Urgent Reasons to Invest in Alternative Energy

“On every level, there is a growing sense of urgency around climate change, energy independence on the Middle East, and American competitiveness,” said John Denniston, partner with Kleiner Perkins Caufield & Byers, in his keynote to the Midwest Alternative Energy Venture Forum November 29 at the Charles M. Harper Center. All signs are pointing to a need for investments in alternative energy, he said.

The first-annual conference, cohosted by the Michael P. Polsky Center for Entrepreneurship, the University of Chicago, Reed Smith LLP, Argonne National Laboratory, and the Association for Corporate Growth,  intended to highlight green technologies being developed in the Midwest. (View the presenting companies.)

Denniston drew a gasp from the packed conference room when he showed world maps of today versus fifty years from now with red dots representing megacities of more than 10 million in population. Map of today: 18 dots. Map of the future: 400 megacities, many of them clustered in China, a projected growth of “six new Manhattans every year,” he said.

“And if those growing economies create and consume their energy in the same way that the Western world has for the past 150 years, we will pollute, choke, suffocate, and warm the planet beyond recognition,” he said.

He thinks the United States will overcome skepticism and “actually do something constructive about this [global warming] crisis. We need to move quickly,” he added.

On the other hand, he said people have “become complacent” about reliance on Middle East oil. While two thirds of known oil reserves currently lie in “highly unstable or outright hostile” areas of the Middle East, he said, in ten years that share jumps to 83 percent.

“China recognizes that the fossil fuel sources are becoming increasingly scarce,” Denniston said. China “will try to capture and own as many of those natural resources as they can.” That’s why it is investing in Africa, he said. A year and a half ago, there were 146 lithium ion companies in China, he said, compared to five in the United States today. Lithium ion batteries are being promoted for use in hybrid electric cars.

Denniston showed a photo of a “massive” Shanghgai science park being filled today, one of ten in the city.

“For those who say we don’t need policies for green technology, I would point them to this picture,” he said, pointing to Shanghgai. “We’re in a race.”

American competitiveness will drive alternative energy investments, but to compete, some public policy may be needed, he said. While fossil fuels have been “heavily subsidized and fully amortized,” the United States is “way off scale” on government funding of renewables, Denniston said.

In comparison Asia and Europe are providing “massive funding to green technology,” he said. “We’re going to lose this race and our economy will suffer long-term if we don’t have that government funding.”

The sun emits such energy that “if you covered 150 kilometers of Nevada with solar panels, we’d need no other energy source,” Denniston said.

He also believes biofuels have potential to be lower in cost and higher in efficiency.

“I think we know that there will be breakthrough energy inventions, because we have to do it,” Denniston said.

Denniston’s keynote was “very inspiring,” said first-year student Jennifer Sireklove. She said it was “grounded in reality and not just some utopian idea.” She particularly found it amazing that covering 150 square kilometers in the desert with solar panels could meet all U.S. energy needs.

– Mary Sue Penn