The Race to Green in the Wake of the Spill

By Mike Randle

For several years now, there has been a lot of talk about "going green" and creating a more sustainable economy. The green movement is a broad philosophy focusing primarily on conservation, recycling, developing new renewable energy sources and simply using the earth's resources more efficiently. Going green is not just a movement or a cause. We've been told time and time again that it is emerging as the most important factor in global, national and local economic development.

If measured by large job and investment generating projects in the South, the talk about the green economy has been mostly just that; a lot of talk. Until now. Predictions that green technology is the next industrial revolution may be coming true as the South has seen over the last 12 to 18 months a slew of big job and investment generating deals from zero emission automotive, solar, recycling, wind, biofuels and other environmentally friendly sectors. In fact, we have not seen a surge in major projects coming from an individual industry sector like this in the South since the automotive industry went nutty-nut with dozens of big projects in 2002 and 2003.

The claim that millions of jobs are at stake as countries race to develop cleaner technologies is now something you can see, touch and feel in 2010, not merely a prediction. You will read more about that later on in this article, including a description of dozens of green economy projects, the most announced in a year's time in the South by a large margin. But first, we have to touch on one of the South's most troubling ironies. While green economic development projects are sprouting all over the region, the worst environmental disaster in the nation's history plays out in the Gulf of Mexico.

Big Oil and the Origin of the Green Industrial Revolution

Reducing our dependence on foreign oil has been at the center of the push to a greener economy since the day-long gas station lines of 1973. That situation, which started in October of 1973 when members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo in response to the U.S. decision to re-supply the Israeli military during the Yom Kippur war, was a major factor in the first significant U.S. recession since the Great Depression. In 1973, when the oil embargo started, the United States imported 24 percent of its oil. Today, the U.S. imports 65 percent of the oil it uses at a cost of about $500 billion a year.

The simple but unfortunate fact is, the U.S. remains "addicted" to oil 37 years later as former President George W. Bush claimed in his State of the Union address in 2006, and the mass use of hydrocarbons is essential in our daily life today and will be for years to come. It is a depressing reality. In his 2006 address, Bush outlined a plan to reduce U.S. oil imports from the Middle East by 75 percent over 20 years. Much of the plan simply included an increase in drilling here in the U.S.

It was Bush's own party presidential nominee John McCain and vice presidential nominee Sarah Palin who made the slogan "drill, baby, drill" a battle cry of the 2008 presidential campaign. Palin was particularly fond of the phrase, using it regularly during her campaign in 2008 and up until one of the worst environmental disasters in world history began on April 20 of this year. That disaster, the Deepwater Horizon oil spill, is now affecting a large part of the American South. Fisheries are dying, livelihoods are being destroyed and pristine beaches spoiled, and no one knows what the long-term effects will be. But whatever they may be, it won't be good.

A mere three weeks before the massive oil spill in the Gulf began, President Obama announced a proposal to open large areas of the U.S. coastlines to oil and natural gas drilling. The timing for Obama was most unfortunate. Almost all of the state coasts Obama proposed to open for new drilling are located in the South, including areas off the coasts of Florida, Georgia, South Carolina, North Carolina and Virginia. Needless to say, those plans are now shelved temporarily and possibly permanently as a result of the Deepwater Horizon tragedy.  

Obama's plan would have lifted a moratorium on drilling in the abovementioned areas and opened up over 167 million acres of ocean and sea, all of which are located in the South and Alaska. In an article published by the New York Times the day after the President announced his proposal to open new oil exploration lands, Michael Brune, the executive director of the Sierra Club said, "Drilling our coasts will do nothing to lower gas prices or create energy independence. It will only jeopardize beaches, marine life, and coastal tourist economies, all so the oil industry can make a short-term profit." That statement by Brune was made less than three weeks before the BP rig exploded and sank off the coast of Louisiana.

So far the Gulf oil spill has already cost billions and the ecological impact has been widespread. Many of the environmental effects won't be known for years. Yet, the initial economic effects in the Gulf region are more easily measured. The four biggest industries in the Gulf of Mexico are oil production, tourism, fishing and shipping. Those four industries accounted for about $235 billion in revenues in 2007 according to a study published by Texas A&M University Press. While shipping has been generally unaffected by the spill, oil extraction, fishing and tourism have been hammered in much of the northern Gulf. 

According to a letter written in late May by 10 U.S. senators urging the President to lift the ban on all new offshore drilling that was enacted after the rig explosion and spill, lost revenue from shallow water drilling in June alone was estimated at $135 million. Oil and gas companies in the Gulf of Mexico generated about $124 billion in revenue last year.

The second-largest industry in the Gulf is tourism, at about $100 billion a year. While it is difficult to gauge the overall negative economic impact that the oil spill has had on tourism on the Gulf, many estimate that beach rental cancellations are running as high as 50 percent, even in places that have seen no oil on the shores. A University of Southern Mississippi study that came out June 16 showed that coastal Mississippi would lose about $120 million in revenues from its tourism and supporting services sector this summer. Mississippi's coastal tourism sector is significant with its large gaming industry, but it's much smaller than northwest Florida's tourism industry. There, beach markets like Pensacola, Fort Walton, Destin and Panama City, where a couple of hundred thousand condos, hotels and beach homes are located, might see an economic impact from the oil spill that is ten times greater than that of Mississippi's.

If there is anything good that may come out of the Gulf spill tragedy, it will likely be a much greater sense of urgency to develop alternative energy sources through an even larger commitment by private industry and the federal government at breaking the nation's addiction to oil. That effort, which President Obama spoke about in a speech on June 15, will be Herculean. Every day, 21 million barrels of oil are used in the U.S. That figure represents 25 percent of the world's oil consumption by just four percent of the world's population. To give you an idea of how much oil that is, if you use the government's mid-range estimate of 40,000 barrels a day being spilled into the Gulf at the Deep Horizon site, about 2.4 million barrels leaked out in the first 60 days of the spill. That figure represents about 12 percent of the nation's appetite for crude each and ever day.  

Another thing that is surely going to emerge from the oil spill disaster is the stimulation of new technologies that are designed to keep another massive oil spill from happening again as well as innovations in cleanup and improvements in collection and protection of wetlands. Actor Kevin Costner’s oil separating machines that BP purchased to help in the cleanup is a perfect example of that innovation.

Oil Consumption per Day

Country 1. United States 2. China 3. Japan 4. Russia 5. India 6. Germany 7. Brazil 8. Canada 9. Saudi Arabia 10. South Korea

*BPD 20.6 Million 7.6 Million 5.1 Million 2.9 Million 2.7 Million 2.5 Million 2.4 Million 2.4 Million 2.3 Million 2.2 Million

* Barrels per Day in 2007. Source: CIA World Factbooks

Economic Development and the Race to Green

The oil spill in the Gulf of Mexico represents one of the most glaring examples of why economies, both large and small, must race to the transition from fossil fuels to clean, renewable energy sources. And it is not just an ecological-based race. It is a contest between nations in the ever competitive global economic development stage that focuses like a laser on job creation and the resulting prosperity.

In a New York Times article published earlier this year, South Carolina Sen. Lindsay Graham, one of the South's most well known leaders in Washington, was quoted about the race to green, saying "Six months ago my biggest worry was that an emissions deal would make American business less competitive compared to China. Now my concern is that every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy."

In the same article, the finance minister of France, Christine Lagarde, said "It's a race and whoever wins that race will dominate economic development." Ms. Lagarde predicted that about 250,000 jobs will be created in France over the next three years from the country's growing green economy.

Sen. Graham cited China as a threat to the U.S. in the green economic development race for a reason. China targeted $34.6 billion of its economic stimulus money to clean energy technologies and production. In comparison, the U.S. federal government earmarked $18.6 billion in clean energy investments with its stimulus package.

China also has an impressive list of credentials that the U.S. can't match at this point in the race to green. Last year China invested $440 billion in clean energy, much of that in nuclear power. Also in 2009, China invested $35 billion in smart grid construction. The U.S. on the other hand is spending $8.1 billion on smart grid installations, $3.4 billion of which is being invested by the fed and the rest by private utilities.

China already is the largest solar thermal market. Three out of four of the world's solar collectors are installed in China with a capacity of 21 GWth, or about 130 times that of solar heating capacity in the U.S. China currently has about 12 gigawatts of installed wind power, but that is expected to grow to 20 gigawatts by 2020. The wind power race is where the U.S. stands out. The U.S. is the world leader in wind power with over 35 gigawatts of capacity.

The primary difference between the paces set by the U.S. and China so far in the race for green is that one is based on a venture capital driven market with government subsidies and the other is simply state capitalism. While the green economy may be all the rage, the sector hasn't shown much in the way of big investment and job generating projects in the South over the years. Not until now.

South Sees Surge in Green Economy Projects

In calendar year 2009, there were more large green economy projects in the South than at any time in the region's history. In fact, a milestone was reached in the region in 2009. Last year, for the first time in the South's history, there were more large renewable energy projects announced than fossil fuel energy projects. And so far in 2010, there have been more green economy projects than at this time in 2009, so it is apparent now that this industry is on a roll that has never been witnessed before.

Several of the green economy projects announced in the South in the last 18 months were born from Department of Energy investments and many proposed projects are waiting for an answer to their applications to DOE. Some of the companies with headquarters or operations in the South that have benefited from DOE grants or loans recently include Cree (Durham, N.C.), Saft America (Jacksonville, Fla.), Exide Technologies (Bristol, Tenn. and Columbus, Ga.), Celgard (Aiken, S.C. and Charlotte, N.C.) and Novolyte Technologies (Zachary, La.).

One of DOE's largest green economy funding packages to date is the $1.4 billion it is loaning Nissan for the Japanese automaker's new advanced battery manufacturing facility and the retooling of the automaker's Smyrna, Tenn. plant for electric car assembly.

As mentioned, 2009 was the first year in the South's history that the green economy established a real foothold in the South. Over the past four or five years, there have been a handful of large green economy projects in the region. Virtually all of those, however, have been wind power projects and biofuel plants, primarily of the ethanol variety.

In 2009 and so far in 2010, green economy projects have come from a multitude of sectors, including next generation automotive, solar, nanotechnology, appliances, biofuels, wind energy and recycling. The following profiles some of the South's largest green economy projects that were announced in 2009 and 2010, all of which meet our 200 jobs or more and/or $30 million in investment or more thresholds required by the Southern Business & Development 100 (see page 28). The communities that landed the following projects can rightly say they were the pioneers in the recruitment of the first major wave of green economy deals in the American South's history. 

1st Annual Excellence in Green Economy Recruitment Awards

V-Vehicle - Monroe, La.

In 2009, the first of three new electric or hybrid car plants in the South was announced in Monroe, La. V-Vehicle is a prospective automotive manufacturer backed by Kleiner Perkins Caufield & Byers (KPCB) the same California-based venture capital firm that helped launch Google, Amazon.com, Electronic Arts and Intel. V-Vehicle plans to produce a high-quality, environmentally friendly and fuel-efficient car for the U.S. market. The company will assemble the cars at the former Guide Corp. plant in Ouachita Parish, La. The deal is expected to create 1,400 jobs.

HK Motors - Baldwin County, Ala.

Another next generation automotive plant was announced last year in Baldwin County, Ala. HK Motors plans to build hybrid vehicles and is led by former Chinese automotive executive, Yung "Benjamin" Yeung. The start up is banking on funding to come from the EB-5 visa program, a U.S. government program that grants permanent resident status to foreign investors who invest at least $500,000 in businesses in rural areas of the country.

Dais Analytic – Pasco County, Fla.

Lutz, Florida-- Pasco Economic Development Council (PEDC) is pleased to announce Dais Analytic Corporation will be hiring up to 200 people to meet production requirements for a new multi-million dollar sales agreement. The company released news that it has signed a $48 million contract with CAST Systems Control Technology Co. and Genertec-America to provide key system components of the company’s NanoClear®nanotechnology clean water treatment process.

PEDC has been working with Dais Analytic Corporation since April 2009 to identify business needs and assist the company’s growth. PEDC has provided help with training, job placement, consulting services, local government support, and financial and investor opportunities. PEDC expects to continue to work with Dais to enhance technology and supplier partnerships.

“We’re thrilled about Dais’ announcement,” said John Hagen, President/CEO of PEDC. “The company is a bright spot in the area economy. It’s what I like to call the Pasco County poster child for the ‘Cleantech industry.’”

Dais Analytic has developed proprietary technology that allows water molecules to pass through a specially formulated membrane. Its applications are extensive in water purification, dehumidification, desalination, and similar processes. 

John Walsh, PEDC’s Vice President, stated that the new sales agreement should lead to similar agreements in the future.  “This is a company with a very bright future, with prospects to employ 1,000 people, which would make it Pasco County’s largest manufacturer.”

Pasco County Commissioner Michael Cox noted that 200 jobs will be a great start toward alleviating unemployment in the County. “We have all been working hard to help Dais Analytic take advantage of its opportunities. It’s gratifying to learn of this agreement. I expect that there will be more in the future.” Cox went on to say that Pasco County has an interesting niche in the environmental industry. “It could be a significant part of our economy, if environmental trends continue as we expect they will.” 

Mitsubishi - Fort Smith, Ark.

Mitsubishi Power Systems Americas (MPSA), a subsidiary of Lake Mary, Fla.-based Mitsubishi Heavy Industries Ltd., announced in fall 2009 its intentions to build a $100 million wind turbine manufacturing facility in Fort Smith, Ark. The project could employ as many as 400 people. The company is locating the plant in a new 200,000-square-foot facility at Fort Chaffee, near Fort Smith, occupying 90 acres. MPSA currently has more than 4,500 wind turbines in operation worldwide, with 3,000 in the U.S.

Nordex USA - Jonesboro, Ark.

Nordex is currently building a $100 million utility scale wind turbine manufacturing facility in Jonesboro, Ark. that will house 700 workers. The German company broke ground on the facility in November of 2009. The plant will produce one of the largest classes of wind turbines in the world, the 2.5 megawatt N90 and N100. Each of the utility-scale turbines is capable of generating enough renewable energy to power about 700 American homes. Nordex is heating and cooling its new plant in Jonesboro entirely by geothermal energy.

Twin Creeks - Senatobia, Miss.

On May 28, 2010, Gov. Haley Barbour, officials from California-based Twin Creeks Technologies and local officials attended the groundbreaking ceremony at the site of Twin Creeks' new solar panel manufacturing facility in Senatobia, Miss. The company will produce photovoltaic solar panels for use in the renewable energy industry at the $175 million plant. The project will create 512 new jobs in two phases.

MAGE Solar - Dublin, Ga.

Germany-based MAGE Solar announced in May it will establish its North American headquarters and invest $30 million and employ up to 350 at a plant in Dublin, Ga. The company manufactures solar panels. MAGE cited Dublin's location, between the port of Savannah and Atlanta, as a factor in the location decision. 

Sustainable Textile - Rowan County, N.C.

Here is a fine example of building a new economy based on green technologies. Sustainable Textiles, a manufacturer of fabric made from pre-consumer waste, has established an operation at the old China Grove Textile Mill in Rowan County, N.C. The company is producing non-woven fabrics made from regenerated cotton fibers. The fabric is used in items such as personal wipes for the medical and automotive industries. Joy Nunn, founder and CEO of Circle LLC, where sustainable patents and technologies are owned and managed said about the project, "The common misperception is that 'green' always costs more. It is our goal to produce items that are first of all better products, cost the same or less and are sustainable. Utilizing waste as a raw material, we create high-quality products that are then sold globally." The project will create 223 jobs.

GE Smart Grid - Atlanta, Ga.

General Electric announced in spring 2010 it will create 400 new jobs in Cobb County, Ga. at its new Smart Grid Center of Excellence. The $15 million project will include GE's new Digital Energy business and a smart grid engineering lab. The smart grid is a more efficient digital distribution system for electricity. GE Energy and GE Technology Infrastructure are also headquartered in Atlanta.

ZF Group - Gainesville, Ga.

ZF Group, an automotive industry parts supplier, announced in the spring 2010 quarter it will invest $90 million and create 215 jobs at a new wind turbine gearbox plant in Gainesville, Ga. The plant will be built near an existing ZF facility that manufactures axle drives and transmissions for passenger vehicles and heavy construction equipment.

Johnson Controls - Florence County, S.C. 

Johnson Controls is expanding its presence in Florence County, S.C. with a battery recycling facility that represents a capital investment of more than $100 million and more than 250 new jobs. Johnson Controls is a leading independent provider of hybrid battery systems and a leader in closed-loop, automotive battery recycling. The proposed facility will be among the most innovative battery recycling operations in the world, with some of the most advanced environmental controls.

Saft America - Jacksonville, Fla.

Saft America, a maker of high tech batteries used in hybrid vehicles, broke ground in March 2010 on a $200 million facility at Jacksonville, Fla.'s Cecil Commerce Center. The French company received a $95.5 million grant from the Department of Energy to help finance the facility under the American Recovery and Reinvestment Act. Once completed, the advanced lithium-ion battery plant will house 300 workers.  

Constellation Energy - Backbone Mountain, Md.

Constellation Energy has begun work on Maryland's first commercial wind farm, a 28-turbine project atop Backbone Mountain. Electric generation from the $140 million project is expected to begin by the end of the year.

Proterra - Greenville, S.C.

In February 2010, Proterra Inc., which develops and assembles drive and energy storage systems for heavy-duty vehicles, including their BE-35 fast-charge battery electric bus, announced that it will locate a facility at the Clemson University International Center for Automotive Research (CU-ICAR). The project will include research and development as well as assembly of its vehicles. The company designs, develops and assembles all electric and battery dominant hybrid drive solutions and complete vehicles for commercial applications including transit, school and commercial buses, parcel delivery vehicles and other class 4-8 trucks. Proterra, which looked at sites in 30 different states before choosing Greenville County, S.C., expects that it will invest $68 million and create more than 1,300 new jobs in the project.

RWE Innogy - Waycross, Ga.

German utility RWE Innogy announced in the winter 2009-2010 quarter that it is building a $150 million, 75-employee bioenergy plant in Waycross, Ga. The new plant will produce 750,000 tons of wood pellets from forest industry byproducts. The wood pellets would then be shipped to the Netherlands for burning in a Dutch power plant. To land the plant, Georgia will provide a $4,000-per-employee incentive over five years.

Confluence Solar - Clinton, Tenn.

In late January, Missouri-based Confluence Solar announced that it will build a 200,000-square-foot plant at the I-75 Industrial Park in Clinton, Tenn. The $200 million facility will produce mono-crystal silicon ingots for photovoltaic solar power generation. The ingots are used in solar panels to generate electricity. John DeLuca, a co-founder of Confluence Solar and a former employee at the U.S. Energy Department's Oak Ridge National Laboratory, said that Clinton's proximity to the lab and to the new stimulus-funded Solar Institute at the University of Tennessee was a factor in choosing the site in northeast Tennessee. The deal is expected to create 250 new jobs.

Waste Not Technologies - Okmulgee, Okla.

Waste Not Technologies of Destin, Fla., will construct an industrial plant in Okmulgee, Okla., that will turn residential and commercial waste into a variety of products including plastic pallets and plastic railroad ties. Construction of the 800,000-square-foot facility on a 250-acre site is expected to start at the first of the year. The company will initially run an eight-hour shift of 700 workers to handle 1,000 tons of trash a day, eventually expanding to three shifts and 1,400 workers processing 3,000 tons of garbage. The company will invest $150 million in the project.

Nissan - Smyna, Tenn.

In May, Japanese automaker Nissan broke ground on the manufacturing facility that will produce the lithium-ion batteries that will power the Nissan LEAF zero-emission vehicle. The all-electric LEAF will be assembled at Nissan's vehicle assembly facility in Smyrna, Tenn. beginning in 2012. The project represents an investment of $1.7 billion and will create 1,300 jobs.

Gemini Solar Development - Austin, Tex.
The City of Austin’s municipally-owned electric utility, Austin Energy, will purchase all of the electricity produced over a 25-year term by a 30 megawatt (MW), $250 million solar project to be built on city-owned property about 20 miles from downtown Austin. Gemini Solar Development Company, LLC, will construct, own and manage the solar facility. The project of photovoltaic solar panels will span approximately 320 acres, producing energy each year sufficient to power about 5,000 homes, and will be the largest utility-scale solar farm in the nation. Austin Energy will pay about $10 million per year for the power.

Castle Rock Industries - Selma, Ala.

Castle Rock Industries is scheduled to begin operations in the South Dallas Industrial Park of Selma in Dallas County, Ala. this summer creating 20 jobs with an investment of $10 million. Ultimately, 130 new jobs should result from a capital investment of $120 million in a five-phase plan. Castle Rock was formed to develop, construct and operate facilities to process and refine animal fats and vegetable oils into biodiesel feedstock oil, animal feed and high value co-products for sale to biodiesel producers. Initial construction includes a refinery for animal fats, yellow grease, and corn oil intended to produce 20 million gallons annually of purified oil for sale to biodiesel producers. Additional construction phases include plant enlargement to double production, a glycerin refining facility, and a solvent extraction plant. The final phase is a biodiesel plant designed to produce between 75 and 100 million gallons of B100 annually.
The project is expected to be complete in 2014.

Decker Energy International - Lindale, Tex.

Florida-based Decker Energy International (DEI) chose to locate a 50-megawatt wood waste fueled biomass power plant in Lindale, Tex. The site advantages for the plant are its proximity to Interstate 20 to take advantage of the heavily forested area of east Texas. Also, the site is near several clean wood waste landfills that are located between Shreveport and Dallas. Founded in 1982, DEI is an experienced developer, owner and operator of biomass generation facilities and is a company that operates with a keen environmental sensitivity. DEI is working with the Lindale Economic Development Corp. to finalize site and infrastructure details. Construction is expected to start on the project by the end of this year.

Florida Biomass Energy - Port Manatee, Fla.
 
Florida Biomass Energy (FEB) plans a 60 megawatt biomass electric power plant on 48 acres in the Port Manatee Encouragement Zone near Bradenton on Florida’s West Coast. The $185 million project will create more than 150 construction jobs and 25 full-time jobs. The company will grow non-food crops to use as renewable fuel. FEB connected with the Economic Development Council (EDC), a division of the Manatee Chamber of Commerce, after learning that the EDC could help in applying for the county government’s fast-track permitting program. Construction should be underway before the end of 2010.

GE Appliance & Lighting - Louisville, Ky.

GE has been an integral part of the Greater Louisville community since 1953. In 2009, the company renewed its commitment to the region by announcing its plan to manufacture two new energy efficient product lines at its Louisville Appliance Park plant. In June, GE unveiled plans to invest $69 million to produce energy-efficient hybrid water heaters. Then later in the year, GE announced plans to bring production of GE Profile dryers and frontload washers to Louisville. The new GE Profile front-load washing machines and Profile dryers will meet proposed 2014 Energy Star standards and will be smart-grid enabled. The combined investment of the expansion projects is more than $600 million and will create more than 830 new jobs.

Other notable green economy projects announced in the South over the past 18 months include: 

• Wacker Chemie - $1 billion, 500-job silicon (solar) plant in Cleveland, Tenn.
• Southern Power - $475 million biomass energy plant in Sacul, Tex.
• Hackberry Wind - $350 million wind farm in Abilene, Tex.
• Renewable Energy - $350 million wind farm in Albany, Tex.
• BP & Verenium - $300 million biofuels plant in Highlands County, Fla.
• Peregrine Energy - $135 million, 150-job alternative fuel facility in Darlington, S.C.
• Pinnacle Wind Force - $120 million wind energy facility in Mineral County, W. Va.
• Reclaimed Resources - $115 million, 118-job recycling facility in Bristol, Tenn.
• Iberdrola Renewables - $114 million wind farm in Sarita, Tex.
• Renewable Energy - $100 million biodiesel plant in St. Charles Parish, La.
• Confluence Solar - $50 million silicon plant (solar) in Hazelwood, Mo.\
• Siemens - $30 million, 400-job wind turbine plant in Hutchinson, Kan.
• Dow Hemlock - $1.2 billion, 500-job silicon ingot (solar) plant in Clarksville, Tenn.