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China's Wind Surge Ignores Financial Mess

Speaking of China: The global wind power industry is bottoming out amidst the global financing crisis and yet China's wind sector is still going strong according to a research update issued this week by consultancy Emerging Energy Research (Cambridge, MA).

EER adds up the impact of "a steady flow of wind industry CAPEX reductions, project postponements, order cancellations, and corporate downsizings on a scale never seen before in this relatively young segment of the energy sector." They forecast a 24% decline in megawatts installed in the US this year over 2008, and a 19% decline in Europe.

Then there's China, which EER calls "the only major market left standing in the face of the crisis." EER projects a 59% jump in megawatts added there in 2009 -- enough to make up for the U.S. and European losses.

Spectrum readers will recall our May 2008 reporting on China's wind sector that was already notable for (a) its "endurance in the face of below-cost pricing" and, (b) low quality assurance that had even its trade association calling for slower growth. Looks like its too late for that.

Nissan Announces Electric Car Program in China that Would Wow Mao

Japanâ''s Nissan announced yesterday that it will provide free electric vehicles and help set up a network of charging stations in Wuhan, an industrial city in Central China on the Yangtze River. The pilot program, to be done in cooperation with Chinaâ''s Ministry of Industry and Information and the Wuhan municipal government, will be modeled on a similar project in the Japanese prefecture of Kanagawa, where Nissan is based. That program, according to a report several days ago in the Wall Street Journal, involves installing 1,000 charging stations by 2014.

Wuhan may not be a household name in the United States, but it was here, midway between Beijing in the North and Hong Kong and Guanzhou in the South, where the first vehicular bridge was built over the Yangtze in the mid-1950s. (Until then, believe it or not, there was no such bridge over the mighty river that bisects China, west to east.) Mao maintained a vacation retreat in Wuhan, complete with an indoor competition-size pool, and it was here that he swam the Yangtzeâ''several times actuallyâ''to demonstrate his continued health and prowess. (Yes, he really did.)

When it comes to electric cars, Chinaâ''s ambitions are of a grandiosity that would do Mao the neo-emperor proud. As noted here earlier this week, battery maker BYD has proclaimed its intention to become the worldâ''s leading electric car manufacturer. According to a report in todayâ''s New York Times, top government officials said at a conference yesterday that they hope to make the country as a whole the top global source of EVs and hybrids.

China Automotive Threat

EnergyBizâ''s Marty Rosenberg, in a recent post, draws attention to the uphill battle the United States faces in trying to outmaneuver the Chinese in the worldâ''s emerging markets for hybrid and electric cars. â''I fully expect China will conquer world auto markets in the coming decade of 2010-2020,â'' says Rosenberg. â''That is the real criminal story of the failure of nerve and vision by GM, Ford and the Michigan mob that has planted a shiv into the heart of industrial America.â'' For a fuller analysis of Chinese near and long-term economic prospects, see also the thoughtful article by James Fallows in the current issue of The Atlantic.

Fallows argues persuasively that China will weather its current difficulties and emerge stronger than ever. Not surprisingly, he ends with a focus on BYD, the hugely successful Shenzhen battery maker which unveiled a mass-produced battery-hybrid car at the Detroit auto show earlier this year. â''The companyâ''s official goal is to be the biggest automaker in China by 2015, and the biggest in the world by 2025,â'' reports Fallows.

BYDâ''s F3DM, â''the worldâ''s first production plug-in hybrid,â'' might also be described as a hybrid hybrid, in that it has three distinct modes of operation: all-electric, gasoline-powered, and parallel gas-electric. Its lithium-ion battery pack is based on iron phosphate.

Europe Shortlists Capture Projects for Stimulus

European leaders shortlisted a dozen proposals to demonstrate large-scale carbon capture and storage at coal-fired power plants last month as eligible to share â'¬900 million of the EU's â'¬5-billion stimulus funding package. The goal is to bring down the cost of carbon-neutral coal power -- which the European Commission expects to continue to exceed the cost of conventional coal power in 2020 -- and to gain more experience with underground storage of CO2.

Seven propose to capture CO2 post-combustion from the exhaust of conventional coal-fired power plants, a relatively inefficient process that nonetheless costs less up front -- an attractive feature given today's financial mess. Three are Integrated Combined Cycle Gasification or IGCC power plants that would pull CO2 out of coal-derived gases prior to combustion, akin to the U.S. FutureGen project that Bush killed and Obama may be reviving. Two more would concentrate their CO2 exhaust by burning coal in purified oxygen -- the oxyfuel approach that Sweden's Vattenfall is testing at a pilot plant in Germany.

Only 6 of the dozen eligible are likely to receive funding, because the euros are earmarked to six countries: â'¬100 million for Italy plus â'¬180 million each for Germany, Spain, the U.K., the Netherlands and Poland. Three projects, such as a 500-megawatt oxyfuel plant in Compostilla proposed by Spanish power firm Endesa, look assured to go foward as they are the only ones deemed eligible for their respective countries' earmarks.

Nevertheless, all of these 'cleaner coal' plants have some hoops to jump still. To get the EU funds proponents must file detailed plans with the European Commission demonstrating their capacity to generate at least 300 megawatts of power, to safely sequester underground at least 85% of the CO2 generated, and to start spending stimulus cash by the end of 2010.

One coda to earlier posts on renewable energy transmission: The stimulus package also includes over â'¬1 billion for electrical interconnections between EU countries and earmarks euros to 11 projects that should start to make good on the European Commission's vision of supergrids to move renewable energy around Europe. Unfortunately the stimulus projects stop at the EU borders and will thus fail to bring North Africa's rich reserves of solar and wind energy to Europe.

Legislative Setback for Cap and Trade

Though little noted in the U.S. press (and, not so ironically, more prominently covered in some of the European press), the Obama Administrationâ''s efforts to enact a carbon trading system suffered a rather severe reverse last week when the Senate rejected an effort to put proposed legislation on a fast track by attaching it to the Federal budget bill. The idea was to bypass the Senateâ''s toxic rule requiring 60 votes to close debate on most bills, whichâ''with the Democrats holding slightly fewer than 60 seatsâ''enables Republicans to block their initiatives by filibustering.

The Senate voted 67 to 31 against attaching the trading bill to the budget, a decisive margin that strongly signals trouble ahead when the administration tries to get Congress to adopt a cap-and-trade system by the normal legislative process. Though some Democrats may have voted against the Administration because of procedural scruples, opposition also came from coal-state Democrats worried about the costs a trading system would impose on their local industries and constituents.

The Senateâ''s action casts doubt on whether the United States will be able to show up at a major global climate meeting at the end of the year with anything to take credit for (which is why the European press is paying attention). But it could also open a crack in the political door that up to now has been closed to the idea of carbon taxation. Might taxes combined with regional rebates turn out to be the more sellable deal after all?

IEEE Spectrum Enters Fray on Carbon Taxation versus Cap-and-Trade

An editorial in this monthâ''s issue of IEEE Spectrum raises the question of whether it would not be preferable, in principle, to adopt a carbon tax rather than the cap-and-trade system that the Barack administration is pushing. Earlier posts in EnergyWise suggested that carbon taxation might fit into a comprehensive program of tax reform and reported that Obamaâ''s economic team initially favored that approach. Economists from the far right to the far left overwhelmingly prefer carbon taxation because of its administrative simplicity, and that even includes economists who have moved from right to left.

Columbia Universityâ''s Jeffrey Sachs, who used to be associated with the shock therapy school but in the last decade reinvented himself as a man of the left, has cogent views on carbon taxation that are reported in Spectrumâ''s editorialâ''along with his resigned attitude about what Congress is likely to do.

The main problem with a carbon tax, as every graduate of Politics 101 knows, is that itâ''s a tax. The advantage of cap and trade is that even though it also drives up energy prices, and by a more or less equivalent amount for equivalent effect, it isnâ''t called a tax. The disadvantages of cap and trade are that it requires a large administrative infrastructure and development of an elaborate trading system, leaves the key economic players in doubt about what the value of emissions credits will turn out to be in the coming years and decades, and invites constant tinkering by politicians.

Attempting to make a virtue of a vice, Fred Krupp argued in the Wall Street Journal last week that â''a well designed cap and trade system will push our economy toward clean, domestic energy in the most flexible way possible.â'' By flexible, he evidently means that a trading system â''is self-adjusting based on economic conditionsâ''â''the price of emission credits will go down when times are tough but go up when they improve. Thatâ''s true, but it implies that when times are toughâ''like right nowâ''investors will have little incentive to invest in green technology, just when such investment is needed most, but the greatest incentive at times when the economy is awash in money anyway.

Krupp is an impressive person who has accomplished much as CEO of the Environmental Defense Fund. But on carbon taxation heâ''s simply wrong. The point of carbon regulation is to induce players to stop doing things that emit large amounts of carbon and to find low-carbon means of generating electricity. The most potent and flexible tool to accomplish that is a tax that penalizes carbon in the exact proportion to which itâ''s emitted, on a long-term schedule etched in stone.

Krupp argues that a carbon taxation bill could end up being just as complicated as a cap and trade bill. True. But this misses the essential point that a cap and trade bill by nature is a very complicated beast that almost inevitably will run to hundreds of pages, while a schedule of carbon taxes could in principle be formulated in one or two long paragraphs.

â''A cap is a legal limit on pollution,â'' says Krupp. â''There is no guessing what will happen.â'' Krupp should know that in Europe, where carbon cap and trade was first introduced, the caps have turned out to be no caps at all. Under the Kyoto Protocol, European countries were supposed to reduced their\ emissions by 7 or 8 percent from roughly 1990 to 2010. So youâ''d think their cap and trade system would set a cap for 2010 thatâ''s 7 or 8 percent lower than in 1990. But thatâ''s not how the political system works. Instead, the European Commission went to each country and asked how much it thought it could reduce its emissions by 2010; then each country delivered a document saying it really couldnâ''t afford to reduce them much. Then the commissions suggested they try just a little harder. The result: high caps, and carbon prices so low they havenâ''t prompted anybody to do anything differently.

Thereâ''s no reason to think politics will work any better in the United States, where green-minded liberals have got in the habit of inventing convoluted ways of accomplishing their ends without using the dreaded tax word. The result, again and again, is a complicated system that turns out to be politically vulnerable. What goes for cap and trade also goes for renewable portfolio standards and the renewable energy credits that give them their muscle. In an interview with the Wall Street Journal that appeared last weekend, Entergy CEO J. Wayne Leonard pointed out that such standards could actually lead to an increase in carbon emissions because green generating technologies would likely displace natural gas, which is expensive but low-carbon, rather than much more carbon-intense coal, which is cheap.

Ironically, countries with strong traditions of social democracy like Sweden and Germany were early adopters of carbon taxation and feed-in renewable energy tariffsâ''straightforward and uniform systems of penalties and incentives that classically trained economists like. In the United States, where socialist ideas are still taboo, liberals have adopted Rube Goldberg workarounds that classically trained economists despise.

Giving FutureGen a Second Chance

FutureGen -- the carbon-neutral coal power project initiated and then killed under the Bush Administration -- looks increasingly likely to be resuscitated under President Obama after proponents met with Energy Secretary Steven Chu this week. There is now good reason to take a fresh look at this proposed coal gasification power plant which integrates carbon capture and storage (CCS) from the ground up.

Those words don't come easy for this longtime FutureGen critic. But the context has changed since FutureGen was conceived in 2003, and even since Bush Energy Secretary Samuel Bodman killed it in January of 2008. While Energywise recently noted ongoing concern over FutureGen's cost, here are five arguments that could justify heavy federal financing:

  • Project scope: In its early years FutureGen was viewed as a PR exercise because it framed carbon-neutral coal as a research project, positioning the use of commercially-ready Integrated Gasification Combined Cycle power plants as a moon-shot. Chu has indicated that the project would be streamlined. One obvious element to drop: plans to generate fuel-cell grade hydrogen.
  • Financing: The most fundamental block to commercialization of IGCC technology was Bush's refusal to put a price on carbon emissions, which thwarted even utilities such as AEP that wanted to build cleaner coal plants. Carbon pricing may arrive under Obama--if he can push it through Congress--but the financial collapse has now slashed utilities' appetite to pore capital into big projects.
  • Efficiency: The carbon capture demonsrtations in construction by utilities mostly involve bolting carbon capture equipment on to the end of existing coal-fired power plants. Such retrofits are far cheaper up front, but likely to be considerably more expensive in the long run than an integrated design such as FutureGen. That's because integration should boost energy efficiency. Demonstrating that cost advantage could accelerate adoption of cleaner tech where it really counts: China and India.
  • Timing: FutureGen's site is selected and its environmental impact statement is complete. That means the project can advance quickly, making good use of the stimulus package's $1 billion in funding for advanced coal. And it could be generating electricity and putting CO2 underground in as little as three years, contributing to the critical evaluation of CCS as a strategy for slowing climate change.
  • Environmental protection: Obama Administration moves last month to challenge mountaintop removal mining mean the immediate impacts of U.S. coal demand could diminish somewhat in the years to come.

In other words, FutureGen is the strongest horse ready to run fast when it comes to technologies for neutralizing the CO2 emissions from coal.

Postscript: So why did the Bush Administration kill FutureGen anyway? It probably wasn't the cost overruns cited by Samuel Bodman last year. Those have been shown to be an accounting mirage by the GAO, Congress' investigative watchdog, and a report last month from Democrats on the House Committee on Science & Technology suggests that Bush officials knew their intelligence was faulty. Sound familiar?

That has conspiracy theorists rolling. Some say that the FutureGen Alliance -- the industrial consortium managing FutureGen -- doomed the project by choosing a site in Illinois over one in Texas. World Coal Institute CEO Milton Catelin saying Bodman ordered the hit to favor future investment in nuclear reactors, according to quotes in energy news pub Platts:

"What happened to FutureGen wasn't an accounting error. I believe it was a decision by an energy secretary in the United States to kill a project he didn't like because he was a nuclear enthusiast."

Can anyone recall when coal engineering supported such intrigue?

More on Climate Skepticism

Earlier this week I blogged about the publicâ''s growing skepticism on the subject of climate changeâ''â''more people less concerned about climateâ''â''and provoked some aggressive pushback. What particularly aroused many a readerâ''s ire was my claim that the debate over the basics of warming is essentially over. More than one reader seemed to propose that I should be stripped of my IEEE membership, or that IEEE should bar people like me from expressing my opinions online or in print. Under the circumstances, some further clarification and amplification of my position may be in order.

First, I am not, have never been, and never will be a member of the Institute of Electrical and Electronics Engineers. Nor am I an engineer. I am a journalist, one who was hired in the 1995 by IEEE Spectrum, the organizationâ''s flagship monthly, to cover energy and the environment. Iâ''d like to think I was hired because I had a solid track record in the field.

Let me digress for a moment to say something about journalists and journalism. It been a commonplace observation among people who do this work that top journalists often start their careers covering sports in small towns. (The late James Reston of The New York Times was an oft-noted case in point.) The reason for this frequent leap from small-time sports to big-time geopolitics is not hard to fathom. If you can report accurately and fairly the action and score of a Little League baseball game in Wichita, Kansas, then you can also report accurately and fairly on the Reykavik Summit, where President Reagan and Secretary Gorbachev sought to agree on the total abolition of nuclear weapons.

What journalists do is keep score.

About this time last year, I reported in this space about a conference of climate skeptics held here in New York City. I was surprised to note that the skeptical science faction still had a lot of life in it, and that it still was getting a lot of support from a variety of organizations around the world.

This year, when the same conference was held again, I was unable to attend. But Andrew Revkin of the New York Times covered the event and reported--again rather to my surprise--that the skeptical scientists all seemed to be throwing in the towel. When I took note of Revkinâ''s observations in this blog, several readers indignantly suggested that he had not characterized the event correctly. Of course Revkin has his personal opinions about climate and so do I. But the reactions to his reporting and my reporting of his reporting made me wonder: If readers have so little respect for what we journalists do, why do they bother to read us at all?

Last year, Exxon, which had been the worldâ''s leading funder of climate skepticism, announced it was cutting support to some groups, suggesting that it was about to get out of the game altogether. By this time, every advanced industrial country in the world except for the United States had signed onto the Kyoto Protocol, committing to sharp reductions in carbon emissions. In the 2008 elections, both candidates for the U.S. presidency were known to take the climate problem very seriously, explicitly rejecting the attitude that had governed U.S. policy for the previous eight years. Barely two weeks after his election, as reported here, President Obama gave a videotaped speech to the bipartisan Governors Climate Summit in which he said: â''The science is beyond dispute, and the facts are clear.â'' From now on, said Obama, any governor seeking to reduce emissions or develop green technology would have an ally in the White House.

Obama did not mean, and I donâ''t either, that people are not entitled to continue disputing the science and debating the facts. Some very eminent people continue to do so, including Freeman Dyson, and they have every right to do so. But until they elect a national leadership that agrees with them--and let me tell you frankly, as somebody has followed the game closely, that this is not likely to ever happen againâ''their views are politically irrelevant. The climate alarmists have won the game.

Could Natural Gas Hydrates Be Energy Bridge?

USGS scientists reported at a meeting of the American Chemical Society this week that huge sub-sea reserves of frozen natural gas, if economically recoverable, could serve as a bridge from todayâ''s fossil-fuel-driven world to a low-carbon future. Tim Collett of the U.S. Geologic Survey delivered findings of a November survey that estimated there are 85 trillion cubic feet of gas hydrates or cathrates stored in Alaskaâ''s North Slope alone, enough to heat 100 million homes for ten years. He said itâ''s been shown that itâ''s technically possible to recover the gas, though it remains to be determined at what costs.

Clathrates form when decomposing organic matter mixes with water at high pressures and low temperatures. In 1982, said Collett, the research vessel Glomar Explorer retrieved a meter-long sample of gas hydrate off the coast of Guatemala, prompting further exploration and the enactment in 2000 of the U.S. Methane Hydrate Research and Development Act.

Because natural gas is a fossil fuel, itâ''s not always appreciated that itâ''s a relatively green source of energy. By comparison with coal, per unit electricity produced, natural gas emits between one third and one half as much carbon dioxide. The implications, if huge quantities of gas hydrates could be economically recovered, are immense. To take the United States as the subject of a thought experiment: since coal accounts for half of the countryâ''s electricity and a third of its greenhouse gas emissions, if the entire fleet of coal plants were replaced by gas turbines, the effect would be to reduce U.S. carbon emissions by a sixth or more.

In a video press conference at the ACS meeting, Collett and colleagues described how cathrates were discovered in the laboratory in the nineteenth century and then in nature a century later. (To find the conference, scroll down to ACS Liveâ''s Video Clips and select the fourth screen from left in the second row of screens.) In the last decades itâ''s been established that catrates are available in huge quantities under the worldâ''s oceans, but typically at great depths. Assessment of their recoverability therefore requires a large international effort, but if economic exploitation proves feasible, they could start contributing significantly to the worldâ''s energy supplies by 2015, the USGS scientists guess.

U.S. Citizenry Is Less Concerned About Global Warming

We canâ''t improve on the headline the editors of the Yale Forum on Climate Change and the Media put on their recent story: â''Gallup Poll Finds More Americans Less Concerned about Global Warming.â'' Yes, even as scientists and opinion leaders are sounding louder alarms about the dangers of global warming, the broad public is getting more skeptical. Whatâ''s going on?

The latest Gallup poll, as reported in the Yale Forum story, finds that 41 percent of Americans consider alarmist news reports about climate change to be exaggerated, while 57 percent regard the reports as correct or underestimated. In a 2006 Gallup poll, in contrast, 66 percent regarded reports generally as correct or underestimated, while just 30 percent considered reports exaggerated. Just as Yale summarizes, more Americans are less concerned about global warming.

In a discussion of American attitudes and news coverage, carried concurrently by Yaleâ''s Environment 360 website, New Yorker writer Elizabeth Kolbert reflects on the situation. Kolbert, author of a New Yorker series that appeared in book form as Field Notes from a Catastrophe, recalls that climate change often is characterized as a â''slow moving catastrophe,â'' one thatâ''s largely invisible until itâ''s too late. She quotes John McCain as having expressed skepticism about â''whether our political system can deal with a problem like this.â'' Kolbert concludes that â''the media have contributed to the general sense of it not being an urgent problem because itâ''s not the lead story of the paper every day.â''

My take, for what itâ''s worth, is rather differentâ''almost the opposite. In the last few years, with polls regularly reporting that Americans broadly think of themselves as more concerned about climate change than they take scientists and opinion leaders to be, the view has taken hold among journalists that they are to blame for having reported both sides of the climate debate, as if both sides were equally valid. Media coverage of climate debates has become more one-sided.

Why then has the public become more skeptical rather than less, even as professional skeptics have become less skeptical, scientists have become more alarmist, and journalists have focused more attention on the alarmists? In my view itâ''s because climate coverage has become repetitive and overly insistent, without being more probing and analytical. The effect has been, I submit, to make some of the public feel itâ''s being railroaded.

The debates are over about whether the world is getting warmer, about whether human activity is an important factor in that warming, and whether the consequences could be serious. People know all that and are getting tired of hearing it. What people want to know is: just how serious could the consequences be? To what extent can they be averted? What is it worth paying to minimize adverse effects of warming? These are the debates--in which scientists and policy economists are sharply dividedâ''that are not getting adequately covered in the press.

Too often, global warming is portrayed as something that can be simply stopped, consequences as something that can be simply prevented. But thatâ''s not the case, and all reasonably informed people know that too. So, I submit, people are tired of being talked down to, of being told things they already know, and not being told about things they need to know about.


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