Energy Policy Meets Federal Land

A recent article called Turning Pristine Public Lands Into Solar Farms in Bloomberg Businessweek highlighted the Obama administrations’ policy of opening federal lands maintained by the Bureau of Land Management and the Department of the Interior to renewable energy projects.  The executive powers that Obama is using are similar to the ones that the Bush administration used to bypass Congress and push for oil and gas drilling on those same lands in 2001.  Using Ken Salazar, the Secretary of the Interior, Obama has approved more than 37 renewable energy projects on federal lands that will power more than 3.8 million homes.

Since taking office, Obama has issued an average of 1,000 fewer drilling leases per year to oil and gas interests.  Instead, the administration has green lighted more than 18 other utility-scale solar plant, 7 wind farms, and 9 geothermal facilities.

However, certain projects have angered environmentalist groups such as the Sierra Club and the NRDC who feel that some of the projects would be better sited on 80,000 – 285,000 abandoned mine sites on federal lands instead of pristine desert space near treasured national parks such as Joshua Tree in southern California.  A coalition called the Western Lands Project is suing the Dept. of the Interior in federal court hoping to have the projects moved to those less desirable, degraded lands.

While I am generally skeptical of politicians bypassing Congress to achieve a political goal, I do favor building renewable energy plants on federal lands.  I also agree with the Western Lands Project that the Interior should look for better locations for these projects that redevelop sites that have already been ruined by mining operations.  Reusing depleted lands and brownfield development would be ideal for PV installation because the land does not have to be cleaned up beforehand and solar PV requires very little maintenance and can be seated on top of the land, not disturbing the contamination.  The EPA announced a brownfield redevelopment project called Brightfields that aims to achieve exactly that.  As with any major project, land use should be a major factor.  This is especially true when using public lands for private development.  By identifying sustainable sites that promote redevelopment of tarnished lands, the government can achieve a double victory of renewable energy and brownfield remediation.

The below image shows a refurnished open pit mine in Germany that is now one of the world’s largest PV plants at 166MW.  This site would have otherwise been left uninhabitable for any purpose.

Next Generation Batteries

I read an interesting article in The Economist this week called Batteries Included?  The Future of Energy that highlighted the new developments in battery technology that aims to usher in a new era of free and renewable energy.  Storage has been the traditional problem with renewable energy deployment as the sun does not always shine and the wind does not always blow.  Our current battery technology is simply too costly and not efficient enough to store energy produced from renewable sources for use at a later time.  The Joint Center for Energy Storage Research just received a $120 million grant from the Department of Energy in order to make batteries 5x more powerful at 1/5^th the price.  The key to achieving this goal is to leverage the “Materials Program” of MIT to find new materials that are more efficient than the now infamous lithium-ion battery found in hybrids and grounded Boeing 787 Dreamliners after recent incidents of overheating.  Examples of these new opportunities include using magnesium atoms, which contain 2 valence electrons, or aluminum with 3, instead of lithium atoms that contain only 1.  The extra electron increases the amount of energy that can be stored.

In terms of grid-scale energy storage, JCESR is researching flow batteries that hold a charge in the electrolyte itself rather than inside a cell as conventional batteries do.  This allows flow batteries to store massive amounts of energy, such as that from wind farms and commercial solar farms.  However, these too face limitations.

Improvements in energy storage technology will allow renewable energy systems to play a larger role in society.  Advanced research using new technologies will eventually make renewable products cost competitive with conventional products.  Instances include new plug-in electric cars that can drive for days without being recharged and even grid-sized batteries that harness energy from wind and solar farms and produce the energy when and where it is needed.  Hopefully these technologies will prove better than anticipated and we can improve our economy and our environment at the same time.

Global Energy Challenge

First, let me start off by saying Happy New Year to all the Greenbacker’s out there.  I apologize for the wait in between posts but it has been a crazy couple of weeks.  Anyway, a few months back BP published their annual BP Review of World Energy 2012.  Below are some key charts created by Jeff Tollefson & Richard Monastersky and published in Nature.com.

This chart shows the largest energy users as well as the relative breakdown of their energy supply.  Two spikes are clearly noticeable – the US and China.  Notice that the US is reliant on coal, oil, and natural gas for a majority of its energy needs while China is heavily dependent on coal, with oil coming in second.  The recent boom (no pun intended) of natural gas supply in the US has not only dropped the price of natural gas domestically, but also explains the price decrease of coal.  Economics proves if the price of x falls, the price of a substitute of x will also fall in order to keep demand steady.  In effect, the benefits of cleaner burning natural gas are offset by increased use of coal in other countries.

The above graph simply illustrates world energy use in million tons of oil equivalent.  The final scenario shows what energy consumption would look like if we were to keep the 450ppm limit on carbon emissions.

This last graph shows several interesting figures – the most interesting in my opinion is that China alone accounts for 49% of global coal consumption.  However, China’s rise these past three decades has been simply amazing.  Already there are more than 170 cities in China with populations over a million.  Fueling this rapid expansion will require significant increases in coal, oil, natural gas, and renewable energy.  By leveraging the power of new technologies and global markets, renewable energy can compete with fossil fuels.  Lets hope that renewable energy plays an even greater role in mankind’s future than current trends predict.

Four Climate Change Policy Ideas for the Next President

Congratulations! We are finally out of this election cycle and all the negative ads. And no matter who the winner is, I hope that we can all come together to build a stronger economy and a healthier society. While we wait for the mudslinging over the fiscal cliff to begin, here are the top four recommendations on climate change policy for the incoming (or returning) president as stated in Businessweek.

1) Put a price on carbon. I alluded to this in a previous post called Carbon Emission where we discuss the differences between a carbon tax and a cap-and-trade policy. Businessweek says that “A $20-per-ton carbon price—collected as a tax or by auctioning carbon allowances—would raise on the order of $100 billion per year while creating powerful economic incentives to curb pollution in the most cost-effective manner (and develop new technologies to do so). A carbon price is also an ideal way to help address the coming “fiscal cliff”: Using some of the revenue to pay for lower taxes on labor or capital would provide a double dividend by reducing distortions in our tax system. For that reason, a carbon price enjoys broad support from economists across the political spectrum, from N. Gregory Mankiw, Douglas Holtz-Eakin, and Arthur Laffer on the Right, to Paul Krugman, Joseph Stiglitz, and Jeffrey Sachs on the Left.”

2) Cut Non-CO2 Greenhouse Gases. CO2 is obviously the biggest contributor to global warming, accounting for over 80% of GHG’s, but it is not the most potent. Other GHG’s such as Methane, Nitrous Oxide, and other flourinated gases such as hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride are numerous time more potent warmers than CO2.  I wrote a paper on this earlier this year and will post it later this month.  Needless to say, focusing attention on these High Global Warming Potential gases may do more in the short-term to curb warming and create some international “good will” for tackling the CO2 problem. 

3) Promote Clean Energy and Energy Efficiency.  The administration should further the transition to renewable energy sources by removing subsidies for fossil fuels and encouraging smarter subsidies for clean energy.  I wrote extensively on this subject here.  In short, current subsidies to fossil fuels should be removed and invested into R&D.  The current subsidies in place for renewable energy promote widespread deployment of these technologies, but do nothing to increase their output and reduce their cost.  A better subsidy policy would promote increases in efficiency or reductions in cost in order to make these technologies competitive with cheap and abundant natural gas.  After all, the taxpayer wants to see results from their money.

4) Use the Clean Air Act.  Finally, the new administration should take full advantage of the Clean Air Act that sets new vehicle mileage standards, sets limits on pollution from industrial sources, and sets more protective standards for air quality.  “The next administration should build on these steps by setting carbon-pollution emission standards for stationary sources, including new and existing power plants. In doing so, the EPA can draw on a proud tradition, dating back to the Reagan administration, of making clean-air rules as economically efficient and flexible as possible—for example, by allowing averaging and trading so companies can meet standards on a fleet-wide basis rather than at each facility individually. The EPA should also design the carbon standards in a way that rewards states that implement their own rigorous programs—such as the innovative cap-and-trade approaches already in use in the Northeast and getting under way in California.”

There you have it.  In only a few hours from now we will know the next leader of the United States of America.  Now if the time for action on climate change.  The four steps outlined above are only the beginning, but they will help to reduce our dependence on fossil fuels, improve the health of our citizens (and the other 6.7 billion citizen of this planet), and even provide opportunities for the growth of new industries.  This is a tall order, but we have never backed down from a challenge before, why start now?

Fracking New York

No, the title of this post is not just something I heard uttered by a disgruntled Red Sox fan on our road trip to Boston this past weekend. It actually has to do with Governor Andrew M. Cuomo’s decision to begin a new environmental study of the effects of fracking on public health. This decision would restart the regulatory process and almost certainly push a final decision into 2013 or later.

While a big victory for the environmentalists, it has angered upstate residents and land owners who were looking for economic development or to simply lease out their land to natural gas companies. Mr. Cuomo is caught between a rock and a hard spot on this issue because of his committment to economic prosperity and job creation on one hand, and his environmental conservatism on the other. With both sides fervently pushing to allow or deny fracking on the New York region of the Marcellus Shale, the Governor decided to review more data and let the facts make the decision for him.

I say, “Congratulation Mr. Cuomo! Thank you for not bending to one political pressure or another and instead reviewing actual science and data. This is something that has been missing from many of the major political arguments recently.”

America really needs to learn the facts about natural gas – do not base your decision on a 30 second tv commercial sponsored by the Natural Gas Alliance. Get out and do some research. This is such a big deal for America’s economy and our environment. If fracking is for the public good, then a public health study of the effects of fracking is exactly what the doctor ordered.

FULL DISCLOSURE: I must admit that I was originally in favor of fracking in certain areas and more importantly, in favor of natural gas as a “transition fuel” until renewable sources were cost competitive. I saw the economic benefits and job creation associated with fracking as outweighing the environmental degradation. Since then I have changed my opinion. I have to ask myself, why are we taking a bunt when we could be swinging for the fences in terms of renewable energy technology. Natural gas will still play a large role in America’s future – after all, we need a diversified energy portfolio. But now I see the economic benefits of renewable energy technology being even more important to our economy. Instead of risking potential poisoning to our fresh water supplies and still being dependent on the spot price of a commodity, our renewable energy future will protect our most vital resources and at the same time create a demand for good, high-paying jobs in science, engineering, and operations and maintenance of distributed, renewable energy systems.

 

Believe in Competition

One of the key components to having renewable energy achieving price parity with fossil fuels is the growth in global demand. As more systems are manufactured, efficiencies attributable to the learning curve and to economies of scale will allow the cost of RE systems to come down. However, in order to reach the global markets, you need a reputable product that meets the customers needs. By investing in science, technology, engineering, and physics the USA can lead this developing market for renewable energy products. While our political leaders debate the existence of climate change, the rest of the world has gotten busy developing products to meet this challenge. In a globalized market, the spoils are going to go to the leader in any given industry. Each firm has a duty to make a product better, cheaper, or leave the marketplace if they can not do this. If not, a hungrier competitor will definitely step forward to take your place.

Underground Coal Gassification

An interesting article in the 9/3 Bloomberg Businessweek introduced a new method of coal mining that has the potential to provide energy while limiting GHG pollution and completely avoiding mountaintop removal – one of the most destructive practices known to man.  Underground Coal Gassification (UCG) technology actually dates back more than a century but is only now gaining momentum thanks to the advances in technology as a result of the fracking boom.  UCG involves drilling well into a deep coal seem, igniting the fuel, and harnessing the gas released through combustion.  The CO2 is then pumped back into the ground to keep it from entering the atmosphere.  Many of the most harmful substances such as arsenic, mercury, and lead are left in the ground alleviating the problem of what to do with the waste (remember the TVA holding pond disaster?). 

UCG projects are currently underway in Canada, China, New Zealand, and Uzbekistan – areas where natural gas is expensive and the coal seams are hard to reach. 

There are plenty of downsides to this new technology – most notably the fact that you are in essence starting an underground mine fire (see Centralia, Pennsylvania).  Other concerns are groundwater contamination, water use, and a slew of environmental issues.  However, UCG has the potential to increase the USA’s exploitable coal reserves by a factor of 5. 

It is well established that coal-burning power plants are some of the biggest polluters in our society but their environmental effects are not limited to the generating facility.  From the beginning, whole mountains in Appalachia are blown up to access the coal in the cheapest manner possible.  After the coal is spent there is still the problem of disposing of the coal ash that contains toxins and carcinogens. 

Until our energy needs are fully met through renewable technologies, we are going to have to experiment with new processes that reduce GHG’s and are more environmentally friendly.  UCG is not the cure to our energy problem, but it does address several of the most devastating by-products of using coal as a power source.  To that end, it is definitely a technology worth researching.

 

Subsidies to the Energy Industry

“I am a big fan of clean energy, but I am bigger fan of a robust economy.”

-Mr. Greenbacks, 2012

Subsidies to the energy industry are nothing new, they have been around for decades.  Generally speaking, subsidies fall into three main categories: Direct Spending, Tax Expenditures, and Loan Guarantees.   For most of the 20th century, fossil fuels have enjoyed a long run of subsidies such as tax breaks, tax credits, tax exemptions, and deferred depreciation, just to name a few.  This extended period government support firmly entrenched fossil fuels as the sole providers of energy by making renewable energy prohibitively expensive by comparison.  The roles reversed in 2009 with the passage of the American Recovery and Reinvestment Act that eliminated some subsidies for fossil fuels and expanded subsidies for renewables.  However, as you can see below, the level of support to fossil fuels is still 6x greater than renewables.

• The IEA estimates that in 2010 worldwide fossil fuel subsidies totaled $409 billion.  That number is expected to rise to over $650 billion by 2020 unless changes are made.
• By comparison, only $66 billion was spent to subsidize renewable energy.

Misguided Policy?
So what is the role of subsidies?  Subsidies should be used to level the financial barriers for new and emerging technologies in order to compete in the marketplace.  Once these technologies are mature enough to stand alone, the subsidy should be removed in order to let the market forces take over and determine a true price for the product.  The support should then go on to fund another technology that could possibly compete with the first one in order to advance a competitive marketplace.   By keeping the subsidy in place for too long, one can create artificial demand that encourages waste and can quickly drain government coffers.  This could apply to any industry, but right now we are focused on the energy industry.

So should we remove all subsidies to the energy industry?  No!  The renewable energy industry has seen more ups and downs than the Cyclone on Coney Island.  Most of these Boom and Bust cycles have been created through a rush of investment in good times (subsidy ON!) followed by a lack of capital (subsidy OFF!) when the music stops.  A clear and definite subsidy policy should be implemented in order to remove the uncertainty faced by investors of clean energy projects.

Subsidies to Renewable Energy
I am a big fan of clean energy, but I am bigger fan of a robust economy.  In today’s economic climate, governments must be extremely careful how they spend their resources.  The current policies offering subsidies to the renewable energy industry have done a wonderful job of creating widespread deployment of clean energy projects.  However, many of these projects are only profitable because of the subsidy.  Current policies should be revamped in order to drive innovation and cost reductions so that renewables such as wind and solar can compete with cheap natural gas WITHOUT the subsidy.

In order to maximize the value of taxpayer dollars the following objectives should be implemented:

1. Remove subsidies to the fossil fuel industry in order to establish a true market value that takes into account the negative externalities of these resources.  A small fee can be added to fossil fuel transactions to help fund clean energy research.
2. New subsidies should promote efficiency gains and cost reductions through the use of steadily improving, performance-based standards.
3. These subsidies should target advanced technologies, decrease as the cost declines, and be temporary in order to deter ongoing support.
4. The US must increase its investment in R&D as well as leverage talent from universities and the private sector in order to establish public-private partnerships and regional clusters of advanced research and manufacturing.
5. Utilize the strength and size of the DOD to drive commercialization of technological advances made through ARPA-E.

Implementing these policies will go a long way toward maximizing public dollars, creating a competitive clean tech industry, and ending the addiction to fossil fuels.

World Wide Electricty Use

Have you ever seen a picture of the world at night? Take a look at the picture below and then try to comprehend the numbers – USA has a population of 300 million, North America and South America combined have about 800 million inhabitants.  Now look across the Atlantic and take a look at Africa – you don’t see many lights for the more than 1 billion people living on the continent.  Then take a look at Asia, which sports a population of 4 billion.  Now if all these areas had the same electricity usage of the USA, think about much energy we would need.  Think about the air quality in the cities, the reduced cropland from the pollution, the destruction caused by mining and drilling, the traffic on the highways, etc.  That is why we need cleaner sources of energy.  Energy production runs hand in hand with economic development and will bring billions of people out of poverty.  Further innovations in renewable technologies combined with a scale-up in production can drop the cost of clean energy and light up this map without the negative externalities associated with fossil fuel.  Now that is something to think about! 

I would just like to say a quick thank you to Professor John Zindar for teaching a great class on carbon constrained economies and to Chip, Dipa, Iana, Pedro, Terence, and Thiago for making each class fun and interesting.  I learned a lot from each of you and wish you the best in all that you do. 

Reinventing Fire – Transportation

Back in March, I promised you a review on Amory Lovins’ new book Reinventing Fire.  Well, Mr. Greenbacks delivers!  Sort of.  This book is an absolute monster – a game changer of dramatic proportions . . . and I only have limited time on my hands between work and school to share it with you.  So, I am going to dissect this book and write about it in stages, but in return, you have to keep checking in and giving me feedback – letting me know if you think this is something we, as a country, can do and what challenges we might face.  Reinventing Fire is rational, thorough, and extremely impressive.  I think we all owe it to ourselves to hear Mr. Lovins arguments, maybe THE BEST I have read thus far. 

The first sector of our economy that Mr. Lovins takes on is transportation, and he does so with panache.  Currently the US uses 13 million barrels of oil a day on our transportation needs.  Thats almost a billion dollars a day, every day, and much of it is wasted on low mpg vehicles.  In order to get the most mpg from our cars, we need a complete revamping of the car building process.  Using integrative design and advanced materials such as alloys and carbon fiber we can dramatically reduce the weight of the frames, using stronger, heavier metals only where it is needed.  Composites allows for even lighter and stronger frames that can be molded instead of assembled, thereby reducing costs and parts.  The integrative design means that a lighter body allows for a smaller engine and so forth, further reducing weight and costs.  The final boost in efficiency is created by switching to an electric powertrain (engine and transmission – what makes the car move), that can be run on battery power, fuel cells, or a hybrid engine.  Electric motors are lighter, smaller, cheaper, quieter, cleaner, and more efficient, and can even recover more than half of the energy lost as heat from the brakes.  By taking these actions, we should have no problem not only reducing demand for oil for personal transportation, but eliminating it all together. 

The biggest issues that I see with this transition is the costs associated with the new materials and ways of thinking.  However, we can overcome this by utilizing economies of scale and ramped up production.  Please keep in mind that these ideas are based on currently existing technologies and will create new jobs as these industries expand.  It should also be noted that innovations will abound as we being to master these new processes and technologies, thereby creating more room for improvement.  So what do you think, can we do it?