California's Proposition 23
This coming campaign season, Californians will be given the opportunity to vote on Proposition 23, an initiative that would suspend California's clean energy legislation, the Global Warming Act of 2006 or AB32. The California Jobs Initiative, a movement reportedly financed by Texas oil companies, is charging that AB32 will cost California 1.1 million jobs and $3.7 billion a year in higher energy costs.
Proponents of AB32 are answering the charge. Joe Romm, a well-known climate expert and blogger, considers it to be "one of the most progressive pieces of environmental legislation ever enacted." According to Romm, in addition to reducing pollution levels and dependence on foreign oil, AB32 is spurring market growth in California’s clean tech and clean energy industries. His climate blog reports that AB32 has stimulated more than $9 billion of private investment, helped pave the way for more than 12,000 companies, and has contributed to the creation of more than 100,000 green jobs. Also, by sending a clear carbon price signal, AB32 provides the long term market certainty necessary for businesses to invest. As a result, California’s clean energy sector has grown stronger and now sits at the forefront of our nation’s energy innovation. In 2007 alone, Californian businesses patented 1,401 new clean technologies, constituting one sixth of all clean energy technology patents in the nation for that year. Contrary to the arguments of the jobs initiative, supporters of AB32 argue that the law has helped buoy California’s economy through the recent recession. Perhaps more importantly, as California has historically done with clean air legislation, AB32 serves as a model for federal action. Suspending AB32 would further complicate the struggles to enact federal legislation on climate change. If California decides that it cannot afford to address climate change, other states will be hesitant to follow California's lead. This would not be welcome news for climate change activists at a time when our most respected environmental groups feel as if they’re losing the battle over the climate bill. Regardless of the outcome this November, it will serve as an important referendum over energy policy.
Potential Battles Ahead on Energy and Climate Policy if the Republicans Win the House
The prospects of a Republican-led House have been increasing as the U.S. nears the November mid-term elections. If Republicans do win back control of the House, it will dramatically reshape the contours of the national debate on energy and climate policy. The discussion would shift from a discussion over legislation to cap greenhouse gas emissions to the following issues.
Climate Regulations
The controversies regarding EPA’s climate regulations, particularly the Agency’s “tailoring” rule, have been ongoing for the past year. These controversies, however, would be amplified with a Republican majority, especially with large emitters becoming subject to the regulations in January 2011. A Republican-led House would likely target the rule by considering legislation to block the “tailoring” rule or strip funding for its implementation. If the House were to pass this type of legislation, and assuming that it could also pass through the Senate, then it would spark a veto battle with the Obama Administration. Republicans could also target other climate regulations, including a draft guidance proposed by the Council of Environmental Quality earlier this year that would require that federal agencies consider climate change in conducting environmental reviews under the National Environmental Policy Act.
Funding for Clean Energy Programs
The Administration has made the transition to a clean energy economy a priority, evidenced by increased funding for clean energy programs. Republicans have criticized these programs for failing to create the jobs promised by the Administration. Campaigning on the need to reduce federal spending and the government’s role in the economy, a Republican-led House could propose reducing or eliminating funding for some of these programs. The Administration will likely oppose efforts to reduce funding for these programs. At the same time, the Administration will be under pressure to also reduce federal spending, and it will be interesting to see how hard the Administration is willing to fight to sustain funding for some of these programs. Additionally, with subpoena power, Republicans could hold Committee investigations and hearings into alleged mismanagement by the Department of Energy into stimulus funding.
Nuclear Incentives
The Obama Administration and Congressional Republicans generally agree in the importance of nuclear energy to our nation’s energy future, one of the few issues where there is at least some consensus. A Republican-led House could work with the Obama Administration on incentives and other regulatory reforms to spur growth in the nuclear industry. That being said, the Administration’s support for closing Yucca Mountain as permanent storage site for nuclear waste could become a major issue in a potential debate over nuclear energy.
As this blog outlines, House Republicans and the Obama Administration have starkly different views over energy and climate policy. If Republicans win the House in November, one can expect some bitter battles to occur over these and other energy and climate issues.
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.
A 2006 report on Enhanced Geothermal Systems (EGS) by MIT (sited by Idaho National Laboratory and Wikipedia) concluded that it would be affordable to generate 100 GWe (gigawatts of electricity) or more by 2050 in the United States alone, for a maximum investment of 1 billion US dollars in research and development over 15 years.
The MIT report calculated the world's total EGS resources to be over 13,000 ZJ. Of these, over 200 ZJ would be extractable, with the potential to increase this to over 2,000 ZJ with technology improvements - sufficient to provide all the world's present energy needs for several millennia. The key characteristic of an EGS (also called a Hot Dry Rock system), is that it reaches at least 10 km down into hard rock. At a typical site two holes would be bored and the deep rock between them fractured. Water would be pumped down one and steam would come up the other. The MIT report estimated that there was enough energy in hard rocks 10 km below the United States to supply all the world's current needs for 30,000 years.
What then are the impediments to this seemingly unlimited resource? First, the depth of these holes are daunting. There are technological challenges involved in drilling wide bore holes to depths of 4,500 meters (about 2.8 miles) as well as the difficulty involved with breaking (fracturing) rock over large volumes. Second, drilling to such depths is currently very expensive. Conventional oil and gas wells drilled to 15,000 feet generally cost tens of millions of dollars. Each enhanced geothermal plant would require two holes.
Google is relying on several potential breakthroughs to advance EGS. On the cost side, Google expects that the economies of scale will bring project costs down in line with coal-fired plants. On the technology side, Google has invested in new hard rock drilling technologies and in companies involved in EGS research and development.
Certainly, the injection of GE as a participant in enhanced geothermal lends tremendous credibility to Google’s efforts. The only question in my mind is whether any one approach is truly the “killer app” in the energy world.
Offshore Drilling
I have the following theory about the fallacy of opening offshore areas of the US coastline to drilling as a strategy to push down oil prices:
- Any additional crude oil that could be recovered from US offshore areas does materially not increase OUR oil supply.
- Regardless of whether the firm drilling for such crude is ExxonMobil, Chevron or any other US firm, it would simply become part of the WORLD crude supply and would be sold at whatever the spot price for crude is on a given date.
- Such crude would NOT be sold preferentially to US citizens at a discount but rather at the going price. The fact that it is locally produced may translate into a slight reduction in transport costs (over Venezuela, Mexico, Canada and other nearby oil-producing regions). But, the reality is that the difference at the pump for US consumers would be inconsequential.
- Yes, by increasing the WORLD supply of oil, the price of crude will drop some, but the amount we are talking about here is relatively small (and the effect on price at the pump likely would be even smaller). And that effect is years off.
- The primary effect of drilling offshore would be to increase the amount of product that US oil companies could sell, in other words increase their sales and profits.
- Moreover, drilling offshore would undermine the battle against climate change. Rather than accelerate the pace of drilling, we should encourage US energy firms to invest in alternative energy sources.
