Companies Mentioned

1. General Electric Co
2. DuPont Co
3. Emery Energy: a Biofuel, which makes fuel from organic waste (the temptation for an indiscrete remark is overwhelming—this time, I’ll have to take a pass)
4. Miasolé: a Solar Power Venture

China just announced its latest plan to help with clean-air and spend billions of dollars so without having to face any upfront costs or capital investment (Yes, I’ve taken my medication this morning—I may have to double-up). How magnanimous. The Chinese government recently pledged to spend $200 billion on renewable energy and to make renewable energy account for 15% of the country's total supply by 2020. And the co-sponsor of the plan is the U.S. government. The Feds hope this idea will help American companies cash-in on Asia's $200 billion commitment to a clean-air program (China acknowledges that these allotments are subject to change—uh!). India has announced that it is considering the plan, if it gains widespread acceptance—the estimated market for renewable energy in India is $500 million annually (and growing 15% per annum)—thus, India could rival China for this approach. The following are highlights of the proposal; officially named “P2E2” (the enticement is so great, but I’ll hold to my pledge to be discrete—as best I can):

1. P2E2 aims to help companies in Hong Kong turn profits while cleaning up heavily-polluting factories in China.
2. P2E2 will ultimately be backed by $1 billion in funding from the Asian Development Bank and “other” sources (I’m still exerting restraint, otherwise I would have said the Mafia).
3. The wheels will “be greased” by eliminating capital costs for the companies involved (There is “something” about having a company’s wheels, or anything greased ...).
4. Environmental-service companies based in Hong Kong will conduct environmental audits at the factories in China's Pearl River Delta region, one of the most intensely polluting places on the planet.
5. These very same service-companies will conduct the audits at the factories and then install new energy-efficient technology and machinery at the factories (Why do I sense many factories are going to fail the “audit”—beyond the obvious?).
6. These very same environmental service companies will then install new energy-efficient technology and machinery (How efficient!). Essentially, Chinese factories will outsource the cleanup of their factories to the Hong Kong environmental-service companies (Now’s it’s clear ... ).
7. The trick (their word, not mine) is that neither party will face any upfront costs or capital investment (that’s innovation at its best—I just want to know where I get one of these P2E2 loans?).
8. Initial funding will come from the Hong Kong companies. They will finance their work with loans from the Asian Development Bank and other sources.
9. The factories get the technology free and later pay the Hong Kong environmental-service companies and receive a cut of the cost-savings generated by the new technology over time.
10. Finally, the Hong Kong companies then pay off the loans and pocket the remainder as profits.

Companies participating in this program come from a broad U.S. industrial base. A very diverse mix of energy saving and green-technologies will be deployed—everything from ethanol to building insulation. There is, however, a “complication” or two, needing some reassurances before P2E2 gets underway (not finished, it gets thornier). Intellectual-property issues have become a growing source of friction between China and the U.S., which last week planned to file a complaint with the World Trade Organization over China's level of copyright enforcement. It appears that the Chinese would like to use our developing clean-air techniques, without necessarily offer the participating companies proprietary technology safety. This risk may be manageable for the large, well-capitalized U.S. companies such as General Electric and DuPont, but lower down the food chain, Emery Energy, Miasolé and other entities placing their new clean-air approaches in China can ill-afford a substantial intellectual-property encounter.

Should this mission (again, their characterization) succeed and ownership interest become contentious, one could argue that it is the business risk of introducing a new product, in a foreign country, will the rewards outweigh the risk? It is important to retain the rights to a new energy science (because the iterations are vast). Below is a break down. This is by no means a complete list of alternatives, but it is intended to illustrate the derivation from existing and new sciences where significant R&D investment dollars have been made, and will continue to be made, and therefore cannot be freely taken or given away:

1. Carbon capture and storage for oil and coal
2. Nuclear — Conventional & Fusion
3. Conservation & Efficiency
4. Geothermal
5. Fuel Cells
6. Hydrogen
7. Solar- Nanotech Solar Cells
         Photovoltaic Cells
         Solar Concentrators
8. Synthetics-Ethanol
         Biodiesel
         Genetically Engineered Microbes
9. Wind
10. Water-Hydroelectric
          Water Towers
          Waves & Tides
11. Superconductor Wires

In short, the renewal and green-energy industry(ies) consists of multiple approaches and do not lend themselves to a simple classification, Ethanol has captured the media’s attention—and investors appear eager to jump on the opportunity, not unlike the care (not) taken to research or adequately asses the risk profiles of individual Dotcom entities—especially, start-ups. From my conversations with investors, renewables and green-power are starting to take on the look, feel, smell and taste of the Dotcom phenomena. I sense a “bubble” in the formative stages—and for those who read my April 17, 2007 commentary on bubbles, I fear history is in the formative stage of a repeat performance—perhaps to a lesser degree.

This new industry is high-risk in the U.S., with substantial R&D dollars deployed. The fatality rate of many starts-up is very high and safeguards on scientific breakthroughs must be assured in order to foster development. Energy advances are not global community property—whether uncovered by an American or foreign company.

Appropriations, infringements, and political restrictions have already been encountered. Mounting concerns over global warming can only increase the risk that no maneuver may become too outrageous to prevent the European Coalition or the Asia-Pacific Partnership from declaring a crisis and employee “eminent domain-like” proceeding to emasculating companies of their proprietary products and technologies. This view is admittedly extreme, yet not overly unrealistic if worldwide climate changes accelerate.