The New New Deal (52 page)

“We’re leveraging evolution,” says CEO Jonathan Wolfson. “We take what the planet is good at making, plant sugars, and turn it into what the planet needs, oils.”

Solazyme feels less like an oil company than a Silicon Valley start-up launched in a garage—which, in fact, it once was. And Wolfson, a forty-year-old dreamer who once spent a year volunteering on a Navajo reservation, seems less like an oilman than a software entrepreneur—which, in fact, he once was. But Solazyme is already converting carbohydrates into designer biofuels. The Navy and United Airlines already have flown jets powered by Solazyme’s genetically tailored bugs. This isn’t pie-in-the-sky someday stuff.

“It’s just a question of scaling up, so we can drive down our costs,” Wolfson says. “Then we can change the world.”

The Recovery Act is spending over $1 billion to move the renewable fuel industry beyond corn ethanol, scaling up advanced biofuels that won’t accelerate the destruction of rain forests or compete with the food supply. “The entire industry was shutting down in 2008, because nobody could get financing,” Rogers says. “Now the U.S. has a chance to lead.” The stimulus is financing America’s first three commercial-scale cellulosic biorefineries in Iowa, Kansas, and Mississippi, as well as eighteen smaller projects that will test a variety of feedstocks, fuels, and chemical processes; Solazyme won $22 million for a Peoria plant that will produce over half a million gallons of jet fuel every year. Without federal aid, it’s doubtful that any of these companies could have crossed their Valleys of Death. The technical and market risks were too high, the factories they needed to build too costly, and the lead times to profitable fuel sales way too long.

Even with a boost from Uncle Sam, it won’t be easy to compete with Big Oil in such an incomprehensibly gigantic industrial sector. If all the Recovery Act projects exceed their targets, they could conceivably produce 140 million annual gallons of fuel; Americans use 140
billion
annual gallons. And unlike ExxonMobil, BP, and other energy incumbents, advanced biofuel firms don’t have tens of billions of dollars sitting around to finance the massive refineries they’ll need to generate economies of scale.

Which brings me to those desserts I ate at Solazyme. I started with algae-derived chocolate ice cream that had one third the fat and
one tenth the cholesterol of regular chocolate ice cream. It tasted like chocolate ice cream. I also tried an algal chocolate chip cookie, which was even tastier than the Mrs. Smith’s version I ate for purely comparative purposes. It turns out that high-end food oils sell for $20 to $50 a gallon, as opposed to $4 a gallon for jet fuel, and Solazyme’s microbes can make them, too. So the company has forged a potentially lucrative partnership with the European food giant Roquette to produce ingredients and nutritional supplements. It’s also working with corporate partners like Unilever and Dow on algal substitutes for soaps, plastics, and chemicals that usually require petroleum-based oils. And Solazyme’s Algenist brand of cosmetics has been a hit with consumers on QVC and in Sephora stores.

It just so happens that high-end skin creams can fetch over $5,000 a gallon. Those cosmetics revenues helped Solazyme go public in 2011, raising cash for its gradual advance toward the multitrillion-dollar fuel market. Obviously, the Energy Department didn’t anticipate that Solazyme would be selling anti-aging creams to baby boomers when it helped the company cross the Valley of Death with taxpayer dollars. But it did anticipate that savvy firms in areas where technologies were at “inflection points” would find ways to produce breakthroughs—not every company, but some of them.

“We don’t know which of these approaches will work,” Rogers says. “We don’t care.”

V
ultures were circling as the Swiss petrochemical giant INEOS broke ground for another biorefinery at a former grapefruit juice plant in Vero Beach. Not metaphorical vultures—actual turkey vultures, trolling for food at a landfill behind the construction site. “Those vultures are circling above a dying way of life,” declared Paul Bryan, the former Chevron executive running the Energy Department’s biomass program.

Thanks to a $50 million stimulus grant, the newfangled refinery will convert organic waste into eight million annual gallons of cellulosic ethanol, as well as electricity that will power its operations and send a couple megawatts to the grid. So instead of taking their loads to the
landfill, trucks can just bring it to the plant to create renewable fuel and power. It’s a bummer for the buzzards, but that’s part of the point.

After searching the globe for a waste-to-fuel biochemistry breakthrough, INEOS executives had found it in a musty University of Arkansas lab, where an ornery professor named James Gaddy had spent years developing ethanol-producing bacteria he found in the chicken manure so abundant in that part of the world. At first, Gaddy refused to relinquish control of his super-bugs—he wanted INEOS to build him a control room in Fayetteville to oversee its refineries—but he finally agreed to let the chemical conglomerate handle the chemical plants in exchange for royalties for an evangelical charity. “I care about saving the earth through Jesus,” the seventy-eight-year-old Gaddy told me. “I’m glad this will help the environment, but that’s secondary. And I’m not interested in wealth.”

Well, INEOS is. It’s betting that in a carbon-constrained economy, communities will pay good money to reduce their waste streams while producing green power and fuel. The Florida biorefinery will be able to convert just about any feedstock, and if it performs as expected, they plan to replicate it around the world.

“We want to do millions of barrels, not just millions of gallons,” said INEOS executive Peter Williams. “This will be the template for the future.”

Or maybe it won’t. There are visionaries like Gaddy and Wolfson and Chiang behind many of the Energy Department’s five thousand stimulus projects, and not all of them will pan out. Range Fuels, a venture-backed cellulosic ethanol firm that had attracted $150 million worth of grants and loan guarantees from the Bush administration, went bust just a couple weeks before the Vero groundbreaking. The press took no interest in the story, which was comforting to Obama administration officials who worried about the response to the Recovery Act’s inevitable failures. But it was still disturbing to see a company once hailed as a template for the future shut its doors before producing a single gallon of fuel.

“You never know with new technologies,” Bryan told me. “If they
weren’t risky, they wouldn’t need our help. But if we don’t take risks, we’ll just have the status quo.”

G
reener cars and better trains would reduce demand for fossil fuels, but transportation accounted for less than one third of America’s energy use. The rest came from “stationary sources”—homes, offices, power plants, factories—and the coal that powered many of them was even dirtier than oil. So while Obama pushed to reduce fuel use and promote renewable fuels, he was also pushing to reduce electricity use and promote renewable power.

The low-hanging fruit of efficiency came first. Just as he did with fuel economy standards for cars and trucks, Obama tightened efficiency standards for light bulbs, furnaces, refrigerators, dishwashers, air conditioners, and other electrical devices. Those energy savings can add up; one mandate requiring cold-drink vending machines to reduce their own juice consumption will reduce electricity demand enough to power 1.4 million homes. The Recovery Act’s arcane language requiring governors to pledge to promote efficiency-friendly utility rules and greener building codes—the pledge Sarah Palin refused to sign—also drove quiet regulatory shifts. In two years, the number of states with California-style rules encouraging utilities to help customers save power increased from six to fifteen. The number of states with residential building codes that met strict international standards soared from one (if Washington, D.C., counts as a state) to twenty-three. Those boring bureaucratic tweaks will avert the need for scores of coal plants.

Building efficiently in the first place is easier than retrofitting buildings after they start heating and cooling the outdoors, but America is so spectacularly inefficient that retrofits are also, as Chu says, not just low-hanging fruit but fruit lying on the ground. Our power plants alone waste enough energy to electrify Japan. And the main barrier to upgrades, even upgrades that pay for themselves within a few years, is
our reluctance to front the cash, especially in tough economic times. So the Recovery Act fronted it for us, financing thousands of retrofits of federal buildings, data centers, border stations, public housing projects, colleges, military bases, city halls, fire stations, and more. The low-income home weatherization program got most of the attention, because it got off to such a slow start, but the stimulus also funded $150 million worth of industrial efficiency initiatives matched by over $600 million in private funds, including co-generation projects that will recycle waste heat into electricity at America’s largest medical center in Houston and America’s largest steel plant in Indiana. A $450 million competitive grant program will weatherize entire neighborhoods in cities like Phoenix and Philadelphia, just as cable companies wire entire neighborhoods at once.

“We’re making retrofits the norm,” Cathy Zoi says. “Every project is on-the-ground evidence that this isn’t airy-fairy stuff from
The Jetsons
. It’s here and it’s now.”

The Recovery Act has already transformed the General Services Administration, the federal government’s unglamorous real estate arm, into “the green proving ground for the building industry,” in the words of former GSA building commissioner Bob Peck. The agency got $5.5 billion to improve federal energy efficiency, four times its annual construction budget. “NASA had its moon shot. This is ours,” Peck told me. GSA is converting an abandoned munitions factory in St. Louis into green Social Services offices. It’s installing solar panels on dozens of federal rooftops, including an Indianapolis federal building that will serve as a “solar lab” measuring the performance of competing brands. It’s renovating a century-old courthouse in Grand Junction, Colorado, into the first “net-zero” building on the National Historic Register, which means it will generate as much energy as it uses. Peck told me the federal government is such a huge purchaser that it’s moving markets, driving demand for geothermal heat pumps, LED lighting, and eco-certified contractors.

“We’re seeing a tipping point in the industry,” Peck said. “Before long there won’t be ‘green architects’ or ‘green contractors.’ Everyone’s going to be green.”

The GSA later became a symbol of the follies of big government, after its inspector general exposed its lavish spending on clowns, psychics, and other lunacy on a Las Vegas junket. Peck and other top officials were fired. But the cynics who say Washington never changes ought to see what GSA is doing to the physical city, starting with its own World War I–era headquarters, which had wires duct-taped to its ceilings and antique air-conditioning units in its windows when I first visited. Now it’s installing state-of-the-art heating, cooling, and electrical systems, with motion sensors, sun-tracking window shades, and other green features that could cut the agency’s energy bills in half. And as Peck pointed out, going green isn’t just about high-tech bling. The remodeled headquarters will also accommodate thousands more GSA employees, saving the agency over $20 million a year on leases for spillover office space. (That would fund two dozen over-the-top Sin City conferences.) The result will be greener in the same way dense cities are greener than sprawling exurbs. When I visited, Peck had moved four staffers into his eight-hundred-square-foot McMansion of an office.

“Who needs all that territory?” he asked. “We’re not Neanderthals anymore.”

Meanwhile, at the St. Elizabeths Hospital campus in southeast Washington—best known as the home of mental patients from Ezra Pound to John Hinckley, and as a stately red-brick backdrop in the film
A Few Good Men
—GSA has launched the largest federal construction project since the Pentagon was built, the new Homeland Security complex that Republicans perversely attacked as “government furniture” during the stimulus debate. It will convert dozens of abandoned nineteenth-century hospital buildings into energy-efficient offices; GSA has set up shop in the former morgue. I watched workers pouring concrete for a 1.2-million-square-foot Coast Guard headquarters, which will cascade down a hillside overlooking the marble edifices of federal Washington. It will feature one of America’s largest green roofs, and is expected to attain LEED (Leadership in Energy and Environmental Design) Gold eco-status. In fact, starting with the Recovery Act, every GSA project will aim for at least LEED Silver.

“We’ve changed everything we do,” says Kevin Kampschroer, head of
GSA’s Office of Federal High-Performance Green Buildings. “And we’ll never go back to the old way.”

I
n early 2009, the U.S. “base case” energy forecast expected that it would take more than two decades for wind power to grow from twenty-five to forty gigawatts. It took less than two years.
³⁶⁹
Solar power was growing even faster, with photovoltaic installations doubling in 2010. By year’s end, the wind and solar industries employed nearly 200,000 Americans, more than the coal industry. It was quite a recovery from a near-death experience.

“What the stimulus did for renewables, I want a stronger word than ‘transform,’” says Ed Fenster, CEO of San Francisco–based Sunrun. In 2009, Sunrun helped 400 homeowners go solar; in 2010, its numbers soared to 5,400. “Solar was failing, and now it’s the fastest-growing industry in America,” he says.

The Recovery Act also jolted green energy manufacturing. In 2006, the United States imported 75 percent of the content of its wind turbines, which was inconvenient and costly; they have thousands of parts, and can weigh as much as jumbo jets. By 2010, only 40 percent of the typical turbine was imported, thanks to dozens of stimulus-funded factories, many producing gear boxes and other high-value components that had never been made in America.
³⁷⁰
The stimulus sparked a similar boom in solar manufacturing, to the point that the United States became a net exporter of solar products. Its tax credits also helped finance factories for energy-efficient window makers like Serious Materials, smart appliance manufacturers like General Electric, and LED lighting ventures like Cree, which Obama and Biden both hailed as a firm of the future in visits to its North Carolina headquarters.