
area of education should be applied to the challenge domestic clean tech manufacturing.



CONCLUSION
The DMC track successfully engaged a diverse group The specific recommendations offer an initial pathway
of decision-makers from across the clean technology and framework for the clean economy sector in shaping
industries. The discussion identified critical challenges a shared agenda with clearly articulated priorities.
that the industry must overcome to scale production The barriers to deployment, commercialization, and
and penetrate mainstream energy markets, through a manufacturing remain significant. As evidenced in the
combination of private sector action and public policy discussion, the ideas already emerging from within the
measures. While there was not unanimous agreement clean economy community offer a strong starting point
on these specific suggestions, a general consensus for developing a detailed roadmap for market-based
did emerge from this diverse group, emphasizing the mechanisms for the rapid adoption of clean technologies
need for a comprehensive messaging campaign, and and the transition of the entire economy to run on clean
a renewed focus on promoting innovative policies to and efficient energy.
reduce regulatory barriers and the cost of capital.


ELECTRICITY:
REGULATORY INNOVATION

INTRODUCTION
One of the greatest barriers the clean economy sector faces in
achieving higher levels of market penetration is an outdated electricity
infrastructure and regulatory framework. While virtually every other
sector of the American economy has evolved to meet the needs of
the 21st century, the electricity grid remains the world’s largest analog
system. In a world of rapid change, the electricity system has stood
virtually still.

Much stands in the way of clean energy increasing its share of
America’s power. For example, current regulatory rules do not require
the incorporation of public policy concerns when planning transmission
lines, nor do they mandate cost allocation formulae to decide how such
projects will be financed. Additionally, the scheduling of power is not
rapid enough to effectively include intermittent resources like solar or
wind. While the Federal Energy Regulatory Commission (FERC) has
proposed rules to address these problems, the existing system harms
our global competitiveness and hobbles a potential engine of job and
wealth creation.

As the clean economy grows and business and consumer energy needs
become more complex, the country needs a new approach to energy
generation, use, and distribution. The U.S. must address the structural
and policy deficiencies of our electricity sector—including an outdated
grid, overly complex rules, and lack of incentives for utilities to adopt
more stringent efficiency standards
or diversify their energy portfolio.
Doing so requires a robust mix
of new technologies, business
models and policy innovation at
the federal, state and local levels.


ELECTRICITY

TRACK PARTICIPANTS This track discussion explored the issues with current
regulatory policies that hinder clean energy growth,
Michael Moynihan, Director, Green Project, NDN (Moderator) identified the problems, proposed some solutions and
Clare Giesen, Director, Electricity 2.0 Initiative, NDN began to develop strategies to effect change.
(Moderator)
Warren Belmar, Capitol Counsel Group
FRAMING THE CONVERSATION
Cameron Brooks, Senior Director of Market Development The United States’ fragmented regulatory structure
and Policy Strategy, Tendril is the central challenge to modernizing the electricity
Dan Carol, Senior Fellow, New Policy Institute, NDN grid. Building an electricity infrastructure that can drive
Shelley Cohen, Senior Project Developer, Ameresco 21st century economic prosperity is no easy task, and
it is further complicated by a regulatory system that
Chris Cook, Keyes & Fox, LLP
distorts rather than clarifies information, incentives, and
Stephen Cowell, Founder, Chairman & CEO, Conservation implementation strategies for a diverse spectrum of
Services Group stakeholders. These stakeholders include but are not
Cynthia Curtis, VP & Chief Sustainability Officer, CA Technologies limited to: regulatory bodies at the federal, state, and
local levels; political actors; power generators; public
Bob Dolin, System Architect, Echelon
power, investor-owned, cooperative, and federal utilities;
Andrew Friendly, Principal, Advanced Technology Ventures non-utility businesses; and consumers. Each of these
Donald Gilligan, President, National Association of Energy groups has different and often even competing priorities
Service Companies (NAESCO) when it comes to designing and developing a modern
Katherine Hamilton, Director of Clean Energy & Environment, electricity grid.
Quinn Gillespie & Associates
Arno Harris, CEO, Recurrent Energy There is no “silver bullet” solution to these problems.
Indeed, it was difficult for the participants in this
Steve Hauser, VP, Grid Integration Program, National discussion to even agree on how to begin the long-term
Renewable Energy Laboratory
process of modernization. Much of the frustration is
Paul Hudson, Founder & Principal, Stratus Energy Group, LLC rooted in the fact that the electricity grid is unequipped to
John King, Executive VP, LS Power Development, LLC incorporate renewable energy sources, and the relevant
actors are largely unmotivated and lack the incentive to
Maria Kingery, Co-Founder & Director of Cultural Development,
Southern Energy Management make necessary changes. These dynamics are hindering
the growth of a robust clean energy market here at home.
Jennifer Layke, Director, Institute for Building Efficiency,
Johnson Controls
In addressing these challenges, participants agreed on
Craig Lewis, Executive Director, CLEAN Coalition one central goal: fostering innovation. It is clear that the
Steve Melink, Founder, Owner & President, Melink Corporation clean economy business community must capitalize on
Lesa Mitchell, Vice President, Kauffman Foundation
Commissioner John Norris, Federal Energy Regulatory
Commission (FERC)
Tom Osdoba, Managing Director, Center for Sustainable
Business Practices, University of Oregon
Doug Payne, Co-Founder & Executive Director, SolarTech
Jeff Ross, Executive VP of Business Development, GridPoint
Michael Sachse, VP, Regulatory Affairs & General Counsel,
OPOWER
Richard Stuebi, Founder, NextWave Energy, Inc.
Michael Terrell, Policy Counsel, Google
Kathrin Winkler, VP, Corporate Sustainability, EMC2 Corp.

ELECTRICITY
the market opportunities these technologies represent, By enabling real-time, two-way communication between
and utilities have demonstrated that they are unwilling, utilities and consumers, there is hope that changes in
and in some cases, unable to lead the way. While there both generation and end-use behavior will occur, as
was not consensus on how best to address the issues consumers will be more empowered to make smarter
that currently impede innovation, the discussion focused choices. Additionally, this information will create more
on the problem of limited access to information and to opportunities for non-utility businesses to provide energy
the grid, which makes it difficult to identify ways to drive management services.
innovation forward. Not every participant agreed with
this focus, and their concerns are noted in the following While lack of information access is a sizable problem,
sections. it is disingenuous to suggest that merely making
information available to consumers and businesses
Fostering large, open platforms—both within and will solve the challenges at hand. Many proponents of
outside of the utility structure—is a way to support viable smart grid platforms have treated information as the
entry points to the energy market without necessitating end goal. In doing so, they fail to recognize that making
a complete overhaul of the United States’ regulatory information available is necessary but not sufficient to
structure. Such platforms include smart grid technologies, meet greater long-term goals like energy efficiency,
home energy networks, enterprise networks, microgrids, bringing more renewable energy online, or fostering
and distributed generation/storage. While platforms new market development. The challenge is far more
like smart grid will complement existing infrastructure, complex: first, how to standardize mechanisms that
others—like distributed generation—represent a marked make this information readily accessible, and second,
departure from the current system. The characteristic how to encourage structural and behavioral changes
that connects them is an emphasis on innovation: how that effectively utilize this information. In this frame,
best to provide information and the corresponding information is an intermediate goal, but ultimately only
structural incentives to relevant actors so they can a means to an end. Ideas about what precisely that end
implement changes to our electricity system. goal entails, and how valuable smart grid-generated
information is in achieving that goal, vary considerably
The benefits of open platforms can be examined through among stakeholders.
the lens of the information, incentive, and implementation
problems presented by the current regulatory system. The potential for smart grid technologies to change the
While these issues are certainly interconnected, electricity grid has been demonstrated in pilot programs
addressing them separately allows for more concrete across the country. However, realizing the promise of
recommendations, tailored to acknowledge and smart grid is dependent on the clean economy community
incorporate specific stakeholder priorities. clearly articulating the goals of these technologies at
each stage of energy generation, distribution, and use.
Important questions remain unanswered, including:
INFORMATION
One of the electricity system’s shortcomings is the almost For consumers:
total control regulators and utilities have on information • What policies are needed to guarantee consumers’
related to energy generation, distribution, and use. Open right to access smart grid data?
platforms, specifically smart grid technologies, are • What policies are required to protect consumer privacy?
heralded as the future of modern electricity infrastructure • Under what circumstances will consumers be
because they fundamentally change which actors have interested in changing their behavior based on this
access to such information. Furthermore, smart grid information?
devices improve the quality of information, allowing
for quicker response time by generators and utilities in For utilities:
maintaining load/demand balance, addressing power • What policies are required to incentivize utilities to
outages, and keeping the grid secure. Smart grid also invest their capital (not ratepayers’ capital) to become
introduces the possibility for real-time pricing. more efficient in their distribution of energy?


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