US military on frontline of energy strategy to save money and lives

President Barack Obama may be losing his argument for clean energy in Congress, but he has already won hearts and minds in the US military which is rapidly reducing its carbon bootprint from the barracks to the battlefield.

Major General Anthony Jackson spoke earlier this month of the importance of removing "the vice-like grip of oil from our necks" at a Pew Charitable Trusts forum to promote its new report on energy security at Stanford University.

The Department of Defense is the world's largest single consumer of energy, guzzling 300,000 barrels of oil a day. The US military consumed as much energy as Nigeria, according to this Post-Carbon Institute Energy Bulletin from 2007.

But in the past four years, DoD clean energy investments in biofuels, solar technology and advanced batteries have increased 200%, from $400m to $1.2bn. And the military is likely to clean up its operations even further.

Last year the DoD launched Energy for the Warfighter: Operational Energy Strategy "to ensure that the armed forces will have the energy resources they require to meet 21st century challenges". 

“Lightening the load” for those with boots on the ground, reducing energy demand and dependence on foreign oil are they key goals.

Batteries account for around 20% of the weight of a soldier's pack and a typical infantry battalion uses $150,000 worth of batteries a year, says the Warfighter report.

On the podium at Stanford, Maj Gen Jackson unfolded a sheet of PV panels that packs down to the size of a slim laptop case and can be used to recharge equipment.

Meanwhile, reducing energy costs are critical. In 2010, the DoD consumed nearly 5 billion gallons of petroleum in military operations, at a cost of $13.2bn an increase of 255% over 1997 prices.

But more importantly was the cost to lives at the frontline, said Maj Gen Jackson

In 2007 in Iraq and Afghanistan, a total of more than 3,000 Army personnel and contractors were wounded or killed in action from attacks on fuel and water resupply convoys.

He said: "I know the cost of [oil]. I know it up close and personal if you have never seen the mixture of blood and sand it's a harsh purple on the desert floor.

"There is an urgent need for our nation to lead the world in renewables and conservation and getting a grip on the strategic vice that one three letter word has around our neck. For every 50 trucks we put on the road someone is killed or loses a limb."

US Navy secretary Ray Mabus said something similar at the National Clean Energy Conference in August.

"We buy too much fossil fuel energy from potentially or already volatile places on earth. We give those countries a say on whether those aircraft fly or ships sail or round vehicle operate. There are great strategic reasons for moving away from fossil fuels.

"Every time the cost of a barrel of oil goes up by a dollar it costs the US navy $31m in extra fuel costs. When the Libya crisis began the navy faced a fuel bill increase of over $1.5bn.

"We import gas and water into Afghanistan more than anything. For every 50 convoys of gas we lose one marine – that is too high a price to pay for fuel."

He said that the Navy aimed to cut its dependence on oil for its aircraft and seacraft by 50% by investing in advanced biofuels, of the sort that cleantech startups like Solazyme produce. The US Navy's fleet of aircraft now all been tested with biofuels dropped in.

Despite the military's plans to develop "greener" tanks with BAE Systems, Jackson admitted that he would still drive his Corvette, because "compared to an Abrams tank which does .8mpg, I don't feel too bad."

Jackson, who commands marine installations on the western United States, said energy demand had already been cut by 37% in response to a 50% target by 2030. "We'll be there by 2015. It's not going to be anything for us," he said.

A metering pilot showed soldiers on base how much electricity they were using - if they used more than their neighbours, they'd get a bill, if they used less they'd get a cheque. This reduced energy demand by 30-40%, he said.

He also mentioned that one civilian employee had started to sell tin, aluminim cardboard on a commodities exchange - the proceeds of which now covers the costs of libraries and other facilities.

The Wounded Warrior Barracks at Camp Pendleton in California was the first LEED Platinum Certified building.

The Marine Corps had also installed solar panels and a 1.5MW wind turbine that provides 40% - 50% of the electricity at a barracks in Barstow, southern California, said Jackson. He wants to put another 1.5MW wind turbine at Barstow, but Southern California Edison hadn't worked out a way to "absorb" excess electricity into the grid.

"The utility companies have not yet learned to absorb what we're doing in renewables so I have to hold off until Southern California Edison figures [it]. It will not only cover the needs of the base but it will put back into the grid. We're ready to make this base net zero so we're negotiating."

Maybe Jackson would like to join the battle with the California Public Utilities Commission and utilities over decent feed in tariffs. Reading this UC Berkeley study on the economic (energy security?) benefits, should get Jackson off to a good start.

Jackson and Mabus may be acting on orders from their commander in chief, but they have certainly taken up this mission with great enthusiasm. Jackson said that when he once testified in front of the California Senate select committee for energy and security he was asked how he got people to meet the clean energy targets. "It's pretty easy senator I just tell them," he said. "Everyone in my command knows my intent."

If only Congress were that easy to command and control for the president. But the president's military powers are impossible to replicate politically. But it's one of the smarter differences between the UK and US political systems.

While Republicans bicker between themselves and with Democrats over spending cuts and the budget deficit, real progress continues by stealth where it can. Aside from Republican assaults on the EPA, powerful binding regulations on CAFE standards were agreed with automakers earlier this year. And in California, the Air Resources Board has exemplified stakeholder rule making and participatory democracy at its best with the development of the state's cap and trade regulations.

Jackson's clean energy mission seems to sit well with him. He said: "We like it when the president comes in and lays it out. We know this is important to the current administration.

But the ripple effect goes beyond what the Obama administration wants. Jackson's wife was not under orders when she insisted on buying a Prius and installing solar PV at home.

There may be an even more powerful effect of the military's campaign to reduce energy demand and dependence on foreign imports.

The impact of the DoD procurement clout on the growth of the semiconductor industry is well documented, and the internet was developed from the military's Arpanet funded by Defense Advanced Research Projects Agency (DARPA) in the late 1960s.

Today, the DoD's Environmental Security Technology Certification Program aims to demonstrate innovative energy technology and the military appears to be partially filling the void in the absence of policy or direct subsidies such as European-style feed in tariffs to create a sustainable renewable energy industry.

Solazyme already has large contracts with the US military worth $8bn to deliver algal biofuels. Bob Florence, VP of marketing and business development at Solazyme said: "The Navy's investment has been very helpful in scaling us. Thanks to these investments we're moving from an R&D company to a commercial entity. What we're making for the Navy is diesel fuel [like] you'd buy at a commercial pump. The good news is [they] don't see any difference when they run their ships on our fuel. We want to drop in to the existing structure, we don't want to reinvent the whole entire global fuel supply."

Skyline Solar from Mountain View, California, has a $1.58m contract with the DoD to demonstrate its high-gain solar plants at military bases in the south-west.

Lee Burrows, managing director at VantagePoint venture capital fund national energy policy was essential aligning policy with technology goals: "What the military can do is look at a timeframe for tech that is 10 or 15 years out. Elected officials typically have two to four years and corporations have the next earnings call as their timeframe. The critical part here for DoD and DOE is that they are enabling the technology of the future to help the country gain its long-term goals. We need to have a goal set that we can aim at."

While the US military fights a clean energy war, the question remains whether civilians in Congress can deploy an effective strategy to ensure energy security into the future - and to unshackle the "vice" of oil imports from the necks of US consumers and American soldiers on the frontline.

Steve Jurvetson and the invisible innovation that will change the world

What venture capitalists really think and what they say aren’t always the same thing. Intellectual excitement doesn’t always correspond with bets they place on the gambling tables of early stage investments.

Steve Jurvetson, from Draper Fisher Jurvetson, this week gave his overview of disruptive innovation in cleantech at the Always On Going Green conference in San Francisco. The man who famously invested $300,000 for 30% stake in Hotmail and made $250m for his VC firm when Microsoft bought the company two years later enthused this week about the “explosion of possibilities” of synthetic genetics in clean tech.

In August, one of Jurvetson’s portfolio companies, Genomatica, filed an S-1 form with the US Securities and Exchange Commission. The company uses computerized biotechnology modelling to design high-volume chemicals from renewable sources such as cellulosic biomass. 

DFJ joined a consortium of investors including VantagePoint in raising $84 million in financing Genomatica. Tate & Lyle and Mitsubishi list among its partners. 

Biofuels have bucked the downward clean tech IPO trend this year, not least because the oil incumbents have a huge interest in replacement fuels.  

But apart from a scattering of clean energy plays, DFJ hasn’t done a great deal to promote itself as a VC leader in the field since 2008 – perhaps as the economic crisis matured into the great recession. DFJ’s portfolio of “companies that are changing the world!” reveal a curious lack of clean tech companies, with BrightSource, CoalTek and Tesla among the exceptions. Furthermore, DFJ’s star clean tech venture partner, Raj Atluru earlier this year announced his move to George Soros’s $1bn clean energy fund, Silver Lake Kraftwerk.

Although Jurvetson’s clean tech portfolio is fairly modest: Genomatica, Tesla and synthetic biology company Gen9, he made a robust case to claim that these investments were made in “disruptive innovations.”

He said: “First let’s define innovation: by innovation, I mean things that matter. Not sustaining innovation, but disruptive innovation – what will history books be written about. 20 years from now what will people remember as a seminal advance for the human race? And that will not be some marginal improvement buried deep in some large company. It’s always startups.”

In what sounded almost like a explanation for his scarcity of clean tech investments, he said: “If you think 20 years out, and ask what’s the most important company on the planet, it is not any company you could write down today. The most important company 20 years from now has not even been founded yet and doesn’t have a name. That’s a bit disconcerting for anyone who thinks about the trajectory of technology progress. That is always obvious in retrospective, eg Google Facebook didn’t exist 20 years ago. It’s not so obvious when you plan into the future.”

He argued that large companies by their very nature were incapable of being disruptive. “I’ll go further and say that no large companies does disruptive innovation in any sustained manner – not even Apple. If you think about the personal computer what have they done over the last 10 years in personal computing?”

Economic crises were an engine of change and could be an advantage for startups because it was cheaper to get established when markets are depressed, he said

“Two thirds of the Dow Industrial Average was formed during recession or the great depression. Companies tend … to build their business in more sustainable ways when they are formed in a down market. The odds might be in your favour. Why might this be?

“What is it about market disruptions and economic disruptions that make markets thrive? One example might there hasn’t been a car company IPO here since Henry Ford.

“But it got a little easier – Teslsa was able to buy a new manufacturing plant for pennies in the dollar. Who could have predicted that 5 years ago?

“When you have debt crises and pension plan disasters in large companies within our broader portfolio even outside of clean tech it’s those startups that are focusing on automotive, financial services real estate that are thriving. Exactly the things that you read about in the headlines have been the most destructive economically.

“But if you look at electric vehicles there maybe a few people buried deep within large companies who don’t realize that every vehicle in the future will be electric. Every train, automobile, etc. Big companies wouldn’t lead that disruption. It takes a startup to lead that challenge but it is happening.

“The future will be less predictable, forecast rises will shrink, company lifetimes will shrink, new entrants will proliferate and it’s going to just get more unpredictable. If you thought financial crises came and went, just count on them – another economic collapse, it’s almost going to be like not news any more. But for startups this is great, because it’s a perpetual driver of disruption.”

However, what really excites Jurvetson, it seemed, are not flashy electric cars or sophisticated IT services to manage energy domestic demand or across smart grids, but “genetic alchemy” also known as synthetic biology.

Life sciences were entering a renaissance that would converge with clean tech thanks to computational biology, he said.

“It’s an interdisciplinary renaissance… think about ideas mating in new and interesting ways across academic disciplines to greater effect than within one.

“IT is now reaching out to fuels and chemicals, energy and clean tech, rockets, all kinds of bizarre industries that formerly didn’t face much competition.”

Drew Endy, assistant bioengineering professor at Stanford University and cofounder of Gen9, one of Jurvetson’s portfolio companies put our “partnership with biology” in perspective at a later panel discussion.

“Our work is a radical departure from the past generation (35 years) of biotechnology which has tended to be overdriven by applications, given that we typically turn to biology as a technology partner of last resort to solve pressing problems (cure this disease, give me a drop in fuel now, etc.). This has resulted in a collective and persistent underinvestment in tools supporting biotechnology. Most practice the details of genetic engineering today no different from how it was done in 1980.

“We can project that we’re going to get better at constructing [synthetic DNA]. What does that mean 10 years from now? We should not be surprised to see another 10 fold increase in our capacity to print genetic material.

“In 1980 Genencor took the enzymes that are used in laundry detergent and re-engineered them to work at cold water wash temperatures and the net impact of that if you distribute those enzymes in laundry detergent throughout the US you can realize up to 10% decrease in domestic hot water heating requirements. In 1980 that was the equivalent of around 100,000 barrels of oil a day, 5x the Gulf of Mexico oil spill. That’s one protein integrated into human existence to reduce environmental energy needs.

“You typically don’t think of what’s in your soap or the enzymes that are in your ice cream that prevent ice cream crystals from growing too big in the thermocycle coming in and out of your freezer – I know this is a first world problem – but biology exists with us everywhere. And I see how to partner better with it to reduce loads on the environment and energy that’s where we’ll see a lot of disruption.

“The key is going to be how to figure out how to sustain the investments in the told. If we try to implement the future with the tools of the last 35 years, we’re dead in the water. We’re going to get another handful of things we can celebrate.”

The most powerful gamechanging disruptive innovation is likely to be invisible, said Endy. “We’ll make some biofuels - they are important we need to have agility in terms of replacement petroleum. But we’re also going to change how we exist to reduce our energy loads and footprints. That’s probably where I would expect to see a lot of disruption. It’s likely to be invisible.”

Do flights of fantasy & innovation 'win the future' for the US economy?

Americans love innovation, particularly if they are venture capitalists or politicians.

Venture capitalists such as Kleiner Perkins Caufield Byers claim to be able to "see around corners" to anticipate the "next big thing". To do so, they must risk real-world capital on often untested ideas, ie innovation, that then become real-world profits, sometimes from companies that actually make things and provide services.

President Barack Obama said investment in innovation would be how the US would "win the future" by unleashing the ingenuity of business, leading to the country's Sputnik moment in his state of the union address he gave at the beginning of the year.

I had often wondered whether this focus on innovation was more than contemporary alchemy… the profits from innovation could become real gold for the investors, but what would be the benefit for the wider economy. Would jobs, taxes and other revenues flow out of the country?

Henry R. Nothhaft writing in the San Francisco Chronicle clarified this conundrum for me with a fantastic analysis of what this innovation-only policy means: outsourcing manufacturing to other countries such as China, while the US leads on the gamechanging innovations, creates problems for the economy, not jobs or revenue.

Innovation-only "explains why the $30 billion trade surplus in high-tech products that the United States enjoyed 10 years ago has become a $56 billion deficit," he says.

Consider that in 1980, America produced 42 percent of the world's semiconductors. Today, the United States produces only 14 percent of the world's supply of a device that we invented 53 years ago. And along with the movement of production offshore, 8 percent of R&D spending by U.S. semiconductor firms within the United States also has moved offshore. 

Americans in general appear to find gadgets and shiny new things more appealing solutions to climate change and transport issues. That explains the enthusiasm among VCs and politicians for electric vehicles rather than something a bit simpler to deploy, but less sexy, such as a comprehensive bus system.

Even academics get swept up into these flights of fancy when characterising what "innovation" could do for the future of US transport. Tyler Cowen, who is a professor of economics, lamented in the New York Times at the weekend that companies are being restricted in testing and developing technologies for "driverless" cars. Google has apparently requested a relaxation of laws in Nevada to allow it to test on the state's roads.

Prof Tyler has written in the past about how little benefit the average American may gain from innovation:

Although America produces plenty of innovations, most are not geared toward significantly raising the average standard of living. It seems that we are coming up with ideas that benefit relatively small numbers of people, compared with the broad-based advances of earlier decades…

Which is why his comments in the NYT on Sunday were all the more surprising when he described what I would view as a nightmare scenario on US roads:

The benefits of driverless cars are potentially significant. The typical American spends an average of roughly 100 hours a year in traffic; imagine using that time in better ways — by working or just having fun. The irksome burden of commuting might be lessened considerably. Furthermore, computer-driven cars could allow for tighter packing of vehicles on the road, which would speed traffic times and allow a given road or city to handle more cars.

I can't imagine an arena that an American would find more "irksome" than not having control of  their car. And doing something useful while commuting is not a "radical innovation" in countries that are willing to invest in public transport. Cars driven by computers - sorry to contradict the bright minds at Google - belong in the same category as Jetson-style personal spacecraft.

All this blue sky thinking when VCs talk about innovation can be a bit dizzying, which is why companies such as Solazyme come as a breath of fresh air.

Solazyme, the algal biofuels company, has been a great success story for its VC investors, which include VantagePoint Capital Partners, Braemer Energy Ventures and Lightspeed Venture Partners.

Last week, it started trading on NASDAQ after raising $198m on its IPO which exceeded expectations. Solazyme is focused on transport fuels, and has so far signed three increasingly large deals with the Department of Defense to provide hundreds of thousands of tonnes of algae-based fuel for the US Navy.

Those deals, and last week's IPO are ringing endorsements of the science behind Solazyme's technology. But bringing this innovation to scale is problematic, even for a successful startup such as Solazyme, and doubts remain over the scalability of the production of algal biofuels.

Solazyme said last week that it purchased its first commercial-scale plant in Illinois, funded in part by a $22m grant from the Department of Energy, according to Bloomberg.

But it will need much more capital than that to compete with the heavyweights in the oil and chemical industries. The IPO was part of this strategy but Solazyme will also have to partner with the competition - Chevron and Dow Chemicals and Unilever - are among those in the frame. The traditional companies also rely on innovations from companies such as Solazyme, creating a symbiotic relationship between startup and establishment.

So far, Solazyme, is possibly the closest to a breakthrough start up that can show VCs and presidents that the alchemy of investment innovation - with its magic formula of bringing a new idea to scale -  can turn into real gold for the US economy.