A similar scheme, called the Clean Development Mechanism (CDM), is already up and running, and has primarily focused on Western companies building renewables projects in the developing world. Many view REDD as a possible replacement for the CDM, which has been plagued by bureaucratic problems and allegations of abuse and corruption. REDD's proponents also believe the forestation program could have a larger -- and, importantly, more cost effective -- impact in the fight against global warming.

Yet for those championing REDD, lessons can be learned from the CDM. In an interesting report, Barclays Capital estimate four countries (Brazil, India, China, and Korea) currently generate 92% of all the credits created through CDM projects. Even more importantly, 75 of the largest projects (from a total of 512 worldwide) represent 90% of the CDM credits, which were subsequently sold in the world's cap-and-trade markets. That's not exactly a large number of countries/projects for the UN-backed CDM -- particularly as it was designed to give as many countries as possible technical expertise and access to foreign direct investment.

For sure, REDD certainly will differ from CDM (apologies for all the acronyms), and you could say focusing investment on large projects offers the highest environmental impact for the cheapest price. But one thing is certain: to get developing countries to accept binding carbon dioxide targets (as the U.S. and other developed countries hope to do), policy-makers will have to show REDD, unlike the current CDM, offers benefits to all -- and not just the largest developing countries.

Call me a cynic, but I'm not sure Scotland will be able to meet its 'world-breaking' target. Sure, the country (which although part of Britain -- which plans a 34% reduction by 2020 -- has autonomy to set stricter limits) has ample scope for wind power, and maybe marine energy in the coming years. But the Scots (and fellow Brits and Europeans, for that matter) are struggling to meet the European Union's existing targets. You have to ask yourself how policymakers in Edinburgh expect to more than double the '20% by 2020' reduction already mandated by their Brussels-based counterparts.

Loyd Case installed about 6 kw or about 27 panels on his rooftop in northern California. He writes about the installation process and what the power bill looks like: after about three weeks, it totals $11.34 and is likely to end the month at $16. If so, that will be just 5% of his $300 bill from a year before.

I get scores of questions from readers and friends in New York asking about the process of installing solar panels and what the finances look like. This write up answers a lot of those questions well. Admittedly, it's California -- one of the most aggressive markets in terms of incentives such as time of day pricing for solar. But many states including New Jersey, New York and in the South West are adopting similar policies.

Are you thinking about installing solar? If so, what's the biggest barrier preventing you from doing so: A lack of information? Or a lack of skilled installers? Or is it the high upfront costs?

"Going Solar Power: One Month Later" by Loyd Case

That message was reinforced on June 23 when consultants New Energy Finance released preliminary results about cleantech investment. Not surprising, they also found VCs were steering clear of energy generation projects. In the first half of 2009, venture capital and private equity firms forked out $3 billion globally for clean energy companies -- a 56% drop compared to the same period last year.

What are the reasons behind the decline?

"Rich countries may act on their own to reduce greenhouse gas emissions by developing a carbon market they hope will lure in poor nations even if U.N. climate talks get bogged down…

"The rich world, including the European Union and the United States, may form a carbon market outside or parallel to the U.N. talks. Rapidly developing countries like China may be inspired to join the market to sell emissions offsets such as clean energy projects."

That may sound like pie-in-the-sky stuff, but the chances of linking CO2 trading between the world's largest industrial countries are better than you might think.

For the ins and outs of concentrated solar power, the article is definitely worth a read. One figure, though, caught my eye:

"About 12 Gigawatts of concentrating solar-thermal power capacity is being planned worldwide—a vast amount, given that only about 500 megawatts (MW) of such capacity has been built to date."

A lot of this capacity may well not make it to production. But even if half does -- some 6GW -- that would be roughly equivalent to six large-scale coal, natural gas, or nuclear power plants. Not a bad for a renewable energy source.

The other article focuses on smart grid technology.

How contentious is proposed legislation to tackle climate change by putting caps on greenhouse gas emissions? A fairly subdued House Subcommittee on Energy and Environment hearing on June 9 grew a little bit tense when lawmakers began to push panelists for yes or no answers on the American Clean Energy and Security Act. After David Sokol, Chairman of the Board of Mid American Energy Holdings Company claimed that the bill could increase energy costs in Iowa by $283 million, ranking member Joe Barton (R-Texas) demanded that other witnesses weigh in. One tried to explain that Iowa was “the exception to the rule,” but Barton cut him off. “Is he telling the truth?” The response: silence.

There was also no lack of heated rhetoric from lawmakers. The legislation is either “economic Russian roulette” (said Fred Upton R-MI) or “the start of a clean energy revolution.” (said Jay Inslee D-WA). “We need a plan and we can’t run the risk of living on this rollercoaster where the economy just rises and falls on the price of a barrel of oil,” said Committee Chairman Edward Markey (D-Mass). The bill, which had already been marked up before the hearing, requires that producers of emissions obtain allowances for each ton of CO2 that they release, establishes programs to protect consumers from energy price increases and pledges to drive the development of innovative green technologies.

That’s what it does, of course, if you’re a proponent of the Waxman-Markey bill. The bill’s opponents, including ranking members Barton and Upton (R-MI) say that the legislation will bring more job losses, give foreign countries like India and China a competitive advantage in the energy marketplace, and drive up costs for consumers. “I doubt very highly that anyone fully understands exactly how this system will work or what the true costs will be,” Upton said. For his part, Barton even cast doubt on the science underlying the legislation. He said he’s “not convinced that mankind generically and CO2 specifically is a dominant cause of the climate changing.”

The witnesses testifying before the committee and a crowd that included college students in green hard hats homemade t-shirts supporting 100 percent auctions of allowances, were split as well. G. Tommy Hodges and Steve Cousins from the trucking industry and a small oil refinery respectively, said the bill would devastate their businesses, while others, including Thomas F. Farrell II from Dominion, were on board, but hoping that changes would be made.

“If the bill had called for 100 percent auctions, we certainly would not be here supporting this,” Farrell said.

It was a little taste of the bigger drama come when the bill comes up for a vote in the entire House of Representatives.

Personally, the IEA's '$180 by 2030' projection seems overblown. Even the most pro-cap-and-trade analysts figure a $50 to $70 per metric ton number will be on the cards in the next 11 years. And even when oil -- which has a direct effect on other energy prices, including CO2 -- peaked last July, Europe's carbon price topped out around $40 per metric ton.

To extrapolate on what happened last summer (quite pertinent as oil prices continue to rise), we won't need such a drastic spike in CO2 prices to jumpstart investment in clean energy technology. For those new to carbon markets, the higher the price to offset carbon emissions, the greater the incentive to invest in energy efficient/low-carbon products.

My answer would be no, but we're getting close. Here's why. On June 8, analysts over at Barclays Capital increased their estimates for global polysilicon production -- the base material used in solar panels. They now expect 2009 levels to hit 90,359 metric tons, an 8.4% increase over previous estimates. Next year, BarCap now predicts production to top 138,563 metric tons, a 13.1% jump from earlier predictions.

The analysts also released global polysilicon demand forecasts, a key measure of market sentiment. A continued lack of short-term project financing means things still don't look good: In 2009, demand will fall 25% annually to 4,454 MW worldwide. But next year, the figures are expected to rebound to 6,837 MW -- a 54% increase over 2009, and well above last year's number of 5,950 MW, which had been an all-time high.

So what's leading the protracted resurgence in solar energy?

Predictably, some environmental groups are against the bill. Friends of the Earth says that the bill "is a huge letdown" with "hundreds of billions of dollars in handouts" to "corporate polluters." (And by the way, the same email asks for a donation!).

But most of the immediate reaction is overwhelmingly positive. Representative John Dingell (D-Mich) weighs in with a gracious note (considering that he was deposed by the current Energy and Commmerce Committee chairman Henry Waxman (D-Calif)) commending Waxman and Representative Ed Markey (D-Mass) for their hard work, and lamenting the failure of Congressional Republicans to get with the program.

California Governor Arnold Schwarzenegger adds that passage of the bill was urged by the Governors' Energy and Climate Coalition, "the largest, most diverse group ever assembled," he says, on the climate issue. The group includes 30 states and territories.

Perhaps the most interesting dynamic here is how many segments of business support the legislation. A group of companies, called the US Climate Action Partnership (USCAP), was instrumental in convincing Congress that major businesses, from General Electric and Dupont to Duke Energy and Ford, backed the idea of mandatory limits on climate change-causing emissions. Now, USCAP points out that "taking action to address climate change provides important opportunities to spur innovation and economic investment, and to strengthen American competitiveness." In other words, it's good for business, not bad, they say.

Ironically, the fact that so many companies are backing the bill has Republicans backed into a corner. The GOP has been forced to make a rather unique argument--bashing Democrats for being in the pocket of Big Business. Quite a turnaround!

The military has a surprisingly green track record. At its Nellis Base, the Air Force built the largest solar array in the US. The Air Force is also a leader in research for bio-based substitutes for jet fuel. Likewise, the Army is experimenting with solar-panels in sun soaked Iraq as a replacement for truckloads of diesel shipped in at great expense. The Army is also driving the push for compact batteries and research into innovative gizmos that use less microscopic amounts of power, or even generate power from soldiers’ motion. That would let soldiers cut the 25-lb. load of batteries they typically go to battle with.

The military is a good shepherd of green technology for a couple of reasons. First, think of the Interstate highway system, built in the 1950s to rapidly move troops across the country, and the Internet, developed by DARPA as a defense project. Both are examples of how politicians are more comfortable doling out public money on big investment initiatives when they're dressed up as defense efforts. Giving some military urgency to the green agenda is no different. Second, the US military has an unequaled ability to promote social changes. From the start of WWII, the army has gone from all-white, all-male to fully integrated and co-ed. In the process, it showed the rest of society how not-a-big deal such change really is.

I'm not, of course, suggesting the acceptance of green energy is on par with overcoming racism or sexism. But the example shows the how the military's pragmatic approach can quickly transform deep-seeded skepticism. Just the sort of kick green energy might need now. How will a little military "can-do" affect America's green efforts?

After all, most of the technologies we're talking about -- from solar panels, to batteries, to green IT -- are manufactured goods already made mostly in China. What's more, China needs new investment in energy capacity more desperately than any other country and is spending more per year than most developed countries put together. Then there’s the political part of the equation. Toxic air, water and earth are eroding quality of life for China’s emerging middle class. As Thomas Friedman suggested in a NYTM piece last year, China’s one-party policitical system has maintained its grip on power by delivering better quality of life year in year out. If that formula fails, latent desires for a more responsive government will surface. Put simply: environmental degradation is a threat to the Communist Party.

Put it all together and it becomes clear. China makes most of the world's stuff and faces a dire need to clean up its environment. China is likely to first become the manufacturing and export base for many of the green technologies the US will buy, as is already the case with solar panels. In time China will likely become the largest market for these same goods, since it is spending far more than the US to build cities, grids, housing, and power plants.

What's surprised me is how fast this has come to be. Over the past three months, I've worked with a team of BusinessWeek colleagues to identify some of the companies emerging in China's green economy. To be sure, this is happening at the edges: Growth comes first and foremost there, so headlines about China’s green issues will be dominated more by its intransigence about greenhouse gasses output than its progress. Just today, Friedman's colleague Paul Krugman tackled this in the NYT, pointing at what's likely to be one of the most vexing issues in the dawn of carbon limits in the U.S.: how to handle the carbon content of imported goods.

But change is afoot in China. And the country’s green awakening, however nascent, opens up many questions. Is China, ironically, the best hope for low-cost green technologies? How should we treat the carbon content in goods it sells to the US? And will the "China price" for green technologies suffocate their development here?

Read more on these issues here in our special report, Can China Go Green?, and let me know your thoughts here, too.

The fact two of the world’s leading solar companies posted poor results, by itself, isn’t that interesting. The green energy sector has been struggling since the second half of 2008. Yet what’s worth paying attention to is both companies’ forecasts for the rest of the year. Q-Cells cut its yearly sales targets by 22% to 25%. And in a statement, Solon said: "In response to the persistent lack of market visibility, the Management Board deems it appropriate to wait until later in the year to announce a forecast for 2009 sales and earnings."

That shows the economic incentives for green energy announced by governments worldwide has yet to trickle down to the industry. For sure, (government-backed) funding is supposed to pick up by the end of the year. But in the short-term, companies like Q-Cells and Solon will continue to bear the brunt of the global recession.

A new study in the May 7th issue of Science magazine calculates that, if cars are to be fueled with biomass (such as by ethanol from corn or switchgrass, or by electricty generated from burning crops), those cars will actually get more miles per acre of crops if the cars run on electricity, than on liquid fuel. Why?

When I interviewed Vestas Chief Executive Ditlev Engel on Apr. 28, he was characteristically cagey about how the new funds would be spent. Yet with the company pushing aggressively into the U.S. and Chinese markets, analysts reckon the money could be used to snap up undervalued assets, particularly cash-strapped technology companies that could strengthen Vestas' own wind-turbine machines.

Vestas' capital raising shows investors still are willing to stump up cash for top-tier green energy companies. But Citigroup analyst Mark Fielding, in an Apr. 29 research note, highlighted an important caveat to the Danish company's rush to tap the market for more funds. "This is the third capital increase by Vestas in six years," he wrote. "And [is] a reminder of the group's poor cash generation history."

That may cause problems for Vestas' ambitious -- and capital-intensive -- expansion plans for new markets, particularly the U.S. and China.