2011 clean economy roadmap

PROCEEDINGS OF THE CLEAN ECONOMY SUMMIT January 24–25, 2011

Washington, DC

CLEAN ECONOMY ROADMAP

CHARTING A COURSE FOR THE GROWTH OF THE CLEAN ECONOMY

Photo courtesy of BrightSource Energy

Table of Contents

Introduction by Jeff Anderson 1Executive Director of the Clean Economy Network Education Fund

The Clean Economy Roadmap Introduction 1 Transportation and Infrastructure 5 Deployment, Manufacturing and Commercialization 11 Electricity 19 Clean Economy Markets 25

Clean Economy Network Education Foundation 32board of directors and staff

Acknowledgments Inside back cover

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INTRODUCTIONOn January 24-25, 2011 in Washington DC, the Clean Economy Network Education Fund (CENEF) held the first annual Clean Economy Summit, an invitation-only convening of the existing and emerging leadership of the clean economy business community from across the nation. Over the course of two days, the Summit engaged these leaders in a structured dialogue with top policymakers, opinion leaders and issue experts. From their facilitated conversations on a strategic set of issues, CENEF has begun to map some of the most critical policy pathways for the rapid expansion of a clean economy, which has been captured in this Clean Economy Roadmap.

CLEAN ECONOMY ROADMAP

CLEAN ECONOMY ROADMAP • www.ceneducationfund.org/clean-economy-summit 1

The Journey Begins HereJEFF ANDERSON, Executive Director, Clean Economy Network Education Fund

What would happen if you put clean economy business leaders in a room with policy makers from the Hill and Administration, and asked them to discuss some of the burning questions facing this community with no media present? What if you told them there would be no PowerPoints, no speeches, and no presentations?

What if you gave policy makers the opportunity to listen to the unfiltered experience of business leaders who are trying to deal with federal, state and local policies and programs? What if you gave business leaders the opportunity to hear directly from policy makers about the challenges of developing innovative policies to support the clean economy? What would happen?

I’ll tell you what would happen—rich, thoughtful conversation, dialogue and sharing of ideas.

All that, and much more, took place at CENEF’s inaugural Clean Economy Summit in Washington, DC on January 24-25, 2011.

The conversations that took place about transportation and infrastructure, deployment, manufacturing and commercialization, electricity and clean economy markets have been captured and summarized here in the Clean Economy Roadmap.

The Roadmap is not a set of specific policy prescriptions for the clean economy. Every journey needs a starting point, a point of departure. This inaugural Roadmap is just that. It sets the stage and lays the groundwork for further discussion and exploration of policy issues.

I encourage you to use this Roadmap as a starting point for your own path to policy development and formulation. I hope you will share with us your thoughts and experiences as we move forward so that at next year’s Summit, we can look back at where we started and continue to chart a course—a map, if you will—to a clean economy future.

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THE CLEAN ECONOMY SUMMIT: Unleashing innovation, economic growth and job creationThe creation of a clean economy requires long-term and consistent public policy, which is essential to the creation of market clarity and certainty. Implementation of such consistent policies requires sustained engagement by the clean economy business community in the policy development and political process. To that end, CENEF launched the annual Clean Economy Summit in order to explore this intersection between business and policy and the impact each has on the other.

To be effective, this examination required high level interaction among opinion leaders, policy-makers, business leaders and other thought leaders who have demonstrated the substantive expertise necessary to drive the clean economy sector forward. Business community participants in the 2011 Summit came from CEN’s Leadership Council (which includes the CEOs of CEN’s corporate members), CEN executive members, CEN chapter steering committee members, CEOs of allied organizations, and the CEN and CENEF boards of directors. Their partners in the ensuing policy dialogue were key federal legislative, administration, and agency staff.

The primary goal of the Summit was to surface and prioritize those policy proposals with the greatest potential to unleash innovation, economic growth and job creation. Taking advantage of the political reset of a new Congress, the Summit used the opportunity to evaluate the landscape that lies ahead, both in terms of business opportunities and policy possibilities. By integrating business and political perspectives and drawing on the rich expertise of both communities, Summit participants identified key challenges and issues impacting the clean economy and began to investigate the possible pathway to solutions.

On the first day of the Summit, clean economy leaders met for a facilitated interactive dialogue aiming to surface critical policy themes and ideas. Participants were divided into four systems-based tracks that brought together business leaders, leading NGOs, key Hill and agency staff, and other thought leaders with expertise in an assigned topic area. The resulting conversations were moderated by a career professional familiar with the

subject area in order to ensure knowledgeable facilitation of each session. The participants brainstormed ideas, then evaluated and prioritized the potential policy and program solutions that emerged.

THE CLEAN ECONOMY ROADMAP: Charting a course for the growth of the clean economy The main themes, issues and topics that surfaced during the conversations at the Summit have been summarized below in the Clean Economy Roadmap. While by no means comprehensive, the Roadmap identifies four critical sets of policy issues impacting the clean economy that correspond to the four tracks at the Summit. To ensure continuity, CENEF intends to use these same categories of issues as the basis for subsequent Summits and the resulting Clean Economy Roadmap documents. The issue areas were:

Transportation and InfrastructureThe availability of cheap oil has defined and shaped America’s transportation

policy. From hybrid and electric cars and trucks to advanced fuels and efficiency technologies, new and underutilized technologies are already available to greatly reduce our dependence on oil. The global race is on to bring these technologies to the marketplace, and, if America does not attempt to compete, we will fall even further behind. A revitalization of the declining US transportation industry, a major domestic employer, could come about if government would move quickly to implement policies that stimulate demand for and encourage investment in cleaner forms of transportation, thereby creating jobs, spurring the economy, and reducing our dependence on oil.

Deployment, Manufacturing and CommercializationThe innovation cycle is a complex web

of actors and investments that all play a critical role in each stage of a technology’s development, from concept through deployment and commercialization. Each step of the process comes with a set of risks and challenges that public policies can influence, both positively and negatively. If correctly formulated, policy

2 CLEAN ECONOMY NETWORK EDUCATION FUND • www.ceneducationfund.org


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can create an environment that drives innovation, encourages investment, and ultimately facilitates the entry and expansion of clean technologies into the domestic marketplace. Deploying clean technologies in turn assists their commercialization, grows a domestic manufacturing base, and supports the expansion of such technologies in domestic and foreign markets.

ElectricityDuring the majority of the 20th century, the United States had the most sophisticated energy grid and infrastructure in the

world. However, it has failed to evolve to meet the needs of a changing age, and the electricity grid remains the only large-scale analog system in operation in today’s digital world. The U.S. must begin to deal with the numerous structural and policy deficiencies of the sector, including outdated and inefficient grids, inflexible pricing rules, lack of interconnectivity, and consumer education. The solution requires a mix of policy changes and technological innovations at the national, state, and local levels.

Clean Economy MarketsWhile clean economy markets have been slowly developing for decades, they have yet to fully hit their stride in the U.S. for

a variety of reasons, including a lack of commitment by government to develop the environment necessary for long-term certainty in the marketplace. In order to build

efficient domestic markets, it is critical to determine the best means by which to set the appropriate long-term signals and find the correct mix of standards, incentives and mandates through policy at the federal, state and local levels to balance with the needs of a free market.

The goal of the Roadmap is to shed light on some of the top policy issues broadly impacting the clean economy sector through the lens of the experiences of those business leaders who are even now building the new clean economy. Each track report below includes a full list of the participants in the conversations to demonstrate the depth and breadth of the expertise, knowledge and points of view represented in the conversations. As you will see, what sets the Roadmap apart is that the participants are overwhelmingly from the business community, which helps to provide a more accurate sense of the issues from the business point of view. We have included in each section a brief profile of two of the businesses whose executives participated in the track to illustrate the innovation and cutting edge technologies that clean economy companies are already bringing into the marketplace.

HOW TO USE THE ROADMAPThe Roadmap is designed to foster a better understanding of the complexities we face in building a clean economy, while simultaneously driving into the policy arena those informed, innovative ideas that are


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based upon the actual expertise and knowledge of clean economy business leaders. However, the contents of each of the sections below are not meant to serve as a comprehensive analysis of every policy issue facing the sector. Rather, the Roadmap lays the groundwork for further policy development by exploring specific topics within each area that are the most relevant and current in 2011. Future Roadmaps will undoubtedly address other topics in more detail as both business and political circumstances change over time.

Each section provides an overview of the discussions that actually took place during the 2011 Clean Economy Summit and presents some of the key outcomes and conclusions articulated by the participants. At the Summit, each track operated independently from the others and the outcomes described below mirror the unique dynamic of each discussion in both structure and content.

From a process standpoint, each section of the Roadmap was created using a combination of notes taken during the discussion by the moderators and staff

and transcripts of the contemporaneous recordings made of each session. Each of the sections was peer reviewed by the participants themselves to ensure that the content, themes and tone of the conversations were accurately captured and represented.

Finally, it is important to note that the sessions were closed to the media in order to facilitate a fully open and honest dialogue. While the participants in each discussion session are listed, no observation, recommendation or opinion may be attributed to any specific participant; neither can any conclusion or idea be deemed one that is shared by all of the participants.

CENEF is publishing this Roadmap so it can be put to good use by those who read it, whether that use is learning more about the structural barriers faced by the clean economy business community, formulating policy proposals to address those issues, or stimulating your own thinking and innovative ideas. We look forward to continuing the dialogue and working together to unleash the vast potential of the clean economy sector to create jobs and economic growth across the nation.


TRANSPORTATION AND INFRASTRUCTURE:

PETROLEUM DISPLACEMENT IN LIGHT DUTY VEHICLES

INTRODUCTIONAmerica’s appetite for petroleum endangers our national security, exposes our economy to a volatile global oil market, and threatens the sustainability of our environment. The transportation sector consumes 72% of the country’s petroleum supply, a significant portion of which is utilized in light duty vehicles.

While government can assist the development of advanced, cleaner vehicle technologies, it is the private sector that will bring those solutions to the marketplace. This section of the Clean Economy Roadmap articulates the state of these technologies and investigates what kinds of policies will best advance their commercial deployment.

The following discussion focuses specifically on displacing petroleum use in light duty vehicles. The Clean Economy Network Education Fund has identified vehicle efficiency, electrification, and advanced biofuels as three of the most viable solutions for achieving this goal.


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TRACK PARTICIPANTS

Laura Lovelace, Co-Founder, Welford Energy Advisors (Moderator)

Rohit Aggarwala, Advisor, Bloomberg Philanthropies

Justin Ashton, Co-Founder & Vice President, XL Hyrbids

Carrie Atiyeh, Director—Public Affairs, ZeaChem

Josh Becker, Founder, New Cycle Capital

Michael Brylawski, Executive Vice President, Bright Automotive

Kelly Carnes, President & CEO, TechVision21

Aimée Christensen, Founding Principal, Christensen Global Strategies

Robbie Diamond, Founder, President & CEO, Secure America’s Future Energy (SAFE)

Honorable Suzanne Kosmas, former member of the U.S. House of Representatives

Martin Lagod, Managing Director, Firelake Capital

Jim Lyons, Chief Technology Officer, Novus Energy Partners

Bill Mitchell, Executive Vice President, A123 Systems

Erik Olbeter, Senior Research Analyst—Government Technology, Pacific Crest Securities

Sunil Paul, Founding Partner, Spring Ventures

Graham Richard, Principal, Graham Richard & Associates LLC

Naveen Sikka, CEO, TerViva

Luke Tonachel, Senior Policy Analyst, Natural Resources Defense Council (NRDC)

Jonathan Wolfson, CEO & Co-Founder, Solazyme

R. James Woolsey, Chairman, Woolsey Partners LLC & former Director of the CIA

THE PROBLEMDependence on oil is the problem. Petroleum fuels 95% of the energy consumed by the transportation sector. Accordingly, the cost of personal mobility is closely tied to the cost of petroleum, a price that is determined by a global market characterized by rapid, unpredictable fluctuations. An increase in the cost of oil drives up the price of gasoline, which adversely impacts American consumers and the economy. The price of oil also has a ripple effect on the price of other products, such as food and consumer goods, that rely upon it for production and transport. These factors pose a continuing threat to the health of the recovering economy.

Twelve countries control 80% of world’s proven oil reserves and 40% of annual production. Those countries—Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela—are members of the Organization of Petroleum Exporting Countries (OPEC) and together have the ability to influence the price of oil to suit their interests. As the recent violence in Libya illustrates, some of these nations are politically unstable or do not share U.S. interests. Therefore, the federal government must devote financial and military resources to discourage instability and secure the oil supply, which adds a significant national security cost to our oil dependence.

These two factors—oil’s dominance among transportation fuels and OPEC’s near monopoly on oil supply—give foreign nations incredible influence over America’s economy and national security and expose the nation to unnecessary risk.


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This dependence derives from the lack of readily available, viable fuel alternatives. A number of factors have prevented the emergence of such technologies. First, the federal government spends significant amounts of taxpayer dollars on tax breaks and subsidies for oil companies. While oil companies argue that these programs are necessary to keep the price of oil down, the result of these interventions is that oil alternatives must compete on an uneven playing field because the price of their established competitor is kept artificially low.

Furthermore, fuel prices don’t reflect the full cost of oil dependence and consumers lack perfect information about future prices. Market barriers inhibit technology adoption, including consumer acceptance, time necessary for technology development, and time required for new technologies to enter the marketplace.

1. Consumer acceptance: While “early adopters” have taken to advanced vehicle technologies, such as hybrids (HEVs) and electric vehicles (EVs), many consumers lack familiarity with new technologies and assume that such vehicles will not provide a satisfying driving experience. Furthermore, consumers lack the information necessary to calculate the full payback over the lifecycle of the vehicle.

2. Technology development: New clean technologies require significant time to reach the market. While many Internet technology companies can commercialize very quickly, clean economy technologies generally require more time for testing, capital investment, and scaling. Even if the technologies exist now, it may take years for them to deploy to the marketplace.

3. Technology penetration: Deployment is also further inhibited by the slow turnover of the American automobile fleet. It takes the national fleet as many as 15 years to cycle in new vehicles, which slows the adoption of petroleum displacing technologies.

While not discussed in the Roadmap. there are three additional possibilities for achieving significant reductions in petroleum use: use of liquid natural gas (LNG) as an alternative fuel; the development of new, unpredictable vehicle technologies; and changes in consumer behavior. LNG and other disruptive technologies have significant potential to displace petroleum and certainly

warrant further discussion in other forums. Furthermore, adoption of alternative transportation and communication behavior—public transportation, telecommunications, vehicle sharing—could also drastically decrease the need for petroleum.

STATE OF THE TECHNOLOGIESNo “silver bullet” technology will solve our reliance upon oil. Even with the possibility of as-yet unknown technological breakthroughs, it is more likely that a combination of technologies will reduce U.S. oil consumption. In the current landscape, advances in three areas of technology have great potential to displace petroleum use: fuel efficiency, electrification, and advanced biofuels.

Fuel EfficiencyWhile alternative fuel technologies mature, improving the fuel efficiency of internal combustion engine (ICE) vehicles will play a crucial role in reducing petroleum consumption. Recent advances include more efficient internal combustion engines that use high pressure fuel injection, downsizing and turbocharging, hybrid-electric drivetrains and lighter, stronger structural materials, such as lightweight high-strength steels, magnesium alloy and carbon fiber composites. An additional benefit of these technologies is that they can carry over to other vehicle applications. ICE improvements can be applied to a vehicle burning non-petroleum fuel, while advanced materials can be used for any light duty vehicle.

There are tremendous potential gains from efficiency—some estimate that conventional non-hybrid vehicle technologies can nearly double efficiency and cut fuel consumption by 45% from 2008 levels. Further, these technologies result in fuel savings that far exceed their cost. And perhaps most importantly, the automobile industry is already capitalized and could be ready to make these improvements within a short timeframe, which is not the case with electrification and advanced biofuels.

It should also be noted that advanced diesel engines are inherently more fuel-efficient than gasoline vehicles and are cost-competitive today. The total cost of ownership (TCO) for advanced diesel vehicles is currently lower than advanced gasoline vehicles at all oil prices.

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Improvements can also be made in the 240 million vehicles already on the road. New lubricant and tire technologies can greatly increase the fuel efficiency of existing vehicles. Given that many of these vehicles will continue to be on the road for the near future, these efficiency gains will be crucial to petroleum displacement and consumer savings in the short term.

ElectrificationDecades after they were first proposed for the modern fleet, electrific vehicles (EVs) are entering the marketplace. In 2010, Chevrolet and Nissan introduced a plug-in hybrid electric and battery electric vehicle to the American marketplace, and other automobile manufacturers are poised to do the same.

The price of batteries remains the single largest obstacle to the deployment of electric vehicles. While the cost of batteries for electric vehicles continues to decline, significant investment in research and development is still needed to produce smaller, safer, cheaper batteries for electric vehicles.

Studies have shown that 60-70% of vehicles on the road today could be electric before new power plants are required. This is a distinct advantage of electrification—the energy infrastructure already exists. That being said, access to the grid remains a point of concern, and significant charging station infrastructure needs to be installed to give consumers confidence about having adequate access to vehicle charging opportunities.

At this point in time, plug-in hybrid electric vehicles (PHEVs) are technologically promising and stand to benefit from many vehicle technology advances, including electrification (batteries), fuel efficiency (advanced structural materials), and advanced biofuels (burned in the ICE).

Advanced Biofuels2010 saw the opening of the first commercial advanced biofuels plant, and other advanced biofuels are steadily moving down the cost curve to be competitive with

petroleum fuels. Lignocellulosic biofuels, in particular, have experienced cost declines, and algae-based oil and syngas have made significant technological advances.

As a direct substitute for petroleum-based fuels, advanced biofuels must be cost competitive with oil. Technological barriers to competitiveness include the cost of enzymes, feedstock yield and quality, and scalability. Should these technological issues be addressed, there are still concerns regarding fueling infrastructure, storage, and combustion engine conversion.

THE POLICY LANDSCAPEThe federal government has enacted a multitude of policies to address oil dependence. The U.S. Department of Energy invests in electric vehicle technology development, the Department of Agriculture encourages biofuels from farm-based resources, and the Environmental Protection Agency and National Highway Transportation Safety Administration oversee fuel economy standards. This Roadmap seeks to work within the Federal government’s policy framework to articulate a path forward.

Above all, the Clean Economy Network Education Fund identified three characteristics of a sound petroleum displacement policy:

1. Long-term in duration2. Technology agnostic3. Outcome-driven

These requirements are crucial to ensuring efficient outcomes and investment in innovative technologies.

Long-term DurationPolicy certainty encourages investment. As shown by the experience of E.U. countries, long-term fuel economy standards and oil taxes can unlock significant financing for advanced vehicle technologies. American auto manufacturers are now taking similar actions, mainly due to increasingly higher U.S. fuel efficiency standards they must meet. Fuel economy standards in Europe and the U.S. have long time horizons, providing auto manufacturers and investors sufficient time to invest in innovative technologies that will enable them to meet those standards.


SOLAZYME, INC.www.solazyme.com

Founded in 2003 and headquartered in South San Francisco, Solazyme is a privately held industrial biotechnology company producing renewable oils and bioproducts using microalgae.

Solazyme’s renewable oil production technology allows them to do in a matter of days what it took nature millions of years to do. The company renewably fabricates a wide range of products quickly, cleanly, cost effectively, and at large scale standard fermentation facilities. It offers fuels, including microbial-derived jet fuels, bio-diesels, and renewable diesels. They also offer marine and microaquatic compounds for health and wellness products.

Its products are used for biofuel production, replacements for fossil petroleum, and plant oils in various products ranging from green household cleaning supplies to cosmetics and foods. The company serves renewable energy and industrial chemicals markets, as well as specialty ingredients markets in cosmetic, nutritional, and pharmaceutical products.

Solazyme’s oils and fuels provide compelling solutions to increasingly complex issues of fuel scarcity, energy security and environmental impact while fitting cleanly into the pre-existing multi-trillion dollar fuel infrastructure.

Co-founders Jonathan Wolfson and Dr. Harrison Dillon started Solazyme in Palo Alto at a time when few in Silicon Valley had heard of the concept of biofuels. Mr. Wolfson is the Chief Executive Officer, Chief Operating Officer and Director, where he oversees the management and strategic direction of the company. Dr. Dillon serves as the President, Chief Technology Officer and Director.

Technology AgnosticGovernment is frequently criticized for picking technology winners. The Synthetic Fuels Corporation, established by Congress in response to the 1970s oil crises, ended in bankruptcy. Corn ethanol and hydrogen fuel were politically popular at different points during the last decade but have not yielded anticipated results despite relatively large subsidies in the case of corn ethanol. Most recently, the Federal government has provided significant tax incentives to promote the purchase of electric vehicles.

The most technologically agnostic approach is to address the price of oil. All clean vehicle technologies compete with it, and the higher the price of oil, the more viable investments in those technologies become. While no one policy alone can resolve the problem, there are a variety of policies that undertaken together can address price volatility and increase investor confidence. These policies include lowering subsidies and tax breaks for the petroleum industry, setting a price floor on the cost of oil, and taxing oil consumption. While Congress has spurned such polices in the past, these policies are technology-neutral and allow the market to determine which technologies to pursue.

Furthermore, government incentives should encourage the development, deployment, and consumer purchase of the most fuel-efficient transportation solutions, regardless of their technology platform. For example, instead of providing a tax credit only to newly-purchased electric vehicles, the credit could be applied to all advanced technology vehicles that dramatically increase fuel efficiency and pro-rated so that the most efficient vehicles receive the greatest credit.

Outcome-drivenLegislation that tells the private sector how to innovate—in other words, means-driven policy—will not be as successful as policy that is ends-driven and focused on outcomes. Currently, there are a multitude of laws that aim to displace petroleum but do so by encouraging different, and often competitive, technologies. While ends-driven, technology neutral policy will motivate private sector innovation, the Federal government should not skew markets with carve-outs and quotas to satisfy special interests or with incentives that favor a particular technology solution.

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A better, more market friendly means by which to achieve that end is to set a performance standard, such as one based on efficiency and/or greenhouse gas emissions reductions, and require the private sector to meet it. A long-term, performance-based vehicle standard that does not pick technology winners will unleash the greatest innovation and achieve the greatest reductions in petroleum use.

CONCLUSIONLeadership from policy makers is necessary to implement these recommendations. It is crucial that the President, Members of Congress, and other thought leaders use their bully pulpit to advance petroleum displacement. Not only is this essential for improving policy, it is necessary for cultivating support among the American public for new technologies, which is crucial to their adoption.

The economic and national security threats of continued reliance upon petroleum should compel the US government to incorporate these principles into existing and new policies. As gas prices rise and instability in oil-producing regions persists, it is important—now more than ever—to achieve petroleum displacement.

A123 SYSTEMS, INC.www.a123systems.com

A123 Systems (NASDAQ: AONE) develops and manufactures advanced Nanophosphate® lithium ion batteries and energy storage systems for the transportation, electric grid and commercial market. The company was founded in 2001 based on novel nanoscale technology initially developed at the Massachusetts Institute of Technology and currently employs more than 2,200 people globally.

A123’s high-performance Nanophosphate lithium ion battery technology delivers high power and energy density combined with excellent safety performance and extensive life cycling in a lighter-weight, compact package. The company’s solutions have low capacity loss and impedance growth over time, allowing customer applications to meet end-of-life power and energy requirements with minimal pack oversizing.

A123’s growing list of blue-chip customers in the automotive market includes leading passenger car makers (including Fisker Automotive, BMW, GM and SAIC, the largest automaker in China) as well as companies focused on the truck/bus market (including Eaton, Navistar and BAE Systems).

A123 is also the leading producer of lithium ion battery energy storage solutions for the electric power grid, where its technology is helping to make ancillary services more efficient and cost-effective while also addressing enabling the increased penetration of renewable energy by addressing the variability of wind and solar power. Customers include AES, Southern California Edison, DTE Energy and Vestas.

Led by President and CEO David Vieau, A123 Systems is headquartered in Waltham, MA and operates manufacturing facilities in Massachusetts, Michigan, China and Korea, as well as offices in St. Louis, Germany and Japan. In September 2010, A123 opened the largest lithium-ion battery manufacturing plant in North America in Livonia, Michigan, which has the potential to supply systems to the equivalent of 30,000 battery electric vehicles when the plant is fully operational. With this facility and A123’s additional planned expansion, the company expects to have 760MWh of global manufacturing capacity in place by early 2012 to meet increasing demand for its Nanophosphate lithium ion battery technology across its target markets.

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DEPLOYMENT, MANUFACTURING, AND COMMERCIALIZATION:

FINANCING THE COMMERCIALIZATION GAP

INTRODUCTIONDeploying innovative clean technologies at commercial scale in the United States faces numerous barriers that slow job creation, investment, and innovation.

The global economic downturn has reduced capital investment across the board, hitting young companies and new technologies hardest. Failure to pass any form of comprehensive climate and energy legislation has increased uncertainty in energy markets, and fostered confusion for investors about the longevity and stability of clean economy markets. Capital availability for project finance has been hurt by the collapse of tax equity markets that accompanied the banking crisis and mortgage industry meltdown. Stronger policy support for clean energy products and services in Europe and Asia attract the limited dollars available for manufacturing of advanced technologies. At the same time, a host of information failures, misaligned incentives, and structural barriers in U.S. markets for both electricity and real estate have continued unabated, slowing commercial adoption of otherwise economically viable clean technologies.


TRACK PARTICIPANTS

Bracken Hendricks, Senior Fellow, Center for American Progress (Moderator)

Benjamin Abram, Lorax Capital

Jason Anderson, CleanTECH San Diego

Carter Bales, Chairman and Founding Partner, New World Capital; Chair, CEN Leadership Council

Chris Chafe, Executive Director, Clean Economy Development Center

Will Coleman, Partner, Mohr Davidow Ventures

Marc Cummings, Director of Policy and External Affairs, Battelle/PNNL

Luka Erceg, President and CEO, Simbol Materials

Mark Fulton, Climate Change Strategist, Deustsche Bank

Ashok Gupta, Natural Resources Defense Council

Monty Humble, Cavallo Energy

Reed Hundt, CEO, Coalition for Green Capital

Danny Kennedy, CEO, Sungevity

Erich Klawuhn, Vice President of Business Development, Soladigm

Steve Miles, Partner and Energy Sector Chair, Baker Botts LLP

John Mizroch, Of Counsel, Wilson Sonsini Goodrich and Rosati

Marc Porat, Chairman and CEO, GreenCube

Brian Sager, Co-founder and Vice President of Corporate Development, Nanosolar

Joel Serface, Founder, Clean Range Ventures

Shannon Smith, Founder and President, Abundant Power Group

Silda Wall Spitzer, Managing Director, Metropolitan Capital Advisors

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Overcoming these barriers to deployment, manufacturing, and commercialization of clean technology in the United States will require a coordinated strategy by technology companies, financial investors, and policy makers. Such a shared blueprint for a sustained national commitment will drive new investment and strengthen American competitiveness, job creation, and long-term prosperity.

The Deployment, Manufacturing, and Commercialization (DMC) track focused specifically on addressing these cross-cutting challenges, which are fundamental to the mass adoption of innovative business models and clean technologies at a large scale across the entire economy. For purposes of the roundtable discussions, each term was defined as follows:

• Deployment describes the task of moving beyond basic science and early phase research to building markets and promoting the widespread adoption of proven tools.

• Manufacturing is central to extending the innovation process beyond the lab. It includes the development of intellectual property and engineering practices that increase the efficiency of production, drive down costs, and sustain market growth.

• Commercialization describes the process of building strong profitable companies, scaled production of new products, and commercially viable business models, to serve both emerging U.S. and growing global demand.


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DEVELOPING A ROADMAP FOR CLEAN ENERGY DEPLOYMENT, MANUFACTURING AND COMMERCIALIZATIONThe discussion within this track strongly emphasized the connection between clean technology and jobs, American competitiveness, and economic recovery. It identified commercial scale deployment of a domestic industry as the key challenge for broadening markets, developing new products, and fostering the growth of productive new companies.

The goals of the DMC session were:

1. To identify key policy needs for building a strong domestic clean economy industry and increasing penetration of clean technologies in energy markets,

2. To begin the development of a shared blueprint and common priorities for unlocking greater flows of both public and private capital investment to scale the industry, and

3. To bring together clean economy business leaders, relevant thought leaders, and key Congressional, Administration and Agency staff to explore strategies for more effective public outreach and deeper alliances.

Participants in the DMC discussion stressed the close connection between overcoming market barriers and strong economic performance for the industry. They identified a range of strategies for overcoming these barriers, seeking to find opportunities both for direct action by companies and investors requiring no new policy, as well as for opportunities to use new policy at the federal, state and local level.

SPECIFIC BARRIERS TO DEPLOYMENT OF CLEAN TECHNOLOGIESThe commercial adoption of clean technologies—emerging from laboratories, breaking into existing markets, and competing with traditional energy sources at scale—has been slower in recent years than is warranted on a technical or economic basis. While this is not the case for every technology or company, the clean

technology industry faces significant market barriers to achieving broad deployment, including:

• Insufficient capitalization of early stage companies as they try to cross the ‘valley of death’ combined with frozen debt markets have slowed capital investment in projects

• Artificially high perception of policy, technology, and lack of operating history risks have increased the cost of capital and created a barrier to investment

• Transparency, longevity and certainty in both economic incentives and market rules is needed to demonstrate sustained demand for projects and attract needed investments

• Lack of sustained demand for clean energy due to the absence of market-creating policies such as a national renewable or clean energy standard or stronger incentives in utility policy

• The sun-setting of effective ARRA (American Recovery and Reinvestment Act) funding programs and threats to other public investment programs

• The failure of the clean technology industries to create a unified and strong policy and political voice that rivals that of existing energy producers

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RECOMMENDATIONS FOR OVERCOMING MARKET BARRIERS AND SCALING INDUSTRYParticipants discussed various solutions to the above barriers. Their recommendations clustered around six areas. These included three specific federal policy issues: 1) finance policies, 2) regulatory tools, and 3) tax reform, as well as three major cross-cutting themes, including: 4) communications and messaging to shape public opinion and build public will, 5) re-engaging the issue of industrial policy, and 6) regionally based economic development strategies. Their suggestions were as follows:

1. Finance Policies Can lower the cost of capital, reduce perceived risk, encourage investments in clean technologies, and create market demand for new projects and new technologies. Specific policies could include:

a. A federally chartered financial mechanism, such as a Clean Energy Deployment Administration (CEDA), that can address commercialization challenges faced by early phase technologies as they begin to scale.

b. An Energy Independence Trust that can offer low cost capital for deployment at low or zero cost to the Treasury. Such federal backing can also be offered to encourage the development of state green banks.

c. Aligning capital market structures to match project finance mechanisms needed by clean technology industries.

d. Federally backed warranty insurance products that could increase developer investment by reducing perceived risk, including the lack of operating history of clean technologies.

e. Promoting standard offer contracts or CLEAN Contracts that address the cost of capital by increasing transparency, longevity, and certainty.

2. Regulatory ToolsCan help send market signals, drive demand, and enhance predictability. Participants suggested:

a. Passing a national Renewable Energy Standard (RES). Many but not all participants supported expanding the concept of a renewable energy standard to include nuclear and other forms of low carbon energy, potentially through a broader Clean Energy Standard (CES).

b. Raising national energy efficiency building codes and establishing a national energy efficiency resource standard.

c. Adopting stronger national appliance standards for energy efficiency that would also drive markets for advanced manufactured products.

d. Pursuing utility reform measures that would better align incentives for utilities to act as partners and better reward shareholders for reducing load and deploying renewable energy sources.

e. Continuing the implementation of stricter emission standards to encourage decommissioning of the most inefficient plants and to promote greater energy diversity.

3. Tax reforms Can encourage private capital investment in clean technologies while leveling the playing field with existing energy interests.

a. Extend the availability of Master Limited Partnerships (MLP) to renewable energy and efficiency projects to greatly increase the pool of potential investors that will finance the growth of clean technologies.


SIMBOL MATERIALSwww.simbolmaterials.com

Simbol Materials (formerly Simbol Mining) is a US-based company focused on producing critical materials, such as lithium and manganese, for the next generation of energy storage technologies, by co-producing from the brines of geothermal power plants. Their co-founder, President, and CEO, Luka Erceg has 12 years of experience in the energy space. Prior to founding Simbol Materials, he was largely involved in private transactions related to power development and generation, natural gas gathering and distribution, and oil and gas field telemetry.

Simbol Materials will produce lithium, manganese, zinc and other key compounds using clean, zero waste production processes in the United States. As geothermal power plants pump geothermal brines and effluent streams from 10,000 feet below the earth’s surface, Simbol Materials uses proprietary processes to extract the valuable minerals and metals from the water for use in EV batteries, consumer electronics, agriculture and other industrial clean technology applications.

Lithium has become an increasingly valuable commodity due to the increased market for rechargeable batteries in consumer electronics, tools, and electric vehicles. Most electric vehicles and electricity storage devices are designed to use batteries built with lithium and manganese. Simbol Materials seeks to create a supply chain that sustainably supports the entire electronics industry and

is on track to be a leading supplier of lithium carbonate, lithium hydroxide, and manganese compounds. The process Simbol Materials employs will ensure the company is the lowest-cost producer of lithium in the world, bringing a vital part of the EV battery supply chain to the U.S.

Simbol Materials is a late stage venture capital funded company. Their funders include Mohr-Davidow Ventures, Itochu Corporation, and Firelake Capital Management.

b. Connect energy saving behaviors to personal economic incentives. (For example, linking certain financial instruments related to the clean energy economy to IRAs and 529 plans.)

c. Eliminate wait time on tax credits and other enhancements to allow small companies to sell credits and drive tax benefits more deeply into the economy.

d. Investigate a partial tax holiday targeted to clean economy investment that would allow large corporations to repatriate billions of dollars domestically in profits from overseas operations.

e. Expand the accelerated depreciation schedule for clean energy.

4. Communications and MessagingCan shape public opinion and build political will. There was general consensus that the industry needs a forceful, expansive, and well-funded messaging campaign to educate opinion leaders, policy makers and the general public. Specific recommendations included:

a. Develop a central vision and accompanying narrative that focuses on the many advantages of the clean economy, including job creation, competitiveness, innovation, entrepreneurship, nationalism and national security.

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Founded in 2007 by Danny Kennedy, a former activist, Andrew Birch, a photovoltaic economics expert, and Alec Guttel, a serial entrepreneur, Sungevity uses an internet-based approach to make the transition to solar power as simple as possible. At its inception, Sungevity’s team concluded the high initial cost of solar panel sales and installation is the major deterrent to homeowners.

Using the power of the Internet—satellite-powered maps and algorithms to determine household energy output—the Remote Solar Design Team at Sungevity can put together an iQuote at no cost to the customer. Customers receive designs of fully realized virtual arrays and can choose whatever system best fits their needs. The company explains it as being the Netflix of home solar, tapping into the convenience of the Internet to serve up solar savings.

Although Sungevity is located in the Bay Area of California and its market has been mostly in the Southwestern United States (CA, AZ, CO), the company is focused on expansion. In December 2010, Sungevity announced a $15 million round of financing that has allowed the company to expand to five north eastern states—MA, NY, NJ, MD, DE.

In their first year, 2008, the company sold 164 systems and in October 2010 did the same number with 1 megawatt of solar deals. In May 2010, Sungevity partnered with US Bank to offer a 10 year Solar Lease, which allows homeowners to install solar arrays for no money down. Sungevity more than tripled its staff in 2010 and is expecting to grow to 175 full-time employees by late 2011.

Sungevity also ran a campaign to install solar panels on the White House. At a White House Earth Day event, Danny Kennedy made the offer in person to President Obama. The White House recently announced that they would indeed install solar panels in 2011. In the meantime, Sungevity has expanded its offer to include other world leaders. In October 2011, the team installed a solar array on the home of President Mohamed Nasheed of the Maldives.

Despite its incredible growth, Sungevity is an early stage company.

b. Produce concrete empirical data to document the successes already achieved within the sector, and outline the potential growth of the sector that would result from the implementation of specific policy recommendations.

c. Create broader alliances based on common interests with other industries and sectors, including nuclear energy, natural gas, utilities, and energy intensive manufacturing industries.

5. Industrial PolicyThere was a strong consensus in the DMC session that America needs to clean up its tangle of existing contradictory industrial policies and formulate a comprehensive industrial and manufacturing strategy that focuses on performance metrics such as emission reductions and efficiency. Key features of such a strategy should include the following:

a. U.S. industrial policies should not operate in a vacuum, but should take into account the market conditions created by the policies of other countries, such as the recent Chinese five-year plan for clean energy, as well as industrial policies in Germany, Japan, and South Korea.

b. A comprehensive strategy should be designed to create long-term stability, include domestic content requirements, and address cars, fuels, electricity generation, and building efficiency as key manufacturing and industrial sectors.



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c. It should include the finance, tax, and regulatory policies outlined above. For example, a CES can determine incentives for developing domestic supply chains.

d. Industrial strategy should not be based on specific technologies, but on the various stages of the commercialization process. In particular, industry and government should target policies to address the special challenges in moving from innovation to deployment.

e. Many existing policy tools, like manufacturing extensions, small business lending, workforce investment, and other forms of economic development, should be included and systematically expanded to cover the clean economy sector.

6. Regional InnovationStrategies can help promote clean technology deployment on a regional, state and local basis.

a. “Race to the top” approaches that have worked in the area of education should be applied to the challenge

of clean energy deployment in order to align existing incentives and financial resources at the federal, state and local levels.

b. Track participants expressed concern about fragmented electricity markets, and supported the development of regionally based strategies for market and regulatory reform.

c. Productive partnerships could be established through working directly with state regulators, as well as by identifying and working with state and local governments with similar or complementary plans.

d. A federal CES should incorporate regional differences in clean energy targets and credit regionally appropriate clean energy resources in order to build interest and support for its enactment at the federal level.

e. Strategies should encourage regional competition on tax and land policy, and through existing economic development subsidy programs, to encourage more domestic clean tech manufacturing.


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CONCLUSIONThe DMC track successfully engaged a diverse group of decision-makers from across the clean technology industries. The discussion identified critical challenges that the industry must overcome to scale production and penetrate mainstream energy markets, through a combination of private sector action and public policy measures. While there was not unanimous agreement on these specific suggestions, a general consensus did emerge from this diverse group, emphasizing the need for a comprehensive messaging campaign, and a renewed focus on promoting innovative policies to reduce regulatory barriers and the cost of capital.

The specific recommendations offer an initial pathway and framework for the clean economy sector in shaping a shared agenda with clearly articulated priorities. The barriers to deployment, commercialization, and manufacturing remain significant. As evidenced in the discussion, the ideas already emerging from within the clean economy community offer a strong starting point for developing a detailed roadmap for market-based mechanisms for the rapid adoption of clean technologies and the transition of the entire economy to run on clean and efficient energy.


ELECTRICITY: REGULATORY INNOVATION

INTRODUCTIONOne of the greatest barriers the clean economy sector faces in achieving higher levels of market penetration is an outdated electricity infrastructure and regulatory framework. While virtually every other sector of the American economy has evolved to meet the needs of the 21st century, the electricity grid remains the world’s largest analog system. In a world of rapid change, the electricity system has stood virtually still.

Much stands in the way of clean energy increasing its share of America’s power. For example, current regulatory rules do not require the incorporation of public policy concerns when planning transmission lines, nor do they mandate cost allocation formulae to decide how such projects will be financed. Additionally, the scheduling of power is not rapid enough to effectively include intermittent resources like solar or wind. While the Federal Energy Regulatory Commission (FERC) has proposed rules to address these problems, the existing system harms our global competitiveness and hobbles a potential engine of job and wealth creation.

As the clean economy grows and business and consumer energy needs become more complex, the country needs a new approach to energy generation, use, and distribution. The U.S. must address the structural and policy deficiencies of our electricity sector—including an outdated grid, overly complex rules, and lack of incentives for utilities to adopt more stringent efficiency standards or diversify their energy portfolio. Doing so requires a robust mix of new technologies, business models and policy innovation at the federal, state and local levels.

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TRACK PARTICIPANTS

Michael Moynihan, Director, Green Project, NDN (Moderator)

Clare Giesen, Director, Electricity 2.0 Initiative, NDN (Moderator)

Warren Belmar, Capitol Counsel Group

Cameron Brooks, Senior Director of Market Development and Policy Strategy, Tendril

Dan Carol, Senior Fellow, New Policy Institute, NDN

Shelley Cohen, Senior Project Developer, Ameresco

Chris Cook, Keyes & Fox, LLP

Stephen Cowell, Founder, Chairman & CEO, Conservation Services Group

Cynthia Curtis, VP & Chief Sustainability Officer, CA Technologies

Bob Dolin, System Architect, Echelon

Andrew Friendly, Principal, Advanced Technology Ventures

Donald Gilligan, President, National Association of Energy Service Companies (NAESCO)

Katherine Hamilton, Director of Clean Energy & Environment, Quinn Gillespie & Associates

Arno Harris, CEO, Recurrent Energy

Steve Hauser, VP, Grid Integration Program, National Renewable Energy Laboratory

Paul Hudson, Founder & Principal, Stratus Energy Group, LLC

John King, Executive VP, LS Power Development, LLC

Maria Kingery, Co-Founder & Director of Cultural Development, Southern Energy Management

Jennifer Layke, Director, Institute for Building Efficiency, Johnson Controls

Craig Lewis, Executive Director, CLEAN Coalition

Steve Melink, Founder, Owner & President, Melink Corporation

Lesa Mitchell, Vice President, Kauffman Foundation

Commissioner John Norris, Federal Energy Regulatory Commission (FERC)

Tom Osdoba, Managing Director, Center for Sustainable Business Practices, University of Oregon

Doug Payne, Co-Founder & Executive Director, SolarTech

Jeff Ross, Executive VP of Business Development, GridPoint

Michael Sachse, VP, Regulatory Affairs & General Counsel, OPOWER

Richard Stuebi, Founder, NextWave Energy, Inc.

Michael Terrell, Policy Counsel, Google

Kathrin Winkler, VP, Corporate Sustainability, EMC2 Corp.

This track discussion explored the issues with current regulatory policies that hinder clean energy growth, identified the problems, proposed some solutions and began to develop strategies to effect change.

FRAMING THE CONVERSATIONThe United States’ fragmented regulatory structure is the central challenge to modernizing the electricity grid. Building an electricity infrastructure that can drive 21st century economic prosperity is no easy task, and it is further complicated by a regulatory system that distorts rather than clarifies information, incentives, and implementation strategies for a diverse spectrum of stakeholders. These stakeholders include but are not limited to: regulatory bodies at the federal, state, and local levels; political actors; power generators; public power, investor-owned, cooperative, and federal utilities; non-utility businesses; and consumers. Each of these groups has different and often even competing priorities when it comes to designing and developing a modern electricity grid.

There is no “silver bullet” solution to these problems. Indeed, it was difficult for the participants in this discussion to even agree on how to begin the long-term process of modernization. Much of the frustration is rooted in the fact that the electricity grid is unequipped to incorporate renewable energy sources, and the relevant actors are largely unmotivated and lack the incentive to make necessary changes. These dynamics are hindering the growth of a robust clean energy market here at home.

In addressing these challenges, participants agreed on one central goal: fostering innovation. It is clear that the clean economy business community must capitalize on



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the market opportunities these technologies represent, and utilities have demonstrated that they are unwilling, and in some cases, unable to lead the way. While there was not consensus on how best to address the issues that currently impede innovation, the discussion focused on the problem of limited access to information and to the grid, which makes it difficult to identify ways to drive innovation forward. Not every participant agreed with this focus, and their concerns are noted in the following sections.

Fostering large, open platforms—both within and outside of the utility structure—is a way to support viable entry points to the energy market without necessitating a complete overhaul of the United States’ regulatory structure. Such platforms include smart grid technologies, home energy networks, enterprise networks, microgrids, and distributed generation/storage. While platforms like smart grid will complement existing infrastructure, others—like distributed generation—represent a marked departure from the current system. The characteristic that connects them is an emphasis on innovation: how best to provide information and the corresponding structural incentives to relevant actors so they can implement changes to our electricity system.

The benefits of open platforms can be examined through the lens of the information, incentive, and implementation problems presented by the current regulatory system. While these issues are certainly interconnected, addressing them separately allows for more concrete recommendations, tailored to acknowledge and incorporate specific stakeholder priorities.

INFORMATIONOne of the electricity system’s shortcomings is the almost total control regulators and utilities have on information related to energy generation, distribution, and use. Open platforms, specifically smart grid technologies, are heralded as the future of modern electricity infrastructure because they fundamentally change which actors have access to such information. Furthermore, smart grid devices improve the quality of information, allowing for quicker response time by generators and utilities in maintaining load/demand balance, addressing power outages, and keeping the grid secure. Smart grid also introduces the possibility for real-time pricing.

By enabling real-time, two-way communication between utilities and consumers, there is hope that changes in both generation and end-use behavior will occur, as consumers will be more empowered to make smarter choices. Additionally, this information will create more opportunities for non-utility businesses to provide energy management services.

While lack of information access is a sizable problem, it is disingenuous to suggest that merely making information available to consumers and businesses will solve the challenges at hand. Many proponents of smart grid platforms have treated information as the end goal. In doing so, they fail to recognize that making information available is necessary but not sufficient to meet greater long-term goals like energy efficiency, bringing more renewable energy online, or fostering new market development. The challenge is far more complex: first, how to standardize mechanisms that make this information readily accessible, and second, how to encourage structural and behavioral changes that effectively utilize this information. In this frame, information is an intermediate goal, but ultimately only a means to an end. Ideas about what precisely that end goal entails, and how valuable smart grid-generated information is in achieving that goal, vary considerably among stakeholders.

The potential for smart grid technologies to change the electricity grid has been demonstrated in pilot programs across the country. However, realizing the promise of smart grid is dependent on the clean economy community clearly articulating the goals of these technologies at each stage of energy generation, distribution, and use. Important questions remain unanswered, including:

For consumers:• What policies are needed to guarantee consumers’

right to access smart grid data?• What policies are required to protect consumer privacy?• Under what circumstances will consumers be

interested in changing their behavior based on this information?

For utilities:• What policies are required to incentivize utilities to

invest their capital (not ratepayers’ capital) to become more efficient in their distribution of energy?


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• What policies are required to incentivize utilities to replace equipment that is not fully depreciated to adopt more modern, cleaner, energy efficient equipment?

• Is smart grid data primarily of value to generators as a way to match load and demand, thus improving operational efficiency?

• Can utilities find a way to use this information when their revenue is largely dependent on a rate-based system?

For non-utility businesses:• How can businesses benefit from smart grid platforms

both within and outside of the utility market structure?

INCENTIVESThe regulatory structure and economic realities of the electricity grid do not encourage innovation for a variety of reasons. One of the overarching constraints is how U.S. utilities generate revenue, particularly in terms of their capital assets. Utilities have no incentive to upgrade to more efficient equipment while their older equipment is still viable unless those costs can be passed onto ratepayers. In addition to the long-term infrastructure depreciation schedule, the unique demands of electricity grid services present significant barriers for innovators.

Policymakers, regulators, and utilities are tasked with maintaining reliable service on a secure grid while shielding customers from rate increases. As a result, regulators and utilities tend to view innovative technologies and platforms as inherently risky and likely to result in higher costs. Some open platforms like distributed generation/storage and home energy networks also dramatically undermine the rate-based system utilities rely upon to stay profitable. Even with smart grid technologies that do not directly challenge their market share, utilities are reluctant to invest without the guarantee of rate-based recovery.

However, there are other ways of structuring utilities to make them more conducive to accepting clean energy sources. Utilities operating in deregulated markets in multiple states and across multiple business sectors, for example, are most likely to champion open platforms that advance renewable energy.

Non-utility businesses also face daunting challenges under the current system. Because of the varied

regulatory environment, renewable energy providers must engage with each utility individually to guarantee a power purchase agreement (PPA) and negotiate consumer rate cases. Securing these contracts requires an extraordinary amount of time, money, and expertise that can be prohibitive for start-up companies. Additionally, these companies must work with multiple regulatory actors to gain access to transmission lines, which is also an expensive proposition. This complex system slows the pace of upgrades to the grid, thus delaying critical economies of scale and keeping costs high.

Policies like renewable energy standards (RES) and energy efficiency resource standards (EERS) provide incentives for utilities to bring more renewable energy online and implement innovative platforms. However, these standards are often met with resistance because policymakers are reluctant to be seen as “picking winners and losers” or passing laws that may result in higher consumer rates.

Changing the incentive structure for regulators and utilities to more fully embrace open platforms is a significant hurdle facing the clean economy community. Just as important is making the regulatory system easier for renewable energy generators and ancillary businesses to navigate. One way of addressing this problem is to advance clean economy representation on federal, state, and local commissions and advisory boards. These entities have the potential to collaborate early in the policy process, develop long-term relationships, and influence incentive structures.

IMPLEMENTATIONEven when incentives are aligned for grid stakeholders, implementing changes can be an arduous process. One of the key recommendations to emerge from the policy roundtable was the prepackaging of best practices that could be applied “out of the box” by utilities to facilitate a wide-scale rollout of open platforms. Similarly, a compilation of prepackaged regulatory filings would be useful for companies in securing power purchase agreements or negotiating rate cases.

Modernizing the electricity grid through open platforms requires long-term action on the federal, state, and local levels. Participants discussed various strategies for interacting with policymakers and regulators in Congress,

the Federal Energy Regulatory Commission (FERC), and statewide Public Utility Commissions (PUCs). While acknowledging the clean economy community’s capacity constraints, most agreed that a targeted, collaborative approach is needed over a sustained period of time in local, state, regional, and federal jurisdictions.

This long-term involvement solves one of the key problems identified by participants of the track discussion: the lack of overall participation in the back-end processes that determine our nation’s electricity system. The business community, new entrants, and innovators need to have their voices heard much earlier in the process, especially when it comes to rate case decisions and rulemaking. Indeed, including these stakeholders at the table may help create a more holistic picture, connecting the dots between load planning and region-wide economic impact assessments. Engaging early and often with PUCs and utilities will also help identify best deployment strategies for these technologies. Furthermore, these efforts could be a relatively easy yet decisive way to shift the conversation about how to fund innovation. The current stalemate—between utilities that do not want to invest without raising rates and politicians and consumers who do not want those rate-hikes to take place—is simply unsustainable.

Other recommendations coming from the discussions focused on specific open platforms, including smart grid, home energy networks, enterprise networks and microgrids, and distributed generation/distributed storage.

One of the challenges associated with smart grid is the lack of interoperability standards. The National Institute of Standards and Technology (NIST) is currently overseeing the development of such standards that could help establish industry norms and ease implementation burdens. Other platforms could also benefit from similar standards and guidelines.

Home energy networks rely on data that is produced and owned by utilities. Policies affirming consumers’ right to access this data must be passed at the federal level to create a platform for investment and innovation in the home that is free of utility or regulatory restrictions. Additionally, consumer privacy safeguards present a related but distinct policy need.

AMERESCOwww.ameresco.com

Ameresco was founded in 2000 by George Sakellaris, and is headquartered in Framingham, Massachusetts. Privately held until 2010, Ameresco is now a publicly traded energy management company, working with a wide-range of customers on both sides of the meter to drive energy efficiency and leverage renewable energy sources. The independent company employs over 650 people in 55 offices located throughout the United States and Canada.

Ameresco’s principal service is the development, design, engineering and installation of projects that reduce the energy and operations and maintenance costs of their customers’ facilities. Energy Savings Performance Contracts (ESPCs) are a key component of their service portfolio because they eliminate the up-front capital costs that often derail energy savings projects.

Under an ESPC, Ameresco assumes the costs of identifying and implementing the unique energy upgrades for each project. The subsequent cost savings are then used to pay for the upgrades over the life of the contract. After the contract expires, customers are able to directly reap the savings. By guaranteeing that the improvements will pay for themselves, Ameresco has successfully partnered with over 2000 organizations since its inception, including the federal government.

In May 2009, the Department of Energy selected Ameresco to design and install three biomass-fueled steam cogeneration plants at the Savannah River Site in Aiken, South Carolina. The $795 million project is the nation’s largest-ever ESPC, and will replace an existing coal-fired cogeneration plant. When the project is completed in December 2011, it will deliver annual cost savings starting at $35 million as well as a minimum of 77,000,000 kilowatt-hours of renewable power each year.

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OPOWERwww.opower.com

OPOWER develops energy-efficiency and smart grid software solutions that help electric and gas utilities engage customers to reduce energy consumption and save money. Founded just four years ago, OPOWER currently provides services to more than 50 utilities—including eight of the ten largest—in 22 states nationwide.

OPOWER’s unique programs are rooted in behavioral science and use targeted messaging and multi-channel engagement to produce significant and sustained results. Utilities that have implemented the OPOWER Home Energy Reporting system have delivered between 1.5 and 3.5 percent average energy savings to the entire targeted population—regardless of age, income level, or household size. These results have been verified by several independent parties, including ACEEE, Navigant Consulting, and academics from Harvard, Yale and MIT, among others. This innovative approach and dedication to results have made OPOWER’s business a model of sustainable success. Recently, the Wall Street Journal named OPOWER one of the top 10 Cleantech companies.

OPOWER’s exponential growth illustrates the link between good policy and innovative business. Like many “cleantech” companies, OPOWER works in a government created market. In particular, OPOWER has taken advantage of state policy frameworks that encourage energy efficiency. Utilities work with OPOWER because it helps the utility meet its efficiency goals, while customers use the information delivered to reduce their energy consumption, save money, and, in the process, help reduce carbon emissions. As President Obama observed in a visit to OPOWER’s offices, “The work you do here…is making homes more energy efficient, it's saving people money, it's generating jobs and it's putting America on the path to a clean energy future.”

Enterprise networks and microgrids face a number of regulatory barriers that must be addressed at the federal level. As a starting point, participants recommended the creation of a specific classification that would expedite the ability of companies to move and manage renewable power at a preferential tariff within their own network.

Distributed generation is perhaps one of the more challenging open platforms because of complex interconnection standards and policies that differ dramatically by jurisdiction. In some places, co-generation is against the law, making it impossible for factories to use waste heat to generate electricity. Universal plug-and-play standards as well as the elimination of standby charges would be beneficial for distributed power, especially solar resources.

CONCLUSIONWhile the discussion in this track focused primarily on the potential of open platforms, questions remain about the ability of such platforms to take root in a sector dominated by multi-level, complex, and often disconnected regulatory regimes. Thus, it is generally acknowledged that open source platforms alone do not provide the incentives and certainty necessary to build a more efficient electricity grid that utilizes a greater share of clean energy sources. The bottom line is that addressing the challenges posed by the electricity grid will require a combination of regulatory reform supplemented with smart policies to create an environment that is conducive to investment and implementation for stakeholders.

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CLEAN ECONOMY MARKETS:CLEAN ENERGY STANDARD

INTRODUCTIONWhile clean economy markets have been slowly developing for decades, they have yet to fully hit their stride in the United States. A variety of factors have contributed to the slow growth of the sector, including declining economic conditions, an aging energy infrastructure, and a lack of consistent, stable signals to develop the environment necessary for long-term certainty in the marketplace. Established and emerging economic powers, such as Germany, China and India, are aggressively pursuing a variety of policies aimed at creating the market signals necessary to grow a robust clean economy sector in their own countries, both to meet domestic energy needs and to capture the export potential of emerging technologies.

Recent discussions about market mechanisms have focused either too broadly to be politically feasible or too narrowly to drive transformative change. In order to build efficient domestic markets, it is important to first determine the best means by which to set the appropriate long-term signals to provide certainty for businesses to grow and develop. This includes finding a correct mix of standards, incentives and, when necessary, mandates in policies developed at the federal, state and local levels to balance against the needs of a free market.

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TRACK PARTICIPANTS

Patrick Von Bargen, Managing Director, Quinn Guillespie & Associates (Moderator)

John Arensmeyer, CEO, Small Business Majority

Julia Bovey, Director of Government Affairs, FirstWind

Scott Clark, CEO, SolTherm, Inc

Rob Day, Partner, Black Coral Capital

Nicholas Eisenberger, Partner, Pure Energy Partners

Jeff Genzer, Counsel, National Association of State Energy Officials

Gideon Gradman, Vice President, Ze-Gen

Tim Greeff, Policy Director, Clean Economy Network Education Fund

Russell Hagan, VP Energy and Renewable Resources, Plum Creek

Mark Hankowski, Vice President, Potter Drilling

Joe James, President, AgriTech

Mark McIntosh, Partner, Boyden Gray & Associates

Jack Oswald, President, SynGest

Sameer Rashid, Managing Director, Think 21

Peter Robertson, SVP of Legislative Affairs, American Natural Gas Alliance

Steve Schiller, Founder, California Industry Energy Efficiency Council

Gia Schneider, CEO, Natel Energy

Jason Scott, Managing Partner, Eko Asset Management Partners

Aaron Severn, Government Affairs, American Wind Energy Association

Jon Sohn, Counsel, McKenna, Long and Aldridge LLP

Greg Staple, CEO, American Clean Skies Foundation

Jaime Steve, Director of Government Relations, Pattern Energy

Lucky Wentworth, Deputy Legislative Director, Union of Concerned Scientists

Across the country, states have adopted various versions of Renewable Energy Standards (RES) as one means of driving the production and installation of clean energy and, in some cases, energy efficiency. More than 30 states have adopted some form of RES, utilizing a range of standards and carve-outs to promote clean energy. As recently as last November, a national RES was actively under discussion in Congress, and there remains bi-partisan support for such policies.

Recent discussions at both the state and national levels have begun to focus on a national Clean Energy Standard (CES) that fundamentally functions like an RES, but includes a larger list of qualifying technologies. In fact, some states, such as Ohio, have adopted standards that more closely resemble a CES, covering nuclear energy, efficiency programs and advanced coal technologies that can capture carbon emissions. In the case of energy efficiency, it is important to note that many states with an RES have adopted a separate policy most commonly known as an energy efficiency resource standard (EERS), while other states (Nevada and North Carolina, for example) combine the two mechanisms by allowing energy efficiency to meet a portion of the RES requirement.

UNDERLYING ASSUMPTIONSBefore turning to an examination of how a CES might best be constructed, it is important to address a few underlying issues that are not specific to the CES but do impact and provide context to the overall discussion. The most important of those was a lack of certainty among participants that a CES by itself could send strong enough signals to fundamentally change investor behavior. This concern took two general forms.



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First, there still appears to be broad agreement across industries and technologies that a price signal on carbon remains the most comprehensive means of establishing proper market signals. While the specific mechanism for such a price signal was not discussed and past experience would indicate some disagreement about how to best set such a signal, a CES was generally viewed as a smaller and less comprehensive method of sending a signal to spark greater investment in and deployment of clean energy technologies. Moreover, while a CES could certainly be designed to drive deployment, it is important to recognize that other regulations also matter, even if they are not specifically related to a CES. The red tape and bureaucratic maze of siting, permitting, and loan applications all serve to slow down development of projects in energy and efficiency. Thus, a CES should not be viewed as a cure-all and its effectiveness may be limited by some of these other factors.

Second, it will be difficult to move forward the energy conversation generally, and the clean energy development conversation in particular, until there can be an honest and transparent accounting of costs. A fundamental reconsideration of the concept of costs is a key component of designing any new energy infrastructure. For example, the reality that energy prices are steadily rising while remaining volatile due to a lack of diversity in supply sources must be taken into account. Similarly, health impacts, safety, jobs, national security and other risks are not the same for all resources and such inherent benefits and costs should also be reflected to the extent possible in any new energy paradigm.

Additionally, when comparing costs between new and existing energy sources, we must do a better job of ensuring they are similarly measured. For example, when discussing a CES and new generation, we must compare new capacity to new capacity. Too often, the price of electricity from new wind projects gets compared to the cost of electricity from existing coal plants. The real comparison should be between new wind, new solar, new gas, new nuclear, new coal, etc., as well as their relative risks in terms of issues such as reliability, creating a diversity of resources, and price volatility. The purpose and role innovation plays in the cost equation should also be considered. Innovation occurs precisely to bring costs down, become more efficient, create jobs and evolve existing processes. Price savings for

consumers comes from scale, and national energy policy discussions should better internalize this concept.

Finally, it is important to be more honest about the energy discussion and the criteria that are used to assess market-driven policy. This point was expressed in many ways, but the most common example involves the desire to create policies that ‘do not pick winners’. Nonetheless, it is difficult to have a constructive conversation about energy policy without recognizing the fact that national policies picked winners decades ago and the current energy policy landscape does not treat technologies equally, especially not new technologies. The goal should be a level playing field on which all technologies can fairly compete, but without an acknowledgment that existing technologies already have a head start, then no policy, CES or otherwise, will be able to achieve that goal.

At the conclusion of this preliminary framework discussion, the Clean Economy Markets roundtable discussion delved into specific aspects of a CES in order to more clearly determine what criteria are the most important to advance national clean economy markets and how a national CES would function in relation to existing state RES policies.

KEY CRITERIA FOR CLEAN ENERGY STANDARDSThe discussion surfaced the following criteria into which any CES should fit in order to be effective in driving innovation and investment in clean energy technologies and projects.

Ends DrivenThe fundamental goal of a CES should be to send the market signals necessary to increase the diversity in supply and efficient use of our energy resources. By far, the main criteria to determine the efficacy of a CES is whether it actually helps drive the development and deployment of clean energy above and beyond business as usual projections, which will in many ways depend on how clean energy is defined. Modeling of past versions of a national RES has produced mixed results on the question of increasing the deployment of cleaner technologies. The standards should also be robust enough to measure not only the absolute increase

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in megawatts of traditional renewable energy for example, but also the increase in percentage of cleaner technologies like natural gas as a share of the overall generation by fossil fuels.

CertaintyInvestors and developers need certainty from policy and in the marketplace to confidently make the types of long-term investments and commitments necessary to move toward a clean economy. The existing energy infrastructure and regulatory framework favors the build-out of traditional sources of energy from large centralized generation facilities, and often creates a financial disincentive for alternative energy, distributed generation and energy efficiency. Most current tax incentives for clean energy technologies are too intermittent to provide the certainty necessary for long-term investment. Moreover, short-term extensions of specific policies like the investment and production tax credits (ITC/PTC), while important and critical to some industries in the short-term, will not drive investment as much as a long-term extension of 7 to10 years or a long-term target from a CES or similar policy. To an investor, the risk of a constantly changing policy and regulatory landscape is a frightening concept that can stifle investment and skew markets in an unintended direction.

Achieving certainty requires policies that look to the medium and long term rather than just a year or two out. Long term signals are a key component for companies looking to raise the necessary capital to construct projects. Investors and companies need a longer timeframe in order to build the levels of comfort and trust that facilitate better investment. Under the current policy framework, the US is not an attractive market for investment in clean technology projects. Ultimately, any CES must recognize the sheer scale of the investment required to fundamentally transform how we create and use our energy in this country and set the long-term targets accordingly.

ClarityOverly complex rules riddled with loopholes, exceptions and other policy levers create confusion and limit the effectiveness of any policy. When it comes to regulation or government intervention in markets, businesses and investors crave simplicity and transparency. Setting a price or standard should be as straightforward

as possible and the mechanisms used to ensure compliance should be transparent and accessible. The goal of a CES should be to increase the amount of domestic low-emission generation, create diversity in energy generation, improve the efficiency of energy consumption and drive the deployment of clean energy technologies. Any standard should address the uneven playing field among energy technologies under existing regulations, subsidies and pricing.

Enforcement and AccountabilityA CES is only as effective as its enforcement mechanism permits it to be. Arguably, the most impactful state policies are those with a meaningful penalty for failure to meet the standard. That is a key part of the price signal that motivates utilities and others to aggressively pursue qualifying technologies that will meet the standard. If there is not a strong mechanism for enforcement or accountability, then the policy will be limited in its ability to drive the investment and deployment that a successful CES should aim to accomplish. For example, the most common enforcement mechanism in existing state RES or CES policies is known as the Alternative Compliance Payment (ACP). It is generally accepted that the ACP level of 2.1 cents contained in the 2010 Bingaman-Murkowski federal RES proposal was insufficient to drive investment in any alternative technologies other than wind. From an existing state policy standpoint, a national CES should only serve as a baseline and should not pre-empt current or future state policies that include more aggressive standards.

Account for Regional DisparityA third recurring theme was the need for any policy to account for regional and economic differences in energy needs and available resources. Most commonly, the southeastern region of the United States was mentioned as the trickiest place, both technically and politically, to implement a Clean Energy Standard or any other mandate for a more diversified energy portfolio. The resource constraints in several southeastern states, particularly on traditional renewable energy, make a national standard at the federal level a more difficult proposition. This has certainly played out during debates around a national RES, and it is unclear whether a CES, with its larger pool of qualifying technologies, would overcome these issues.


A standard must also take into account the difference between urban and rural areas. Rural areas have very different energy needs than do highly populated and more energy intensive urban areas.

A national standard must be sufficiently flexible to allow for the unique needs of each area of the country. One recurring idea was whether it would be possible to formulate some sort of incentive structure that would create a ‘regional race to the top’ for clean energy deployment.

SPECIFIC POLICY QUESTIONSThe discussion did focus on a few specific aspects of a CES. While there was not enough time to fully dissect and discuss all of the key aspects, the discussion did provide some valuable insight into the following:

TargetsCES targets should be built from a clear and transparent baseline of what already exists. While the baseline should also be adjusted to account for energy efficiency gains so that they are appropriately recognized as well, the difficulty in doing so is evidenced by several state efforts to calculate a baseline that accounts for other existing regulations. Once targets are set and clearly defined, then, as much as possible, market forces should be allowed to determine the best way to go about meeting them. As mentioned previously, there should also be some consideration of regional targets that allow for the differing resource profiles of regions across the country.

AGRI-TECH PRODUCERS, LLCwww.agri-techproducers.com

Columbia, South Carolina-based Agri-Tech Producers (ATP) is a creative small business, focused on commercializing innovative torrefaction technology developed by North Carolina State University (NCSU). This process cost-effectively converts cellulosic biomass, like plant and wood material, into a substance which can be used as a clean and renewable coal substitute; as a superior feedstock from which to make stronger, more energy dense and water repellent energy pellets; and as a superior feedstock from which to make cellulosic liquid fuels, using gasification methods.

ATP has been involved in torrefaction efforts since late 2007, when its founder sought a solution to the challenges in utilizing and shipping cellulosic biomass, due to its bulkiness, high moisture content and several other drawbacks. NCSU was, at the time, developing a new and more cost-effective torrefaction technology, which would more than overcome those challenges. ATP began working with NSCU to commercialize their torrefaction process and in January 2009 received an exclusive, world-wide license to the technology.

Today, with the help of its manufacturing partner, the South Carolina-based, Kusters Zima Corporation, ATP has designed its first commercial unit and is poised to manufacture and sell torrefaction equipment, both in the US and into a strong export market. ATP also intends to develop and operate a few torrefaction-based processing plants in conjunction with key strategic partners, and is also involved in the planting and utilization of high-density bio-crops, which can be treated by its torrefaction process.

As part of its social entrepreneurship commitment, ATP will continue to explore ways in which its torrefaction process can promote economic development and job creation in distressed rural communities, both here in the US and abroad. ATP’s units can also produce a biochar, for soil enhancement purposes, and a plant-based cooking fuel for the Third-World, which can reduce de-forestation pressures, caused by the practice of chopping down trees to make charcoal.

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RECURRENT ENERGYwww.recurrentenergy.com

Recurrent Energy is a leading solar project developer, providing clean electricity to utilities and large energy buyers. The company's vision is to use proven solar technology to meet rising energy demand with a fleet of clean power plants located right where they’re needed most. With a 2 GW project pipeline and 400 MW of contracted projects, Recurrent Energy has one of North America’s largest solar development portfolios.

Recurrent Energy's development strategy is to build a balanced portfolio of utility solar projects ranging in size from distributed-scale to central-scale. The company has differentiated itself by focusing on distributed-scale projects, 2 MW-20 MW solar generating plants that are connected to existing utility distribution networks in areas of high demand. These types of projects typically benefit from faster permitting and interconnection. However, Recurrent Energy is also developing a number of central-scale projects that address the utility market’s need for larger capacities.

Based in the US, Recurrent Energy is the primary solar development company for Sharp Corporation worldwide. Together, Recurrent Energy and Sharp finance solar projects through a global network of project lenders and equity investors. Technology expertise, supply chain capabilities, and access to capital enable Recurrent Energy to deliver solar generating plants at any scale, with market-leading cost and efficiency.

Qualifying TechnologiesGenerally, a CES should err on the side of being inclusive rather than exclusive, with the caveat that how each technology is included is just as important as which technologies are included in the standard. Two specific questions continued to come up during this discussion. The first part concerns how each technology is treated. There is broad recognition that the existing regulatory framework in the US greatly favors traditional legacy industries over emerging energy technologies. Recognizing that we do not operate on a level playing field begs the question of how a CES could be used to help erase long-entrenched disparities that have created unintended market barriers to diversification of our energy sector.

Second, a CES should respect the individual qualities, risk profiles, and needs of individual technologies. Some technologies are more mature and are currently being commercially deployed; others are much newer and have not yet reached what can be considered normal commercial-scale deployment. For example, the up-front capital costs of technologies like geothermal can skew the value proposition of that technology relative to others. As discussed previously, a recalculating of ‘cost’ should be a part of the design of any policy to help account for this.

Further, a CES should aim for a middle ground that can drive the deployment of commercially available technologies while not unintentionally freezing out next generation technologies. Current energy policy can stifle innovation, and it is important that emerging technologies not be expected to compete with traditional sources that

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have existed for decades. Long-term costs should also be considered, and the question of whether the cost of a particular energy source is rising or falling should be taken into account.

In addition, once technologies reach a certain threshold of deployment in the marketplace, they arguably no longer need the specific mandate of a CES. On the subsidy question, there was broad agreement that no technology should receive unlimited help and that sun-setting subsidies and other incentives is generally desirable.

Capping and Carve-outsCapping refers to the limitation on the percentage of the standard that can be met with any one given technology. Participants generally agreed that arbitrarily capping certain technologies was not appropriate. However, the most difficult technology to address in this regard is energy efficiency. We posed the question of whether or not efficiency should be capped, and the general feeling was that it would be hard to justify doing so. However, there was also broad recognition that from a market share perspective, certain technologies would be impacted more than others by uncapped efficiency and that the general principles would come into direct competition with technology-specific interests. Accordingly, dealing

with efficiency in a separate standard such as an EERS might be the better option since it is difficult to treat both generation and efficiency in one standard.

In terms of carve-outs, there was very little agreement on specific carve-outs and whether to tier technologies. The primary concern was the complexity such a structure would likely entail and whether such complexity would ultimately create so many problems with qualification and compliance that the effectiveness of the overall CES would be negatively impacted.

CONCLUSIONThe diversity of industries represented in the discussion of a national CES demonstrated the complexity of interests that must be taken into account. While there remain many unanswered questions, the discussion did produce key insights into the common ground that exists between competing technologies and industries. Fundamentally, a national CES could help send important signals to the market that would help investors and developers deploy the capital and resources needed to develop a clean economy sector domestically and to capture the benefits of the jobs, industry, innovation and economic growth that come with it.


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Founded in March 2009, the Clean Economy Network Education Fund (CENEF) is a 501(c)(3) organization affiliated with the Clean Economy Network Education Fund (CEN), a 501(c)(4) advocacy organization. Together, they constitute the largest national networking and educational organization shaping a new economy based on clean technology and innovation. Our members are professionals, entrepreneurs, investors, researchers and students who connect to each other, learn information relevant to business and professional growth, and influence public policies that impact the clean economy.

CENEF is unique among organizations participating in the movement to build the clean economy. Unlike other groups that speak on behalf of particular technologies, industries, or issues, CENEF connects clean economy professionals across industries to build a group identity and creates a framework for their direct engagement at all levels of public policy debate. CENEF aims to build and organize a permanent, accessible network of such individuals and to create a cohesive class of engaged civic leaders from the clean technology business and investor sector.

Josh BeckerNew Cycle Capital*

Warren Belmar (Chair)Capitol Counsel Group* David BohigianBridgewater Associates*

Shelly CohenAmeresco*

Rob Day (Co-Chair)Black Coral Capital* Nicholas Moore EisenbergerPure Energy Partners*

Richard HusseiniBaker Botts LLP*

Sunil PaulSpring Ventures* Dan PriceSidley Austin*

Graham RichardGraham Richard Associates* Joel SerfaceFront Range Ventures* Sanjay WagleFormer Venture Capital Investor

R. James Woolsey Woolsey Partners*

*Professional affiliations listed for identification purposes only.

STAFF

Jeff Anderson, Executive DirectorSam BlodgettLexie BriggsCrystal CookChris DallyShannon DulaneyLiz GilchristTim GreeffMichelle HarrisTamar Strain

BOARD OF DIRECTORS

AcknowledgmentsThanks to the participants in the Clean Economy Summit, the boards of directors of the Clean Economy Network and the Clean Economy Network Education Fund, the CEN Leadership Council, and CEN staff and interns for making the Clean Economy Roadmap possible.

Thanks to Brian Sager of Nanosolar and Jonathan Wolfson of Solazyme for serving as chairs of the 2011 Clean Economy Summit.

Thanks to former CEN staff members Brandon Keefe, Nader Halawa and Kari Manlove for their many contributions to success of the Clean Economy Summit.

Thanks to the principal authors of the Roadmap, Sam Blodgett, Shannon Dulaney, Tim Greeff, and Bracken Hendricks.

Thanks to Deepika Mehta for the design of the Roadmap and Harris Lithographics for its printing.

Thanks to the following companies for providing photos for the Roadmap:Cover: Photo courtesy of BrightSource Energy. Inside pages: A123 Systems, Agri-Tech Producers, LLC, Ameresco, Doug Kapustin, OPower, Recurrent Energy, Simbol Materials, Solazyme, Inc., Sungevity.

Clean Economy Network Education Fund 1101 14th Street NW, Suite 1200

Washington, DC 20005www.ceneducationfund.org

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