Thursday, December 27, 2012

We'll Never Get to Where We Need to be This Way….


 The above graph (static version) is from the US Energy Information Agency (EIA) (see http://www.eia.gov/oiaf/aeo/tablebrowser/) a part of the US Department of Energy (DOE). It displays the anticipated energy output from a set of renewable energy systems, based on the real data up to 2011, coupled with the best estimates of what is likely from EIA experts. The EIA gathers lots of important statistics and makes them available to the public, and a tiny portion of the EIA does future estimations of energy consumption and energy production, as well as estimates of how much this energy will be priced at. It is the prognostication part of the EIA, which has a lot of influence in the US and world economy (especially with their "cousin", the International Energy Agency (IEA) that we need to concern ourselves with (great, more stuff to worry about...).

This graph tells a really sad tale - basically, this assumes we surrender to the inevitability of Global Warming, and decide to do essentially nothing about it. The "Other Renewable Energy" category is composed of the following - electricity from landfill gas, biogenic municipal waste (biogas), wind, PV and solar thermal, as well as the heat from active and passive solar. The energy units are quadrillions of British Thermal Units per year (Quads). For reference, in 2010 the US made an average of 29.34 GW electricity from hydropower (257,052 GW-hr/yr, from http://www.eia.gov/cneaf/solar.renewables/page/hydroelec/hydroelec.html,  or 2.98 Quads, as there are 9.84 GW per Quad). Most of that "other renewables" is composed of wind turbine sourced electricity - about 84% in 2010. In 2012, this is likely to be close to 90% wind turbine based.

So what is seen in this top graph is pretty much the end of new additions of DELIVERED renewable electricity (MW-hr/yr) at the end of 2012 in the US (the end of the PTC/ITC incentives which, with the MACRS tax avoidance subsidy, allows wind sourced electricity to be sold at "grid prices" of between 3.5 c/kw-hr to 4.5 c/kw-hr). This leads to horrible graphs like the one below (actual or estimated CO2 pollutant emissions per year for the next 25 years). While on the positive side at least the CO2 pollution rate does not increase, it does not decrease, either, at least to any significant extent.


This is a disaster, climate wise, because if the US persists in powering up in such a reckless manner, much of the world will not change their evil ways and evil trends (in the climatic sense), either - notably China and India (it is assumed that Europe will continue onwards with its renewable energy trend). And if there is more CO2 put into the atmosphere than is taken out by dissolution into the oceans (as is the present case), then CO2 concentrations will continue to INCREASE at a rate of between 2 to 3 ppm/yr, at least. And if CO2 concentrations just stay constant, things will keep going from bad to worse. But, if CO2 concentrations INCREASE, well, "worser" will come faster, and at an accelerating rate, too. Uggh!!!!

But, this fast trip to more or less permanent weather disaster (floods, droughts, tornadoes, hurricanes more severe, more common, and pretty much the extinction of most trees in the western part of the US due to forest fires that can't be brought under control due to super-intensive droughts, and then coastal flooding to beat the band) is only made a more likely event through the inability to install more renewables. And in this piece of EIA science fiction (a nasty, dystopian version, too), electricity from polluting sources is made possible to the exclusion of all else via cheap natural gas, which keeps coal prices ALSO cheap.


Right now, fracking provides about 30% of the 24 trillion cubic feet per year (tcfy) (see http://www.theoildrum.com/node/9736#more) we use in this country. Four years ago, that was less than 5% of the US Ngas supply. Fracking was not chosen as methane source because it is cheap; it is about 5 to 10 times more costly than conventional methane extraction approaches. But, those conventional sources are rapidly depleting, and these presently cannot supply 24 tcfy in the US - only about 16 tcfy. Prices need to be in the $10/MBtu range, at least for tracking based Ngas, to justify the average added risks and costs, and due to the way the natural gas market is structured in this country, almost ALL natural gas gets this price if any gas gets that price, even the stuff from old conventional fields which is incredibly cheap to produce. To maintain a consumption rate of at least 24 tcfy without resorting to imports (why go to the US when Ngas in Europe goes for $11/MBtu and $16/MBtu in Japan…), MORE Ngas has to come from fracking over the next decade, not less.

But most tracking wells are losing money at present prices (this week the spot price (Henry Hub) is around $3.30/MBtu, though a small minority of prolific fracking Ngas wells are profitable at these prices. If the average tracking well needs $8.30/MBtu and is only getting $3.30/MBtu, this loss (8 tcfy * $5/kcf = $40 billion/yr) is projected to last for at least 10 years, but it will rise to $80 billion/yr (16 tcfy from tracking). This scenario of cheap fracking sourced Ngas just does not compute…

Cheap Ngas also begets cheap coal prices. Cheap coal and Ngas prices lead to low cost electricity, and increased electricity usage (why bother being efficient, since it is SO cheap…..). And cheap electricity from pollution based fossil fuels prevents renewables from providing increasing amounts of electricity that also result in less CO2 pollution. Such trends are exemplified in this graph:


 And with effectively no jobs in the manufacture of renewable energy systems when the wind turbine installation rate is effectively zero, there is unlikely to be any economic rationale to make more renewable energy systems, and specially the most cost effective ones, commercial scale wind turbines (made so by the incredible US wind resources). And above all, there will be no POLITICAL drive to keep the 75,000 now employed in the wind biz and the up to 1 million people who COULD BE employed in this sector of the economy. Or all the people who would be employed by the 75,000 or if the 1 million people WERE employed in the wind biz.

So there is a lot involved in the climate nightmare that is a logical conclusion of the EIA forecast of the end of the wind biz (as shown in the top graph) and of significant new renewable energy DELIVERED to our country (remember, capacity to make electricity is not the same as electricity made). For the time being, almost all renewable energy made that is not biomass or hydropower sourced is wind sourced - PV has a negligible effect on prices and is no threat to Ngas consumption, nor does it exert any significant downward effect on electricity and especially Ngas prices. But wind turbines do such things, and that is why a lot of effort is being directed to kill off this young industry before it spreads and does some serious good with respect to employment, economic activity, real wealth creation and CO2 pollution mitigation. Maybe you should take up this obtuse issue (EIA future energy trends with respect to renewable energy) with your elected officials. Or better yet, do something about why pollution based energy gets loads of subsidies, but the wind biz should either get none (and thus go extinct), some (like the bizarre but better than nothing PTC) or else a sane pricing system that does note NEED tax avoidance subsidies like Feed-In Tariffs (FITs) or at least the less effective than FIT mandatory quota systems, which at least DO work.

Your world (got another one - yeah right, not too likely), and your choice (well, you and a lot of others, and maybe not much chance of affecting things much, either, but what's the alternative?). As Quicksilver Messenger Service  famously stated "Whatcha gonna do?"(http://www.youtube.com/watch?v=PZ-O4HsP_-o), well, that's also a good question about both our economy and what we want to do about our electricity supply. Our future ahead may be a rough ride, but why make it worse by putting the peddle to the metal with respect to CO2 pollution and its result, Global Warming? Why not at least try to make the world a better place? Why settle for the doom that  is this EIA vision of horror? And hey, maybe there needs to be some proverbial kicking of butt in the EIA? Let's start with the upper management: http://www.eia.gov/about/senior_executive_bios.cfm

BTW, this (see picture below) is the one of the main ways that we can have a sane and functional climate in the near future and still have electricity at a significant scale and quantity. Without these (and lots of these), we can have electricity but not a sane climate. And with 7+ billion people in the world, achieving a sane climate but without sufficient access to energy is probably not a good space to be in. And this is why the top graph represents such a really bad idea..... and why this image below represents a much better alternative..


from http://renews.biz/wp-content/assets/Vestas-v100-wind-turbine1.jpg





Saturday, December 22, 2012

Absolutely Unjustifiable Optimism

Some Enercon wind turbines (E-101/E-115 left, E-126 right)

Given the state of the wind business in December of 2012, optimism about our nation's energy policy, economic policy and climate policy (which all also affect the world's future economic, energy and climate arrangement) pertaining to a better future seem completely unwarranted. Maybe the rosy view might be a bit more justified in the future (a month, a year, a decade?), but not right now. So many people in positions of political, economic or media power/influence seem to be just tubing these issues, big time - they must think the days of apparently limitless fossil fuel supplies and an atmosphere and ocean with the seemingly infinite ability to sponge up all the resultant CO2 emanations so the the planet's climate remains essentially unperturbed will go on and on forever. Silly people…..

But what the heck, why not go for the optimistic gusto? Let's splurge and cogitate on a better way to make electricity and things that can be made at a reasonable price using what we know works now. Let's imagine our leaders do what is right by the planet, and by most people, and not just for the lucky few (which usually includes themselves in that picture - right?)… So, off we go……

Recently, GE announced that they had just sold their 20,000th wind turbine - but their arch-nemesis in Germany - Enercon - has also just sold it's 20,000th turbine. And that unit was not just any kind of turbine - it was one of the biggest in the world (see top picture) - the E-126 (now undergoing serial (or "mass") production about 100 to 200 per year). This VERY hard to hide unit (a 135 meter (443 feet) tall tower, 126 meter (413 feet) rotor diameter) is rated at 7.5 MW, and for about $US 20 million, it can be obtained as long as you don't want it installed in the USA. Like with many Enercon units, the tower is made of reinforced concrete (steel is too flexible), and like all Enercon units, this unit is gearless, often with around 108 poles on the low rpm generator (higher spinning speed generators only have 4 or 6 poles). Turbine number 20K was installed at a huge auto raceway (sort of like Watkins Glen) in Brandenburg, and the intention was most definitely NOT to hide it. For those opposed to wind power, this is an in your face refutation of the superstition, bigotry, ignorance of science and climate insanity that generally (key word here is GENERALLY) seems to be associated with hatred of renewable  energy systems. And since the winds at 135 meters above the ground are roughly 12% faster than those at 80 meters in forested regions (like those in Brandenburg or Watkins Glen), this E-126 should be able to put out about 1.4 times as much power per unit rotor area as a smaller unit on an 80 meter tower (which is the majority of US commercial scale wind turbines).

Enercon is a privately held company that does not have to pay dividends, unlike GE, which is a publicly traded company. GE makes all kinds of energy related stuff, both pollution related (gas turbines, steam generators for coal fired plants, nuclear reactors, coal based sun-gas systems) and renewable (biogas gen-sets, wind turbines, steam turbine/generators for biomass, geothermal and solar thermal systems), while Enercon only makes renewable energy systems, and is almost entirely wind turbine oriented. But, between the two companies, over 60 GW of wind turbine capacity has been installed worldwide, with an output equivalent to 20 x 1.1 GW rated nukes. But these wind systems are not made for altruism - this is a money making arrangement. The combined sales of the GE wind division and Enercon (an odd corporate couple if there ever was one) is over $120 billion in the last decade. Nice work if you can get it…. and a bit more than chump change. Plus, they both see growth opportunities worldwide in the wind biz, even if the US wind industry for 2013 is but a shadow of what it was for 2012…

Wind turbines have a number of nifty features. They have an EROEI (Energy Returned On Energy Invested) value of between 20:1 to 40:1, far greater than what PV is for good locations (about 6:1). For an EROEI analysis, all of the energy used in making and installing the system as well as the "embedded energy" in the materials used (for example, concrete and steel) is added up and compared with the expected lifetime energy output. The "energy payback" period of a wind turbine tends to be 6 months to a year, depending upon the wind speed at the given location. And thanks to the development of "Low Wind Speed Turbines", about half of the land mass of the planet can generate electricity at prices between 5% to 50% of the same location's solar photovoltaic potential. Another nifty feature is production cost stability - annual production costs are fixed when the financing for the project has been nailed down, so that long term power purchase agreements are a viable way to do business. And once the turbine has been paid off, production costs are really low - between 1 to 2 c/kw-hr. The electricity production without CO2 emanations is also pretty cool....

So let's get cracking, and "Git 'er done", as that sage provider of wisdom (Larry the Cable Guy) is known to say in his very emphatic way.


And since "we're not gittin' 'er done", climate-wise, what's the problem? There's that widespread unemployment problem, and that infernal Global Warming "super-wicked problem" which both need to be solved ASAP. Wind power might just be THE dominant way to do this, world wide - but especially in the USA, (since we have such an awesome wind resource both on and offshore) much to the chagrin of futurists and other prognosticators of what is likely to come (wind turbines never seemed to be in their picture..). Especially in conjunction with either pumped hydroelectric (low cost option) or compressed air (more expensive, but when you either don't have hills and/or water…) energy storage facilities. We in the US should have at least 1 million people directly employed making and installing wind turbines, and yet peak employment maxed out at around 75,000 earlier this year before it became apparent that the PTC incentive system was not going to be allowed to be extended by Republicans in the House of Representatives. There is so much room for improvement… so what's the problem? You don't want to be in violation of Larry the Cable Guy's Climate Fixing Edict now, do you?


Actually, the problem lies with the way we pay those who generate electricity, and what costs imposed on the world are not paid by those paying for the electricity. Right now the going rate paid to electricity generators in the US is in the 3 to 6 c/kw-hr range (it's likely to be 3 c/kw-hr in WNY for 2012). And if we decide that since we haven't paid for the CO2 pollution problem (or the nuke rad waste trash disposal problem, either) and we really don't want to raise electricity prices by between 8 to 10 cents/kw-hr to do this, maybe there is an easy compromise. If it costs around 6 to 12 c/kw-hr to generate electricity by commercial scale wind turbines (depends what the wind resource is at a given location), maybe we could just set a price for wind based on the average cost to make it in a given region plus some reasonable profit rate. The cost to make wind based electricity remain constant (yearly basis) and are not affected by the price of coal or natural gas (which don't necessarily reflect the cost to deliver them to their users but instead how much money can be extracted from those users). Pricing systems for electrical generation based on fossil rules or renewables should not be the same if the cost of fuels is pretty much the main refrain (coal, natural gas) or irrelevant (wind turbines). Putting your left shoe on your right foot is stupid, and so is using identical pricing arrangements for wind turbines and pollution based fossil fuel powers approaches.

So that's how you "Git 'er Done". Got a problem with that? That same pricing system was integral to winning World War 2, where we simply out-produced Nazi Germany and Imperial Japan COMBINED as part of the war effort.

And while the USA is nominally a democracy, the number of non-politicians who are the main determinants ("energy deciders") of how our political leaders vote on energy related issues (and pricing is the big one on energy) is a really minute fraction of our population, and as a rule are wealthy white dudes. And while it might be possible to identify them, convincing them is likely to be an impossible (at minimum highly improbable) even if you are a relative, offspring or spouse of them. It would be nice to think that that sad dog look (when it's time for food but the owner spent the dog food money trying to get lucky (if you know what I mean), and probably endedcoming up unlikely, the owner is going to rightly be on the receiving end of THE LOOK) would dip the trick. You know, the kids saying "why are you trashing my future, big time?", along with the neighbors and everyone else in the community of these "energy deciders". Except the communities in which these "energy deciders" tend to live are all filled with rich white dudes - and rarely young ones, either - in some very socially, economically and quite often politically segregate communities.

Odds are, some candidate states (like NY?) will need to be selected, and some relentless citizen pressure will need to be applied to both politicians and those "energy deciders" who tend to be walled off in rich people suburbs. And they will need to be proverbially beat upon with the combination of green jobs, economic activity and sane climate compatible policies, and called out when they are promoting lies, such as "tracking is good for us" (the apparent present Cuomo NY State energy policy). And while this may seem like the equivalent to pumping out a malfunctioning septic tank and at times quite distasteful, remember that life is a lot better when such things are working than when they are not. It took many decades to build up the non-renewable, depleting resource based energy system that runs our country. And its has been a decade of "money for nothing" renewable energy pricing systems based on the de-facto policy bribing of rich people via tax avoidance subsidies that needs too be overcome. Just like in physics where to move a body at rest it requires energy to be expended, it's going to take work to adjust the electricity pricing system in a place like NY State. But seriously, what's the alternative - more unemployment, more Frankenstorm Sandy's as well as ever increasing energy prices and exports of money to pay for imports of fossil fuel energy if we keep the status quo? That sounds like going nowhere, ad infinitum. Nope, it's got to be "pester politicians relentlessly", and proverbialy "beating upon their financial contributors" until the job gets accomplished. And don't forget to shine a light on shady groups like the local "Chamber of Commerce" or equivalents..   They will only change if they are "motivated" by others, even if they stand to make a ton of money "going renewable".

Anyway, we have a change of year coming up soon. Time to get cracking' and "Git 'er Done". Besides, some of those wind turbines can be so darn photogenic….


Images: Enercon turbines, from "Windblatt" Vol 3, 2012 (http://www.enercon.de)
Larry: http://ecx.images-amazon.com/images/I/515zAbqlGaL._SX500_.jpg
http://www.dcows.com/images/git_done.jpg
http://www.flickr.com/photos/fhuinbe/6404894305/in/pool-1004576@N23/lightbox/


Friday, December 21, 2012

Waiting For the End of the World…

Some GE 2.5 MW turbines located in farming country somewhere in the world....

This (Waiting For the End of the World) can take on a lot of meanings, and its also a nifty Elvis Costello song. Today is the shortest day of the year in the northern hemisphere (Winter Solstice), and for number freaks, well, 12-21-12 is about as good as it gets, datewise. Elvis wrote his song a long time ago (36 years ago) for the album "My Aim Is True", and it still has attitude on and comment about bad behavior that seems to be just what is needed to cope with humans in the year 2012:

You may see them drowning as you stroll along the beach
But don't throw out the lifeline till they're clean out of reach

Waiting for the end of the world
Waiting for the end of the world...
http://www.playlist.com/search/Waiting+For+The+End+Of+The+World#a/r_02/0tc/

Oh, by the way, according to some misinterpretations of Mayan calendars and mythology, today is pretty much the end of it all (big meteor crashes into earth or something..). Or not…

There is a similar "end of the world" moment going on with the wind turbine business in the US. The small incentive that allows wind turbine sourced electricity to be sold at ~ 4 c/kw-hr or less is commonly referred to as the "Production Tax Credit", or PTC, though it also includes the Investment Tax Credit" (ITC), and all projects done under the Section 1603 (must be started by the end of 2011, has to be finished by end of 2012). In general, the US federal subsidies amount to around 2.8 c/kw-hr as evaluated over a 20 year stretch. And only the really, really rich can utilize them, which is why that group is the only one who can own wind turbines on a commercial scale (there are minor exceptions, but the key word is MINOR) in this country. The amount of installed wind turbine capacity completed in 2012 will be a record for the US (estimated to be near 12 GW, or roughly 4 GW on an average delivered basis). And activity has been frantic of late, with lots of announcements of wind farms being commissioned (made operational by the definitions in the current PTC law). About $25 billion in activity will have been done for the year 2012 in the US, also a record.

So, a $25 billion in sales/installations industry gets "poofed" - as in "disappeared" in the Argentinian Junta sense (they were really bad people), where they "disappeared" troublemakers by flying them out over the cold southern Atlantic Ocean waters in helicopters, and threw them into the water - no one ever survived, and no traces of bodies were ever recovered, and this was done to several thousands of people over a few years…. Job killing, and by an Act of Congress (actually, an act of omission..), no less. There were several attempts at extending the PTC past the end of this year in the US House (all unsuccessful), but extensions were only passed in the Senate. And bills have to get passed in both the House and Senate before they can go to the next step (signed by the President, and that would have happened with a PTC extension).

It is simply amazing that a $25 billion dollar industry can get annihilated via legislation and it hardly gets mentioned in what passes for our "Main Stream Media". Aren't we as a nation still hurting (macro basis) economically speaking?, Granted, we do have a $14 trillion/yr economy, but $25 billion/yr still rates as significant. Plus, over the last fours years, the size of the US wind turbine "fleet" DOUBLED, quite the feat considering that this happened during some of the worst economic conditions experienced since the Great Depression. And 75,000 people were employed in the wind biz at its peak earlier this year in the US. Sure, it's only 0.06% of our nation's employment, but still… Oddly enough, most of the job losses will be in Republican states (notably Texas). And recently anti-dumping tariffs were just imposed on a bunch of Chinese companies (and a Vietnam one), though it is too late for DMI and Trinity (wind turbine companies that shut down or sold off their tower factories).

In about a week, there will be close to 60 GW of wind turbine capacity installed in the US chugging out an average 20 GW of electricity. This is the reason why the PTC is being allowed to expire, essentially all at the hands of Republican legislators - it got too successful for its own good. Yes, this means that US imports of Canadian natural gas (or production from tracking wells) get offset by 1.5 trillion cubic feet annually, which is about 6% of the current US natural gas consumption. By knocking back annual consumption by this amount, this keeps the price of natural gas significantly lower than it otherwise would be. And it keeps the price of electricity lower as a result of these lower gas prices. It also tends to lower coal prices a bit (though exports are keeping coal prices pretty high these days, and US coal production near the 1 billion tons/yr output rate). And this saving of close to $100 billion/yr in the form of lower gas and electricity prices does not amuse the nuke, coal and natural gas business executives one bit. Or the oil industry leaders, either - and it is the oil industry which produces so much natural gas either deliberately or as a by-product of oil production. They are not amused at all…. In fact, the Koch-head front group "American's for Prosperity" (of only a few Americans) has made prevention of the extension of the PTC one of their top priorities. Oh well, all's fair in love and war, and business is often described as war without the romance, with rules set by those who buy those rules….

Oh, by the way, those cheap natural gas prices that are keeping the winter heating bill cheap this year and are significantly that way because of the 1.5 tcf of natural gas NOT burned as a result of wind turbines - you're welcome. For more on that, see http://www.nawindpower.com/e107_plugins/content/content.php?content.9881#.UNR_8xB5mK1; keep in mind, some key players in the energy business in North America will not have their interests served by cheaper long term energy prices arising from wind power. Oh well, can't say that you weren't warned about this backlash against wind power....

Anyway, maybe the PTC will get re-upped sometime in 2013. The House just adjourned is disarray and it is apparent the Teabagger wing of the Republican Party is not yet prepared to govern. But this might not happen for many months, or perhaps a year or two. So, for the time being, we can do a wake for the US wind biz:

US Wind Industry  RIP December 31, 2012. Rest in Peace, and good luck to all concerned…

There were a number of records set this year., world wide and in this country, wind power-wise. Part 1 of the London Array (630 MW, 175 wind turbines) is now the work's biggest offshore wind farm, though not for long. Within 3 years it should be up to 1000 MW capacity, in some really windy shallow waters. At the beginning of 2012, the largest offshore array was 300 MW or so. Areva (mostly known as the French government's nuclear reactor company) just landed a 400 MW offshore wind farm contract for their 5 MW (ex-Prokon-Nord) units, a spiffy $US 1.8 billion deal, half of which goes to Areva - see http://www.offshorewind.biz/2012/12/19/iberdrola-selects-areva-turbine-for-wikinger-offshore-wind-project-in-germany/. In the Irish Sea (between England and Ireland) just southeast of Dublin the 1 GW Coddling Wind Farm gets started with the contract for the grid connection (about 325 wind turbines, type not yet specified - see http://www.offshorewind.biz/2012/12/19/fred-olsen-renewables-secures-offshore-grid-connection-for-codling-wind-park-ireland/). Meanwhile, the East Anglia ONE (there will be a few) wind farm (1.2 GW) - to be located northeast of London on the other side of England - submitted its completed project plan (http://www.offshorewind.biz/2012/12/17/uk-eaow-submits-east-anglia-one-planning-application/). So life goes on in the wind biz outside of America/in spite America. Things are going decently in the rest of the world, notably Brazil, South Africa, India, Australia, China and japan (though China is essentially a market closed to all but Chinese companies, again with minor exceptions..

And GE just announced it has installed it's 20,000th wind turbine (done in 10 years - see http://www.windpowerengineering.com/construction/installation/u-s-oem-installs-20000th-wind-turbine/). Most of these reside in the US, and most are 1.5 MW, but new sales are either 2.5 MW or else Low Wind Speed 1.6 MW x 100 meter rotor diameters units. South Dakota and Iowa now average more than 20% of their electricity from wind turbines, though this is barely scratching the surface of their wind potential. And recently the US DOE handed out some real money to get offshore wind turbine "mini-arrays" installed in 7 locations in the US - including 2 "floating" examples (one for Maine, one in Oregon's waters) and money for the Cleveland Crib array in Lake Erie (http://www.offshorewind.biz/2012/12/13/doe-selects-seven-projects-to-demonstrate-offshore-wind-technologies-usa/). And as of now, NextEra (a subsidiary of Florida Power and Light) now owns 10 GW of wind power projects, almost all of them in the US - this represents an investment of about $20 billion in wind turbine arrays, most of which were installed in the last ten years(see http://www.nawindpower.com/e107_plugins/content/content.php?content.10851#.UNRct4Ud4Xw). A lot off those were GE wind turbines, too, including the 400 MW Limon wind farm in Colorado, which pushed them over the 10 grand MW landmark…Once those get paid off (and some of them are now paid off, these will become some of the lowest cost energy production systems (only hydroelectric might be cheaper). Talk about a cash cow….that's a big one. Meanwhile the Nebraska Public Power District (NPPD) the state owned electric monopoly in Nebraska decided to spend money boosting the capacity of its Cooper nuke, despite the many problems associated with such projects (Vermont Yankee, for example). Two obvious problems are associated with the changing climate - yes, Global Warming is striking out at nukes. There are the floods associated with the intensity of rainstorms combined with the trend towards the desertification on Nebraska, a predicted effect of Global warming in essentially any climate model worth a hoot. Without cooling water, nukes don't work (drought mode as in 2012), and if there are intense floods (as in 2011), that can lead to disaster via electrical "islanding" and problems  with keeping a shut down nuke cooled via electricity imported across flooded lands. Nebraska has an awesome wind resource, rated at at leaf 100 times its current consumption just using high quality only winds. Must be nice….

And if you are looking for a growth business opportunity, maybe you should check out underwater high voltage cables. A recent report estimates that 1100 submarine power connectors, mostly due to offshore wind power plant projects (http://www.offshorewind.biz/2012/12/21/usa-more-than-1100-new-submarine-electricity-cable-systems-planned-from-2012-to-2020/). However, some of these projects will be island/continent to island/continent projects, such as the 600 MW Ireland-Wales connector, the Atlantic Array (6 GW between Virginia and Long Island), the Great Britain-Norway connector and the Netherlands-Denmark one. Such cables are around 6" thick, usually have fiber optic cables incorporated in them, and can be either AC (3 wire) or HVDC (single wire, with the ocean being the "ground" wire). The boldest proposal to date is an Iceland-Scotland project. In such projects (plus associated cable laying vessels), quality counts, labor cosdts get trumped by quality issues and the US has quite a history of deep sea cable installation (the US Navy has essentially covered most of the Northern Atlantic and Pacific with sensors to track Russian submarines - and the same skills are needed for HVAC and HVDC cables as for submarine detection cables…. Maybe Gov. Cuomo might want to invest in HVDC and HVAC underwater cable manufacturers for WNY (Corning would like it for the fiber optic aspect), instead of specious pharma crapshots….

Oh well, this is no longer a battle of Global Warming denialists versus the rest of us with respect to the science of it. Wind turbines are the renewable energy source that can deliver massive quantities of electricity at affordable prices in the US - on an unsubsidized basis (which PV cannot really do, even in desert locations, and to date, NY State is not a desert) - though it still needs subsidies to compete with subsidized and often below the cost of production pollution based energy. This is a political battle that can employ or dis-employ close to 100,000 people in this country, even when the ridiculously complicated and obtuse subsidies we use are in force. Right now, a section of the Republican Party has decided to dis-employ 75,000 people, and apparently they are quite proud of themselves for doing this. And now it's time for the public to judge them on their pro-bad economy and pro-unemployment (as in fewer employed and more people looking for work).

What say ye on this matter? After all, we have a couple of right wing extremeophiles (Reed, Collins) who will be working hard to put a hurt on our world via more COI2 pollution for our energy instead of less CO2 for our energy. Maybe they have to go, and soon.

And lastly, here is a really elegant essay by Dave Roberts of Grist - very timely: http://grist.org/climate-energy/newtown-tragedy-empathy-and-growing-our-circle-of-concern/. Here's to a better future, one that improves on the past and not one that takes 2012 as its cue and makes things even worse….








Thursday, December 13, 2012

Thoughts on Bill McKibben’s Article “Global Warming’s Terrifying New Math”



I have been following the issue of Global Climate Change for years, thinking about it, reading about it and experimenting with lifestyle changes that, in a very small way, would anticipate the kind of lifestyle we will likely be living in the future, when high prices will make us use energy in dramatically different ways.

I recently read an article by Bill McKibben that has changed the way I think about Global Warming.   The article was “Global Warming’s Terrifying New Math” and it ran in the Rolling Stone Magazine on July 19, 2012.


Over the years, as I have “bent the ears” of my friends on the issues of energy and climate change, I have found it much easier to talk about “Peak Oil” and the dangers of high energy pricing than the threat caused by Global Warming.   For one, Peak Oil is a more manageable problem, more tangible and easier to explain.   Anyone who lived through the Oil Shocks of 1973 and 1979 remembers how disruptive it was.   As bad as these Oil Shocks were, a conversation about Peak Oil doesn’t have the same emotional content than the “world is coming apart in slow motion and there is nothing we can do about it” feeling that accompanies a serious discussion of Global Warming.  
So, I would tell my friends that “the easy to reach oil has been gotten” and that “what is left is in smaller deposits, really hard to get and very expensive to extract”.   This will result in much higher energy pricing in the future than we are used to.   “It is not that there won’t be any oil in the future” but, it will be so expensive that “we won’t be able to use it” the way we are used to using it now.   So, there will be no more driving 5 miles to the nearest corner store to buy a quart of milk.  Given this situation, it would only be prudent to develop renewable energy facilities to hedge our exposure to, and reduce our dependence on, fossil fuels.  I would tell my friends that, in my opinion, one of the first signs that the economy is “truly picking up” is the “price of oil and in particular gasoline, will go through the roof”. 
It is not that I wasn’t worried about Global Warming, it is just that I assumed that high energy pricing would initiate the beginning of the 20 year plus process of creating an infrastructure required for a low carbon economy.   I assumed that the economics would compel us to move away from the volatilely priced fossil fuels.  And in the process, the problem of Climate Change would “solve itself”.
After reading Bill McKibben’s “Global Warming’s Terrifying New Math” in the July 19th issue of the Rolling Stone, I am not so sure of my comfortable scenario.   I am questioning whether high future energy pricing will generate results fast enough to avert climate disaster.  
McKibben’s article talks about three numbers that are important to understanding Global Warming.  The first of these three numbers is 2 degrees Celsius (3.6 degrees Fahrenheit).   After some 20 years of discussions, about the only thing the world leaders have been able to agree on is they don’t want the average surface temperature of the Planet to increase any more than 2 degrees Celsius.  To put this in perspective, so far, since the beginning of the Industrial Revolution, the average temperature of the Planet has increased by about 0.8 degrees Celsius.   The weird weather we have been getting this last 10 years: the floods in Europe in 2002 and 2010, the severe drought and brush fires in Russia in 2010 & 2012 (who ever heard of forest fires in Russia before?), the washing away of Pakistan in 2011, the record summer time shrinkage of the Arctic ice cap, the Pacific Hurricanes that in recent years started striking Mexico and North America from the West (since when have Hurricanes been arriving from the West?), the huge drought in Midwestern U.S in the Summer of 2012, all of that is in keeping with a 0.8 degree Celsius increase in average global temperature.  The article said that climate scientists have been shocked at the amount of devastation resulting from just a 0.8 degree Celsius increase in average temperature.   But, there is another 0.8 degree Celsius increase in average global temperature already “baked in” to the atmosphere that hasn’t expressed itself yet.  That is, the carbon dioxide has already been emitted to the atmosphere but its effect takes place gradually and we have not yet seen the full amount of heating that these emissions will eventually bring about. 
The second number to understanding Global Warming is 565 Gigatons of carbon dioxide.  A Gigaton is a billion tons.   According to the consensus of the climate models, we can cumulatively emit another 565 Gigatons of carbon dioxide into the atmosphere and still stand a 4 out of 5 chance of not heating the atmosphere above the 2 degree Celsius goal.  Which, is another way of saying that, at that level of emissions, we would still have a 1 in 5 (20%) chance of exceeding the 2 degree Celsius goal (assuming, of course, that a 2 degree Celsius average increase in temperature of the Planet is acceptable).   To put the 565 Gigatons into perspective, in 2011, according to McKibben, mankind emitted 31.6 Gitatons of carbon dioxide.   This represented approximately 3.2% increase over the year before.  At current trajectories, we will reach the 565 Gigaton cumulative emissions in approximately 16 years.
The third number of Global Warming is 2,795 Gigatons.  This number represents the amount of potential carbon dioxide emissions that is currently sequestered and in the ground, in the proven reserves of all the world’s oil, natural gas, and coal companies as well as, as McKibben puts it, those nations with huge reserves “that act like fossil fuel companies”.   This doesn’t count unconventional fossil fuel reserves like the tight shale natural gas deposits that are currently supplying 30% of the natural gas needs of the United States.   The problem is, the proven reserves hold 5 times the carbon dioxide emissions than the planet can absorb if we want to keep average global temperatures from rising beyond 2 degrees Celsius.   At current market values, according to McKibben, these proven fossil fuel reserves and the companies that own them are worth approximately $27 trillion.  If the planet is to keep from cooking, these fossil fuel companies and the nations that act like fossil fuel companies are going to have to keep 80% of these deposits in the ground, thus reducing the current market value of all these entities by about $20 trillion (in recent years, the annual total of all goods and services produced in the United States economy was around $14 trillion and the world economy generates around $40 trillion in annual goods and services).  It might surprise you to learn that, most likely, the fossil fuel companies and nations that act like fossil fuel companies, have no intention of leaving 80% of their proven reserves in the ground.   As Naomi Klein who is quoted in the McKibben article puts it, “wrecking the plant is their business model, it’s what they do”.  
So, where does this leave us?   Those of us, that is, who don’t want the planet to burn?  As much as I would like to advocate the promotion of more renewable energy as a “hedging strategy”, a way of producing fixed price (but somewhat more expensive) power to reduce our dependence on fossil fuel electricity and it’s wildly gyrating prices, I think we have to focus on the bigger picture.   The potential CO2 emissions stored in the proven fossil fuel reserves represent a dire threat: to our climate, our ability to consistently raise food in a fluctuating climate, and to our very civilization.   The provision of cheap, polluting energy is not worth the risk of destabilizing the climate.  These new weather patterns of record floods, record droughts, and record heat compromise our ability to produce food on a reliable year after year basis.  Or, as I tell my students “anyone who wants to eat, consistently, 4 out of 4 years has a dog in this fight”.    My students generally agree, that the prospect of generating enough food to eat 3 out of 4 years “just doesn’t cut it”. 
There are public policies that can make significant impact on these issues including: carbon taxes, cap and trade, renewable portfolio standards and Feed in Tariffs (FITs). 
McKibben advocates for carbon taxes, but I agree with David Bradley from the Wind Action Group (WAG) Engineering Blog, that carbon taxes would have to push the price of energy very high to make renewable energy price competitive.  These high taxes would be very regressive, severely hurting the poor and ultimately would not be politically feasible.  A gradually growing carbon tax would heighten the awareness on the part of business that consuming fossil fuel has a real monetary cost (which would be good) but at a time of climate change urgency, it would probably take too long to have much effect.  
The Cap and Trade policy was extraordinarily effective reducing the emissions of Sulfur Dioxide and Nitrous Oxide generated acid rain at minimum cost.   This policy could potentially generate payments to third world countries to help finance the construction of new renewable energy facilities at very low additional cost rather than new cheap coal fired plants that would doom the planet to more CO2 emissions and climate disaster. 
The Renewable Portfolio Standard policy creates a goal of a certain percentage of total energy produced from renewable sources by a certain target date.  The government then pays renewable energy developers a certain amount, per unit of renewable energy produced, above the current market price of electricity, over a multi-year contract to compensate the developer for the additional cost of producing renewable energy compared to the cheaper but dirtier fossil fuel generated electricity.  This policy works when the market price of energy is high but dooms renewable energy generators with income less than operating costs when the market price of power swings low, like it is today.  
The Feed in Tariff policy uses the same amazingly successful incentive mechanism that the United States used to retool it’s industry to a war time footing at the very beginning of World War II.  It offers renewable energy developers no tax payer subsidy for construction, but instead guarantees access to sell their units of power to the grid at a 20 year fixed price that is sufficient to amortize their construction loans and earn a socially acceptable profit on their investment.   It has proved to be the cheapest and most successful method of incentivizing the development of new renewable energy investments and more importantly the creation of renewable energy manufacturing industries and their associated jobs.  
I think, given the urgency, that an “all of the above” policy that combines a modest but growing carbon tax, in addition to a modest but growing cap and trade policy, combined with a robust Feed in Tariff policy similar to Germany and Ontario, is in order.   This would make carbon based energy sources have a real and growing cost, provide cap and trade revenue to finance the lowest cost methods of reducing carbon emissions across the planet and make it financially feasible to actually develop and operate renewable energy facilities in an energy market that is experiencing wide price fluctuations.  
No matter what policies are introduced, we have to face the fact that our long-term survival as a civilization is dependent on our ability to raise food and we can’t reliably produce food in a destabilized climate regime.  The urgency is too great, we must call it for what it is, Climate Change, by threatening our food supply, is an existential threat to our civilization.  We must act now. 

Derek Bateman serves as the present Chair of Buffalo’s “Wind Action Group”.  Any opinions expressed in this editorial are entirely those of the author and do not in any way reflect positions of the Wind Action Group.

NY's Maple Ridge (2) wind farm in a very photogenic mode - a cure (one of many) for pollution sourced energy that is putting a hurt on our planet's climate... picture source at http://www.rechargenews.com/multimedia/archive/00035/MapleRidge2_72_35909b.jpg



Monday, December 10, 2012

FITs vs. CO2 Sin Taxes - The Math

An Enercon turbine recently installed in Canada. These are considered the highest quality turbine made in the world, and you can't buy them for installation in the US. These feature tall towers so that the turbines can be installed in forests, where trees produce significant ground level turbulence and resistance to wind flow. And the owner of Enercon is a really big fan of Feed-In Tariffs - see http://en.wikipedia.org/wiki/Feed-in_tariff 

While some will argue that the "versus" is inappropriate, well, that's their right to have an opinion, and a belief or two. How's the expression go… you are entitled to your own opinion, but not your own facts...But, perhaps it depends on what the goal is - is it to drastically cut the CO2 pollution going down on our planet, or is it to just make a statement? Are "CO2 Sin Taxes" a moralistic idea - that we should punish "improper" behavior? After all, it is a bit on the sinful side to pollute our only atmosphere with so much CO2 that we drastically alter our climate. Actually, significant climate alteration is quite a feat, but now that we as a species have proved that we can do this (and it has been proved beyond any reasonable doubt, with only the deluded or terminally ignorant professing disbelief in the Greenhouse Gas pollution and Global Warming relationship..), what now? And one way to discourage sinning is supposedly to tax the beans out of that sinning…

But, the stakes are really high in this case, so maybe we can do a bit of math to figure out whether Feed-In Tariffs (FITs) are a better way to allow us humans to have access to energy and still not warp out our planet's climate out of shape than are Sin Taxes in their various guises - "carbon taxes", "carbon prices", "carbon fees", "Cap'N Trade", "Cap'N Dividend", The "CO2 Trash Disposal Indulgences". And for starts, lets keep the discussion limited to electricity, as there really is no renewable replacement for liquid fuels - at least at the scale of present day usage in this country. As for heat - that's got to be provided by electricity (mostly via heat pumps) and solar thermal means, as well as by needing less of it because we get more efficient in using it. But even in an era where each year has averaged a bit warmer than the last one for the last 20 years, it can still get really cold in a lot of our country at times - cold enough to kill if you don't have heat, or kill to get heat if that's what it takes to get it - so heat when it is needed is important.

A Feed-In Tariff is a renewable energy pricing system that has three working parts (and FITs work better than any other system tried to date in delivering renewable energy). The first is that renewables get priority access to the grid, and that pollution based energy has to wait in line and can only be sold into the grid when no renewable energy is available for delivery. The priority grid access is the mechanism that allows for the replacement of all pollution based electricity now provided. The second part is that renewables are allowed to be sold into the grid at a long term fixed prices which is based on the average cost to provide it plus a socially determined reasonable profit rate. The prices can vary depending on scale, technology and/or available renewable resource; these generally take the form of a long term (20 years, usually) Power Purchase Agreement (PPA). Different technologies can be selected/allowed in different regions and the percentage of expensive technologies (such as PV) also can be limited in the renewable "mix" that is given PPA's. The third FIT characteristic is that prices paid by electricity consumers are the weighted average of the renewables and the non-renewables in the grid mix. The non-renewable energy prices can be arrived at by a weighted average of cost plus allowable profit or via a casino-like spot market (also called marginal based pricing and/or uniform clearing pricing) - in a FIT system, the non-renewable pricing arrangement is not that relevant due to the priority grid access. However, FIT systems generally drive down the uniform clearing price systems prices (of the non-renewables) via a process known as the Merit Order Effect (MOE), which removes the extraordinary (rentier) profits that can accrue to owners of paid off low cost pollution based generation facilities under some conditions.

A FIT system does not guarantee profitability for renewable energy generation owners - putting an overpriced system in a bad location and/or failing to operate it competently will probably lead to the bankruptcy of that project. The price set for a technology/scale allows developers to select whether or not a given technology at a given location is a reasonable prospect. The long term pricing does remove the value-less added speculation risk associated with varying prices for electricity, which only makes sense when fuel prices vary with time. Most renewable energy systems have no fuel cost, or at least depletable fuel needs (hence the "renewable" term). The long term stable electricity prices allow low cost, long term capital and bank loans to be used to finance FIT projects, and this lowers the yearly capital costs of these projects to a very significant degree as compared to "casino pricing systems", such as those in NY State at the present time. Variable electricity pricing systems are a significant hindrance to even low production cost renewable energy systems (such as wind turbines), and a complete stop for expensive renewable systems such as PV's, especially in low insolation regions like NY State.

The idea behind the CO2 Sin Taxes is to raise the price of consuming fuels whose combustion takes old stashed away carbon based fuels - coal (empirical formula = CH), oil (empirical formula = CH2) and natural gas (formula = CH4) - and spews forth CO2 and water vapor into the air. After 30 years, about half of that CO2 still remains in the air (the other half is mostly absorbed in the surface portion of the oceans). But that remaining CO2 is likely to remain in the air for centuries… Right now there is essentially no cost to doing this spewing - as long as the fuel can be had, there is essentially no extra cost to the CO2 trash disposal. And a relatively small part of the humans over the last 200 years have raised the CO2 content in the air from ~ 283 ppm to nearly 400 ppm. While this may not sound like much, it's totally messed with the thermal balance of the planet, as slightly more heat energy is now absorbed from the sun than is radiated into outer space at 400 ppm CO2, while at less than 300 ppm, a balance occurs. So every second of every day, about 0.75 watt more is retained for each square meter of our planets's surface. And that's a lot of area (Area = Pi*diameter*diameter, and the earth has a diameter of around 6.371 million meters)….

But what is the correct price for this CO2 pollution? And what if only some can afford it? Do we then ration fossil fuels at these higher prices than is presently the case? At what price does natural gas, oil and coal have to be before renewable substitutes (if even available) are cheaper, and thus the preferred route to go? Not easy questions, and usually, this is a range - a certain price rise for fossil fuels will displace some percentage of fossil fuel consumption. For example, in the US, raising the price of oil by $20/bbl drops gasoline consumption by about 1% in the short term, maybe more in the long term. To get rid of gasoline consumption via this demand destruction process, very high prices will be needed. And since most people in our country have seen their standard of living drop in the last decade (only the top 10% have seen net improvement), that will not be very popular at all. Odds are, prices for gasoline will have to at least double before half of the gasoline now used will either not be used and/or substitutes will be found… like cellulose based ethanol, ethanol made by reducing CO2 with hydrogen or "fried biomass derived liquids". But not all gasoline now consumed can be replaced with fuels like ethanol. And without liquid fuels, transport of people and goods at the scale now being done is probably not possible.

One of the better known attempts to determine the "social cost of carbon" was the effort led by Sir Nicholas Stern (Stern Report) in 2007. Adjusting for inflation, the $US 85/tonne of CO2 (2007) price is around $85/ton of CO2 pollutant nowadays. While this may not be perfect, it's a start. For oil, (880 lbs CO2/bbl of combusted oil), such a price would add $37.40/bbl, or $6.68/MBtu. This CO2 price adds $5.20/kcf for natural gas,  about $170/ton of Wyoming lignite or $218/ton for Appalachian coal (12,500 Btu/lb). Or, in dollars per million Btu (MBtu), about $5.20/MBtu, 9.66/MBtu or $8.72/MBtu. Since delivered natural gas is selling for $5.30/kcf in bulk (Nov 28, 2012), lignite is $12/ton at the mine ($42/ton delivered to WNY) or Appalachian coal is near $65/ton (WNY), these are significant price increases. If these were instituted immediately, this would cause a huge economic shock to the nation, at minimum doubling the generator price for electricity and doubling the heating bill for anyone using gas for heat. But, this would cause demand destruction with respect to coal and natural gas, which is the object of cranking up fossil fuel prices. Obviously, another $1.33/gallon higher gasoline and diesel prices as well as doubling natural gas heating prices/tripling bulk electricity prices to around 10 c/kw-hr would not be very popular….. And some of the energy price increase would translate into higher costs/prices for a wide variety of foods, goods and services in this country, as corporations try to recoup their increased costs of doing business.

With electricity, there is at least one major viable competitor (wind turbines) and several minor ones (biomass, biogas, tidal, geothermal) to the coal and natural gas used to make about 2/3 of our electricity, so the liquid fuels problem does not apply. Electricity production is responsible for around 40% of US CO2 pollution, while heating (mostly with natural gas) is responsible for around 25%. Oil is mostly transport utilized, and petroleum burning is about 35% of US CO2 pollution (oil is now too expensive to be used to make much electricity and the amount used for heating is shrinking rapidly due to its high price).

The Pricing Experiment
Lets' say that the unsubsidized wind turbine electricity price is 10 c/kw-hr (i.e. no tax avoidance subsidies like the PTC, ITC and MACRS are used to allow wind sourced electricity to be sold at prices near what pollution based electricity is now sold at). And let's use the average (so far) for Western NY's bulk electricity price (essentially all coal based, as natural gas is TOO EXPENSIVE to compete, even at the present below cost of production natural gas price of $4/kcf) of 3 c/kw-hr. And as the demand for coal drops, the price for that will also drop somewhat, requiring still higher demand destruction efforts (higher carbon taxes).

The present price of Appalachian coal ($65/ton) gives an electricity raw material price of around 2.2 c/kw-hr; upping the price of this coal to $283/ton from $65/ton would raise the raw material cost of this electricity to 9.7 c/kw-hr. Let's say that the break-even price for coal based generation at $283/ton coal is 10.5 c/kw-hr. With the $85/ton CO2 pollution price, coal becomes slightly more pricey than wind to supply electricity, and adding more turbine capacity actually lowers prices for consumers. At a price of around $81/ton for CO2 pollution, coal starts to become more expensive than wind to provide electricity to grid based customers.

At what price point for CO2 pollutant will wind turbines be the lower cost option? The CO2 pollution price needs to be at least $81/ton; below that, coal is still the lower cost option, and as less coal is used nationwide, the basic price will likely drop, requiring a higher CO2 pollution price to make wind the lower cost option.

Unless a FIT pricing system is implemented, even at CO2 pollution prices of $25, $50 or $75/ton of CO2 (the present RGGI fees, which pass as the CO2 pollution tax (though technically it is not a tax), are only $1.80/ton of CO2), no new wind turbine capacity is likely to be installed, because wind would still be the higher priced generation technique. This is akin to a step function, or the ante to a poker game. Until the initial initial step has been climbed, renewables are still the higher priced option.

Let's say that either the FIT and Sin Tax process are used over a 10 year period to replace all coal usage in a system with a 2000 MW average electricity load. Under a FIT system, prices would rise 0.467 c/kw-hr each year, but in the process, sufficient wind turbines to deliver 200 MW of average power production (about 600 MW of capacity) would be installed. Electricity prices might also drop somewhat due to the MOE, especially in the initial years of its implementation. In 10 years, all electricity would be supplied by wind, and for the next 10 years (years 11 through 20), prices would be 10 c/kw-hr. After that period, prices would drop once the capital for the wind turbines has been paid down, though after roughly 10 more years, those initial turbines (with a probable lifetime of 25 to 30 years) would need to be replaced.

Under the Carbon (sales) Tax approach, electricity prices would also rise by about 0.467 c/kw-hr per year, but until year 10, wind sourced electricity would still be more expensive than the coal plus the partial Sin Tax arrangement. However, in this 2000 MW system, each year about $81.8 million in additional revenue would be collected. If that revenue is returned to all electricity customers (Cap and Dividend), none can be used for renewable energy investments unless the customers themselves do it. However, since a wind farm (or set of wind farms with the same total output), that delivers 200 MW on average probably cost $1.2 to $1.5 billion to install, it is unlikely that the carbon tax revenues would be able to install such a system/systems. If this money is used as a replacement for other tax revenue (for example, using these regressive electricity sales taxes to replace more progressive income taxes), economic damage would result from the resulting greater economic inequality. This money could also be used to subsidize some renewable energy (but which ones?), but subsidized renewable projects always tend to have greater real costs than do FIT installed projects. If this money is used to to buy more expensive renewable energy than wind (for example, PV that is at least 5 times the unsubsidized wind turbine electricity cost), then not all of the coal can be readily replaced in the 10 year time frame - in the case of an all PV approach, less than one fifth would be replaced.

Of course, some of the sales tax revenue could be used to increase energy efficiency (LED lights for all!), and this could reduce the overall demand for electricity somewhat. But since other forms of fossil fuel usage (natural gas heating with electrical heat pumps, gasoline and diesel with electrical powered transportation) need to get replaced with electricity, efficiency will likely only go so far.

Lastly, there is the question of how much renewable energy (intensely job creating) gets installed, and where these systems are made. FITs were designed as economic demand stimulating systems. With carbon VAT taxes, the manner in which those tax revenues are used is a wide open question, and is likely to create a lot fewer jobs than with FIT systems, since that money could be squandered on immediate consumption, or worse yet from a macroeconomic vantage, not spent at all ("saved"). It is unknown if the higher electricity prices will be used for new job creation making and installing new renewable energy systems, which is where maximum economic stimulus is likely to come from.

So, at best, CO2 pollution taxes might be able to displace almost as much renewable energy as FITs can do, although that is also a matter of which renewable approaches are used to displace present pollution based routes to energy production. But at worst, these can become very regressive sales taxes that end up creating few jobs and that further exacerbate the income inequality that is degrading our economic capabilities. Carbon taxes can be a form of negative behavior modification, a sort of electro-shock for bad behavior, but one that can further degrade the standards of living for the vast majority while benefitting the ultra-rich, who will be essentially unperturbed by higher energy costs.

And since political consensus is required for a stable climate policy, policies that are not massively job creating (unlike FITs, which ARE massively job creating) are unlikely to realize such a consensus. Instead, they will be hated, especially by those with the least income and wealth, and some seriously regressive types will be able to run with that hatred of high energy prices that don't deliver adequate job creation. And they will run most of the human race off cliff, a great imitation of lemming-ness. Is it worth punishing climate sinners (which essentially we all are) with more income and wealth inequality creating flat taxes rather than concentrating on installing as much renewable energy that displaces pollution sourced electricity as fast and as efficiently as is possible because it sort of syncs with Protestant religious traces that still are imprinted on our society?

The neat thing about FITs is that carbon taxes are irrelevant to the way that FITs work. With or without the tax/fee on CO2 pollution, FITs replace pollution sourced energy and they also create demand for renewable energy systems, which creates jobs. And given the massive unemployment now afflicting our country, that's probably more important now than destroying demand for fossil fuels via pricing it higher. After all, if you don't survive the winter (what's left of it), what happens 5 years from now or 50 years is not of much consequence to you, though it may be to others….

Picture from http://investincanada.gc.ca/eng/publications/enercon.aspx





Saturday, December 8, 2012

Ignorance Amongst Environmental Leaders

Evidently, Knowledge is a lifelong pursuit, and it keeps fleeing from those who should know better. Odds are, it happens to us all at some time, but normally we try to keep these events to a minimum, unless we are somewhat bent out of shape, like Mitt Romney, Dick Armey or Glen Beck. Today's Encounter with Ignorance was seen on that awesome TV Talk show, "Up With Chris Hayes", who tries really hard to be factual. Maybe one of his guests needs to try harder, though this blooper could be from profound stubborn beliefs that superimpose themselves on otherwise well meaning activities and goals. The "oops" was done by Frances Beinecke, leader of the Natural Resources Defense Council (Robert Redford is the most famous member of this organization of environmentalists...):


Frances is on the right. It can be seen on this segment starting around 2:15:

From "Up With Chris Hayes" Dec 8, 2012 -
http://www.msnbc.msn.com/id/46979738/ns/msnbc-up_with_chris_hayes/#50127977

Frances Beinecke, President of NRDC, continuing a discussion on present low energy and electricity prices and why that is deterring the deployment of (some types of) renewable energy in this country:

>> the only thing to change that is if we put a price on carbon. the externalities of all the fossil fuel development are not incorporated in the current price, so the environmental effects, the health effects, the consequences to communities, none of that is factored in. we have to change that and get a price on carbon and drive it up to promote renewables and efficiencies first and foremost.

Of course, this is not true - and it is because of the word "only". This makes Ms. Beinecke a liar, though she probably does not consider herself one, or even realize she is doing it. And maybe it is due to the somewhat chaotic nature of talk shows like the one Mr. Hayes hosts. But the large scale deployment of wind turbines in the US does not require a (sufficiently) high price on carbon (dioxide pollution) that would raise the price of electricity made from coal or natural gas. A Feed-In Tariff (FIT) pricing system would NOT require "carbon prices" in order to make wind turbine sourced electricity financially viable, and we know that FIT systems work, and are responsible for the deployment of most of the non-hydroelctric energy renewable systems installed in the world, to date. FIT systems can work with or without "carbon prices", and especially at "carbon prices" high enough to make wind energy (subsidized or unsubsidized) lower cost than either coal or natural gas based electricity at present fossil fuel prices.

So, the head of the NRDC is just lying on national TV, and it is doubtful whether she even understands that she is telling untruths, and trying to sound authoritative about it, too. Will she ever be held accountable for this? Will she ever apologize for propagating such falsehoods? It would be nice to think so, but the NRDC has tried to remain pretty dumb about the potential of FITs for some time - especially in NY State. And they just don't seem to get what makes large scale job creation via the demand stimulus that FITs can facilitate, and why FITs work so well compared to the convoluted subsidies that are used in the US to allow renewables to exist, but not really flourish.

Any ideas on ways to allow the NRDC and its leader to "get it" would be appreciated. We know she is an otherwise smart person who does not wish to be known as ignorant, especially about something with massive climate and environmental consequences. What will it take to "Git 'er done" and move Ms. Beinecke back to the side of Truth and Justice?




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