The New Carbon Cycle

Forbes Article Concludes 93% of Public Companies Facing Climate Risk, Only 12% Disclosing Risk

A new Forbes article concludes that 93 percent of public companies face risk from climate change, but only 12 percent are actually disclosing that risk to the public and their shareholders.  The Securities and Exchange Commission (SEC) issued guidance on climate risk disclosure several years ago. Thus, there is at least a basis for arguing that all affected companies are on notice of the need to disclose climate risk in their public filings such as 10-Ks.  Having advised clients on climate risk disclosure in SEC documents, this is an important aspect of financial disclosure that should review and determine the nature of disclosure that may be advisable.  As the Paris Agreement has been negotiated, with many countries including China developing greenhouse gas regulations and cap and trade programs, the writing is on the wall that international, national, and in some instances sub-national state and provincial limits on greenhouse gas emissions are a reality that appears to only be growing.  Reviewing the supply chain and potential impact of climate change on the business may be an issue that investors may find material, or a court may judge as material. 

Companies should also consider developing approaches that reduce their carbon footprint, such as considering new energy efficiency investment, the installation of renewable generation on-site and purchase of renewable electricity from the grid.  Supply chain review and de-carbonizing it  are steps that should be considered as well.  in other words, having a good story to tell in any disclosure may provide an edge on competitors.  Key is finding carbon reducing steps that save money for the company.  Energy efficiency is the low hanging fruit typically, but renewable energy in some locations can provide cost savings as well. 

McKinsey Article Concludes Good News for Emissions: US and EU Emissions Down, Economies UP

McKinsey and Company director Scott Nyquist authored on article entitled Great News on Emissions. Really.  He concludes that the US and EU have cut emissions while growing their economies. 

His article provides an upbeat view.

So it’s very important that in both 2014 and 2015 the global economy grew—and energy-related emissions didn’t.  In the 40 years that the International Energy Agency has been tracking emissions, this is the first two times that year-on-year energy-related emissions have been flat or less, without an economic downturn.  And in 2013, emissions grew less than the global economy.  For perspective, energy accounts for more than two-thirds (68 percent) of global GHG emissions, and energy use increased more than 150 percent from 1971 to 2013.

So all that sounds pretty wonky.  Why does it matter?  Because it means that it is not only possible, but a reality that the link between emissions and growth can, in fact, be cut.  Indeed, in a number of developed countries, that is already happening.  In 2014, for example, the EU grew modestly—and cut emissions by more than 5 percent.  The United States saw power-related carbon emissions decline 10 percent from 2005 to 2014, due to greater efficiency—in effect, like Europe, it is creating more wealth using less energy—and  the displacement of coal with cleaner natural gas.

China and India have room to approve as most of us know.

But here, too, there are encouraging trends.  The rate of growth of emissions in China is slowing, as its economy becomes less energy intensive—services now account for more than half of GDP, the highest ever.  China has also begun to get serious about growing less filthily. In part because of pressure from a public literally sick of living in smog-choked cities, the country is investing in more efficient and cleaner energy use.  In 2014, Chinese emissions increased less than 1 percent compared to the previous year, even as it grew 7.3 percent.  In the previous decade, China’s emissions had grown an average of 6.7 percent a year.  So that’s a big change.  The big reason: China is depending less on coal, which accounts for more than 80 percent of its energy-related emissions.

 

The author concludes, and I agree, that technological innovation is the key to solving greenhouse gas emissions issues. While the emissions issues are far from solved, great steps have been made.  The investment in new technology, renewables, innovations in business models and financing approaches present one of the great business opportunities the world has ever seen.  Trillions of dollars will be invested over the next 10 years and beyond to address these issues as more energy is demanded, but more efficient use and alternative ways of generation energy and controlling emissions from traditional sources opens up an economic boom.

Related articles

California, the clean energy leader

How Disruptive Technology Can Provide Money-Making Emissions Reductions

I recently published an article entitled How Disruptive Technology Can Provide Money-Making Emissions Reductions.  This article explores the disruptive technologies that are changing the way companies purchase power, or reduce their power consumption or both.  With renewable energy, LED lighting, Cloud-based, Internet of Things energy management, and now batteries, the technologies are getting cheaper and the money that can be saved is signifiant. 

These new technologies also reduce emissions as they reduce the amount of fossil fuel that needs to be burned to produce electricity.   With new business and financing models, the customer may not have to put up any capital, but through a shared savings model, start making money the first or second month.

Thus, emissions go down, and the customer makes money from lower electricity prices or reduced electricity use.  The company providing the power, LED lights, and energy management make money. 

It is a win all the way around.  The new technologies and financial models are bringing clean, cheap energy to corporate America.

What Do “Primordial Soup” and Climate Change Solutions Have in Common?

In my last blog, I mentioned the class I am teaching at in Climate Change Law at the University of Texas Law School.   One of my classes I mentioned consisted of inviting several companies and the leader of the UT Clean Energy Incubator to speak to my class and to people in the university community and local community.  The title of the program was Environmental Entrepreneurs: Local Companies Leading the Way to a Low-Carbon Economy. (Video) This program may seem odd, and some in the audience thought it was odd to have such speakers at a law school.  However, the crux of my class was that the concerns raised by the national academies of science and climate scientists and merely reported on by the International Panel on Climate Chance (IPCC) requires the invention of new technologies.  Current technology is not sufficient.  Thus, as we study law and policy, we have to think about how law and policy cannot only get out of the way of such invention, but actually promote the innovation and investment necessary to address climate concerns.

But why “Primordial Soup”?  First, let’s define the concept.  “Primordial Soup” is a concept that began with a Russian biologist Alexander Oparin, who, in 1924, proposed that life begin in a combination of organic chemicals in ocean water that somehow combined to form the earliest life forms.  The mixture of water and organic chemicals was thus this “primordial soup” that spawned life.  Later theories have been proposed, which come up with different explanations, but for purposes of our discussion, let’s focus on the primordial soup.

In studying ecology and evolution in my early days of education, I, as any student in this sphere became enthralled as to how nature through innovation and adaptation leads to new or modified species in response to changes in the environment.  The concept of primordial soup from which life emerges is a fascinating thought.  

In my own practice and study of energy and environmental law, I’ve read about and have known and worked with start up companies with many new and potentially transformational technologies.  Many of which can reduce energy use, significantly increase energy efficiency, or produce energy in new or more efficient ways.

Thus, the adaptation and evolution I studied in biology and ecology classes many years ago, is occurring now in an economic setting as opposed to an ecological setting as there is significant focus on clean energy, clean tech, and ways of doing other types of energy and industrial activities in ways that have much less impact on the environment.

Getting back to my class, we had several companies speak at our class that are engaged in new technologies, most seeking early stage capital to try to develop the technology and hopefully reach commercialization.  

The reason for this harks back to another class in which we reviewed the California or AB 32, by its original bill name in the California legislature.  California is seeking to reduce its greenhouse gas emissions by 85% by 2050.  A Berkley National Laboratories analysis concluded that without new technologies, the state could not achieve such reductions.  Thus, I wanted to introduce my students to some of the local companies that are working on technologies that may lead to reduced greenhouse gas emissions.  

The speakers and their companies were as follows:

Mitch Jacobson, UT Clean Energy Incubator

Barry McConachie, CEO, Incenergy

Lu Yan, CEO, Yan Engines, Inc.

F. Todd Davidson, CEO, nCarbon

Panos Adamopoulos, Founder, Seismos

Yetkin Yildirim, Co-Founder, Terra Pave International, Inc.

Video of Presentations.

These companies in many ways are working on low carbon technologies, and are a very small subset of companies across the United States, and the world for that matter, developing potentially commercial technologies that can in numerous ways lead to a lower carbon economy.

Just in Texas, in the Austin area, another company, Skyonic, is working on a technology to capture CO2 from smokestacks and use it to produce carbonates and other products, so pollution control becomes a for profit business. The first deployment is at a cement plant near San Antonio.

Several companies use captured CO2 for enhanced oil recovery, such as Denbury Resources in Plano, Texas and Chaparral Energy in Oklahoma City.

With the large installed base of fossil fuel power plants, our global fleet of fossil-fueled vehicles, pipelines, refineries, etc. we have to find technologies to use fossil fuels in way that reduce emissions. Too much infrastructure and investment in that infrastructure to expect it to go away any time soon. I don’t expect that to occur in my lifetime.

After the class and meeting, I had dinner with one of the company CEOs and several attendees.  We talked about many things and one of which was carbon trading law, as one of the people mentioned I had written a book on the subject.  In our discussion, I made the point that the exact nature of carbon trading programs was not to regulate the greenhouse gases out of existence or have a perfect system, but to have enough of a carbon price that substantial investment was made in hundreds if not thousands of technologies and services such that out of the “primordial soup” would emerge technologies that would transform our energy use.

So as I had thought about “cap and trade” it was not to solve the problem through the regulatory system as such, but to create the economy or market place that drives sufficient research and development and investment to come up with low cost innovative technologies.  I said this doe not comport with environmentalists, who simply want to phase out fossil fuels, with an idealistic view that this can be done without great economic loss and job loss, and frankly that it is even possible le with today’s technology.

The renewable energy they promote depends on natural gas plants to balance the grid so our lights will stay on—yes, renewable energy is dependant on fossil-fuel produced energy.

To ignore the issues is unrealistic as well as the overwhelming science on climate change and its causes will put pressure on governments and policy makers and publicly traded companies, particularly those that produce, use, or are otherwise dependent on fossil fuels, which are most of the publicly traded companies.

Thus, we need a policy and regulatory system that promotes the type of technological research and innovation and creates enough profit for angel and venture capitalists to invest in companies developing these technologies.  My point at the dinner was that a perfect system is not needed, or possible, but enough of a system that provides sufficient incentives to create the primordial soup.

Thus, perhaps a long winded way of answering the question posed.  To find the solutions you need the primordial soup of inventors, investors, and entrepreneurs to form the marketplace that will lead to climate change solutions.

 

The program was made possible through the University of Texas Law School

Video--Environmental Entrepreneurs: Local Companies Leading the Way to a Low-Carbon Economy

A program called Environmental Entrepreneurs: Local Companies Leading the Way to a Low-Carbon Economy was a  program presented at the University of Texas Law School was presented as part of my Climate Change Law Class I'm teaching at the UT Law School, and in conjunction with UT's Center for Global Energy, International Arbitration and Environmental Law.  A video can be viewed if you are interested.

 

 

 

The speakers were as follows:

Mitch Jacobson Co-Director, ATI Clean Energy Incubator, The University of Texas at Austin; Board Chair, CleanTX Foundation

Barry McConachie, CEO, Incenergy

Lu Yan, CEO, Yan Engines, Inc.

F. Todd Davidson, CEO, nCarbon

Yetkin Yildirim, Co-Founder, Terra Pave International, Inc.

Panos Adamopoulos, Founder, Seismos

Video

 

 

 

Brattle Report Concludes Solar Power Would Save on Texas Electricity Rates

The Texas electricity market within the Electric Reliabibilty Council of Texas or ERCOT, which covers 80 percent of Texas, is suffering from a deficit of peak power.  Concerns are rising that the state will be short on power during the summer months.  The Brattle Group was engaged to prepare a report for ERCOT on how to manage or address the power shortage issue.  The Brattle Group also prepared a report entitled, The Impact on Solar PV on Electricity Markets in Texas, which discusses electricity cost savings Texas could produce if it built more solar farms--the price of solar power would be less than peak power plant prices.

The irony is that many believe that solar power is always more expensive than traditional power plants like natural gas plants.  But electricity markets are complicated.  Base load power is very inexpensive in Texas because of abundant natural gas that has arisen through the technology of horizontal drilling and hydraulic fracturing in the gas shales--which has unleashed a tremendous resource of cleaner burning fossil fuel.

However, peak power prices can be very expensive.  In Texas, ERCOT raised the cap price from $3000 per MW to $4500 per MW, and the cap is going to rise to $9000.  The hope is this will encourage more natural gas power plants to be built.

Solar can be one of the answers.  With rapidly declining prices for solar PV panels and the short time to build solar farms, 90 or 120 days in some instances, solar is much less than $3000 per MW.  A natural gas plant can take a couple of years to permit, finance, and build.  We still need these plants, but solar can be a contributing factor to managing peak power--the sun shines most when peak power is needed to cool homes and businesses in the hot summers in Texas.

Solar PV can contribute to energy savings, if applied in the right way, in the right market, and at the right price.  The Brattle Report shows how solar could contribute to enhancing the Texas electricity market.  Unfortunately, the politics in the Texas legislature is likely to prevent any renewable bills from passing.

While Texas has the largest installed wind power base, it is unfortunate that we could not work to be the leader in solar, so that Texas is the all-of-the-above leader--wind, solar, and oil and gas.  It would appear to all be good for the economy and good for the environment.  Creative and empirical thinking is at a disadvantage if politics gets in the way--Democrats and Republicans both need to realize that we need at this time fossil fuels and alternative energy.  Each has their own necessary role in today's economy and with today's technology.

Atlantic Article Delves into Complexities and Interrelationships of Energy and Climate

A very good article from The Atlantic was shared with me by Mike Titens, one of Thompson & Knight's corporate partners and a member of our Climate Change and Renewable Energy Practice Group.  The article is entitled The Elusive Green Economy and delves into the complexities of and interrelationships between climate change, renewable energy, energy independence and security, as well as how entrepreneurship and government can have a positive impact or a negative one depending on the policies adopted. 

 

It's rare that any insight is shown on these issues by the press (or politicians for that matter).  While I may not agree with every conclusion, I was pleased to see a more in-depth discussion of these complex issues and recommend it for your reading.

Energy Efficiency and the Competitive Advantage of Our Nation

Management guru and professor Michael Porter's concludes in The Competitive Advantage of Nations that one of government's roles involves "acting as a catalyst and challenger, . . to encourage--or even push--companies to raise their aspirations and move to higher levels of competitive performance. . .."  In the Senate debate over the American Clean Energy and Security Act, H.R. 2454, the "Waxman-Markey Bill", the Senators should consider the extent to which energy efficiency contributes to both domestic firm competitive performance and to the competitive advantage of the nation as a whole.

No doubt companies that can substantially reduce their energy consumption can reduce costs and,therefore, increase profits.  As an example, Walmart is working with numerous potential vendors to reduce its energy consumption as its energy costs are significant.  Walmart's Sustainable Building Plans among other efficiency plans would reduce energy usage dramatically.  Other companies such as Dow cite substantial reductions in electrical use and concomitant reductions in greenhouse gas emissions.  Dow's energy savings program  has resulted in energy savings of $8.6 billion and has prevented 86 million metric tons of CO2 from entering the atmosphere. With the ability to monetize these greenhouse gas reductions in the form of carbon credits, these firms will have an additional incentive to reduce electrical and transportation fuel consumption.

In addition, these firms will be incentivized to switch transportation fuels for their fleets of trucks.  Natural gas is now abundant in the United States with the discovery of the means to extract natural gas from the various shales from across the United States that contain huge stores of natural gas.  Not only does the use of natural gas allow the potential savings in fuel costs over the long term, but the monetization of the greenhouse gas reductions by switching from diesel to natural gas permits yet another revenue stream to assist in financing a more sustainable and more efficient company.

As a nation, these changes make the firms in the country more competitive as costs of production decrease and allow the use of domestic fuels.  To the extent, new regulations promote not only energy efficiency and fuel switching, but the invention and domestic manufacture of new technologies and products for export, then the nation become even more competitive.

Nations that reduce their dependence on foreign oil will undoubtedly increase their domestic and international competitiveness.  Those that can design new, more distributed energy sources for their troops to produce water, drive electronic-based weapons and communications, and alternative ways of fueling mechanized aspects of their sea, ground, and air-based forces will have a stronger military.  The United States armed forces are spending significant money to develop these technologies.

McKinsey & Company recently issued a report entitled Unlocking Energy Efficiency in the U.S. Economy.  In this report, the leading business consulting firm states its central conclusion as follows:

Energy efficiency offers a vast, low-cost energy resource for the U.S. economy--but only if the nation can craft a comprehensive and innovative approach to unlock it.  Significant and persistent barriers will need to be addressed at multiple levels to stimulate demand for energy efficiency and manage its delivery across more than 100 million buildings and literally billions of devices.  If executed at scale, a holistic approach would yield gross energy savings worth more than $1.2 trillion, well above the $520 billion needed through 2020 for upfront investment in efficiency measures (not including program costs).  Such a program is estimated to reduce end-use energy consumption in 2020 by 9.1 quadrillion BTUs, roughly 23 percent of projected demand, potentially abating up to 1.1 gigatons fo greenhouse gases annually.

The McKinsey Report demonstrates that a more energy efficient country is a more competitive country.

To put this in competitive context, Europe and China are pushing for more energy efficiency and the building of domestic sources of energy and fuel and the development of renewable energy technology firms, energy efficiency technology firms, and the domestic manufacturing of new 21st-century products.  Technologies like LED lighting that will reduce the consumption of electricity dramatically are the race to the future by companies around the world.  The countries that achieve development of firms with lower energy consumption and energy efficient technologies and alternative fuels will likely be the more dominant economic powers in this century.

Thus, a look back at Michael Porter's book and the application of its model to the current debate about the Senate version of the American Clean Energy and Security Act is warranted.  Putting politics and ideology aside, the empirically demonstrated need to move toward a 21st-century energy policy is critical to the future competitiveness of the nation.  This should be at least one of the critical strategies underlying the debate in the Senate over the next few months.

Significant Climate Change Developments Part 1: European Parliament Adopts 20/20/20 Plan on Climate Change

The European Parliament after eleven months of long and tumultuous debate among the various countries and constituencies reached an agreement called 20/20/20.  By 2020 the EU plans to address climate change by achieving: a 20% reduction in greenhouse gas emissions, a 20% improvement in energy efficiency, and a 20% share for renewables in the EU energy mix.  The EU plans to extend and amend its cap-and-trade program referred to as the EU Emissions Trading System or ETS to control greenhouse gas emissions as well. 

A compromise was reached to address concerns by industry in the former communist countries that depend almost entirely on old coal-fired power plants for their electricity.  The EU agreed to provide free carbon allowances to industries that face stiff international competition as a result of greenhouse gas reductions if they face a 5 percent increase in costs.  The former communist countries will receive 70 percent of their carbon allowances without charge in 2013.  The exemption will be fazed out over time and end in 2020, when all allowances in these countries must be purchased at auction.

The revised EU ETS will apply from 2013 to 2020 and is designed to reduce greenhouse gas emissions by 21 % of 2005 levels. The EU ETS is a "cap and trade" system: it caps the overall level of emissions allowed but, within that limit, allows participants buy and sell allowances as they require, so as to cut emissions cost effectively. The Community-wide quantity of allowances issued each year will decrease in a linear fashion, so as gradually to reduce the overall level of emissions each year.
 
The ETS currently covers over 10,000 installations in the energy and industrial sectors, which are collectively responsible for close to half of the EU's emissions of CO2 and 40% of its total greenhouse gas (GHG) emissions (the remaining 60 % will be covered by the 'non-ETS' Effort Sharing decision).
 
In the first and second ETS trading periods (2005 -2012) the great majority of allowances were allocated free of charge to installations. The revised directive establishes auctioning from 2013 in principle (as proposed by the Commission and backed by the Environment Committee), but includes several exceptions, as advocated by the European Council on 12 December 2008.

The "effort sharing" decision sets binding national targets for each EU Member State to reduce greenhouse gas emissions from non-ETS sources (e.g. road and sea transport, buildings, services, agriculture and smaller industrial installations), between 2013 and 2020. These sources currently account for about 60% of all EU greenhouse gas emissions. The decision aims to reduce these emissions by 10% overall between 2013 and 2020, so as to contribute towards the EU's overall aim of a 20% reduction in total greenhouse gas emissions by 2020. The effort sharing decision is the first of its kind worldwide.

The EU Parliament also approved a proposed directive providing for the legal framework for the new carbon dioxide capture and storage technology (CCS). To cut their CO2 emissions, industrial installations and power plants could in the future use this new technology to capture CO2 and store it "permanently and safely underground" in geological formations.  Great Britain's Prime Minister Gordon Brown succeeded in winning a fund of 6 billion Euros to invest in technology to capture and store carbon dioxide from coal-fired power plants in underground formations.  The fund will apparently be established by earmarking 300 million allowances for CCS.

A new regulation will set emission performance standards for new passenger cars registered in the EU. The compromise backs the Commission's proposed target of an average of 120g of CO2/km for the whole car industry by 2012, compared to the current levels of 160g/km. The regulation sets an average target of 130g CO2/km for new passenger cars to be reached by improvements in vehicle motor technology.  It will be supplemented by additional measures to achieve a further 10g/km reduction, so as to reach the 120g/km target, through other technical improvements. The compromise introduces a long term target for 2020 for the new car fleet of average emissions of 95 g CO2/km.
 
Manufacturers will be given interim targets of ensuring that average CO2 emissions of 65% of their fleets in January 2012, 75% in January 2013, 80% in January 2014 and 100% from 2015, have to comply with each manufacturer's specific CO2 emissions target. In case the average emissions of CO2 exceed the targets, manufacturers will have to pay fines.

The revised fuel quality directive requires fuel suppliers to reduce greenhouse gas emissions caused by extraction or cultivation, including land-use changes, transport and distribution, processing and combustion of transport fuels (i.e. fossil fuels like petrol, diesel and gas-oil and also biofuels, blends, electricity and hydrogen) of up to 10% by 2020.

The adoption of post-2012 greenhouse gas reductions is a critical first step in the process of moving toward a global carbon cap and trade system.  The EU has laid down the first step internationally to create the atmosphere for negotiations of a post-Kyoto climate change treaty. The negotiations in Poznan, Poland were to some extent inconclusive, but the Bush Administration was not going to make any commitments late in its administration and has not been willing to take steps to impose a greenhouse gas reduction program in the United States.  2009 could shape up to be the Year of Climate Change.

I will further discuss the other three developments in late 2008 that may lead to a global carbon-constrained economy.

MIT Discovery May Revolutionize Power Production through Solar Power and May Resolve Greenhouse Gas Emissions Challenge

Scientists at Massachusetts Institute of Technology (MIT) have announced a discovery that may unleash solar power to generate power during the day and generate oxygen and hydrogen to produce power from fuel cells at night.  This discovery has the potential to revolutionize power production over the next ten years.

Until now, solar power has been a daytime-only energy source, because storing extra solar energy for later use is prohibitively expensive and grossly inefficient. With today's announcement, MIT researchers have hit upon a simple, inexpensive, highly efficient process for storing solar energy.

Requiring nothing but abundant, non-toxic natural materials, this discovery could unlock the most potent, carbon-free energy source of all: the sun. "This is the nirvana of what we've been talking about for years," said MIT's Daniel Nocera, the Henry Dreyfus Professor of Energy at MIT and senior author of a paper describing the work in the July 31 issue of Science. "Solar power has always been a limited, far-off solution. Now we can seriously think about solar power as unlimited and soon."

Inspired by the photosynthesis performed by plants, Nocera and Matthew Kanan, a postdoctoral fellow in Nocera's lab, have developed an unprecedented process that will allow the sun's energy to be used to split water into hydrogen and oxygen gases. Later, the oxygen and hydrogen may be recombined inside a fuel cell, creating carbon-free electricity to power your house or your electric car, day or night.

The key component in Nocera and Kanan's new process is a new catalyst that produces oxygen gas from water; another catalyst produces valuable hydrogen gas. The new catalyst consists of cobalt metal, phosphate and an electrode, placed in water. When electricity -- whether from a photovoltaic cell, a wind turbine or any other source -- runs through the electrode, the cobalt and phosphate form a thin film on the electrode, and oxygen gas is produced.

Combined with another catalyst, such as platinum, that can produce hydrogen gas from water, the system can duplicate the water splitting reaction that occurs during photosynthesis.

The new catalyst works at room temperature, in neutral pH water, and it's easy to set up, Nocera said. "That's why I know this is going to work. It's so easy to implement," he said.

"This is just the beginning," said Nocera, principal investigator for the Solar Revolution Project funded by the Chesonis Family Foundation and co-Director of the Eni-MIT Solar Frontiers Center. "The scientific community is really going to run with this."

James Barber, a leader in the study of photosynthesis who was not involved in this research, called the discovery by Nocera and Kanan a "giant leap" toward generating clean, carbon-free energy on a massive scale.

"This is a major discovery with enormous implications for the future prosperity of humankind," said Barber, the Ernst Chain Professor of Biochemistry at Imperial College London. "The importance of their discovery cannot be overstated since it opens up the door for developing new technologies for energy production thus reducing our dependence for fossil fuels and addressing the global climate change problem."

Currently available electrolyzers, which split water with electricity and are often used industrially, are not suited for artificial photosynthesis because they are very expensive and require a highly basic (non-benign) environment that has little to do with the conditions under which photosynthesis operates.

More engineering work needs to be done to integrate the new scientific discovery into existing photovoltaic systems, but Nocera said he is confident that such systems will become a reality.

"This is just the beginning," said Nocera, principal investigator for the Solar Revolution Project funded by the Chesonis Family Foundation and co-Director of the Eni-MIT Solar Frontiers Center. "The scientific community is really going to run with this."

Nocera hopes that within 10 years, homeowners will be able to power their homes in daylight through photovoltaic cells, while using excess solar energy to produce hydrogen and oxygen to power their own household fuel cell. Electricity-by-wire from a central source could be a thing of the past.

The project is part of the MIT Energy Initiative, a program designed to help transform the global energy system to meet the needs of the future and to help build a bridge to that future by improving today's energy systems. MITEI Director Ernest Moniz, Cecil and Ida Green Professor of Physics and Engineering Systems, noted that "this discovery in the Nocera lab demonstrates that moving up the transformation of our energy supply system to one based on renewables will depend heavily on frontier basic science."

The success of the Nocera lab shows the impact of a mixture of funding sources - governments, philanthropy, and industry. This project was funded by the National Science Foundation and by the Chesonis Family Foundation, which gave MIT $10 million this spring to launch the Solar Revolution Project, with a goal to make the large scale deployment of solar energy within 10 years.