There are three energy and climate bill currently before the US Senate. These are:

• The American Power Act.

• The American Clean Energy Leadership Act.

• Lugar Practical Energy and Climate Plan.

The first of these-  the American Power Act proposed by Senators Kerry and Lieberman, which is the Senate version of the House’s Waxman- Markey Bill passed last year would mandate a cap and trade system and require a 17 per cent reduction in greenhouse gases from 2005 levels by 2020.

The second bill emerged from the Senate Committee on Energy and Natural Resources in June 2009, sponsored jointly by Democrat chairman Jeff Bingaman and Ranking Republican Lisa Markowski is a bipartisan measure designed to accelerate clean energy technologies in the US, including clean energy project financing, a renewable electricity standard, and a robust and secure national electricity transmission highway.

The bill which is yet to go to the floor of the Senate would also require increased energy efficiency in buildings.

The third measure, Lugar Practical Energy and Climate Plan S 3464 by Republicans Senators Richard Lugar and Lindsay Graham is a “possible bipartisan framework for making progress on energy driven national security, economic, and environmental concerns.”

The Plan would reduce by over 40 per cent the need for foreign oil; cut energy use by 11 per cent; cut greenhouse gas emissions by more than 20 per cent over “business as usual” by 2030. This climate savings trajectory meets nearly half of President Obama’s 2020 climate goal.

Barack Obama’s (June 15 2010) powerful speech from the Oval Office to the American people, at a time when the BP oil spill disaster in the Gulf is a blow to the American psyche deliberately made no mention of the Kerry-Lieberman bill.

The problem is that the Republicans won’t swallow the  carbon cap and trade  measure.. Democrats would like it,, but they can’t secure the support of 60 Senators for passing such a requirement. But in a design to secure wavering Republican support for some meaningful legislation, Obama mentioned the other two proposals before the Senate.

Obama said in part: “ Last year, the House of Representatives passed a strong and comprehensive energy and climate bill- a bill that finally makes clean energy the profitable kind of energy for America’s businesses. Now, there are costs associated with this transition. And there are some who believe that we can’t afford not to change how we produce and use energy- because the long term costs to our economy, our national security, and our environment are far greater.”

“ So, I’m happy to look at other ideas and approaches from either party – as long as they seriously tackle our addiction to fossil fuels. Some have suggested raising efficiency standards in our buildings like we did in our cars and trucks. Some believe we should set standards to ensure that more of our electricity comes from wind and solar power. Others wonder why the energy industry only spends a fraction of what the high tech industry does on research and development- and want to rapidly boost our investments in such research and development.”

“All of these approaches have merit, and deserve a fair hearing in the months ahead. But the one approach I will not accept is inaction.”

The excellent  online newsletter on Congress, Politico.com (June 17 2010), said that the Senate Democrats held a special caucus meeting on the three bills. But there was no consensus, on which bill was likely to gather sufficient support for a bipartisan energy and climate bill could emerge on the floor of the Senate,  before the August recess. The November elections is expected to hand ccntrol of both Huses back to the Republicans, so time is short. Another caucus meeting is tentatively scheduled for next week.

The Democrat Majority would like to get through the floor of the Senate a climate and energy bill that puts a price on carbon, but they lack the numbers to execute such a plan.

What is likely to happen in a consensus measure, is one which  cobbles together pieces from all three bills. No cap and trade for the US economy as a whole,. But possibly some measure which includes  a mandated reuirement for power plants to use less hydrocarbons and more renewables. This would be accompanied by large tax benefits for the energy utilities to dramatically increase their renewable energy facilities in wind and solar power.Also a ban on new coal fired power plants. That would be a big advance to the bits and pieces the US has now.

After all, seven of the largest electric utilities- AES, Duke Energy, Exelon, NextEra Energy, NRG, PG&E, PNM Resources are members of the US Climate Action Partnership, which says “we are committed to a pathway that will slow, stop and reverse the growth in US emissions, while expanding the US economy.”

Other large greenhouse gas polluting companies in the Climat Action  group  include DuPont, Dow Chemical, Alcoa, Shell Oil, Rio Tinto, General Motors, Ford and Chrysler, which share the same passion with some leading environmental organisations, who are also members of the partnership.

When China paraded its energy efficiency qualifications at the Copenhagen climate change conference, many observers were cynical, believing that Chinese statistics were regularly fudged.

Even when McKinsey consultants on assignment in China regularly reported that the Chinese were junking obsolete energy intensive plant and equipment and replacing them with energy efficient, low carbon equipment, the too smart western observers refused to believe them.

Xiong Yan, chairman of the China Beijing Environment Exchange and China  Beijing Equity Exchange at the Eight Transnational Corporations China Forum (China.org.cn March 2 2010) said that China’s decision to reduce the intensity of carbon dioxide emissions per unit of GDP by 40 to 45 per cent by 2010, compared with the levels of 2005, will require changes to the law and policy, and cause improvement of the development of technology.

“It will transform the structures of economy, industry and energy, including the area of renewable energy, energy efficient, forest carbon sinks, low carbon transportation and pattern of consumption,” Xiong said. The Chinese energy efficiency drive is on top of a “reduction of carbon emissions per unit of GDP by 47 per cent from 1990 to 2005, and I believe it is practicable to achieve its goal for 2020.”

Chinese Premier Wen Jinbao, in addressing a State Council meeting of conserving energy and cutting emissions in Beijing on May 5 2010, called for more efforts to cut emissions and conserve energy to meet the country’s targets set by the 11th Five Year Plan, (China Daily china.org.cn).

New targets to shut down outdated 10GW capacity of small coal-power plants, 25 million tonnes of small iron smelting, 6 million tonnes of steel production, 50 million tonnes of cement, 330,000 tonnes of aluminum, 6 million containers of glass sheets and 530,000 tonnes of paper production within this year.

All these closures are being achieved by administrative measures, with the “new targets distributed to local governments and enterprises by the end of May. The enterprises involved are expected to be closed down by the end of September. Local officials and executives of enterprises will be taken to task if their specific energy efficiency targets are not met by the end of the year.”

The environmental costs in the transformation to a fast growth economy have been very high, resulting in unacceptable levels of atmospheric pollution, and in water pollution.

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.”

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.

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.

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.”

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.

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.

In was not until 1982, before the first motor vehicle was assembled in China. And it took a further 10 years before one million vehicles were sold in any one year. But over the last 18 years, an astonishingly giant industry has been created to become in 2009 the largest auto market in the world.

And having come this far, it is inevitable that like the steel industry, where the Chinese produce about 50 per cent of global supply, the same trends are emerging in motor vehicles.

In hybrids and fully electric cars, China with its still current 200 auto manufacturers will dominate this space, with the government goal for 2011 of 500,000 electric vehicles seen as a modest beginning.

All the major international auto companies, with hopes of marketing success in the hybrid and electric vehicle space, with affiliates in China are extremely busy right now.

Indeed, all of the majors, whether joint ventures with foreign auto companies, state owned, municipal owned, or private owned are currently working two and three shifts throughout the week, with an almost endless supply of customers.

Passenger car sales rose 63 per cent to 1.26 million vehicles in March 2010, and commercial vehicles rose even more strongly to 470,000 units over the same month, according to the China Association of Automobile Manufacturers (CAAM).

In 2009, vehicle sales totalled 13.6 million units, a gain over the previous year of 45 per cent. CAAM expects the domestic auto market to grow 15 per cent this year suggesting a total market of 15-16 million. Another auto trade association, Shanghai based China Passenger Car Association is even more confident, suggesting that China’s vehicle sales will surpass 17 million units in 2010.

In 2008, the Ministry of Science and Technology mandated that 10 per cent of Chinese cars will run on alternative fuels by 2012 and called for research subsidies. The Ministry of Finance announced a new commitment to promote new energy vehicles in the country’s 13 largest cities- Beijing, Shanghai, Chongqing, Zhangchun, Dalian, Hangzhou, Jinan, Wuhan, Shenzhen, Hefei, Kunming and Nanchang.

The mandate called for public services to begin buying alternative fuel vehicles in these cities and provide subsidies for their production and purchasing. The subsidies included 50,000 yuan for hybrids and 60,000 yuan for pure electric cars.

A revised subsidy scheme is eagerly expected for new energy vehicles. China Daily (April 9 2010) reported that electric cars qualifying for subsidies are those that have received the government’s production license and are assembled in China, regardless whether they come from domestic or joint venture firms.

Zero emission pure electric cars is now the preferred technology path for new energy cars in China, which will be reflected in the new stimulus plan. Where hybrids and hydrogen fuel cell vehicles fit in is not clear, as they were targeted as the priority for new energy vehicle development in China’s 11th Five Year Plan (2005-2010).

Zhang Jinhua, vice secretary general of the Chinese Society of Automotive Engineers, who is also an official for the national 863 research program on energy saving and new energy vehicles says that China’s roadmap for new energy cars has shifted in “giving priority to pure electric cars and taking hybrid cars as complement.”

As part of China’s new12th Five Year Plan, the National Development and Reform Commission (NDRC), China’s major planning body has highlighted nuclear energy, wind energy and new energy vehicles as priorities.

Frank Liao, chief engineer of Chery, now China’s fifth largest automaker, says that the first round of competition for the electric car market share would mainly be between medium and small sized domestic private automakers, and the large state owned domestic automakers ,which had acted “sluggishly” in electric car research and development.

There has since been an element of change, with even the highly profitable state and municipal owned SAIC, the No 1 auto company in China, too content in its cosy joint ventures, finally getting the message that the government wants the industry to accelerate change. SAIC is releasing a hybrid model this year, and a pure electric car in 2012.

A number of pure electric cars are about to enter the market. BYD, the 7.5 per cent affiliate of Warren Buffett’s Berkshire Hathaway was first in with its own hybrid F3DM introduced in 2009. BYD for “Build Your Dreams” started in 1995 in auto batteries, and it is only in recent years that it entered the vehicle market.

For many years, a notorious reverse engineering outfit, which never paid for foreign technology,was openly exposed as such in a prominent online piece by Caexon Online. BYD sold 430,000 vehicles in 2009, and is building a new plant to double that output. It now wants to do its own research and development, and is prominent in the export market.

Chery started in 1997, and became the fifth Chinese automaker to reach a production goal of two million vehicles, the first one million was in 2007, and the second in 2009. At the beginning of 2010, Chery began a $350 million R&D program to develop traditional automotive technologies and new energy technologies at the same time.

The aim is to continue a strong program of technical improvements spending around 4.6 per cent of yearly sales on R&D. Chery, which launched its S18 electric car in March 2009, the first of its S series of fully electric cars, has been concentrating on “high efficiency, energy saving, easy operation, continuous variable transmission and quietness.”

The largest of the private auto companies Geely, which nreleased its EK-1 fully electric car, has just concluded a deal with Ford to buy Volvo, the Swedish motor firm for $1.8 billlion. Whether the Chinese company can meet the full purchase price at this stage is up in the air, but they retain first right of refusal advantage to purchase the prestige marque.

To make the 500,000 electric car target by 2011, there are generous production subsidies, and there is a scramble among large state owned enterprises to set up charging stations to enable the new car revolution to take place.

Preliminary figures of PV growth in calendar year 2009 by the European Photovoltaic Industry Association (EPIA) suggest that about 6.4 GW was installed worldwide last year reaching a total capacity of over 20GW (20,000 MW).

The growth, says EPIA, is particularly impressive given the weak level of demand at the height of the recession in the March quarter. A sizzling increase in global cumulative installed PV capacity is expected in 2010 by at least 40 per cent, with an annual growth expected to increase by more than 15 per cent.

The PV market survey firm Solarbuzz expects the first quarter 2010 to show global module production rising by 7 per cent, with a further 19 per cent in the second quarter. Thin film production is expected to account for 17 per cent of global shipments in the first half of 2010.

One word of caution is introduced with Germany, the largest PV market, which increased installations by about 3 GW in 2009 to a cumulative installed capacity of almost 9 GW will at some stage reduce the size of its gross-feed-in-tariff.

Italy is the second largest European market, with an expected 700 MW in 2009. Czech Republic also showed strong growth with 411 MW installed in 2009. Belgium, France, Portugal and UK showed positive growth. The 2008 leader Spain languished, as a result of the cap imposed by the government in 2008.

In other regions, USA achieved around 475 MW in installations in 2009, while Japan did even better with new installations of 485 MW. Promising markets in Canada, Australia, Brazil, Mexico, Morocco and South Africa are expected in future years.

The most exciting solar PV producer continues to be First Solar, now the largest PV module producer in the world, with Shyam Metha of Greentech Media (March 29 2009) demonstrating the profit potential of the solar market. First Solar is the dominant player in the thin film market specialising in (CdT) cadmium telluride.

Add these ingredients – high throughput (1,011 MW in 2009), competitive efficiency of 11 per cent, and industry leading cost. This is currently a sensational 83 cents per watt. A lot of the applied genius is due to investor/ entrepreneur Harold McMaster, who concluded in the early 1980s, that the “essential cost element of large area solar arrays was glass, and (he) could treat the actual solar cell as simply a different kind of coating on glass.”

Metha explains: “In other word, thin film PV represented a technology that could be manufactured using glass’ high throughput coating process instead of the slow, cumbersome batch process of traditional crystalline silicon wafer-based PV – an approach that had one hundredth the feedstock requirement.”