Is the Financial Meltdown killing your Green Project?

November 5, 2008 at 10:04 pm Leave a comment

We are all aware that the financial world is in a bit of a chaotic mode at the moment and that this level of uncertainty is a problem if you are looking to borrow some money. Well it looks like these problems are starting to seriously affect the budding green economy we are all so hopeful will help us shorten this recession.

To start with the much written about “World’s Largest Wind Farm” is now on hold because its driving force T. Boone Pickens is having trouble raising the 10 – 12 billion dollars it is expected to cost.  The article here on Cleantechnica.com (http://cleantechnica.com/2008/11/05/largest-wind-farm-in-world-halted-by-credit-crisis/) gives some more details.

Excerpt: “The credit crunch is not just hurting the banks and the real estate market. Even the billionaire and wind energy enthusiast, T. Boone Pickens is having trouble financing his high profile 4000 MW wind farm. The proposed Texas wind farm has a hefty $10 and $12 billion price tag.

Although we are used to hearing about climbing energy costs, the price of natural gas is actually down. Natural gas accounts for 20% of the nation’s electricity generation. The energy sector is also suspecting that the financial crisis may result in a global reduction in energy demand. Pickens’ plan calls for replacing natural gas with wind energy for electricity generation, while converting vehicles to run off natural gas. The natural gas currently used for electricity would be used for transportation and America could wean itself off foreign oil.

The financial crisis is also affecting the green sector in more subtle but equally important ways.  The ASHRAE ( American Society of Heating, Refrigerating, and Air-Conditioning Engineers) committee developing the proposed green building code has disbanded over differences mostly on the part of the materials interests as well as the building owners representatives.  No one is really talking about the actual specific reasons why, but the obvious one is money and increased costs that would result at least in the short term with a new greener building code.  There is a good article here on GreenBuildingLawupdate.com (http://www.greenbuildinglawupdate.com/2008/11/articles/codes-and-regulations/industries-halt-proposed-green-code/) that covers the majority of the bases.

Excerpt:

Several committee members discussed the move with EBN, all of them speaking off the record, either because they were unauthorized to speak by the organizations they work for, or did not want to jeopardize their chances to rejoin the committee.

Discussing resistance from various industry groups, including steel, gas and utilities, wood, and building owner interests, one committee member said, “We must have been doing a good job.” While those trade associations had specific complaints in some cases, in others they were unsupportive of ASHRAE’s involvement, as a mechanical engineering association, in a broad green building standard.

Another example can be found in the battery sector.  A company trying to develop a type of capacitor called and UltraCapacitor which could be an important piece to making electric and fuel cell automobiles possible simply can’t seem to raise sufficient money to actually get them into production this year. The full story is on Ecogeek.org: http://www.ecogeek.org/content/view/2269/

Excerpt: “The company signed an exclusive contract with Canadian manufacturer ZENN and said it has negotiated another deal with Light Electric Vehicles Company, but it seems we will have to wait a bit longer to see the fruits of these contracts.

If all of this weren’t enough of a headache for all of the finance types at these companies there is another metric that is gaining importance in this sector.  It is called the “Social Return on Investment” or SROI. This is a process where by an organization attempts calculate the impacts and value gained from a social perspective of an investment.  It unfortunately kind of makes my head spin just thinking about some of the difficulties of this type of analysis, although I am in favor of the idea on general principles.  There is a good and short article here on the Inspired Economist site: http://inspiredeconomist.com/2008/11/05/the-new-business-metrics-measuring-social-returns/ that provides more explanation and discussion.

So it looks like our brave new greener economy is in for some rough times just like the rest and I hope that our new administration is wise enough to not forget the financial basics when they push this sector forward. I have faith that they will do there best and I look forward to a more prosperous time ahead!

As always I thank you for your time and interest. Please take the time to Digg, Stumble Upon or add to the other social network of your choice to help me spread the word about these issues. Please forward any questions or suggestions to: askthefm@gmail.com

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