Posts tagged “energy policy”
President Obama aggressively called for addressing climate change in his fifth State of the Union address, but ultimately came up short of outlining a clear and compelling vision with the necessary policy scope to address the significant technological challenges impacting clean energy.
Here are my five top take-aways:
1) Demanded Action to Address Climate Change
It is indicative of the sad state of the U.S. climate debate when a mere mention of support for addressing climate change elicits celebration. Nonetheless, the President deserves credit for calling on Congress to take action against climate change and using about 10 percent of his speech to discuss what he would like to see.
“But for the sake of our children and our future, we must do more to combat climate change. Yes, it’s true that no single event makes a trend. But the fact is, the 12 hottest years on record have all come in the last 15. Heat waves, droughts, wildfires, floods – all are now more frequent and more intense. We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science – and act before it’s too late.”
2) Aggressively Called for Increasing Public Investments in Energy R&D
One of the biggest issues impacting clean energy innovation is declining public investments. Of particular concern are stagnant energy R&D programs, which are a fraction of what is necessary to aggressively develop breakthrough clean energy technologies. According to the Energy Innovation Tracker, federal funding for energy R&D totaled $3.6 billion in fiscal year 2012. In comparison, the Defense Department’s R&D budget that year was $72.3 billion, or more than 20 times as much.
In my previous column — Why I Don’t Ride a Unicorn to Work — I used an analogy to describe the US government’s approach to cellulosic ethanol mandates. In brief, they have mandated that something that does not exist — commercial cellulosic ethanol volumes — be blended into the fuel supply in the hopes that they can incentivize the industry into existence. They decided to require gasoline blenders to purchase the fuel, which as it turns out was a bit of a problem since it didn’t exist.
Last week the court sided with the American Petroleum Institute in a lawsuit against the Environmental Protection Agency (EPA) over the mandates. The court ruled that the EPA — which was responsible for determining the mandated volumes each year — based their projections on wishful thinking rather than on sound analysis (See the court decision here).
So how did the EPA respond? Less than a week after the court ruled that the EPA had based their cellulosic ethanol projections on wishful thinking, the EPA set the 2013 cellulosic ethanol mandate at 14 million gallons — up from last year’s mandate of 8.65 million gallons. Given that only around 20,000 gallons of qualifying cellulosic fuel was produced in 2012 — about 0.2% of the final mandated volume — the EPA’s decision to increase the 2012 mandate by over 60% is odd to say the least. It seems like they have doubled down on last year’s wishful thinking with an even larger dose of wishful thinking. CONTINUE»
The Unicorn Analogy
It isn’t because it’s too far to work. Nor is it because it rains here in Hawaii nearly every day and I might get wet. It isn’t because the powerful automobile lobby has convinced me that driving a car to work is a better option for me. No, it’s a bit more fundamental than that.
I don’t ride a unicorn to work because unicorns don’t exist.
But imagine the following scenario. A number of companies claim that they are developing unicorns, and in 3 years they will be commercially available. The government thinks “Hey, this is a great idea. It would be a more environmentally friendly method of transport. Let’s force automakers to start selling these unicorns in 3 years. We will base our projections on how many unicorns these unicorn companies say they will produce. After that we will increase the number the automakers must sell in each subsequent year, and then force the automakers to pay up if they don’t meet these quotas.”
This is Part 4 of a series of posts analyzing and detailing federal investments in clean energy innovation. Part 1 defined “clean energy innovation.” Part 2 broke down the federal clean energy innovation budget. Part 3 took a look at federal investments in clean energy demonstration projects.
For the last couple of years, the lion’s share of debate on U.S. clean energy policy has focused on encouraging deployment – or large-scale construction and installation – of low-carbon technologies. By significantly deploying clean energy technologies, supporters say, the United States can encourage integration of emerging technologies in an energy market dominated by entrenched fossil fuel interests, spur cost-cutting economies of scale, and get started on lowering greenhouse gas emissions in the process. However, others argue that there is a necessity to designing well-constructed deployment incentives aimed at directly spurring innovation to address climate change.
A Quick Typology of Deployment Policies
Federal clean energy deployment incentives can be made available through grants and other annually appropriated programs. For instance, the State and Tribal Energy Programs at the Department of Energy (DOE) deploy building efficiency and renewable energy technologies within communities. The New Energy Frontier initiative at the Department of the Interior (DOI) deploys renewable and energy efficiency technologies on federal lands.
Innovation is Central to Making Clean Energy Cheap
The United States and the world face an urgent imperative to transform its energy system by developing and deploying low or zero-carbon technologies on a dramatic scale. And while developed regions like the United States and Europe might be willing to change their consumption patterns and businesses to incorporate clean energy (though not significantly), developing nations can’t afford to pay the necessary premium for this access. And they shouldn’t have to, as they try to gain access to energy of any kind. As such, the only way the entire global energy system can transition to clean energy is if its cost is lower and its performance is equal to or greater than cheap fossil fuels like natural gas, coal, and oil.
Unfortunately, today’s clean energy technologies like wind, solar, electric vehicles, smart grids, and energy storage are more expensive and oftentimes performance-limited compared to their fossil competitors. Solar and wind power are intermittent without energy storage and still require significant advances in energy conversion efficiency. Electric vehicles are up to double the cost of comparable gasoline powered cars, and significant infrastructure build-out like smart grids, charging infrastructure, and transmission lines are barriers to rapid deployment as well. (Read More: An Introduction to Fueling Innovation)
In last week’s Energy Trends Insider (ETI) I explained The Obama (Non)-Impact on Oil & Gas Companies. In addition to my article, Andrew Holland discussed How the Obama Administration Will Deal With Natural Gas Exports and Elias Hinckley concluded the issue with Increasing Talk of Climate Change and Carbon Taxes Impacts Energy Industry. As we have done previously, we would like to share a story from ETI with regular readers of this column. Interested readers can find more information on the newsletter and subscribe for free at Energy Trends Insider.
The Obama (Non)-Impact on Oil & Gas Companies
Following President Obama’s reelection, a number of fossil fuel stocks sold off based on the belief that Obama’s policies would prove harmful to the fossil fuel industry. But will the President manage to push through tough new regulations that raise the cost of production for fossil fuel companies? CONTINUE»
Can Oil Supplies Grow Fast Enough to Keep Prices in Check?
I, along with my editor Sam Avro, recently conducted a broad-ranging interview with John Hofmeister, former President of Shell Oil and currently the head of Citizens for Affordable Energy, a non-profit group whose aim is to promote sound U.S. energy security solutions for the nation. In the first part of this interview Mr. Hofmeister spoke of A Difficult Decade Ahead For Oil Prices and Supplies. In this installment, he sets forth his vision of a sound energy policy for America.
The Hofmeister Energy Plan
Mr. Hofmeister’s plan consists of the following elements:
- Set a national objective in the United States to get back to the production level of the 1970s and 80s of 10 million barrels a day;
- Reduce our imports by 5 million barrels a day by using natural gas as an alternative to the internal combustion engine oil products:
- Use compressed natural gas for trucking to displace 2 million barrels a day of imported oil, and,
- Convert natural gas to methanol for flex fuel engines to reduce imports by another 3 million barrels a day;
- Continue the journey toward more higher efficiency automobiles and continue the journey to more electrified vehicles as well, both batteries and hydrogen fuel cells.
The new energy policy will allow some or all of Japan’s 50 nuclear reactors, 48 of them currently shut down, to go back online during the 27-year transition period, as needed.
The Claim: President Obama Has Doubled Gasoline Prices
During the Republican primaries, a number of candidates made a claim that at first glance seems improbable: That under President Obama, gasoline prices have doubled. A current advertising campaign by the American Energy Alliance repeats that claim: “Since Obama became president, gas prices have nearly doubled. Tell Obama we can’t afford his failing energy policies.” Let’s examine that claim.
A Recent History of Gasoline Prices
We all remember $4/gallon gasoline under President Bush, so how could prices have doubled under President Obama? Let’s look at the recent history of retail gasoline prices. Barack Obama was sworn in as president on January 20, 2009. In the week that ended on January 19, 2009, the weekly retail gasoline price in the U.S. was $1.90/gallon. Most people don’t remember that given the recent history of high gasoline prices, but I will get to that. CONTINUE»
In Issue #7 of Energy Trends Insider, a reader asked about the potential implications of the Obama Administration’s recent announcement that they were considering a release of oil from the Strategic Petroleum Reserve (SPR). My view is that since it is an election season and gasoline prices have remained stubbornly high, the chance of a release from the SPR is high. Having a Democrat in the White House also increases the odds, as illustrated by this post.
If the Obama Administration orders a release, it would be the 2nd time the administration had tapped the SPR. In 2011 the Obama Administration ordered a release of 30 million barrels of oil in conjunction with a 30 million barrel release from other members of the International Energy Agency. At that time, oil prices were already well off their highs, and the impact was short-lived.
With the 2011 release, the price of West Texas Intermediate (WTI) dropped by 4% on the day the release was announced, but one week later the price was higher than it was before the release was announced. If you look at the data from the EIA, you can see the fleeting impact of that 30 million barrel release (the announcement was on June 23, 2011 when the price of WTI was $94.96). The price dipped, climbed back up, dipped again as summer driving season ended, but by year-end was back above $100/bbl.