What do you need to be a powerhouse in the CleanTech Sector?
Well Vinod Khosla, thinks you need intellectual capital, industrial capital, trained technologists and the will. All of which India has in abundance. Vinod Khosla, Venture Capitalist from KPCB and co-founder of Sun Microsystems spoke recently at the CleanTech Conference in San Francisco about the future of Clean Technology in India. Here is an excerpt from his presentation and a short brief on the startup of Cleantech India, a fund headed by Jesswinder Kaur to encourage funding of green technology enterprises in India. India is working to create an industrial revolution in the CleanTech sector. To that end It has created the world's first Ministry of Renewable Energy which will work to concentrate investment in areas where there is predicted to be strong growth. Australasia in general is using Clean Tech Policy as a driver of innovation. Singapore with its Solar and Water, China working to build a sustainable or at least low impact city for 8 million from scratch and India all seek to capitalize on innovation in this sector as an economic motive force. Khosla points out that even though while the largest current focus is on the energy sector with about 85% of investments in the CleanTech sector going into alternative fuels and recently solar. There are many other markets for innovation from cement to glass. Cutting the cost and environmental footprint of cement and other common building materials in half would make a huge difference in worldwide carbon reduction.

San Francisco a Good Place for a Timely Conference.
Many implications of the post Bali, Kyoto 2 world were covered at the recent CFA Forum in San Francisco. One of the initial discussions was moderated by Henry Derwent current Director of the IETA, and former director of climate, energy and environmental risk at the UK's Department of the Environment. Who made some of the opening statements concerning the current state of world carbon offset markets as both an overview and in detail. There are several pieces of pending legislation including the Lieberman Warner Bill and the Bingman Spector Bill, either of which will provide the impetus for government mandates to institute a nationwide cap & trade system. Right now carbon offsets are grossly undervalued in the United States even though there has been a recent price spike on the Chicago Climate Exchange largely because the system is largely based on voluntary compliance.

Carbon Forums Worlwide.All three of the presidential candidates support some kind of cap and trade scheme. Barack Obama, for example, was one of the founding board members of the Chicago Climate Exchange. The full scale entry of the US into the carbon markets will increase the demand for offset credits by at least 810 million tonnes under current market conditions. That number merely sums up the numbers already being traded in California, the Northeast's RGGI and the Chicago Climate Exchange's closed system according to NASD verified accounting. The demand is likely to be substantially higher as the Lieberman Warner Bill (S2191) or another piece of legislation gets out of committee and heads for the floor. The Lieberman Warner Bill started life as the Lieberman McCain Bill but underwent some changes in both name and substance during this last year when the presidential race went into full swing. The various proposed bills mandate between 3.25 and 4.65 billion tonnes of CO2 offsets to be sold at market rates. The price of US carbon offsets will likely climb initially to at least parity with the European market rate of at least $30/tonne when these bills become pending legislation.
ADF the 500kg Gorilla for Legitimate Verifiable CreditsThe entry of the US into the international market will at least double the demand for carbon offsets on the international market. Expect further mandates and legislation with an economy wide GHG cap and concommittant trade legislation. There is currently a shortfall of deliverable and verifiable carbon offsets on the the world market. Existing contracts are often unable to deliver the full promised amount currently the system sees a shortfall in 15-25% of cases. Price projections also do not take account of full scale Chinese participation. Something which is likely to happen after 2010 as China seeks to turn itself from a greenhouse gas pariah into a CleanTechnology powerhouse and as the PRC begins to administratively implement already pending cap & trade regulations. These factors will increase the vastly increase the demand for legitimate offsets beginning in the US as voluntary customers make the shift to mandated caps and continuing on an upward trend as China begins to establish and implement its own government mandates. There is already movement to quality projects, and a focus on counter party risk which addresses delivery problems. Delivery of promised or contracted offsets being a major issue since at the present time between 15% & 25% of promised offsets are non-deliverable almost a quarter of the market. At the end of the day this is what matters. Can you actually deliver the promised tonnage in the contract and right now the answer is no in many cases. The supporting infrastructure to allow the rapid creation of large projects with auditable and verifiable offset potential does not currently exist nor is there sufficient personnel to support them. A tidal wave of involvement would overwhelm CDM as project surges slow down the CDM mechanism according to a Nature Conservancy report. Planning assistance for these kind of projects currently works best outside of highly regulated areas. A projected shortfall of credits caused by a lack of suitable carbon finance instruments which will extend into the foreseeable future could create the potential for unwarranted speculation and potentially spurious instruments in a burgeoning market. Something already seen in various european markets most notably London over the past decade.
Post Bali the Sun Shines on ADF Projects.ADF credits can take up some of the shortfall, they have been hard to package and monetize as they were really not addressed coherently in Kyoto One. Post Bali, or Kyoto Two, has leveled the playing field for Avoided Deforestation Offsets. They can now be securitized as a viable Carbon Finance Instrument (CFI) albeit in one-offs through specifically designed project aggregators. They are both visible and verifiable and now can be securitized and monetized through several different but international standards including VCS. At the current time Avoided Deforestation (ADF Offsets) are grossly undervalued and just beginning to make it to market as projects are created and audited then securitized and monetized. Much of the science is in place and the VCS (voluntary carbon standard) provides a framework that can be used and conforms to recognized international standards. VCS may help plug the gap in providing the framework for accelerated development of ADF projects. But to help ADF offsets to gain wider acceptance some questions first have to be addressed.

Questions:
-How do we get full value for non CDM projects?
-How to use REDD as a CDM type mechanism instead of the policy mechanism as it is now.
-how far out to lo create a viable credit (30,50,100) years?
-how long is the expected lifespan of a vintage. 2010 is the expiration of many.
-How to create a standard criteria for valuing assets

Also important given the potential for an impending demand there is a need to create a suitable standard CFI that has unequivocal international acceptance. Open source frameworks which allows for more standard guidelines in the creation of programs would speed up the process.ADF programs, especially tropical ones are a major untapped source of deliverable carbon credits. There is now the likelihood of getting specific programs off the ground that have languished through the CDM process.
More Work is Needed but the Future Looks Good. New programs that come on line will acquire accumulated vintages. Standing forests are also verifiable, securitizable and deliverable in almost all cases short of a major environmental disaster. Most projects will have 'buffers' built in to allow for shortfalls, unlike a lot of more conventionally generated carbon offset credits which should cover even unforeseen eventualities. Programs will hopefully incorporate financial underpinnings designed to support & maintain longterm sustainable forestry programs as well as providing the carbon offset credits to accommodate the surge in demand needed to fill the hole in carbon finance instruments likely to accompany the surge in demand caused by government mandates. With a big new mandated markets opening up internationally. its possible many carbons offset programs of dubious provenance might crop up, especially in the US given that countries tendency for derivative mischief making. Avoided Deforestation offsets can fill the gap with a real & verifiable credit that can actually be delivered.

The EcoCity World Summit currently going on in San Francisco, brings together a selection of innovators, business leaders, architects, technologists and planners to speak about more intelligent and more sustainable development. Among the speakers addressing the conference on the subject of climate change and its impact on the urban environment is architect Ken Yeang, of the firm Llewelyn Davies Yeang. A forceful proponent of EcoDesign & Bio-Climatic Architecture Mr Yeang who has offices in London and Kuala Lumpur and he counts among his many achievements the highly acclaimed Singapore National Library and the Great Ormand Street Childrens Hospital. We recently interviewed Mr Yeang in New York about his work.

We do Cleantech Right. Countries that want to implement a comprehensive program to stimulate the developement of Clean technology and investment would do well to study the programs being implemented by the EDB (Economic Development Board) of Singapore.Singapore, a small city state has been at the head of the pack when it comes to innovation. I would like to point out also that Singapore implemented it first version of urban congestion pricing in 1975, decades before London. It implemented an updated fully functional version in 1998, which electronically priced the usage of roads, something that should be considered a future standard. New York City most notably is trying to still trying to muster the the political wherewithal to think about doing this 33 years later. I point this out because it is indicative of the way Singapore is able to fund, implement and refine longterm programs. Ramping up what can be considered emerging industries and technologies and using itself as a proving ground for development, implementation and testbedding. Singapore leads the curve so much that technology, economic models and administrative implementation that are 'done & done' there often have yet to be phrased in a coherent manner in other jurisdictions.
Another Center of InnovationRecently at the Clean Tech Investors conference in San Francisco, Kenneth Tang from from Singapore's EDB went into detail about what makes Singapore different. To begin with a little background about Singapore, it is a City State located off the Malacca Strait, one of the worlds busiest maritime passages transited by 70% of the world's shipping. Its population of about 4.5 million has one of the highest standards of living in the world. 3 billion people live within a 7 hr flight radius. There are over 30,000 companies located there. Its manufacturing capability is 35% of California, which is by itself the world's 6th largest economy. Taxes are low with a cap of 20% on personal income tax and 18% on corporate and Singapore is connected via its business relationships and sovereign wealth fund (Temasek) to 60% of the world's GDP.Singapore's EDB has for 45 years pursued a core development strategy of creating a high standard of living in a garden city environment with a strong emphasis on development that is both ecologically and economically friendly to its inhabitants. Certainly the lack of available fresh water was one of the earliest reasons for the consideration and implementation of conservation techniques in the 1960's. Water comes from either rainfall based cisterns, aqueducts or desalination. Singapore has innovated so consistently in water ways that it won the Stockholm prize for water managment and in some ways has succeeded in turning itself into a tropical version of Venice in SE Asia. This is part of a longterm strategy to become a world CleanTech Hydrohub.
Sunlight in the Tropics, 25% More. REC, the Norwegian Solar Energy firm is building the world's largest solar panel manufacturing plant there. The plant when finished will have an annual capacity 1.5 gigawatts, 75% of global capacity. Singapore's EDB is working to establish a solar value chain and industrial park capable of supplying the area's needs. Sensible I would say given that solar power in the tropics generates 25-30% more than in temperate zones and that there is also more need for clean electricity in this area. Thats just one project. The real secret to the approach is Singapore's policy of a having a CleanTech strategy for sustainable growth which is integrated into a holistic policy managed by the EDB. The rationale is simple: Cities are the new focus. Singapore will lead the way by building the infrastructure, passing the laws and training the people. Its infrastructure is open to testbedding projects and products. The R & D budget is $14 Billion over the next 4 years. To put this in perspective the the US is trying to get a 'Green Jobs' bill of $250 million passed for training and industry development over 2 years.Singapore looks to the future and intends to 'export social capital and solutions to the world' according to Ken Tang, with the city state itself acting as a CleanTech proving ground whose motto is almost 'Think, Try, Test & Trust.' One of the projects on the drawing board is building a sustainable city for 6 million inhabitants in the PRC from the ground up as a technology proving ground.
Really Big Green RoofsOne way to attract knowledge capital is to bring in the best and brightest. To that end Singapore is encouraging partnerships between the Public sector, Private industry and Universities. Overseas Universities and research institutes are being encouraged to setup satellite campuses in Singapore including Stanford, http://www.caltech.edu/ and Germany's Fraunhofer Institute.This includes providing the funds and facilities to get them setup and going. The EDB's policy is straightforward: to establish themselves as a 1 stop shop for any organization looking to setup shop in SG. One that is also in charge of policy & planning and one that can assist in:1-Setting up companies
2-Providing and training staff
3-Coninvesting and incubating new Clean Technologies
4-Providing office and manufacturing space
Xeriscaping at Changji AirportIn other words if you want to start a new business in the Cleantech sector or setup manufacturing Singapore is trying to be your one-stop solution.   It will also provide matching funds for CleanTech Ventures that meet its investment criteria including grants for hight school and college students to get a leg up early. All that in the environment of a Garden City, lets hope this model catches on worldwide.