Newsletter Volume 1 : Issue 5: June 2018
Entering our third year, CCA has seen growth in its own operations and in entities we have had the privilege of collaborating with within the spectrum of climate change mitigation. Accordingly, this issue centers on growth, as we highlight how our early-stage impact investment fund CLIIF has initiated talks with the exciting biofuel company Investancia. We also outline the expansion of our Lowcountry Study, and take a look into the multifaceted and snowballing field of non-federal U.S. efforts to establish decarbonization standards. To wrap up the issue, we interview our newest staff member, and take a birds-eye tour of the development of our Green Room, a sustainability contest search engine and database.
Clockwise from top left: The Paraguay River, Pongamia saplings, Pongamia trees, harvesting the seed pods, silvopasture grazing, young seed pods. Images courtesy of Investancia.
Climate Impact Investment Fund Exploring Partnership with Investancia
CCA has begun creating the framework for a private equity investment fund that will aim to support emerging companies engaged in greenhouse gas (GHG) reduction. Titled the Climate Impact Investment Fund (CLIIF), the initiative is moving forward in collaboration with Chicago-based private equity firm TJM Capital. Our early efforts in identifying a potential funding recipient have centered on Alsip, Illinois-based Zone Mechanical (profiled in our newsletter #4), and has continued with Investancia Paraguay S.A., which produces biofuels made from seeds of the Pongamia tree.
Investancia’s business model is founded on the principle of a solar fuel. Since liquid fuels have 60 times the energy density of batteries, transporting and storing them require fewer resources. An ideal fuel source would combine the renewable properties of solar or wind power with the energy density of a low-carbon liquid fuel. The biofuel that Investancia refines comes from Pongamia seeds, and since their growth is driven by photosynthesis, the end product produced from the seeds qualifies as a solar fuel.
Investancia has thus created what they call a second-generation biodiesel, which has major advantages over first-generation biodiesels primarily made from soy, rapeseed, and palm oil: at least a 60% reduction in GHG emissions compared to fossil fuels; a perpetual vegetable crop as a source, grown on non-food land that spares water and soil; and the integration of silvopasture, which allows cattle to graze among the Pongamia trees, thereby reducing deforestation to create grazing land. What’s more, the Pongamia trees, which are planted on reforested land, act as a carbon sink that, together with these other benefits, more than offsets the CO2 emissions resulting all aspects of its production and use. Finally, seed cake (the pulp remaining from the Pongamia seed after refining) is fed to grazing livestock, further reducing land use that would otherwise be required to produce animal feed.
The company owns 300,000 Pongamia trees on 1000 hectares just west of the Paraguay River, which forms part of that country’s northeastern border with Brazil. With an eye to expansion to 10,000 hectares, Investancia highlights the benefits to the local economy of hiring a workforce that could prepare such extensive land for the planting of up to six million trees. Estimated annual crude vegetable oil production from this capacity is 50 million liters (13.2 million gallons).
CCA is currently taking part in preliminary discussions with Investancia regarding proposed investments, and is carrying out due diligence on the company’s financial projections and acquisitions structure. In addition, CCA Treasurer Jeff Phillips and intern Eithan Graber (see profile below) have initiated an investor marketing program for approaching foundations that would have an interest in investing in CLIIF, and an investor database for related marketing purposes. Scanning the clean energy industry for innovative concepts such as Investancia’s “reforestation oil” has been encouraging, considering the wealth of human and financial capital currently backing decarbonization efforts.
Lowcountry Study Update
Since our Tidal Decision conference planned for earlier this year was postponed, the research project on sea level rise that served as its basis—the Lowcountry Study—has seen notable progress. In late May, CCA Director Stuart Williams met with Professor Norman Levine of the College of Charleston to discuss recent findings. The scope of the project spans the long and short term, and has lately been isolating the entire decade of the 2020s, projecting flooding probabilities in the Charleston metro area for time spans as minute as day-to-day.
The primary benchmark used by Professor Levine has been nuisance flooding, which describes days when sea levels are high enough disrupt business operations. There were an annual average of four nuisance flooding days in the 1970s, and today that average is 50, according to Professor Levine. Most concerningly, the study projects 130 nuisance flooding days in the Charleston area by 2030, 60 during which roads could be undriveable. A practical follow-up question would then be, How will this kind of disruption affect the local economy, and broadly the desirability of owning a home or business in the area?
Williams and Levine aim to answer these questions by integrating the flood projection data with local GDP projections, in order to generate year-by-year estimates for how sea level rise could affect local business revenue, population, and hence the tax base. With this model we hope at the very least to convince businesses of Southeast coastal areas of the importance of contributing to resiliency and decarbonization efforts.
Climate Change News
University Cleantech Entrepreneurs Pitch for Prize Money
What might result from bringing together major research university resources, with venture capital to be disbursed to promising entrepreneurs breaking into the renewables economy? If you guessed the Clean Energy Trust’s Switched On: Student Innovations in Cleantech competition, that’s spot on. CET convened teams of student entrepreneurs from eight Midwestern universities to present their products at incubator mHUB in Chicago in early February. A panel of experts from the public and private sectors picked the top three companies to advance to the national competition this summer, while awarding a grand prize of $50,000 (provided by the U.S. Department of Energy) to the winner.
Universities represented included Minnesota, Kentucky, Chicago, Northwestern, Iowa State, Case Western, and Washington (St. Louis). Two of the fledgling companies provide power storage services: Aelios Technology (Minnesota—runner up) creates backup electricity systems for hospitals in developing countries where unsteady power supply is a problem; Beltech (Chicago—runner up) is developing a hyper-efficient lithium-ion battery that increases energy density threefold and eliminates leakage.Boundary Labs (Case Western) aims to improve the efficiency of wind turbines with their “dialectic barrier discharge plasma actuator” technology, which minimizes aerodynamic drag over turbine blades. And Aerospec (Northwestern—winner) has pioneered a quality control system for solar and wind farms, involving inspection by drone-powered video surveillance combined with big data analytics.
Sonny Garg, Energy Solutions Lead at Uptake Technologies, and former executive at Exelon Corporation, delivered the keynote address on the current climate of technology innovation. He began by offering some perspective on the state of U.S. utilities: “You could hire Thomas Edison to run 90 % of the utilities in America, the industry has changed that little in 100 years. It’s basically the same...but everything we’re hearing today, all these startups, we are in a moment of significant innovation...we’re rethinking the entire industry.” As a case in point, Garg outlined a study done by Uptake, called “Untapped Energy,” which aimed to improve the accuracy of predicted failures for most components of wind turbines. He elaborated: “If we can get every wind turbine up to 99 % reliability...that would create 12 terawatt hours of additional electricity…and that would power every home in Chicago.”
Mentioning the urgency of dealing with climate change, he claimed, “When you combine these two moments, of innovation and consequence, in everything you’re going to be doing you’re making history.” This should have come as no surprise to the likes of the student entrepreneurs participating in Switched On, whose problem-solving acumen should help steer the course of renewable energy development for the near future.
Broad Coalition Steps in to Pursue Paris Agreement Targets
First the Kyoto Protocol, then the Paris Agreement: The United States has shown reluctance to commit to global emissions standards for addressing climate change. While the U.S. cannot formally withdraw from the Paris Agreement until 2020, its non-binding terms make it uncertain whether the majority of carbon-intensive industries will take the initiative to meet targets, especially in the absence of any federal guidance. Nonetheless, a significant group of states and major cities are expected to adhere to the guidelines of the Clean Power Plan, despite the Trump administration's ending of the program last October. This caliber of responsible action is being demonstrated by coalitions acting at multiple levels.
Several state-level coalitions formed before, and in the wake of, the U.S.’s withdrawal from the Paris Accords aim to mandate GHG emissions limits and set carbon pricing standards. Additionally, cities, businesses, universities, and NGOs increasingly have shown climate leadership in their policies. While these initiatives’ ability to compensate for a lack of nationwide standards, including those once outlined through the soon-to-be-defunct Clean Power Plan, is uncertain, their relatively strict enforcement at least ensures a dependable level of GHG reduction.
Throughout the past two decades, governors of twenty states have been issuing executive orders to set greenhouse gas emissions targets for the short and long term. The most ambitious plans include those passed by the executives of Michigan and Minnesota, which call for an 80 percent reduction in GHG emissions below 2005 levels by 2050, while Connecticut aims to do the same based on 2001 levels. California and Massachusetts mandate an 80 percent (and Rhode Island 85 percent) reduction based on 1990 levels. Less stringent targets include Illinois’s 60% of 1990 levels by 2050, though most others fall just below the stricter guidelines.
Supplementing these measures, The U.S. Climate Alliance was created soon after the Trump Administration withdrew from the Paris Accords in June 2017. The coalition represents 17 states (40% of the U.S. population and a $9 trillion economy, the third largest globally after the U.S. and China) that have pledged to reduce GHG emissions by 26-28% of 2005 levels by 2025.
Not surprisingly, many of the states leading on legislating GHG reduction also have cap-and-trade policies in place through the Regional Greenhouse Gas Initiative. These efforts are appropriately centered on the Northeast, which has the worst levels or air pollution nationwide. Comprising all six New England states, in addition to Delaware, New York, and Maryland, the coalition requires that all fossil-fuel-generated utilities with an output exceeding 25 megawatts pay a per-ton fee for annual CO2 emissions. The price of these fees is determined at quarterly regional auctions. The limits at which annual allowances have been set (82,235,598 tons in 2018) have continually declined, requiring utilities to build efficiency into their operations. The program has generated $2.8 billion since 2009, which states have invested in renewable energy projects, electrical bill assistance, education and job training programs, GHG emission-reduction measures, and energy efficiency initiatives.
At the city level, the Climate Mayors coalition comprises 406 mayors representing a population of 70 million (including the eleven most populous cities, and all cities with more than 1 million residents). Members have pledged to uphold the terms of the Paris Agreement, and to “work together to create a 21st century clean energy economy.”
In addition to these standards, some cities have set ambitious targets to completely decarbonize city operations. According to Jennifer Roberts, former mayor of Charlotte, NC and a CCA Advisory Board Member, on June 4th the Environmental Committee of the Charlotte City Council voted to support taking the city to a zero carbon emission status in city operations—transportation services, fleet vehicles, and buildings—by the year 2030. In addition, the resolution committed the city to developing a Sustainable Energy Action Plan for short-, medium-, and long-term measures that would implement deep reductions in GHG emissions across public, private, and non-profit sectors by 2050. Dozens of environmental organizations and citizen groups took part in shaping the scope of the resolution and the city's planned actions.
“During the committee meeting, it was emphasized that not only is Charlotte setting goals, but the city is also developing a comprehensive, detailed, step-by-step blueprint on how to achieve these goals by partnering with the business and academic communities,” Roberts said. “The city is working with an international consultant to develop this plan, which goes well beyond city government operations. The stated goal is to reduce per capita carbon equivalent emissions from their current level of 12 tons CO2 per city resident to less than two tons per capita annually.”
Rounding out the list of major non-federal coalitions are universities and businesses. The Presidents’ Climate Leadership Network, an initiative of the organization Second Nature, has signatories from over 600 universities representing every state and the District of Columbia. These institutions pledge either to pursue carbon neutrality through the Carbon Commitment, or climate adaptation and community capacity-building through the Resilience Commitment, or both. Finally, the We Are Still In coalition represents over 1900 businesses and investors, hundreds of cities and counties, colleges and universities, states, cultural institutions, tribes, and faith groups. Together they have signed a declaration to “promise to world leaders that Americans would not retreat from the global pact to reduce emissions and stem the causes of climate change.”
All in all, perhaps the most encouraging thing about these various partnerships is that they represent only a portion of the total non-federal actors currently taking on measures modeled after the Paris Agreement; and more encouraging yet—many of their emissions reduction targets are set beyond international standards, in full awareness of the urgency of the moment.
Around the Organization
The Green Room
The goal of The CCA Green Room project is to create an intuitive, interactive, web-based directory of sustainability project contests and challenges. There are a growing number of such competitions presented online. Unfortunately, they are frequently hard to find and difficult to compare. This situation most likely discourages participation and inhibits innovation in the renewables and cleantech sectors. The Green Room concept will serve as an sustainability-contest nexus for a global community of like-minded students, entrepreneurs, designers, and engineers, and scientists. This resource could also create a basis for additional projects such as leadership and investment opportunities.
The Green Room project aims to:
introduce awareness of climate change issues to a wider audience
increase participation in existing competitions
improve matchmaking quality between participants and contests
provide a database of environmental contests and link users to contest organizers' websites
offer to connect contest winners with CLIIF investors to assist the further development of the most promising concepts
seek to become an environmental contest advisor to establish best practices for a successful contest
encourage instructors to include environmental issues in curriculum offerings
serve as a resource for organizations wishing to improve or establish new challenges
become a catalyst in forming worldwide design teams to address environmental issues
Current project development status:
A detailed project budget has been put forward, and a budget for the first year has been presented.
Bids have been gathered for building and maintaining a CMS platform. We have chosen a partner company to help develop the CMS Platform.
A Job description for a research/administrative position is being developed.
Funding sources are being identified.
The Green Room site plan should be ready for launch within three to six months, to be accompanied by a multimedia promotional campaign.
Introducing the Staff: An Interview with Intern Eithan Graber
Eithan Graber, an MBA candidate at Northwestern University's Kellogg School of Management (Class of '19), has joined CCA as an intern to assist with the development of the Climate Impact Investment Fund (CLIIF). The following is a brief interview with Eithan.
How would you describe your interest in ways the private sector can address climate change?
My interest in the energy sector emerged in college when I worked for a leading provider of energy audits and with the CEO of an LED lighting manufacturer in the east coast of the United States. After graduation, my work with a policy consulting company provided substantive exposure to the energy sector, particularly in the legal and financial aspects of energy projects in the United States and Latin America.
My desire to work in the energy and sustainability sector motivated me to apply to and attend business school. As a first-year MBA candidate at the Kellogg School ofManagement, I am pursuing a double finance and strategy major with an emphasis on energy markets and renewable technologies. In addition to my responsibilities as a Director of the Energy Club, I completed an investment thesis for a sustainable finance seminar addressing challenges in the resiliency of the electricity grid. This summer, I will be working as a global strategy intern at Redaptive, a leading provider of commercial Efficiency-as-a-Service programs based in San Francisco.
What is the focus of your current research, and how did you become interested in this topic?
I am currently researching the implication of batteries and electric vehicles in fleet transportation companies across the United States. Most people think of electric vehicles as expensive, independently owned cars. But the implications of batteries and electric trucks in the transpiration sector is profound and will affect several sectors within the energy space, including power generation, infrastructure, and renewable technologies.
How are business schools adapting to the trends of corporate responsibility and the renewables economy?
Many business schools have launched academic programs, research centers, and professional institutes devoted to corporate responsibility and the renewables economy. I have been impressed by the number of courses, experiential learning opportunities, and professional resources at Kellogg to learn more about the sustainability sector and transition to a job in the cleantech space this summer.
Business schools in general could be doing even more to adapt to the pressing environmental and sustainability challenges of our generation. More academic and research pathways, conferences, case competitions, and networking opportunities can be established to allow students to gain experience and take leadership in the sustainability sector after business school.
Which industrial or service sectors have the most potential to drive the renewables economy in the near future?
There is a lot of innovation in the renewables space and it is difficult to tell which sector will make the biggest push toward a cleaner future. The price of solar is falling, wind is becoming more competitive, and batteries are becoming more efficient. There are also a lot of exciting developments in the high-tech space that are allowing industrial and commercial players to consume less energy and manage their energy consumption more efficiently. All of these developments will be important for driving the renewable economy forward.
Can you offer any tips for weathering the challenges of graduate school?
Each graduate student has a different path and a different set of challenges throughout graduate school. However, here are a few pointers from my own experience:
1. Prioritize what is most important to you: There are a vast number of opportunities and it is hard to find time to do all of them. Pick a few things that really matter to you and invest in those areas. To me, the sustainability and energy opportunities, the Latin American business community, and playing with a jazz group in Chicago have been most important throughout my time at Kellogg.
2. Try something new: This is (somewhat) contradictory to my first tip above! But graduate school is a great time to try something that you previously did not have the time or the risk appetite to do. I would recommend taking a course outside your area of interest or which you find challenging. Whatever that new, challenging experience may be for you, graduate school is a great time to try it and to challenge yourself.
3. Invest in the people: One of the most rewarding aspects of graduate school is meeting so many new students, faculty, and staff at the university. I have been amazed by my fellow students, the faculty and their dedication to my academic and professional development, and the staff at the academic and career development centers. I know I will count on my fellow students and professors as friends and mentors for many years going forward. I think taking the time to work with them and learn from them has been extremely valuable throughout my time at Kellogg.
Mayors of major U.S. cities gather to form the Climate Mayors coalition. (Photo courtesy of Climate Mayors)