Wednesday, December 31, 2008


Yep, I'm still here! Between the "holiday season", work demands, and the various unbidden excitements of the economy--global, local and personal--I have found no time to write as I would otherwise have liked, about many things. This hasn't stopped me from collecting a lot of good stuff which I intend to organize and trickle out in the next few weeks, although I have learned that it is pointless to wait until some future point "when things are less crazy" because that time never comes.

Looking back at my efforts in this space I realize that, as a relatively new blogger, I still have much to learn and there are many things I want to change and, ideally, improve.

In the meantime, please accept my thanks for reading and ocassionally commenting on these disparate tidbits and screeds. I especially wish to thank those of you that have subscribed; you give me encouragement to continue posting and some relief that I am not merely talking to myself as if in some delusional reverie.

I take comfort in the lengthening of the days and the promise of Spring's rebirth. This year I also await a political rebirth and cautiously hope also for a rebirth of a deeply reflective and self-aware consciousness. We cannot continue uncritically on a path of unsustainable existence.

John Michael Greer wrote another fine piece today, cautioning against a naive belief in some kind of manifest destiny stemming from the comforting but irrational notion that history has a purpose, an evolutionary arc that leads us ever onward to an improved human condition. It doesn't.
Thus there’s a fine irony in the insistence by so many people these days that evolution will shortly relieve us of the necessity to deal with the consequences of our own mistakes, and get history back on track to their imagined goal. They’re right that the historical changes under way now are evolutionary in nature; their mistake lies in thinking, to put the matter perhaps a bit too harshly, that evolution is some sort of cosmic tooth fairy who can be counted on to leave a shiny new future under the modern world’s pillow to replace one rotted away by three centuries of extravagant living.
We have been living in extravagant times. It's been quite a ball, but the clock approaches midnight not just on the day or the year, but in a much deeper, perhaps even epochal way. Yes, the sun will come up tomorrow, but will we still be dressed in finery, riding in splendid coaches and enjoying delicacies imported from afar?

Peak oil. Peak resources generally. Instability in Greece and Thailand. Wealth destruction. The fecklessness of the Splurge. Species extinction. Ice caps and glaciers melting. Carbon beyond the tipping point. The Doomers are in full throat. Was Malthus right after all? Will food riots and wars over water be the theme of this century?

There is much work ahead of us, and despair is not an option. While I work on some small efforts to create technology that may help I know it will take much more than that, and not just the making of new contraptions better suited to the coming age. We need to not just act, but also to think and to believe differently. We are past the point where incrementalism is much help; evolution will take too long. More importantly, our vast, complicated, and interconnected society has blinded us to the necessity of doing ourselves. Do not think you can continue on as you have been, and somehow, someday, somewhere, someone will invent a wonderous technology, galvanize a movement or discover something--anything!--that will let us exhale and go back to whatever it was we are doing. The calvary isn't coming, or rather, we are the calvary. It's time to ride. Are you with us?

If you are on Twitter please consider following me @cleyerle. You can also find me on Facebook, LinkedIn and Plaxo. Ping me should you ever be in the area and we can have some nice sludgy coffee together; I enjoy meeting and learning from new people.

May the coming year bring you strength of heart, clarity of vision, confidence of purpose, power of imagination, stamina of perseverance, and resourcefulness in every meaning of the word.

Yes we can. Yes we must. Yes we will.

Monday, December 15, 2008

Questions on Public Transit

James Fallows has an interesting post on the Beijing Metro. The growth, both current and planned is astounding.

How can they afford it?

How can they afford not to?

These are basically the same questions we should be asking ourselves and our leaders in this country about public transit.

Sunday, December 14, 2008

Energy Efficiency for Buildings

Ted Kulongoski, Governor of Oregon, plans to send the Oregon legislature a bill next month which would require disclosure of the energy use and greenhouse gas emissions of all buildings for sale in the state. Homes would be covered starting in 2010 with businesses following in 2011.

Home builders are predictably sceptical:
Jon Chandler, chief executive of the Oregon Homebuilders Association, called mandatory certificates “silly.” “It’s an educational tool,” Mr. Chandler said. “It doesn’t do anything for energy efficiency one way or another.”
Really? The disclosure of the energy use of furnaces, water heaters, and appliances has certainly had an educational effect, but armed with that education consumers increasingly demanded more efficient models, and manufacturers focused their efforts on meeting that demand. Most consumers no longer even consider an appliance that lacks an Energy Star label. The result has been an overall increase in energy efficiency--40% for refrigerators since 2001--exactly the result intended and the result which Jon Chandler appears to believe won't happen with buildings.

Energy Star was expanded to also include new homes in 1995, but I don't believe that this is widely known. Energy Star ratings on homes certainly aren't widely used--my wife and I bought our home a year ago, and we looked at several new homes. Not one had any hint of Energy Star or other efficiency information, except on the appliances. Like most, we bought with little idea what the monthly energy costs would be.

The reluctance of home builders stems, as ever, from their cost. It costs something to do the energy analysis of a building and get an Energy Star (or other) rating. It likely costs more still to make the design, materials, and other decisions necessary to garner a good rating. Such costs may decrease over time as the building industry gains familiarity with good energy designs and realizes economies of scale in implementing them. Meanwhile, the overall trend of rising energy costs is impelling consumers towards more energy efficient purchases. A higher purchase price can be justified if it entails longer-term operating cost savings. This is clearly happening right now with cars.

Astute businesses don't wait for government mandates before addressing evolving customer preferences. This is true for car companies, and it will soon become true of builders as well. Why wait until your costs are higher and competitors are eating your lunch? Chandler tacitly acknowledges this truth when he admits:
We’re gearing up for the mandate. We’d like to position ourselves to do the contracting work.
Indeed. Why not make money from giving customers what they want? Be a leader! Our future energy economy will require massive investment in renewable energy, smart grid technology, distributed electrical generation and energy efficiency. The trend is clear--voluntary systems like Energy Star, Portland's nonprofit Earth Advantage, and programs in California and Minnesota will likely give way to required disclosures such as those in the UK.

Promoting energy efficiency is a critical part of an overall energy policy, and one of the most cost-effective. Utilities already subsidize everything from refrigerators and furnaces to windows and insulation. Homeowners can get an energy audit, which are generally available for free in most areas, and are offered by energy utilities, local governments and educational institutions, especially those that have related vocational programs. It's time for the building industry to get more proactive in both building and bragging about their energy efficient products.

Saturday, December 13, 2008

Distributed Generation

In the developed parts of the world we are all quite familiar with centralized electricity generation. Megawatts of high-voltage electrical power are created by large coal, gas, nuclear, or other installations and sent over the transmission grid to areas of large demand where it is transformed to lower voltage and distributed to individual homes and businesses.

The alternative is distributed or point-of-use energy generation. Water wheels have been used for thousands of years to create mechanical energy for grinding grain, sawing lumber, and pumping water for drinking or irrigation. Windmills have been used similarly. These and other technologies are still in use in much of the developing world today, along with distributed power from less sustainable sources like diesel generators.

Distributed and point-of-use generation have advantages and disadvantages over centralized power generation. Centralized generation requires an electrical grid, which is both costly and difficult to create since it demands an enormous right-of-way footprint. Our current electrical grid was developed higgledy-piggledy over time and increasingly reveals its growing decrepitude. It is less suitable to the many of the new forms of generation, especially variable renewable energy, like wind, which now comprises 40% of all new generation in the United States.

Restructuring our energy economy is a monumental, but critically needed undertaking. Promoting greater energy efficiency, developing utility-scale renewable energy generation and creation of a new, smart, electrical grid are important certainly, but getting less visibility is the rediscovery and resurgence of distributed energy, especially that based on sustainable sources. Distributed renewable energy generation has a huge potential market where there is no electrical grid, primarily in the developing world, but also in off-grid locations such as remote communities, military and offshore marine uses, and isolated scientific or other installations.

Distributed renewable energy generation will also often make sense even alongside centralized generation and grid distribution for several reasons:
  • Operating cost: where there is no fuel expense the operating cost of distributed energy can be very low, limited only to maintenance and financing. Where excess is generated, it can be reverse-metered and make money.
  • Environment: as the likelihood of the introducing some carbon tax or cap-and-trade system grows, a carbon-neutral solution gains appeal.
  • Security and independence: locally produced and used power is not as subject to disruptions from foreign fuel supplies, labor unrest, hostile state or terrorist action.
There are many distributed generation approaches, both new and re-imagined from older ideas. Apart from small solar and small wind, which are quite widely recognized and have decades of recent installations, there are some intriguing others:

The ones that capture human power are especially tantalizing, since they appear at first to be free and nearly limitless from something otherwise wasted. However, I can't help but wonder if we were drawing energy from all our kinetic activities all day long, wouldn't we get rather hungry? No free lunch (or breakfast or dinner) means that the operating costs are just hidden in another way. Energy that comes from nature, however, be it flowing water, waves, solar, etc. does not require any significant input of human productivity to generate on a day-to-day basis. This is why we're so bullish on in-stream hydrokinetic power, and started our company Hydrovolts to make a product to harvest it.

The biggest disadvantage of distributed energy generation is capital cost. Economies of scale have largely favored centralized generation; to be cost-effective, distributed energy generation solutions must be simple, mass-produced, easily transported and require minimal installation time and expertise. Lots of companies, including ours, are seeking to create just these kinds of products.

The current political and economic debate rightfully focuses on building the energy infrastructure that will both create a current economic stimulus and to lay a foundation for future growth and prosperity. President-elect Obama, as well as many think-tanks, institutes, and progressives--call them the Obama Ohana--cheer large-scale and large-dollar solutions for enormous renewable energy projects and massive smart grid building. I support these, but a similar impetus should also be given to partially decentralizing energy generation. A federal investment bank providing grants and loan guarantees, like a clean energy bank modeled on the very successful Ex-Im Bank, would be a powerful and cost-effective measure to nurture good ideas into the next generation of businesses to solve our nation's energy needs, rebuild our industrial base, and create jobs.

Not all big problems need big solutions. In an era when "too big to fail" should imply too big to exist, it's time to start thinking and acting locally.

Wednesday, December 10, 2008

6 Principles of a Coherent Energy Policy

Excellent piece in Scientific American this morning by Shirley Ann Jackson, vice chair of the U.S. Council on Competitiveness, and co-chair of its Energy Security, Innovation and Sustainability Initiative. Her (too brief) article outlines some great principles and suggests some specific elements of an action plan on energy for consideration by the Obama team in the first 100 days.

The U.S. can no longer afford merely to tinker with alternative energy or to focus on a single energy source. We certainly cannot drill our way out of this problem. A comprehensive energy plan would adhere to six principles: ensure redundancy of supply and diversity of source; support well-functioning energy markets; invest in sound infrastructure for energy generation, transmission and distribution; provide for environmental sustainability and energy conservation based on full life-cycle costs; offer consistent regulation and transparent price signals; and link each energy source to its optimal sector of use.
Bravo. Replace "tinkering" with policy. Recognize that "drill, baby, drill" is not a solution. Address both supply and demand of energy in equal measure. End the privatization of profit and the socialization of costs and losses. So much of this has been anathema to the free-booting carpetbaggers of the Bush years, and their wilful obstruction has helped spawn the current crisis and has elevated the costs and risks enormously. It's past time for taking realistic, long-term approaches to our environmental, financial and energy future. Yes we will.

Some of the specific suggestions Jackson add include:

  • An executive order mandating that the federal government purchase products and services that meet the highest energy-efficiency standards.
  • Establish a $200-billion “clean energy” bank, modeled on the U.S. Export-Import Bank and Overseas Private Investment Corporation.
  • Triple the federal investment in basic and applied energy research and development.
  • Create public-­private partnerships, finance start-up companies and support existing small and medium-size clean energy businesses.
  • End inequitable subsidies between different energy sources, equalizing competition.
  • Establish a consistent federal investment framework for all energy options and require a full life-cycle analysis.
  • Create a the smart grid, enabling significant expansion of alternative energy supplies.

These are all good ideas and fit with the kinds of plans Obama has been mentioning on the campaign trail. The price tag will be large, but compared to the $335B dispensed (so far) under the Splurge, relatively affordable. The overriding need, of course, is to have a balanced energy policy, rather than an ad hoc grab-bag of handouts to friends and favored industries. Despite the significant cost at least we will be buying something of value. The public has given a mandate for bold action, and obstructionists will only cement their own marginalization.

Monday, December 8, 2008

Grays Harbor Ocean Energy Company

The Grays Harbor Ocean Energy Company (GHOEC) has filed applications for preliminary Federal Energy Regulatory Commission (FERC) permits for hydrokinetic power at seven sites in six US states.

These filings are starting to get more visibility and comment and several people have asked us for more information on what we are doing, what our plans are, and why we are taking this approach. We have also upset a few people, primarily over two things: for not having engaged in more advance consultation, and for (some fear) having some kind of nefarious agenda.

In this post I will strive to provide some explanatory background along with more information about our plans and intentions. Your comments and constructive criticisms are welcome; please comment on this post or send email to


My business partner Burt Hamner and I founded GHOEC a year ago initially to pursue utility-scale ocean energy near Grays Harbor County in Washington State. Burt earlier had directed a feasibility study (12MB PDF) for Tacoma Power in Puget Sound's Tacoma Narrows to assess the viability and feasibility of tidal power. The study's conclusion is that tidal power in Tacoma Narrows would not be feasible for a decade or longer, and Tacoma Power sensibly declined to proceed further.

Although the study's result was disappointing--we had hoped to proceed with a demonstration project there--the need for renewable energy persists, so we looked at where to go next, and, as a result formed two companies, Hydrovolts and GHOEC. Hydrovolts seeks to take the concept of utility scale tidal turbines and build them much smaller--at kilowatt scale--for distributed and point-of-use generation. GHOEC sought to find solutions other than tidal power for large-scale renewable energy generation in Washington State.

During the assessment for Tacoma Power it became clear that the outer coast of Washington State has very strong wave and wind resources, and few were exploring them. Natural Currents LLC received a preliminary permit for tidal energy in Willapa Bay in March 2007 (P-12729) and Finavera Rewnewables continues to pursue wave energy in Makah Bay, having received the nation's first (and so far only) commercial operating license from FERC. (FERC permits and comments can be found here.) GHOEC filed an application for a preliminary FERC permit on 10/28/07 to assess the ocean energy potential near Grays Harbor; given the potential of the resource, we were surprised that no one else had previously done this.

Interestingly, AquaEnergy (later bought by Finavera) earlier looked at offshore energy in Grays Harbor, but discontinued their efforts because the ocean was too deep for their particular wave device. This may be the origin of the idea that the Washington coast is too deep for ocean energy devices in general; as we talked to various renewable energy people and companies we kept hearing that the ocean of Washington State was "too deep." However, the ocean current on the Pacific Coast moves south-to-north, and the Columbia River discharges at least a million tons of sediment into that current every year. So, while the outer continental shelf (OCS) is very narrow off California and much of Oregon, it gets quite large from near the mouth of the Columbia and to the north. 10 miles from shore the ocean is only about 150 feet deep, meaning that there is a very large area suitable for many kinds of marine renewable energy devices, and offshore wind turbines of the largest size could be placed far enough out to perhaps entirely mitigate concerns about views and noise.

The FERC Role

The FERC issued our preliminary permit P-13058 on 7/30/08. (Press Release.) This preliminary permit gives us the right to assess the potential for wave power at the two sites detailed in the application and described in detail on our web site. It does not permit the placement of anything in the water; that can only occur under a FERC pilot or operating license, and only after acquiring many other permits from the various local, state and federal authorities. What the FERC permit and FERC process do, however, is provide a detailed framework for proceeding. It removes ambiguity on what is required and ensures formal involvement of all stakeholders, including environmentalists, fishers and crabbers, local officials, tribes, property owners, and others. The FERC system also grants the first applicant for a hydropower site priority development rights. Says the FERC:
Section 4(f) of the Federal Power Act authorizes the Federal Energy Regulatory Commission to issue preliminary permits for the purpose of enabling prospective applicants for a hydropower license [covers wave power but not wind power] to secure the data and perform the acts required by FPA section 9.3 which in turn sets forth the material that must accompany an application for license. The purpose of a preliminary permit is to preserve the right of the permit holder to have the first priority in applying for a license for the project that is being studied. Because a permit is issued only to allow the permit holder to investigate the feasibility of a project while the permittee conducts investigations and secures necessary data to determine the feasibility of the proposed project and to prepare a license application, it grants no land-disturbing or other property rights.
We are very interested in offshore wind, and the wind off Washington State is amongst the best in the world for generating wind energy. Wind is not much mentioned in any of our FERC permit applications for a very simple reason: FERC has no jurisdiction over offshore wind on the OCS or anywhere else. In our application for the Grays Harbor demonstration project we had originally included information on our plans to test wind energy using a single turbine; the FERC sent the application back and requested we remove all references to this. The FERC didn't even want to hear about it. In our newest applications there is also only passing mention of wind energy, and this is based on our experience in filing applications with FERC according to their rules and requirements.

The Minerals Management Service Role

Historically, Minerals Management Service (MMS) of the Department of the Interior has overseen the leasing of federal lands (and waters) for resource extraction. It grants leases through a competitive auction for everything from oil and gas drilling to metals and mineral mining. The Energy Policy Act of 2005 (PDF) also gave the MMS jurisdiction over renewable energy projects on the OCS. The MMS and the FERC have been negotiating how to cooperate on offshore renewable energy projects ever since. They had publicly announced their intention to sign a MOU, but there is still no completed agreement. MMS completed the comment period on their proposed rules in September and has indicated that they will release final rules before the end of the year (now only weeks away.)

I posted earlier about FERC asserting jurisdiction over hydrokinetic projects on the OCS and the state of affairs between the two agencies. There are excellent summaries of the inter-agency squabble here and here. Final resolution by mutual agreement may yet happen, but intervention by Congress or adjudication by courts is looking more and more likely.

The GHOEC Approach

We believe our energy future requires offshore renewable generation from wind and wave. The best places to do these kinds of energy projects is farther out, beyond the limit of state waters--10-15 miles from shore.

The GHOEC technology solution for ocean renewable energy includes a mobile jackup platform that supports wave energy and wind turbines. The MMS does not yet have a process or rules to pursue energy projects on the OCS. When FERC asserted jurisdiction on hydropower projects on the OCS they provided a way to proceed. The Company therefore applied for FERC preliminary permits to assess wave energy from the sites identified. If the FERC issues preliminary permits the Company will proceed with site studies. The results of the studies, local consultations, partnering discussions and other factors will guide GHOEC in its decision of whether or not to proceed with the next phase of FERC permitting. We expect that resolution will be achieved on the issues between the FERC and the MMS and expect to pursue whatever applicable rules and procedures established by MMS, just as we will comply with those of all other authorities at every governmental level.

We are not hiding our interest in pursuing offshore wind or engaged in some kind of devious Trojan horse activity. Formal applications and responses to FERC are done according to their rules; we strive to present the full and accurate picture of what we are doing and planning on our web site. We also encourage interested or concerned parties to submit comments to FERC or directly to us. Commenting on the FERC applications is easy--when you have the docket number of the application go to FERC Online and follow the directions.

Finally, all of this is still at a very preliminary stage and many things could change as we go forward. We have not selected any particular wave or wind technology and recognize that considerable work lies ahead in figuring which, if any, would be suitable. Those alluded to in the applications or on our web site are provisional; any proposed solution will require careful and competent study in many areas, including suitability for any particular site.
We do like the three-legged jackup platform, adapted by Offshore Wind Power Systems of Texas from use in the Gulf of Mexico oil and gas industry. There are many advantages to this platform, including:
  • There are no cables/wires underwater which threaten whales
  • It has a smaller ocean floor footprint than cable systems
  • It can be placed/removed in as little as a single day
  • There is no driving of piles and thus none of the noise that pile-driving causes
  • The structures are simple enough that they can be manufactured locally using facilities that exist in any marine industry in any reasonably-sized port.
  • The core design withstands force 5 hurricanes and 60-foot swells

There are, of course, also many questions, which is why more studies need to happen before this or anything else is put in the water. Our approach is to proceed deliberately, following the rules, and doing the work of careful assessment and study using qualified experts and the insight and knowledge of local groups. If at any point it becomes clear that any project under consideration cannot be made viable, feasible, and environmentally compatible we will stop. Bookmark the page, print it out, memorialize this how you want. It is a commitment on our part.


The first that many local authorities and stakeholders learned of our plans was by a notice from a federal agency or a piece in the news. That is not what we wanted, and we are sincerely sorry for the shock and for any offense.

Just as with our removal of most mentions of wind turbines in our applications to the FERC, so to with our consultations: we acted based on our experience with the application for the project in Grays Harbor. Burt wrote an open letter explaining how we were surprised by the pace of the process:

I wish to extend my apologies for surprising state and local officials and organizations in the states where we have proposed projects. The FERC acted on our applications faster than I think it has ever acted for any applicant before, and, frankly, it caught it us off guard. We have not had time to contact the political, energy and ocean leaders in our project areas.

We applied for the preliminary FERC permit for the Grays Harbor project on October 28, 2007. The FERC opened the application for public comment five months later, and issued the permit on July 30, 2007, nine months after we applied. The seven recent permit applications were applied for on October 21, 2008 and the FERC opened them for public comment on November 28, 2008, a mere five weeks later. We simply did not expect (and did not have advance notice) that seven applications would all be opened for comment so quickly. Naively, we assumed that we could begin that process in January rather than during the holiday season, and be fully engaged prior to the FERC's action. We were clearly wrong to assume this and regret the negative impression of our intentions it has created. Burt wrote:
We have been preparing to contact the officials in the states affected by our applications in January and February, after the holidays and the Presidential transition and the new Federal agency heads are in place. I personally called FERC and asked them to open the public comment period in January or February, because opening it in December is rather unfair to the public - the holiday season is a big distraction and I don't think the public and agencies really get a "normal" 60-day comment period if it opens on November 28. A proposal for offshore energy development of course greatly concerns state and local officials and the affected public and interest groups. We have great experience in stakeholder consultation and the permitting processes and we like the FERC system, unlike almost every other developer, because it requires and directs an extensive consultation process with every stakeholder. We will follow that process and contact state and local leadership in our site areas beginning in January 2008. We have already contacted a few key people in each state. We look forward to receiving "official" comments on our applications to FERC during the 60-day period, and of course we want any feedback at any time to help us understand local concerns and learn how we can advance this tremendous opportunity in open partnership and collaboration.
Again, we welcome your comments, either directly to us or to FERC (use the docket number of the application and go to FERC Online.)

Wednesday, November 26, 2008

Offshore Drilling for Little Oil

The subject of offshore oil drilling has largely faded following the election, and we have heard mercifully little of the "drill, baby, drill" inanity. Nonetheless, the drilling moratoria of both the executive and legislative branches have been lifted, and interest in drilling is growing in Alaska, Virginia, Florida, North Carolina, ...

As offshore oil was being given the green light back in July, Joe Romm at Gristmill wrote:

The oil companies already have access to some 34 billion barrels of offshore oil they haven't even developed yet, but ending the federal moratorium on offshore drilling would probably add only another 8 billion barrels (assuming California still blocks drilling off its coast). Who thinks adding under 100,000 barrels a day in supply sometime after 2020 -- some one-thousandth of total supply -- would be more than the proverbial drop in the ocean?
Some Alaskans oppose this drilling too, and some no doubt remember the soothing blandishments proffered by industry apologists that nary a drop would be spilled from the planned oil terminal in Prince William Sound. Apparently, Captain Hazelwood hadn't paid any attention to that any of that before skippering the Exxon Valdez onto a reef and drenching 11,000 square miles of ocean and coastline with 11 million gallons of oil.

(Lagniappe: Exxon, to its enduring discredit, fought the damage award with every barrel of its corporate being, even as it continues to set records for its quarterly earnings, engages in shameless greenwashing and sets the standard for underfunded pension plans. After 19 years, the fisherman may at last get some tiny fraction of the original $5B jury award.)

This week, drilling in the Beaufort Sea was stopped by the 9th Circuit Court, which found that the Minerals Management Service had not done an adequate job assessing impacts to wildlife and to the Inupiat Eskimos that depend on them. Shell Oil, whose plans have been (temporarily) thwarted will doubtless appeal, and may ultimately prevail. President-elect Obama has been less than consistent about his position on offshore drilling, and there are so many battles to fight I doubt that offshore drilling will be much slowed. Certainly there will not be another moratorium, and more environmental damage is nearly inevitable.

All of the wrangling misses the larger problem of climate change, and the folly of pursuing more oil in a manner so environmentally troublesome and which won't solve our energy needs anyway. This chart pretty much sums it up:

Takes years, costs lots, damages the environment, exacerbates climate change and produces very little oil. Hmm, why are we going forward on this turkey?

Thursday, November 20, 2008

World Changing

Support for renewable energy and hesitancy on nuclear and coal generation of electricity is part of the mandate President-elect Obama received at the polls. Common Dreams reports that this support is global in scope, based on a survey of more than 2,000 residents in 21 disparate countries:

An average of 77 percent of respondents thought policy-makers should require utilities to invest more in alternative energy, with country results ranging from 50 percent support in Russia to 89 percent in South Korea.

With an average agreement of 74 percent, almost the same enthusiasm was shown for greater efforts to make buildings more energy efficient. The lowest support, 54 percent, was found in the Palestinian Territories, while an overwhelming 89 percent of French and British want to see stronger commitments by their governments.

In contrast, fewer than half of the nations polled favour more emphasis on nuclear energy, coal or oil to meet energy demands in the future. Only in Kenya, Argentina, Jordan and Nigeria did researchers find more than 50-percent support for building new coal- and oil-fired power plants.
69% of respondents would bear higher short-term costs if necessary to support alternative energy and energy efficiency.

Charging Ahead on Electric Vehicles in California

The three largest Bay Area cities in California have agreed to foster the infrastructure for electric vehicles.

Better Place (formerly Project Better Place) has scored a coup in the California Bay Area. The electric vehicle startup has struck a deal with the region, including the cities of San Francisco, San Jose and Oakland, to set up a $1 billion charging network for electric cars, with car availability beginning in 2012.
The cities will proide a lot of incentives and will "streamline," "expedite" and "harmonize" regulations, permitting, etc. The actual source of $1B is less clear; it sounds like mostly in-kind support and encouragement rather than cash, but that kind of support is still fantastic.

Wednesday, November 19, 2008

Shale Game

Monday the U.S. Interior Department's Bureau of Land Management (BLM) finalized regulations to encourage oil shale development on federal lands. The rules specify royalty rates and lease sizes and are intended to create a regulatory framework to encourage commercial development, primarily in the so-called Green River Formation, a two million acre tract of federal land straddling Colorado, Utah and Wyoming that optimists in the Fossil Industry think may contain perhaps 800 billion barrels of "recoverable" oil.
"Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully."
--Attributed to Samuel Johnson by James Boswell
While many are focused forward on real energy solutions, and most are too enervated to hang even an effigy, almost all are paying close attention to the clock. In these remaining lame duck months the Bush Administration has concentrated its mind around unilateral enactment of regulations, many appearing as favors to its long-coddled industry bedfellows, and few appearing very well thought through. After eight years at an open bar, do the besotted party-goers really need "one more for the road"? Ever the convivial host, this past week Bush announced that oil drilling would be green-lighted within sight of Utah's famous Delicate Arch. Other recent and hasty measures include allowing power plants next to national parks, relaxing rules that protect rivers from mountain-top mining, and removing wolves from the list of endangered species.

This last proposal drew more than 300,000 public comments, which the Department of the Interior, under the rapacious "leadership" of Dirk Kempthorne ("Gale Norton in pants") has said they would review in one week prior to finalizing the rule. One week? If one reviewer worked continuously, 24/7, for a week, that would be a reviewing rate of one comment every 2 seconds. 30 people working continuously side-by-side for that week could lavish an entire minute on each comment, reading, understanding, and incorporating worthy feedback into crafting a better rule. Although monkeys with typewriters would perhaps have only an even chance at producing a more coherent result, at least with monkeys none could attempt to argue that such a slapdash method could produce a considered result.

The proposed oil shale regulations prominently feature royalty rates that appear designed to encourage development by having the taxpayer subsidize the costs. Normal royalty rates are typically 12.5% for oil and gas leases on public land, but BLM offers rates on oil shale starting at just 5% for the first 5 years of production, rising 1% per year until reaching parity with the main rates. Stephen Allred, the assistant secretary for land and minerals management at the Interior Department justified the give-away by saying that developing companies will spend "hundreds of millions of dollars" so the rate is "a compromise" that will "provide a fair return to the American public." U.S. Senator Ken Salazar (D-CO) called it "a pittance." He further criticized the hastiness of the decision in light of the failure by BLM to analyze the potential environmental impacts, and the additional and enormous resource contention that would ensue over dwindling water supplies:
These regulations are premature and flawed. The Bush Administration has fallen into the trap of allowing political timelines to trump sound policy. Over and over again the Administration has admitted that it has no idea how much of Colorado’s water supply would be required to develop oil shale on a commercial scale, no idea where the power would come from, and no idea whether the technology is even viable on a commercial scale.
Previously, the Energy Policy Act of 2005 (EPACT) required the BLM to create a process for granting "research development and demonstration leases" under which companies could apply for 10-year leases on token 160-acre parcels to investigate oil shale extraction and feasibility. The new regulations are clearly consistent with an expansion of activities and commercialization well beyond that envisioned by EPACT. Is oil shale ready?

In 2005, a Rand Corporation study concluded that oil shale development would not be economically feasible using current surface "retort" technology unless crude oil prices were "at least $70 to $95 per barrel (2005 dollars). Stephen Allred, the assistant secretary for land and minerals management at the Interior Department, admitted in a conference call following the BLM announcement that oil shale development "may be profitable in the neighborhood" of oil prices of $60-$80 a barrel "more than the current price" should techniques "under development" work out. The Rand report noted in its summary:
Currently, no organization with the management, technical, and financial wherewithal to develop oil shale resources has announced its intent to build commercial-scale production facilities. A firm decision to commit funds to such a venture is at least six years away because that is the minimum length of time for scale-up and process confirmation work needed to obtain the technical and environmental data required for the design and permitting of a first-of-a-kind commercial operation. At least an additional six to eight years will be required to permit, design, construct, shake down, and confirm performance of that initial commercial operation. Consequently, at least 12 and possibly more years will elapse before oil shale development will reach the production growth phase. Under high growth assumptions, an oil shale production level of 1 million barrels per day is probably more than 20 years in the future, and 3 million barrels per day is probably more than 30 years into the future.
Allred admitted that the technology necessary to commercialize oil shale development does not currently exist, might not for a decade or more and acknowledged that the BLM lacks the information to project demand for leases or the economics of producing shale oil. "Rather than completing the necessary research and development, the Bush administration is rushing ahead with rules for a development process they know little about," said Senator Salazar.

Several oil companies attempted to commercialize oil shale in the early 1980's and Shell has more recently invested at least $200 million developing an "In-Situ Conversion Process" (ICP) that heats the shale in the ground to extract the liquefied kerogen which would then be refined into various petrochemicals:
In a nutshell, ICP works like this: Shell drills 1,800-foot wells and into them inserts heating rods that raise the temperature of the oil shale to 650 degrees Fahrenheit. To keep the oil from escaping into the ground water, the heater wells are ringed by freeze walls created by coolant piped deep into the ground; this freezes the rock and water on the perimeter of the drill site. Eventually the heat begins to transform the kerogen (the fossil fuel embedded in the shale) into oil and natural gas. After the natural gas is separated, the oil is piped to a refinery to be converted into gasoline and other products.
The long term viability of this process is not yet known. Existing methods require vast amounts of water (2.3-5.7 barrels of water for each barrel of oil produced)and energy (more than 40% or more of the energy produced.) Shell reports that its in-situ process will have an EROEI of 3-4, although this might change given the enormous energy costs involved in building and maintaining the frozen water "walls" below ground that would contain the heated shale. Wind power has an EROEI of approximately 20.

Then there are the environmental impacts. Shell's ICP relies on containing the super-heated liquid products under ground, but the efficacy of the freeze-wall technique in actually preventing groundwater contamination is unknown and may have cumulative impacts that cannot be understood prior to actual commercial production (by which time the damage would already be done.) Both strip mining and room-and-pillar mining have well-recognized problems in land use and broad habitat destruction. Air quality, water quality, and greenhouse gas emissions all have uncertain (but large) impacts and costs. The RAND study highlights the serious impact on water usage:
About three barrels of water are needed per barrel of shale oil produced. Water availability analyses for oil shale development were conducted in the early 1980s. These analyses indicated that the earliest constraining factors would be limitations in local water supply systems, such as reservoirs, pipelines, and groundwater development. A bigger issue is the impact of a strategic-scale oil shale industry on the greater Colorado River Basin. Demands for water are expected to continue to grow for the foreseeable future, making the earlier analyses regarding oil shale development outdated.
The BLM, in its own rules [PDF], updates the concern:
While it is not presently known how much surface water will be needed to support future development of an oil shale industry, or the role that groundwater would play in future development, it is likely that additional agricultural water rights could be acquired.
I'm sure the farmers and ranchers will be all over that one. As an old western saying has it, people talk over whiskey and fight over water.

The RAND report concludes that additional research and study is needed, and that development should be at "a measured pace". The final recommendation was for public participation because any development would "profoundly" affect stakeholders; "the federal government should consider fostering the creation of a regionally based organization dedicated to planning, oversight and advice, and public participation."

Canada's experience with extracting oil from Alberta tar sands is instructive, as the techniques of mining and surface retorting are substantially similar. The Natural Resources Defense Council calls oil shale the "dirtiest fuel on the planet". Says Amy Mall, a Boulder-based senior policy analyst for NRDC, "cooking rocks and scorching the Earth is not a solution to our energy crisis," and estimates four-fold larger emissions than from gasoline production. It's "an enormous threat to our environment and a huge backward step."

Nonetheless, despite lack of a viable commercial technology to develop oil shale, despite the environmental damage the similar tar sands efforts are having in Alberta, despite the horrific costs in energy and water required for development, despite the lack of any companies to develop projects in the next 10 years or longer, and despite, by their own admission, BLM's lacking information to project basic demand or economic figures for development, they have offered up rules that amount to a starting gun with bargain basement royalty rates.

Perhaps the public will get lucky and these ill-considered regulations will be voted down on a simple majority vote (without possibility of filibuster) in the 111th Congress. On oil shale this would be a very welcome development. The rush to develop oil shale should be placed in the context of our overall energy needs. In Alberta, it took 30 years to reach an output of a million barrels per day from the oil sands, a level of production that Shell hopes to reach someday in the Green River Basin. The United States consumes approximately 20 million barrels of oil a day, importing about half that, so, while it would help, oil shale doesn't really change much on energy independence or supply either soon or eventually, while it will quickly change the environment for the worse.

While the role of additional oil exploration and new forms of its production in an overall energy policy are subjects for legitimate debate, the public must demand, and lawmakers must consider carefully the full menu of energy alternatives in light of their widely differing environmental and economic costs. In the case of oil shale, little production will occur for many years; there is time to assess it properly. We should take time to assess it properly.

Sunday, November 16, 2008

Solving the Variability of Renewable Power

An oft-repeated problem with renewable sources such as wind, solar, wave, and tidal is that they are variable. When the wind is not blowing or the sun is not shining then they don't produce power; conversely, there are times where more power could be produced than could be used. This variability, often exacerbated by its unpredictability, has significant implications, especially for utility-scale generation that is connected to the electrical grid.

Current grid management is, in its simplest form, the matching of electrical generation and electrical use, the matching of supply and load. Electrical grid managers are able largely to rely on the load profile, the historical variation of the load over time. There are two basic techniques today to match generation and load: generate additional electricity from various sources when needed (the usual approach) or reduce demand (demand response, much less common.) A detailed explanation can be found here:

The power utilities are able to predict to a reasonable accuracy (generally to within one or two percent) the demand pattern throughout any particular day. This means that the free market in electricity is able to schedule just enough base load in advance. Any remaining imbalance would then be due either to inaccuracies in the prediction, or unscheduled changes in supply (such as a power station fault) and/or demand. Such imbalances are removed by requesting generators to operate in so called frequency response mode (also called frequency control mode), altering their output continuously to keep the frequency near the required value.

The grid frequency is a system-wide indicator of overall power imbalance. For example, it will drop if there is too much demand because generators will start to slow down slightly. A generator in frequency-response mode will, under nominal conditions, run at reduced output in order to maintain a buffer of spare capacity. It will then continually alter its output on a second-to-second basis according to the needs of the grid.

This spinning reserve is a significant expense to the power utilities as often fuel must be burned or potential power sales lost to maintain it. The kind of generation used for fast response is usually fossil fuel powered which produces emissions of between 0.48 and 1.3 tonnes of CO2 equivalent for every megawatt hour (MWh) generated. Thus a significant environmental burden, in the form of increased greenhouse gas emissions, is associated with this imbalance.
Most forms of generation are unsuitable as peaking power plants (peaker plants, spinning reserves) because they cannot be efficiently started/stopped or operated on an intermittent or sudden demand basis. As a practical matter, only natural gas turbine generation can serve as peaker plants. This is the core reason why T. Boone Pickens, Chesapeake Energy and others are so interested in wind power--it will increase demand for natural gas.

Thus the paradox: the desire to add renewable sources of electrical generation is motivated in part by the need to mitigate climate change; however, the addition of variable renewable sources increases the need for spinning reserves, which currently adds to the carbon problem.

What to do? What other than natural gas, with its carbon footprint problems, could serve as a spinning reserve or, more broadly, as a peaking power plant or some kind of load following capability from storage that would enable near-instantaneous supply increases to respond to changes in the electrical demand?

An alternative is grid energy storage. With the growing interest in and development of electric vehicles, especially plug-in hybrid electric vehicles (PHEVs) some have suggested that a growing array of distributed batteries in PHEVs could serve as a source of additional electricity in periods of high demand.

The concept, called vehicle to grid (V2G), is based on the fact that your car is typically not being used 90 percent of the time. "What if it could work for you while it sits there?" said Jeff Stein from the University of Michigan.

The National Science Foundation has granted a research team lead by Stein $2M to explore the possibility of V2G technology using PHEVs. There are many problems to be solved, however. The cars would need to be plugged into a socket not just when being charged, but also so electricity could be drawn back out. How would this be controlled? No PHEV owner will be happy to wake up in the morning and find the battery (half-)drained after being plugged in all night, presumably charging. There are (potentially significant) efficiency losses in charging/discharging batteries, and the life of the batteries would likely be shortened by an arbitrary cycle where complete charge or discharge may not occur. Lastly, there would need to be substantial elements of a future smart grid deployed to even allow this distributed storage to be harnessed in a centralized way. Interestingly, there is already a test of this concept underway at the University of Colorado (Boulder) by Xcel Energy. Other tests are also underway by Southern California Edison, Austin Energy, Duke Energy, Wisconsin Power, Excel Energy, and Pacific Gas & Electric, amongst others.

Hydro is another mostly green approach. Here in Washington state we get about 70% of our electricity from conventional (big dam) hydroelectric power, which has the ability to serve as a peaker plant by letting more or less water flow out of the reservoirs and through the turbines. There is competition for the water, however, especially from irrigation, but also from navigation and fisheries concerns, so the degree to which these dams can serve as peaker plants is somewhat limited.

Pumped storage hydroelectricity is another storage mechanism that might be explored, and may be very well-suited in coastal settings with large amounts of ocean energy generation (offshore wind, wave, etc.) Some of the drawbacks of this form of energy storage would be mitigated by a reservoir built for the purpose, rather than the use of a pre-existing (freshwater) lake.

Storage could also be achieved via flywheel arrays, hydrogen generation, compressed air, or other techniques.

Longer term, an updated, expanded, and smarter electrical grid is necessary. Wind generation is more variable the more local the scale and geographic reach of the turbine array. As more wind generation comes on line in greater density and over a more diverse, interconnected geographic area, local variations even out and become less significant. Offshore wind, despite its higher cost has several significant advantages over onshore wind; a large one is greater wind (power) on a steadier basis. Large coastal arrays (example) would take out some of the variability.

Exxon Mobil Spins, NYT Gets Dizzy

Another nail in the coffin of the liberal media meme.

Finavera Seeks Investor Funding

It's a tough time to be raising investor money, and no company is doing that unless they really need it.

Finavera Renewables Inc. has announced that it plans to raise US $1,002,000 through a non-brokered private placement of 20,040,000 units at a price of $0.05 per unit. Each unit consists of one common share and one-half of a share purchase warrant, with each full warrant exercisable at $0.10 for 12 months from the date of closing of the private placement.
The money will be used primarily for the company's wind rather than wave projects, particularly in the Peace River area of British Columbia where the company has 12 projects with a total potential of 1.5GW. Finavera has tested wave devices in Oregon and Washington, and recently suffered a setback by the California Public Utilities Commission on its PPA with PG&E.
The company also announced that is has applied to extend the term of all 21,000,000 share purchase warrants issued pursuant to a December 2007 private placement. The warrants, exercisable at US $0.15 per share and initially issued for a term of twelve months, have been extended an additional year.
Sounds like the investors are restless.

How We Measure the Cost of Oil

The Oil Drum has found fault with the classical economic assessment of oil production, and in particular such notions as "proven" reserves, and the foundation those numbers and that thinking play in energy policy formation. They propose a more useful analytical approach in an era of increasing resource contention:

The analyses presented by the IEA assume that only dollars will need to be invested (and $24 trillion at that). But oil, like anything else, requires real resources to procure, and it will be obtained only in proportion to how much real resource (energy, steel etc) is spent in getting it. The main problem is that geology, not the market, holds the key, and the geology of earth is getting more and more parsimonious in two ways: quantity and quality. Both of these concepts impact the energy return on investment (EROI) of national and global oil and gas supplies.


Just to give you a rough idea as to where we are at present with respect to EROI, “according to legendary oilman Charles Maxwell” on The Money Show, most countries report that it costs from $55 (Saudi Arabia) to $70-90 (Russia and most of OPEC) to $90 (Iran and Venezuela) to produce a barrel of oil.


Many economists will say that EROI undervalues the role that technology will play in accessing deeper and poorer quality reserves. But as we have stated, EROI in the US obtained at least 100 barrels of oil from each barrel invested in going after it in the 1930’s but only about 10 for one in about 2000, despite the tremendous increases in technology (Cleveland et al., 1984, Cleveland 2005). Therefore, in the US, and subsequently the world, geologic limits have trumped technological advances, and so we reiterate: the arguments about how much oil is left in the ground misses the point - what is important is not the total oil remaining but how much we can get out at a significant energy profit.

Another reason to think Peak Oil may be much closer than it has recently appeared.

Saturday, November 15, 2008

AWEA--Not in Kansas Any More

Denise Bode was named by the American Wind Energy Association (AWEA) Friday as its next CEO, and will take over from Randall S. Swisher on January 2, 2009. Swisher headed the AWEA for the past 19 years.

Not surprisingly, the AWEA press release was effusive:

Bode, who is currently CEO of the American Clean Skies Foundation, is a nationally recognized energy policy expert and served for nine years on the Oklahoma Corporation Commission. Her experience in the energy field is extensive and includes seven years as President of the Independent Petroleum Association of America (IPAA) and nine years on the staff of then–U.S. Senator David Boren (D-OK) as his legal counsel, focusing on the areas of energy and taxation.

“Denise Bode is an extremely dynamic and well-respected leader on energy issues in Washington, D.C.,” said Swisher, “and brings a wealth of knowledge and experience to AWEA. We are very fortunate to have such a talented and able individual available to lead the Association at a time when renewable energy stands on the threshold of dramatically expanding its contribution to America’s energy supply.”
No doubt space considerations were the reason to leave out a few other parts of Bode's energy credentials, particularly her service on George W. Bush's Energy Transition Advisory Team. In that role perhaps she also participated in Dick Cheney's still-secret energy task force which is thought to have largely shaped administration energy policy for the past 8 years. (That policy, so favorable to the Fossil Industry, represents an enormous lost opportunity that will now be much harder to accomplish.) Bode has also been a lecturer at the Heritage Foundation and the Federalist Society.

Bode is currently the CEO of the American Clean Skies Foundation (ACSF), a position she has held from its founding last year. What is the ACSF? It may not have an agenda, but its backers in the natural gas industry sure do. The appointment of Bode suggests opportunism by a still-committed Fossil Industry to co-opt a new political mandate and shape it for their own benefit. The AWEA press release includes an endorsement from her current employer:
“We were very lucky to have Denise’s leadership to get ACSF established as a real player in the debate on energy and the environment,” said Aubrey K. McClendon, Chairman and Founder of the American Clean Skies Foundation.
ACSF has certainly been running ads extolling natural gas, but the extent to which it has been a "player in the debate" is subjective at best. Bode's position at the helm, however, had little to do with luck. ACSF was founded by Aubrey McClendon, billionaire owner of Chesapeake Energy, one of the country's largest producers and sellers of natural gas. Source Watch lists Bode and McClendon as the "personnel" of the foundation, and their relationship extends back many years. Together McClendon and Bode have sought to advance the purpose of ACSF: to advocate for "clean-burning" natural gas and to attempt to position natural gas as a "natural partner" for truly clean renewable energy, like wind.

McClendon was one of the members of the Professional Basketball LLC, a group lead by fellow Oklahoman Clayton Bennett who prevailed on a gullible Starbucks CEO Howard Schultz to sell them the Seattle SuperSonics, Seattle's NBA team owned by Schultz. The group publicly insisted that "It is our desire to have the Sonics and Storm stay in Seattle," but McClendon, in an unguarded moment, let slip the truth: "We didn't buy the team to keep it in Seattle." Not for speaking the truth, but for revealing the lie, smarmy carpetbagger David Stern, the NBA commissioner, fined McClendon $250,000. After a year of making unreasonable demands for large taxpayer subsidies and fending off lawsuits, they took their new plaything back to Oklahoma.

McClendon was also one of the chief financiers, along with his good friend T. Boone Pickens, of the Swift Boat Veterans for Truth, the "independent" group that played such an instrumental role in besmirching John Kerry in the 2004 presidential election. The smear group's claims proved to be exaggerations and outright lies, but achieved their intended effect.

McClendon has also helped fund and direct political campaigns of people who can help him pursue his business interests. His support ranges from his pal Picken's eponymous Plan, to their joint (but failed) effort to foist Proposition 10 on California voters two weeks ago. McClendon also contributed to Bode's unsuccessful run for Oklahoma's 5th congressional seat in 2006. (She lost in the Republican primary to the then Lieutenant-Governor.)

So why am I writing so much about Aubrey McClendon when he's not actually becoming the head of AWEA? Because he doesn't need to personally run AWEA to get what he wants. McClendon's history shows that he backs and funds liars who shill for him and his political and business interests. With the plunge in natural gas prices, the broader economy and general confidence, McClendon's fortunes have declined both economically and politically. There may be a cautionary morality tale in all this; however, the tale is not over and McClendon, as Fortune noted, is too combative to simply give up.

For her part, Bode was enthusiastic on taking control of one of the country's leading voices for renewable energy:

I am thrilled by my new opportunity of working with the AWEA team to grow wind power in the U.S. I am particularly proud of the role I played as Oklahoma Corporation Commissioner to bring commercial wind power to Oklahoma.
We can perhaps give Bode some of the benefit of the doubt; her advocacy of wind energy does go back several years, even if her motivations are less apparent. As recently as this past April she showed her first priority:
Bode, former Oklahoma Corporation commissioner who is now CEO of the American Clean Skies Foundation, told about 1,100 oil and gas producers at a Texas Alliance of Energy Producers’ luncheon Wednesday that the natural gas industry needs to “elbow our way into the debate on energy.”
The sharp end of the elbow is encapsulated by their preferred term "clean-burning." In reality, natural gas does not and can not burn "cleanly" but only "cleaner," emitting about half the greenhouse gases of dirty coal. Suggesting our clean and environmentally sustainable future should use gas rather than coal is literally a half-measure. Traveling at full speed or at half-speed on the wrong road still takes one to the wrong destination.

Of greater concern than the elevation of an unabashedly pro-fossil workhorse like Bode to head a renewable energy advocacy organization is the man behind the curtain, to whom, based on the wizardry of his earlier successes, we should be paying very close attention.

Friday, November 14, 2008

Coda to the Reign of Error

Every lame duck administration rushes out batches of regulations in their waning days, often of an ideological kind they would not promulgate otherwise due to the political costs. These not-so-lovely parting gifts can be hard to undo because of the vagaries of federal rule-making and ADD-like Congressional focus.

This time could be different, however, according to Rachel Maddow last night on CNBC because Congress actually passed a law that changed the rules for changing the rules. Bush may have missed the deadline by months for making these kind of last minute regulatory changes:

Back in May, White House Chief-of-Staff Josh Bolton told federal agencies, "Hurry up. Finalize your new regulations by November 1st." Now, why November 1st? Because they thought if any new regulation passed more than 60 days before the start of the new administration, would kind of be written in stone and difficult to reverse.

The hilarious incompetence here is that the White House either forgot or they just didn't know about something called the Congressional Review Act of 1996, which according to "," means their math is wrong.

The actual deadline for passing new regulations is long past. It was May 15th, not November 1st, meaning anything passed after May 15th can be reviewed by the new Congress and effectively quashed. Oops.

The story at she refers to is here, which explains the thinking, the error, and the math.

Apparently Bush misread the deadlines as they pertain to the Congressional session dates in the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law PL 104-121, which, amusingly, was part of Newt Gingrich's Contract on America and passed by the then Republican congress to reign in then President Bill Clinton from doing exactly the same kind of thing Bush is now trying to do.

The mind-numbingly byzantine text of the law itself is part of 5 USC 801 et seq.

Change--Not Just a Slogan but a Darwinian Imperative

According to University of California Berkeley adjunct professor David Roland-Holst, California will face billions in costs to mitigate the effects of climate change on the state.
Roughly $2.5 trillion in real estate assets is at risk. The report calculated an annual cost to the state between $300 million and $3.9 billion in damages from the physical impacts of climate change. The ultimate cost depends on how warm the earth gets and how quickly we adapt. The report ominously quotes Charles Darwin: "It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change."
As with the US auto industry, a refusal to accept looming reality, a hubristic insistence on clinging to the status quo, or a simplistic belief in a false dichotomy between the economy and the environment will lead only to a disaster of much greater cost. Write the authors:

Markets can deliver profits, but they may not deliver sustainability. For this reason, the public interest must be secured at all times by policy foresight and responsible leadership.
The authors note that the "political challenges may be greater than the economic ones" in addressing the problem, which suggests to me a need for education. Political movement is easier to achieve if it can be shown clearly and objectively that economic costs to individuals and society as a whole are less when applying an ounce of prevention rather than a pound of cure.

Climate response — mitigation to prevent the worst impacts and adaptation to climate change that is unavoidable — on the other hand, can be executed for a fraction of these net costs by strategic deployment of existing resources for infrastructure renewal/replacement and significant private investments that would enhance both employment and productivity.
There are several conclusions. On energy, government is urged to facilitate adaptation policies to overcome "market failures" by

More extensive and, where appropriate, intensive promotion of renewable energy technology, including innovation, diffusion, and adoption.
The Berkeley web site has the full report PDF and executive summary PDF. The report was also supported by California nonprofit Next 10. Professor David Roland-Holst also authored the report on green jobs in California about which I posted here.

Thursday, November 13, 2008

GM Fights The Country--Both Lose

In an earlier post I argued that companies end up harming themselves, sometimes fatally, by resisting changes they eventually must make anyway.

The recent troubles of American car makers show this clearly. Gristmill:
...for years they refused to listen to those who begged them to build fuel-efficient cars -- heck they ran away from the hybrid vehicle partnership they started with the Clinton administration in the mid-1990s once W. took office, ultimately giving Toyota and Honda a 10-year lead in the core drivetrain technology of the century.

Competition has hurt GM. Their workers' legacy health care and benefits package is unsustainably more expensive than that of the foreign auto makers. Their cars are not as energy efficient. The damage is largely self-inflicted by their refusal to adapt their business and innovate to create a more competitive product that customers increasingly demand in the market. The Energy Crisis of the 1970's should have been a wake-up call. We muddled through and went back to the old ways. The growth of foreign brand market share should have been a wake-up call. Instead, there was lobbying to protect an uncompetitive product line and a failing business model. The folly here would seem to be a belief that change can be successfully resisted, that the tide can be commanded to stop, that you can step into the same river forever. Did Detroit's executives naively believe that our oil economy was limitless and that the Republicans would protect their flank forever? That party's over.

General Motors (GM) now publicly worries that they will run out of cash as soon as the first quarter of 2009. Some analysts think it will be as soon as next month, and the stock will become worthless. This is a probable outcome if GM is forced into a death embrace with Treasury Secretary Hank Paulson, who will smother the remaining pittance of shareholder value with his TARP. Today, Toyota's market capitalization is 70 times that of GM. Purchasing GM at the current stock price would cost less than $2B.

It didn't have to be like this.
...Detroit has not only been suicidally lobbying against its own inescapable future of highly fuel-efficient cars; it has been lobbying against the future of all Americans who want to end our oil addiction, and against the future of all humans who want to preserve the health and well-being of our planet for future generations.

Fred Wilson writes that GM's brands would be better off as independent businesses, and that the country would be better off without companies that are "too big to fail". Furthermore:

...we need to completely neuter the auto industry's ability to lobby our govt to stop important initiatives like clean/alt+energy and mass transit. Its borderline criminal what the auto industry's political efforts have done to our global competitive position right now.

The same is true of the financial services business, the airline business, electric utilities, and a host of other industries.

More than 50 years ago GM's president, Charles Wilson, said "what was good for the country was good for General Motors and vice versa." When did both GM and the country lose faith in this idea?