Choosing Between the Economy and the Environment

In the abstract everyone is in favor of protecting the environment. The particulars are another story. Opposition stems from the belief that environmental protection can come only at unacceptable economic cost. Must we choose between the environment or the economy?

Opposition to environmental legislation was, and is, clearly misguided. Exposure to lead at an early age is now known to cause neurological problems, even at extremely low doses. Since 1984, airborne lead concentrations have fallen 98 percent because of environmental activism. We have seen declines in airborne sulfur dioxide of 35 percent and carbon monoxide of 32 percent even as our GDP has more than doubled. Yet let us never forget that efforts to clean the air were vehemently opposed when first introduced. Remember the hue and cry of those who foresaw economic calamity when the lead phase-out was legislated. Industry gravely predicted that tens of thousands of gas stations would go out of business. Let us always remember the hysterical cries of economic doom as we tightened pollutions standards with the Clean Air Act in 1970. Every major automobile manufacturer came to Washington with tales of impending bankruptcy should the proposed act become law. None of the predictions of economic failure came to pass.

History has proven, clearly and unambiguously, that environmentalists are on the right side of this debate. We would otherwise be breathing black poisonous air and drinking mercury-laden water laced with raw sewage. Yet, amazingly, we still debate when we should instead be focusing on solutions. We continue to fight the false notion that protecting nature comes at the cost of economic growth.

Companies suffer economic damage if they fail to respond to the needs of their customers. Slowly, there is a realization that some customer needs are more abstract; customers want their own needs met, but increasingly also want outcomes that benefit broader communities or even distant communities to whom they may have no more than an aspirational connection. It is no longer enough simply to fish tuna; people want it to be dolphin-safe. It is no longer enough only to sell consumer electronics for their features; they must also be free of hazardous substances and minimize the waste stream. It is no longer enough to merely wear clothes however made; they must not come from sweatshops.

The economy didn't crater when we passed laws protecting our air or our water. The auto industry didn't collapse with CAFE standards. If anything, companies suffer if they fail to respond to the needs of their customers, whether personal and more abstract. Correctly understanding and predicting the buying motivations of customers is a key trait of businesses that succeed in the marketplace. Companies that wait until laws and regulations force them to adapt their products trail those that anticipate these changes. As in business generally, the race goes to the swift: making a product better matched to your customers needs more quickly than your competitors leads to more customers and more sales.

The importance of climate change is growing amongst customers, at least in more developed countries. Customers and even ordinary consumers demand environmentally-responsible business practices from the companies that sell them goods and services. Businesses that take that need seriously and communicate their meaningful response effectively realize a competitive advantage. The imposition of regulations designed to advance broader societal goals is not what damages businesses; if the laws are well-designed, what damage that results comes instead from the failure by some businesses to anticipate and respond to shifting customer needs before regulations require it.

Regulating greenhouse gas (GHG), passing a carbon tax or creating a cap-and-trade system would have a negative economic effect only on a business that fails to anticipate and respond to customer needs and preferences.

Addressing GHG emissions is not exactly the same as some of the examples above. Unlike lead or other heavy metals, GHG don't poison people directly. GHG spread globally; heavy metal toxicity has primarily local effects that stem from its concentration. Admittedly, some businesses would have trouble responding: a coal-fired electric utility can only do so much; they do burn coal after all.

So what would make good policy? For starters, not buying into the divisive notion that protecting the environment and protecting the economy are mutually exclusive aims. For each business that would suffer under an environmentally-focused law (e.g. a coal-fired electric utility) there are many-fold more that can grow and prosper by keeping an eye toward the market drivers and using forward-thinking planning. Lawmakers must provide a transition period for companies less forward-looking to make an orderly adaptation, and laws should provide cushioning for those few that are structurally unable to adapt.

After yesterday's elections the likelihood of laws being enacted to address climate change has increased. There almost certainly will be some kind of carbon tax or cap-and-trade system established in the next few years. Companies that have not yet prepared should get going. Those that cannot respond need to formulate proposals that provide a reasonable transition that minimizes damage both to the environment and to the economy (particularly their own.) As with previous environmentally-driven laws, the biggest economic harm comes from fighting the inevitable. King Canute could not command the tide to stop; denying the need to address climate change would be equally feckless.

Still Time for Mischief

Shame.

Even some free-market organizations have joined conservation groups to urge a moratorium on last-minute rules proposed by the Interior Department and the Environmental Protection Agency, among others.

"The Bush administration has had eight years in office and has issued more regulations than any administration in history," said Eli Lehrer of the Competitive Enterprise Institute. "At this point, in the current economic climate, it would be especially harmful to push through ill-considered regulations in the final days of the administration."

Obama: Apollo Project

Yesterday Obama reiterated that his #1 priority if elected would be energy policy, including the investment of $15B per year over 10 years in an "Apollo Project". From The Independent in the UK:

That's going to be my number one priority when I get into office," Mr Obama
has said of his "green recovery" plans. Making his arguments in a radio address
yesterday, the Democratic favourite promised: "If you give me your vote on
Tuesday, we won't just win this election. Together, we will change this country
and change the world."

The election has come during the worst economic crisis since the Great Depression of the 1930s, but he declared: "We'll invest $15bn a year over the next decade in renewable energy, creating five million new green jobs that pay well, can't be outsourced and help end our dependence on foreign oil." The appeal of the idea that clean energy could help to kick-start the economy is such that Mr Obama's Republican opponent, John McCain, has also promised "millions" of green jobs if he wins.

...it is the American plans that could have the greatest effect in dragging the world economy out of crisis. Mr Obama believes that a new clean-energy economy "can be the engine that drives us into the future in the same way the computer was the engine for economic growth over the last couple of decades".

The head of Mr Obama's transition team, John Podesta, has called for "a new vision for the economic revitalisation of the nation and a restoration of America's leadership in the world", adding: "We must seize this precious opportunity to mobilise the country and the international community towards a brighter and more prosperous future."

Rumors abound that US Representative Jay Inslee (D-WA), author of "Apollo's Fire" about the need for renewable energy investment, might be an Obama cabinet choice for Interior (or perhaps Energy.)

Obama: Carbon Regulation Will Boost Renewables

Obama speaks very plainly about the impacts of carbon emissions regulations (a carbon cap and trade system):

That will create a market in which whatever technologies are out there that
are being presented, whatever power plants are being built, they would have to
meet the rigors of that market and the ratcheted-down caps that are imposed
every year. So if somebody wants to build a coal-powered plant, they can. It’s
just that it will bankrupt them because they’re going to be charged a huge sum
for all that greenhouse gas that’s being emitted. That will also generate
billions of dollars that we can invest in solar, wind, biodiesel, and other
alternative energy approaches.

These remarks come from an tape originally from a San Francisco Chronicle interview of Obama back in January, and recently brought in an attempt to scare people about job losses in the coal industry that would supposedly result from carbon regulation. More details on the political angles, actual coal industry job drivers and some interesting reader comments at Climate Progress.

Peaked Oil

The International Energy Agency expects to release its World Energy Outlook study of annual oil production and depletion on November 12, but the Financial Times leaked the results last week, and the principal summary finding, if borne out, represents a tipping point in the world's energy economy:

Without extra investment to raise production, the natural annual rate of
output decline [of the 400 largest oil fields in the world] is 9.1 per cent.

The IEA in a statement, cautioned that the 9.1% figure:

...appeared to be based on an early version of a draft from several months
ago that was subsequently revised and updated. The numbers in the article can be
misleading and should not be quoted or considered to be official IEA
results.

Were the figure to hold up it would mean that, just in order to maintain crude oil output at current levels, 6.825 million barrels a day of new production capacity must be developed every year. By way of comparison, the total annual crude oil output of Saudi Arabia, the world's largest producer, is just over 10 million barrels a day.

Says the IEA:

The future rate of decline in output from producing oilfields as they mature is
the single most important determinant of the amount of new capacity that will
need to be built globally to meet demand. [There must be a] significant
increase in future investments just to maintain the current level of
production.

The global economic recession will (and is already) depressing demand, which somewhat obscures the impacts. OPEC and other oil-producing countries can (and do) adjust their actual output based on myriad factors: demand, spot price, political pressures, etc. The IEA report addresses not how much they pump, but the maximum amount they could pump. With slackening demand in the short term, the effects may be imperceptible.

The longer term picture is more disturbing. Replacing depleted production will require investment in a climate where investment capital is expensive or unavailable. Falling oil prices will continue to delay additional investment. When the global economic climate improves and demand increases the combination of declining output of existing fields and the lack of new additional sources will result in sharply higher prices and a panicky global grasp for energy security suddenly unattainable with oil. The kind of investment needed to replace 9.1% of lost production could be so large as to be economically infeasible unless the price of oil is exponentially higher than it is today. Put another way, if we fail to move beyond our terminal reliance on oil for our energy needs, the amount of investment required to ensure supply will guarantee a radical upshift in the price of oil, and hence of everything else in the economy dependent on it (i.e., just about everything.) Finally, there is no assurance that, even with the scale of these investments, any resultant project will produce a sufficient flow of new production.

Comments the Post Carbon Institute:

...the IEA has disavowed the Financial Times story. But if nine percent is even close to being the final figure, then it's absolutely clear: July 2008 was the all-time peak in world oil production. Don't expect anyone at the IEA to officially admit that fact until 2025 or so. But among those who pay attention to the evidence and the terms of the debate, further ink need not be spilled in speculation.

Peak oil is history.

More oil is not the answer to our energy future. Maintaining existing oil supply levels is becoming rapidly harder to do. Changing to other forms of energy will take time and money, probably lots of money. Not changing will be equally if not more costly. This is just economics--climate change outcomes also demand change. The sooner we aggressively transition to other energy sources the better off we will all be.

Construction Costs per Watt

Bizjournals.com:

SolFocus Inc., a provider of concentrator photovoltaic solar energy solutions, said
Monday it signed a $103 million agreement to install more than 10 megawatts of
CPV solar energy projects in several sites across southern Spain by the end of
2010.

Mountain View-based SolFocus' said its CPV systems use a combination of
"high-efficiency PV cells and advanced optics to provide high solar energy
yields at competitive costs for commercial, industrial, and utility
applications."

$10.30 per watt in construction costs? Could it really be spendier than offshore wind?

I'm hunting for reliable numbers on the typical per-watt construction costs of different kinds of commercial-scale electrical generation technologies, so far with little success. I've looked through the mountains of data at the Energy Information Administration, googled at length on the Handy-Whitman index (amongst other terms)--without much success.

Any readers have suggestions on where to find this data?

Wind Actually "Feeling Much Better"

The WSJ avers that the wind industry, like the poor sod in Monty Python is "not dead yet" (only a flesh wound?) Sure, there's a pulling back, but worst-case total projected capacity additions next year of 6GW are still larger than all but four other countries' entire installed capacity. The WSJ projects consolidation:

The biggest impact of the credit crunch, then, is likely to be a be change in how the wind-power market develops rather than how fast it grows. Smaller players are being squeezed, and consolidation is on the horizon.

The probable hunters? Companies with lots of cash and predictable tax exposure who can take full advantage of clean-energy tax credits, NEF says. That includes the usual suspects like utilities, especially European power companies. But it could also include another group of companies with healthier-than-ever balance sheets which are looking for a place to put their cash: U.S. oil majors.

Of course the small players have been squeezed for several years as the turbine manufacturers, faced with a favorable supply/demand imbalance increasingly favored large "frame agreements" that provided large number of turbines to their biggest customers. Smaller players wanting a few or even a mere dozen or so turbines couldn't get orders filled.

Smaller players may end up having an easier time since the enormous funding needed by large projects is not as easily available now, but much smaller amounts may be easier to get, especially if funded through municipalities using their tax-free bonding authority.

Nonetheless, the WSJ is probably right that consolidation will occur; this is a normal stage in the development of any new industry. The oil "majors" are likely players, especially BP, Shell, Conoco and others already interested. The question is will they start to play to develop the industry and make money at it, or to retard its advance while they milk their obscene oil profits for many more years?

Election Offers Distinct Options

Worldwatch observes the importance of Tuesday's election on the future of green jobs, and notes that there are "distinct options":

With less than a week until the United States elects its next president, and at
a time when Americans are losing their jobs in record numbers, the two leading
candidates are suggesting that the financial crisis can be resolved by addressing the country's worsening energy crisis.

Combining job creation and energy policy into one economic stimulus plan is gaining steam among political and environmental leaders worldwide. Yet despite similar rationales, the plans presented by the Democratic and Republican candidates offer distinct options. And not all of the proposed jobs would truly be "green."

I've posted several items on the Green New Deal, and some of the other ballot measures in different states. As is typical of the election season the candidates are never wholly specific about what they will do, but despite the uncertainties of what is promised and what might be delivered, there are plenty of substantive elements voters should consider. While down-ballot races and initiatives certainly matter, the largest impact will come from who we elect as President for the next four years.

John McCain's energy plans heavily emphasize oil and nuclear, adding only a perfunctory nod to other approaches in a so-called "all of the above" policy. Oil is not the way forward. With 3% of the world's reserves and 25% of the world's consumption the United States cannot drill its way to energy security, even if all the oil could be feasibly extracted. Recent reports suggest peak oil may be much closer than previously thought--as soon as 5 years away. Nuclear power has gained adherents and public support; even some environmentalists such as Stewart Brand have softened their opposition in the face of climate change fears. However, nuclear has very long lead times, arduous permitting, unsolved waste disposal problems ("blah blah blah"), and uneconomical costs. Even if McCain succeeds in spurring the construction of 45 new nukes by 2030, it won't come close to solving our problems. Nuclear is not the way forward either. McCain offers nothing new.

Barack Obama's energy plans (PDF) emphasize updating the electrical grid, creating a national Renewable Portfolio Standard (RPS), and investing $150B over 10 years in renewable energy development. Updating the grid is a critical infrastructure need and will allow better integration of variable renewable sources such as wind, as well as allow significantly greater energy efficiency at all levels. The cost for this is potentially astronomical (or should I say economical?) A national RPS is a good idea, and would prevent the kind of sophistry proposed by Washington State gubernatorial candidate Dino Rossi to redefine the term "renewable" in a way that would vitiate any new renewable energy development under the state RPS. There are several problems that will be difficult to resolve, especially deciding what qualifies as renewable, and making it appropriate for windy states like North Dakota, states with big solar resources like Arizona, states with large hydrokinetic resources like Washington, and states with few renewable resources like those in the southeast. Obama's $150B is a good step, but more is needed, the neo-Hooverite objections must be met, and there are questions about how it would square with free trade agreements under the WTO. There are questions about Obama's proposals, yes, but they aren't nearly as fatal as those posed by McCain's proposals, and it is easier to see how answers might be found.

In summary, Obama offers an approach where America can lead in the global energy economy of the future, while McCain offers an almost nostalgic reprise of the policies that got us here. I don't like where we are, and the last thing we need is more foot-dragging in the face of a future that makes the old ways of thinking not only obsolete but dangerous to our economic and environmental health. Whether Obama can deliver, and whether it will make enough difference are questions not yet answerable, but what McCain offers, even if delivered in full, will not suffice.

I will vote for Obama. For the future of our environment, our energy needs and our economic well-being, I urge you to do the same.

Green Mayors for Green Jobs

Global Insight, in a report (PDF) prepared at the behest of the US Conference of Mayors, defines and quantifies the existing green job sector and projects more than fivefold growth over the next 30 years:

Global Insight estimates there are currently 750,000 green jobs in the U.S. economy, with 85% of them in metropolitan areas. The jobs are in varied categories including renewable power generation, agriculture, construction, manufacturing, research, consulting, and engineering, among others. Over the next 30 years, Global Insight projects potential growth of 4.2 million new green jobs assuming a significant increase in electricity generated from renewable resources, investment in energy efficiency in the residential and commercial sectors, and increased production of renewable transportation fuels.

The forecast assumes that, by 2038, the U.S. will generate 40% of its electricity from alternative fuels (wind, solar, hydro, geothermal, biomass), that 30% of fuel used in cars and light trucks will come from alternatives to gasoline and diesel, and that electricity use in existing buildings will drop by 35%.

The 750,000 current green jobs represent a mere 0.5% of all US jobs. Of that figure, according to the report, 418,000 are in engineering, legal, research and consulting, 127,000 in renewable power generation, 72,000 in (no kidding) "government administration," 60,000 in manufacturing, 58,000 in agriculture and forestry, (only) 9,000 in construction and installation, and 6,000 in sales and distribution. To compare, 2.2 million jobs have been lost overall in the US in the past 12 months.

The USCM represents the (currently 1,139) cities in the United States with populations of 30,000 or more. The top 10 US cities ranked by current green jobs (and showing the potential number of green jobs they could have by 2038 according to the report) are:

• New York (25,021/197,971)
• Washington (24,287/192,165)
• Houston (21,250/168,136)
• Los Angeles (20,136/159,321)
• Boston (19,799/156,660)
• Chicago (16,120/127,545)
• Philadelphia (14,379/113,772)
• San Francisco (13,848/109,570)
• San Diego (11,663/92,285)
• Pittsburgh (9,627/76,174)

The potential future green jobs include an estimated 1.23 million jobs related to renewable energy production, 1.5 million jobs in alternative transportation fuels, 1.4 million jobs in engineering, legal, research and consulting positions, and 81,000 jobs from commercial and residential retrofits, according to the study. 85% would be in urban areas.

The report concludes:

The United States is clearly heading toward a new era in terms of its energy policy, energy infrastructure, and energy-based economy. Elected officials at all levels of government and private markets are both gearing up for massive investments in new alternative fuel technologies and in increased energy efficiency. There are many Green Jobs in our economy already, but that figure stands to grow tremendously over the coming years due to market forces, legislation, and local initiatives, or some combination thereof. The vast majority of Green Jobs are not location dependent, so future Green Jobs will be located in cities and metropolitan areas that are currently the most attractive for investment, or in areas that actively increase their attractiveness relative to competing areas. The good news is that traditional industries continue to be replaced by new opportunities, and we have only just begun to tap into many of them.

At the release of the report last month, USCM President and Miami Mayor Manny Diaz stated:

We are firmly convinced that what we need in this country is a green revolution.
This report proves that being green is not optional, it is necessary for a
healthy and robust economy. Creating green jobs is an investment we must
continue to make.

Yes, not optional. Creating green jobs needs to be a national priority as it addresses our three current and enormous problems: energy, climate change, and the economy.

Slimmer Pickens

Wind power projects are being slowed or cancelled as I posted earlier here, here and here. Now Texan T. Boone Pickens has announced he is pulling in his horns on the Pampa Wind Farm planned by Mesa Power. Pickens, controversial booster of the Pickens Plan and California's "Big Wind" Proposition 10, is scaling back or delaying what was to have been the world's largest wind farm, 4GW on 400,000 acres northeast of Amarillo in the Texas panhandle. He ordered 667 GE turbines back in May for mid-2010 delivery. Original plans called for a project total of as many as 2,000 turbines; the eventual number is now unclear.

The change of plans is a result of three factors: the general difficulty obtaining financing from constipated and timid credit markets, the decrease in natural gas prices making wind less competitive, and the $2B Pickens has lost in the market swoon, causing some of his investors to get cold feet.

Not So Lovely Parting Gifts

The Imperious Presidency's final acts in its Reign of Error:

Until January 21, nobody in this country is safe from the lemming-in-chief.
Unsatisfied with blocking all serious national and global action on climate
change, the Bush administration is intent on leaving the next president with a
variety of pollution-accelerating regulations that will be difficult to reverse
quickly.

Records Made to be Broken

I know I complained that Obama's promise of $15B on renewable energy spending seemed paltry. Compared to this, however, it looks large:

Capital investments in U.S. cleantech companies reached a record $1.6
billion in the third quarter, according to an Ernst & Young LLP analysis
based on data from Dow Jones VentureSource.

A total of $3.3 billion was invested in the first three quarters of 2008, surpassing the figure for the same period last year by 71 percent, the report said.

Forced to choose, I'm sticking with paltry. Bold action is needed.

Talking to the Flat Earthers

The American Enterprise Institute, the Cato Institute, the Competitive Enterprise Institute and other last bastions of wingnuttery continue to assert that climate change is some kind of liberal hoax.

Talking points that refute this hokum.

WTO vs. The Green New Deal

From alternet.org:

If Barack Obama wins the White House, his administration will face potentially
irreconcilable conflicts between his signature proposals -- like transforming
the American economy into a 21st century "green-collar" job engine -- and the
dictates of the "free trade" regime that both major parties have advanced with
unbridled zeal for the past quarter century.

At issue is whether government policy can provide incentives that supposedly provide an unfair advantage to one country's industry at the expense of that same industry in its "free trade" partner countries. I can't get far enough down the rabbit hole to understand the legal and political pivot points on free trade. Here in Seattle most of us remain baffled how European governments can subsidize Airbus against Boeing. Our government has subsidized any number of industries in a near-infinite variety of ways. Are ethanol subsidies illegal from a free trade perspective? What about the smorgasbord of goodies the Fossil Industry has enjoyed over the decades? Can someone explain to me why it will be impossible to implement incentives to boost green job creation and the renewable energy industry?

Oregon Governor Ted Kulongoski Unveils Clean Energy Agenda for 2009

Oregon Governor Ted Kulongoski has an agenda for clean energy in 2009.

"Climate change is the most important environmental and economic issue of our
time," Kulongoski said as he laid out his proposal for new clean energy tax
incentives and ambitious goals he wants the 2009 Legislature to adopt. On Monday,
Governor Kulongoski said it's time to redouble the state's commitment to a clean
energy future. "In 2009, we must be bolder, more comprehensive and even more
visionary," Kulongoski said.

Key elements according to the Oregonian include:

• Greenhouse gas reduction: Authorizes regional cap-and-trade system for
carbon emissions; sets limits on emissions from the state's largest sources;
sets low-carbon standards for all new electricity generation
• Energy efficiency: Establishes energy performance certificates for new
homes or commercial buildings, similar to MPG ratings for new cars; sets goal of
zero-emission new buildings by 2030; allows 50 percent tax credit for
large-scale energy efficiency projects, up to $20 million
• Renewable energy: Sets up pilot program to pay for energy produced from
solar projects; establishes tax credit for residents who donate to a renewable
energy incentive fund
• Transportation: Offers $5,000 credit for purchase of new plug-in
hybrid or all-electric car; authorizes new low-carbon fuel standard similar to
those in Washington and California

Oregon gets it. Here in Washington we're still waiting for a comparably aggressive commitment to renewable energy and sustainability. We're having an election (surprise!) but I don't hear either of our gubernatorial candidates talking about anything other than what a scumbag the other is. (To be fair, one actually has some energy policy accomplishments; the other intends to gut our state's RPS by including existing hydro dams as a qualifying renewable energy source.) Please, can the election be over soon?

First Offshore Wind Turbine Operating in Germany

The first offshore wind turbine in Germany started producing power on Tuesday. Environment Minister Sigmar Gabriel turned on the first turbine at the future Hooksiel complex near the coastal city of Wilhemshaven. "Offshore wind power is of key importance for our future energy supply and a decisive factor in achieving our expansion goals for renewable energy," Gabriel said.

The 5MW pilot project located a mere 500m from the beach is a proof-of-prototype for an eventual 80 turbines to be placed 100km off the North Sea island of Borkum. Construction on that facility is planned to commence in 2009.

Germany joins Denmark, the United Kingdom, Sweden, Ireland and the Netherlands as the only countries generating offshore wind energy. Plans for offshore wind are underway in many places in Europe and in the United States. Offshore wind has been slower to catch on due to its higher costs, but this is changing due to continuing demand growth, the lack of additional land-based sites with good wind, and the development of new platform technologies.

Last year 14% of German electrical supply came from renewable sources, up from 11.5% in 2006. Germany has a 30% target by 2020--the most ambitious goal in the European Union.
By 2030 they aim to provide 15 percent of households with electricity produced at offshore wind farms, the equivalent of around 25,000 megawatts.

Goals, not Paths

David Roberts posts pragmatic good sense that should be applied to our energy policy:

Define where you're trying to go, the social benefits you're trying to
achieve, and then allow actors in an open, competitive market to find the best
way there. Progressive goals; market-based means.

The way this is often expressed in the political arena is as an aversion to
"picking winners." But we have to be careful. Three policy imperatives fall out
of GNP thinking:

(1) The goals themselves must be mandatory and legally enforced.
(2) No particular path should be given new favors and advantages.
(3) Paths that presently enjoy favors and advantages should have them removed.

Obama proposes a national RPS as a key goal--will it be "mandatory and legal enforced" once Congress gets done with it? Will we see an end to the disparities in the PTC across different renewable energy technologies?

Presidential Candidate Energy Policies

A concise summary of the positions of each.

Nuclear spring?

Nuclear power has not, for most of its history, enjoyed much popular support. Three Mile Island and Chernobyl have had a very long half-life in the public's anxiety closet, and waste disposal solutions remain scientifically and politically challenging.

Yet support for nuclear power has shifted, returning closer to what it was before TMI, undergoing what some now call a renaissance. Climate change, energy security are the leading reasons for this change of sentiment. Politicians, leaders that they are, have been quick to follow. John McCain positions nuclear as a co-equal with expanded oil drilling as his energy solution; Barack Obama advocates $15B per year for renewables, but hedges his (political) bets by suggesting a role for both nuclear and greater oil drilling as part of his comprehensive approach to energy.

Our energy policy needs to change--there's little arguing with that, especially after events of the last few months (years.) While many worry about carbon emissions and climate change, and others about supporting foreign oil despots and achieving energy independence, most Americans care primarily these days about economic impacts. (Update: polling.)

What does it cost? A recent analysis by Amory B. Lovins and Imran Sheikh, "The Nuclear Illusion," pegs the cost of electricity from a new nuclear power plant at 14¢ per kilowatt hour, based on costs of fuel, capital, operations and maintenance, and transmission and distribution. The authors claim wind power under a comparable costing analysis to be just half that--7¢ per kilowatt hour. These cost estimates do not include the not insignificant costs of waste disposal, insuring plants against accidents, and decommissioning (cleaning up) the plants when they wear out.

These costs are not trivial:

To get a sense of the costs of nuclear waste disposal, we need not look beyond
the United States, which leads the world with 101,000 megawatts of
nuclear-generating capacity (compared with 63,000 megawatts in second-ranked
France). The United States proposes to store the radioactive waste from its 104
nuclear power reactors in the Yucca Mountain nuclear waste repository, roughly
90 miles northwest of Las Vegas, Nevada. The cost of this repository, originally
estimated at $58 billion in 2001, climbed to $96 billion by 2008. This comes to
a staggering $923 million per reactor -- almost $1 billion each -- assuming no
further repository cost increases. (See data).

The repository is now 19 years behind schedule, and it becomes harder with each passing year to believe that it will ever be built at all. If it does get built through some miracle of political will, the cost will almost certainly be greater than today's estimate. Who will pay? Yep, that's right--the taxpayers.

McCain endorses nuclear and the folly of "drill, baby, drill" as the solution, but his policy fails on virtually any metric you care to pick--climate change, immediacy, security, cost, effectiveness. It looks increasingly like more of the same.

Looking at the statements of the candidates and the sentiments of public opinion, the question is not whether we should invest in our energy future, the question is how much do we invest and where do we get the best value? Investing in more fossil foolishness as we've done for decades will not now produce different results or solve our increasingly urgent problems. Nuclear is not the answer. Clean coal isn't. The only investment that simultaneously addresses energy independence, climate change, and long-term affordability is renewable energy.

The $150B Obama proposes to invest in boosting renewable energy is a step in the right direction, but as an investment in our future it looks downright paltry. Both for a forward-looking energy policy and as a response to the economic neo-Hooverism some now dangerously advocate, there needs to be a substantial investment in renewable energy.

We need a Green New Deal, not retreading tired and failed approaches of yesteryear.

Barack Obama on Renewable Energy Investment

From Barack Obama's "closing argument" in Canton, Ohio yesterday:

We’ll create two million new jobs by rebuilding our crumbling roads, and
bridges, and schools, and by laying broadband lines to reach every corner of the
country. And I will invest $15 billion a year in renewable sources of energy to
create five million new energy jobs over the next decade – jobs that pay well
and can’t beout sourced; jobs building solar panels and wind turbines and a new
electricity grid; jobs building the fuel-efficient cars of tomorrow, not in
Japan or South Korea but here in the United States of America; jobs that will
help us eliminate theoil we import from the Middle East in ten years and help
save the planet in the bargain.

That’s how America can lead again.

This echoes what he said in Denver, Colorado on Sunday:

If I am President, I will invest $15 billion a year in renewable sources of
energy to create five million new, green jobs over the next decade – jobs that
pay well and can’t be outsourced; jobs building solar panels and wind turbines
and fuel-efficient cars; jobs that will help us end our dependence on oil from
Middle East dictators.

I'd like him to talk about public transit a bit more than roads, but he's on the right track for sure. More detail on his energy policy here.

Nuclear Power Imminent?

From the NYT via Gristmill regarding the "imminent" spending on nuclear power:

The critics argue that the same money spent elsewhere -- on wind power, or on retrofitting buildings -- could create bigger cuts in carbon dioxide output. Joseph J. Romm, an official in the Energy Department during the Clinton administration, pointed to a recent estimate by Florida Power & Light that a new reactor could cost a steep $8,000 for each kilowatt of capacity -- enough power to run a window air-conditioner. That is at least double what a coal-burning power plant would cost, and Mr. Romm said that it was only the preconstruction estimate of an industry famous for cost overruns. He said the plants would be hard to finance. "I just read that McDonald's was having trouble getting money, and there's not a lot of risk in building a new McDonald's," he said. "Obviously, the risks with a nuclear plant are enormous."He predicted a return to the problem of the 1970s -- high prices for electricity driving electric demand down so much that plants under construction were no longer needed. Some people say they believe more political opposition will emerge once some of the proposed plants move closer to construction.

Lessons from the Mayans

Sobering parallels.

Overcoming Wave Farm Opposition

From my favorite local NPR station, KUOW 94.9 FM:

Harnessing the power of ocean waves to make electricity is all the rage
among Northwest politicians and conservationists. Oregon State University and
the University of Washington just got a big grant to work on wave and tidal
energy. Even the Presidential candidates are all for it as part of the quest for
"energy independence." But the possible effects on fishing, crabbing and whales
make some coastal residents uneasy. Correspondent Tom Banse reports backers of
wave energy have some persuading to do.

Coal is Not the Answer

The folks at Treehugger have taken umbrage at the coal industry's PR campaign touting the sooty black stuff as "clean coal" and the solution to our energy needs.

So they started a new web site.

Ill Wind

Reuters reports demand for wind turbines has gone slack.

Investors are deserting a wind power sector which until now had benefited
from twin climate and energy concerns, as a debt squeeze forces developers
to re-think projects. The sector has enjoyed explosive growth, at more than
30 percent per year during the past five years, partly on aggressively
priced project finance debt. Now that debt is more expensive, if available
at all, harming the economics of wind farm financing. Weaker demand for wind
turbines, especially from smaller project developers which rely on debt
finance, will hurt manufacturers. "You're going to see a massive decline in
turbine orders," said Tom Murley, the head of the renewable energy team at
private equity investors HgCapital.

Support Growing for Nuclear Power

Studies in Germany and the US show increasing public acceptance for expanded nucelar power generation. In the US support is now at a record 74%, driven by electricity cost and concerns about climate change and energy security. (Given nuclear's record, I'm not convinced that nuclear has a good story to tell on cost, given their enormous and routine construction budget overruns.)

(Information from the EEnergy Informer, November 2008 issue--not yet online)

China to spend $280B on Rail Network

China will expand their rail system by 30% at the cost of $280B. Why? It's crowded and needs more capacity, but also, interestingly, "as a stimulus measure aimed at blunting the impact of the global financial crisis."

EPA draft rule on GHG

Climate Change and Carbon Management Blog reports:

The EPA has submitted a draft of a proposed rule that
would create a national greenhouse gas registry program to the White House
Office of Management and Budget (OMB), whose sign-off is generally
required for all agency rulemakings. The submission of the proposed rule
comes a month after the September statutory deadline for the publication of
the proposed rule had passed. While the draft is currently under
review, it is expected that the final regulation won’t be released until next
summer. The title of the draft proposed regulation is
“Regulation to Establish Mandatory Reporting of Greenhouse Gases from Upstream
Fuel and Chemical Producers and Importers and Downstream Emitters.” Having
a greenhouse gas registry in place may help with the development
of a GHG cap-and-trade program that is expected at some point under
the next administration.

Will this really take until next summer? Can't they gut this rule before 1/20/09?

Public Transit Investment

Reconnecting America recently released new report: "Jumpstarting the Transit Space Race: How the New Administration Could Make America Energy-Independent, Create Jobs and Keep the Economy Strong." Their conclusion:

The next president and Congress could enact a public works project similar to
the National Interstate and Defense Highways Act of 1956 in order to build
the transit projects lined up and waiting in the federal funding queue. A public
works project of this magnitude would help make this country energy independent
and more financially secure and create jobs. At the same time it would help
Americans avoid high gas prices and find places to live where commutes are
shorter and less expensive. Given today’s economic crisis, these investments are
warranted.

There's a wealth of great details in the report. For example, the American Public Transportation Association analyzed how much people could save by using public transit instead of driving--an astonishing average of $9,499 per year! The upshot is simple: investing in more public transit would not only help the energy security and independence of the United States and reduce the carbon emissions that exacerbate climate change, it could save us money. Says Shelley Poticha, CEO of Reconnecting America: “Americans are running on empty. This surge of interest in transit has opened a window of opportunity for the federal government to make an investment in transit that would also address the major challenges facing this country.”

Our spending priorities were established back in the 1950's when gas was a nickel a gallon, and these priorities are clearly better suited to that bygone era than they are today. Federal transportation spending requires a "local match" of funding for projects, but that matching requirement is much less demanding for road construction than for public transit projects. Want to build more roads? The Feds will pay 80% or more. Want to add buses or extend rail lines? Don't expect help for more than half the cost.

This is nuts no matter how you look at it (unless you're an asphalt company I suppose) and seems especially nonsensical in light of the public's growing attitudes about transportation funding and policy:

The enormous interest in bus and rail transit is prompted, of course, by
rising gas prices as well as the fact that building more roads hasn’t solved the
problem of traffic congestion — the result of 60 years of sprawling growth that
have made driving a necessity. Ridership figures are up 32 percent over 1995,
more than double the rate of population growth, and greater than the 24 percent
increase in miles traveled by automobile. Auto use actually declined by 3
percent in the second quarter of 2008, while transit ridership increased 5.2
percent.

Voters approved 70 percent of transportation-funding ballot measures between 2000 and 2005, indicating huge public support for transit construction. Public
opinion polls, too, have found overwhelming support for transit. A recent poll
commissioned by the National Association of Realtors, for example, found that
only 23 percent of Americans believed building more roads is a good way to
combat traffic congestion, while 75 percent believed that improving public
transportation and being smarter about development was a better idea. An August
2008 AARP poll found that while many Americans over the age of 50 want to drive
less because of gas prices, they cannot because of inadequate public transit,
sidewalks and bike lanes.

Some politicians get it:

“This is going to be the public transportation century in America,” Congressman James Oberstar (D-MN), chair of the House Committee on Transportation and Infrastructure, announced earlier this year. “We’re loving our transit systems to death today,” Congressman Peter DeFazio (D-OR) told the U.S. House in a debate early this summer, noting that the increased ridership and higher fuel costs are straining the budgets of transit agencies. Congress is considering providing $1.7 billion to help transit agencies cover these increased costs, and is discussing providing an additional $10 billion to expand transit service.

Good sentiments, but the Interstate Highway system cost $25B in 1950's dollars. To truly replicate that kind of effort today would entail a much larger investment. Such a Green New Deal with a significant transportation component would have a powerfully positive effect on our economy and way of life, just as building a national highway network did in its time.

Here in the Seattle area we will vote next week on Proposition 1, which proposes further expansion of our fledgling light rail system, bus routes and schedules. I am troubled by the means of financing--another increase in the sales tax, this time of 0.5%, which will boost our overall sales tax to almost 10%. I dislike the regressive nature of sales taxes, but I'm not one to browbeat our leaders about how government should do more of this, that and the other thing, but no way will I accept higher taxes to pay for it. (We've been spending beyond our taxation revenue nationally for 8 years and look where that's gotten us.) I believe in public transit, and I'm going to hold my nose on the financing aspect and vote for it; if you live here I hope you vote for it too. Even with the sales tax increase, it's a better deal than any other solution, and will have real benefits unlike the latest gimmicky balderdash of I-985, whose principal purpose is to provide a means of self-aggrandizement and personal enrichment for a so-called watch salesman from Mukilteo. Even the Bush administration won't support this turkey.

Public opinion appears at last to be emerging from the torpor of cheap gas and the miasma of "pave, baby, pave" spin to a more realistic and clear-eyed vision of what our future can and should be.

Vote yes on Proposition 1 and no on I-985.

Twitter

You can follow me on Twitter, where I post tweets on various things and links to things that amuse. Some are about renewable energy, water policy, and whatnot. Others, not.

Wind Down?

More signs of the slow down in wind energy development.

The economy is starting to take a toll on the green energy sector. Florida Power and Light said Monday it is trimming its plans for new wind energy projects by 400MW in 2009 to a total of 1.1GW of new capacity, still a significant amount. The company indicated that it remains committed to renewables and wants to remain poised "should attractive market opportunities present themselves."

A short-term breather before a resumption in clean energy investment doesn't surprise Clean Edge principal Ron Pernick:

Companies are cutting investments across the board, so it's not just about
renewables. I think there's no doubt that there's significant uncertainty in the
marketplace, that credit is tight and that that's impacting the decision-making
processes of quite a number of organizations. Renewables don't exist in a vacuum
and aren't separated from the vagaries of the market.

The good news is that wind turbines are suddenly more available as backlogs shrink--for now.
Gamesa, the Spanish wind-turbine manufacturer, has "temporarily" ceased production, and is awaiting customers to confirm purchase plans. Suzlon, the fifth largest turbine manufacturer saw its stock price plunge and its customers back off after another widely-reported turbine failure.

If the reduction in demand is temporary, the reduction in supply can be temporary too. If, however, the economic climate for wind energy remains difficult due to tight credit, inconsistent and unpredictable energy policy, and recession-induced reduction in electricity demand, expect an industry shake-out, higher costs, and a more difficult time until steady winds return.

1GW of Ocean Power by 2015

A Greentech Media report announced today predicts installed wave/tidal power capacity will grow from less than 10MW today to 1GW by 2015. The report also states that about $500M has been invested thus far in ocean energy technology research and development, but projects this to quadruple over the same time period to $2B. An additional $2B will be invested on deploying ocean energy farms.

(There's apparently lots more good stuff in the report, including time lines, supply chains, technology comparisons, policy drivers, utility influences, etc.; but since it costs $2,995 I can't afford to read it. Anyone want to lend it to me?)

UK to Pay Half of Pre-Construction Costs of Offshore Wind

Wow.

McGreen or McSame?

I posted a link earlier to John McCain's energy policy. HuffPo has a detailed rebuttal here.

Update: And here.

Wind Power Flagging?

The United States added more wind capacity in 2007 than any other country in the world--over 5,000MW. This year, the new additions will break records again--more than 7,500MW. Can it continue? The Wall Street Journal, quoting the American Wind Energy Association, is doubtful:

Next year won’t be so sweet, the AWEA says, for two big reasons. First, the financial crisis is making it tough for lots of developers to get the cash to build new wind farms. And even though the industry’s prayers were answered with a last-minute, one-year extension of tax credits for wind energy, the tax breaks came late, in the last-gasp Congressional bailout package. That means construction on new wind farms will get a slow start next year.

There are other reasons for concern not cited by the Journal. One is growing opposition to wind projects from the local NIMBY factions and also from those who oppose wind farms on principal (for whom some have coined the terms BANANA--Build Absolutely Nothing Anywhere Near Anyone--and NOPE--Not On Planet Earth.) More on this in a later post.

Another reason is our increasingly creaky and ad hoc transmission and distribution electrical grid. With generation typically far from the load, the power must be moved. Here in Washington most wind generation is in the eastern half of the state and must use one of two corridors over the mountain passes. Both of these routes are at or very close to capacity today, so new wind farms cannot send power to a hungry Puget Sound area unless more wires are strung, a very expensive option.

These last two problems might be overcome by offshore wind. The larger problems of tight credit and, shall we say, gusty support for renewable wind energy will require stronger and better focused political leadership than we've seen the last few years. Dithering on making the smart and necessary energy choices would be an enormous missed opportunity for both our environment and our economy. The renewable energy industry in the United States demands bold leadership. Let's boldly demand it.

How Green is your State?

Turns out we're pretty green in the Pacific Northwest, at least according to the US Energy Information Administration, which has just this week released information on carbon dioxide emissions per state in 2005. This interactive map makes looking at the data pretty easy.

Energy on the Ballot

Here's a brief summary of state ballot initiatives on renewable energy in California, Colorado and Missouri. California's two propositions are especially interesting, and I hope they aren't overshadowed by all the angry noise over the gay marriage-banning Proposition 8. Proposition 7 would dramatically increase the state's Renewable Portfolio Standard (RPS) to 50% by 2025. Proposition 10 amounts to a referendum on the Pickens Plan by requiring the state to subsidize natural gas and alternative fuel vehicles.

The New York Times also has a blog entry on selected congressional races with energy policy implications, including Michael Skelley, an executive from Horizon Wind Energy running in Texas.

Please vote. Better still, vote for a green energy future.

Vinod Khosla on clean tech, Obama

Local venture capital observer and entrepreneurship writer John Cook has an interesting new blog entry of remarks by Vinod Khosla at the 2nd annual Algae Biomass Summit in Seattle. Excerpts:

On the presidential candidates:

I think Obama will be much stronger for clean tech. So that is going to be good news. I think it is very likely. I am one of those Republicans who is for Obama. I am happy to say that because McCain has reverted back into a different conservatism...

On capital for new clean tech companies:

I think the money will be there.

Hmm. When will that be?

Finavera and PG&E denied wave permit

PG&E had worked out a deal with Finavera Renewables for a wave project off Humboldt County in a PPA that would have paid an astonishing 23 cents per kWh. But the California Public Utilities Commission rejected it:

The commission determined that the project isn't viable, that Finavera's bid doesn't compare to others in PG&E's renewable energy portfolio and that the contract price for the power isn't reasonable.

Putting a brave face on it, PG&E says it is still committed to wave energy and will go forward with other projects: "We believe the rejection of this contract won't hinder further wave development." UPDATE: Finavera's trying to be brave too.

The lack of viability was based in part on the fact that Finavera's wave devices are “precommercial” and that an earlier buoy sunk off of Reedsport, Oregon. Approving the proposed project right now “is not the best way to move this wave technology towards commercialization.”

Reality check for state regulators. If this is a good reason to turn down such a project, how will any project get permits? Shouldn't regulators be encouraging development rather than insisting that all technology be somehow perfected before being placed in the water? Athena may have sprung fully armed from the head of Zeus, but technology isn't birthed fully ready for commercial battle. How do they expect that technology will become ready without getting wet?

The Green New Deal

All but the most determined nay-sayers (who, in another age similarly insisted that the Earth was flat) agree that the global environment is under stress, largely man-made, and getting worse. Addressing this reality is the most pressing issue of our times. So what's getting in the way? Would you believe fear of strangling the economy?

There's any number of people claiming that the goal of reviving the economy (much less economic growth) and the goal of addressing environmental needs are mutually exclusive--that you can't do both:

So that's it, then, choruses the commentariat. Collapsing confidence, crashing stock markets and credit-starved banks spell doom not just for the economy, but for environmental concerns. Saving the planet may be all very well in the good times, but is an unaffordable luxury when things turn bad. The argument is pervasive, persuasive and gaining ground. Even some environmentalists half-accept it, believing they should mute their message.

However, the state of the economy is not a reason to scale back investment in the green economy. Quite the contrary as the United Nations Environment Programme (UNEP) will advocate Wednesday:

Its multi-million-dollar Green Economy Initiative – already being funded by the German and Norwegian governments and the European Commission – aims to convince the world, that, far from restricting growth, tackling the growing planetary environmental crisis would accelerate it. UNEP plans to "make and communicate a strong and convincing economic case". As The Independent on Sunday exclusively reported last week, it envisages a Green New Deal to create jobs, revive the international economy, slash poverty and head off environmental disaster.

The Stern Report also makes a convincing case with respect to peak oil and the relative costs of migrating from the fossil economy.

Other examples supporting this thesis aren't hard to find.

For example, California'a far-sighted emphasis on energy efficiency hasn't been good just for the environment, it's also been good for the economy. According to a study done by David Roland-Holst, an economist at UC Berkeley's Center for Energy, Resources and Economic Sustainability, state policies created nearly 1.5 million jobs from 1977 to 2007, while eliminating fewer than 25,000. The study, released Monday, also found that net growth in total compensation paid due to this policy was $43B over the same period. The study goes on to estimate an increase in household wealth of $48B and the creation of more than 400,000 new jobs over the next 12 years.

Germany has seen the percentage of its electrical generation from renewable sources in the last 10 years nearly triple to more than 14%. The renewable industry has also created 250,000 jobs.

Even China, despite building coal-fired electrical generation at an astonishing pace, is more green-focused than most people think:

In China 600,000 people are employed in making and installing solar water heaters: they are now used in one in 10 of the nation's homes – a proportion forecast to rise to one in two by 2030. Chinese wind-energy capacity has doubled in each of the past two years, while its production of solar cells soared from virtually nothing in 2005 to the biggest in the world last year.

Politicians are fond of talking about how their policies will create jobs, but from where will those jobs come in the next decade? What will be the cost if government is the driver in creating such jobs?

Derrick Z. Jackson, writing in the Boston Globe describes what the Green New Deal might entail:

There have been several attempts to project what this would look like nationally. The US Conference of Mayors said an economy that shifts to generating 40 percent of its electricity from wind, solar, biomass, and other fuels will generate 4.2 million green jobs by 2038. The Apollo Alliance coalition of environmentalists and business leaders says a $500 billion investment over the next 10 years will create 5 million green-collar jobs. The alliance says the $50-billion-a-year average "is a smaller share of our gross domestic product than what we spent on the original Apollo program" to go to the moon. "It is one-third the amount that we spend each year in Iraq."At the University of Massachusetts-Amherst, the Political Economy Research Institute is a bit more conservative, but still estimates an impressive net increase of 2.5 million green jobs over the next 10 years for an investment of $150 billion a year. Institute co-director Robert Pollin testified last month before the House select committee on energy independence and global warming - chaired by Ed Markey of Massachusetts - that the jobs could be created with the same kind of cash that President Bush plowed into those $600 stimulus checks (remember them?)."It is actually very simple to think about," Pollin said by telephone yesterday. "For the most part we are talking about construction and manufacturing, retrofitting buildings, improving the electrical grid, boosting public transportation. Then, once you get the energy savings, then there is a lot of money around to spend on other things, instead of spending more on importing oil from Saudi Arabia. The money can go elsewhere in the American economy."Democratic presidential nominee Barack Obama has made a pledge of 5 million green jobs a staple of his stump speech, calling them "jobs that pay well and can't be outsourced; jobs building solar panels and wind turbines and fuel-efficient cars; jobs that will help us end our dependence on oil from Middle East dictators." What is unclear to researchers like Pollin is how Obama will get there if he is elected. Obama's pledge to spend $15 billion a year to create such jobs is well short of the annual investment estimates of Pollin and the Apollo Alliance. Also unclear is how Obama's pledge will weather the economic storms waiting for him."When I was testifying, someone suggested we can't do this because we're in a financial crisis," Pollin said. "We have to do this precisely because we're in a financial crisis. I just watched Ben Bernanke (the Federal Reserve chairman) call for another stimulus package. What we ought to be doing is rethinking regulating the financial market to channel credit into useful investments instead of useless, destructive speculations. Putting money into green jobs is useful in many ways."The investments can come none too soon as America has already fallen, as Pollin put it, "dramatically behind" Europe and Asia in the wind and solar manufacturing sector. The Globe last week reported that wind turbine projects are being delayed for up to two years because the parts cannot be made fast enough, hurting one of the few big American players in this arena, General Electric. "You can't retrofit a building in Amherst in China," Pollin said. "You can't rebuild a subway system from abroad. The technology is there. We know we're going to get a fast payoff if we get going."

You know when Thomas Friedman is thumping the tub, it's truly gone mainstream. Not everyone agrees, but both support and opposition has transcended the tired politics of left vs. right, and when both Barrack Obama and John McCain are trying to outdo each other on their alternative energy credentials, you know change in national policy might really be coming at last.

The prospect is truly exciting in part because it represents a true break from decades of fossil-centric policy. Thus:

If all this has been happening under the old, now failing, economic regime, which has not been at all favourable to green growth, what might happen if the world decided to promote the new green economy? For a start there would be many more jobs. Renewable energy, says Professor Daniel Kammen of the University of California, Berkeley, "has been shown to generate three to five times more jobs per dollar, or yuan, invested, than comparable investments in fossil fuels". Similarly, recycling creates 10 times as much employment as dumping rubbish in landfills, while the International Labour Organisation reports that worldwide move to energy-efficient buildings could create "tens of millions of new jobs".

Worldwide, renewables now employ 2.3 million people, a figure expected almost to quadruple by 2030. How much of that will be in the United States? Other countries are making big investments and bold plays.

Will we lead or cede?

FERC press release

Here is the full press release from FERC:

FERC Asserts Jurisdiction over Outer Continental Shelf Hydroelectric Projects
The Federal Energy Regulatory Commission (FERC) today said it has jurisdiction over hydroelectric projects located on the Outer Continental Shelf (OCS), pointing to laws that define the Commission’s role.

FERC addressed the jurisdictional question, raised by the U.S. Department of the Interior (Interior), in the context of a rehearing order on two preliminary permits issued to Pacific Gas & Electric Co. to study the feasibility of developing wave energy projects in the OCS off the California coast. The projects are the Humboldt Project off the coast of the Samoa Peninsula in Humboldt County near Eureka, and the Mendocino Project off the coast of Fort Bragg in Mendocino County.

"I am confident that today’s decision puts to rest any questions about FERC’s jurisdiction over hydroelectric projects on the OCS," FERC Chairman Joseph T. Kelliher said. "This will allow applicants, local, state and federal agencies, and other interested groups to work together more effectively and expeditiously to develop appropriate projects that utilize our renewable ocean resources."

Commissioner Philip Moeller said the development of viable hydrokinetic resources needs a streamlined process like FERC’s. "It is indisputable that renewable energy is a valuable resource and hydrokinetic projects could harness a vast resource of new hydropower," he said. "Instead of legal battles, my preference, and this Commission's, has been to reach out to federal agencies and states to work in a cooperative manner to the same goal: timely development of a new renewable power resource in a responsible manner after input from all affected stakeholders."
Interior has asserted that FERC only has jurisdiction to issue licenses and preliminary permits for projects within state waters, which for most states is defined as extending three miles offshore. Projects beyond state waters are considered to be located in the OCS.

But FERC says the Federal Power Act (FPA) gives it two bases of authority to issue preliminary permits and licensees for hydroelectric projects located on the OCS. First, the law expressly grants FERC jurisdiction to license in "navigable waters" without limitation as well as in "streams or other bodies of water over which Congress has jurisdiction." That, FERC said, means the Commission has jurisdiction over hydropower projects such as those being studied under the permits issued in these proceedings.

The second authority is for those projects located on "reservations" of the United States. FERC concludes that the OCS is land owned by the United States, qualifying it to be a "reservation" under the FPA. "The Supreme Court of the United States has consistently held that the United States owns the submerged lands off its shores, beginning from the low-water mark," FERC said.


Finally, FERC addressed comments by Interior about the meaning of the Energy Policy Act of 2005 (EPAct 2005) as it relates to the jurisdiction question for hydroelectric projects located on the OCS. Interior asserted that EPAct 2005 intended for Interior to be the lead federal regulatory authority over wave and ocean current energy projects in the OCS.

In today’s order, FERC notes that EPAct 2005 does not limit the scope of its authority over hydroelectric power or withdraw FERC jurisdiction over projects in the OCS. "To the contrary, Congress expressly preserved the Commission’s comprehensive hydroelectric licensing authority under the FPA by including two saving clauses….," FERC said.

FERC Chairman Kelliher stressed today that FERC recognizes the role of Interior, which through the Minerals Management Service (MMS) manages lands on the OCS. There is no conflict with FERC’s role as the licensing agency, he said.

"We have proposed a Memorandum of Understanding (MOU) with MMS that carefully delineates the roles of the two agencies in a manner that respects both our licensing, and Interior’s resource, roles," Kelliher said. "We stand ready to enter into the MOU to clarify those roles."

A preliminary permit gives the holder of a permit priority over the site for three years while the holder studies the feasibility of developing the site. It does not authorize construction of any kind. A license authorizes construction and operation of a hydroelectric facility.

Today’s order also finds that although two local governments, the City of Fort Bragg and Mendocino County, asserted that they did not receive personal notification from FERC of the filing of the preliminary permit applications, only Mendocino County acted in a timely manner once it received actual notice of the application in order to preserve its right to intervene. As a result, Mendocino County’s request for late intervention is granted. However, the order finds that Mendocino has not provided grounds for the Commission to revoke the Mendocino Project permit or to reopen that proceeding. The order also denies motions for late intervention in both proceedings by FISH Committee.

An MMS spokesperson, reached yesterday, had no comment.

FERC asserts itself on OCS hydrokinetic projects

Just when you thought it was safe to go back in the water, the Federal Regulatory Energy Commission (FERC) of the Department of Energy yesterday issued a ruling which makes a detailed case for FERC to regulate "hydroelectric" energy on the entire Outer Continental Shelf (OCS), not just within the 3-mile territorial limit:

In short, based on our review of the statutory language, relevant case law, and pertinent legislative history of the FPA [Federal Power Act], we find that the FPA provides the Commission with two bases of authority under section 4(e) to issue preliminary permits and licenses for hydroelectric projects located on the OCS, or the submerged lands extending ten miles from the coastal baseline in the case of this rehearing. The first is the authority to license hydroelectric projects located on "streams or other bodies of water over which Congress has jurisdiction" under the Commerce Clause and the second is the authority to issue hydroelectric licenses for projects located on "reservations" of the United States. Second, we find that FPA section 23(b)(1) makes it unlawful for any person to develop these projects without a Commission license, because of their proposed location on both "navigable waters" and U.S. "reservations."

(This conclusion appears as section 56 on page 27; their argument leading to this conclusion begins on page 15: "The Commission’s Jurisdiction on the Outer Continental Shelf ")

Which federal agency has or should have jurisdiction over ocean energy? EPACT05 tried to segregate the roles: FERC would have jurisdiction over all hydrokinetic projects within the 3-mile territorial limit, and MMS would continue to oversee leasing for energy developers on the OCS. Obviously this was an imperfect decision for a lot of reasons both practical (most projects, especially cables, will straddle this arbitrary line) and philosophical (what minerals are being managed there anyway?)

EPACT05 didn't resolve matters, but seemed rather to set the battle lines to come. For a few years now FERC and the Minerals Management Service (MMS) of the Department of the Interior have each laid claim based on their respective areas of expertise and involvement. I have been to several panel discussions where representatives of the two agencies speak temperately about finding a modus vivendi that would encourage ocean energy. They have been working on a MOU to define their respective roles; FERC's latest salvo suggests that a final MOU won't see light of day.

Meanwhile we've all been waiting for the MMS to issue final rules for leasing portions of the OCS for ocean energy projects. The comment period closed in September; according to remarks from Maureen Bornholdt of MMS at the AWEA Offshore Wind conference, final rules are expected before the end of the year. The differences between the preliminary rules and the submitted comments make guessing the final rules difficult. This pre-emptive strike by FERC will make those rules more interesting still. Will their issue be delayed? Probably, because MMS will need to respond to FERC.

More uncertainty is clearly harmful to the industry. There's uncertainty regarding the PTC (extended a feckless one year.) There's uncertainty regarding financing for projects (both from the short PTC period and the global credit squeeze.) Now there's even more regulatory uncertainty. The determination of project developers to go ahead anyway is remarkable in the face of so many challenges. What could we do if Congress took the time and initiative to directly address renewable energy and provide a crisp, comprehensive framework that provided clarity and confidence? A robust manufacturing industry, economic benefits, and a better energy future for our country awaits.

Renewable Energy incentives enacted

The house comfortably passed the Splurge and the President has signed it into law. That's the good news. The bad news of course is that we taxpayers are now on the hook for another $700B of good money after bad with little indication that there won't be another "emergency" next month or next week.

The bill also includes provisions for disaster relief, mental health, and random other.

The renewable energy portions are basically good, although lacking some provisions that might have been adjusted or added if there had been more time and deliberation. But then, maybe we would have got less too.

Energy provisions of note:

Sec. 101 extends the renewable energy credit for wind for one year. AWEA and others make a compelling argument that a one-year extension is too short. Bizarrely, "refined coal" also gets this "renewable" energy credit. (I suppose coal could be renewable if enough life dies out and we just wait long enough.)

Sec. 102 provides the PTC for "marine renewables" which include the obvious wave and tidal, but also ocean currents and energy produced from the "free flow" of rivers, canals, etc., which is excellent news for Hydrovolts. The provision applies to equipment placed in service before 1/1/2012.

Sec. 103 extends the credit for solar out to 12/31/16.

Sec. 104 provides for a credit for small wind (less than 100kW) and increases it from $2000 to $4000.

Sec. 105 provides credits for geothermal heat pump systems.

Sec. 106 "clarifies" (as only the Government can!) residential rules for credits for small wind and geothermal.

Sec. 107 provides $800M of new Clean Renewable Energy Bonds (CREBs).

Sec. 117 requires a "carbon audit of the tax code" by the National Academy of Sciences who is tasked with issuing a report in 2 years.

Sec. 304 extends the new energy efficient home credit by one year, and Sec. 305 provides credits for energy efficient appliances.

Sec. 306 allows accelerated depreciation for "smart grid" hardware.

Sec. 404 extends the federal unemployment tax another year. No doubt some would call this a "tax increase" but it's more accurately termed a decision to not provide a tax cut.

There's a lot more stuff to help the steel industry, the coal industry, the oil and gas industry, the Black Lung Fund, for carbon sequestration, biofuels, plug-in electric vehicles, to encourage bicycle commuting, to dicker some more with the Alternative Minimum Tax (AMT), and clauses (whether intentionally so-designed or not) to further complicate everyone's tax return.

There are also some of the clauses quickly becoming infamous, such as Sec. 502 for Hollywood producers and Sec. 503 providing an exemption from tax for makers of wooden arrows for children. I can see the entertainment industry having the clout to stuff this in, but the childrens' archery lobby?

Glad to get at least enough on the renewable energy front to tide the industry over into the next Administration which will have the opportunity to do a thorough top-to-bottom restructuring of our energy economy and perhaps both simplify the rules and better align tax policy to a a sensible and realistic energy policy that addresses climate change, energy security, and the creation of jobs. The renewable energy industry is still in its infancy; our government has the opportunity to make the US a leader as it grows into the next global industry.

Wave technology ahead of ecological impact studies

Thanks to Brittany Sims for alerting us to new research out of OSU's Hatfield Marine Science Center. Stated Center Director George Boehlert: “Right now, the wave energy technology is ahead of the related ecological research. It is important to begin addressing these questions because the potential benefits from a clean, renewable energy source like ocean waves are enormous.” Some details of the study are here, but I can't find the whole report on the web yet; if anyone sees it please post a link!

PTC added to the Splurge

In the latest twist of the ongoing drama around the credit market bail-out (aka the Splurge), the Senate passed a version today that adds in the PTC, ITC and other renewable energy incentives that were in uncompleted legislation passed earlier by the Senate. By adding these and apparently many other initiatives into the Splurge Congressional leaders are clearly hoping that they can attract enough votes (without losing others) that the bill can pass both houses and presumably be signed with minimal sniveling by the President.

It's a really risky approach--adding in a host of unrelated legislation and spending to attract additional one-issue voters who feel passionately enough about the additions that they will vote for a bill on which they otherwise would have voted nay. At $700B, those members of Congress will have to really love these added goodies to vote yeah.

The House was where the previous PTC legislation foundered, as some representatives arbitrarily insisted that the renewable energy provisions be subject to the pay-go rules. Will they stick to that petty token of financial discipline so they can still posture as fiscal conservatives even while sacrificing the budget (and the deficit) on the altar of trickle-down salvation?

The stink of the Splurge is causing many people to hold their noses. Will it be voted anyway, especially in an election year? I worry that the renewable energy elements will garner the stench of this massive taxpayer-funded handout, which, regardless of its merits, is extremely unpopular. I like Thomas Friedman's view that funding green initiatives is the right way to address our economic problems, but coupling a tiny tincture of that to the horse pill which is the Splurge may make all of it unpalatable. Too bad we can't decouple the Splurge altogether. Imagine what $700B would do if instead it were all committed to (re)building our country's infrastructure and laying the groundwork for a sustainable 21st Century economy and the enormous and multi-faceted industries that will compose it.

I don't think that's likely to happen, but right now I don't see anyone who has much of an idea what will happen at all, regardless of whether the Splurge passes or not.

Does anyone else get the sense our planning is less disciplined than making decisions based on the Magic 8-Ball?