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Green Wheels Spinning For Venture Backers.......

By: Steve Marshall, Bruce Agnew
Puget Sound Business Journal
May 28, 2007


Original op-ed

If author Michael Lewis were to write a sequel to his 1999 book on cutting edge investors, "The New New Thing," he might well focus on green transportation.

High-profile venture capitalists such as John Doerr of Kleiner Perkins and Eric Straser of Mohr Davidow are promoting with zeal -- and a sharp eye toward returns -- green tech, clean tech and green on wheels.

U.S. venture investments in energy technology nearly tripled to $2.4 billion last year, while global revenues in solar, biofuels, wind and fuel cells jumped 39 percent to $55 billion, according to the clean energy clearinghouse Clean Edge. But apart from biofuels, a serious focus on how to turn green tech into transportation has just started to take hold.

What does this mean for the Northwest?

First, the dirty secret. In Washington state, with its busy ports and highways, transportation causes much of our air pollution and over half of all of our greenhouse gases. We burn 3.6 billion gallons of gasoline a year for transportation. We pay over $9 billion for that gas, which mostly goes out of state. This is more than we spend on K-12 education.

The ports of Seattle, Tacoma and Vancouver, British Columbia, have announced an important new voluntary plan to cut on-site greenhouse gas emissions, and that's a good start. Yet even the smallest subcompact cars, such as the Chevy Aveo, Honda Fit and Toyota Yaris, produce eight to nine tons of carbon dioxide a year when driven an average number of miles.

We can't realistically meet the carbon dioxide reduction goals set this year by Gov. Chris Gregoire and the Legislature without a dramatic reduction in emissions from cars, trucks and other transportation.

The goal is to scale back to 1990 levels by 2020 and achieve as much as an 80 percent cut by 2030 -- even while the population is increasing and the economy is booming. To do that, we need significantly more investment in new transportation technology.

Not surprising, then, that a capacity crowd attended Cascadia Center's recent symposium on development of alternative fuels and so-called "plug-in hybrid electric vehicles" (PHEVs) which go the Toyota Prius one better.

Tom Alberg, a managing director of Madrona Venture Group, of Seattle, said the venture capital community has awakened and will be a helpful ally in moving toward energy independence and green energy. He noted that promising areas include more efficient conversion of biomass to fuels; batteries and other improved storage devices for power; software networks that make the electric grid more efficient; and predictive technologies for automobiles, which can help drivers avoid fuel-wasting traffic congestion.

We believe investment toward a more efficient, greener grid can be directed to technologies and systems that ensure the recharging of plug-in electric cars occurs at night or other low demand times and that provide power back to the grid when it is most needed.

Additionally, using intelligent systems, PHEVs can channel to the grid intermittent renewable power, such as wind and solar. Technologies to sequester carbon dioxide from a relatively few power plants are also possible, and a lot more likely than trying to sequester it from the tailpipes of millions of conventional gas-powered vehicles.

Investing in green transportation technologies has paid off this year in another part of the country. A venture capital-backed spinoff from the Massachusetts Institute of Technology called A123 Systems has developed a new type of rechargeable lithium ion battery that is much more powerful and durable than current hybrid car batteries.

This month, A123 announced that its new technology will allow automakers to build PHEVs with a battery pack lasting more than 10 years or 150,000 miles.

General Motors is looking at using A123 batteries in its plug-in Saturn Vue due in 2009, and its plug-in electric Chevy Volt due the following year. A123's battery announcement may well accelerate those rollouts and boost competition among major automakers to produce the first commercially available rechargeable vehicle.

In the Northwest, venture capital has played an important role in the past 30 years in the development of many of our major new technologies. Beneficiaries include Microsoft and Amazon.

What we need now is for green venture capital to help us replace a significant part of the gasoline we use with domestic electric power and biofuels. If we succeed, we will reduce greenhouse gases, help make the power grid more efficient, and keep most of the $9 billion we spend on gas in the Northwest.

If we are imaginative enough, we may also help create the newest next thing, in the tradition of Microsoft and Amazon.

STEVE MARSHALL is a senior fellow and BRUCE AGNEW is the director of Discovery Institute's Cascadia Center For Regional Development, in Seattle. The center's website is www.cascadiaproject.org.






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