July 2009 Archives

I've been following the government's cash-for-clunkers program loosely on this blog, as it's an interesting experiment of targeted stimulus spending to aid a particular industry in trouble. Back in May and June, when the details were being hashed out, I predicted that the program might be more popular than the government estimated, and may run out of money. Not to be smug about it, but it turns out I may be right.

The program, which provides for up to $4500 in government payments directly to the dealer who accepts a qualifying vehicle, has seen dealership traffic improve dramatically all across the country (e.g., see here and here). Chrysler reports sales at a two-year-high last weekend. There have been a few hiccups along the way, such as the EPA's revision of what vehicles can qualify, and of course, not everyone is happy with the idea of a government subsidy to buy a new car. By and large, though, the program is doing what it was intended to do: drive traffic to clear out long backlogs of inventory, and remove fuel efficient vehicles from the road (traded in vehicles must be disabled by the dealer and then scrapped).

Now, the National Automobile Dealers Association (NADA) has expressed concern that the money be running out. According to the government's official count, over $800 million remains left in the program. According to NADA, however, the money will "obviously" not last until the end of October, and may not even last till the end of the week. One dealer has reportedly suspended sales pending confirmation there is sufficient funds left in the program. Their concern? That they might destroy a trade-in only to find out later that they won't get paid by the government.

When a similar program was launched in Germany this past winter, it was wildly popular, helping drive vehicle sales upwards of 20% or more. Although the U.S. program is more limited in scope, it's still a large vehicle market out there. With three full months left to run in the program, I'm guessing the CARS fund will have to be topped up beyond its initial $1 billion funding. Just don't forget you read it here first.

I haven't heard the term "vaporware" being bandied around too much recently. It seems that the marketing departments at the various tech companies have wised up and realized that "underpromise and overdeliver" makes for much happier customers than missing delivery deadlines. Thus, new versions of OS X and Windows appear ready to ship on time and on schedule, to my relief as I run both OS on my Macs. Nonetheless, the idea of technology that fails to deliver on its promise, either in terms of timeline or performance (or both) can capture the attention and imagination. Boeing's two-year delay on the 787 program, for example, is a good specimen of vaporware that can dramatically hurt a company even today.

In green tech, one technology that has been nothing but vaporware has been fuel cell technology. As most of us know, battery technology has failed to keep up with quantum advances in microprocessor, video and display, and storage technologies. We went from Nickel Cadmium (NiCad) to Nickel Metal Hydride (NiMH) to Lithium Ion (LiOn), and that's about it. Apple claims its new battery is "breakthrough" because it can be recharged 1000 times before losing its capacity, but at its heart it's still using LiOn techology.

A battery powered by a fuel cell could change all that. In the tech area, the most promising technology has been Direct Methanol Fuel Cell Based chargers (DMFC). These advanced chargers have been promised for years, but technological hurdles still remain. DMFC's use a chemical reaction between methanol, air and water to produce electricity, and could provide a breakthrough for battery life (think up to a month!). Back in March Sony showed a prototype DMFC USB-based charger, while Samsung and Toshiba have been promising the technology for some time now. Still, vaporware.

On a bigger scale, the idea of using fuel cells to power vehicles has been capturing a lot of imagination as well. Fuel cell vehicles, such as the Honda FCX Clarity, produce only water as pollution. That's right, only water. These zero-emission vehicles are wildly attractive for their non-existent carbon profile, but huge obstacles remain to their adoption. For starters, they're expensive. The FCX is over $100,000, and the only way to drive one is to lease one from Honda for $600 a month for 3 years, if you live in Southern California. The biggest obstacle, though, is how to develop an infrastructure (refilling stations) to deliver hydrogen to customers. The costs are so high, and the obstacles so large, that most vehicles manufacturers are pouring their resources into hybrids and plug-in vehicles instead.

Back in May, Energy Secretary Chu announced that he was cutting more than $100 million in federal funding for hydrogen fuel cell research. This week Congress looks set to reverse that decision. As usual, Grist has some excellent analysis of the decision, including why it's the equivalent of pouring money down a drain.

As the experts go back and forth on the future of fuel cells, there will no doubt be more debates and acrimony over funding and resources, with entrenced players spending big bucks to get the government's attention. In the meantime, the promise of laptop batteries that last for weeks or cars that get more than 70 mpg and emit nothing but water sadly remains nothing but vaporware.

As I've previously blogged, NYC's e-Waste law is causing electronics manufacturers all manner of heartburn. The law, which is supposed to take effect this Friday, requires manufacturers to provide door-to-door electronics collection to city residents. Last Friday, two industry groups filed a federal lawsuit to stop the regulation from coming into effect.

According to the Information Technology Industry Council, one of the plaintiffs, the law will cost manufacturers upward of $200 million per year in compliance costs, leading to job losses and stifled growth. The ITI calls the NYC plan the "most costly, burdensome, and environmentally harmful" recycling program in the world. The other plaintiff is the Consumer Electronics Association (CEA).

At this stage, the plaintiffs are seeking a temporary restraining order (TRO) to stop the law from coming into effect. This means the judge doesn't have to actually decide whether the law is constitutional or not, he/she simply has to decide whether the requirements for granting a TRO (there are three, the most important being whether the plaintiffs can demonstrate irreparable harm from allowing the law to move forward) have been met. I'll keep an eye on this as it progresses and blog more about it in the future.

News Roundup

• Rackable Systems, Inc. reported $44.4 million in first quarter revenue, including delivery of two ICE Cube containerized data centers.

• Citi opened an eco-friendly global operations and technology center in Singapore, including a green data center to serve the Asia Pacific region.

• A Forrester Research survey indicates 11 percent of companies plan to slow down implementation of green IT initiatives due to the recession.

• Singapore’s science and technology university, Nanyang Technological University (NTU), has installed the fastest green supercomputer in the Southeast Asia region at its new data center on campus.

• Baryonyx has won a bid to build massive wind farms to power Tier 4 server farms in south Texas.

• Canadians are worried about the carbon impact of the Internet.

In the debate over global warming, many in the United States feel that action to cap carbon emissions in the U.S. won't do any good if developing countries such as China and India don't follow suit. What's worse, the argument goes, is that as energy costs rise in the United States as a result of cap-and-trade, manufacturing in those developing countries becomes even more attractive, leading to a further erosion in the competitiveness of the United States. And it's clear so far that while the U.S. progresses towards cap-and-trade, China and India have no plans to follow suit (witness India's unilateral rejection of such a suggestion during Secretary of State Clinton's visit there this week).

I think there's a lot of merit to this argument, but I also think there's a fundamental flaw in the fairness to the argument. Let's accept for a moment that every conceivable human activity produces carbon dioxide. Collectively, this carbon dioxide is leading to a gradual warming of the earth, which will eventually lead to rising seas, devastation of indigenous species, and other sorts of calamities such as dying polar bears and palm trees along Lake Erie. Let's further accept that national boundaries are artificial constructs based on geopolitical balances of power, history, aggression and war, and cultures -- all constructs that Mother Earth doesn't give a damn about. Under this scenario, it's really how much carbon EACH HUMAN BEING emits that matters most, not what each country emits. In other words, in a totally utilitarian world, each human being would emit the same amount of carbon so that the human race collectively can survive.

So how much carbon does each human being emit? One answer can be found in the Carbon Footprint of Nations, a website published by the Norwegian University of Science and Technology. The site ranks countries by the amount of carbon per capita. Of the 68 countries ranked, the United States comes in first, with 29 tons of CO2 per person. Australia and Canada round out the top 3. China ranks towards the bottom with 3.1 tons of CO2 per person, and India is lower yet at 1.8 tons of CO2 per person.

The ranking is important because it illustrates how much each country has to go in terms of reducing carbon. Yes, China and India need to do their part. Waiting for those countries to act before taking action here at home, however, is a logical error when our emissions per capita are so much higher. This is a case where a #1 ranking isn't anything to be proud of.

Last week CNN produced a couple of interesting stories about green IT. The first is a online story about the environmental impact of the Internet, and the second is a video segment about some of the actions tech companies are taking to reduce their carbon footprints. Some surprising tidbits from the stories:

• Every second someone spends browsing a web site generates 20 mg of CO2.
• In the aggregate, information technology is responsible for about 2% of the world's greenhouse gas emissions, which is roughly equivalent to the aviation industry.
• The amount of power needed to produce and deliver spam email in the United States annually generates the equivalent in greenhouse gasses of three million cars.
• Within a decade, the Internet will be generating 20 percent of the world’s greenhouse gasses.
• In 2002, data centers emitted 76 million tons of CO2.

So the next time you might feel a pang of guilt about taking that flight from New York to LA, spare a thought for the impact of powering up your laptop and popping in your 3G modem for some wireless web surfing or email. You might be surprised at which activity is worse for the planet.

It’s not all bad news though. Data centers can take a lot of steps to reduce their carbon footprints. If you’re a Google user, Google's Director of Climate Change and Energy Dan Reicher recently held a liveblog to answer questions from a UK newspaper about Google’s environmental efforts. One Google search emits 0.2 grams of C02. One round-trip car ride to the library (8km) is the equivalent of performing 10,000 Google searches, and one printed and distributed newspaper is the equivalent of 850 Google searches.

News Roundup

• Oracle has apparently stopped work on Project Sequoia, a green data project near Salt Lake City.

• GlassHouse Technologies announces the expansion of its green services to include a Energy Efficiency Impact Analysis (EEIA), to assist IT companies in complying with the recent ACES cap and trade law.

• A crime lab in Pennsylvania has cut costs by up to 20% by adopting green practices for its data center.

• Ave Maria University, in Naples Florida, is planning on adopting IPv6 across its data centers to improve energy conservation on its campus.

• Houston-based INX Inc. has entered into a contract with E-Waste Recovery Services of Northern California for a server recycling program.

• Rack Force Networks has opened its new green data center in British Columbia, which generates 1/50th the carbon footprint of similar data centers.

• A recent survey of IT managers reveals that nearly 80 percent report that their companies spend up to a quarter of their IT budgets on energy-related costs, up from 44 percent the year earlier.

• TechNet, a bipartisan group of clean technology CEOs, recently met with state leaders from California to discuss the importance of green technology and innovation to California’s economy.

As carbon cap and trade draws nearer and nearer to the United States, will it be the final nail in the coffin to convince U.S.-based manufacturing to relocate to China or other developing country? We all know that most IT equipment is already made in China or elsewhere in Asia, but there are a few holdouts still in the U.S. Is relocation a viable strategy? The answer may not be as simple as it appears.

For starters, there is now intense pressure on China to hop aboard the climate regulation train. The Europeans have been pressuring the Chinese for some time now, and this week the EU placed some additional pressure on China to commit to a 15-30% reduction in carbon emissions by 2020. The Americans joined in the game too, with the joint visit this week by Energy Secretary Chu and Commerce Secretary Locke, both delivering a consistent message that China needs to start reining in carbon emissions.

Predictably, China has not responded well to these requests, responding with a firm "butt out" to both the EU and the US. In truth, I suspect the Chinese government itself really is not prepared to confront the monumental task of regulating carbon emissions in China, and wouldn't even know where to begin. No, if carbon caps and environmental change are going to come to China, it's not going to come from the central Communist government.

It's going to come from external pressures. The first is the threat by the U.S. government that the U.S. will impose a carbon tariff on U.S.-made goods. Energy Secretary Locke picked up on a theme that has been bandied in Congress for several months now, and suggested by Chu and picked up in the ACES bill. In Shanghai, Locke cleverly twisted the tax as one that U.S. consumers should pay, but the effect is the same -- increased cost of goods from China. In other words, if the Chinese government won't regulate carbon directly, the U.S. government will do it indirectly at the U.S. border. While President Obama has expressed some misgivings about the legality of this tax, or the wisdom of threatening a trade war with China, it appears very much on the table for now.

The second external pressure is going to come from U.S. industry itself. If Wal-Mart's Product Sustainability Index, which I blogged about earlier this week, comes to fruition, then it really doesn't matter what the U.S. and China do at international negotiations -- carbon caps will come about simply because companies that don't make a serious effort to reduce carbon will see their products languish and die on store shelves in the U.S.

So whether it's internal laws or external pressures, carbon caps will come to China eventually. Any plan to escape U.S. caps through relocation will therefore likely be short-lived and temporary.

I've blogged about the ambiguity surrounding green labels before, from Energy Star to industry-specific labels such as EPEAT. Today, Wal Mart announced a huge initiative aimed at delivering a whole new level of transparency and information to its customers. Suppliers were told today that they must provide environmental impact information to the retail giant, or face being dropped as a supplier. In spite of the work and costs involved, big suppliers such as Unilever and P&G have responded positively to the move.

According to Wal Mart, the information will be used to create a Sustainable Product Index that will establish a "single source of data" for evaluating the sustainability of a product. As a first step, all suppliers must answer a questionnaire by October 1 on location of factories, water use, and solid waste. The 15 questions can be found here. In the second phase, Wal Mart will create the Sustainability Index Consortium, which will include other retailers, government agencies, consumer groups, NGOs, etc., to collect and analyze and distribute life-cycle information on the products. The third phase will be develop a single index that will then be communicated to consumers along each of the products sold.

If Wal-Mart can pull this off, this is potentially game-changing stuff. Climate change legislation, such as the ACES bill pending before the Senate, imposes legal penalties on polluting industries and products. What Wal-Mart is doing is taking a market-driven approach, so that products that are more polluting will end up losing customers in the marketplace. To analogize, whereas federal legislation requires certain nutritional information to be put on food, it is consumer-driven market pressures that eventually led to the drastic reduction in trans fats in our food supply. As Rosabeth Moss Kanter at Harvard Business points out, this is values-based capitalism "at its best."

So you know that day when you have to measure your company's carbon footprint because of a federal law capping carbon emissions? That cap may still be years away. If you want to see your products on Wal Mart store shelves, though, the day to start measuring carbon emissions is here.

The search for alternative and renewable sources of energy always comes up against the same brick wall -- it's too expensive, especially when compared to existing technologies, especially coal. In the United States, the problem is compounded by a power grid that needs to meet fluctuating seasonal demand. Storing wind and solar energy remains a technical problem, whereas burning more or less coal as needed remains an easy solution. These obstacles have not stopped an incredibly ambitious, half-trillion dollar (yes, you read that right) project that would generate solar electricity in Northern Africa, then transport them via undersea cables to Europe, from taking shape.

The Desertec Industrial Initiative (DII), plans to take the next three years to conduct feasibility studies and prove the technology behind the idea. If successful, the plan could generate 15 percent of Europe's energy needs by 2050. Some big names behind DII include Deutsche Bank, Siemens, Munich Re, and E.ON. Backers see all kinds of benefits to this project, from reduced carbon emissions to job generation for impoverished African countries. There are skeptics, of course, who have called the idea of shipping solar-powered electricity from the Sahara to Europe as "fantasy."

The study phase for the project should be most interesting to watch. The companies backing this project aren't going to pour money, or seek investors, if the technology doesn't work out. If it does work, though, it has all kinds of implications for solar, including here in the U.S., where abundant sun energy in the West and Southwest could ultimately be affordably harnessed for the populated East and West coasts.

• A 1 Billion GBP data center planned for Scotland will likely be the world’s largest. Current plans for the data center call for it to be powered by a biomass plant and nearby wind farms.

• Part of the Environmental Defense Fund’s 10-week Climate Corps Program invites business students throughout the country to work with tech companies to reduce environmental impact of data centers. The Houston Chronicle recently spoke with one of them.

• Wall Street & Technology examines the latest efforts to implement green IT strategies in financial firms’ data centers.

• A related article looks at Citi’s three LEED-certified data centers.

• Another helpful article is called “5 Tips to Achieving an Energy-Efficient Data Center.”

• Internap Network Services Corporation announces several green initiatives for its Manhattan data center.

ACES, the sweeping climate change bill that narrowly passed the House of Representatives, is stalled in the Senate. Democratic leaders had previously set a deadline of end-of-summer to move the bill to the floor for a vote, but that deadline has now slipped to mid-September. You can blame health care reform or the Sotomayor confirmations, but I think the extra time is necessary because of the behind-the-scenes convincing and horse trading that is going to take place to get the necessary votes in line.

With a commanding 60-vote majority in the Senate, one would be justified in asking why convincing and horse-trading is even necessary. The answer lies with the so-called moderate and Blue-Dog Democrats (some profiled in this NPR story), mainly from energy-producing and farm-heavy states, who are hesitant to publicly support the bill, which imposes limits on carbon emissions and forces polluters to purchase permits, or allowances, to emit carbon.

Keep in mind, though, that the 60-vote argument is somewhat illusory, since the bill only needs 51 votes to pass. If the Senate leadership can keep those 60 votes in line to overcome a Republican filibuster, I wouldn't be surprised if some of those Democrats then switched their votes to "no" on the bill to keep their voters happy, while still ensuring passage on the final vote.

In the meantime, lobbying for and against the bill is ramping up, with Obama administration cabinet members starting to make the rounds to the half-dozen committees holding hearings on the bill. What bill eventually emerges from the Senate is hard to say at the moment. The House bill is laden with compromise, but eventually will limit carbon emissions to the 17% and 50% thresholds. The Senate bill will undoubtedly need to make further concessions, and how those concessions will affect Green IT (particularly with respect to carbon caps and retaliatory trade measures) will be followed closely on this blog.

The folks at Greentech Media have released a $195 report on the level of venture capital activity in green technology for the first quarter of 2009. Venture capital, or VC, is generally a good indicator of the future success of a particular sector of business since the investors behind VC carefully scrutinize each deal in hopes of eventually exiting (typically through an IPO) a business much richer than when they first invested. The report broadly defines "green technology" as including alternative energy and transportation as well as Green IT.

The good news is that venture capital investment totaled $1.2 billion in 85 deals during Q1, compared with $836 million in 59 deals during the same period last year. Solar power was the leading investment at $300 million, followed by automotive and transportation and biofuels. Green IT ranked about the middle of the pack, with 2 deals totaling $34 million.

Looking at the number of venture capital deals, though, Green IT's 2 deals is a far cry from the 17 deals in solar or 12 deals in biofuels, 10 in batteries, or 11 in smart grid. In fact, of all the categories broken out in the report, Green IT ranks dead last with its 2 deals. Clearly, while there remains a healthy level of interest in financing green technology ventures, that interest in Green IT is tepid at best. I suspect that a lack of viable start-up ideas in green IT may be the culprit. What do you think?

We all know that data centers use a lot of energy, and that a lot of that energy is used to cool down processors and drives. There are ways to reduce the heat generated such as variable drive speeds and virtualization, and there are new ways to cool down the data centers such as using ambient outside air, going underground, or going out to sea. As you suck that heat out, however, where does it go? Why not capture the heat? That is exactly what one research data center in Switzerland is doing. The concept sounds simple enough, and is explained more in this video.

Essentially, IBM's Zurich Research Lab has developed a way to run tiny tubes of water extremely close to the heated chip. As the water cools the chip down, the water warms up to about 65 degrees Celsius. This hot water is then plumbed into a water system used to heat over 60 buildings. The Blade server running Aquasar, as the system is called, is expected to reduce its carbon footprint by over 85 percent. The system is on a three-year trial, but I imagine that if it works, and can be proven cost-effective, that IBM will have a winner on its hands.

News Roundup

• Fujitsu has developed a new structure for gallium-nitride high electron-mobility transistors that can minimize power loss in power supplies, with applications for IT hardware and home electronics.

• The New York Stock Exchange is building new data centers with 10 gigabit Ethernet technology to support internal latency of 50 ms roundtrip. Oh and it’s green too.

• Unilever joins the Climate Savers Computing Initiative, along with over 470 other companies already in it.

• American Internet Services’ data center greening efforts has been recognized with an award by San Diego Gas & Electric.

• Bank Technology News thinks that banks should start going green now, especially in IT, to get ahead of government regulations. Good advice!

• NextGen Research predicts that purchases of green computers will grow from less than a sixth of the market in 2009 to nearly two thirds (over $190 billion) by 2013.

• Sony reduced its global CO2 emissions by approximately 100,000 tons in fiscal year 2008. In Sony Europe, every facility with over 100 employees is powered exclusively by renewable energy.

• Yahoo announces it will become carbon-neutral by becoming more energy-efficient, not through purchasing carbon offsets.

The Supreme Court wrapped up its term last week, and will now recess for the summer. There were lots of headline cases, ranging from whether cities can re-test job applicants if not enough minorities qualify the first time around (they can't) to whether schools can strip-search teenage students in search for prescription drugs (they also can't). Justice Souter's resignation and Judge Sotomayor's likely confirmation are also grabbing a lot of attention.

What has been under-reported, however, are the Court's environmental law cases this term. Most of the decisions came earlier in the term and were buried in the headlines. Yesterday the NYT's Adam Liptak ran a piece focusing on the five environmental law cases, and it's well worth a read. In each of the five cases before the Court this term, the environmentalists lost. From the article:

The court allowed Navy exercises using sonar that threatened whales off California. It limited the liability of companies partly responsible for toxic spills. It made it harder to challenge Forest Service regulations and easier to dump mining waste into an Alaskan lake. And it allowed the Environmental Protection Agency to use cost-benefit analysis to decide how much marine life may be killed by cooling structures at power plants.

Liptak spends the bulk of the article looking at the Justices. Sam Alito replacing Sandra Day O'Connor marked a shift in the Court's environmental balance, with John Roberts' pro-government and pro-business bent tilting the windmill further. Justice Kennedy was likely the swing vote in many of the cases. And Sonia Sotomayor's confirmation will likely not affect the balance much as she's expect to vote similarly to David Souter. I agree with most of this analysis, but I think the really interesting part is the look to the future. If ACES becomes law, what challenges will be brought before the Supreme Court, and how will the Court rule?

Like dandelions in spring time, state and city laws that regulate recycling of electronic waste such as printers and monitors continue to profligate throughout the country, placing a real and tremendous burden on manufacturers, especially smaller ones. This morning's Wall Street Journal has an article about the latest of these efforts, particularly in Washington state and New York City. According to the article, the Washington state recycling fee applies even to manufacturers who go out of business or stop selling their products in the state, while New York City's ordinance, which goes into effect July 31, is estimated to cost the industry $200 million a year. It's the first ordinance that goes beyond manufacturers paying a recycling fee. Companies will also be required to provide free, door-to-door pickup of electronic waste.

Depending on your perspective, these laws might range from annoying to onerous. From a legal perspective, though, it may be hard to challenge them. While it may seem unfair to continue charging companies a recycling fee even if they've stopped doing business in that state, the state's argument is that the company did business in the past, (presumably) profited from that business, and therefore the state can require the company to pay for recycling costs. The New York city ordinance seems even more solid -- local jurisdictions have broad latitude to impose taxes on a wide variety of businesses (have you checked out your motel or hotel bill recently?) without judicial intervention, and they do it all the time. If you don't like it, you can pull out of that jurisdiction (as Amazon has done recently, by canceling its affiliate program in certain states to avoid collecting sales tax). The only thing states have to be careful about is running afoul of the interstate commerce clause -- their recycling laws can't impose an "undue burden" on interstate commerce. It's a tough standard to meet, and I don't see anything in these laws that would meet it.

The solution? A federal law that covers e-waste recycling, as cumbersome as it might seem, would probably go a long way towards killing local and state efforts. Having one standard to deal with is nearly always preferable. In the absence of federal legislation, these local ordinances will continue to pass. Just like those pesky dandelions.

In this week's News Roundup I covered the news of Wikimedia Foundation selecting EvoSwitch, a Dutch data center operator, for its European hub operations. The contract is worth nearly half a million dollars a year. EvoSwitch is a carbon-neutral data center operator, and was recognized recently by the German government as one of 11 environmentally friendly data centers. The green factor was apparently one of the reasons EvoSwitch was selected.

Green data centers are very much the focus of the Dutch Hosting Providers Association industry group. Last week, the 19 members of DHPA drafted a set of regulations to regulate green data centers and power usage. The regulations address cooling, virtualization, tax policy and flex time for workers.

I think the Dutch may be on to something. Industry-led regulation and standards is nearly almost always a better option that government mandate. We see this time and time again in the United States, from voluntary ratings for video games and music to auto safety standards. The DHPA appears to have an ambitious agenda (based on a rough Google translation) ranging from collecting information about its members, developing a common customer rating standard, and developing a standard Service Level Agreement. Some of these activities would raise an antitrust eyebrow in the United States, but there's certainly no legal impediment to an industry group developing a common standard for regulating and branding green data centers. We'll see if the Dutch standard takes off, and whether its impact will spread beyond Dutch borders.