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The New Future of Energy Policy

The rise of the powergrid (and new taxes)
Monday, November 26, 2012, 3:32 PM

Flood myths are common to human culture. Swollen rivers, tidal storms, and tsunamis make their appearance frequently in literature. But Hurricane Sandy, which has drawn newly etched high-water marks on the buildings of lower Manhattan (and Brooklyn), has shifted the discussion from storytelling to reality.

Volatility in climate has drawn the attention of policy makers for a decade. But as so often is the case, a dramatic event like superstorm Sandy – the largest storm to hit New York since the colonial era – has punctured the psyche of the densely populated East Coast, including the New York-Washington, DC axis where U.S. policy is made.

Not surprisingly, in the weeks since the historical hurricane made landfall, new attention is being paid to the mounting costs that coastal world megacities may face.

Intriguingly, however, this new conversation about climate, energy policy, and America’s reliance on fossil fuels comes after a five-year period in which the U.S. has dramatically lowered its consumption of oil and seen an equally dramatic upturn in the growth of renewable energy. America’s production of CO2 in the first quarter of 2012 fell to twenty-year lows. The country is using less coal, increasing its use of natural gas, and (like the rest of the OECD) is seeing its transportation demand migrate from cars and trucks to rail. While Europe is often cited as being at the forefront of renewable power, the U.S. has also started to produce very strong growth rates for wind and solar power:

The combination of declining oil use and a greater reliance on the global powergrid is going to shape energy and climate policy. Especially at a time when the concerns of climate change – or, rather, rising seas and the greenhouse dangers of fossil fuel dependency – are being increasingly raised. This will make for a rather muddled and complex array of diverging policy initiatives.

Moreover, as the oil-based economy (which was harder to meter) gives way to the electricity-based economy, policy makers will find there are more levers to shape energy demand in their economies. The Oil Age was a more natural fit for free-spirited individualism. The Electricity Age will see an era more comprehensively dominated by policy, as the powergrid becomes the mechanism for governments to shape the future of energy demand.

Rebounding to the Grid

The oil age went into decline roughly ten years ago.

Oil’s share of total global energy demand, which had been on the rise since the 1930s, peaked in the mid-1970s but held steady for over twenty years until the new millennium. But starting early last decade, through a combination of oil’s repricing and the industrialization in the Non-OECD, oil’s market share in the global energy mix retreated.

This decline of oil in the global economy explains perfectly why the weak rebound since the 2008 financial crisis has grown along the contours of the powergrid. It’s not just the United States. In Japan, and especially in Europe, oil use has continued to decline right through “the recovery,” as increasing numbers of car drivers are taken off the road, as jet travel declines, and as trucking has given way to higher deployment of freight rail.

However, this opens up a number of new constraints as well as new opportunities, because while there is high growth in solar and wind power, the growth of global electricity is largely driven by coal. That means awareness of coal’s role is going to widen among populations, and governments are going to be drawn into action over coal.

Carbon Taxes, Renewable Portfolio Standards, and Feed-In Tariffs

Global coal markets have recently sputtered in the face of slower growth in China as well as the rise of natural gas in the United States, which has dislocated consumption of its own coal. If glanced at quickly, this looks like an interruption in the supertrend. Alas, no such interruption is taking place.

Instead, the coal which Americans are no longer consuming is being exported to the rest of the world. Even Europe is taking greater volumes of U.S. coal, which in 2012 is on pace to see the highest level of exports in U.S. history.

But a more important phenomenon to understand regarding global energy consumption is that much of the upswing in Asian coal demand over the past decade, especially in China, is really just an offshoring of OECD manufacturing capacity. In other words, an increasing proportion of goods purchased by Westerners since the year 2000 is the result of goods made in Asia. And these goods are made in factories powered by coal-fired electricity generation. Clothing, appliances, electronic devices – yes, iPhones, too – are made in facilities powered by coal.

This is why, as policy is increasingly driven either by concerns about climate, increased distaste for dependency on fossil fuels, or both, the clamor for carbon taxation is going to grow.

In a recent essay, Forget Kyoto: Putting a Tax on Carbon Consumption, the author takes note of the emerging emphasis on the global trade of energy use:

China’s phenomenal economic growth has been based on exports, notably of energy-intensive goods, from steel and petrochemicals to a host of manufactured products. These have been bought largely by the U.S. and Europe, which together account for nearly 50 percent of world GDP. It is carbon consumption that measures the carbon footprint and hence responsibility, not the carbon production in particular geographical areas. Yet remarkably the Kyoto framework does not take consumption into account. Instead it focuses on carbon production, and mostly in Europe, where deindustrialization and the collapse of the former Soviet Union make compliance with the targets easy.

Politically speaking, carbon taxation has been a very tough sell, especially in the United States. Interestingly, there have been trial balloons since the election that the Obama Administration may even tie together (or try to tie together) new carbon taxes as a way to lower the U.S. budget deficit. That, too, is unlikely to have much political appeal, though it does signify the shift coming in the wake of Hurricane Sandy and this summer’s extraordinary drought.

However, there are interesting divergences about the effectiveness of carbon taxation among those who work in the areas of energy and climate policy.

Chris Nelder, writing in Smart Planet, Why America Needs a Feed-in-Tariff, makes the case that a carbon tax policy will not necessarily spur construction of renewable energy. Essentially, if getting renewable energy infrastructure built is the ultimate goal shared by both climate policy and energy policy, then why not pursue a national FiT (feed-in tariff), of the kind deployed in Europe?

Given the obvious success of FiTs as a policy tool in Europe, one must wonder why the U.S. has not embraced them. Germany already tried all the incentives that we’re using in the U.S., such as aspirational targets like renewable portfolio standards (RPS), rebates, and low-interest loans, and eventually turned to FiTs because they proved to be far more effective, simple, low-cost, and efficient.

But while it’s true that growth of wind and solar power is already growing at a very strong rate in the U.S. (as discussed previously), it’s not clear this will continue at the same rate.

California’s RPS (renewable portfolio standard) has triggered the construction of a great deal of new utility-grade solar power. However, this is small in comparison to California’s overall energy challenge, as it sees its own dependency on out-of-state power supply continue to expand. As I have addressed previously, California’s energy production from all sources is at 50-year lows. This comes at a time when, just as in the rest of the country and the world, transportation demand is switching over from cars and trucks to the grid as light rail is built out in its cities.

New Energy, Climate, and Urban Infrastructure

(image: Thames Flood Barrier, Greater London, UK)

Western cities are aging, and the forecast for rising sea levels may hold true regardless of any climate policy. In a recent post, Roger Pielke Jr notes that mitigation of rising sea levels through aggressive CO2 reduction may not change the current trajectory all that much:

One of the more reasonable discussion points to emerge from efforts to link Hurricane Sandy to the need to reduce carbon dioxide emissions focuses on the role that future sea level rise will have on making storm impacts worse. Logically, it would seem that if we can "halt the rise of the seas" then this would reduce future impacts from extreme events like Sandy. The science of sea level rise, however, tells us that our ability to halt the rise of the seas is extremely limited, even under an (unrealistically) aggressive scenario of emissions reduction.

If cities like New York are compelled instead to construct tidal barriers, and other coastal cities in the U.S. follow, then changes in global energy consumption and in the public's perception of climate issues may see governments drawn in more closely than ever before to such policy making.

After all, the construction costs for mitigation through infrastructure will come through state and federal partnership. Indeed, the discussion about tidal barriers for New York has already begun. Given the extent of recent flooding, this is no surprise. And subsequent storms will only push such initiatives along further.

The New Policy Era

The decline of oil’s share in the global economy marks the end of a kind of free-ranging era in which individual discretion over energy use reached spectacular heights. Cheap oil gave rise to cities such as Los Angeles, where the freedom to drive all distances was a luxury enjoyed by most people. It’s not surprising that the cultural adjustment to a new era, where individual choice in energy use will be redefined, is proving cantankerous.

Moreover, as new oil supplies emerge from domestic American sources, the dream of resurrecting this cheap oil era will no doubt come back around several more times. But none of these new resource plays will change the trajectory of global oil supply much, nor will they lower the price of oil. So far, new oil supply mostly offsets declines elsewhere – but at substantially higher marginal cost. This should now be clear.

In Part II: Investing Strategies for the New Energy Era, we take a look at some of the risks but also opportunities that will present themselves to investors, as the global powergrid rises and comes under heavier scrutiny from government regulation.

While renewable energy is growing almost exponentially, coal still remains the global anchor for many of the most important electricity networks, especially in the developing world. The inevitable switch to the powergrid will draw two competing forces: 1) massive new investment, with many losers and winners, and 2) the attention of governments who will see the grid as a way to implement climate policy and to raise revenue.

Click here to read Part II of this report (free executive summary; enrollment required for full access)

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19 Comments

jojokirk's picture
jojokirk
Status: Member (Offline)
Joined: Jul 19 2012
Posts: 8
intermittency and unreliability of renewable energy

I listened to MIT professor lecture on his team's invention of a liquid metal battery. He said we will never use solar and wind at scale until we figure out how to store its energy. His battery would be large. ..
Go here to learn about it

http://www.ted.com/talks/donald_sadoway_the_missing_link_to_renewable_en...

SailAway's picture
SailAway
Status: Gold Member (Offline)
Joined: Aug 11 2010
Posts: 342
Wireless EV Charging Technology Comes To Mass Transit

Wireless EV Charging Technology Comes To Mass Transit

As mass transit fleets strive to be greener, electric and hybrid bus offerings are becoming increasingly common. Charging the electric ones though limits how much time they can be used though, but this may be changing as innovation at Utah State University recently culminated in what’s said to be a first of its kind electric bus that can be charged wirelessly in a way which allows for battery top offs during its daily operations when the bus stops to load and off-load passengers.

jojokirk's picture
jojokirk
Status: Member (Offline)
Joined: Jul 19 2012
Posts: 8
intermittency and unreliability of renewable energy

I listened to MIT professor lecture on his team's invention of a liquid metal battery. He said we will never use solar and wind at scale until we figure out how to store its energy. His battery would be large. ..
Go here to learn about it

http://www.ted.com/talks/donald_sadoway_the_missing_link_to_renewable_en...

Gregor Macdonald's picture
Gregor Macdonald
Status: Silver Member (Offline)
Joined: Oct 7 2011
Posts: 130
Grid and Storage

I agree that storage is key, and unlike the battery problem which will persist for Electric Vehicles, the prospect for large technological gains in stationary storage, scalable, is positive. See Smil's latest on the persistent problems for the EV and its battery: http://www.american.com/archive/2012/november/far-from-electrifying

Unlike many unsolvable problems, I'm confident that the grid storage problem can indeed be solved. However, it too will conform to the slower moving economy paradigm in which we grow at very low rates, and pay more for all energy and natural resource inputs.

G

Greg Goble's picture
Greg Goble
Status: Member (Offline)
Joined: Nov 28 2012
Posts: 1
LENR

This is a news tip for you about a Cold Fusion LENR Powered Boeing 747 being developed by NASA.

May 2012 NASA Contract NNL08AA16B – NNL11AA00T
“Subsonic Ultra Green Aircraft Research – Phase II” – N+4 Advanced Concept Development
http://ntrs.nasa.gov/archive/nasa/casi.ntrs.nasa.gov/20120009038_2012008934.pdf

“Even though we do not know the specific cost of the LENR itself, we assumed a cost of jet fuel at $4/gallon and weight based aircraft cost. We were able to calculate cost per mile for the LENR equipped aircraft compared to a conventional aircraft (Figure 3.2). Looking at the plots, one could select a point where the projected cost per mile is 33% less than a conventionally powered aircraft.”

3.0 LENR Requirements Analysis …pg 24
Figure 3.1 – Potential Heat Engines for LENR Systems ..pg 25
Figure 3.2 – Parametric LENR and Heat Engine Performance Parameters …pg 25
6.2.3 Low Energy Nuclear Reactor Technologies …pg 82
Table 6.3 – LENR Technologies Success Criteria …pg 86
Also pgs 15, 18, 19, 20, and 21.

These are the 39 folks who have been involved in this since May, 2011

Bradley, Marty (Boeing)
Daggett, David (Boeing)
Droney, Christopher(Boeing)
Hoisington, Zachary (Boeing)
Kirby, Michelle (GT)
Murrow, Kurt (GE)
Ran, Hongjun (GT)
Nam, Teawoo (GT)
Tai, Jimmy (GT)
Hammel, Jeff (GE)
Perullo, Chris (GT)
Guynn, Mark (NASA)
Olson, Erik (NASA)
Leavitt, Larry (NASA)
Allen, Timothy (Boeing)
Cotes, Dwaine (Boeing)
Guo, Yueping (Boeing)
Foist, Brian (Boeing)
Rawdon, Blaine (Boeing)
Wakayama, Sean (Boeing)
Dallara, Emily (Boeing)
Kowalski, Ed (Boeing)
Wat, Joe (Boeing)
Robbana, Ismail (Boeing)
Barmichev, Sergey (Boeing)
Fink, Larry (Boeing)
Sankrithi, Mithra (Boeing)
White, Edward (Boeing)
Gowda, Srini (GE)
Brown, Gerald (NASA)
Wahls, Richard (NASA)
Wells, Doug (NASA)
Jeffries, Rhett (FAA)
Felder, James (NASA)
Schetz, Joe (VT)
Burley, Casey (NASA)
Sequiera, Christopher (FAA)
Martin, John (NASA)
Kapania, Rakesh (VT)

Maybe you could interview a few of these guys… see what they have to say about the emerging LENR technology (popularly known as cold fusion).

“Real Popular Cold Fusion” http://coldfusionnow.org/real-popular-cold-fusion/

Is Commercial LENR the Real Deal? http://www.lenrproof.com/

Thank you,

Cold Fusion Now Org

 
 
Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2736
fusion

Funny, I just heard a story this afternoon indicating that scientists haven't been able to figure out how to do it yet.

http://www.npr.org/2012/11/28/166095618/a-short-fuse-for-fusion-as-ignition-misses-deadline

Quote:
So when NIF opened, there was a lot of excitement.

"I cannot wait for this to become a reality here," said California's then-Gov. Arnold Schwarzenegger, who was at NIF's dedication in 2009. George Miller, then the head of Lawrence Livermore National Laboratory, where NIF is based, was there too. Everyone seemed to believe ignition — that moment the fusion chain reaction begins — was right around the corner.

"I think we will get ignition," Miller said. "I think we'll get ignition relatively shortly after we turn the facility on."

Now, fast forward 3 1/2 years.

"We just haven't gotten it to burn yet," Moses said last month. He has been doing a lot of these interviews lately, because Oct. 1 was a deadline, set by the agency that oversees NIF — the National Nuclear Security Administration — for the project to have achieved fusion. But they just can't get the conditions right.

That seems to be the life history of fusion, tantalizing close, but can't quite touch it.  Maybe they will some day, but science hasn't figured it out yet.  I would be very hesitant to invest in something unproven.  But, it wouldn't be the first time I've missed out on a big payday.

Doug

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2302
Welome aboard Greg.

Welome aboard Greg.

Taint Boil's picture
Taint Boil
Status: Member (Offline)
Joined: May 24 2008
Posts: 8
Cold Fusion?

Cold Fusion ????

I clicked the link for a good laugh but found the article had nothing to do with cold fusion at all – go figure.

Mark Goldes's picture
Mark Goldes
Status: Member (Offline)
Joined: Nov 30 2012
Posts: 1
Ultraconductors and Energy Storage

Polymer Ultraconductors are little known equivalents of ambient temperature superconductors.

They are presently in film form, but wire is on the horizon. Cable will follow.

At that point they can be made into energy storage rings similar to Superconducting Magnetic Energy Storage which requires cryogenic cooling.

However, they can function at temperatures up to 200 degrees C (390 degrees F).

There are obviosly many other uses as well, including transmission lines.

See Cheap Green at www.aesopinstitute.org for more about them as well as other potential breakthrough renewable energy technologies that can change the entire energy and economic landscape.

jessie henshaw's picture
jessie henshaw
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Joined: Sep 17 2008
Posts: 8
This is a very nice

This is a very nice presentation of where the markets are really going on energy generation technology. There's a serious "fly in the ointment", though.    The markets are not factoring in the vast looming liabilities for the business model they are pursuing at the same time.   They're all seeking out new energy resources so the economy can continue multiplying its consumption and rates of depletion of them.   That's been the "status quo" for a long time and remains so.  

I've been pointing out this crystal clear flaw in the objectives of the "alternative energy movement", for decades in fact.   Hoping to satisfy an infinite enegy demand with finite additions of energy resources is a halucinatory view of nature, actually. **Somehow** (I think by the magic of self-affirmation) we are acting as if being creative in our personal lives suspends the laws of nature for ourselves and our children.   

It's the bizzarest darn thing!!   The clearly most caring group of people to be seen on earth in some time also seems to care deeply for making mysterious excuses for the most flawed parts of the culture they're committed to breaking free of.    

We just can't keep buying into the old myth of man over nature how that frees us of limits, and also succeed in breaking from the culture that got all of mankind into such horrible trouble by believing in that very falsehood.   Nature is a teamwork.   I do sincerely hope others who are not willing to break with it now will eventually catch up, but at present we should definately break with people who don't want to join the team.

JLH   http://synapse9.com/signals

acomfort's picture
acomfort
Status: Bronze Member (Offline)
Joined: Aug 7 2008
Posts: 45
Part Time Electricity

We may be making things worse by only considering full time electricity.  Yes this is what we are used to and yes it is the best for all but . . . by not considering part time electircity (load sharing) we could be making things worse than they have to be.  

Would you rather have no refigerator or one that can be cooled for 1/2 of a day?   . . . Would you rather have no job or only work when your company is not down from load sharing?    To me the answer is obvious . . . electricity is going get harder to come by.  Let's make sure we have some  . . . even if it is not all that we want.  

Solar and wind energy may never give us what we have now but they can/will improve load sharing.  . . .  My two cents. 

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
acomfort, agreed. Many

acomfort, agreed. Many citizens of the world has just such power. It pumps their water, helps them cook, and does other necessary heavy lifting. I am quite sure that 6 hours of something is better than nothing. Japan just had such a rude awakening with Fukushima and adjustments are made, and you adapt. Less is more, and life goes on with the same joy as it always has or hasn't (I suppose).

BOB

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1459
Use less energy

Frankly, we saw energy getting more expensive, and so I spent some of my retirement monies on things to make us more energy resilient. The key to this is to use less energy. We downsized to a car that gets twice as good milage: we now pay half as much to fill up our gas tank.  And with me working from home we fill up that tank a lot less.

We have a heat pump, but now heat our house with an airtight stove with a reburner. Basically, we heat our home for the cost of free wood, a few of gallons of gasoline for our chain saw, and the price of tools like an axe, a bow saw, a wedge and a sledgehammer.  We got all our screens fixed, eco-foil reflective attic barriers, a solar powered attic fan, and screen doors--all to cool without A/C. So far even when using A/C we are saving $50 to $100 a month net after the electric rates went up and there are months when we do not use the A/C, just ventillation. And there's that priceless "we would not fry or freeze in a power outage" feeling. Coming projects include an outdoor cooking area for the summer (in the old days they called it a summer kitchen) and a outdoor dining area that can also be used as a "sleeping porch" during hot weather. We are also putting in a venting skylight for the bathroom. (Check these out if you live in a hot climate.)

We have solar hot water which means we hardly use the electic water tank except in the dead of winter. We use all LED or CFC lightbulbs, which save us a very measurable number of kilowatts per month, too,as does the clothesline instaed of the dryer. And we just added a few solar panels, and I mean just the panels since for us the deep cycle batteries are free and hubby knows how to chain the whole system together. We wll add more and more solar power as we can afford it.  And we are planning on converting a chest freezer into a very-low-electric-use refrigerator.

We believe conservation is the key to not only an energy resillient future, but to keeping costs down NOW. People who drive their gas-guzzling SUVs ( which I call Mall Terrain Vehicles) from a distant job to a home that has no cooling except A/C (or heat except oil) are already feelling the energy-cost sticker shock of their lifestyles, and it will only get worse. You want an investment with tangible results? Invest in energy efficiency and resilliency.

robie robinson's picture
robie robinson
Status: Platinum Member (Online)
Joined: Aug 25 2009
Posts: 610
Our "Sundanzers"

run off 3 120watt kyoceras and a golf cart. Gotta have ice for...come hell or high water.  robie

the golf cart also runs our "simple pump" which has been in seasonal use for 3 yrs.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Cooling inspiration

safewrite,

Your area may not be conducive to energy saving device, but your post inspired me to suggest it to those who live in an area with cool summer evenings.

We bought an old farm house a dozen years ago that had a greenhouse exhaust fan in the ceiling of the upstairs bathroom that vents to the attic. We use it on summer evenings to rapidly replace the "too warm" air inside the house with cool outside air. After about 5 minutes of use, the house is cool enough to sleep comfortably (most of the time.) This year, we only used the heat pump (to cool) on 3 separate occasions. The rest of the time, the fan did the trick.

Grover

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1459
Grover, we do have coolever

Grover, we do have cooler evenings, so we got one of these:

It runs all the thime on solar energy. Aircraft-quality aluminum  housing with a five-blade fan; it will not degrade in the hot sun like plastic or rust like steel. Installation was a snap: cut a hole in the roof, add some tar and flashing, and drop it in. It was $750 with installation.You used to be able to fry an egg in our attic storage area at 10 PM, now it's cool up there as soon as the sun goes down and since we put in the Eco-foil (DIY - all of $200 for the underside of an 1,100-SF roof) and gable fans it's not much hotter up there than outside during the day. You've better believe that cuts our A/C bills or makes cooling with just screens more of an option.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Great addition for cost subtraction

safewrite,

Good for you! I'm always amazed when folks start complaining about utility bills when they can do simple things to reduce the cost. You sound like you're hitting on all cylinders.

Grover

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 1791
Liquid Metal Battery

Interesting concept:

Let's see how swiftly Professor Sadoway's further progress proceeds from here

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Good TED Talk

Adam,

Thanks for posting that TED talk. It is an interesting concept that has the potential to collect wind and solar power as it is generated and disbursed as needed. That overcomes the biggest problem with these "green" energy sources. I hope he can get it scaled up while it still matters.

Grover

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