Ex-CIA chief: Renewable Energy is Key for National Security

Riverside, Ia. - Tapping renewable sources of energy to replace oil is in the national security interest of the U.S. government and its people, former CIA director James Woolsey said Friday.

Woolsey, a lawyer specializing in energy for the Booz Allen Hamilton firm in McLean, Va., told the "Renewable on Parade" alternative energy conference that ethanol, biodiesel, wind, sun and other renewable energy sources can help end oil's reign as a strategic commodity in the world.

U.S. dependence on oil creates problems, he said, including making the nation vulnerable to terrorists from politically unstable Middle Eastern countries, creating a huge trade imbalance with large purchases of imported oil, and fueling global warming from carbon emissions caused by burning oil for energy and transportation.

"The first thing we have to do is destroy oil as a strategic commodity," Woolsey said.

The only way to do that, he said, is to have affordable alternatives such as ethanol, biodiesel, biobutanol and other energy sources that can be made from U.S. agricultural products and natural resources like sun and wind.

Both corn ethanol and soy biodiesel should be seen as a beginning in the effort to replace oil, Woolsey said.

Other alternative energy sources also will be needed, he said, including cellulosic ethanol made from plant residues and electricity made from renewable sources like sun and wind.

Hybrid vehicles that can run on electricity and blends of 85 percent ethanol and 15 percent gasoline can cut the U.S. dependence on foreign oil, he said.

"If we work on it, we have the opportunity to lead the U.S. and the world away from oil and toward renewable fuels," Woolsey said.

Woolsey said an unlikely coalition is rallying around renewable fuels.

Agricultural interests, environmentalists, religious groups and other grass-roots organizations are all banding together to provide political support for renewable fuels, he said.

Either the government must give some incentives to renewable fuels or remove the subsidies that the oil industry has received for 100 years, Woolsey said.

"We need more of a level playing field" between oil and renewable fuels, he said.

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James Woolsey discusses renewables - view video

Texas startup says it has batteries beat

AUSTIN, Texas - Millions of inventions pass quietly through the U.S. patent office each year. Patent No. 7,033,406 did, too, until energy insiders spotted six words in the filing that sounded like a death knell for the internal combustion engine.

An Austin-based startup called EEStor promised "technologies for replacement of electrochemical batteries," meaning a motorist could plug in a car for five minutes and drive 500 miles roundtrip between Dallas and Houston without gasoline.

By contrast, some plug-in hybrids on the horizon would require motorists to charge their cars in a wall outlet overnight and promise only 50 miles of gasoline-free commute. And the popular hybrids on the road today still depend heavily on fossil fuels.

"It's a paradigm shift," said Ian Clifford, chief executive of Toronto-based ZENN Motor Co., which has licensed EEStor's invention. "The Achilles' heel to the electric car industry has been energy storage. By all rights, this would make internal combustion engines unnecessary."

Clifford's company bought rights to EEStor's technology in August 2005 and expects EEStor to start shipping the battery replacement later this year for use in ZENN Motor's short-range, low-speed vehicles.

The technology also could help invigorate the renewable-energy sector by providing efficient, lightning-fast storage for solar power, or, on a small scale, a flash-charge for cell phones and laptops.

Skeptics, though, fear the claims stretch the bounds of existing technology to the point of alchemy.

"We've been trying to make this type of thing for 20 years and no one has been able to do it," said Robert Hebner, director of the University of Texas Center for Electromechanics.

"Depending on who you believe, they're at or beyond the limit of what is possible."

EEStor's secret ingredient is a material sandwiched between thousands of wafer-thin metal sheets, like a series of foil-and-paper gum wrappers stacked on top of each other. Charged particles stick to the metal sheets and move quickly across EEStor's proprietary material.

The result is an ultracapacitor, a battery-like device that stores and releases energy quickly.

Batteries rely on chemical reactions to store energy but can take hours to charge and release energy. The simplest capacitors found in computers and radios hold less energy but can charge or discharge instantly. Ultracapacitors take the best of both, stacking capacitors to increase capacity while maintaining the speed of simple capacitors.

Hebner said vehicles require bursts of energy to accelerate, a task better suited for capacitors than batteries.

"The idea of getting rid of the batteries and putting in capacitors is to get more power back and get it back faster," Hebner said.

But he said nothing close to EEStor's claim exists today.

For years, EEStor has tried to fly beneath the radar in the competitive industry for alternative energy, content with a phone-book listing and a handful of cryptic press releases.

Yet the speculation and skepticism have continued, fueled by the company's original assertion of making batteries obsolete — a claim that still resonates loudly for a company that rarely speaks, including declining an interview with The Associated Press.

The deal with ZENN Motor and a $3 million investment by the venture capital group Kleiner Perkins Caufield & Byers, which made big-payoff early bets on companies like Google Inc. and Amazon.com Inc., hint that EEStor may be on the edge of a breakthrough technology, a "game changer" as Clifford put it.

ZENN Motor's public reports show that it so far has invested $3.8 million in and has promised another $1.2 million if the ultracapacitor company meets a third-party testing standard and then delivers a product.

Clifford said his company consulted experts and did a "tremendous amount of due diligence" on EEStor's innovation.

EEStor's founders have a track record. Richard D. Weir and Carl Nelson worked on disk-storage technology at IBM Corp. in the 1990s before forming EEStor in 2001. The two have acquired dozens of patents over two decades.

Neil Dikeman of Jane Capital Partners, an investor in clean technologies, said the nearly $7 million investment in EEStor pales compared with other energy storage endeavors, where investment has averaged $50 million to $100 million.

Yet curiosity is unusually high, Dikeman said, thanks to the investment by a prominent venture capital group and EEStor's secretive nature.

"The EEStor claims are around a process that would be quite revolutionary if they can make it work," Dikeman said.

Previous attempts to improve ultracapacitors have focused on improving the metal sheets by increasing the surface area where charges can attach.

EEStor is instead creating better nonconductive material for use between the metal sheets, using a chemical compound called barium titanate. The question is whether the company can mass-produce it.

ZENN Motor pays EEStor for passing milestones in the production process, and chemical researchers say the strength and functionality of this material is the only thing standing between EEStor and the holy grail of energy-storage technology.

Joseph Perry and the other researchers he oversees at Georgia Tech have used the same material to double the amount of energy a capacitor can hold. Perry says EEstor seems to be claiming an improvement of more than 400-fold, yet increasing a capacitor's retention ability often results in decreased strength of the materials.

"They're not saying a lot about how they're making these things," Perry said. "With these materials (described in the patent), that is a challenging process to carry out in a defect-free fashion."

Perry is not alone in his doubts. An ultracapacitor industry leader, Maxwell Technologies Inc., has kept a wary eye on EEStor's claims and offers a laundry list of things that could go wrong.

Among other things, the ultracapacitors described in EEStor's patent operate at extremely high voltage, 10 times greater than those Maxwell manufactures, and won't work with regular wall outlets, said Maxwell spokesman Mike Sund. He said capacitors could crack while bouncing down the road, or slowly discharge after a dayslong stint in the airport parking lot, leaving the driver stranded.

Until EEStor produces a final product, Perry said he joins energy professionals and enthusiasts alike in waiting to see if the company can own up to its six-word promise and banish the battery to recycling bins around the world.

"I am skeptical but I'd be very happy to be proved wrong," Perry said.

By GRANT SLATER,

Associated Press Writer

Favorable winds fueling sharp rise in renewable-energy stocks

By Steven Mufson The Washington Post

The planet isn't the only thing heating up because of climate change. Some renewable-energy stocks have been pretty hot too.

Shares of Vestas Wind Systems, the world's biggest maker of wind turbines, have doubled in the past year, despite the market's latest turmoil. The Danish company is ramping up production in its two biggest markets, China and the U.S., and expects sales to rise 17 percent this year. It recently announced that profit jumped fivefold in the most recent quarter.

Vestas might seem a perfect place to invest for an era of global climate change. The fortunes of many firms are tied to changes in the Earth's temperatures and to the evolving legislative climate, and that can present an array of investment opportunities, as well as pitfalls. There are builders of nuclear power plants, traditional utilities, wind turbine-makers, solar companies and biofuel firms.

"This is not a social or moral issue only. It's an investment issue," said Edward Kerschner, chief investment strategist at Citigroup Inc. "Whether or not you believe in climate change is not germane to how you invest your money."

But before jumping in, investors would be wise to carefully study the companies involved. Vestas, for example, faces hurdles. Wind turbines use hundreds of parts that are in limited supply, raising the specter of bottlenecks despite strong demand. The company also depends in large measure on continued government subsidies. And it faces stiff competition as companies such as General Electric Co. and Siemens AG expand and take aim at Vestas' market-leading position.

Investors also need to pay close attention to action in Congress. The final details of climate-change legislation, such as whether to auction or distribute carbon-dioxide emission allowances, could turn some companies from losers to winners, or vice versa.

One thing a lot of analysts agree on: Some kind of regulation or tax for emissions is coming, and that could affect the fortunes of several companies, including Lake Forest-based Tenneco Inc. and Chicago-based Exelon Corp.

Though not the most potent greenhouse gas, carbon dioxide is the most common, accounting for 77 percent of the gases. And because carbon dioxide is produced by the most common forms of energy use -- coal, oil and natural gas -- that could alter a wide range of behavior and investments.

*Transportation. California and Florida plan to require the carbon content of tailpipe emissions to drop by at least 10 percent by 2020. That won't help just Toyota Motor Corp. and its hybrid vehicles, but Tenneco, which supplies emission-reduction technologies for diesel-fueled engines, could benefit, Citigroup said.

Tenneco has jumped 25 percent since the start of the year. Diesel engines are more efficient than gasoline engines and, as a result, diesel-powered vehicles emit 10 percent to 30 percent less carbon dioxide than gasoline-fueled ones.

Anticipating a rise in diesel market share, Marathon Oil Corp. is investing in its largest U.S. refinery to be able to produce equal quantities of gasoline and diesel. Marathon is up 13 percent since the start of the year. Diesel car sales will climb to about 750,000 this year, but sales of gas-electric hybrid vehicles are growing faster and pose competition for carbon-conscious consumers.

*Coal. If Congress and the White House agree on legislation that puts a price on carbon-dioxide emissions, utilities that have a lot of nuclear power capacity, such as Exelon, could benefit from being able to sell carbon-free electricity. Others, such as American Electric Power Co., whose coal-fired plants are leading emitters of carbon dioxide, could face new costs.

A cap-and-trade system would set a national ceiling on emissions and issue allowances for that amount. Companies with extra allowances could sell them to those falling short.

Any company that figures out the best method of separating carbon dioxide from coal-plant emissions and burying it safely underground stands to make lots of money. There are three unproven, and costly, technologies now, pioneered by the likes of GE, Siemens, Babcock & Wilcox and Alstom.

Meanwhile, the coal rush has shown some signs of slowing. Several plants have been blocked by lawsuits, soaring construction costs and regulatory delays. Citigroup recently downgraded coal stocks.

*Biofuel. Federal regulations requiring growing use of ethanol by gasoline refiners have boosted the fortunes of countless ethanol producers. Ethanol production in January averaged 375,000 barrels a day, up 30 percent from the year before. Legislation approved by the Senate would require that use to rise to 2.3 million barrels a day over the next 15 years, half of it corn-based and half using other plants, such as wood chips or switch grass, as feedstocks.

Corn-based ethanol saves little energy compared with petroleum because of the energy that goes into growing and distilling corn. Cellulosic ethanol, or sugar-based ethanol, has a better balance between energy and carbon and would fare better than corn-based rivals under legislation that placed a value and price on carbon emissions.

So far, however, all the major U.S. ethanol producers, led by Decatur-based Archer Daniels Midland Co. and Verasun Energy Corp., use corn. Profits at those firms have been squeezed by high corn prices.

*Solar power. This is much more expensive than other forms of power generation, but it would become more competitive if lawmakers tax or price carbon-dioxide emissions."Electricity prices could go up 50 percent over the next 10 years. Then solar will be cheaper than the grid," said Jesse Pichel, a senior analyst at Piper Jaffray, who expects rising oil and coal prices and falling solar costs as companies innovate the way semiconductor chip firms did. For now, solar relies heavily on government subsidies.

Shares of Suntech Power Holdings Co, a Chinese maker of photovoltaic cells used in solar panels, were up as much as 35 percent in the past year before sliding during the market turbulence this month. The company's output has surged, however, making it the world's fourth-biggest manufacturer of solar cells in 2006. Next year's Summer Olympics in Beijing could prove to be a showcase for Suntech's products.

Although the problem of polysilicon shortages and a sevenfold price increase over five years is squeezing profits at Suntech and its competitors, it has proved a boon to companies that turn sand into polysilicon. Among those companies are a unit of Dow Corning and MEMC Electronic Materials Inc., based in St. Peters, Mo. The polysilicon industry is expected to more than double production by 2010.

*Nuclear power. Advocates for nuclear power believe their time has come. The Bush administration has been pushing for a nuclear power revival, and the Energy Policy Act of 2005 contains powerful financial incentives, especially for the first half-dozen plants.

If lawmakers make companies pay for carbon emissions, nuclear would get another boost. So far, 17 companies are weighing license applications for more than 30 plants, and other plants are being built abroad. The main companies in the nuclear-power construction business are a unit of GE, Areva of France, a unit of Mitsubishi Heavy Industries and the Westinghouse Electric unit of Toshiba.

In anticipation of a nuclear resurgence, uranium prices have soared, brightening the fortunes of firms such as Cameco Corp. of Saskatchewan, the world's largest uranium producer. Uranium prices rose to $136 a ton in mid-July from $11 a pound in June 2003, though they have fallen to $105 per ton.*Natural gas. Carbon dioxide emissions from natural gas are far lower than those of other fossil fuels. That should keep demand strong for domestic natural gas producers and importers of liquefied natural gas.

Costly LNG projects mostly involve big utilities and major oil and gas multinational firms. Sempra Energy and Cheniere Energy are active in new LNG terminals in the U.S. Exxon Mobil is helping Qatar expand its LNG export sector. In a recent climate change report, Citigroup noted that every 1 billion gallons of additional ethanol production would require 28 billion cubic feet of natural gas to fire the ethanol distilleries.

*Wind. There is a giant backlog of orders for wind turbines. Most manufacturers have enough orders to keep busy through 2009. Gearboxes, blades, castings and bearings are all in short supply. Technology has more than doubled the power output from each turbine, with size growing from about 10 yards in diameter in the 1970s to more than 80 yards today. The biggest turbinemakers are Vestas Wind Systems, Spain's Gamesa, GE and Siemens.

Developers of wind farms also could benefit. Citigroup pointed to Babcock & Brown Wind Partners Group, an Australian company, which has an interest in 33 wind farms, many in the U.S.

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