New attitudes toward environmental investment

The growing concern about global warming -- even President Bush concedes the need to reduce carbon dioxide emissions -- promises a shift to non-polluting energy sources and new attitudes toward environmental investment in industry in the years ahead. Change will be more gradual than dramatic, perhaps a 20 % rise in use of wind and solar power to generate electricity and the beginnings of commercial use of fuel cells to drive cars and trucks by 2010.
Non-polluting, renewable energy will still make up less than 7 % of total US energy consumption 10 years hence, predicts the Energy Department. But trends will be established in this decade. Business will base investment on environmental concerns as never before. Reminders that the Earth's temperature will rise for the next 50 years no matter what we do now will bolster development of energy-efficient machines and industrial processes.
The chemical firm DuPont, for example, aims to reduce emissions of greenhouse gases -- carbon dioxide and methane -- by 65 % over this decade. Also by 2010, DuPont hopes to rely on renewable sources for 10 % of its energy use.
That 10 % estimate may not sound heroic, but it's based on the expectation that renewable energy will be cost-competitive with oil, natural gas and coal, says Paul Tebo, DuPont's vice president for environmental and health policies. "It's important that renewables become cost-competitive because investing in them if they're uneconomic creates other problems," Tebo says.

Where does the business of renewable energy stand today? Wind power is attracting a lot of investment and will grow rapidly in the next few years. Solar power now boasts $ 2.7 bn in annual sales worldwide; only 25 % of those sales, however, are in the US
Fuel-cell development is intense, with every major automotive company backing research and testing pilot projects for on-board power plants in which hydrogen energy drives the car and most of the exhaust is clean water. By 2008, vehicles propelled by fuel cells will be used by early adopters, as hybrid cars are today, says Dan Sperling, head of the Institute for Transportation Studies at UC Davis, a major centre of fuel-cell research.
More than $ 1.5 bn will be invested this year in projects to generate electricity from wind power, says Randy Swisher of the American Wind Power Assn. in Washington. That's double the previous highest investment total. Investment is growing because wind power has become efficient. A single windmill generator today is capable of doing the work of 10 windmills of the 1970s, when wind-power experiments began.

Wind generation can deliver electricity at 3 cents to 6 cents a kW-hour, promising a $ 15 to $ 30 electric bill for the average home that uses 500 kW-hours per month. In addition, wind-power projects are being encouraged by a federal tax credit of 1.5 cents per kW-hour to the investing companies.
FPL Energy, a subsidiary of Florida's FPL Group, and Enron Wind, a subsidiary of Enron, are the largest companies in wind generation. But mostly it is a business of small firms and investment partnerships.
Zilkha Renewable Energy, a privately held Houston firm, will be involved in $ 100 mm worth of wind-power projects this year in Iowa, Pennsylvania, California and Britain, often in partnership with Denmark's EnXco. Denmark gets 15 % of its electricity from wind power, a typical percentage for European countries, which are more environmentally conscious than the US

Solar energy is still comparatively expensive, producing electricity from photovoltaic cells at 20 cents to 30 cents a kW-hour. That would equate to monthly electric bills of $ 100 to $ 150 for the average home.
Solar energy can be produced more cheaply by vast solar arrays in desert areas. This method, called thermal, can produce power at 10 cents a kW-hour today, says Avi Brenmiller, chairman of Solel Solar Systems, an Israeli firm that built a giant solar thermal plant in California's Mojave Desert.
An irony is that Israel, a largely desert country, does not use a lot of solar power to date -- mostly because conventional fossil-fuel power has been cheaper, Brenmiller says. Brenmiller looks for new solar projects to be launched in the US and abroad as a result of uncertain energy prices and availability.
The main cost of solar energy is the capital needed to build panels of solar cells on roofs of homes and buildings and on farms to run irrigation. "After the plant is built, the cost of fuel -- the sunlight -- is essentially zero," observes Marwan Masri, director of renewable energy for the California Energy Commission.
State and federal grants of up to half the capital cost encourage solar projects. Masri is working with home builders to install solar cells in all homes in new subdivisions, so the cost of providing energy can be amortized over 30 years along with the home mortgages. Meanwhile, solar energy powers buildings, traffic lights and irrigation projects around the world, with Japan and Germany using more solar energy than the US.

BP Solar, a division of BP; Kyocera of Japan; and Siemens of Germany, which owns the former Westinghouse Electric in the US, are global leaders in solar. But the technology of solar cells, akin to that of semiconductors, is still under development. Small firms, such as Evergreen Solar of Marlboro, Massachusetts, and AstroPower of Newark, Delaware, are working on cheaper and more effective ways to make solar cells, reports analyst James LoGerfo of Banc of America Securities.
In fuel cells, Xcellsis, a joint venture of DaimlerChrysler, Ford Motor and Ballard Power Systems, has developed fuel-cell engines based on methanol and gasoline for demonstration models being tested in Germany and the US Fuel cells that derive hydrogen from gasoline, methanol or natural gas are less environmentally ideal than improved models that will appear later in the decade. But, clearly, new industries that will change the way the world lives are taking their first big steps. And concerns about global warming that are giving these industries a push today won't diminish in the years ahead.

Climate change that will add 2.5 to 10 degrees to the Earth's temperature over the next 50 years is already assured because of heat from past emissions that is stored in the world's oceans, reports UC Irvine Chancellor Ralph J. Cicerone, a renowned atmospheric scientist, who headed a recent study of global warming for President Bush. As temperatures mount, so will sentiment and pressure for new thinking on energy, environment and the world economy.