It is the odorless and invisible 500-pound gorilla in the room.  Currently hailed as the antidote to U.S. energy insecurity and a bridge fuel for the 21st century, natural gas is every bit as fossil as its coal and petroleum cousins.  But for clean energy, which is coming off a stimulus-fueled high and $100-dollar-plus oil run, could it be a death knell?  My colleague Kerry-Ann Adamson has looked at this question from the point of view of Smart Energy overall.  In my world of bioenergy, the accelerating development and availability of biogas, a renewable form of natural gas, indicates that natural gas surge could actually hasten the transition to clean energy, not impede it.

In 2009, the U.S. passed Russia to become the world’s largest producer of natural gas.  Estimates suggest that at 2010 consumption rates, the U.S. has enough recoverable natural gas resources to supply over a century of use.  Meanwhile, the Nymex price has dipped below $3 per million British thermal units (MMBtu), down from nearly $14 four years ago.  The glut has analysts in the U.S. scrambling to recalibrate energy forecasts and renewable energy project developers searching for new off-take partners to make project economics pencil out.

The boom in shale gas has stripped renewable energy of two of its key arguments: that a heavy reliance on fossil fuels is 1) contributing to irreversible climate weirdness; and, since these fossil fuels tend to come from nefarious nations, 2) making the United States increasingly energy insecure.  With respect to mitigating climate change, studies point to natural gas being less carbon intensive than coal and potentially oil as well.  As for energy security, the sudden bounty of domestic carbon is fuelling what could be a huge shift in U.S. transportation fuel, away from petroleum-based fuels to compressed and liquid natural gas, and potentially hydrogen and fuel cells, longer term.

Crossing the Biogas Bridge

Many believe the natural gas bonanza may be a transition fuel for the larger clean energy transformation.  John Podesta, former chief of staff to ex-President Bill Clinton and now head of the Center for American Progress in Washington writes that natural gas can serve “as a bridge fuel to a 21^st-century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels.”

No renewable is in a better position to cross this bridge first than biogas.  Vastly underutilized, biogas is essentially natural gas that is produced in a matter of millions of seconds rather than millions of years.  The result of anaerobic digestion – a naturally occurring process in which bacteria feed on organic matter in the absence of oxygen – biogas is commercially produced in anaerobic digesters (AD) and landfill gas recovery facilities designed to treat biowastes such as manure, sewage, energy crops, and organic matter.  Currently, in the U.S., the economics for generating electricity from biogas are dismal.  But with emerging technologies, raw biogas can be stripped of carbon dioxide and other trace gases, bringing it up to the quality level of natural gas.

This renewable natural gas, essentially purified methane, is virtually identical to natural gas, but without the fracking.  It’s a fully fungible alternative, avoiding many of the blending constraints you see with an alternative like ethanol.  Leveraging natural gas infrastructure, it can be distributed as CNG, LNG, or in pipelines via gas-to-grid injection.  Although upgrading biogas to pipeline quality results in a fuel considerably more expensive than natural gas, biomethaneis starting to gain momentum in the U.S., particularly as a potential renewable fuel that can satisfy advanced biofuels mandates under the Renewable Fuel Standard (RFS2) and emerging Low Carbon Fuel Standards (LCFS).

The challenge for the biogas industry will be scaling up in economical ways.  As Pike Research’s analysis in our upcoming biogas report shows, one model that can reduce costs and concentrate supply is the development of community biogas hubs.  Using gathering infrastructure that is shared across several smaller-scale biogas producers linked via a pipeline network to an upgrading facility, upgrading costs can be defrayed among all producers.

Longer term, by leveraging shale gas infrastructure, biogas is poised to capitalize on a free ride to widespread scale up, a notion unheard of in many clean energy technology circles.  Should a massive natural gas infrastructure build-out take place to move shale resources to market, with significant untapped feedstock potential, biogas could emerge as a clean energy Cinderella story over the next decade.

Three out of four of my bosses in my cleantech career have been women, so it’s no surprise to me to finally see growing attention being paid to women’s leadership in cleantech as executives, financiers, and influencers as well as leading researchers, advocates, and policy leaders.  Despite the small sample size, I would say the trend extends to the cleantech analyst space as well as our very own Kerry-Ann Adamson, a fuel cell expert who leads Pike Research’s Smart Energy practice, in which females make up 60% of the team.

Female leadership is regularly in the spotlight these days with big private sector names like Vestas-America CEO Martha Wyrsch and SunRun founder Lynn Jurich, as well as in the public sector, where three women have arguably had a more central role catalyzing cleantech, climate, and energy issues than any other male or female while in office: Former EPA administrator and former director of the White House department of energy and climate change policy Carol Browner (known as the climate czarina), former undersecretary for energy at DOE Kristina Johnson (winner of the John Fritz Medal, considered the highest award made in the engineering profession and holder of 129 patents), and former assistant secretary for energy efficiency and renewable energy Cathy Zoi.  All three have now left the Administration, with the latter two joining cleantech-focused private companies.

Indeed, the industry was shaped early on by women in leading roles.  One of the best examples is Mary Nichols, who first served as California Air Resources Board (CARB) chairman in 1978, was reappointed by then-Governor Schwarzenegger in 2007, and again by Governor Brown.  Indeed, many insiders credit the Governator’s cleantech legacy not to his famous Kennedy-family connection but to his chief of staff, Susan Kennedy (no relation).

Nor is female leadership novel in cities like Portland, Oregon, one of the epicenters of the U.S. clean-tech and sustainability movement.  In 1993, under Susan Anderson’s leadership at the Energy Office, the City of Portland became the first in the country to adopt a climate action plan.  Since then, carbon emissions have been reduced by 26 percent per capita.  Now, as director of the city’s Bureau of Planning and Sustainability, Anderson is making a global impact with many city leaders in the U.S. and overseas looking at the Silicon Forest as a model.

These women have helped dispel the myth that entrepreneurship is the domain of males in the United States, but in Japan this has long been the case.   According to one study, Japan is the only country in the world where women are more likely to be entrepreneurs than men, with 13.79% of all women considered entrepreneurs compared to 12.2% for men.  Alexis Ringwald, whose company Valence Energy was acquired by Serious Materials, highlights that women entrepreneurs in Japan are critical to the country’s recovery, with clean-tech a major opportunity in a Post-Fukushima world.

Browner, the former czarina put it this way, “Energy is a women’s and girls’ issue,” and “women will stay in a technology career when they’re allowed to affect a social issue,” so the challenge is to “mix humanities and social sciences and engineering to make a difference in the world.”

As a father, I will of course push my three-year-old daughter toward, a career in clean-tech – after an all-star career in the WNBA, an illustrious term as President of the United States, and only if I can talk her out of her current first choice: professional butterfly catcher.

The first Pike Research Smart Energy Annual Report is due out soon (Q2 of 2012), and in it Pike Research calculates the size and value of the global smart energy market in 2011.  We define smart energy as “the range of efficient technological options available to providing electricity in a distributed fashion, either for local use or for grid support,” covering renewable energy, biopower, energy storage and advanced conversion technologies such as fuel cells and CHP technology.  But we don’t cover developments in the natural gas market.  Why? Because it remains unclear whether the developing natural gas market in the US will harm or help the smart energy market.

Daniel Yergin in his article for CNN is cautiously optimistic that in the US natural gas will not crowd out the developing renewable energy market, but will more likely replace and then displace coal and nuclear for power production.  In Europe I believe that governments are starting to move away from the dash-to-gas due to the increased geopolitical tensions caused by the location of most of natural gas reserves.  In Austria, for example, the region of Güssing has a policy of 100% renewable, locally produced, power.  As I covered in the past in an article for Fierce Energy, this includes 50 MWs of distributed fuel cell power using locally produced biogas.  The United Kingdom has taken a slightly different approach, and has to date limited the use of hydraulic fracturing, or “fracking,” due to the increased incidences of minor earthquakes in the vicinity of a nuclear waste storage facility.

But how will the surge in natural gas supplies affect the overall smart energy paradigm – the production, storage and use of efficient, distributed power?  From my own personal perspective it’s likely to be a good thing.  Over three quarters of all fuel cell systems deployed today use either natural gas or a form of fuel in which natural gas is the main component.  The addition of natural gas-powered fuel cells will in some cases help a renewable installation in the same grid system win contracts, as it can guarantee steady, predictable baseload power.  A win-win surely and a prefect example of the systems based approach that we see rapidly developing in the smart energy market.

One scenario we could see developing is utilities providing smart energy systems, rather than electrons and heat, where a package that combines a natural gas-fuelled fuel cell, solar and wind capacity, and an advanced battery for hydrogen-based storage are deployed together in a turn-key system.  This could be everything from 1-5-kilowatt (kW) systems for homes right up to 50-100 megawatts for communities or towns.  Joining the dots in this way will increase the overall efficiency of the power and heat production network, and emissions will decrease.  So, note to self: Next year in the 2013 Smart Energy Annual Report – include natural gas.

Europe has been operating huge wind turbines offshore for more than a decade, while here in the U.S., this cutting edge clean technology seems perennially “five years off.”

The infamous project proposed offshore of Cape Cod, Massachusetts has been under deliberation for more than 10 years. During that time, Denmark, Germany, the United Kingdom, and seven other countries have already installed 53 offshore wind farms totaling 3,813 megawatts (MW) of carbon free electricity. That is enough power to keep the lights on for more than 2.8 million American homes, or a city larger than the size of Chicago.

The international wind power industry is watching Washington, DC to see if lawmakers will extend the federal production tax credit (PTC) for wind power. But their eyes are also focused on Trenton, the state capital of New Jersey, to see if state regulators there will help launch America’s long-awaited offshore wind energy industry.

In August of 2010, New Jersey Governor Chris Christie signed into law the Offshore Wind Economic Development Act, which authorizes up $100 million in ratepayer-funded subsidies for offshore wind developments in the Atlantic Ocean that connect to the New Jersey grid.  Special “offshore renewable energy credits” (ORECs) help make projects more economic, but unlike the Solyndra federal government loan guarantees, these subsidies are only awarded after projects meet a cost/benefit criteria and produce renewable energy delivered state consumers. In addition, a “Clean Energy Manufacturing Fund” offers additional grants and loans based on local job creation.  Many experts consider New Jersey’s offshore wind program to be the most well conceived state policy initiative in the nation.

Perhaps the most unusual company pursuing the Garden State’s offshore wind power opportunity is Fishermen’s Energy, based in Cape May, New Jersey.  Several of the East Coast’s largest commercial fishing companies have partnered to create the company, which has been developing a 25 MW project for several years. In contrast to Cape Wind and other ambitious proposals, the New Jersey-based consortium chose a step-by-step approach: a demonstration project. It is siting its five turbine windfarm within the three-mile state-controlled boundary off Atlantic City, a city looking to extend its image – and economy – beyond casino gambling.  If building America’s first offshore windfarm were a race, Fishermen’s Energy might look like the tortoise to Cape Wind’s hare.

Showcasing a savvy approach, Fishermen’s Energy has trimmed pre-development costs and shortened the development cycle to what may be less than half that of the Cape Wind project by doing the following:

• Sited its first project in state waters, thereby eliminating redundancy in permits/paperwork and limiting federal agency reviews to the Army Corps of Engineers
• Relied upon shore-based anemometers, radar, and new laser-based technologies to collect data, eliminating the need for site-based meteorological towers in the ocean
• Engaged environmentalists and recreational fishermen in dialogue about the merits of its pilot project in advance of large-scale developments off the New Jersey coastline
• Discovered data on avian and sea life studies performed by a credible third-party company – Geo-Marine – that covers almost 127 miles of coastline (including its project site), to help secure its permits from the Department of Environmental Protection
• Used one of its company’s vessels – an 85-foot former fishing boat – to install a buoy at the installation site to monitor whale activity for two years
• Recruited financial support from XEMC, a Chinese industrial giant known as “China’s GE,” in planning for a 5MWdirect drive wind turbine

All these innovative steps – and more – add up to project savings, a critical accomplishment in light of the tight fiscal constraints imposed by the state OREC program.

The New Jersey Board of Public Utilities (BPU) is currently reviewing the company’s proposed pilot project.  By modestly committing consumer dollars to the pilot project, New Jersey would lock in its leadership of an entirely new industry: offshore wind power.  If the Fishermen Energy’s pilot project is allowed to move forward, more than 500 MW of additional offshore wind capacity could come online to serve New Jersey within the next five years, creating as many as 11,000 manufacturing, installation and ongoing operation and maintenance jobs for the Garden State.