Obama's SOTU clean energy wishlist derailed by Congress gridlock

A week is a long time in politics… 52 weeks between state of the union addresses is a lifetime. But progress in creating legislation that will actually help the US economy recover has been proceeding at such an agonisingly glacial pace thanks to the so-called "gridlock" in Congress that last year's appeals by the President to support investment in clean energy have not advanced since last year. 

Many Republican members of Congress are increasingly making it clear that they are not interested in running the country, just running their 44th President out of office – if his policies succeed, then Barack Obama has more chance of winning a second term in office and they will stop at nothing to stop anything that makes the current incumbent look like he might be a competent president.

Pugnacious comments punctuated Obama's usual emollience, which made his plea for Congress to look to the US military on tips on cooperation.

Chinese imports of cheap PV were clearly in the crosshairs when Obama announced the creation of a Trade Enforcement Unit to investigate "unfair trading practices in countries like China," thereby turning up the heat in the trade war started by SolarWorld's legal challenge last year.

"And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration –- and it’s made a difference… It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized."

Solyndra was not specifically named. But when Obama acknowledged that public investment in technologies had associated risk - some that paid off, such as shale gas and some that failed - everyone knew he was referring to the Californian thin-film solar company that collapsed last year taking around 535m federal dollars with it.

"Some technologies don’t pan out; some companies fail. But I will not walk away from the promise of clean energy."

He called for an end to fossil fuel subsidies - a vague hope that has not moved on since his last SOTU address. "Pass clean energy tax credits," he urged, before the first and only mention of climate change, over which his tongue slipped to say "flight" rather than fight climate change. The clean energy standard which would create a federal-wide renewable portfolio target for utilities, also got an honourable mention for the second year in a row even as bills in Congress have not inched further forward in the past 12 months.

"We can also spur energy innovation with new incentives. The differences in this chamber may be too deep right now to pass a comprehensive plan to fight climate change. But there’s no reason why Congress shouldn’t at least set a clean energy standard that creates a market for innovation. So far, you haven’t acted.  Well, tonight, I will.  I’m directing my administration to allow the development of clean energy on enough public land to power 3 million homes.  And I’m proud to announce that the Department of Defense, working with us, the world’s largest consumer of energy, will make one of the largest commitments to clean energy in history -– with the Navy purchasing enough capacity to power a quarter of a million homes a year." 

In many ways, that Obama's energy and climate goals have found a more welcome home in the US military comes as no surprise. As with the fuel economy standards introduced last year, executive orders are a useful addition to the political arsenal of the commander in chief. It's a curious trick of America's style of democracy that bypasses Congress… that is where Obama appears to be most effective. The same could be said of his administration's foreign policy - killing Osama Bin Laden tops a long list of successes in the state department thanks to Hilary Clinton, along with withdrawal from Iraq and toppling murderous dictators such as Colonel Gadaffy.

But the Republicans pretend not to be interested in foreign policy to avoid drawing attention to Obama's successes, citing the domestic problems as far more pressing.

But given the freedom to execute his executive role, Obama is clearly more effective without the burden of a Congress that has bound itself to industrial interests such as the Koch brothers et al at the expense of the wider American public. 

Tea Party Republicans mask prejudice and discrimination and obstruct reasonable discourse on everything from energy policy to abortion by citing the constitution, or rather their own appropriated interpretation, with the same religious fervour as Islamic fundamentalists cling to the Koran, or their own warped interpretation, as justification for waging war on the west.

Climate change is just one issue where Republican sceptics make themselves sound ridiculous because their arguments and comments have to stray so far from the facts and the scientific consensus that the rest of the world accepts.

That Republican presidential candidates are now equating "socialism" with "European" makes them sound silly. But these daft comments become more serious when this newly coined synonym passes almost without comment or inquiry by the public or press in the US…  David Cameron, Angela Merkel, Nicolas Sarkozy are all right of centre party leaders who have vowed to cut public spending and allowing sovereign monarchs to remain as heads of state in countries like Spain and the Scandinavian nations, is hardly a "socialist" strategy for organising society.  

During a conversation recently with a VC specialist at a large accounting firm the discussion turned around to Obama's threat to tax "wealth creators" and "wasting money on entitlements". Ah yes, the benefits culture has become a problem in the UK too, I said. To which the reply was: That's right, in Europe, you have socialism there. 


This lazy association through redundant ideologies obstructs discourse. After all, China a country run by a "communist" party has little or no "welfare" state as we would call it in the west, where healthcare payments are based on the extended family's ability to pay. So much for socialism taking care of the poor… if by socialism = European, they mean social equity, then that's a definition I'll live with. But that is a pejorative concept for too many Republicans.

In the Iron Lady biopic of Margaret Thatcher there is a wonderful scene in which Meryl Streep quotes: "Beware of your thoughts, they become your words. Beware of your words, they become your actions. Beware of your actions, they become your habits. Beware of your habits, they become your character. Beware of your character, it becomes your destiny."

Words and their real meaning should matter to everyone, especially politicians, regardless of bias.

The global warming debate is where this lack of interrogation of factual accuracy stands out in the US - it is depicted as if there is still enough weight of evidence to give credence to the doubters. That is just not true and it doesn't matter who says so or how many times, the US is a country where consensus on climate change can be reported as a "revelation" 10 years later than every other nation because it suits politicians and their fossil fuel influencers to obscure and dissemble.

Professor Naomi Oreskes deftly argues in the LA Times that climate change is an issue where "open mindedness" does not apply. It's just one of many issues: it is no longer scientifically acceptable to stay "open minded" on the adverse affects of smoking; nor is it socially acceptable to stay "open minded" about prejudice or discrimination on grounds of colour, gender, religion or sexual orientation. There are some things in life which are so politically or socially unpalatable in a free and fair society that "open mindedness" is inappropriate…

Unlike last year, there was no specific mention of high-speed rail. Last January, Obama boldly said:

"Within 25 years, our goal is to give 80% of Americans access to high-speed rail, which could allow you go places in half the time it takes to travel by car."

In the 12 months since then, not a single piece of HSR track has been laid and its deep controversies have seeded doubt about its viability even among staunch supporters such as Joe Simitian, a Democratic state Senator for Palo Alto, a region not known for its aversion to technology. 

This year, Obama played safe by pledging to reduce redtape on infrastructure projects: 

"Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure."

Clean energy advocates responded positively to Obama's speech last night. But the headwinds of cheap and abundant natural gas, the possible expiration of the Production Tax Credit low and the spectre of China's oversupply of cheap PV - the Solyndra ghost will haunt the solar industry and government support for clean energy for years to come.

Eileen Claussen, president at the Center for Climate and Energy Solutions, which had to remodel itself from the Pew Center on Global Climate Change after Pew Charitable Trusts cuts its purse strings at the end of last year.

"Even if comprehensive legislation remains off the table for now, we can make important progress tackling these challenges piece by piece. C2ES is working with policymakers and stakeholders on ways to expand enhanced oil recovery using captured carbon dioxide – an approach that can boost domestic oil production while reducing greenhouse gas emissions. Similarly, we’re working with automakers, environmentalists and others on a plan for integrating plug-in electric vehicles into the U.S. electrical grid. We look forward to sharing the results of these and other C2ES initiatives aimed at practical solutions to our twin climate and energy challenges."

C2ES is now mostly funded by business, including Entergy, HP, Shell, the Alcoa Foundation, Bank of America, GE, The Energy Foundation, Duke Energy, Rockefeller Brothers Fund. The presence of energy companies among its top donors may explain the interest in advanced fossil fuel technologies such as enhanced oil recovery which aims to maximise the extraction of the resource and does nothing to minimise the effect of burning what comes out of the ground.

At one point the president pointed out Bryan Ritterby, who he tried to present as an ordinary Joe who was laid off …

"Bryan Ritterby was laid off from his job making furniture, he said he worried that at 55, no one would give him a second chance.  But he found work at Energetx, a wind turbine manufacturer in Michigan.  Before the recession, the factory only made luxury yachts.  Today, it’s hiring workers like Bryan…"

But Bitterby is no ordinary born-again American clean energy industry worker. He is representative of many who work in the US wind industry - largely developed with expertise from Europe where policy has created an export market for renewables.

Although Energetx is an American company that has changed course from making yachts in Michigan, if it's not built by GE, wind turbines in the US will be built in factories established by European-based companies: Gamesa, Siemens and Vestas just to name a few. These companies were attracted to the US manufacturing industry partly by the 48C advanced manufacturing tax credit, which as I've reported before, was not taken by GE. However, last night Obama made clear that any future tax credits would favour indigenous companies. Where that leaves the Europeans who have been so involved in developing the US wind industry and creating a manufacturing base remains to be seen.

Aside from being a wishlist of things that will never happen, like the clean energy standard, commentators last night also saw Obama's third SOTU as a stump speech for the presidency. I wonder whether he will make it to a 4th… otherwise Mitt Romney may be required to dig into his own deep pockets for ideas on how to help the economy recover. Perhaps he could pay down some of the US debt from his own savings account?

Can policy keep cleantech innovation out of the valley of death?

The Breakthrough Institute recently published a series of reports on policy solutions to keeping cleantech innovation out of the valley of death:

"The energy sector as a whole is a roughly $5 trillion market, and it is expected to grow by more than 50 percent by 2035. Supplying this market with clean and affordable advanced energy technologies thus represents an enormous economic opportunity for American entrepreneurs and firms and the US economy as a whole."

"In the past, the United States has driven immense and far-reaching technological transformations. As the pioneering global innovator of the 20th century, the United States built the world’s largest economy because of the ingenuity and creative enterprise of its entrepreneurs and citizens. 

"Each step of the way, proactive public policy has played a crucial role in driving American innovations, from railroads and jet engines to microchips, biotechnology, and the Internet, unleashing long waves of economic growth and shared prosperity. New and advanced clean energy technologies afford the same opportunities to the United States today—if public policy is shaped in a way that allows American innovators to thrive once again."

In recognition of the fact that it takes more time, money and investor patience (see box) to bring innovations in the energy industry than say, internet startups, the Breakthrough Institute advocates:

The creation of the Clean Energy Deployment Administration (CEDA) "a flexible, independent government investment agency—effectively a bank—that aims to unlock the capital necessary to move innovative energy technologies across the Commercialization Valley of Death."

A National Clean Energy Testbeds (N-CET) programme to offer "a second response to the Commercialization Valley of Death".

Some of these ideas are already taking form in the UK, with the Green Investment Bank, and to some extent the Carbon Trust already fulfills some of the areas of weakness identified by the Breakthrough Institute.

But there is one Achilles heal in the UK which has yet to be addressed. As the world's second largest centre for VC funding — at $184m a distant second behind the US according to the Cleantech Group's Q3 2011 report — much of that investment ends up overseas, even if the innovation began in UK universities.

In the UK, there are some really good examples of spinouts from university labs, such as Cavendish Labs at the University of Cambridge and Imperial Innovations at Imperial College. 

This is progress, but the UK tech spinouts seem to face an additional valley of death — the gravitational pull of Silicon Valley and its vast amounts of capital. Enecsys, a successful cleantech spinout from the University of Cambridge backed by Wellington Partners in London, has now got the stage where it feels more comfortable with offices in California. But is this brain/economic drain? Or is it healthy cross-pollination of business opportunities that straddle technology development and policy and renewable energy targets?

Policy in the US has been a key driver in developing the entrepreneurial culture, with tech transfer legislation at the heart.

The Bayh-Dole Act of 1980:

• permitted universities, not-for-profits, and small businesses to obtain title to inventions developed with governmental support

• provided early on intellectual property rights protection of invention descriptions from public dissemination and Freedom of Information Act (FOIA)

• allowed government-owned, government-operated (GOGO) laboratories to grant exclusive licenses to patents.

Paul Kedrosky, senior fellow at the Kauffmann Foundation warns that although Bayh-Dole has driven universities to think more seriously about what they’re doing with their research, its perverse affects have been "considerable and detrimental to innovation".

"By creating this incentive by universities to obtain title to inventions they could profit directly from the inventions even though the inventions were developed with government support.

"Economics 101 tells us that that’s going to create more incentives for them and do more things that have more of a profit incentive. So they’ll do more of those things. And that’s mostly true and universities have become much more aggressive patenters and aggressive exploiters of their own invention portfolio to the point that we’ve seen a large expansion of licensing revenues for larger US HE institutions.

"But it’s had a lot of perversity attached to it. For example, it’s one of the reasons why we’ve seen the emergence patent hold organizations because they are now perfectly happy to buy university portfolios of patents and send revenue back to the university and they stand there as ticker takers or toll takers for people who want to use that piece of technology. But increasingly rather than driving people to commercialise the technology, the universities are becoming gatekeepers and licensers of the technologies and licensing it to organisations that have no intent to commercialise the IP."

California cap and trade will 'attract lion's share of cleantech investment'

Mary Nichols yesterday made much ado about the impact that California's cap and trade scheme would have on the development of clean technology.

The chairwoman of the California Air Resources Board yesterday said in her opening remarks: "The programme sends a clear signal to the global investment community that an investment in California's clean technology and clean energy industries will be rewarded, maintaining our status as a magnet for cleantech investment.

"Cap and trade sends a policy signal to the market and guarantees that California will continue to attract the lion's share of investment in clean technology."

Unlike last December's meeting, when there were less than a handful of opposing voices, opponents of cap and trade from steel unions and oil refineries attended in great numbers.

BP America and the Western States Petroleum Association were among those who lined up for their 3 minutes in front of the board to complain about the "10% haircut" for oil refineries because the benchmarking gives free allocation for only up to 90% of emissions.

Carb has this year introduced a best in class benchmarking system so that at least one installation in each sector will be allocated 100% allowances. While examples where given for the cement and glass sectors, perhaps many of California's refineries fear they will flunk the class, even though as Carb staff pointed out the benchmarking in the EU system had been set at a more "ambitious level".

Chris Riley, who described himself as a "concerned citizen employed by Valero" which attempted to spike the cap and trade scheme last year through the ballot box with prop 23.

"I'm concerned about how these emission taxes and in general this will have impacts on our families and higher energy costs that will be incurred consequently what will happen to our jobs."

Lisa Bowman, a ConocoPhillips employee, made an impassioned testimony about how her company had allowed her as a single mother to bring up her children without government support. She asked Carb for "leeway" to meet the regulations on behalf of her employer.

Enough individual ConocoPhillips employees followed to repeat their concerns about job losses to suggest their presence was not a spontaneous response.

As Carb's charts for mandatory GHG reporting clearly show, refineries are the biggest polluters in the state. California's stringent regulations on refineries makes building a new installation prohibitively expensive, while the refineries themselves claim that they are already working to optimal levels of efficiency. But refineries run a double accounting system for carbon emissions by producing transportation fuels, thereby being involved in the first and second highest source of emissions in the state and reductions are not going to be easy, the refiners say.

Mike Wang, of the Western States Petroleum Association, said: "Our facilities are the cleanest in the world and they produce the cleanest products. What you are hearing from us is can we choose alternatives to the 10% reductions in allocations. Can we achieve the goals of AB32 more easily?"

So far, Carb's rules have been subject to legal challenges from environmentalists, not industry. But that may change once implementation approaches and it will be interesting to see how Californian oil refineries respond to mandates designed to force innovation.

In the EU, the Emissions Trading System is also designed to be a principal driver of the deployment of low carbon technology. The NER300 assists with large-scale demonstration of low carbon energy technologies in Europe and bridging finance also comes from the European Economic Recovery Programme, the Strategic Energy Technology Plan and the Global Energy Efficiency and Renewable Energy Fund.

A report published soon after the EU ETS began showed that anticipation of mandatory emission limits can drive innovation. The report included a case study at the Shell Pernis Refinery in Rotterdam, Europe's largest refinery, where engineers have been capturing 170,000 tonnes of CO2 a year since 2005. The CO2 waste is converted into fertilizer, avoiding the need to import and burn natural gas to generate fertilizer. It's a double accounting benefit from fossil fuel industry.

But Europe's power sector is the great polluter not refineries, and account for 60% of EU ETS emissions. Electricity generation in California produces 20% emissions in the state which mostly burns natural gas to produce electricity.

California is clearly a leader in many market segments of the broad category of cleantech. It already appears to dominate the solar market in the US. Some of this success can be attributed to the state's Renewable Portfolio Standard - the most aggressive (and mandated) target in the US. But it means the state's the power sector is primed for innovation in energy efficiency and cleaner generation.

And the transportation sector could also flourish as the low-carbon automotive industry has followed the money to the west coast where the bulk of VC capital has come from to fund Tesla and Fisker (it also helps that VCs are a perfect test market for the upmarket electric vehicles).

The California Global Warming Solutions Act of 2006 acknowledged its position and potential as a cleantech leader and ordered the Economic and Technology Advancement Advisory Committee was created under to advise Carb on "identifying new technologies… that will assist in the reduction of greenhouse gas emissions."

But yesterday it took 79 testimonies and seven hours to return to the subject of stimulating cleantech when board member, Daniel Sperling, asked whether it would be a good idea for Carb to employ a chief technology officer who could monitor whether the scheme was incentivising innovations in energy efficiency and clean tech. Presumably this person would sit alongside ETAAC's chairman, Alan Lloyd.

Carb staff agreed to look into this "interesting issue" raised by Sperling.

But a report from the Fraunhofer Institute in Germany last year indicated that the connection between cleantech development and climate policies such as carbon trading is not so clear cut.

The authors found that: "the innovation impact of the EU ETS has remained limited so far because of the scheme’s initial lack in stringency and predictability and the relatively greater importance of context factors. … Our analysis suggests that the EU ETS by itself may not provide sufficient incentives for fundamental changes in corporate climate innovation activities at a level adequate for reaching political long-term targets."

Recent low carbon prices of around €10 have hardly helped to stimulate behaviour change and innovation in the EU.

Metrics will be vital to California's scheme but carbon reductions shouldn't be the only thing Carb measures - progress in cleantech innovation and job creation will be vital too.

But new and unforeseen opportunities would inevitably arise from the cap and trade scheme - along with the unintended negative consequences, Nichols said yesterday.

"When the nation is ready to address the growing danger of climate change as I believe it must and it will California's climate programme will serve as the model for a national programme. We believe that if we implement a cap and trade programme in California other states, the federal government and other nations will join with us."

Cornflakes, ethanol, an ex-CIA boss & terrorists = innovation through a tube

Who knew that a box of cornflakes, an icon of the perfect American home, could become such an controversial symbol of misguided policymaking?

The Senate's vote earlier this month on stopping ethanol subsidies marked a rare moment of bispartisan consensus in Washington. The amendment will end three decades of subsidies to the corn ethanol industry, save taxpayers $6bn this year and end ethanol import tariffs.

Former investment banker turned policy adviser, Steven Rattner wrote a brilliant piece in the New York Times last weekend that brought home just how iniquitous ethanol subsidies had become. As a former journalist it's no surprise his piece is suffused with nuggets about the fool's gold farmers and some in government have been passing off as something useful to society and the environment:

Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex.

Forty per cent of corn in the US is diverted to ethanol with "disagreeable consequences for food" such as a 24% increase in the price of bacon, he writes.

But that's not the worst of it. Ethanol packs less punch than gasoline and uses considerable energy in its production process. "All told, each gallon of gasoline that is displaced costs the Treasury $1.78 in subsidies and lost tax revenue."

To ease the pain, Congress threw in a 45-cents-a-gallon subsidy ($6 billion a year); to add another layer of protection, it imposed a tariff on imported ethanol of 54 cents a gallon. That successfully shut off cheap imports, produced more efficiently from sugar cane, principally from Brazil. 

That tariff has now been dropped - welcome news for the Brazilian Sugarcane Industry Association which can now introduce its less energy intensive and less environmentally controversial ethanol on to the American market.

Brazil's ethanol industry and the impact it has had on its motor fuel infrastructure was the subject of the keynote speech at last month's Ceres conference in Oakland. 


Jim Woolsey, former CIA chief turned venture capital investor, made the simple point that the reason why Brazilians had greater choice for fuels at the filling station was because of the type of plastic used in the fuel lines by Detroit manufacturers. Changing the fuel line in engines could be done simply and inexpensively he insisted, after all if Brazil can do it why can't the richest world in the country do it? 

It’s not we who are addicted to oil it’s our cars. Because of the type of plastic fuel line they cannot use anything other than gasoline – or with flex fuels they could use 85% ethanol.

But what if cars could pull into a gas station and pump either gasoline or methanol or ethanol. Methanol can be made out of biomass if you hate ethanol use methanol. Brazilians have a choice of fuels at filling stations. Why Brazilians so much smarter, shrewder and decisive than we? All that you need is the right kind of plastic in the fuel line so the cars can use alcohol fuels as well as gasoline. The alcohol fuels are readily made from green alcohol or wood alcohol for hundreds of years we have had a large methanol production capacity in the US, larger probably than natural gas.

We don’t have to have mandates, we don’t have to have mandates, we don’t have to have duties, we can get rid of all of the subsidies for oil, ethanol and the tariff barriers for ethanol and let them compete. It’s the worst thing that could possibly happen to oil because it depends on that lock in mandate which insisted upon buying cars with the wrong kind of plastic in the fuel line. 

He likened the shift in attitude towards transport fuels to that of salt as a strategic commodity, his implication being that oil could go the same way…

For 1,000s of years, salt strategic commodity – people had to have it to preserve meat and other food. When Ghandi went on his salt march in 1930 he was protesting about British taxes on salt. The reason why they were so burdensome was because everybody had to have salt. It wasn’t Ghandi that did it, it was electricity but electricity made salt boring because of refridgeration.

In relatively few years, salt was destroyed as a strategic commodity.

Energy, particularly transport fuels, is a matter of national security. And the only people at fault for funding terrorist in the Middle East were ourselves. This is how he reasoned this:

Between 1-2% of the world’s Muslims the Saudis control something of the order of 90% of the world’s Islamic institutions.

If you’re driving around and running out of gas, you need to stop at a gas station and you just happen to ask yourself as you’re listening to the radio why are these 8 year old boys in Pakistan or on the West Bank have their objective of becoming a suicide bomber? What’s going on? Who’s paying to teach them that?

Before you get out of your car to pump your gas, stop just for a minute and turn the rearview mirror just a couple of inches. So you’re looking into your own damned eyes - now you know who is paying well over $1bn for imported oil to teach those little boys to want to be suicide bombers. Moving off oil is a very high priority.

Innovation doesn't have to be bold, gamechanging or highly technical … although all those things are good too. Sometimes it comes down to innovating the way we look at things, finding new ways to apply old tools.

Innovation through a plastic tube that could also bring peace to the Middle East… now that's something I would like to see.

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.