Sunday, July 06, 2008

Alternative Energy Can Return Economic Prosperity to Michigan

Great story from business writer Rick Haglund making the rounds in the Michigan media. Today's GR Press print edition, across the top of the page headline, "Auto industry set to re-energize", and right below that in smaller print, "Alternative fuels could be vehicle for economic recovery in Michigan".

Yes. Finally. It took $4 a gallon gasoline, plummeting auto sales, and rumors of a GM bankruptcy to get everyone's attention, but finally we see the media starting to pick up on the fact that not only is this a solution for our energy crisis (let's just start calling it that, shall we?) - it's an amazing economic opportunity that would bring thousands of jobs to the state of Michigan.

Not only do we have the manufacturing base and workers to provide the physical components for gathering energy from renewable sources (wind turbines, solar cell/film production), and the natural resources for new fuels (wood byproducts for cellulosic ethanol), all of which will be wanted to power homes and businesses, we have an auto industry that is turning to alternatives with increasing desperation as consumers move away from the gas guzzlers and demand energy efficiency from their cars.

Home. Business. Auto. Everything that demands energy, we can do it here. The only question left is, will we take advantage of this opportunity?

The rest of the country is pulling away from us.

"It will be extremely difficult because we're competing with 49 other states," said Brett Smith, of the Center for Automotive Research in Ann Arbor. "Differentiating ourselves will be very important."

Michigan's difference could be its battered auto industry, which is spending hundreds of millions of dollars to develop vehicles that run on biofuels, electricity and hydrogen.

The sense of urgency has picked up considerably with gas prices topping $4 a gallon, new federal regulations that will boost fuel-economy standards for cars and trucks to 35 miles per gallon by 2020, and worries about emissions contributing to climate change.

Deriving energy from wind, sun and biofuels such as ethanol -- and producing the vehicles it runs on -- could become an industry rivaling the Internet-driven boom of the 1990s, some say.

Oil hits $200 a barrel and you can bet Jimmy Carter's sweater it will be more than "some" saying it. It may have taken 31 years and the advancement of technology to get there, but it sure looks like we are getting there - and now we can't get there fast enough.

"This may be the technology that will have an impact similar to the computer industry over the next 10 years," said Don Grimes, a University of Michigan economist.

Haglund goes on to list some of the companies already doing this work in Michigan, companies that we have talked about before such as ECD (Uni-Solar), Dow, Delphi, and the just recently announced Mascoma, as well as the universities like MSU, Wayne State, and the U of M that "received $79.5 million in alternative-energy grants last year, more than other any state except California." We are attracting new growth slowly but surely, now we need to start making the bold moves that will attract the attention of investors and put us on the path to be a leader in the nation in advancing and manufacturing this technology.

We have the tools. We have the desire. The only thing stopping us now is the perception that Michigan is just not "green enough"...

Smith said one of Michigan's biggest challenges will be overcoming a perception that Detroit, given its history of fighting federal fuel-economy and emissions standards, is unfriendly toward "green" technology.

"There is a perception that Michigan is not a clean state," Smith said. "People don't look to Michigan as a leader in these technologies."

Stuck with a bunch of SUVs that will probably have to be sold for scrap metal, look for Detroit to get on board the alternative game as quick as they can. They will have to, or they will perish. And they know it. At least they had better know it by now. What more could it possibly take?

That only leaves state policy standing in the way. Haglund recently wrote that there isn't much Lansing can do when it comes to Michigan's economy - and on many levels he is probably right - but what they can do is help change the world's perception of Michigan as being "unfriendly" to a green economy. They took one small step with the Choose Michigan fund...

Hours after Mascoma's announcement, the Michigan Legislature approved an $18.75 million Choose Michigan fund that would offer loans and grants for locating here.

Gary Krause, the development corporation's director of special projects, said developing an alternative-energy industry gives Michigan a chance to boost its economic self-image.

"Despite all the doom and gloom, there is some hope here," he said. "But it's going to take bold action by everyone involved."

And one big, bold action that would announce to the world that we are ready, willing and able to be a major player in this market would be to pass a strong renewable portfolio standard that would position us to recruit companies that will be pouring investment money into the places where there is demand. A paltry 7% isn’t going to cut it, it makes us a laughing stock – and this Legislature should know that. They can make all the excuses they want about "mandates", but mandates are part of the forces driving the market, and other states are reaping that investment.

One recent example for proof - Duke Energy in North Carolina is investing $100 million to install 850 solar panels on homes, schools and businesses. Money and jobs gained - and they point to the RPS as the main catalyst. Policy they supported, by the way.

"We believe an initiative of this scope and scale will help us meet the requirement of North Carolina's new Renewable and Energy Efficiency Portfolio Standard (REPS)," said Keith Trent, group executive and chief strategy, policy and regulatory officer. "This program also will enable us to evaluate the role of distributed generation on our system, and gain experience in owning and operating renewable energy resources."

So, how many experts and examples and business executives and headlines will our Legislature ignore? Hope we don't have to find out the hard way.

Interestingly enough, the headline below Haglund's story in today's Press is “Lansing may face voters’ hatchet”. Maybe when the voters realize that Lansing is passing up an opportunity to change the perception of our state because certain people want to play obstruction games and stick their heads in the proverbial sand to drill for more oil while the rest of the world moves forward and gets the jobs and the money that this industry is going to bring - they will pull that lever with glee.