Block’s Indicator of Sustainable Growth

by Ray Block

Having won the fight over national health insurance, followed up by financial reform bills now in the conference stage to be reconciled between the House and Senate, to achieve the trifecta with a climate and energy act in 2010 would be a tremendous achievement for President Obama and the Democratic Party.

Every step of the way to legislative reform in the US Congress has been bitterly fought over, with the Republicans fighting rear guard action much in the way of military campaigns, with few defecting to the other side.

There is still a long way to go before the climate and energy bills become law, but some headway is being made. Here are some road signs:

* Bloomberg (May 28 2010) reports that China will likely set up a domestic market for trading carbon emissions by 2014. Polluting companies would have “half mandatory” targets for their greenhouse gases. Feng Shengbo, deputy director of the China Clean Development Mechanism Management Centre said this in an interview.

The market would be run by trade associations overseen by the government. “From the government point of view, an absolute reduction is not realistic for China at the current stage.” Feng said that he didn’t think the targets would be “very hard.”

* The E&E group which publishes a number of excellent newsletters on climate and energy policy issues reported on May 28 2010 that Senator Lindsay Graham, leader of the moderate faction of the Senate Republicans, said that “we do need to price carbon to make nuclear power and the wind and solar and some alternative technologies economically viable.”

“The electric utility industry is most in need of a market signal for pricing greenhouse gases, while other major industries could be left out of a new US carbon market, especially if it means finding enough votes to pass a bill in the Senate.”

The Greenwire unit of the E&E publishing group says “Graham maybe on to something.”

It went on to say that “Beyond Graham, several other Senate Republicans seen as critical for passing a climate bill have also expressed an interest in a less sweeping plan for controlling greenhouse gases including Senators Judd Gregg of New Hampshire, Lamar Alexander of Tennessee, George Voinovich of Ohio and Richard Lugar of Indiana.”

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

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

There is a political campaign in California to begin the unwinding of the far reaching reforms, which liberal Republican governor Arnold Schwarzenegger inspired and campaigned for to transform the state to a low carbon economy.

In the process of starting the transformation under Schwarzenegger, the state legislature passed trailblazing measures, never attempted before in the US. These included the Global Warming Solutions Act of 2006 to achieve a reduction of greenhouse gas emissions in the state by 20 per cent from 1990 levels by 2020. This act has not yet come into force.

Another positive step was the Governor’s executive order in 2007 to create the world’s first Low Carbon Fuel Standard (LCFS). This requires fuel producers reduce the carbon intensity of transportation fuels sold in the state by 10 per cent to 2020. The effect of this is to reduce greenhouse gas emissions by more than 13 million metric tons a year, equivalent to taking three million cars off the road.

The third positive was establishing California’s Renewable Portfolio Standard (RPS) by executive order to provide clear and permanent direction for the creation, delivery and servicing of the state’s renewable energy programs, while increasing the renewable energy use. The California Air Resources Board (CARB) will adopt regulations to increase the state’s RPS to 33 per cent by 2020.

The state’s leadership on energy conservation and the environment led to the first step to national Green Building Standards, which will serve as a foundation for commercial buildings worldwide. Another initiative was California’s encouragement to other western states in launching the Western Climate Initiative in February 2007. The other states taking part were the governors of Arizona, New Mexico, Oregon and Washington to develop a regional strategy aiming for a uniform approach to cutting greenhouse gas.

The states of Montana and Utah, and the Canadian provinces of British Columbia, Manitoba, Ontario and Quebec also saw the advantages of joining. The partners resolved to reduce greenhouse gas by 15 per cent below 2005 levels by 2020, and to build compatible systems to ensure that programs could be linked for maximum environmental benefits and at the lowest cost.

All these advantages are now at threat. Schwarzenegger retires as Californian governor in January 2010, having been elected in the November 2003 state wide Recall election, after the Democrat Grey Davis was removed from office of governor by a vote of 55.4 per cent. In a second ballot, Schwarzenegger was elected by 48.6 per cent of the vote.

The most likely successor as governor is expected to be conservative Republican Meg Whitman, the one time very successful chief executive of eBay. At immediate threat is to the Global Warming Solutions Act (this is AB 32, which mandates the reduction of about 30 per cent in the state’s greenhouse gas in 2020 from 1990 levels).

Although AB 32 is unlikely to come into force before 2012, conservative Republicans want to see a 12 month moratorium on its implementation. A separate call for a legislated stay on AB32 is a movement led by two ethanol producers based in Texas, who are spending freely to get sufficient signatures to require a special state election. This bar would remain in place, until the state unemployment fell to 5 per cent. They need to get 433,000 signatures for this special election, and hopefully they may miss out.

The fact that the not so “golden state”, with a jobless rate of 12.5 per cent in January 2010, compared to the national average of 9.7 per cent makes it a daunting task for any governor to deal with, however well experienced to restore balance to the economy.

Coupled with a potential state budget deficit of $20 billion, largely due to an undue reliance on state income taxes, with property tax reserved mainly for local government, it becomes a herculean task.

In May 2009, Schwarzenegger tried to get a raft of ballot measures carried by the state’s special election process to restore some balance to the budget process. The key proposition was to place a spending cap on the budget forcing the state to more than double the amount of funds it puts away in reserves for spending during times of economic difficulties. These ballot measures failed.

California’s chief justice, Ronald George (San Francisco Chronicle Feb 20 2010) trenchantly criticise the state’s legislative process saying “unrestrained ballot lawmaking is paralysing government.”

The state and its lawmakers “have been placed in a virtual straitjacket” by a requirement of a two thirds legislative vote to raise taxes, imposed by Proposition 13 in 1978. Ronald George said other ballot measures further tied legislators’ hands by reserving specified portions of state funding for public transportation and education.

This is where the threat to unravel Schwarzenegger’s renewable energy program comes in. If AB 32 is cancelled or rescinded, who is to prevent the unravelling of the rest of Schwarzenegger’s dream of a low carbon economy.