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BP's Other Problems

Far from the Gulf of Mexico, a subsidiary BP had established in Siberia  was forced into bankruptcy at the end of last week when BP called in loans. BP had negotiated much of this year with Russia’s state-owned Gazprom and Rosneftegas, hoping to find mutually agreeable arrangements that would salvage its investments in the Kovykta  gas field and in RUSIA Peteroleum, in which the joint venture TNK-BP  holds a 62.9 percent stake.  But on June 3 it threw in the towel.
According to a Financial Times analysis, BP’s decision to force RUSIA into bankruptcy court may indeed be its only hope of recovering a $600 million investment in Kovykta, but it’s risky, because the Russian government could simply revoke its license to develop the field, leaving it with nothing.
The New York Times said that TNK-BP’s Kovykta venture “embodied” the fierce desire of investors to connect Russia’s oil riches with East Asia’s insatiable energy demand. That ambition put investors into direct conflict with the Putin regime, which has made no secret of its intention to cement a Eurasian natural gas monopoly, leaving it in a position to play off European and East Asian customers. Things got so heated between the Russians and BP that at one point TNK-BP’s CEO Robert Dudley withdrew to a secret location, citing a long campaign of legal harrassment by the Russian authorities.
Ironically, just as BP was shutting down its Siberian subsidiary last week, it announced it was bringing Dudley in to manage its Gulf clean-up operation. Perhaps BP is seeking to get the spotlight off its embattled chief executive, the tone-deaf  Tony Hayward. During the last month BP has lost a third of its value, and as the Financial Times put it in a separate analysis, “when a whale is wounded, it does not take long for the sharks to circle.”
Because BP is exposed to such huge long-term financial risks a takeover is most unlikely, at least in the near future. But as its legal and financial liabilities mount, its longtime competitors and rivals are sure to be smirking, among them Russia’s Vladimir Putin, whose environment complaints about oil companies like  BP used to be dismissed as mere pretense.

Pioneering Glaciologist Sets Sights on Another Big One

ENSO--the El Nino-Southern Oscillation--plays a huge role in governing short-term climate fluctuations from Peru to India. Accordingly, how it is being affected by climate change is one of the really big issues in ocean-atmospheric science. Hoping to cast light on that issue, the pioneering glaciologist Lonnie Thompson of Ohio State University and Dwi Susanto of Columbia University's Lamont Doherty Observatory are getting set to head for Indonesia's Puncak Jaya, the highest mountain between the Andes and the Himalayas and the world's highest island mountain, period. They will take ice cores, whose annual "rings" will tell them how much precipitation fell in any given year, while changes in the isotopic composition of the water record yearly changes in temperature.

The cores may also contain, says Columbia's Earth Institute, pollens, volcanic ash, wildfire soot, plant debris, insects, and other animals--including possibly human remains.

Thompson, the first scientist to ever take cores from tropical mountain glaciers, has in the last four decades explored many such glaciers all over the world, including on Africa's famed Mt. Kilimanjaro; he is a leading authority of the Himalayan glaciers, a subject of especially intense controversy of late. Generally tons of equipment have to be carried up mountains and back, a challenge that has stimulated technical and logistical innovations.  Susanto, says Columbia, "has focused on studying how ENSO affects the gigantic, highly changeable flow of Pacific waters through the torturous straits formed by Indonesia's 17,000 islands into the Indian Ocean, and how this in turn links to changing climate. Studies by Susanto and others. . .have shown that during the cold, or La Nina phase of ENSO, the so-called Indonesian throughflow may increase 10 times over."

On this expedition, Thompson and Susanto, having brought four tons of equipment to the top of Puncak Jaya, plan to drill six 100-millimeter cores to bedrock. The cores will be shipped to Thompson's ice laboratory at Ohio State for analysis. Progress with work can be followed on the expedition's blog.

Hydrokinetic Power Coming to New Orleans?

Although it probably won't stay this way for too much longer, for the moment, hydroelectric power remains the largest contributor to renewable power generation in the United States, ahead of solar and wind and everything else. Hydroelectric dams, though, come with their own vast set of environmental issues including the destruction of ecosystems when a river is turned into a lake. In Louisiana, one company wants to keep the "hydro" but ditch the "dam," going instead with the concept of hydrokinetic power.

Free Flow Power wants to install lines of turbines under water in the Mississippi River where the current is strongest, allowing the moving water to generate electricity in the turbines. The company already has 80 sites in the Mississippi picked out, along with another 17 in the Atchafalaya River. According to an Associated Press article, this idea "potentially could create enough energy to power the city of New Orleans."

That struck me as pretty amazing, considering that the Free Flow Power turbine design claims it can generate 10 kilowatts in water flowing 2.25 meters per second, and 40 kW in a 3 meter per second stream. The Federal Energy Regulatory Commission says that 103 total inland preliminary hydrokinetic permits have been issued, mostly along the Mississippi but also the Ohio River and scattered in other locales as well; collectively, those permits have an estimated capacity of 6,759 megawatts. And that's not the half of it: a 2007 report estimated that hydrokinetic power could provide close to 13,000 MW by 2025 (okay, it is the half of it).

The appeal of a passive system that allows already-flowing water to just keep doing what it does best is undeniable, especially in the context of the damage that a large dam can do. While some countries around the world continue to ponder massive engineering projects like the Grand Inga Dam in Africa ($80 billion, anyone?), turbines that apparently have only one moving part and can sit unnoticed in the Mississippi start to sound like a pretty good deal.

Photo via Free Flow Power

Uncertain Outlook for Concentrated Photovoltaics

A report issued recently by CPV Today says that the levelized cost of electricity from concentrated photovoltaics "could fall as low" as 8 cents per kilowatthour in 2015, from 26 cents/kWh currently. Installation costs of highly concentrating PV--that is to say, CPV's average capital costs--"are set" to fall 49 percent to $2.47/W in 2015 from $4.84/W today.

What stands out in these industry-friendly formulations is the use of phrases like "could" and "set to." Even in this almost avowedly optimistic assessment, current CPV generating costs are a great deal higher than average electricity costs today and are almost sure to remain significantly higher five years from how. Compared with wind energy, solar's closest competitor, CPV installation costs will be at least 20 percent higher five years from now than wind capital costs are today.

The outlook for CPV is of particular interest because concentrating PV is sometimes considered closer to commercial competitiveness than standard PV, especially in relatively large plants that produce electricity for the grid. The CPV Today report mentions, in this connection, a 59 MW plant being built in Taiwan.

An alternative to CPV is thermal solar, in which for example an oil is warmed by parabolic mirrors and the heat is transferred to a molten salt in tanks, where steam is generated to drive turbines. Physics Nobelist Robert Laughlin has been giving talks in which he touts that solar technology, mentioning a plant in southern Spain (Andasol, above). But there too, Laughlin concedes, generating costs are at present about 30 cents/kWh, about five times average electricity costs.

Why Is This Man Smirking?

During the last five years or so, the Putin-Medvedev regime has repeatedly forced the big oil companies to renegotiate major development contracts on terms more favorable to Russia. The government's modus operandi, whether the situation pertained to the Sakhalin 2 field in East Siberia or the even more challenging Shtokman fields in Russia's northern waters, has been to bring environmental complaints against the partner companies, saying in effect that the multinationals have to pay Russia more to compensate for unforeseen damages. Though such complaints have not been wholly dismissed by industry experts and the world press, it's generally been taken for granted that Putin's environmental complaints--like his punitive use of tax law to eliminate rival power centers--have been a mere cover for his true political and economic objectives.

As Spectrum editor Sandra Upson put it in a news analysis several years ago, "The government’s environmental concerns may be genuine: Greenpeace and the World Wildlife Fund have raised strong objections to the damage inflicted on [Sakhalin]  island as a result of the energy companies’ operations. However, if the Russian government is challenging the companies’ environmental permits. . .solely to rework contracts to include Gazprom (as most analysts believe), the government is threatening the sanctity of all business relationships that bring in outside companies and capital."

As Upson explained, oil contracts with multinationals generally had been made on the basis that Russia would cover initial development costs but only start collecting revenues when oil production started. That meant, as the Putin-Medvedev government saw it, that the multinationals had little incentive to constrain development costs. Then too, there was Putin's basic determination, articulated in a kind of doctoral dissertation he wrote before becoming the country's leader, to take full national control of the country's mineral resources and use them to power its economic recovery and the reconstruction of a mighty Russian state.

Russia is overwhelmingly the dominant supplier of natural gas to Europe, and a major supplier of oil as well. It aspires to build out pipelines to Northeast Asia, and even become of significant supplier of liquefied natural gas to the Americas.

The decisive turning point in relations between the Russian state and the big oil companies was the arrest in late 2003 of Mikhail Khodorkovsky, the country's top oil tycoon, who had started to act as if he were operating in a liberal democracy with competitive party politics and a prevailing rule of law. Khodorkovsky was funding opposition parties, threatening to challenge Putin for the presidency, negotiating international pipeline contracts without consulting Putin's people, and even thinking of selling a big stake in Yukos to Exxon or Shell. In the past decade, as some outside experts saw it, Khodorkovsky had made Yukos Russia's best-run company, and so he saw not reason why he should not be allowed to collect his just rewards.

 All those factors evidently contributed to Putin's decision to have Khodorkovsky locked up and to throw away the key. The arrest sent an unmistakable message to the general public that nobody in Russia was safe, not even the country's richest and most successful person. And it told the multinational oil companies that they had better watch their steps. Relations with the companies soon deteriorated to the point where, some years later, the British CEO of BP's joint venture in Russia--TNK-BP--announced he was moving out of Russia to an undisclosed location, citing a long campaign of legal harrassment by Russian authorities. From the end of July to the beginning of December 2008, Robert Dudley continued to run TNK-BP from a secret location, until the venture's Russian shareholders and BP agreed to replace him.

What an outrageous way to treat a fine upstanding company like BP, right? Well, actually, the arrest of Khodorkovsky and Putin's hard line on multinational oil development always went down well with Russians: with reason, men like the Yukos CEO were seen as robber barons, who had acquired their industrial empires for a fraction of their real worth; with some reason, the multinationals were seen as arrogant, accustomed to getting their way in relations with weak developing countries.

Outside Russia all that looked rather differently, of course, But now, in the wake of BP's Gulf of Mexico catastrophe, does one really need to ask why Putin is smirking?



Growing Expert-Public Rift on Climate Change

In the last week, just as the U.S. National Research Council issued a long-awaited trinity of blue-ribbon climate studies, the New York Times happened to report that growing skepticism about climate change, its causes, and its gravity is not merely a North American phenomenon. In fact,  that skepticism has grown just as fast during the last two years in England and Germany, where public opinion has been strongly alarmist about global warming for close to two decades.

A survey in February by the BBC found that only 26 percent of Britons believed that 'climate change is happening and is now established as largely man-made,' down from 41 percent in November 2009," wrote the Times's Elizabeth Rosenthal. "A poll conducted for the German magazine Der Spiegel found that 42 percent of Germans feared global warming, down from 62 percent four years earlier."

Yet, according to studies released by the NRC, "a strong, credible body of scientific evidence shows that climate change is occurring, is caused largely by human activities, and poses significant risks." Among them, specifies the first report on advancing climate science:  "rising sea levels, increases in intense rainfall events, decreases in snow cover and sea ice, more frequent and intense heat waves, increases in wildfires, longer growing seasons, and ocean acidification." Additional warming in this century, "on top of the 1.4 degrees Fahrenheit already observed over the last 100 years," could be as high as 11.5 degrees F or 6.4 degrees Celsius.

All that has been the climate science consensus for close to a decade, and so why are publics increasingly resisting calls for action? Could it be that many people are beginning to suspect that it may be cheaper to adapt to climate change than to prevent it? If so, a second of the NRC reports, on climate adaptation, addresses that preference.

"Even if emissions of greenhouse gases were substantially reduced now," says the report, "climate would continue to change for some time to come" and so "potential consequences for humans and ecosystems are significant." The report calls on the U.S. Federal government to "provide technical and scientific resources that are currently lacking at the local or regional scale" and to provide "incentives for local and state authorities to begin adaptation planning." The report praises New York City for being early to plan for climate change, highlights a heatwave early warning system that Philadelphia put into place several years ago, and focuses attention on Alaskan towns that already are having to be relocated because of greater erosion and flooding, reduced sea ice, and permafrost thawing. 

It would be interesting to know, given those circumstances, what exactly Sarah Palin thinks should be done to limit the magnitude of climate change, the subject of the third NRC report. (As governor, Palin did useful work to advance the cause of natural gas, but did anybody think to ask her during the presidential campaign about the effects of climate change in Alaska, where they are so dramatically evident?) 

The third report says that the United States should adopt a budget for greenhouse gas emissions., 2012-2050, and develop "policy mechanisms durable enough to persist for decades but flexible enough to adapt to new information and understanding." In its write-up of the report, the Times suggested, somewhat misleadingly, that the report implicitly endorses the Obama administration's goals and the energy & climate  bill it's trying to get through Congress. The NRC report does in fact endorse Obama's long-term goals, but it is quite critical of two major elements of the American Power Act: its proposal to give away some emission allowances for free, rather than auction them; and its sectorial rather than economy-wide approach to cap-and-trade.



Integrating Wind: Western U.S. Could Be 30 Percent Wind-Powered

The United States government wants 20 percent of all electricity generation to come from wind power by 2030. This would most likely require about 25 percent wind power in the western portion of the country, and a new report from the Department of Energy's National Renewable Energy Laboratory found that such goals are truly within our reach.

In the Western Wind and Solar Integration Study the NREL showed that it is even doable to get 30 percent of power from wind along with 5 percent from solar, given a few practical changes to the system. Notably, though, there is little need for substantial new transmission line projects to get at least to a 20 percent penetration with wind:

"Up to 20% renewable penetration could be achieved with little or no new long distance, interstate transmission additions, assuming full utilization of existing transmission capacity."

This is a significant finding, given that transmission is the biggest obstacle to jumping head first into the largest of renewable energy projects. For example, T. Boone Pickens abandoned his plan for a giant wind farm in the Texas panhandle because of the expense associated with bringing that electricity where it needed to go. When about two or three percent of our electricity is lost along transmission lines around the country, keeping generation close to its final destination is a key factor in maximizing wind's potential.

According to some estimates, wind power only remains economically viable when it has to travel no more than 500 miles to get where it's going. This is because high voltage power lines are not cheap: by one count, the transmission infrastructure needed in order to get 20 percent of power from all renewable sources by 2024 would cost $100 billion. When individual projects are examined, that lofty price tag almost seems too small; one 3,000-mile transmission project between North Dakota and load centers like Chicago, dubbed the Green Power Express, will cost between $10 and $12 billion on its own.

With the efficiency losses and the economic hits required in order to build up the transmission architecture, NREL's contention that little new infrastructure is needed is a welcome sigh of relief. in a press release on the NREL report, American Wind Energy Association president Denise Bode said the feasibility of large-scale wind adoption is clearly feasible.

"Now the only question is whether Congress and the Administration will step up and enact the policies - particularly a strong Renewable Electricity Standard and robust transmission legislation - that will allow us to get there," she said.

Photos via NREL

Facing Our Flow with BP's Live Spill-Cam

Click image, then hit play (persistently) for live streamFor a look in the mirror that could inspire a car-free weekend, BP has made available a livestream feed of its uncontrolled oil spill over 5000-feet below the Gulf of Mexico's increasingly oily surface. [You'll need to hit play several times to get a peek at this very popular feed.]

Government agencies and industry engineers have been viewing this feed for two weeks. BP made it accessible today to gasoline consumers and shareholders of the Gulf of Mexico ecosystem at the urging of Ed Markey, chair of the House Select Committee on Energy Independence and Global Warming and an advocate of fossil fuel-free energy and transportation.

Just how much of the oil our cars and trucks need is instead spilling out of the Deepwater Horizon's crippled riser? BP and the Unified Command directing the spill response have stuck for weeks with an admittedly imprecise estimate of 5,000 barrels per day (bpd), while independent scientists analyzing earlier video imagery argued for a number of 20,000-100,000 bpd. BP's explanation for the discrepancy is the large amount of natural gas exiting the riser (about half of the plume, says BP) and distortion of the riser, whose diameter is now 30% wider than its pre-accident dimension of 19.5 inches.

We may get a better number tomorrow, when a panel of federal scientists is mandated to report their best estimate.

The new federal figure may, however, be outdated by early next week when BP plans to attempt its most invasive intervention to stem the leak. As I report in MIT Technology Review today, their 'top kill' method could stanch the flow altogether, or break it wide open.

Senate Energy Bill

Two weeks ago Senators Kerry and Lieberman unveiled the American Power Act, essentially the Senate version of a climate bill that the House passed mid-2009. Since Obama’s election and before, climate legislation handicapping has fluctuated wildly: initially, with Republicans like Arizona’s McCain and South Carolina’s Graham co-sponsoring cap-and-trade bills, prompt enactment of a bill to cut U.S. greenhouse gas emissions was considered a virtual sure thing; then, with the onslaught of the Great Recession, the edging of more urgent issues to the top of the legislative agenda,  and the defection first of McCain and then of Graham, a pundit consensus formed that climate legislation had little or no chance of getting through the Senate this year; but most recently, with Obama’s major victories on health reform and financial regulation, it’s beginning to look after all like he may manage to get anything big he cares about greatly.
Easily the most important factor favoring Senate  passage of the American Power Act is the wide support the bill has garnered in the U.S. business community. Membership in American Businesses for Clean Energy, the main organization representing firms that favor national climate legislation, has grown from barely 750 toward the end of last year to more than 6,000 today.
Boeing, General Electric, IBM, and United Technologies are among the businesses participating in that organization and others, such as the We Can Lead Campaign and the U.S. Climate Action Network. Last year Apple Computer dropped out of the U.S. Chamber of Commerce because of unhappiness about the chamber's obstructionist climate stance, and leaders of energy companies such as Duke, Exelon, NRG, and Shell are backing Kerry-Lieberman four-square.
Yet winning corporate support for climate legislation and courting Republican moderates has come at the cost of many compromises, and not a few are wondering whether those costs have been too high. The main point of the American Power Act is to “put a price on carbon”—that is, to penalize emission of carbon dioxide. But is that price high enough to be meaningful? Does its value exceed the costs paid to get it?
Among the provisions riling some environmentalists, and not just environmentalists:
--its boost in Federal guarantees for new nuclear reactor projects to $54 billion: a “bailout” in the making, rail the libertarian Alliance for Generational Equality and the Cato Institute
--its billions of dollars to support carbon capture and sequestration: a delusion, says Robert Bryce of the market-oriented Manhattan Institute
--donation of free emission permits to coal-burning utilities: a gratuitous lock-in of coal-fired power, at a time when gas and wind represent much more attractive alternatives, says Christopher Flavin of Worldwatch
--promotion of interstate electricity transmission corridors to facilitate transmission of Plains-states wind to consumers east and west: not necessarily transparent enough to guarantee that those who benefit pay the costs, say Timothy Fagan of PSEG
In its totality, the American Power Act comes to an unsightly 987 pages, and thus resembles earlier comprehensive energy bills that came into disrepute because they began to look like Christmas trees for spoiled kids.
The essential point of the bill is to create a nationwide carbon trading system, with emission permits starting at $12/ton carbon, and rising to no higher than $25/ton, so as to help make the country cut its carbon emissions 17 percent by 2020 and 80 percent by 2050.
But can any target for a year 40 years away have any real political meaning? And is the 17 percent target for 2020, which after all will only get the United States back to its 1990 emissions level (the baseline for Kyoto Protocol cuts), ambitious enough?  Is a $25/t  price high enough to stimulate needed technologies like carbon capture and integrated coal gasification? Why are coal-burning utilities and heavy industry getting such cheap rides, and aren’t the oil and transportation justified in complaining about that?
Such considerations suggest it might be better to put the power and climate bill on the back burner, take care of more pressing business first, and return to Congress next year with a 5-page carbon-tax bill that penalizes electric power, transportation, and heavy industry equally.
The conventional wisdom has always been that cap-and-trade is the only path politically viable. But opponents of climate legislation already have dubbed the power act cap-and-tax. Under the circumstances, why not just go straight for the tax?

Germany Leads Again in Solar Growth

The 2009 solar round-up from the (American) Solar Energy Industries Association reports that additions to U.S. capacity (both photovoltaic and thermal) came to 481 MW, up 37 percent from 2008, bringing cumulative capacity to nearly 24 GW. Even so, the United States trailed world leader Germany by a large margin, as well as other siginificantly smaller countries. Germany's 2009 installations totaled 3,800 MW, Italy's 700 MW, and Japan's 484 MW. The tiny Czech Republic installed 411 MW of solar, putting it in fifth place, just behind the United States.

The United States remains world leader in concentrated solar power, however, with 432 MW installed.

Perhaps the most significant development in 2009, as reported by SEIA, was a sharp drop on PV module prices, from $3.50-4.00 per watt in mid-2008 to $1.85-2.25  last year. Considering that modules generally amount to about half the total PV system cost, that would seem to imply that photovoltaic installation costs are now about half what they were in the early part of this decade--big news indeed, if it holds.

SEIA credits much of the 2009 U.S. growth to the U.S. stimulus bill, which eliminated a ceiling on residential thermal reimbursements and replaced tax credits with grants. "Solar equipment manufacturers have been awarded $600 million in manufacturing tax credits under the American Recovery and Reinvestment Act [of 2009], representing investments in new and upgraded factories of more than $2 billion."

State and local incentives also improved. Of the 30 states with renewable energy standards, 18 now have solar "carve-outs"--specific targets for solar, within overall renewable targets--and 5 provide extra credits for solar or distributed generation. So-called property-assessment clean energy financing (PACE) has become increasingly popular among municipalities, Berkeley, California having taken the lead.

Some sore solar points unmentioned in the SEIA report:

--the decision by the leading maker of PV manufacturing equipment to site a major research lab not in the United States but in Xian, China

--the closing of a little factory in Maryland whose acquisition probably inspired BP to declare it was moving beyond petroleum

 As we all are all too vividly aware, BP not only has failed to move beyond oil, it's mired in it, along with growing portions of the Gulf Coast.




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