Monday, June 30, 2008

The Sunshine State Goes Solar!

Let's hear it for Florida! The state's leading utility is making a massive investment in solar power generation. The point I want to underline here -- is that it is the UTILITY, (often deemed "the enemy" by enviros") who is making this impressive solar power gain possible. With energy prices as high as they are now -- this is the time to work WITH industry rather than continuing the demonizing rhetoric of the past.

If you care about the environment and the "renewable/alternative" energy sector -- remember, that sector will be driven by INDUSTRY -- it has to be because government simply does not have the resources or technical expertise at the scale needed.

Florida utilities starting to soak up some rays

Daniel Cusick, Greenwire reporter - June 27, 2008

MIAMI -- The Sunshine State is getting serious about solar power.

From acres of photovoltaic cells in the state's southern tier to roof-mounted panels for water heaters in the Panhandle, Florida is experiencing a solar surge that rivals the recent wind power boom of the West.

This week, the state's largest utility, Florida Power & Light, helped Florida pass Arizona, Nevada and other sun-drenched states by announcing plans to spend $688 million building three new solar power plants capable of powering 35,000 homes.

"America's economy is driven by a fierce entrepreneurial spirit," Lewis Hay III, chairman and chief executive of FPL Group, told the Florida Conference on Global Climate Change here, where the utility unveiled the projects.

By committing to an aggressive renewable energy program, which also includes more than 5,400 megawatts of wind power capacity, FPL says it is putting its money where its mouth is on climate change.

"Tell a capitalist there's money to be made in finding cost-effective CO2 reductions and watch the market burst with cost-effective solutions," Hay said.

The solar wave also is also catching on with other Florida utilities. Pensacola-based Gulf Power, a subsidiary of Southern Co., recently announced it would offer customers $1,000 in incentives to install new solar-powered water heaters in homes and offices, and it is working to develop similar technology for apartments and condos.

Progress Energy, meanwhile, has partnered with BP gasoline retailers to install solar photovoltaic systems on 17 store canopies in the Orlando area, and it continues to install solar panels at Florida public schools under the state's SunSmart Schools program. The utility also has worked alongside the Florida Solar Energy Center and Palm Harbor Homes to study the feasibility of installing solar panels on manufactured homes.

And in central Florida, the Orlando Utilities Commission is working with state and county officials to install a 1-megawatt rooftop solar photovoltaic system on the roof of the Orange County Convention Center. The 200,000-square-foot setup will generate up to 1,500 megawatt-hours of electricity each year, the commission said.

Philip Fairey, deputy director of the Florida Solar Energy Center, a research arm of the University of Central Florida, said the recent surge in solar power interest, among both utilities and home and business owners, is borne of Gov. Charlie Crist's (R) commitment to put the state on a course toward cleaner energy and reduced greenhouse gas emissions.

The new enthusiasm for renewable power contrasts sharply with the conventional wisdom of only a few years ago, when utilities in Florida dismissed solar development projects, saying they were not cost-effective and that Florida's frequent cloud cover would not support a robust solar power grid.

What changed?

"The leadership changed," Fairey said. "I have to credit Charlie Crist, I really do. He has made this a point of very serious discussion at the highest levels. We now have utility companies aiming to do things that they never considered two years ago."

FPL faces criticism, questions

The new FPL solar projects demonstrate that sea-change in attitude. They are in keeping with the company's commitment, announced last September, to build 300 megawatts of solar power generation in its home state. FPL also operates the world's largest solar thermal field in California's Mojave Desert.

Construction on the three Florida plants should begin late this year, and they could be operating as soon as 2009, FPL said. The plants will be Florida's first commercial-scale renewable energy projects.

FPL has already acquired environmental permits for the three sites -- in Martin, DeSoto and Brevard counties -- but the projects must still be approved by the Florida Public Service Commission.

The PSC may have tough questions for the utility, however. The commission staff issued a report this week criticizing the utility's efforts on renewable power.

The Sunshine Energy Program has collected $11.4 million since 2004 from customers to foster clean energy development. But the PSC found less than a quarter of the money FPL collected went toward new clean energy projects. The bulk of the cash went to marketing and administrative expenses.

The report also criticized FPL for failing to deliver solar projects that benefit the broadest cross-section of its customers.

Recouping solar investment

With this week's announcement, FPL hopes to overcome such concerns. Indeed, no U.S. utility has proposed to build as much new solar capacity -- 110 megwatts -- in such a short period.

The Martin County plant would generate approximately 75 megawatts of solar power to help boost production at FPL's existing combined-cycle natural gas plant, officials said.

The other two solar plants, proposed for rural DeSoto County and a site at Kennedy Space Center on the Atlantic Coast, would generate 25 megawatts and 10 megawatts of solar power, respectively, through the use of advanced photovoltaic cells.

As with any new power-generation project, and especially large-scale renewable energy efforts such as FPL's solar campuses, the cost of initial development remains high, and the utility will expect to take longer to recoup its investment than it would with a conventional fossil-fuel power plant.

FPL officials say they will work aggressively to market the new solar power, some of which could be sold to other utilities seeking to meet their own renewable energy goals. One such utility is neighboring Gulf Power, which last month issued a request for proposals to meet a 600-megawatt renewable energy mandate by 2014.

John Hutchinson, a spokesman for Gulf Power, said FPL did not submit a bid to provide any of the 600 megawatts. Nevertheless, Gulf Power could purchase solar energy from FPL in the future should it need renewable energy credits to meet additional state or federal mandates. The utilities do not share a direct transmission link, but FPL's electricity could be routed to Gulf Power through the broader Southern Co. grid, which extends into Georgia.

Gulf Power is unlikely, however, to follow FPL's lead in developing large-scale solar power plants within the state. "Our approach," Hutchinson said, "has been that solar is great as an end-use application, as a supplemental source of power for homes or businesses."

Wednesday, June 25, 2008

WANTED: Policy to Unleash the Private Capital Dollars that Await the Renewable Energy Sector!

Great story about both the amazing market opportunity of the renewable/clean energy infrastructure market and the financial risks holding it back -- mainly due to policy that refuses to remove uncertainty, that is holding back the flood of investment that would otherwise go into this sector.

One of the best things government can do is to set a clear, long-term policy signal that makes it clear that there will be a long-term, steady market preference for renewable/clean/sustainable energy. They don't have to subsidize renewables -- just set policy that ensures they will have a growing market presence BECAUSE of the multiple societal goods they provide: energy security, energy diversity, environmental enhancement/protection, ability to stabilize and lower energy costs over time.

June 23, 2008

Renewable Energy a 'Finance-driven' Industry

New York, United States --

Although the renewable energy industry saw over US $100 billion in global market activity, 14 percent of global venture capital investment and accounted for roughly one-third of new U.S. electrical generation capacity last year, the industry is still very far from maturation. But America's financial leaders are helping change that.

"It is clear that we are now a finance driven we move forward there will be big successes and failures and only the strong will survive."

-- Michael Eckhart, President of the American Council on Renewable Energy

One thing was clear at last week's Renewable Energy Finance Forum (REFF) in New York City: This budding industry is still a very risky one for investment. That reality has been illustrated by Congress' failure to extend the Investment (ITC) and Production Tax Credits (PTC); a situation that has spooked some investors and is starting to cause a shift of capital to other countries and other industries.

“If you don't like policy risk, you don't belong in this market,” said Rhone Resch, President of the Solar Energy Industries Association, in a speech to attendees. “But if you are willing to get into that risk, you belong in this business.”

All risks considered, the world's leading investors are recognizing that a transition to a clean energy economy is the single biggest economic opportunity of the 21st century — and possibly the biggest economic opportunity ever. The U.S. represents one of the largest renewable energy markets, so merchant bankers, private equity firms and venture capitalists are all educating themselves about how to navigate this immature yet promising marketplace and make the right decisions to drive the industry forward. REFF is an event designed to give financiers the tools to invest in this increasingly complicated space.

“It is clear that we are now a finance-driven industry. All of you here are in the right place at the right time,” said Michael Eckhart, President of the American Council on Renewable Energy (ACORE). “However, as we move forward there will be big successes and failures and only the strong will survive.”

Along with understanding policy risk, many investors want to know if the “clean energy revolution” is another bubble or just a replay of the short-lived enthusiasm for renewables during the oil shock of the 1970's. That's not the case, said conference speakers. The political and economic landscape is now perfect for strong, sustainable industry growth: The scientific debate over climate change is over; the price of oil will probably not fall dramatically, if it falls at all; developing countries like China and India are emerging as major energy consumers, increasing the demand for all types of energy; and despite the short-term political stalemate in Washington, there is bipartisan recognition that renewable energy is an economic driver and a necessary part of national security strategy.

“There are so many factors converging at once. It really is a perfect storm,” said David Sandalow, Senior Fellow at the Brookings Institution. “I just don't see this as another repeat of what happened in the 70's. This is the real thing.”

Although the expectations for growth are very high, the industry is still in its infancy. Renewables account for only 3.4 percent of total global power generation. The International Energy Agency recently issued a report estimating that in order to reduce greenhouse gas emissions 50% by 2050, global investment in renewable energy, energy efficiency and carbon sequestration will need to reach roughly US $45 trillion dollars by that date. That's the conservative estimate. Some analysts have said the figure could be much higher.

As the renewable energy industry works to put meaningful amounts of capacity online, the market remains very volatile for investors, especially in the U.S. However, the industry is finally approaching the form that it will eventually take on a larger scale, making the market a bit more clear for investors, said Michael Liebreich, CEO of New Energy Finance.

“We went through a number of years where people were waking up to renewable energy and energy efficiency, but they didn't know quite what that meant in terms of how they would integrate into the energy infrastructure,” Liebreich said. “We're now starting to get more clarity on how that will work.”

Liebreich and others point to the growing size of installations, increased consolidation of the industry and refined promotion policies as the factors creating this clarity. As a result of this continued “shake out,” the ability of firms to see how and where to invest their capital is continually improving.

All of this bodes well for the long-term picture. But in the short-term, there is a lot of concern about the U.S. market and what will happen over the next year if the ITC and PTC are not extended or are extended late in the year. By many estimates, if something is not passed in the next 30 days, there will be a significant derailment of investment with the U.S. wind and solar markets.

To raise more awareness about the issue, GE Financial Services and ACORE released a report at the event weighing the long-term economic impact of wind development with the up-front cost of the production tax credit. The report found that the net present value of 2007 U.S. wind development is worth US $250 million more than the price tag for the tax credits, which was about US $9 billion last year. According to the report, the tax credit pays for itself because of federal tax revenue received from wind projects, worker wages and property taxes.

“This study needs to be combined with the other area we've been discussing, which is the dire impact it will have on the industry if we don't extend the tax credits and lose jobs and squander the opportunity to create a domestic, clean power source,” said Kevin Walsh, Managing Director of Renewable Energy at GE Financial Services.

According to another widely cited report from Navigant Consulting, the wind industry could see the loss of 76,800 jobs and US $11.5 billion dollars in economic activity. Many in the industry estimate that up to 6 gigawatts (GW) worth of projects could be derailed at the end of 2008 and throughout 2009. In addition, the solar industry could see a 465-megawatt (MW) reduction in demand for PV modules if they do not get an ITC extension. Navigant estimates that around 39,400 jobs and US $8 billion in economic activity would be lost.

Almost everyone at REFF was hopeful that the credits would be extended by December. But even if that happens, there could still be a significant slowdown in the market as tax equity investors hesitate to make new deals in the second half of the year.

Due to the precarious situation in Congress, the talk at REFF was centered around policy as much as investment strategy and development figures. Due to the industry's infancy, it's very difficult to talk about renewable energy without talking about policy. Once the PTC and ITC issues are behind the industry, the next big battle on Capitol Hill will be over a carbon-weighted policy like cap and trade, according to presenters.

Most of the speakers had the same thing to say: Renewables can and will thrive without subsidies once the social and environmental costs of fossil energies are properly valued by a carbon-weighted policy. However, that will be a difficult piece of legislation to craft and one that could take years to become law. For the time being, many businesses in the industry are pushing ahead in spite of the politicking in Washington over incentives.

“We simply need more energy. We're not waiting around for governments to craft the perfect policies,” said Vivienne Cox, Executive Vice President of BP's alternative energy business. “This is an important market, and we're going to build a business around it.”

Tuesday, June 24, 2008

Metals & Mining - Fueling the Green Revolution

Great article below from Canada's Gazette talking about the new green revolution (i.e. building the massive infrastructure for solar, wind, battery-powered cars) will rely a great deal on metals -- which means mining.

So - for the purist enviros who refuse all compromise, how do you have the solar panel without the metal? And, should the answer be to just make it out of something "organic" -- you'll be adding YEARS onto the commercialization and BIG EXPENSE onto the cost -- if that's even possible. And then of course, it will be blamed for high food prices.

All this makes the point of this website -- we MUST have a pragmatic approach toward the improving the environment and transitioning to a new energy infrastructure if we are going to succeed.

Enviros and the miners need to see the value in what each camp can bring -- and stop making the perfect the enemy of the good.

The Gazette (Montreal, Canada)

Can mining make a greener world?


Clashes between environmental lobby groups and international mining companies especially over global warming could soon be history. The attraction is not apparent to many of them yet, but miners and tree-huggers will likely find each other increasingly good looking if the party heats up.

Most environmentalists agree that the overriding environmental imperative, trumping other concerns, is to reduce greenhouse gas emissions. But converting from a hydrocarbon burning society to one that runs on cleanly generated electricity will not be simple or painless. And the switch will demand metals - lots of metals. Those metals have to be mined.

According to a study by British merchant bankers, the Fortis Group, over 1,000 tonnes of silver will be used in 2008 to manufacture solar panels. That's twice the amount of silver that was used in 2002 by the solar industry.

Silver is the most conductive of metals and that quality makes it a necessary element in solar equipment. More and more silver will be mined for the solar energy ramp up in coming years.

Robert Friedland, the executive chairman of Ivanhoe Mines likes to point out that hybrid cars require twice the amount of copper as regular gas guzzlers. Friedland's company is sitting on a mountain of copper at Oyu Tolgoi in Mongolia, and the significance of this increasing use of copper in vehicles isn't lost on him. Open pits will be blasted to provide copper for greener cars.

Current hybrid models also use an estimated 14 to 20 kilograms of nickel per vehicle in nickel-hydride batteries and electronic systems. While two-thirds of the world's nickel production is now used in stainless steel, the popularity of hybrid cars has helped to boost the overall demand for nickel and the also the bottom line for companies like CVRD and Xstrata.

Non-hybrid vehicles also use metals to help keep the air clean. The principal demand for platinum is not in fancy jewelry, but in pollution control. One third of platinum mined every year goes into the catalytic converters that control emissions from cars and trucks.

Wind turbines and smart electricity grids need metals. Electric vehicles, advanced batteries, and solar arrays need metals. Metals are integral to the effort to reduce greenhouse gases.

Eventually, environmentalists will be forced to reconcile the need for metals with the concerns they have about mining. The realization that metals are cool when it comes to cutting carbon could eventually win over their hearts.

Patrick Moore was a co-founder of Greenpeace and the group's leader for a number of years. In 2006, he turned around his attitude about nuclear power 180 degrees. Moore became a spokesman for nuclear energy, sponsored by a lobby group called the Nuclear Energy Institute. He now sees uranium as part of the solution to global warming. The conversion of Moore from anti-nuclear demonstrator to pro-nuclear advocate may be a harbinger of things to come.

Not every environmentalist will have the kind of epiphany Moore must have had. But environmentalists may soften their attitude toward mining companies. Could a new accommodative attitude be reciprocated by the miners?

The mining industry has been too busy fighting environmentalists to embrace them. Mining companies have been engaged in political and public relations combat over issues like chemicals seeping into groundwater, and the destruction of habitats of endangered species.

But mining is an energy intensive business. And lately, problems obtaining a steady supply of electricity have hurt mining in different parts of the globe. In South Africa, Eskom, the power utility, has had to ration electricity to gold and platinum mines. That's a major reason that South African gold production dropped 16.8 per cent in the first quarter of 2008 compared with last year.

Merrill Lynch has upped its forecast price for platinum prices in 2009 to $2,500 ounce, largely because of supply constraints due to a reduction in electricity to the South African mines.

On June 3, an explosion at an offshore natural gas installation off Western Australia cut supplies to the region by a third. This translated into electricity outages at several mines. These kinds of disruptions have sent miners hunting for alternatives. In some cases they have started to look at renewable energy - wind and solar power.

The Atacama Desert of northern Chile is home to the biggest copper mines in the world. About one-fifth of the world's copper is mined in this arid, sunny place. In 2004, Argentina reduced gas exports to its neighbour, and Chile has faced a power problem ever since. The Chilean government is now considering the installation of large solar power operations in the Atacama to assure a supply of electricity for the mines.

In July 2007, Barrick Gold submitted a proposal to the Chilean government to build a $40-million wind farm. Located in the Punta Colorado area, the wind farm will have a capacity of 20 megawatts, making it the biggest wind energy project to date in Chile.

Barrick operates a copper mine in Chile and has been fighting environmental lobbyists over a huge project called Pasqua Lama on the Chile-Argentina border, where they hope to move a glacier to mine gold and silver.

Building a wind farm is a way for Barrick to help alleviate electricity problems in Chile, and counter the negative press on Pasqua Lama.

With so much bad blood between these groups in the past, it's hard to envisage a truly smooth relationship developing between miners and environmentalists. But circumstances may force them to co-operate. The more serious a problem becomes, the more pragmatic people get.

David Zgodzinski is a Montreal freelance writer.

Monday, June 23, 2008

Rhetoric or Energy Policy - Can't Have Both

I really like the article below from the Financial Times. What we really do need is leadership on the energy question -- and that means admitting some hard truths on both sides. Developing a massive alternative energy infrastructure is NOT going to be cheap or easy. Enviros should quit acting as if its "no big deal" to get rid of fossil fuels. And on the other side, we can NOT drill our way out of this problem. We MUST start planning now for the steady and stable transition away from fossil fuels for BOTH our own security as a nation and to protect the one planet we all live on.

Its not that complicated to understand -- unless you start pandering to all the various egos involved and regional/political prejudices.

America - we have to ask ourselves -- do we want to solve this energy problem more than we want to blame the "other" side?

I surely hope the answer is yes! For our strength comes when we set our mind and wealth to a goal.


Hot air clouds the energy debate

By Clive Crook Financial Times

Published: June 22 2008 18:58 | Last updated: June 22 2008 18:58

Ferguson illustration

Week in and week out, Washington gives master classes in making simple questions complicated. It is a bipartisan effort of mutually assured irrelevance. Perfected over years, a combination of tribal ideology, empty posturing and feverish displacement activity generally does the trick. You see it everywhere, but nowhere more than in energy policy.

The US constitution makes it difficult for politicians to do much (except fight wars) and this avoids a lot of damage that would otherwise result. But now and then some intelligent policymaking is needed, and energy is again a case in point.

Nowadays most Americans want to see action on global warming. Sensing the mood, both presidential candidates advocate a cap-and-trade approach to reducing carbon emissions. However, even more than they want to see global warming addressed, Americans demand cheap fuel for their urban assault vehicles. So the candidates must cater to that appetite as well – with petrol tax holidays and new plans for offshore drilling (John McCain) or windfall taxes to punish oil company gouging and “help families to pay for their skyrocketing energy costs” (Barack Obama).

The US does not know whether to tax energy or subsidise it, promote domestic oil production or forbid it, treat ExxonMobil and Chevron as champions or pariahs. So it does all of the above. What it knows for sure is that it wants energy security, energy independence and clean air – plus the inalienable right to recreational trucks (not to mention freezing its citizens in summer and broiling them in winter) as though energy were a free good.

What would political leadership on this issue look like? It would dispel confusion, insist that expensive energy was necessary and confront voters with choices – as if they were intelligent adults. Somebody should try it.

Mr Obama has lately been pandering to the anti-business sentiment that blames $4-a-gallon petrol on Big Oil and oil-market speculators. It is true, of course, that oil companies are enjoying a profit windfall from the oil price spike. It is also true, or plausible, that futures trading has driven spot prices above their market equilibrium. But these are not the main drivers of the oil price – nor for that matter is the high price of oil a bad thing, if you care about climate change. Done right, a surtax on oil company windfall profits is defensible – as long as one admits it would deter future investment and that working out what “reasonable profit” means would open a can of worms better left closed. The main thing, though, is that it would do less than nothing to cut the price of petrol. It is a sideshow.

Mr McCain is pandering as well – to the view that $4-a-gallon petrol is caused by bunny-hugging curbs on domestic supply. He is busy chasing votes with his own sideshow: new offshore drilling.

Like Mr Obama, Mr McCain has a point. The present ban on offshore drilling is a mistake – just as it would have been a mistake for Britain to ban production in the North Sea. If oil can be extracted profitably and with appropriately strict environmental safeguards from offshore wells (or, for that matter, from the Arctic National Wildlife Refuge, which Mr McCain still wants to protect), well and good. But the reasons to extract it are that it is a valuable resource that would otherwise be wasted and that diversifying US oil supplies has some benefit, not that it would lower the price of petrol. New oil would take years or even decades to come on stream; when the new supplies arrived, they would most likely have no more than a marginal effect on the world market price.

The US has a compelling economic and geopolitical interest in curbing both its use of oil, especially oil imported from unstable suppliers, and its emissions of greenhouse gases. The right thing is to pursue that goal in many different ways: diversified sources of supply, energy conservation, alternative fuels (including nuclear), carbon capture and sequestration, and so on. But whether you strive to achieve this balance through top-down control and a labyrinthine system of quotas, taxes, subsidies and regulations, or else through a simple and explicit carbon tax, energy will have to get a lot more expensive. How refreshing it would be to hear a politician say so.

If the Democratic party were correct about speculation and gouging, it should be demanding a Nobel Prize for futures traders and oil titans. They have done more for the planet than Al Gore, making the pump price of petrol so unthinkably expensive (almost half as dear as in Europe!) that the country has started to economise. Americans are driving less and buying smaller cars.

If ever there were a case for the maxim, get prices right, this is it. The way to curb carbon emissions is to add the environmental cost of carbon to the price of energy. The current oil price offers a good opportunity: when it falls (as it probably will) a carbon tax could be used to set a floor, making the transition to correctly priced energy much easier.

Once the price of energy is right, other decisions become simpler, or can be left mainly to the market. There is no need to legislate fuel economy standards or subsidise conservation and low-carbon forms of energy; no need for an emissions trading regime, with all the waste and complexity and gaming that that entails (witness Europe’s experience); no need to scapegoat oil companies or environmentalists; no need to mislead or pander. For sure, the politics is a challenge – but not, I am willing to bet, as hard as conventional wisdom insists. Carbon is bad: tax it and use the money to cut other taxes. A new kind of politician could do something with that.

Friday, June 20, 2008

Enviros & Partisanship - Again

Now here's a news flash -- the Sierra Club is supporting the Democratic candidate for President. In some years you could make the case that there were substantive reasons behind this. But McCain has been a bigger leader on the climate change issue -- at greater political cost than Obama or any of the other presidential contenders.

I don't begrudge Sierra Club their choice -- Sen. Obama has a fine environmental record. But so does Sen. McCain. The point that bothers me is to see groups that claim the mantle of environmental purists turning themselves into just another wing of the Democratic party.

Be a political interest group -- or be an environmental protection group -- but don't think you can be both at the same time and actually solve any problems.


CAMPAIGN 2008: Sierra Club throws support to Obama
Lydia DePillis, Greenwire reporter

The nation's biggest environmental organization formally announced its support today for the presumed Democratic presidential nominee, Sen. Barack Obama of Illinois, at a press conference in Cleveland, Ohio.

"Our endorsement today marks the beginning of a massive mobilization of thousands of members around the country for the campaign -- on the phone, on the ground, on the airwaves and online," said Sierra Club President Allison Chin. "We support his plan to solve both our economic challenges and the challenge of global warming at the same time."

Sierra Club spokesman David Willett said the group will focus on Colorado and New Mexico -- especially the U.S. Senate campaigns of Democratic Reps. Mark Udall and Tom Udall, respectively -- and also on Minnesota, Nevada, New Jersey, Oregon, Ohio, Pennsylvania, Virginia and Wisconsin.

In previous presidential election years, the 750,000-member group spent between $8 million and $10 million on political campaigns and this year expects to spend about the same amount.

The club's national leaders were joined today by Leo Gerard, president of United Steelworkers International, which endorsed Obama on May 15. The USW is the United States' largest manufacturing union, with 850,000 members.

In June 2006, the two groups joined to form the Blue Green Alliance, which works to build support for green jobs, fair trade and reducing toxics in six key states: Michigan, Minnesota, Ohio, Pennsylvania, Washington and Wisconsin. The alliance also partners with Working America, the community affiliate of the AFL-CIO, in its Green Jobs for America campaign.

The AFL-CIO announced after a private meeting with Obama on Wednesday that it would be voting to endorse him "in the next few weeks." The organization, as of Thursday, had a presentation on its Web site entitled "McCain Revealed: The Briefing Book," warning about the GOP candidate's positions on jobs, health care, trade, workers' rights and retirement security.

Friends of the Earth also switched its allegiance to Obama in May, after having initially supported former Sen. John Edwards of North Carolina in the Democratic primary race. Most other large environmental organizations have not endorsed a candidate yet

Wednesday, June 18, 2008

China's Wind Power: Blowing Past Expectations

Another article of interest on China & energy. Just look at what they are doing with wind. Yes, I know, the U.S. is ahead of China on wind (for now). But again, this is a developing country - we are not. This is a country that has staked its EVERYTHING on the need to continue economic growth at breakneck pace. If they are expanding dramatically into wind -- why is it so difficult for us in the U.S. to see alternative energy as an economic growth engine vs "just something nice to do for the environment"???
------------------------------------------------- -- June 16, 2008

China's Wind Power Industry: Blowing Past Expectations

Bejing, China []

At the end of 2007, China's installed base of wind power totaled just over 6 gigawatts (GW), making China the fifth largest producer of wind power, after Germany, the U.S., Spain and India. As a consequence of the rapid build-out of wind power projects in China, in April 2008 the National Development and Reform Commission revised its 11th Five Year Plan Period plan for wind power development from 5 GW to 10 GW by 2010.

By 2015, installed capacity of wind energy will have reached 10 GW or more and by 2020 Gansu is expected to have 20 GW of wind power in the Jiuquan corridor.

More impressively, wind power industry statistics show that by the end of 2008 China's total installed base of wind power production will have already reached 10 GW, two years ahead of the revised plan. Some experts are estimating that by 2010, the total installed capacity for wind power generation in China will reach 20 GW and that by 2020 China's installed base of wind power will total 100 GW.

Estimates by experts in wind power development in Inner Mongolia have an even more optimistic assessment; they believe that by 2010 China's total installed base of wind farms will total 27,700 megawatts (MW) and that China will then be the fourth largest producer of wind power in the world. The Inner Mongolia experts further predict that China will become the third largest producer of wind power worldwide by 2015.

From Xinjiang in China's far west to Shanghai, wind power projects are being developed across China. Below are highlights of local efforts to build-out wind power capacity throughout China.

Inner Mongolia

Of the 230 million kilowatt-hour (kWh) wind potential throughout China, it is estimated that Inner Mongolia has wind resources of approximately 101 million kWh or 40% of the total. There are some 200 companies that already have entered or plan to enter Inner Mongolia's wind power industry.

Through the end of 2005, total installed on-grid wind generating capacity was 170 MW and there is another 962.1 MW of installed wind generating capacity already under construction. By the end of 2010 Inner Mongolia expects to have a total of more than 5 GW of wind projects operating, which will amount to 7.5% of total power generating capacity in the region.

Yet based on the announced projects, it is likely that the total amount of wind power capacity in Inner Mongolia by the end of 2010 will exceed 5 GW. For example the city of Chifeng already has entered into an agreement with the Datang Company to develop 1 GW of wind power and by the end of 2010 Chifeng city alone is expected to have total installed capacity of 1.5 GW.

Gansu Province

The Hexi (west of the Yellow River) corridor near Jiuquan city, which has been dubbed the "Land-Based Three Gorges," is the locus of development of Gansu Province's substantial wind resources. In this area there is an estimated 10,000 square kilometers of land which can be used for wind power development and the estimated capacity that can be developed there is 40 GW.

Though Gansu Province's long-term wind power development plan calls for the construction of 18 large and mid-sized wind farms with a total installed capacity of 20 GW, through the end of 2007 there were a total of 500 MW of wind farms operating, with another 1 GW in planning. Gansu's plan calls for 3 GW to be added in the last three years of the 11th Five Year Plan period, so that by 2010 there will be 4 GW of wind power in operation in Gansu Province. By 2015, installed capacity of wind energy will have reached 10 GW or more and by 2020 Gansu is expected to have 20 GW of wind power in the Jiuquan corridor.

Shandong Province

The province of Shandong is undergoing a boom in wind power development. There are five wind farms that were under construction in 2007, including one each in Rongcheng, Dongying, Zhanhua, Shougang and Weihai. In total these five wind farms are to cost 2.5 billion Yuan and provide a total of almost 300 MW of power generating capacity. Because Shangdong Province is a coastal province bordering the East China Sea, provincial officials estimate that the province has upwards of 67 GW of wind power resources; this is equivalent to 3 Three Gorges Projects.

Long term, engineers in Shangdong believe that there can be as many as 38 wind farms producing power in Shangdong. According to the provincial government's plan, Shandong will have 1 GW of wind power generating capacity by 2010 and 3 GW by 2020.

Heilongjiang Province and its capital Harbin also are making strides to develop wind power. Surveys indicate that the wind resources in Harbin alone are equivalent to 10 GW of power and that with existing technology the exploitable wind power in Harbin is ~ 1 to 2 GW. The Mulan Wind Power Plant, which was started up in 2004, has installed capacity of 12 MW.

According to a National Development and Reform Commission plan, Shanghai will build a total of 13 land and sea-based wind farms in Nanhui, Qinjian and three islands (Chongming, Changxing and Hengsha). By 2020 Shanghai will have a total of 1 GW of installed wind power generating capacity, which will be sufficient to supply power to 4 million residents. Presently Shanghai has three wind farm projects operating, including the Shanghai New Energy Environmental Protection Engineering Co., Ltd.'s four wind turbines with combined capacity of 34 MW; the Shanghai Wind Power Development Co., Ltd.'s 21 MW wind turbines; and the 13 wind turbines located in Nanhui and Chongming which produce 42 GWh/year combined.

The Ala Mountain Pass region of Xinjiang Province is one of that province's best locations for the development of wind power projects. According to plans developed by the provincial government by the end of the 12th Five Year Plan period (in 2015) this area will have an installed base of wind farms totaling 1 GW.

Construction has been completed on the first stage of the Beijing Guanting Wind Farm project. The thirty-three windmills have a total capacity of 50 MW. Based on average consumption by Beijing residents of 1000 kWh/year, the Beijing Guanting Wind Farm will be able to provide power to approximately 100,000 households. After the second phase of the Beijing Guanting Wind Farm is constructed (by 2010) the project will be generating 100 MW in clean wind power.

Hainan Province has drafted a plan to encourage the development of 13 wind farms to be located primarily in the Eastern, Northwestern and Western coastal areas of the province. The anticipated total capacity of wind power to be developed in Hainan through this plan is more than 1.2 GW; of this total Hainan Province anticipates having between 4 and 6 wind farms operating by 2010 with total installed capacity of 250 to 300 MW at a cost of approximately 3 billion Yuan. By 2015 Hainan Province's installed capacity to produce wind power will have grown to 400 MW and by 2020 will grow again to 600 MW.

The Daan city region is the location of some of Jilin Province's most plentiful wind resources; with an area of some 1200 square kilometers that region has the potential to develop as much as 6 GW of wind power. If the full potential of the Daan city region's wind resources were exploited, as much as 12 billion kWh of power could be generated from wind power in that region, which also has good infrastructure for the transmission of power generated there.

Because wind power is proving to be a cost competitive source of power for this energy thirsty nation, the Chinese are aggressively ramping up capacity wherever wind resources can be found. As Chinese manufacturing prowess is increasingly put at the disposal of the wind power industry and the cost of wind power further declines, the rate of growth of wind power installations will continue to accelerate.

Next month will look at the growth of indigenous Chinese manufacturing capabilities for wind turbines, blades and other components of the wind power industry.

Tuesday, June 17, 2008

Efficiency's New Popularity

Hello all - sorry for falling behind in my posting. I've been very busy of late working on the Senate climate change bill with various groups/Congressional staff that was recently debated and pulled from the floor (more about that in another post). Below is a story from Greenwire that discusses the steps China is taking to try to conserve energy even as it grows its economy.

For all the hundreds of times I've heard "What about China?" from friends of mine who question the U.S. need to reduce our emissions -- this story makes several points I've been trying to make for some time.
  • 1) Energy conservation is going to be the NEW MARKET DRIVER - as energy prices remain high -- those countries and industries who are efficient, smart and utilize the best technology will have a huge ECONOMIC advantage. Set aside the "environmental" reason for creating a low carbon energy economy -- there are increasingly huge ECONOMIC advantages to doing this -- and THAT is why China will deal with their ghg emissions -- because the same things that reduce carbon will also help them develop economically.
  • 2) Need I remind my friends that CHINA IS A DEVELOPING COUNTRY. The U.S. is not. It is ridiculous -- and frankly, defeatist to take the attitude that we will not create a more efficient, renewable, domestic energy economy "because China hasn't gone first" Are you kidding? I feel like the founding fathers would be rolling in their graves to see such whimpy, limited thinking about America's possibilities.
  • 3) Why is China focusing more on energy efficiency than the U.S.? This is crazy!! We have GOT to start seeing the new world market advantages in energy efficiency -- and REWARDING them with a market -- the kind of market that a cap-trade system would provide.

More later . . .

CHINA: Can energy efficiency fuel an industrial evolution? (06/17/2008)

Michael Burnham, Greenwire senior reporter

The second in a series of stories on China.

SHANGHAI -- From sunup to sundown in China Energy Recovery Inc.'s warehouse here, men in hard hats and overalls drill, press and solder steel into cylinders the size of a tractor trailer. And when the day is done, nine more energy-saving boilers are ready for China's industrial evolution.

Many, many more are needed.

Green Games -- Red Dragon

The world's most populous nation built about two coal-fired power plants a week last year. Scores of inefficient steel, paper, cement, chemical and textile factories consumed most of the energy. Business boomed. But after years of double-digit economic growth, China is going on an energy diet.

The Red Dragon is targeting 8 percent gross domestic product growth this year. China's current five-year plan, meanwhile, calls for cutting energy consumption 20 percent per unit of GDP by 2010 while reducing carbon dioxide and other emissions 10 percent.

Old habits must change first.

China is falling short of its economy-wide conservation target, largely because of poor execution at the local level. The worn promotion path for Communist party officials is producing as much energy and goods as possible, explained Wang Minyuan, an environmental law professor at Tsinghua University in Beijing.

"The targets for energy conservation have not been sufficiently clear," Wang said. "Necessary supporting measures are weak, even nonexistent."

But Wang and other experts contend that a recently amended energy law -- which places top priority on conservation -- could be an effective catalyst in China's transition from a planned economy to a market-based economy. International development banks and nongovernmental organizations, meanwhile, are forging new financial and technical tools to help China reduce its massive carbon footprint.

Last year, China emitted almost a quarter of the world's carbon dioxide -- the main heat-trapping gas -- surpassing all other nations, according to a report published last week by the Dutch government (Greenwire, June 16). China accounted for almost two-thirds of the 3.1 percent increase in global CO2 emissions last year.

"China is under increasing pressure to clean up its act," said John Elkington, a London-based corporate sustainability consultant. "The country has long been the low-cost manufacturer, but pressure is coming to bear on polluting factories that export."

'Things are changing'

That pressure is good for the boiler business.

China Energy Recovery (OTCBB: CGYV), whose boilers are helping about 200 industrial manufacturers capture and convert their wastewater and steam into energy, went public April 15.

Welders within the cavernous insides of China Energy Recovery Inc.'s warehouse in Shanghai make boilers that recover industrial waste heat. China is sparking a boilermaking boom as it tries to reduce the energy intensity of its massive economy. Photo by Michael Burnham.

Company officials are using $8.5 million in foreign cash to erase a backlog of orders. They plan to seek additional capital to produce enough boilers to help cement, paper, steel, chemical and petrochemical operations recover up to 5,000 megawatts annually.

"We aim to be the leader in the industrial waste heat-recovery business, not just in China but globally," said Chen Qi, the company's general manager.

The domestic market alone for industrial heat-recovery boilers is worth about $1.4 billion and growing, Chen and his colleagues estimate.

"In the past, factories didn't care about saving energy because it was cheap," Chief Financial Officer Richard Liu said. "Things are changing."

The government's new carrots include $1 billion in subsidies for companies to renovate their manufacturing facilities. Sticks include shutting down polluting enterprises that do not meet tougher efficiency standards.

In the first three-quarters of 2007, China shuttered old-fashioned production facilities that produced 25 million tons of cement, 400,000 tons of calcium carbide, 11 million tons of coke, 9.7 million tons of iron and 8.7 million tons of steel, according to government statistics.

Thousands of fiery furnaces and smokestacks remain, of course, presenting an enormous opportunity and challenge.

'Herculean task'

The central government launched a program in 2006 to improve the efficiency of China's largest 1,000 enterprises, which collectively consume about a third of the country's primary energy and half of its industrial energy.

Each state-owned company has its own conservation target to offset the annual consumption of 100 million metric tons of coal, collectively. The climate savings equate to between 250 million and 300 million metric tons of carbon dioxide -- roughly equal to Poland's annual greenhouse-gas emissions, said Lynn Price, a scientist at the Lawrence Berkeley National Laboratory.

The 1,000 companies are achieving their targets so far, due largely to the government's leverage to promote and demote executives, explained Jiang Lin, who directs the China Sustainable Energy Program, an arm of the Energy Foundation, a grant-making organization.

The "Herculean task," Lin contends, is spurring conservation among the millions of Chinese companies under local or private ownership.

For China to hit the economy-wide conservation target in its five-year plan, provinces must reduce their collective energy consumption about 4 percent per GDP unit annually, compared to 2005.

The provinces achieved savings of 1.3 percent in 2006 and 3.3 percent last year, according to a forthcoming paper by Price and her colleagues at the Berkeley, Calif.-based lab.

Lin attributed the shortcomings to China's rapid transition to a market-based economy.

"China is largely a private economy now," Lin said. "How do you enforce a mandate when you don't have direct ownership of companies?"

The answer could come in the form of an amended energy conservation law that took effect in April, Tsinghua University law professor Wang suggested.

The law includes first-time subsidies for manufacturers and builders to make capital efficiency investments. Perhaps more important, the law requires district, county and provincial governments to report annually on their conservation progress to the central government, Wang said.

As with the "Top 1,000" program, those who conserve get promoted. Those who don't could lose their jobs.

"Compliance is possible because of the party-based system of promotion for those who are loyal," explained Deborah Seligsohn, director of the World Resources Institute's China program. "Clear metrics for promotion are a very effective tool in China."

But as China's economy evolves, market-based tools may prove even more effective, Lin suggested.

Paying up-front costs

The number of Chinese energy service companies, known as ESCOs, has increased from about three a decade ago to about 100 today, according to the World Bank. Such companies typically sign performance contracts with manufacturers to pay for capital efficiency improvements, such as installing boilers that recover waste heat or renovating kiln furnaces.

ESCO investments in Chinese energy performance contracting projects topped $1 billion last year -- more than triple the investment in 2006, said Robert Taylor, an analyst with the bank's East Asia Transport and Energy Sector Unit. The ESCO investment total is likely to be higher this year, he predicted.

The bank's executive board boosted those efforts last month when it approved a $200 million loan to China that will trickle down to ESCOs and industrial enterprises. The Global Environmental Fund will contribute an additional $13.5 million grant as part of the efficiency project.

The Asian Development Bank, meanwhile, expects to extend up to $1.5 billion in loans and $20 million in grants to China through 2010. The money will be targeted at several sectors, with a special focus on strengthening environmental protection.

Nongovernmental organizations working with the banks underscore that such efforts must be replicated widely to shrink China's carbon footprint.

The Natural Resources Defense Council worked with the Asian Development Bank to create a $100 million loan for industrial efficiency in China's southeastern Guangdong Province, which is home to scores of inefficient factories and some 20 million migrant workers.

The province's factories must pay their loan back, plus interest, as they save energy, said Barbara Finamore, who directs NRDC's China clean-energy program.

"Even though energy efficiency pays for itself eventually, people don't want to do it because there's a higher up-front cost," Finamore explained. "The market doesn't work the way it should for energy efficiency."

Targets and quotas

That is where computers are coming into play.

Finamore and her colleagues have developed software that shows industrial enterprises the areas where they could reduce their energy consumption. The software also indicates how much of a capital investment is needed.

NRDC has tested the software in three factories in Jiangsu Province, north of Shanghai, with the hope of creating a national template, Finamore said.

"If you can put enough energy-efficiency projects together, you can avoid the need for new power plants," she added.

The World Resources Institute is also working with the Chinese government to develop software that tracks industrial energy use and emissions. China program director Seligsohn considers the computer tool a starting point for the regulation of carbon dioxide and other heat-trapping gases.

"The fact that China is struggling with how to measure this stuff -- and they should be struggling as a developing country -- means they're nowhere near ready to take a cap on carbon," Seligsohn said. "But this is a crucial first step, because I think the way the Chinese are going to govern CO2 is with targets and quotas.

"That's what people are used to," she added.

Roger Ballentine, who led a Clinton administration climate task force before joining China Energy Recovery's advisory board, echoed Seligsohn's remarks.

"One of the biggest issues in the U.S. and international debate is what we will do with China and India," Ballentine said. "At the end of the day, the answer will come from demonstrating that there are economic paths to significant energy reductions in developing countries."

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