The venture capital (VC) industry demonstrated its commitment to the clean technology space in the second quarter of 2009, pumping $1.2 billion into the sector, according to a report by GTM Research. VC investments in cleantech are up 43.5% from the first quarter of the year, when $836 was put into play in the cleantech space.

The number of transactions increased, as well. In the first quarter, 59 deals were completed, and deal-flow surged 44% to 85 in the quarter just finished. Average deal size remained fairly consistent: $14.2 million for the first quarter and $14.1 for the second.

Venture capital firms Braemar Energy Ventures and Lightspeed Venture partners led the Series C round for Solazyme, Inc., putting $57 million in fresh capital into the company. This brings total outside financing to above $76 million for the algae-derived biofuels company ... and shows yet another sign of life for private investment in green technology.

Solazyme uses microalgae biotechnology for the production of clean fuels, green chemicals, edible oils, and wellness products. The company seeks to "answer the increasing global demand for clean and renewable sources of oil" through sustainable and scalable technologies. The company's renewable oil production process relies on industrial fermentation, in which the algae consume nonfood biomass and industrial byproducts, which the algae converts to oil. End products include renewable diesel, biodiesel, and jet fuel.

A roundup of the dark tidings from BloggingStocks and elsewhere on the Web:

• CDS holders to push GM into bankruptcy despite salvage efforts? (Financial Times)
• Recession creates first April budget deficit since 1983 (BloggingStocks)
• Biofuels fall off a cliff, hard to find opportunity (Earth2Web)
• Georgia Gulf near bankruptcy (Zack's)
• More home owners unable to sell houses opt to rent them out (BloggingStocks)

Sometimes during a crisis the United States rushes toward a solution, only to find that the action was not only not a panacea, it was, in fact, ill-conceived and harmful.

The late British Prime Minister Winston Churchill alluded to this when he noted that, "In the end, America will do the right thing . . . after she's exhausted all other possibilities."

That may very well be the case with corn-based ethanol.

Initially heralded as a renewable fuel that reduces foreign oil imports, it now appears that a powerful coalition is building against corn-based ethanol -- a problematic energy source, in economist Glen Langan's interpretation.

A ' tax dollar not well spent'

The U.S. Government (which means you, the taxpayer) heavily subsidies ethanol from corn production via payments to farmers, Langan said. "The tax dollar is not well spent, either from an environmental standpoint or an energy policy standpoint," he said.

"Cosan SA Indústria & Comércio (NYSE: CZZ) is a terrific company that is benefiting from both higher agricultural prices and higher fuel prices," says Mike Burnick in his newly-launched advisory service, Market Shock Trader.

"Sugar-cane based ethanol has been refined for years in Brazil, at a significant cost advantage to other sources of ethanol. In fact, Brazilian ethanol is about 40% cheaper to make than in the U.S. - and costs less than half the price of European ethanol.

"It doesn't require deforestation or the destruction of natural resources to cultivate it. It can be processed and refined without expensive exploration and drilling. And, it produces 5 times the energy output of corn.

"Today, ethanol accounts for 50% of Brazil's total annual automotive fuel consumption, and more than 70% of all new cars sold in the country are flex-fuel capable, able to run either on gasoline, ethanol or some combination of the two.

"And Brazil's ethanol industry has plenty of room to grow for years to come - and plenty of customers demanding its low-cost cash crop. Germany alone uses about 450 million gallons of bio-diesel a year. An estimated 50% of Europe's cars and trucks can run on this bio-fuel.

"With Brazil at the hub of the alternative fuel revolution, Cosan SA Indústria & Comércio (NYSE: CZZ) is the king-of-ethanol. And, it's also the king-of-agriculture in Brazil too. That gives you double-play profit potential as Cosan earns a fortune from both higher sugar prices and booming ethanol demand.

When oil was at $65 a barrel, almost no one believed it would double. There were a few nuts making the case, but they were ignored like Galileo was when he said the Earth moved around the sun.

Now, it is hard to find analysts who do not believe oil is going to move over $140 a barrel, and, perhaps above $200. Their reasoning is sound enough. Demand in emerging nations like China and India is still increasing. While crude use in the U.S. may be off slightly, it's not off enough to matter. Supplies may be drying up as fields in the Middle East, Mexico, and Russia age. A political catastrophe in Nigeria or Venezuela could cut production.

Against all that, a case for a sharp drop in oil prices is quietly forming and its logic is powerful but poorly understood.

The first argument that oil is too high is that it has been pushed up in part by speculators rushing to cover bets that crude will fall. It is a bit like a "short squeeze" in stocks. Once the "covering" is done, oil prices will face less pressure on the upside.

According to the FT, GE (NYSE: GE) "will announce plans to double its investments in renewable energies to $6bn by 2010."

GE is, of course, smart to put its capital into a necessary hedge against crude oil and gas. Most evidence points to the fact that high prices in this sector will make alternative energies more practical and profitable.

But GE's plan has some drawbacks. The first is that the market for new energy sources will be very crowded. Many of the companies are small. That does not play to GE's strength of being in very large, capital-intensive businesses like jet engines and infrastructure. The capital that makes GE such a winner in its current businesses may not be as important in an emerging industry with hundreds of start-ups.

GE also is entering a business that depends to a great degree on government regulation and tax breaks. In many countries, alternative energy growth is based on incentives granted through taxation or contracts for local projects. That can be fickle. GE may not do fickle well.

Douglas A. McIntyre is an editor at 247wallst.com.

The odds of a 2007 Energy Bill passing the Democratic Party-led U.S. Congress, with President Bush's blessing, "Are still likely," according to a Washington-based, public policy lobbyist with knowledge of the matter.

"The bill will need a few revisions, but I'd say it's a 70/30 go, in favor of the bill being signed by the president," the lobbyist told Bloggingstocks Tuesday, on condition he not be identified by name.

The lobbyist, who represents primarily Democratic Party-based constituencies, said the the bill's renewable energy component and potential tax increases remain the hangups in the bill.

Modification likely

"More than likely President Bush will get the renewable energy component modified, but the Democrats may gain extra footing with better solar/wind energy credits," he said.

The bill current would require utilities to generate more power from renewable energy. Lawmakers from the Southeast U.S. have said they're concerned that utilities in their states will not be able to meet the requirement, due to a lack of wind power, The Wall Street Journal reported.

"Biofuels won't solve the world's energy problems and will never substitute for crude oil," cautions Elliott Gue, editor of The Energy Strategist. "However, generous subsidies will power rapid growth in this industry."

He explains, "The U.S. government has mandated that the U.S. produce 12 billion gallons of ethanol by 2012, up from around 5.4 billion gallons in 2006. But many on both sides of the aisle in Congress want to extend that mandate to a whopping 35 billion gallons by 2017.

"To put that into perspective, there currently isn't enough corn grown in the U.S. to produce 35 billion gallons of corn-derived fuels even if we divert every last kernel to biofuels production.

"In addition, the European Union has aggressive mandates for biofuels production. Even in fast-growing Asia, there's plenty of growth to be found. The U.S. government offers generous funding and subsidies for biofuels production.

"Our recommend play in the biofuels sector is Monsanto (NYSE: MON), whose main business is the production of genetically modified (GM) seeds. GM seeds are designed to exhibit certain traits; examples might include drought, weed, and pest resistance.

It is not a secret that Exxon Mobil (NYSE: XOM) has been criticized in the past for being a little "behind the times" in their stance on global warming. Well, there is an effort to get rid of the chairman of the company's public issues committee, Michael Boskin, and now the nation's largest public pension fund is joining the fight.

According to The California Public Employees Retirement System (CalPERS), Mr Boskin, is not fit to lead the company's committee and should be removed from his position. CalPERS claims that Boskin is not fit due to his lack of communication with shareholders regarding the business risks that go along with the current climate changes.

CalPERS owns 30 million shares of Exxon Mobil, so you can be sure that their view on Mr. Boskin is going to have some weight in whether or not Boskin will be able to continue to head the company's public issues committee. With Exxon Mobil being one of the few big oil companies to refuse to accept the role of fossil fuel burning and the impact it has on the environment, it really shouldn't come as too much of a shock when the company declines to candidly discuss the issue with its shareholders.