Spill Baby Spill or Blow Man Blow?
This week we are seeing two starkly different uses of offshore natural resources playing out on a national stage. In the context of emerging climate and energy legislation, its worth taking another look at the risks and costs of both as Congress and the Obama Administration deliberate on policy incentives for offshore wind and oil that are pursued through legislation or Executive Branch action.
In Louisiana, an estimated 5,000 barrels of oil a day are leaking from BP's Macondo well in the Gulf of Mexico after Transocean Ltd.'s Deepwater Horizon rig exploded a few days ago. Reports are that people in Louisiana can already smell the oil. BP is working to stop the flow of oil and experts suggest BP will need to drill a “relief well” to halt the leak. Such a mitigation process can take upwards of 3 months. BP is reportedly spending $6 million a day in this effort and preparation of two relief wells will cost an estimated $200 million. (Adding in US Government support costs, Evolution Securities suggests that the “net cost to BP of the cleanup operation so far plus the drilling of two relief wells would be around $845 million.” This figure does not necessarily address harm some experts anticipate to Louisiana coastal communities and their ecosystem services, and potential punitive damages that could emerge. The punitive damage figure for ExxonMobil as a result of the Valdez spill in Alaska was approximately $507.5 million after the Supreme Court struck down the original figure of $2.5 billion as excessive.)
Continue Reading...Governor Schwarzenegger Struck Again
California Governor Schwarzenegger struck again last week. The Governor issued Executive Order S-21-09 requiring California utilities to obtain 33 percent of their electricity from renewable energy sources by 2020. The previous requirement was 20 percent by 2010. This law compliments the State goal to reduce GHG emissions to 1990 levels by 2020. Yet the Executive Order comes with controversy on the horizon.
Continue Reading...Update on Pickens' Pullout
In my July 13 post, I commented on the implications of T. Boone Pickens' widely reported announcement that he intends to pull out of his massive Texas wind project. But since making those remarks, Pickens has clarified that he is delaying, not canceling, the $10 billion project.
Pickens says the so-called Pampa project will be postponed until 2013 when Texas is expected to complete a $4.9 billion transmission line. By that time, hopefully, credit markets will be healthy enough to finance the project: "Financing is tough right now so what is going to happen is it's going to be pushed back a year or two."
Pickens' Pullout Underscores the Need for Renewable Electricity Standard
After T. Boone Pickens' stunning decision to shelve his ambitious plan to build the world's largest wind farm in the Texas panhandle, does anyone still think converting from fossil fuels to renewable energy will be easy? One year ago, Pickens was the toast of the green movement. The Texas oil man, foe of Al Gore, identified a common cause that both climate changers or doubters could get behind: energy security.
The stated goal of the "Pickens Plan" was to reduce America's dependence on foreign oil by one-third over a ten-year period. To achieve this goal, Pickens would replace natural gas now used to generate electricity with wind power and then use the saved natural gas to power vehicles that presently run on gasoline. His $60 million ad campaign draped the American flag around his Plan: "at current oil prices, we will send $700 billion out of this country this year alone - that's four times the annual cost of the Iraq war." He described adoption of his Plan almost as an act of patriotism. Why send all that money to our enemies in the Middle East when right here in the US we have a massive untapped resource - a wind corridor stretching from North Dakota all the way through Texas?
Continue Reading...Storing the Sun
Last week, the Washington Post published an op-ed repeating an old mantra for those who try to dampen enthusiasm for renewable energy. The authors complain solar and wind energy are intermittent and that they are of limited use without the technology to store energy.
The search is on for breakthroughs on storage technology -- indeed the American Reinvestment and Recovery Act (ARRA) has money to support this work.
I expect to see more and more evidence to overcome these objections in the months and years ahead, but here's a start reported today in the Guardian: The Andasol 1 solar thermal plant near Granada, Spain, has the ability to provide nearly round-the-clock power using energy from the sun.
Is Bio-Char the Next Great Hope?
Never heard of bio-char? I was only vaguely familiar with ituntil this Tuesday. That's when McKenna Long & Aldridge's DC office played host to this year's EPA Climate Leaders award winners in a program co-sponsored by the firm and the Association of Climate Change Officers.
The event brought together some of the foremost thought leaders on climate change science andfeatured several enlightening presentations, including one by Durwood Zaelke, president of the Institute for Governance and Sustainable Development.
He described the dramatic effects on climate change of acting to control "non-CO2 climate forcers" such as black carbon (which we've written about) and bio-char.
A Glimpse from the Bright Side
I am at the RETECH conference in Las Vegas, which captures all of the challenges facing green technology in these heart-in-the-throat times -- and the opportunities as well.
Many of the large companies that enjoyed such significant profiles at gatherings like this in the recent past were absent. Instead, when I participated in a panel, the room was packed with hopeful green technology entrepreneurs. It reminded me of Tom Friedman's admonition that the US needs thousands of inventive minds working on green technology at thousands of workbenches to put the United States back on track. This moment clearly belongs to those who are willing to start out with less.
Continue Reading...Ethanol's Fall and the Oil Price Floor
Earlier last week, I wrote about a recent study that demonstrated how cellulosic ethanol carries fewer public costs than corn ethanol primarily because it releases fewer fine particulate emissions. In part because of its attractive emissions profile, I suggested the future of cellulosic ethanol looked rosy.
Of course, that future depends on demand for ethanol of any kind. And that appears to be very much in question.
The New York Times wrote later this week about how collapsing demand for ethanol has set off a wave of plant closings and bankruptcies in the industry:
“Bob Dinneen, president of the Renewable Fuels Association, a trade group, estimated that of the country’s 150 ethanol companies and 180 plants, 10 or more companies have shut down 24 plants over the last three months.”
When oil was at $145 a barrel, ethanol demand far outpaced the amount needed to satisfy federal mandates for ethanol blending. But now, with oil trading under $40, demand has vanished. New production mandates set by Congress just one year ago seem unattainable as well.
Senator Jeff Bingaman of New Mexico, the chairman of the Senate Energy and Natural Resources Committee, has said Congress may have to "reconsider" the mandate because oil and gas prices have plummeted and ethanol no longer looks like a go-go fuel.
Continue Reading...Is Coal the Fuel of the Future?
Every one is looking for the silver bullet that will get the United States off of fossil fuels. My hunch is that we’ll pursue all of the alternatives like wind and solar, but we’ll spend a lot of resources making our dirtiest fuel, coal, less dirty. And while clean coal has its skeptics, others recognize it has a place in the mix.
I place myself in the latter camp. I’ve just penned my thoughts on why that’s the case in a guest commentary for Law360. Click here (subscription required) for the full article.
People Power
Ethanol has taken its lumps in recent months, after Congress blessed it with mandates in 2005 and 2007, but if you are looking for a low carbon, Middle East independent, sustainably produced bio-fuel, it is going to be hard to beat cellulosic ethanol. Now, there's a new reason to prefer ethanol made from switchgrass and other biomass: it inflicts less harm than comparable corn ethanol mixtures. It emits smaller amounts of fine particulate matter, according to a new study from researchers at the University of Minnesota.
Researchers compared the total environmental and health costs of producing corn-based and cellulosic fuels, primarily studying their impact on air pollution and air quality. They estimated the health costs represent about 71 cents per gallon of gasoline burned. Corn-ethanol fuel carries additional cost of between 72 cents to $1.45, depending on how it is made. Cellulosic ethanol by comparison clocks in between 19 cents to 32 cents, again depending on how it is made.
Continue Reading...Enhanced Geothermal Systems - The "Killer App" of the Energy World
Google surprised the audience at the National Clean Energy Summit in August by pronouncing that “enhanced” geothermal energy could be the “killer app” of the energy world. In September, Google and General Electric jointly announced an effort to more fully develop this potentially unlimited resource.
What exactly is “enhanced” geothermal energy? Why has it excited such giants as General Electric and Google? And, will it live up to expectations?
Traditional geothermal energy relies on naturally occurring pockets of steam and hot water beneath the earth. Geothermal power plants on the surface use the steam from 1 to 2 miles below the surface to run turbines and generate electricity. In order to be economic, large geothermal plants are usually built where the heat is relatively near the surface and where the temperatures of the hydrothermal resources are generally warm (between 300 and 700 degrees Fahrenheit). These plants produce, on average, for about 30 years and, depending on their location, are competitive with the prices from traditional fossil fuels plants. However, large scale geothermal resources seem quite hard to come by or the resources are located at uneconomic depths. Consequently, traditional geothermal power plants produce less than .0035 of total electric generation in the US and less than 1 percent world-wide.
“Enhanced” geothermal however, taps into the earth’s unlimited hot rock. Those rocks are then fractured, water is circulated through the system, and the resulting steam is used to produce electricity in a conventional turbine.
Continue Reading...Observations on The National Clean Energy Summit
I had the privilege of attending the National Clean Energy Summit in Las Vegas on August 18th and 19th. Sponsored by Senate Majority Leader Harry Reid, the University of Nevada Las Vegas, and the Center for American Progress, the summit brought to together an extraordinary number of state and national policy makers to discuss the mandate for a clean energy agenda.
The conference opened with President Bill Clinton and included such major luminaries as T. Boone Pickens, Robert Rubin, and Michael Bloomberg, not to mention the governors of Arizona, Colorado, and Utah. In addition, there were speakers from academia, utilities, finance, and technology related initiatives.
I want to share some of my observations:
First, there is a mandate for a clean energy future. It is bipartisan and it is imminent. Greenhouse gas emissions and our dependence on foreign oil are the driving factors. While state and local governments are well in front of the federal government, policy makers are anxious for Congress to take decisive action.
Second, there were a number of common themes expressed by the vast majority of speakers -- so much so -- that they virtually became the “holy grail” of the summit. Here is what they are:
- Tax Credits - Speaker after speaker called for the extension of current energy tax credits. Beyond that, longer term tax incentives (in the form of both guarantees and credits) were considered essential to jump start and sustain solar, wind, and geothermal industries.
- Energy Conservation and Efficiency - The great low hanging fruit of clean energy. President Clinton’s “no brainer.” The thought is that through energy conservation and efficiency initiatives new generation can be avoided. Paths included utility decoupling, along with utility incentives, longer term financing, and application of new technologies, particularly in lighting and smart meters.
- A Price on Carbon - Unanimity that carbon had to have a price, for social, health, and economic reasons. Most of the time, this meant a cap and trade system. Mayor Bloomberg called for a straight-forward carbon tax. The prevailing view was that it didn’t matter who became next President as both candidates were committed to sign cap and trade legislation.
- The Electric Grid - Perhaps the most prevailing theme was the call for a revamped national transmission structure. In short, both wind and solar are located where the grid is weakest -- wind in the Midwest and solar in the Southwest. A projected $60 billion will be necessary to create an effective national grid that moves these cleaner fuels to populated markets.
The big surprise at the summit, at least to me, was Dan Reicher’s, of Google, presentation that the future of clean renewable energy lay primarily in “enhanced” geothermal energy. In essence, enhanced geothermal means uses the earth’s abundance of hot spots as a heat exchanger. Holes (using newly developed and less expensive drilling technology) are drilled to these hot zones, water is poured into the hole, and steam rises to drive turbines. Google is convinced we can produce massive amounts of clean electricity world-wide using this process.
Continue Reading...The Picken's Plan - A Look at Energy Realities
T. Boone Pickens has an energy plan and he should be commended for it. More policy makers and influential individuals should do so. Visions and ideas should be explored and discussed.
The essence of the Pickens Plan is to replace one-third of our foreign imports of oil with natural gas fired vehicles. In turn, natural gas produced electricity is replaced with wind power. Pickens believes that this transition can be accomplished in 10 years.
Wind power currently produces some 1 percent of the nation’s electricity. So, to produce an additional 21 percent in the next 10 years would require a gargantuan effort. But, what would be the impact on natural gas?
Continue Reading...Hanson's Moratorium on Coal - Considering the Implications
Practically, I don’t see how we can stop putting oil in the atmosphere, because that’s owned by Russia and Saudi Arabia. We can make our vehicles more efficient but that oil is going to get used and its going to get in the atmosphere…and it doesn’t really matter much how fast we burn it. But what we could do is stop coal.
Certainly, Mr. Hanson believes that in the context of global warming “desperate times call for drastic measures.” At the same time, the economic and national security consequences of Mr. Hanson’s proposal must be more fully considered. He calls for a phase out of all coal use by 2030 (unless plants can capture the carbon dioxide), to be replaced by solar, wind, and other renewable energy.
Some facts about coal:
- In 2007, coal constituted approximately 50 percent of all electrical generation in the US.
- In the West North Central states, coal accounts for 75 percent of electric generation.
- Our demonstrated reserve base for coal, as reported by the Energy Information Agency (EIA), is 491 billion short tons.
- In 2007, we used about 1.2 billion short tons of coal.
- At this rate, there is about 409 years worth of coal resources remaining in the US.
This is why the US has been called the Saudi Arabia of coal.
Currently, renewable energy constitutes approximately 3.5 percent of electric generation. Thus, under Mr. Hanson’s proposal -- either renewable energy must increase by more than 1,400 percent in the next 20 years or coal-fired power plants must find a way to capture carbon. These figures don’t even take into account the growth in energy demand projected over the next 20 years. EIA projects as much as a 39 percent increase in US electricity usage by 2030.
Continue Reading...Climate Change Compliance as a Business Opportunity
A great deal of attention is being paid to the development of multilateral and national accords and legislation designed to compel private industry to reduce carbon emissions. The key assumption underlying these efforts seems to hold that private industry worldwide cannot be counted on to initiate or facilitate carbon emissions reductions voluntarily, and certainly not as part of a preferred business model. But suppose for a moment that this assumption is not entirely correct, that private industry is in fact ready to start embracing climate change as a function of its own self-interest. The implications of such a trend could be far reaching.
Continue Reading...Renewable Portfolio Standards: An Avenue for Fostering Alternative Energy Projects
Government’s response to the focus on climate change must be holistic and visionary. One regulatory avenue for fostering alternative energy projects that assist in the battle against climate change is a Renewable Portfolio Standard (RPS). At its core, an RPS is a requirement that retail electricity suppliers purchase a certain percentage or quantity of renewably generated energy. Currently 25 states and Washington DC have mandatory targets for retail electricity purchases and 4 states have non-binding goals. In 2007 the House of Representatives passed an RPS, but the US Senate did not.
While most RPS programs share a common goal of encouraging the production of renewably generated energy, they vary in terms of purchase goals, timeframes for compliance and eligible technologies. Wind, solar, and geo-thermal are eligible under most of the RPS programs, but eligibility criteria varies widely with respect to other technologies and fuel sources such as bio-mass, landfill-gas, municipal solid waste, hydropower, and fuel cells. While the advantages in terms of climate change impacts associated with renewably generated energy may seem obvious (no emissions), less obvious may be the results stemming from the expansion of several states’ RPS programs into non-renewable areas.
Continue Reading...Climate Change and Aviation Fuel: A Tough Problem to Solve
Large aircraft require high energy fuel, and lots of it. But jet fuel is very difficult to clean up to satisfy climate protection imperatives, which has led to a major dispute in the US over the role coal-to-liquids and other alternative aviation fuels may play. Congress, the US Air Force, the major airlines, the US Environmental Protection Agency, its Federal Aviation Administration, a special Defense Department task force, coal-state senators, and many, many others are getting into the dogfight, which may go on for a long time.
Continue Reading...Coal: The Energy Source of the Future?
Gas, oil, nuclear energy, biofuels, other alternative energy, energy conservation – are they enough to cause plentiful, Btu-rich, relatively inexpensive coal to take a back seat to post-Kyoto climate concerns in the developed and developing economies of the world?
With high prices for oil and gas and other promising sources of energy, precisely the opposite appears to be happening, with uncertain implications for carbon dioxide emissions levels and the success of technological fixes for Old King Coal’s dark side.
Continue Reading...Food vs. Fuel and Impacts on Climate Change: Biofuels Under Siege
Concern about world food prices and shortages is causing law makers in both the EU and the US to consider either a moratorium or a cutback in biofuels production. In particular, ethanol produced from corn is being blamed as a significant contributor to the world food crisis. [summary]
Continue Reading...International Wind Power
Wind energy experienced a record year of international growth in 2007. According to the Global Wind Energy Council (GWEC), installations of new wind energy facilities increased by thirty percent in 2007, with twenty gigawatts (GW) of new installations brought into service worldwide. According to a US Department of Energy May 2007 report, this follows seven years of growth in wind capacity at the rate of twenty-four percent per year in the US and twenty-seven percent per year worldwide. This growth has been driven in part by multinational utilities such as Iberdrola and Acciona, which joined FPL Energy and Babcock and Brown in 2007 as leaders in wind power plant ownership with new facilities installations in North America and worldwide.
The annual 2007 survey by GWEC and Emerging Energy Research (EER) reflect that wind power ownership and installations continue to increase in North America, Europe, Latin America and Asia. EER reports that while the United States in 2007 remained the largest market with 5.2 GW of new installations, it was closely followed by Spain and China, which added 3.5 GW and 3.4 GW, respectively, to their total capacity of wind power. The other leading international markets include Germany, Canada, India, Denmark, Italy, the UK, Portugal, and France.
The development of wind power is now a global opportunity. For many companies, establishing operations in new international markets may be a sound and profitable part of their strategic growth, particularly markets in which sponsors can achieve greater cost efficiencies and profitability.
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