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What's Ahead for Regulation of Deep Water Oil Drilling?

It's been instructive this week to compare how three major English-language newspapers--arguably the three most influential of all--handled the Federal government's report on the Gulf oil disaster. The New York Times, the Wall Street Journal, and the Financial Times each gave the report rather different emphasis and a distinctly different spin on what lies ahead.

The Wall Street Journal offered up a story of modest length at the top of its second page on Wednesday, opening with the finding that "identifiable mistakes" by BP, Halliburton,, and Transocean had led to the catastrophe. The next graf went on to say that "fundamental reform" of offshore oil drilling would be required and that the industry would have to "dramatically" improve safety practices. Inconclusive analysis of the prospects for such reform and self-improvement followed.

The Financial Times gave the Gulf oil story the biggest play, leading with it on the front page and following up on p. 4 with a detailed description of the report and its recommendations. The lead opening sentence said that the report called for a  "transformation" of the offshore oil industry's safety and environment practices. A bulleted list of points in the followup opened with the finding that offshore drilling can be done safely in principle and is vital to the United States. Next came the commission's call for a new independent agency to regulate the industry, increased funding for regulators, a self-policing industrial entity like the nuclear industry's INPO, certified blowout prevention technology as a precondition for drilling, a sharp raising of the liability cap for individual drillers, and so on.

The Financial Times quoted commission co-chairman Bob Graham, a former Democratic Party senator from Florida, as saying it was flatly unacceptable that the United States has a weaker system of offshore drilling regulation than countries like Britain and Norway. By implication, the Financial Times seemed to say pretty clearly that the commission's report will have a quite drastic impact on offshore oil drilling practices and costs. Tthe Wall Street Journal's article seemed to suggest as much, though more cautiously

It was the New York Times that was most skeptical about the report's likely impact. Though it too quoted strong statements from Graham and commission co-chairman William K. Reilly, a former administrator of the Environmental Protection Agency, on the need for strong regulatory reform, it also gave prominent attention to mixed signals emanating from the White House--including a statement by President Obama that getting most costly regulation through the new Congress would be a tough sell.

Nobody would compare the president with the legendarily tone-deaf Tony Hayward, BP's deposed chairman (photo, above). But one cannot help but wonder in light of what's at stake whether a slightly pessimistic note is the right way to begin this important political negotiation.

"The report is scathing in it indictment of the industry . . . and of the government," the Times notes, and yet it "undertook its study without benefit of subpoena powers, under a right deadline, and without access to a number of critical components, like the well's failed blowout preventer." But it is not the last word. The three companies all face private law suits that will result in more airing of technical and managerial issues, and the Justice Department is conducting both civil and criminal probes of the companies' leaders.

Smart Grid Employment

For decades, sad to say, electric power has been seen as unexciting, low-tech, and has-been; with digital communications, software engineering, and computation attracting most of the top talent, North America has had to look to Asia to find recruits to fill the shoes of retiring power engineers.

Of course, as Erich Gunther observes in the inaugural issue of IEEE's smart grid newsletter, the electricity system is by no means low tech: It's in fact a very high-tech but largely mature bundle of technologies. Still, there's irony that in this time of jobless recovery, electric power suddenly is the place to be.

You only need to google on smart grid jobs to get a sense of the opportunities out there. So, if you're not already enrolled in a program that will train you to apply digital communications and computing technologies to electricity transmission and distribution, go to it, young person!

The U.S. stimulus bill has allocated $100 million to smart grid training, and that money has been distributed to 54 programs to train 30,000 engineers. As The Institute has described, IEEE's Power & Energy Society established a power engineering workforce initiative, which advised the energy department how to spend the stimulus money.

What are some of the main technical challenges facing the young and talented?

One perspective is to be found in a report prepared by PES's Power and Energy Engineering Workforce Collaborative: "Preparing the U.S. Foundation for Future Electric Energy Systems: A Strong Power and Energy Engineering Workforce."

Another can be gleaned from the North American Electric Reliability Corporation's "Potential Reliability Impacts of Emerging Flexible Resources," which appeared last November.

Renewables Tie Nuclear in Primary Energy Production

Energy Daily reports, based on information in a recent issue of the U.S. Energy Information Administration's Monthly Energy Review, that renewables matched nuclear reactors in U.S. primary energy production during the first nine months of last year, each contributing about 11 percent of the total. But if you think this means wind and solar are about to surpass nuclear in generating the country's electricity, you have another think coming.

Remember that primary energy includes all energy, not just electric power, and that renewables as defined by EIA include hydropower and biomass, among other things. Specifically, biomass and biofuels accounted for 52 percent of the renewables share in primary energy production, and hydropower for 31.5 percent. Wind made up 11.5 of the renewables share, and solar less than 1.5 percent.

To be sure, solar energy was the fastest growing renewables component, increasing nearly 50 percent in the first three quarters of last year--but it's still growing from a very small base, with uncertainty as to whether declining PV costs reflect real technological progress or just a shift in production to lower labor cost producers, notably in China.

With enormous potential still untapped--on the Great Lakes, among other places--wind seems destined to still dominate the U.S. renewables picture as far as electricity generation is concerned. Biofuels will remain a dubious contender in transportation: Energy inputs are large, and only modest decreases in greenhouse gases are achieved by comparison with gasoline, if any.

Oil Prices in Economic "Danger Zone"

At a time we're hearing talk of five dollar a gallon gasoline in the United States, International Energy Agency chief economist Fatih Birol is saying that the level of world oil prices could threaten global economic recovery. Birol was commenting on an IEA finding that the OECD member countries--essentially the world's advanced industrial countries--saw their oil import bill increase by a third last year, from $590 billion to $790 billion. The 27 members of the European Union, which has become notably more dependent on oil imports from OPEC and the Russian sphere, found themselves paying $70 billion more in 2010 for imported petroleum.

At present, world oil prices are edging toward $100 per barrel again, and though industry leaders are calling on governments to make life easier for them, it's not likely in the wake of the Gulf Oil catastrophe that their pleas will be heeded. A scathing report on the disaster, to be issued this coming Tuesday, will declare BP, Halliburton, and Transocean to all have been about equally culpable. Because of its alleged negligence, BP is widely expected to face criminal charges.

As energy writer Michael Klare has been putting it, we've entered the age of tough oil.

Subaru Pulls the Plug on Its EV

Back in July 2009, two Japanese automakers launched electric cars within weeks of each other. (And neither one was Nissan.)

One was Mitsubishi, which put its i-MiEV five-door hatchback microcar on sale after several years of consumer tests. That car is now the best-selling electric car in the world, with 5,000 sold as of December, and will be coming to the States as the 2012 Mitsubishi 'i'.

The other was Subaru, which offered an electric version of its Stella mini-car for retail sale the same summer, limited to the Japanese market. But unlike the Mitsubishi, the Stella electric car has languished in the market, with sales projected at just 400 by March.

Now, Subaru is killing its electric car. According to a Japanese newspaper, sales of the Stella could end as early as March. The Subaru Plug-In Stella uses a small 9-kilowatt-hour lithium-ion battery, driving a 47-kilowatt electric motor. Its range was quoted at roughly 50 miles.

The company says it will suspend work on electric vehicles for up to five years while it waits for the market to mature and public charging infrastructure to be installed.

Subaru's decision may reflect influence from Toyota, which now owns roughly one-fifth of Fuji Heavy Industries, parent company of the carmaker. Toyota is publicly downbeat on the chances for electric cars, reflecting its 15 years of investments in its Hybrid Synergy Drive system for hybrid-electric vehicles.

Next year, Subaru is expected to offer its first hybrid, a version of its Forester compact crossover utility vehicle, based at least in part on the Toyota system, but with Subaru's characteristic 'boxer' flat-four engine.

And just yesterday, news reports indicated that the next-generation Subaru Tribeca seven-seat SUV might share a platform with the next Toyota Highlander.

Subaru has several challenges in coordinating its products with Toyota, including its unusual boxer engine that requires different body-structure engineering. As well as the hybrid Forester, the two companies are cooperating on development of a long-delayed sports coupe model.

Meanwhile, the 2011 Nissan Leaf is expected to seize the crown of the world's best-selling electric car, with global production of up to 50,000 units projected this year.

It's hard not to imagine the hand of Toyota in Subaru's decision, though perhaps the company is simply allocating resources where it sees the most market opportunity. The company said it did not see opportunities for profit in small-scale electric car sales for some time to come.

Either way, an early electric-car pioneer is giving up on its first offering. Gee, does this sound familar?


This article, written by John Voelcker, originally appeared on, a content partner of IEEE Spectrum.

What to Watch for in the New Year

There are four  big stories we'll be tracking, with an eye on long-term energy conservation and greenhouse gas reduction. In each there is likely to be a critical threshold; a stumble crossing any of them will have wide repercussions in power engineering.

(1) Electric vehicle reception. With Chevy's Volt and Nissan Leaf coming onto the market, with  a number of other electric vehicles soon to follow from other manufacturers, this is the year in which EVs at last have their chance to obtain a secure niche in the market--or flop. If consumers turn their noses up at them--whether it's because they're too expensive, their performance is not what it's cracked up to be, or the charging infrastructure isn't mature enough--we will have to conclude that they'll have little or nothing to contribute for the foreseeable future.

Through the 1990s IEEE Spectrum magazine ran a regular column called EV Watch, only to retire it at the end of the decade because there just wasn't enough to watch. This year we'll find out whether it was worth resuming the watch.

(2) Smart grid returns. The U.S. government having invested billions of dollars during the last two years in smart grid infrastructure, with smart meter rollouts leading the way, consumers and utilities are getting keen to see payback in terms of lower prices and costs. The credibility of the smart grid vision is seen to be at stake. Though the threshold may not be as sharp as with EVs, if there is nothing concrete to show for all the work by the end of the year, consumers won't be pleased and utilities will find themselves on the defensive.

The Energy Department would dearly like to obtain congressional authorization for a second big round of smart grid grants. But it won't be easy to round up a business consensus in support of such subsidies, or find favor in the environmental community, if it appears that money is being poured down the drain.

Fifteen years ago Spectrum published articles about the promise of flexible AC transmission--FACTS--with a sense that the technologies packaged under that name would soon be widely deployed. Nothing much happened. Has the time for FACTS now really arrived?

(3) U.S. energy trends. Though the Obama administration has aggressively promoted development of green energy technology, it gave up on trying to get a comprehensive energy and climate bill through Congress. That signaled the collapse of any concerted national effort to wean the country from fossil fuels. Yet spontaneous trends in the energy sector may be accomplishing much of what the government hoped to achieve with policy. The boom in unconventional gas already has prompted a distinct drop in coal-fired power generation, which is sure to translate into lower greenhouse gas emissions. The U.S. power sector's carbon dioxide emissions decreased to 5,400 million metric tons in 2009 from 5,800 million metric tons the year before. The results for 2010 are likely to be still better, but we won't know for sure until the numbers are in.

Meanwhile, oil prices have remained stubbornly high, leading to reductions in U.S. gasoline consumption and lower emissions from that sector too. Michael Klare of Amherst College has declared the era of easy oil to be over, and he appears to have few detractors.

Early in the last decade, a blue ribbon group sponsored by Princeton University proposed deliberating taxing up the price of gasoline to $5 per gallon. It seemed ridiculous, and was ridiculous, to suppose that Americans and their political representatives would ever embrace the idea. But now we are hearing a former CEO of Shell Oil predict that we will have $5 gasoline by 2012,.

(4) Greenhouse gas regulation. The U.S. Environmental Protection Agency is about to start issuing rules to limit greenhouse gas emissions, pursuant to a Supreme Court decision authorizing and indeed arguably requiring the step. But whatever EPA does is  sure to be challenged in court, and the issue is almost sure to find its way back to the highest court, now minus Sandra Day O'Connor, who provided the crucial swing vote before.

The Supreme Court doesn't like to reverse its own decisions, especially rather recent ones. But if I were a betting man, I wouldn't bet they won't reverse themselves in this instance.

2010 Renewable Energy Recap: Big Potential, Slow Progress

This year started with good news on the renewable energy front, with reports on impressive 2009 growth in wind power installations. 2010, though, wasn't quite as great a year in terms of the number of turbines and solar panels installed in the US and around the world. Instead, it was the year of potential: report after report showing just how much power the world really could get if all our renewable energy dreams are realized.

In May, we learned that the western portion of the US could be 35% renewable-powered if all the potential is realized, even without extensive (and expensive) transmission projects. And later, the National Renewable Energy Laboratory told us that the total offshore wind potential in the US is staggering -- greater than all the current electricity-generation capacity.

And speaking of staggering, other countries have amazing potential as well. One report demonstrated how Australia could be completely powered by renewables -- yes, 100 percent -- by 2020.

The potential isn't limited to wind and solar, either. In spite of West Virginia's coal-based economy, the state sits atop an enormous geothermal resource with potential to generate close to 19,000 megawatts. And moving even further from the traditional renewable sources, Spain even has the potential to get seven percent of its power from waste.

All this potential is encouraging, but at least in the United States the progress toward realizing it is still slow. The country lacks a renewable energy portfolio standard (though more than half the states have their own), and there are few indications that any major sea change in renewables construction is on the horizon. Still, there are good signs. Just in the past few weeks, major purchases of wind turbines have been reported for Iowa wind projects as well as in various spots around Europe. Solar power in the southwest is also looking up, with approvals for several projects coming toward the end of this year (though there is also some objection, which could slow progress).

It remains to be seen if 2011 will feature significant progress toward renewable energy goals, or just another year's worth of reporting on its potential.

(Photo via spg solar)

US Takes Trade Action Against China on Wind

Five years ago, on July 4, 2005, the Chinese government issued a regulation requiring 70 percent of the ingredients in newly built wind turbines to be home-manufactured. That, together with production subsidies, cheap credit, preferential orders from state-controlled entities, and a variety of advantages, rapidly engendered an industry that now controls almost half the $45 billion wold market for new wind installations. In the United States, though Chinese manufacturers have built only three turbines so far, companies like Goldwind USA are gearing up for an aggressive drive. Reacting to the circumstances, a U.S. labor and environmental coalition led by the United Steelworkers has been calling for trade action against China.

Yesterday, responding to that call, the Obama administration filed a trade complaint against China in the World Trade Organization, arguing that measures like the 70 percent local content rule flagrantly violate WTO rules. On the face of it, considering that just about every major country subsidizes wind and promotes home manufacturers, prospects for the Obama complaint may be dubious. Trade conflicts are notoriously complicated and drawn-out, and they often get settled long after the horse is out of the barn. In the case of wind--not to mention solar, nuclear, and high-speed trains, among other critical technologies--the big corporate players have been reluctant to join legal actions against China for fear of jeopardizing their long-term positions in the country.

Take the Spanish company Gamesa, the world's third largest wind manufacturer after G.E. and Vestas. As described in a recent New York Times feature, five years ago Gamesa supplied a third of the Chinese wind market, a fraction that has now dropped to 3 percent, the Spanish company having trained locals to go into competition with it. "Nearly all the component that Gamese assembles into million-dollar turbines here," said the Times, are made by local suppliers. . . . And these same suppliers undermine Gamesa by selling parts to its Chinese competitors." Yet Gamesa expresses no official regret, saying that if they had not trained the Chinese, some other company would have.

It's that kind of rationalization that time and again produces unfortunate or even tragic results.

Will Lower Solar Costs Revive Moore's Law Talk?

A recent report by researchers at Lawrence Berkeley Laboratory reports a rather sharp drop in photovoltaic installation costs in the first half of 2010, which may revive talk about a kind of Moore's law at work in solar energy. The report, however, does not find a steady decrease in costs, as the alleged law has predicted, and the reasons for the recent decline appear to have more to do with business cycles than with technological progress.

The authors found that in 2008 and 2009 costs held steady at about $7.50 per installed watt. Based on a study of the largest PV system incentive programs in the United States, they determined that installation costs dropped $1.20/W from 2009 to the first six months of this year. Surveying 78,000 grid-connected PV systems built between 1998 and 2009, they found an average annual reduction of $0.30 in real dollars, or 3.2 percent per year--good, but not earth-shattering.

Referring to the sharper decreases this year, one of the report's authors said that during the four previous years, costs stayed rather flat because a fast-growing global market put upward pressure on both module and non-module prices. "This dynamic has now shifted, as expanded manufacturing capacity in the solar industry, in combination with the global financial crisis, led to a decline in wholesale module prices." Though the lower installation costs are primarily associated with lower module prices, non-module costs--labor, marketing, overhead, inverters, and balance of system--also are important.

Curiously, the authors do not highlight the role of China, despite its conspicuously growing role as a low-labor-cost supplier of PV materials and modules in national and regional markets where solar is heavily subsidized. A year ago, Applied Materials--the leading supplier of PV panel manufacturing equipment--announced it was setting up its main solar R&D lab in China, reflecting that role.

Has the U.S. Passed Peak Gas (Demand)?

An interesting Associated Press article that's making the rounds asserts that the United States has actually passed the point of peak demand for gasoline, and instead of a continued rise in the coming years we will actually see a decline from 2006 onward. The data seem solid on that assertion, but the implications may be more complicated than at first glance. According to the article:

"Americans are burning an average of 8.2 million barrels — 344 million gallons — of gasoline per day in 2010, a figure that excludes the ethanol blended into gasoline. That's 8 percent less than at the 2006 peak, according to government data."

Also, Americans will burn 20 percent less gasoline in 2030 than they do today. However, as the AP article does note, this is far from a done deal. There have been declines in demand before, and there's no reason that shifts in the economy or marketplace in the future couldn't shift the demand trajectory as well. The Washington Post has a timeline of gas use and demand since the first gas station was built in 1905, and it highlights just how volatile -- over the long term, at least -- gas demand can be.

Also, there are caveats: as mentioned above, the 8.2 million barrels burned each day in 2010 does not include ethanol blended into the gasoline. If we're talking only about gas, fine, but if the point is to examine the impact of this declining demand then that note becomes important. The bulk of environmentalists, and some of the government at this point, believe that corn ethanol carries its own set of environmental risks and may not even have much of a greenhouse gas emission benefit over gasoline. With ethanol mandated to make up about a quarter of all gas bought at the pump in 2022, are we really sure that the resulting decline in oil-based gas demand is such a great thing?

Even aside from the ethanol questions, a decline in gas demand doesn't necessarily translate directly into greenhouse gas emissions savings. Improved fuel economy -- one of the factors involved in the anticipated demand decline -- can certainly lower emissions, but among the reasons for that improved fuel economy is the use of plug-in hybrid and electric vehicles. What electricity source is powering those vehicles? If it's coal, then we'll have traded one dirty energy source for another, limiting the greenhouse gas savings.

Declining gasoline demand is clearly better than increasing demand, but such issues are rarely completely straightforward when it comes to the impacts.

(Image via Daryl Mitchell/Wikimedia Commons)


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