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Power Source

How a fresh crop of CFOs is propelling the alternative-fuels industry.

When you can get it, that is. An unexpected surge in global demand for wind power has triggered a shortage of wind generators. It can take up to 16 months for delivery of a turbine. “Now, you have to agree to a down payment,” says Jaswant Bangaru, director of finance and project management at Toronto-based wind-farm development company AIM PowerGen Corp. “Otherwise, it’s difficult getting a turbine on time.”

Carbon Copy

It may become even more difficult if a bill introduced in Congress in May becomes law. The proposal would require utilities to reduce their smokestack emissions of carbon dioxide and would almost certainly boost demand for clean energy from producers like AIM, Solargenix, and FuelCell Energy. Other legislators want to regulate CO2 emissions from all commercial smokestacks — great news for GreenFuel. The groundswell of bipartisan congressional support was no doubt inspired by the sizable drop in air pollution brought about by the 1990 revision of the Clean Air Act. That, or politicians saw a recent poll showing that 83 percent of Americans would like to see more attention paid to global warming during the upcoming elections. “It looks like carbon may finally get regulated,” says Interface’s Kelley. “In that case, you won’t have to pay for compliance if you use clean fuels.”

Critics of clean fuels say biomass-fuel producers should make it on their own, without government prodding. It’s a compelling argument — one that would be even more compelling if it weren’t for the raft of federal tax breaks enjoyed by oil companies. One long-standing depletion allowance enables energy companies to deduct the “loss” of fields that have been mined or drilled to the last dollar. The Congressional Joint Committee on Taxation estimates that oil and gas companies will receive about $10 billion in industry-specific tax breaks over the next five years.

For his part, New Energy’s Goldman thinks some biofuel technologies can compete without incentives — even if the price of petroleum drops to $45 per barrel. In fact, the CFO says he’s more concerned about keeping up with demand. “There just aren’t enough builders of these ethanol projects,” he complains. “They’re stretched thin.”

Consider it a sign of things to come, particularly if consumers tire of runaway electric bills and $3.50-per-gallon gasoline. Envisioning this strange new landscape, management at retailing giant Wal-Mart Stores Inc. recently began exploring the possibility of offering ethanol at its 383 service stations.

Meanwhile, back at the GreenFuel offices, they finally painted the walls. Apparently, the company is planning on staying a while. “This is a noble business,” says Bullock. “The good thing is, you can also make a hell of a lot of money from it.”

John Goff is technology editor of CFO.

The Alternative Factors
Every clean fuel comes with its own set of promises and problems. Here’s a breakdown.
Pro Con
Solar Thermal (Parabolic Trough)
Free source, peak output during peak usage hours, no pollutants, some night production Expensive, ill-suited for rainy climes, some night production
Ethanol
Decrease in farm subsidies, reduced pollutants, made in U.S.A., almost cost competitive, flex cars exist, better methods coming Unstable when transported, adds to groundwater pollution, small net-energy gain, boosts food prices, try finding a station
Wind Farming
Free fuel source, no green-house gases, almost cost competitive, domestic source, cash crop for farmers Intermittent, risk to wildlife, often far from grid (power drop), ruins the view
Algae Harvesting (Bio-Conversion)
Double duty (smokestack cleaner, fuel source), produces ethanol and biodiesel, mitigates risk from CO2 cap, works at existing facilities Some carbon release, untested on large scale, algae farming tricky (tiny tractors)
Hydrogen Fuel Cell (Stationary)
Off the grid, ideal power backup, costs dropping, reduced pollutants, quiet Rate volatility (natural gas), reliability, pricey without incentives

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