Block’s Indicator of Sustainable Growth

by Ray Block

What does Brockovich, Darbee, and US Chamber of Commerce have in common?  The ingredients have all the hallmarks of high drama.

It started with the class action in Anderson v Pacific Gas & Electric, (as portrayed in the movie Erin Brockovich, with Julia Roberts in the lead role).

 Brockovich was the single mother paralegal in the office of Masry & Co, who did the leg work for the trial and subsequent arbitrated class action against PG&E, California’s largest gas and electric utility serving 20 million people.

The class action involved 77 residents in the Mojave desert town of Hinkley, who sued the utility for contaminating the ground water supply, with 370 million gallons of cancer causing chemicals in unlined ponds.

Hinkley on PG&E’s gas pipeline route from Texas to California is the site of  the company’s gas compressor station, where one third of the gas is compressed for the company’s customers in northern and central California.

Gas compression generates heat, and the gas and the compressors have to be cooled with circulating water, which in turn passes through cooling towers. Reducing the problem of corrosion, the company chose to use in the inhibitors, a known cancer causing toxin, chrome 6.

The eventual arbitrated settlement in 1987 was $333 million awarded to the plaintiffs in the class action.

The utility was also required to clean up the environment and stop using chromium.

Act 2 of the drama  involved  the deregulation of energy prices in California in the late 1990s. The manipulative energy rogue trader Enron and others created havoc, with the state’s three energy utilities held to ransom. Sharp price rises and electricity shortages leading in  2001 to blackouts, and eventual Chapter 11 bankruptcy. That was in April 2001.

After Chapter 11 bankruptcy and re-organisation in 2002, PG&E goes through an extended period of transformation.  The appointment of the self proclaimed conservative Peter Darbee in January 2005,  as chairman and chief executive intensifies the round of business and cultural tranformation,  with primary emphasis on customer service.

Peter Darbee had joined PG&E at a critical time in 1999, just before the electricity market was about to undergo radical change. He had worked for AT&T, when the monopoly phone company was trust busted, and did telcom deals for Goldman Sachs, before joining the gas and electricity utility. Like the old Ma Bell, PG&E was then a slow moving bureaucratic institution.

In 2006, Darbee and PG&E commenced a campaign of energy efficiency and choosing renewable energy sources to supplement power from traditional sources.

From their denier role in the 1980s, allowing  residents of Hinkley and other towns close by to die of cancer from contaminated ground water to a born again utility giant, now seen as the most green friendly utility in the US, takes a lot of doing and achieving.

Darbee,who has testified many times about the dangers of climate change is a notable supporter of solar and wind energy, with contracts for 1.3 gigawatts of concentrated solar thermal power and more than 800 megawatts of solar photovoltaics, along with wind energy, small hydro power and geothermal.

The latest solar venture is seeking approval from regulators to purchase 200 megawatts from stealth space solar power company Solaren over 15 years.

The concept of space-based solar power is to place solar panels on a satellite to generate electricity. The technology converts it to  radio frequency on board,  and it is then sent to a ground station in California. The receiver then converts the radio frequency to electricity. which is fed into the power grid. Sounds a bit like geo-engineering to me.

 The diversified energy resources will enable PG&E to reach the Californian requirement of 20 per cent renewable energy level by 2010. 

In August 2009, PG&E said that it is seeking $25 million in US government smart grid stimulus funds to build an underground compressed air storage facility.

This would allow the storage of as much wind energy, as a medium size power plant would produce for about 10 hours. The aim is to smooth out fluctuations on the grid from intermittent supplies of renewable energy. The company is also investigating the use of large lithium-ion batteries also for energy storage. 

PG&E is also spending $2.2 billion to instal about 10 million smart meters by 2011. The company has already installed 1.45 million electric meters and 1.9 million gas meters with two way communications so far. Of those,1.2 million electric meters and 1.8 million gas meters are now being billed through the utility’s network.

The last act of the drama involves PG&E  leaving the biggest business lobby in the world, the US Chamber of Commerce, over the lobby’s ”extreme” positions on climate change.

PG&E’s stand has been joined by three other large electric utilities- Duke Energy of North Carolina, Exelon Corporation of Chicago, and PNM Resources, the largest utility in New Mexico.

In PG&E’s letter of resignation, Peter Darbee wrote: “We find it dismaying that the Chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored. In our opinion, an intellectually honest argument over the best policy response to the challenges of climate change is one thing; disgenuous attempts to diminish or distort the reality of these challenges are quite another.”

 

 

 

 

 

 

Unlike

Posted under Carbon Abatement Scheme, Climate Change, Economies, energy efficiency, Fuel & Gas, Global Warming, Low Carbon Economy, Renewable Energies

by Ray Block

The UN Climate Change chief, Yvo de Boer sees China as the green frontrunner, the world climate change leader of the future.

Although China’s President Hu Jintao didn’t state the country’s emissions target by 2020 at the United Nations General Assembly meeting on climate change (September 22 2009), he confirmed that there would be  deep cuts in carbon intensity over the next decade.

Hu Jintao also confirmed that there would be a 15 per cent increase in renewable energy from 2005 levels by 2020. There would also be a substantial growth in forest coverage by 40 million hectares and in forest stock volume.

Carbon intensity is the amount of carbon dioxide emissions per unit of gross domestic product for each 1,000 yuan (US$147) of economic output.

For the five years to 2010, China set a goal of reducing energy consumption per unit of GDP by 20 per cent to 2010.

A big test for the Chinese will be the need to redouble efforts on carbon intensity from current levels. But the goals for the 12th and 13th Five Year Plans between 2010 and 2020 are still being kept secret.

It will need to be large to have a significant impact, given that between 2001 and 2005, energy consumption grew at 1.2-1.5 times the rate of GDP. As the blog, China Sustainable Energy Energy Program pointed out,”such a low efficiency development pattern is wholly unsustainable. It requires enormous energy input.”

In a report  “China sustainable development strategy report 2009- China’s approach towards a low carbon future,” the team leader Professor WANGI Yi, chief scientist of the CAS Sustainahle Development Strategy sets out a low carbon economic development target.

The recommended scenario is that by 2020, China’s low carbon target be set at 40 to 60 per cent reduction of energy consumption per unit of GDP over the 2005 level, and CO2 emissions per unit of  GDP   be decreasing by about 50 per cent.

The  strategy study group of the Chinese Academy of Sciences suggested that if more restrictive policy measures were adopted for energy saving and carbon reduction, “China’s carbon emissions could be expected to peak between 2030 and 2040, and then stabilise and start to decline afterwards.”

This would be a disappointing outcome for cutting global carbon emissions,as the climate scientists are very concerned that countries have a duty to ensure carbon emissions start to fall before 2020.

Posted under Carbon Abatement Scheme, Climate Change, Commodity Prices, energy efficiency, World Inflation

by Ray Block

No matter how much progress is made by the developed world in carbon reduction, renewable energy and energy efficiency, there will be an equal need for  meaningful climate change by the poorer countries. 

However you calculate it, there is a great deal of money involved. 

The broad assumption,egged on by China, which ironically is becoming the darling of the UN on climate change, is that the richer countries must assume the financial burden.

 The contributions are expected to be in place annually for periods beyond 2020. So, how much funds are involved?

Climate Works Foundation estimated that the funding costs for energy savings and low carbon technologies would be in the order of 95 to 130 billion euros a year (US$135 to 185 billion) between 2010 and 2020.

The spending figures include up to 80 billion euros ($114 billion) for the developing countries to meet climate change commitments.

Both the United Nations (UN) and European Union (EU) estimate that the developing world would need to find around 100 billion euros ($145 billion) each year on climate change.

The EU with its 27 -country community say they are prepared to contribute from  two to 15 billion euros a year to the UN for the 11 year period to 2020.

There is an unofficial suggestion that the contribution would start with the two billion euros in 2012, and move up to the 15 billion euros over the period to 2020.

The EU suggest that domestic and private financing in the developing countries should provide 20 to 40 per cent of the 80 billion euros. Another 40 per cent  “could be found through international public financing.”

The EU suggest that each country’s contribution would be assessed according to a scale of emission levels and ability to pay. The poorest countries would be exempted from any commitment to put forward their own plans on low emissions.

Another EU suggestion is the creation of a Forum on International Climate Finance to monitor and review  “gaps and imbalances” in the financing and results of the policy.”

The US Administration hasn’t nominated any dollar figure for a contribution, and the other developed countries have been silent on the issue.  The EU is looking for the US to put up about 12 billion euros a year.

 

 

 

 

 

How much?

Posted under Carbon Abatement Scheme, Climate Change, Economies, energy efficiency, World Inflation

by Ray Block

Whether any legislation on climate change gets through the US Senate this year is extremely unlikely. But what is crystal clear is that there will be no mention of cap-and-trade in any bill this year.

Lisa Lerer in the political commentary Politico.com (September 17 2009) suggests that what might happen is a “modest energy bill, while leaving the more controversial cap-and-trade proposals  for a later date.” Politico.com reported that in August, four Democratic Senators-Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Byron Dorgan and Kent Conrad, both of North Dakota urged that the cap-and trade proovisions of the Climate Bill be dropped.

This followed 10 moderate Democratic Senators largely from Rust Belt states sending a letter to the President saying they would not support a bill that didn’t protect American manufacturing.

If you put the pieces of the political jig saw puzzle together, you come up with the following:

The Senate’s version of the Waxman- Markey bill was to be introduced in August, but it didn’t appear. The bill is now expected to be introduced before the end of September, but not voted on before the Copenhagen COP15 Conference in December.

.Harry Reid, the Democratic Majority Leader, who will have to contest his Nevada Senate seat next November  is cool on the legislation, and unlikely to support it. As the political blog ,FiveThreeEight said on August 24, although Harry has more than $7 million cash in hand for re-election, his approval numbers are poor, and he will have to nurse his electorate , without too much contentious legislation to weigh him down.

Chris Dodd, the chair of the Senate Finance Committee, who is reported to have prostate cancer is also up for re-election in Connecticut , and it’s a toss up whether he’ll be re-elected.  Dodd will have very contentious legislation to defend, when a bill comes through on greater regulation of banks, and in particular, as former Federal Reserve Chairman Paul  Volcker described, the need to curb risky activities in the financial markets. The banks and Wall Street will be vigorously opposing any legislation on this, and there will be opposition in Congress.                                                                                                                                                                       

Also standing for re-election next year are Democrats Michael Bennet in Colorado, Roland Burris in Illinois, and Blanche Lincoln in Arkansas. Lincoln has just been appointed chair of the Agriculture Committee , and won’t be supporting the cap-and-trade.

The net effect is that although the Senate Democrats have nominally 61 votes, including the independent Joe Lieberman,  many are becoming nervous, as the political pendulum is now swinging against them. 

Barack Obama’s popularity is sagging, the town hall campaigns in favour of the government health insurance bill faced so much virulent opposition, as to give the Republicans renewed confidence  in Congress and looking good for re-election next year. 

Even Sarah Palin, the probable front runner for President in 2012 is increasingly looking good, despite her hysterical claims on health reforms. Palin received more than  8oo,000 supporters on Facebook  in August.   

 

  

 

 

lost a great deal of oxygen on the Health Reform Bill, and the need to to legislate on greater bank regulation is going to be very difficult to get congressional approval,       given the vocal opposition of Wall Street

Posted under Carbon Abatement Scheme, Climate Change, energy efficiency, World Inflation

by Ray Block

Concentrating solar power (CSP) grew strongly in the 27- country European Union and Switzerland in 2008, with new installed capacity increasing by 27 per cent to 3.3 GW.

Germany, Europe’s biggest CSP market grew to 1.5 GW in 2008, an increase over the year of more than 120 per cent.  Spain the second largest European market rose by 58 per cent to over 300 MW, and Italy rose by 295 MW.

In Spain, there are 22 CSP projects in development, with 1.2 GW new capacity under construction, with another 13.9 GW scheduled to be constructed by 2014.

To get to the Greenpeace estimate of CSP making up 25 per cent of world energy by 2050, you have to think big.

 One way of thinking big is the Financial Times report  (June 16 2009)  of a German consortium of 20 companies, including Siemens, Deutsche Bank and Munich RE contemplating a network of  hundreds of north African CSP power plants, supplying power by underwater cables to Europe.

The German Aerospace Centre estimates the project costs at Euros 395 billion, with the powerlines alone costing Euros 45 billion. It’s great to think big, but you need big pockets too.

Another think big project, but on a smaller scale, involves a Japanese consortium of 16 companies including Mitsubishi Electric and IHI in a US$21 billion Japanese project to build a giant solar power generator in space to beam electricy to earth without cables.

Bloomberg (August  31 2009) tells us that the trade ministry and the Japan Aerospace Exploration Agency, which are leading the project, plan to launch a  small satellite fitted with solar panels in 2015, and test beaming the electricity from space through the ionosphere, the outermost layer of the earth’s atmosphere.

Bloomberg also report that NASA and the US Department of Energy have spent $80 million over the last 30 years to study solar generation in space.

 Back in more conventional technology territory, CSP installations in United States rose by 922 MW in 2008 to reach a total installed capacity of 7.76 GW. Under development in the US are  24 projects, which in coming years will add further capacity of 6.09 GW.

 Unlike solar PV (photovoltaics) on rooftops, which generate electricity directly, CSP systems use lenses or mirrors and tracking systems to focus a large area of sunlight onto a small beam to deliver steam, which is piped into a turbine to generate electricity in a power plant.

As Michael Kanellos reported in Greentech Media (April 28 2009), CSP systems can be by way of  a tower, a trough, a dish, or a plate. In a trough, rows of curved mirrors focus heat on a tube filled with oil. The oil, which heats to 750 degrees Celsius boils water to make steam.

In a tower/heliostats combination, such as employed by BrightSource Energy, water is placed in a tower in the centre of a field of mirrors.  The field heliostats, which are air cooled or cooled by hybrid systems can tilt in two directions, and allows for higher temperatures to be used.

BrightSource Energy is currently in the process of building CSP power plants involving 2.6 GW of projects with the two dominant utilities in California. One of these is 1.31 GW for PG&E in northern California, and the other 1.3 GW for Socal Edison in southern California.

A related market to CSP in power plants is the CSP thermal steam market, where the same technology is used to turn water into steam to directly clean equipment, pump liquids from the ground or kill germs. BrightSource Energy has a contract for a 29 MW thermal plant at Chevron’a oil field in Central California.

BrightSource now wants to expand its operations to China and India, and has put out feelers.

The main proponent of the solar dish is Stirling Energy Systems, which focus heat on a Stirling engine. The difference in air temperature drives a piston. Stirling’s 25 kilowatt SunCatcher enable a more than 25 per cent efficiency on average.  There are four projects in development, involving  more than 1.6 GW of generating capacity. 

A SunCatcher is made up of a parabolic dish of  40 mirrors( formerly 80 mirrors) to focus the sun’s rays onto a receiver, which transmits heat to a Stirling engine. The engine is a sealed system filled with hydrogen. As the gas heats and cools, its pressure rises and falls. The change in pressure drives the piston inside the engine, producing mechanical power, which in turn drives a generator and makes electricity.

A new player in the US market is Solar Millenium, owned by two German companies-  Solar Millenium in partnership with MAN Ferrostaal, which is developing  two  parabolic trough systems each of 242 MW. This is part of a contract with SoCal Edison in southern California to supply up to 726 MW of generating capacity.

With such a long schedule of CSP projects to develop, some large contracting companies have become involved with the solar firms, which should speed progress. Bechtel, one of the US largest engineering contractors is involved with BrightSource Energy.

Bechtel  will become an equity investor in Ivanpah solar generating system, which involves three power plants in California’s Mojave Desert totalling 440 MW.

The aerospace contractor Lockheed Martin is working on a 290 MW  CSP plant near Phoenix Arizona for the developer Starwood Energy Group.

Posted under Carbon Abatement Scheme, Climate Change, energy efficiency, World Inflation