Translating Climate Change and Advanced
                   Energy Investment into Competitive Advantage
© CH2M HILL 2007

...
Global Market Drivers
© CH2M HILL 2007
Core Market Drivers

                    • Climate Change

                    • Energy Security
                     • Oi...
A Brief History of Energy Use

                    • 800,000 BCE? Fire domesticated.
                    • 2500 BCE Wind-d...
CO2 Emissions Since Industrial Revolution
© CH2M HILL 2007




                                  Source: Carbon Dioxide In...
GHG Atmospheric Concentrations Rising
© CH2M HILL 2007




                                   Source: Deutche Bank Advisor...
Portfolio of U.S. Energy Consumption Today
                                     45

                                     4...
Majority of Oil Reserves are Concentrated in
                   OPEC Countries
© CH2M HILL 2007




                      ...
Finding Costs for Oil are Also Increasing
© CH2M HILL 2007




                                   Source: US DOE/EIA, DB G...
Crude Oil Price has Been Volatile


                                                                      NYMEX Light Swee...
Carbon Pricing

                      • EU ETS EUA
                          • US $37.00 tCO2e (2007 average)

           ...
Supply Side Alternatives
© CH2M HILL 2007
The Opportunity: Renewable Global Exergy
                   Flows
© CH2M HILL 2007




                                   ...
Total Land Area Required to Power 100% of
                   US Onroad Vehicles
© CH2M HILL 2007




                     ...
Growth of Renewable Power Generation to meet
                   GHG targets with an Investment of $45 Trillion




       ...
The Challenge: Cost of Electricity
© CH2M HILL 2007




                                                        16
Commercial Breakeven

                    • For renewable technology to be commercially adopted at
                      s...
Troubled Asset Relief Act (TARP) of 2008


                    • The Production Tax Credit (PTC)
                      – r...
Demand Side Alternatives
© CH2M HILL 2007
Conversion Efficiency of ‘Engines’ Still
                   Moderately Low
© CH2M HILL 2007




                          ...
Decreased Energy Use




                   Inefficient Energy     Energy Efficiency
                         Saving      ...
Putting It All Together: The Total Cost of
                                              Optimizing Carbon and Energy

   ...
New Market Opportunities and Constraints
© CH2M HILL 2007
Clean Technology




                    “Cleantech is any knowledge-based product or service that
                     im...
North American and European Venture Capital investments in cleantech
                                  Total yearly amount...
Amount of VC invested per Cleantech Segment,
                                              North America and Europe 2003-2...
What Next? The Financial Crisis and Green
                   Investment
                   • Given stretched valuations la...
“Green” Job Creation

                    2006




                    2018-2038
© CH2M HILL 2007




                   S...
© CH2M HILL 2007




                   Conclusions
Take Away Messages

                   • Growth in global energy demand coupled with awareness of Climate
                ...
Thank You!




                            Matthew A. Wilson Ph.D.
                                Business Development Le...
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Wilson Aertc 2008

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Advanced Energy Conference, Hauppauge New York Nov 2008

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Wilson Aertc 2008

  1. 1. Translating Climate Change and Advanced Energy Investment into Competitive Advantage © CH2M HILL 2007 Matthew A. Wilson Ph.D. CH2M HILL, Climate Change Services Advanced Energy Conference 20, November, 2008
  2. 2. Global Market Drivers © CH2M HILL 2007
  3. 3. Core Market Drivers • Climate Change • Energy Security • Oil supply vulnerability • Vulnerability of infrastructure to terrorism, natural disaster, or human error • Economics • Fossil fuel prices • Price volatility: oil, natural gas, wholesale electricity • Carbon Pricing © CH2M HILL 2007 3
  4. 4. A Brief History of Energy Use • 800,000 BCE? Fire domesticated. • 2500 BCE Wind-driven sailing vessels • Middle ages: wind mills used for grinding grain, pumping water. • 1700s – steam engine, various versions • 1864 – internal combustion engine • 1879 – invention of light bulb • 1892 – diesel engine • 1880s (DC), 1896 (AC) – central electricity generation and early electric grids • 1930 – jet engine • 1950 – photovoltaic cells © CH2M HILL 2007 • 1990s—Commercialization of hybrid drive train 4
  5. 5. CO2 Emissions Since Industrial Revolution © CH2M HILL 2007 Source: Carbon Dioxide Information Analysis, Oak Ridge National Laboratory 5
  6. 6. GHG Atmospheric Concentrations Rising © CH2M HILL 2007 Source: Deutche Bank Advisors 2008; D. Luthi 2008, Nature 15 May. 6
  7. 7. Portfolio of U.S. Energy Consumption Today 45 40 40 2005 35 2006 2007 30 Quadrillion Btu 25 24 23 20 15 10 8 5 2.5 3.6 0.35 0.32 0.08 0 © CH2M HILL 2007 Source data: US DOE 2008 7
  8. 8. Majority of Oil Reserves are Concentrated in OPEC Countries © CH2M HILL 2007 Source: BP Statistical Review; DB Global Markets Research; DeAM analysis, 2008. 8
  9. 9. Finding Costs for Oil are Also Increasing © CH2M HILL 2007 Source: US DOE/EIA, DB Global Markets Research, 2008 9
  10. 10. Crude Oil Price has Been Volatile NYMEX Light Sweet Crude, Contract 1 $160.00 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 97 98 99 00 01 02 03 04 05 06 07 08 / 19 / 19 / 19 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 / 20 2 2 2 2 2 2 2 2 2 2 2 2 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ 1/ © CH2M HILL 2007 Source: U.S. Department of Energy 10
  11. 11. Carbon Pricing • EU ETS EUA • US $37.00 tCO2e (2007 average) • CCX CFI • US $3.15 tCO2e (2007average) • Over the Counter (OTC) • US $6.10 tCO2e (2007 average) • RGGI • US $3.07 tCO2e (Sept. 2008 Auction) • 12,565,387 tCO2e auctioned • Looking forward: – Continuing strong growth in trading volumes • From 2006 to 2007, the voluntary market experienced a volume growth rate of 165% with a total of 62 million tonnes of carbon dioxide equivalent (MtCO2e) trading hands between buyers and sellers – Price Volatility © CH2M HILL 2007 – Significant consolidation and normalization of market standards. Sources: State of the Voluntary Carbon Markets 2008,Ecosystem Market Place and New Carbon Finance; State and Trends of the Carbon Market 2008,The World Bank. RGGI. 11
  12. 12. Supply Side Alternatives © CH2M HILL 2007
  13. 13. The Opportunity: Renewable Global Exergy Flows © CH2M HILL 2007 13
  14. 14. Total Land Area Required to Power 100% of US Onroad Vehicles © CH2M HILL 2007 Source: Dr. Mark Jacobson (2008) www.stanford.edu/group/efmh 14
  15. 15. Growth of Renewable Power Generation to meet GHG targets with an Investment of $45 Trillion Source: OECD/IEA, 2008, Energy Technology Perspectives © CH2M HILL 2007 15
  16. 16. The Challenge: Cost of Electricity © CH2M HILL 2007 16
  17. 17. Commercial Breakeven • For renewable technology to be commercially adopted at scale, it must be commercially viable—breakeven or better against competitive, less environmentally friendly options. Four factors will drive commercial breakeven: – Traditional and innovation-based incentives (i.e., tax credits) – Increases in fossil fuel prices – Introduction of carbon prices (cap and trade or carbon tax) – Cost declines from movement down the learning curve – Increased supply capacity (economies of scale) © CH2M HILL 2007 17
  18. 18. Troubled Asset Relief Act (TARP) of 2008 • The Production Tax Credit (PTC) – reduces renewable energy producers tax burden by 1.5 to 2 cents per Kwh; – Extended for one year for large-scale wind projects; • The investment Tax Credit (ITC) – reduces capital expenses for solar electric and solar water heating equipment by 30%; – extended for eight years for solar projects; • 1.5 billion in tax credits, along with incentives for carbon capture, for Carbon Capture and Storage (CCS) projects. © CH2M HILL 2007 18
  19. 19. Demand Side Alternatives © CH2M HILL 2007
  20. 20. Conversion Efficiency of ‘Engines’ Still Moderately Low © CH2M HILL 2007 20
  21. 21. Decreased Energy Use Inefficient Energy Energy Efficiency Saving Improvement Increased Economic Efficiency Economically Efficient Waste Energy Intensification © CH2M HILL 2007 21
  22. 22. Putting It All Together: The Total Cost of Optimizing Carbon and Energy U.S. mid-range abatement cost curve – 2030 Residential Abatement Cost cost <$50/ton Afforestation Commercial buildings – Real 2005 dollars per ton CO2e buildings – of cropland HVAC HVAC equipment 90 Coal power plants– Industrial Residential equipment efficiency process buildings – CCS rebuilds with EOR efficiency Fuel economy improve- Coal mining – Shell Active forest Distributed 60 packages – Light ments Methane mgmt retrofits management Solar CSP solar PV Residential trucks Commercial Commercial electronics Residential buildings – buildings – water Nuclear 30 Combined Control Residential heaters new- buildings – heat and systems build Lighting power 0 0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 3.2 -30 Onshore wind – Industry – Onshore wind – Industry – Low penetration Combined High penetration CCS new heat and builds on -60 Biomass power – carbon- power Cofiring intensive Cellulosic Manufacturing – processes biofuels Existing power Car hybridi- HFCs mgmt Coal power plants – CCS -90 Residential plant zation new builds with EOR buildings – conversion Onshore wind – Medium Coal-to-gas New shell efficiency Commercial penetration shift – dispatch of improvements Conservation improvements -120 electronics Winter existing plants tillage Commercial cover crops Coal power plants – buildings – CFL Reforestation CCS rebuilds -230 -220 Commercial lighting buildings – Commercial buildings – Natural gas Afforestation of Coal power LED lighting pastureland © CH2M HILL 2007 New shell and petroleum plants – CCS Fuel economy packages – Cars improvements systems new builds Adapted From: McKinsey 2008 management Negative or No Life-Cycle Costs Significant Life-Cycle Costs 22
  23. 23. New Market Opportunities and Constraints © CH2M HILL 2007
  24. 24. Clean Technology “Cleantech is any knowledge-based product or service that improves operational performance, productivity or efficiency; while reducing costs, inputs, energy consumption, waste or pollution.” Cleantech Group, 2005 © CH2M HILL 2007 24
  25. 25. North American and European Venture Capital investments in cleantech Total yearly amount invested ($US M) and Number of deals Source: Cleantech Group & SVB Alliant, 2007 397 $6,000 400 Europe 373 335 332 350 $5,000 North America 297 $1,230 300 Total number of $4,000 deals 250 $658 $3,000 200 150 $2,000 $891 100 $559 $597 $1,000 $3,950 $1,577 $2,877 50 $973 $1,048 $US M $0 0 © CH2M HILL 2007 2003 2004 2005 2006 2007 25
  26. 26. Amount of VC invested per Cleantech Segment, North America and Europe 2003-2006 Source: Cleantech Venture Network Water & Wastewater Agriculture $406M $404M Transportation Air & Environment Recycling & Waste $285M $637M $568 M Energy Efficiency Materials $782M $849M anufacturing/ Industrial $456M Energy Storage $1,308M Energy Generation $2,976M Energy Infrastructure $510M © CH2M HILL 2007 Clean Energy is 58% of cleantech VC 26
  27. 27. What Next? The Financial Crisis and Green Investment • Given stretched valuations late last year, the public-equity green tech universe has given back about 40% of its out-performance built up in 2006-2007. • Clean tech private markets have maintained growth into 4Q, but are now being affected by the credit-squeeze- equity financing will require more attractive valuations in the absence of debt financing. • As financial markets stabilize, many climate-related and green tech sectors should recover early in both public and private markets, as they have regulatory support and strong long-term growth prospects. • In “green” oriented infrastructure, there are several Gov’t economic stimulus options that would have immediate impact on job creation. © CH2M HILL 2007 Adapted from: Deutsche Bank Group 2008, Investing in Climate Change 2009 27
  28. 28. “Green” Job Creation 2006 2018-2038 © CH2M HILL 2007 Source: Global Insight, 2008, US metro Economies-Current and Potential ‘green’ jobs in the US Economy 28
  29. 29. © CH2M HILL 2007 Conclusions
  30. 30. Take Away Messages • Growth in global energy demand coupled with awareness of Climate Change, will require that innovative low carbon energy technologies be brought on line if GHG emissions are to be reduced at the same time. • Opportunities for energy efficiency improvement exist at every turn – there is plenty of room for cost-effective efficiency improvement with technologies we have today • The challenges go well beyond technical issues! We need behavioral changes, better economic policies to level the playing field for “green” energy, and coordinated local, national and international effort. • The global financial crisis will likely have short term effects, but mid and long term investment in ‘green’ infrastructure/technology could lead to significant job growth and robust market opportunities. © CH2M HILL 2007 30
  31. 31. Thank You! Matthew A. Wilson Ph.D. Business Development Leader © CH2M HILL 2007 Climate Change Services Direct: (720) 286-1811 Matthew.Wilson2@Ch2m.com

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