Block’s Indicator of Sustainable Growth

by Ray Block

There is something heroic about the new UK Coalition Government. To have a coalition between political foes is itself heroic. To go one step forward for Prime Minister David Cameron to commit the UK to have carbon emission reductions of 10% over the next 12 months.

This is at a time when many countries have either slowed down their carbon emission cutbacks timetable, or shelved them entirely, until the world economy stabilises. 

And to do this at a time, when the just announced UK Government Budget brought down by Chancellor George Osborne, for cuts of Estg 6.25 billion in the large government deficit will require a 2.5 per cent cut in the annual budget of the Department of Energy and Climate Change (DECC), while the Department of Food, Environment and Rural Affairs (DEFRA) will have a budget cut of 5.5 per cent.

David Cameron, who is a supporter of renewable energy keeps on asserting that despite these cuts, carbon reductions have to be made.

Housed in the Department of Energy and Climate Change (DECC) are the three largest delivery bodies, Nuclear Decommissioning Agency, Carbon Trust and Energy Savings Trust, which will face budget cuts by an average 1 per cent. The Environmental Transformation Fund, which invests in emerging low carbon technologies will see its budget cut by 22 per cent to Estg 120 million.

Business Green, the UK blog, reported that Leonnie Greene of the Renewable Energy Association is saying that producers of biomass systems, ground source heat pumps and other renewable heat technologies now urgently needed clarity on when the proposed Renewable Heat Incentive scheme will be introduced.

by Ray Block

The Financial Times energy source blog (May 16 2010) reports that Germany, with the largest Solar PV installations in the world, is about to reduce the gross feed in tariff subsidy on solar rooftop installations by 16 per cent.

The cut in feed-in-tariff incentives, along with an 11 per cent reduction in incentives for solar installations on conversion sites, and the scrapping of support for solar installations on agricultural land will come into force from July 1 2010. Predictably, shares in some of the leading solar companies have fallen.

PV-tech.org in a background note reported on April 16 2010 that feed-in-tariff laws place an obligation on energy companies to purchase electricity from renewable sources at a premium price. In Germany, the national gross feed-in-tariff provides access to the grid at a set price per kWh and is guaranteed for 20 years. This makes solar PV and other renewable energy investments secure for producers, investors and suppliers.

The German Government began offering incentives for renewable electricity generation with the introduction of the Electricity Feed Act. The scheme was enhanced with the adoption of the EEG in 2000, leading to a nine fold increase in solar installations. A more updated and refined FiT became law, with an amended EEG in 2004. The new law committed Germany to increasing electricity supplied by renewable energy sources to 12.5 per cent by 2010, and to at least 20 per cent by 2020.

Angela Merkel’s government in May 2010 said that the reductions of solar subsidies were necessary, because panel prices had fallen by as much as 40 per cent, causing overcapacity of silicon panels on the German market. The FiT rules give solar energy producers an extra 8 euro cents for each kilowatt hour generated when they use more than 30 per cent of the total produced.

Bank of America Merrill Lynch says that with “solar prices around E50/MWh in Europe currently, solar is costing consumers around E60 billion more than they otherwise would have paid for electricity. German households are paying E130 annual solar subsidies and rising rapidly. We fear an increasing backlash against overly generous subsidies.”

With all Eurozone countries warned to reduce their sovereign debt and government deficits, there will be a sharp reduction in FiT subsidies. Early in 2010, France cut its solar subsidies. Italy is next on the list, and the other high subsidy countries will follow suit.

by Ray Block

Two years ago, the US House of Representatives passed the Waxman Markey Bill regulating greenhouse gases. Two years later, the Senate is still wrestling with its version of the same bill.

The latest version by Senators John Kerry, the Massachusetts 2004 defeated Democratic candidate for President and Joe Lieberman, the independent senator from Connecticut introduced the American Power Act.

However, unlike last year, when the US Senate was debating climate action, and there was a powerful supporter of the legislation in Lindsey Graham, the moderate Republican from South Carolina, who holds a significant influence among the moderates, this year the coalition for the legislation has no bipartisan support.

As a result, the bill has little chance of reaching a majority of 60, the magic number preventing a minority of opposition senators from a filibuster, delaying endlessly a vote on the floor of the chamber.

The bill would mandate a 17 per cent reduction in greenhouse gases from 2005 levels by 2020, and 83 per cent by 2050. As the New York Times Green blog pointed out on March 12 2010, there are concessions for every major player.

“Loan guarantees for nuclear plant operators, incentives for use of natural gas in transportation, exemptions from emissions caps for heavy industries, free pollution permits for utilities, modest CO2 limits for oil refiners and expansion of offshore drilling for those states willing to accept the risks.”

The likelihood of an expansion in offshore drilling comes at an unfortunate time, with BP’s devastating oil spill in the Gulf of Mexico, potentially the largest oil spill on record. Coastal states worried about how drilling off the coast of one state could affect their state would have the ability to veto drilling projects.

US Public opinion has increasingly downplayed fears of global warming. The opinion poll, Rasmussen Reports in its April 19 2010 release said that only 54 per cent of voters “still believe global warming is a serious problem,” with “48 per cent saying global warming is caused by long term planetary trends, and only 33 per cent blaming human activity.”

A May 10 2010 Rasmussen Reports said that even after the Gulf oil spill was the dominant news item on the web, TV newscasts and newspapers front pages, 58 per cent of respondents still favoured offshore drilling.

Still a big majority for Big Oil, but a 14 per cent drop from the larger 72 per cent majority in favour of offshore drilling after Barack Obama announced at the end of March, the US Government opening new areas to exploratory offshore drilling for the first time in more than two decades.

Reuters summed up on the US public’s wavering opinions (May 10 2010): “(The oil slick) hasn’t really reached the Gulf Coast yet. Let’s start counting now to see how many polls on these contentious issues arrive before (a) the spill is cleaned up and (b) the bill either becomes law or fails to gain congressional approval.”

by Ray Block

The European Union in a new vehicle strategy released last year is committed to spend E5 billion. The EU’s Green Car Initiative is designed in a multi prong approach to cut carbon emissions, and in providing financial support for research in electric and hybrid vehicles, encourage a growing number of electric cars on the market.

The International Energy Agency (IEA) forecast last year that sales of electric vehicles and plug-in hybrids should reach at least five million globally by 2020, which would catapult to a 50 per cent market share by 2050. Along these lines, Germany as the largest state in EU is planning on one million vehicles on its roads by 2020.

Nissan’s Leaf all-electric car, for release in 2011 was unveiled at the 80th Geneva International Motor Show in the March quarter 2010. Nissan has already flagged that the US price will be US$ 32,780, and there will be substantial discounts by the US and state governments.

As the first of the major car companies to offer electric cars in substantial volumes at a near affordable price, the Leaf promises zero tailpipe emissions, and a range of 160 km (100 miles) on a single lithium-ion battery charge. A 50 kW direct current charger will be available to charge the battery up to 80 per cent in under 30 minutes.

The compact AC electric motor in the front of the car driving the front wheels delivers a power output of more than 90 kW of power and 280 Nm (newton metres) of torque. Maximum speed is more than 140 km/h (90 mph).

Nissan is saying that a later model will have a range of 320 km (200 miles), but you may have to wait a long time for this to eventuate. In the meantime, US researchers are almost convinced that the next wave of electric car, with a long range on a single charge will come from a lithium air battery.

Three research laboratories- MIT in Cambridge (MA), IBM at the Almaden Research Centre in San Jose (CA), and Argonne National Laboratory, close to Chicago (IL) are all working on lithium air batteries. There is great promise about their research.

You can understand the enthusiasm when researchers say lithium-ion, the current vehicle battery choice, with its limited energy capacity, has the potential to deliver only about 585 watt-hours of electricity per kilogram. This compares with a lithium sulphur battery, with a theoretical potential of about 2,600 watt-hours, and lithium air batteries with an even higher potential of 5,000 watt-hours.

Currently, BYD, the Chinese car and battery producer has on the market an electric car with a lithium sulphur battery.

The MIT researchers in a paper published in the journal Electrochemical and Solid-State Letters, demonstrated that electrodes with gold or platinum as a catalyst in lithium air prototypes would also be substantially much lighter, a key issue for electric vehicles.

The future of electric cars seems unbounded.

by Ray Block

The Washington Post published an article by Robert Bryce relating to myths about green energy. Bryce is a senior fellow at the Manhattan Institute, and has published a book “Power Hungry: The Myths of ‘Green’ Energy’ and the Real Fuels of the Future.” The book was published in the USA on April 27 2010.

Bryce’s point, although he overdoes it, is that renewable and alternative energy technologies have great emotional and political appeal, but don’t reduce CO2 by much, don’t reduce dependence on imported oil, nor create many new jobs, and so the list goes on and on.

It is true that the hype about renewable/ and alternative energy can be overdone, they are also costly in subsidies, and the reduction in carbon dioxide in the atmosphere is currently minute.

Bryce makes an important point that in the case of hybrids and electric vehicles, the electric motor consumption of rare earth elements is unduly dependent on the only abundant global supplier, which just happens to be China, which by 2012 is expected to be the dominant supplier of hybrids and electric vehicles for domestic and international sales. Consequently, there may not be any surplus of rare earth elements available for export.

Bryce says that solar and wind energies “require huge amounts of land to deliver relatively small amounts of energy, disrupting natural habitats. Even an ageing natural gas well producing 60,000 cubic feet per day generate more than 20 times the watts per square metre of a wind turbine. A nuclear power plant cranks out about 56 watts per square metre, eight times as much as is derived from solar photovoltaic installations.”

All true, but so what. As I have said repeatedly, renewable (and alternative) energy industries, which are still in their infancy will ultimately become the giant industries of the future. These industries are still to reach their peak efficiency levels and become fully competitive with industries relying on coal and oil. But there are no alternatives on offer.