Beverly Simpson, the new consul general at the British Consulate in Denver, hosted a lunch in downtown Denver today featuring special guests Vice Admiral (ret.) Dennis McGinn, now the president of the American Council on Renewable Energy (ACORE); and Rear Admiral Neil Morisetti, the climate and energy security envoy for the United Kingdom.  I had a particular interest in hearing the naval officers speak since Pike Research has published a few reports, including last year’s Renewable Energy for Military Applications, on cleantech and the military.

The admirals’ comments were a strong indicator that the military has moved far beyond civilian elected officials, at least in the United States, in thinking about the future of energy security and innovation.  Morisetti called climate change a “threat multiplier” that will fuel conflicts and promote instability in many parts of the world, particularly Africa and the Middle East.  And he joined McGinn in lamenting the absence of a coherent and forward-looking energy policy in the United States.  “My faith in the U.S. system, quite frankly, had taken a hit over the last two years as I’ve been traveling around with Admiral McGinn,” said Morisetti.  “I had always known the United States as a place where, when there’s a problem, the intellectual and financial resources were harnessed and the problem was taken on directly.  I haven’t seen that in regards to energy security.” (Morisetti did mention that, in the last 36 hours of his visit to Colorado, “my faith has been restored.”)

Interestingly, much of the conversation over lunch centered not on renewables but on natural gas – specifically, the implications of the surge in domestic natural gas supplies that has brought the price down to below $5 per million BTU and is pricing many wind and solar generation projects out of the market.  McGinn, for one, was sanguine about the long-term prospects for renewables competing with natural gas plants.

“We’ve been down this road before, of falling in love with a single energy source,” the former vice admiral said.  “I think there’s a natural synergy between renewables, particularly wind and solar, and using low-cost natural gas generation for firming.” McGinn added that given the environmental challenges the natural gas industry is facing, particularly around fracking, he doesn’t expect the price to stay this low forever.

The other theme of the gathering was the sharp differences between the United Kingdom and the United States around the challenges of climate change and energy security.  “We have a broad political consensus” around the need to face up to climate change and devise sensible and effective policies to limit it, Morisetti said – something that cannot be said about the U.S.  “I’m always amused when I hear a BMW dealer in the U.S. talking about his models that get 25 miles to the gallon.  If you go to Germany, you’ll hear them talking about 70 to 80 kilometers [42 to 48 miles] to the gallon.  And it’s the same company.”

“If I were king of the world for a day,” McGinn stated, “I’d do two things:  Eliminate all subsidies, for fossil fuels, renewables, everything.  And institute a carbon tax that would enable a smooth transition to sustainable sources of energy.”

Strong talk from a former naval officer.  Let’s hope someone in Washington, where ACORE is based, starts listening.

Last month in his State of the Union speech, Barack Obama touted the potential of the clean energy sector as a source of rising employment for the United States.

“We should put more Americans to work building clean energy facilities, and give rebates to Americans who make their homes more energy efficient, which supports clean energy jobs,” the President said.

Plenty of controversy exists over how many jobs emerging cleantech businesses actually generate. “Congress is holding the fate of more than 40,000 jobs in the clean energy industry in its hands – right now – as they hem, haw, and delay deciding whether to renew critical energy financing provisions such as the Production Tax Credit (PTC) for onshore wind, the ‘1603’ grants that have created jobs in the solar sector, access to the Investment Tax Credit (ITC) for offshore wind projects, and credits for efficient manufacturing, homes, and appliances,” wrote Mary Anne Hitt, director of the Sierra Club’s Beyond Coal Campaign, on Huffington Post last week.

The maps below shed a bit more light on the relationship between jobs and investments in clean energy. The first is the well-known Renewable Energy Map, created in 2009 by the Natural Resources Defense Council:

The interactive map shows existing and planned (as of 2009) projects in wind, solar, biofuel, and geothermal power (the image above shows only wind power). The number of projects has increased significantly since then, while the relative geographic distribution has changed little.

The second map was created by Richard Florida, of The Atlantic, and his colleagues Charlotta Mellander and Zara Matheson. It shows the projected percentage increase in blue collar jobs in the United States from 2010 to 2020.

I am not suggesting a direct relationship here, and the data is so complex as to be open to various interpretations. (Is the increase foreseen in the Detroit area, for instance, dependent on a continued resurgence of the U.S. automaking industry?) And, of course, renewable energy projects tend to go where the wind, solar, and geothermal resources already exist. There is, though, a rough correspondence: the highest blue-collar job growth will be in a line roughly tracking the Eastern Seaboard south to North Carolina, in specific pockets along Florida’s Atlantic coast, the Gulf Coast, and across Texas, in a few scattered areas in the inter-mountain West, particularly in Arizona (a fascinating development with strong implications for both political parties), and in parts of central and northern California. The overlay with renewable energy projects is intriguing enough to suggest that, if you’re going to be looking for a working class job in the next eight years, you might want to go where the clean energy investment is going.

This month’s issue of Wired magazine includes a long feature, written by Washington Post national environmental reporter Juliet Eilperin, headlined “Why the Clean Tech Boom Went Bust.” (Disclosure: I’m also a contributor to Wired, and Eilperin is an acquaintance.) The story, which joins a lengthening list of obits for the cleantech industries, has a certain usual-suspects quality to it: John Doerr, Elon Musk, Solyndra, blah blah blah. Beyond that, like most such eulogies, it misses the forest for the trees.

Suffice it to say up front that Pike Research does not see a bust taking down the cleantech industries. Our January 10 webinar, “The Year Ahead in Cleantech,” included a forecast for combined revenue across the industries and technologies covered in our smart energy practice – biopower, energy storage services, distributed solar, wind energy, geothermal, etc. – at nearly $300 billion. By way of comparison, the global automotive industry, which has been in business for about 120 years, generated $1.7 trillion in revenue in 2010 – less than six times the smart energy industries, which are less than 40 years old. Growth rates in 2012 will range from 6.3% for biopower to 116% for stationary fuel cells to 766% for energy storage on the grid. That does not sound like an industry in crisis.

Based in San Francisco, Wired, of course, is the quintessential pinup magazine for Silicon Valley, and Eilperin at first glance confuses a bunch of disappointed venture capitalists for a wider industry downturn. VC funding for cleantech startups, she notes, totaled $4.1 billion in 2008, before the global financial crash. Much of that went down a rat hole. VC firms are temperamentally and structurally unsuited for investment in clean energy technologies: “Venture capitalists tend to work on three- to five-year horizons,” Eilperin acknowledges. “As they were quickly finding out, energy companies don’t operate on those timelines.” VC funding for “the green Google” has almost dried up; that doesn’t mean that large vendors and new startups and angel investors aren’t investing in, and making profits off, nuts-and-bolts clean-energy products like fuel cells, geothermal pumps, smart meters, and so on. Such niche products don’t make headlines like a novel solar panel technology, of the sort developed by Solyndra, does; but they form the core of the real cleantech revolution.

To her credit, Eilperin sheds the narrow, Silicon Valley-centric view late in her article. “And yet, clean tech is far from dead,” she writes, contradicting the headline and premise of her story. “Certain companies and technologies will emerge from the ruins not only to survive but to thrive, just like they did after the bursting of the Internet bubble.” (Among feature writers this is known as the “‘To be sure,…’ paragraph.”)

Among the winners, she predicts, will be electric vehicles – a somewhat surprising conclusion since disappointing EV sales have been in the headlines for weeks – and providers of distributed generation systems. The problem with a story like this one is not that it gets the facts wrong; it’s the six-blind-men-and-an-elephant problem. There is plenty of evidence available that the cleantech revolution is happening at a slower pace than its marketers originally hoped, and in many of the sectors that Pike Research covers, consolidation (including spectacular flameouts like Solyndra) is an inevitable, and healthy, part of the maturation process.

As it happens, the Wired story came out almost simultaneously with former vice president Al Gore’s latest broadside, entitled “A Manifesto for Sustainable Capitalism.” In it, Gore and his partner David Blood (“Blood & Gore” – sounds like a law firm in a Dickens novel) address the very dysfunction that has plagued the cleantech industries. In particular, Gore calls for extending the investor timelines that rule Western capitalism today – abolishing quarterly earnings guidance, for instance, and eliminating short-term performance rewards for investment managers whose liabilities are measured in decades. What we need now, declares Gore, is “a more responsible form of capitalism, what we call sustainable capitalism: a framework that seeks to maximize longterm economic value by reforming markets to address real needs while integrating environmental, social and governance (ESG) metrics throughout the decision-making process.”

This is not warm and fuzzy enviro-correctness; it’s a belated recognition that long-term performance (of corporations, of investment funds, of managers) is inextricably bound up with the notions of sustainability and social costs. That’s exactly the equation that the short-term, IPO-driven models of Silicon Valley VC firms are incapable of solving. To see what’s really happening in cleantech we need to step back, take off the blinders, and see the elephant in full. Unfortunately, gloom and doom stories like the Wired feature don’t help with that.  

The Utah state engineer, a man named Kent Jones, has approved the water rights for the proposed Blue Castle nuclear project in Green River, Utah.  The two-reactor plant would be the first nuclear power plant built in the West since the late 1980s.  Jones’ decision has caused outrage among environmental and anti-nuclear groups in the West, and justifiably so.  The Blue Castle project pretty much sums up everything that’s wrong with today’s nuclear power industry.

First, it’s huge: the twin reactors would produce up to 3,000 megawatts (MW) of power.  The future of nuclear power lies in small, modular reactors (SMRs) that are prefabricated, easy to transport, easy to assemble, and easier to win permits for than gargantuan reactors.  Recognizing this, the American Nuclear Society, among other groups, is campaigning for new licensing procedures for SMRs that could avoid the absurdly long lead times facing most nuclear-power projects in the United States (see below).

“Big” means “expensive,” and the Blue Castle project is nothing if not costly.  It will take on the order of $18 billion to complete the project, including $100 million just to shove it through the approval process.  Blue Castle Holdings, needless to say, does not have that kind of cash.  In its water-rights application, the company listed as a primary backer a Wall Street company called LeadDog Capital.  LeadDog, which Blue Castle said was putting up $30 million for the nuclear project, has been accused in a cease-and-desist petition filed by the Securities and Exchange Commission of running a scam operation.  Blue Castle CEO Aaron Tilton, a former Utah state legislator, says that he never “pulled the trigger” on the LeadDog financing and that his company no longer does business with the embattled funder; however Jones, the state engineer, listed the LeadDog funding as primary evidence that Blue Castle “has the financial ability to complete the proposed project.”  In interviews with the Salt Lake City Tribune, Jones admitted that he took Blue Castle’s word for that: “It was just a plan presented by them, and we didn’t do a lot of investigation into the plan, about the validity of the plan.”

Even if the money becomes available, Blue Castle is years, if not decades, away from actually producing power.  Tilton said his company is readying an Early Site Permit to be submitted to the U.S. Nuclear Regulatory Commission (NRC) in 2013.  The application could take three years to be approved.  Then a combined construction and operating license (COL) would be needed, which would add another four years to the process. “The earliest the project could break ground is 2020,” points out Dan Yurman on his nuclear blog, Idaho Samizdat.  Nuclear power that might come online sometime in the mid-2020s is not exactly going to help reduce carbon emissions from coal plants in the short term.

Inevitably, there’s the question of water.  The state specifically approved Blue Castle’s lease of water rights held by Utah’s San Juan and Kane counties.  As with all Western water rights, the San Juan and Kane rights are part of a complicated tangle of competing claims. They are set to expire in 2015 if not put to beneficial use. 

“At times, the Blue Castle proposal looks like a water right in search of a project,” remarked High Country News in a 2010 feature on the project.

The design for the reactors at Blue Castle has not been finalized, but they are most likely to be boiling water reactors, which are considered “Generation III+” designs – in other words, hardly a real advance over today’s uranium-fueled light water reactors.  There is no plan in place for where nuclear waste from the plant would go.

Finally, the Blue Castle plant would require the construction of massive transmission lines to carry the power to the coastal cities Southern California, the project’s ultimate customers.  Most of those lines would cross federal lands, requiring yet more permits – and more years to approval.  Yurman calls Blue Castle “a continuation of California’s ‘colonial’ strategy of banning new reactors within its borders while buying nuclear powered electricity from plants in other states.”

As I’ve noted elsewhere, the NRC should not be in the business of sitting for years on grandiose plant proposals, backed by speculative (if not fraudulent) investors, based on obsolete technology, requiring huge amounts of scare water resources and new investment in transmission and distribution facilities.  The U.S. nuclear power industry badly needs to move into the 21^st century. With Blue Castle, it’s still pursuing the failed strategies of the 20th.