MICHIGAN'S $2-BILLION INITIATIVE: State aims to become nation's alternative energy hub

The State of Michigan is racing to become the nation's first alternative energy research hub, as Americans grapple with President George W. Bush's recent statement that the United States is addicted to foreign oil.

The initiative calls for investing up to $2 billion in research, development and business incubation and could create thousands of jobs for engineers and other technically skilled Michigan residents if it's successful.

And, given the president's mandate to wean the country off foreign oil, public and private interests in Michigan are pushing aggressively to ensure that the Great Lakes State is the hub for research in alternative energy.

"We want Michigan to be the state that lays claim to this emerging sector," said Gov. Jennifer Granholm, who pointed out the need to focus on alternative energy research during her State of the State address in January. "To take advantage of that legacy of research and development in the auto industry is a huge opportunity for our state."

Michigan, the automotive capital of the world for the past century, plans to spend $2 billion in bond money in the next decade to ensure that it becomes the nation's alternative energy epicenter. Close to $400 million of Michigan's tobacco settlement revenue in 2006-07 will go to support the program that involves research and development in alternative energy, life sciences, advanced manufacturing and homeland security. About $50 million in grants will be available each year from fiscal year 2006 through fiscal year 2011. State development departments will administer the money.

In fact, much of that money will be earmarked for non-transportation ventures that promote cleaner heating and cooling of homes and businesses.

As a key component of the governor's 21st Century Jobs Fund program, research into alternative energy and renewable fuels is expected to be the hallmark of a new high-tech workforce in Michigan. Among the technologies being examined are:

Hydrogen fuel cells: Fuel cells use stored hydrogen and oxygen from the air to produce electricity to power cars, trucks and stationary products. Fuel cells are virtually pollution free because they create only water vapor as exhaust.

Biodiesel: This is a domestic, renewable fuel technology for diesel engines. It comes from natural oils like soybean oil that can be combined with petroleum-based diesel fuel and used in existing diesel engines with little or no modification.

Ethanol: An alcohol-based additive made from corn and other agricultural products that can be blended with gasoline to promote greater fuel efficiency and cleaner emissions.

Solar: Solar panels capture the energy in sunlight. Solar power can be used in vehicles and households. Sunlight can be converted into electricity, too.

Nuclear: Primarily used to generate electricity, nuclear power is considered by some to be a cleaner form of energy compared to fossil fuel-based materials. The major concern, however, is whether nuclear power is safe enough to utilize more widely.

When asked about the possibilities of nuclear power being part of the future of alternative energy sources, Granholm said, "I think everything should be on the table, as long as it's safe and it's clean and its energy won't result in an accident."

Michigan's efforts to explore futuristic energy sources became more urgent after the president's State of the Union speech last month. In that speech, he named breaking America's addiction to foreign oil as a major priority for the nation.

NextEnergy model

The model for Michigan's rise to the top of the alternative energy sector is the public-private partnership that started NextEnergy in Detroit.

NextEnergy is a nonprofit research-and-development incubator focused on high-tech and alternative solutions to current energy problems.

Since it started in 2001, during the administration of Gov. John Engler, NextEnergy has become Michigan's premier example of how the state's economy is becoming less dependent on automotive companies and more diversified to boost its fortunes.

The 40,000-square-foot facility is near the campus of Wayne State University, in one of Michigan's 11 SmartZones that offer tax incentives to lure technology companies.

The U.S. Department of Energy gave the NextEnergy Alternative Fuel Infrastructure funding to test and demonstrate emerging fuel production and storage systems for vehicles and on-site power -- alternatives such as hydrogen, natural gas and bio-synthetic fuels.

"If we're serious about reducing large amounts of oil, transportation is the place we should be looking," said Jason Mark, a transportation analyst with the Union of Concerned Scientists in Berkeley, Calif. "I think we are one of a handful of places in North America that is focusing a significant amount of attention on this," said Jeff Mason, senior vice president for technology at the Michigan Economic Development Corp. "Michigan is one of the top states that is focusing its attention and investment dollars on research and development of emerging industries such as alternative energy and renewable fuels."

If the $2-billion investment in future energy technologies comes to fruition, it could create about 72,000 jobs in the alternative energy field, according to Granholm and some industry projections. The governor didn't elaborate on the timetable for the estimated job expansion.

Michigan ranked fifth in the nation for alternative energy research because eight of the top 250 alternative energy companies are here, according to a 2004 survey conducted by Plunkett's Renewable, Alternative & Hydrogen Energy Industry Almanac. The companies were Consumers Energy, DaimlerChrysler AG, Delphi Corp., Dow Chemical Corp., Energy Conversion Devices, Ford Motor Co., General Motors Corp., and United Solar Ovonic.

Meanwhile, 17 of the 250 companies had a significant technological presence in the state. In terms of overall investments states made for studying alternative energy sources, Michigan ranked eighth, with $17.37 billion in expenditures.

Currently, Michigan has 51 biomass plants, 12 photovoltaic facilities and seven wind-powered plants operating, and five ethanol plants are being built around the state.

"Whether it's corn production or other types of products that could be converted into ethanol, we clearly can be competitive and have market potential with ethanol," Mason said. "I think we can compete in that arena."

Contact ALEJANDRO BODIPO-MEMBA at 313-222-5008 or bodipo@freepress.com.

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