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Wednesday, Jun 7, 2023

Funding, Politics Drive Efforts by Alternative Energy Startups

The combination of advances in technology, available capital, and a political will to address environmental issues on a state and national level is bringing increased exposure to clean technology and alternative energy companies located in the San Fernando Valley region and elsewhere. Oh, and there’s also all that smog in the air. “The environmental challenges certainly are here,” said Joel Balbien, president and CEO of Kreido Biofuels Inc., an alternative energy company in Camarillo. Proposals from Gov. Arnold Schwarzenegger to reduce greenhouse gases and from President George W. Bush to cut the nation’s dependence on foreign oil have put a spotlight on companies such as Kreido and others in the region who are focused on clean-tech and alternative and renewable energy. The increased attention placed on global warming, greenhouse effects and other environmental issues is giving rise to a growing industry of companies engaged in so-called clean technologies that range from emissions reducing devices to solar systems and the manufacture of biofuels, renewable energy sources derived from living organisms. The technology is available, acceptance by the government and the public grows and, most important, enough funding is becoming available to advance efforts out of the research phase and get products to market. To put it simply, the private investment community has learned there are greenbacks to be made by being green. No longer are niche investors the only ones putting capital into cleantech companies. Large investment firms now are also jumping into the fray, said Benjamin Kuo, of SoCalTech.com website. “Technology has progressed enough that focusing a company in that area makes sense,” Kuo said. So just how green is the Valley? North Hollywood is home to Save The World Air, Inc., developer and manufacturer of emissions reducing devices for small engines, and Green Energy Live Inc., a company developing organic fertilizers, ethanol and alternative septic systems. In Westlake Village, there is Solar Electrical Systems and its sister company, Solar Electrical Vehicles, creator of a solar charging system for hybrid electric vehicles. Shell Solar Industries maintains an office in Camarillo. Simi Valley-based Capstone Turbine partnered with two other companies, one located in Manhattan Beach, to develop, produce and sell inter-cooled low emission gas turbine commercial vehicle engines. Transonic Combustion in Camarillo develops engine components to improve efficiencies of gas engines with the long-term goal of running on renewable biofuels created by companies like Ceres, Inc. in Thousand Oaks, as well as Kreido. Making a difference “Biofuels and, in particular, ethanol are making up enough of the transportation fuel supply that it’s starting to occur to people that these can make a difference in reducing our dependence on foreign oil,” said Anna Rath, director of business development for Ceres. A number of factors are driving the creation of these companies in the Southern California region the ability to create startups, a first-class university system spurring innovation and, not to be overlooked, the dirty air. And then there is the money coming from the venture capital community The Cleantech Venture Network reported in January that venture capital investment in North American clean technologies totaled $2.9 billion in 2006, an increase of 78 percent from the $1.6 billion invested in 2005. From an investment standpoint, the sector has gone from marginal to the mainstream, said Rosemary Ripley, entrepreneur in residence with NGEN Partners, a Santa Barbara venture capital firm investing in the areas of renewable resources, alternative energy and bio materials. Increasing prices for oil and other traditional energies; regulations to reduce pollution and a growing awareness by government and consumers of the impact of traditional technologies on health and lifestyle are all changing the economics of investing in cleantech and alternative energy companies. “Historically, investors might have thought this was more philanthropy than good investment sense, but not anymore,” Ripley said. International interest The attraction to cleantech is international. Investors in Save The World Air live in the United Kingdom, Australia and Canada as well as the U.S. The firm has spent $8 million over the past five years and, with its move from the research and development phase to the operational phase, realized its first revenues in the fourth quarter of 2006. The company markets its emission reducing Eco ChargR and Mag ChargR and Cat-Mate, devices for use by car and motorcycle manufacturers. “To get large manufacturers to change their product line is a long term effort,” Save The World President and CEO Bruce McKinnon said. Kreido spent seven years and $20 million developing its “spinning tube in tube” or STT reactor to speed up chemical reactions. The company will receive an infusion of $25 million following a reverse merger with Gemwood Productions, Inc. Specialty pharmaceutical and chemical companies license the use of the Kreido reactor on a small scale now, but later in the year Kreido intends to open a commercial plant in Chicago. Having technology to develop a device like the STT reactor isn’t enough, Balbien said. He believes economic incentives will be necessary to lead capital to the right technologies and government must take an active leadership role to deploy the technology. “When you start to set more aggressive targets for adoption of biofuels in our transportation mix and then give industry flexibility to meet those with different technology and different fuels that is the right way to go,” Balbien said. Targets set In California, Schwarzenegger has set a target for biofuels to account for 20 percent of the state’s energy use and production by 2010. By 2020, Schwarzenegger wants biofuels to make up 40 percent of energy production and consumption. Bush, in his State of the Union address Jan. 23, set a goal to reduce gasoline usage by 20 percent in the next 10 years and by 2017, he is asking for companies to produce 35 billion gallons of renewable and alternative fuels. Bush’s pronouncement was music to the ears of those at Ceres, whose CEO Richard Hamilton responded in a release that the biofuels goal was feasible if crops other than corn are used. Whereas traditional ethanol is made by turning corn starch into sugar, Ceres has developed the next generation of biofuel called cellulosic ethanol made from plants such as switchgrass and mischanthus. Cellulosic crops are at “the cusp” of commercialization, said Rath, adding that Ceres’s role will be to provide the seeds to farmers who grow the crops and then sell them to bio-refineries. Corn alone will not rescue the country from reliance on foreign oil Rath said.

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