If It’s December It Must Be PTC Time, Again
With the end of the year fast approaching, the US wind power industry faces yet another scheduled expiration of federal tax credits for new wind turbines. The wind Production Tax Credit, or PTC, was due to expire at the end of 2012 but was extended for an additional year as part of last December’s “fiscal cliff” deal. There are no signs yet of a similar reprieve this year.
With the PTC and other energy-related “tax expenditures” subject to Congressional negotiations on tax reform, this might truly be its last hurrah in its current form. It is high time for this overly generous subsidy to be “sunsetted”, and if it’s replaced with a smarter policy emphasizing innovation, the outcome could be beneficial for taxpayers, the environment, and even the US wind energy industry.
Too Big To Last
In its 20-year history, minus a few year-long expirations in the past, the PTC has promoted tremendous growth in the US wind industry, from under 2,000 MW of installed wind capacity in 1992 to over 60,000 MW as of today. For most of its tenure, the PTC did exactly what it was intended to do: reward developers for generating increasing amounts of renewable electricity for the grid at a rate tied to inflation.
I spent the first week of November in the heart of the Athabasca oil sands around Fort McMurray, Alberta. I was there as a guest of the Canadian government, which hosts annual tours for small groups of journalists and energy analysts. In the previous two articles, I covered some of the environmental issues arising from the development of the oil sands.
In Oil Sands and the Environment – Part I I discussed greenhouse gas emissions, impacts on wildlife, and I touched upon water usage. I also detailed some of the work of Pembina Institute (PI), which is working to improve the environmental conditions as the oil sands are developed. In Oil Sands and the Environment – Part II I covered the tailings ponds, water consumption, impacts to water quality, and impacts to indigenous people.
Today I want to discuss the actual process of converting the oil sands into oil. Some may feel that this should have been the first article I wrote, but because the development of the oil sands is environmentally controversial on many fronts, I thought it was important to go over environmental issues first before discussing the process. I think that if I had covered the process first, most of the comments and questions would have been about the environmental issues. CONTINUE»
A couple of weeks ago I had the opportunity to tour the Liquefied Natural Gas (LNG) facility at Cove Point, Maryland. Owned by Dominion, the Cove Point facility is currently an LNG import and storage facility.
As readers will know, there has not been that much demand for LNG imports to the U.S. over the last few years – the shale gas revolution has turned the U.S. from an economy looking to import increasing quantities of costly gas to one where a surplus of low-cost gas is looking to global exports. As such, Dominion has applied for the permits to expand the facility for LNG export. It has received approval from the Department of Energy for exports, but it is awaiting state, local, and final FERC approval before construction can begin. They expect to break ground on the new facility in the spring of 2014, with completion sometime in 2017.
A Brief History
When Cove Point was first built in the late 1970s, there was demand for imported gas from the only major supplier of LNG, Algeria. The 1970s had seen shortages of gas around the country. As it came on line in 1978, Congress passed legislation to deregulate the gas industry. With deregulation, domestic production increased and demand for imported LNG fell and most imports ceased by 1980. In the early 2000s, there was pressure in natural gas markets again, and Cove Point was reactivated as an import terminal in 2003. In ‘04 and ’05, Cove Point hosted almost 80 ships per year bringing in LNG from producers around the world. At that time, U.S. demand looked set to grow inexorably, with domestic supplies unable to meet demand. So, in 2004, Dominion embarked on a large expansion of Cove Point’s capacity, more than doubling its storage capacity. Once completed in 2009, markets had again turned against LNG imports, as the shale revolution pushed down prices and pushed up production. 2011 was the last commercial import of LNG; now two or three ships per year service the facility in order to keep their lights on and fulfil their secondary mission of providing a peak demand service (providing gas to markets in times of high demand).
I just spent two weeks on the Galapagos Islands. Their economies are driven almost entirely by Eco-tourism. Like the rest of us, the people of the Galapagos Islands are utterly dependent on affordable sources of energy for their existence.
As a result of a fuel tanker grounding and attendant oil spill in 2001, a consortium of energy companies from the G7, calling themselves e7 (created to bring renewable energy to developing nations), funded the installation of three wind turbines on San Cristobal, an island in the Galapagos archipelago, to minimize the amount of fuel that had to be delivered to run the generators. They also created a trust fund for maintenance and eventual removal of the turbines at the end of their twenty year life spans.
My youngest daughter is studying in San Cristobal. Her class took a field trip to the power station shortly after my arrival. I sent along a list of questions.
Today I continue coverage of my recent visit to the Athabasca oil sands near Fort McMurray, Alberta. I was there as a guest of the Canadian government, which hosts annual tours for small groups of journalists and energy analysts. I will be covering multiple aspects of oil sands production in a series of posts.
In last week’s post — Oil Sands and the Environment – Part I — I discussed greenhouse gas emissions, impacts on wildlife, and I touched upon water usage. I also detailed some of the work of Pembina Institute (PI), which is working to improve the environmental conditions as the oil sands are developed. Today’s article will discuss the tailings ponds, water consumption, impacts to water quality, and impacts to indigenous people.
There are two primary ways of extracting bitumen from the oil sands. In situ production involves injecting steam into the ground to heat up the bitumen which is then pumped out of the ground. Surface mining is done when the resource is fairly close to the surface. During my trip we visited one in situ producer – Cenovus Energy – and one surface miner – Canadian Natural Resources Limited (CNRL). These methods will be discussed in greater detail in next week’s post. CONTINUE»
Concerns Prompted by Tesla Fires
Several vehicle fires involving Tesla’s new high-end Model S sedan have attracted a great deal of media scrutiny. Two of the three reported incidents are now under investigation by the National Highway Traffic Safety Administration (NHTSA). Yet while the company’s founder, Elon Musk, is certainly correct in indicating that gasoline vehicles are involved in the overwhelming majority of vehicle fires, including most of those resulting in fatalities, the statistical comparison he has provided in interviews got me curious enough to track down the data for myself.
How Often Do Gasoline-Powered Cars Catch Fire?
The statistic that caught my attention was that Tesla suffers an average of one fire per 6,333 cars, versus a rate of one fire per 1,350 gasoline-powered cars. I’ve been driving for four decades and have probably observed several million cars on the road in that time, yet I’ve only seen a handful that were burned-out following accidents to the extent of the recent Tesla fires. I sensed something wrong, or at least counter-intuitive about the figures cited by Tesla.
I’ve been writing, researching, and talking a good bit about Arctic issues recently. You can see my piece in Alaska Dispatch, where I claim that the U.S. is “Failing to Meet the Challenges of a Changing Arctic” and I will have forthcoming pieces in the Georgetown Journal of Security Studies and elsewhere.
What comes across is a great disparity in intentions, ambition, and resources devoted to the region between Russia versus the United States. This is most apparent in the status accorded to the security forces.
The US Navy, when asked what they plan to do about an opening Arctic invariably respond by saying “why should we do anything” or “why would we build a new Navy for a new ocean?” They may have a point – there’s not that much up there to protect, and the international regime governing the Arctic is strong: conflict appears highly unlikely.
Last month the Department of Interior (DOI) Bureau of Land Management (BLM) held its first competitive auction for commercial solar development on public lands, offering three parcels for lease with a collective acreage of 3,700 in the San Luis Valley of Colorado. The three leases are located in two of DOI’s designated “Solar Energy Zones,” which the DOI carved out for quick solar development due to access to existing transmission, limited environmental impacts, and cheap land rental.
If fully developed, these two Solar Energy Zones could potentially produce 400 MW of energy, enough to power an estimated 125,000 homes. Unfortunately DOI was alone in their enthusiasm as the auction drew zero bids from solar companies. Moving forward, DOI should learn from this initial failure and expand its Solar Energy Zones to also act as a test bed for next-generation clean energy designs, not just off-the-shelf technologies.
Geopolitics in Region Could be Impacted
Recent natural gas discoveries off Israel’s eastern Mediterranean Sea are reversing its role of importer to that of exporter. According to the Energy Information Administration (EIA), the larger finds — the Tamar and Leviathan fields — hold estimated reserves of 10 trillion cubic feet (Tcf) and 18 Tcf respectively. These fields are part of the Levant Basin, with probable oil reserves of 1.7 billion barrels and probable natural gas resources of 122 Tcf.
In the past, Israel imported most of its natural gas supply from Egypt. “Until early in 2012, the country received 40% of the gas it needed — 90% for electricity generation — from Egypt via a marine pipeline between El Arish and Ashkelon,” notes Oil & Gas Journal. Egypt, facing gas shortfalls, is planning to import gas via LNG, though pipeline deliveries from Israel are likely cheaper. Spot LNG in the east Mediterranean region is currently priced around $12.00 per million British thermal units.
Can CO2 Emissions Become A Useful Feedstock?
A fascinating article in Chemical & Engineering News describes current German research and development work focused on developing new industrial processes for making organic chemicals from CO2. These public/private partnerships capitalize on the country’s long expertise in industrial chemistry and its highly successful chemical sector. They are also extremely timely, not just because of growing concern about steadily increasing levels of CO2 in the atmosphere, but because Germany’s “Energiewende”, which includes the rapid phase-out of nuclear power, is actually raising the country’s emissions as it relies increasingly on coal for baseload electricity generation.
In my last post I explained why it is unlikely that fossil fuels could be phased out rapidly enough to threaten the current valuations of oil and gas firms. But if carbon-based fuels will be with us for some time, that leaves open the large question of what to do about the CO2 emitted when they are burned, particularly from stationary installations like factories and power plants. The long-mooted approach of carbon capture and sequestration (CCS) still faces significant obstacles in terms of cost and social acceptance. That makes CO2 utilization efforts such as those underway in Germany especially intriguing.