Browse
Engage
Research
Coskata, a much-touted biofuels company, is stalled.
So, for the moment, is Compact Power, a U.S. maker of lithium-ion batteries.
Why? Partly because of the global economic meltdown. Partly because both depend on General Motors.
I'll get to Coskata and Compact Power in a moment—their CEOs spoke today at the Wall Street Journal's Eco:nomics conference—but, first, a bit of context.
To me, the overarching question about the environment in the U.S. right now is this: Will the momentum created by the Obama administration's enthusiastic support for clean energy be enough to overcome the headwinds generated by the global financial crisis?
This week, New Energy Finance, a London-based consulting firm that focuses on clean energy and carbon markets, released a report concluding that the financial crisis is, indeed, an enormous obstacle to progress on climate change. It said:
The world economic crisis has hit investment in clean energy and means its growth is no longer on track for the world to avert the worst impact of climate change….
NEF analysts say that although lower economic activity due to the financial crisis will reduce CO2 emissions, in the longer term the drying up of funding for lower- carbon energy solutions is likely to have far greater adverse impact on emissions.
According to The Environment News Service:
Michael Liebreich, chairman and chief executive of New Energy Finance, said, "This should be a real wake-up call. New Energy Finance is generally on the optimistic side of the debate. Even with the current recession we are more bullish on the shift to clean energy than most mainstream analysts."
"However, it is no longer possible to say we are on track to achieve peak CO2 by 2020," Liebreich said. "Something has to happen, either in terms of restoring credit to clean energy projects, or in terms of a surprisingly substantial outcome in Copenhagen."
Sobering. Coskata's CEO, William Roe, made much the same point. The company, which says its technology can make ethanol at a low cost from a variety of inputs (biomass, agricultural and municipal wastes), wants to build its first plant. But Roe isn't making headway with lenders.
Talk to a banker and "all you get is a smile and a pat on the head," Roe says. "There is no project finance today."
Interestingly, Coskata, which is based outside Chicago, raised money as recently as December, reportedly getting a $40 million infusion from the Blackstone Group, the big private equity firm.
But GM, teetering on the verge of bankruptcy, didn't pony up any dough. GM had announced its original investment in Coskata back in January, 2008, with some fanfare., Roe said then that the financing coming in from the auto giant is enough to make Coskata "a speed-to-market play."
Now he's waiting for a loan from the U.S. Department of Energy.
"That's my only alternative at this particular point in time," Roe says. "Absent getting that loan, we are stalled."
For Compact Power, the North American subsidiary of Korea's LG Chem Ltd., a big producer of lithium-ion batteries for the auto industry, the road to the future also leads through Washington.
CEO Prabhakar Patil, who worked at Ford for nearly 30 years before joining Compact Power, said his company will need help from the U.S. Advanced Battery Consortium. That's a government-funded consortium of automakers, battery companies, federal researchers and universities.
In January, Compact Power announced some good news—its parent company, LG Chem will be the production source for the battery cells for the highly anticipated all-electric GM Volt. Compact Power plans to build the battery packs for Volt development vehicles until GM's battery facility is operational.
The Volt is supposed to arrive in late 2010—assuming GM is still around. Its stock trades for less than two bucks a share.
Compact Power is headquartered in Troy, Michigan, outside Detroit, to be near the big automakers. Patil took care not to dismiss efforts by startups like Tesla and Phoenix that are making electric cars, but he indicated that he didn't think the business could get to scale without the big guys.
"Most people don't appreciate the effort it takes to get vehicles on the road and make them safe and successful," Patil said.
He added, unnecessarily: "The vehicle manufactures are critical for our survival."
chevy volt is a porker
Leave it to GM to launch their first electric car as an expensive (and heavy) sports car.
GM has to launch a $40,000 sports car that weights 3,500 pounds.
Would it make sense to launch a small, economical electric car - yes!
Did GM opt to launch a small electric car - no!
Why?
Because this is so typical of their blockhead management.
"We can't make enough money to pay our high salaries launching a small, economical electric car. So let's launch the biggest, heaviest, most expensive car that is barely affordable to the middle classes and try to make as much money on this thing as possible".
As you can see, GM management has morphed their "big is beautiful" mantra from the SUV / HEAVY TRUCK world over to the electric car world.
Honestly, if your average Joe or jane were asked to join GM's board of directors, they'd be shaking their heads at the stupidity of GM management.
GM "Too big to fail, too stupid to succeed".
Liberation
GM is not too big to fail.
Sure, there would be hardship if they failed, but there will be much greater hardship if we continue to pretend that GM can be successful in their current form and with their current thinking.
Between the unions and their management, I give them no hope.
Much like when the dinosaurs ruled the earth, GM's thinking has led them to the brink of extinction.
Nobody (except the government, of course) wants to touch them with a 10 foot pole. Toyota or Honda won't buy them out because they don't want unions to infilterate their own companies. No one wants to take on the cost of GM's exhorbitant retiree benefits.
Not even their own employees, retirees and unions want to buy out the company and make it employee owned.
Why is the government helping GM? Because they have had a long cosy relationship with the unions. And they don't want to take on the retiree benefits either.
So now we have this company that people don't want to buy their cars, no other companies want to buy it and the government doesn't want to be on the hook for their retirees.
What a mess!
You go anon!
GM really is begrudgingly entering the 21st century. Perhaps they should pay the ultimate price for so long being part of the problem and not really being a part of the solution.
RE: The premise of this article is patently stupid
Obviously, the author of "The premise of this article is patently stupid" cannot even begin to imagine the rippling effects of a possible bankruptcy of General Motors.
Thousands of GM employees world-wide would be left unemployed in a time of crisis and job scarcity (not that there ever is an abundance of jobs), not to mention the rippling effect it would have on all other businesses (and their employees) which work alongside GM. Dealerships, Part Suppliers, Transport Companies, Design Firms, ect.
In addition to loss of work and endangering the existence of other businesses, the loss of GM would also result in the end of many events and causes(many of which charity) which are sponsored by GM.
In regard to GM's pricing, you are an absolute idiot for thinking that a luxury brand such as cadillac or hummer should be priced to be "affordable" for everyone. They are luxury brands for those who can afford them, and there is absolutely no obligation for anyone to buy them. GM has a wide range of prices for a varying product line. It's saturn and chevrolet brands offer very reliable vehicles at relatively low prices.
The environment has not been overlooked by GM either. For example, Chevrolet offered it's 'optra' models with the option of natural gas - a first in Thailand (before toyota or ford). In europe, Opel and Chevrolet offers very low emission vehicles with the option of natural gas for no additional charge. Finally GM has been the first company in history to truly consider the use of electricity to power cars. As a result, the 'volt' has been realized.
The premise of this article is patently stupid
GM's business model has always been - "Get people to buy the biggest, most expensive vehicle they can't really afford - so we can make as much money as possible".
For instance, GM rushed in late to hybrid technology by first offering this technology in their SUV's (BOOO!).
Has anyone checked out the Cadillac Escalade? It's a 6,000 pound gross monstrosity that represents everything wrong in our society - but it gets 24 miles per gallon if you check off "hybrid technology" on your SUV order.
Nothing could be greener than having GM go out of business.
This would reward other manufacturers like Toyota or Ford who at least make a good attempt at offering sane transportation.
Perhaps the GM workers will rip up their union cards and drag their sorry asses over to a company that makes electric vehicles or some other green technology.
Then they can start feeling good about themselves, instead of extorting corporations and people to pay their exorbitant salaries and benefits to make dinosaur technology.