Block’s Indicator of Sustainable Growth

by Ray Block

The surge in world recession as America, Europe including the UK and Japan move deeper into recession is now spreading further. Even the rapidly growing Asian countries, such as China and India and the raw material supplier countries are being lashed with the buffeting winds spreading the overall mood of pessimism.

 

The impact on the growth of renewable energy has been to slow down the whole process to a crawl, and in a great number of cases to a dead stop. Despite the overall mood of gloom, there are still a few rays of sunshine.

A positive note of optimism came from Drax plc of the UK. Drax is the owner of Western Europe’s largest coal-fired power station, which on October 23 2008 announced that it planned to build three 300 MW power plants that would burn biomass, including energy crops and agricultural or forestry waste. The plants will be in partnership with the German electrical group Siemens. Drax will own 60 per cent of the project, with Siemens having the balancing 40 per cent. The investment cost 2 billion pounds (US$3 billion.)

 

 Financial Times (October 24 2008) reported that Drax is the UK’s biggest single emitter of CO2. The finance director Tony Quinlan said that as a result of subsidies for renewable energy, the plants would produce a return of about 15 per cent and pay for themselves over six years. Construction is timed to start in 2010, with power generation to start in 2014.

 

The contrast between the future for the company and the past reinforces the benefits of new investment in renewable energy. In its latest year to June 2008, Drax’s current 4,000 MW coal fired plant was responsible for cutting almost a half of its previous net profit, due to the need to buy sufficient CO2 emission allowances to cover its carbon pollution.

 

Another positive for the UK comes from Scotland. Ed Crooks (Financial Times October 31 2008) says that Scotland’s renewable electricity, almost all of it wind and hydro power, which represent 1,380 MW installed capacity can now power 60 per cent of Scottish homes. The Scottish government has set a target of deriving 31 per cent of the country’s electricity from renewables by 2011, and 50 per cent by 2020.

 

Less positive is the outlook in the European Union’s emission trading scheme, where the mood has deteriorated, as reported by the environmental capital blog of the Wall Street Journal (October 24 2008). The price of carbon credits fell by 15 per cent in recent weeks to reach an eight month low of 20.15 euros.

 

With the fall in European output of the major industrial polluters, such as in steel and cement, some heavy industrial enterprises are selling permits they originally received on a free basis. The buyers are the power utilities, particularly the coal fired power stations where the permits will allow them to have sufficient offsets to reduce their immediate need to install costly low carbon equipment.  

In the US, there is some good news, and equally some less positive. Despite the international credit crunch which commenced in August 2007, the accounting firm Ernst and Young’s clean tech venture capital scorecard showed September quarter 2008’s investment rose 55 per cent to US$1.6 billion. For the year to September, clean tech  raised $3.3 billion, a 71 per cent rise over the year.

 

Wall Street Journal’s blog (October 30 2008), which covered the Ernst & Young’s report highlighted the rise in solar energy, with the September quarter’s stellar performance showing a rise of 55 per cent. The American Wind Energy Association says that 1,389 MW wind power was installed in the September quarter, and for the year to December 2008, the 2008 total will be about 7500 MW. This would generate sufficient generating capacity to power the equivalent of about 2.2 million homes.

 

This will be the fourth year in a row that new wind capacity installations have set records. Texas, the US state with the largest wind power installed added 693 MW in the September quarter, which propels it into the ranks of global leaders. Only Germany, India and Spain had more wind energy capacity installed at the end of 2007.

 

The negative news in wind power came principally from T Boone Pickens, the billionaire oil man, who has been the biggest apostle of wind power. His wind farm, which eventually will have the world’s largest wind power installed is on hold. Pickens (Wall Street Journal October 31 2008) says that the now much cheaper natural gas price over recent weeks puts wind power at an increasing disadvantage. There will be “no new wind,” Pickens says until gas prices rebound.    

 

                                                                         

 

 

Posted under Carbon Abatement Scheme, Climate Change, Economies, European Emission Trading Scheme, Global Warming, Low Carbon Economy, Renewable Energies

by Ray Block

In 1990, General Motors was accused by people who love conspiracy theories of killing the electric car at the behest of the oil industry. GM was then intending to market the EV1 electric car, which was to be marketed in Southern California on a lease basis. At least, that’s the opinion of the 2006 documentary “Who killed the electric car.”

 GM wasn’t the only guilty party in the conspiracy according to the documentary. Others were the California Air Resources Board, which initially gave a mandate to the company for the car’s release and then later reversed its stand, the Bush Administration, the oil industry, and even consumers for not being more enthusiastic.

 

Conspiracies aside, these days with governments subsidising the development of the green car, greenhouse gas now realised as a danger to the planet, developing the green car with zero emissions is attracting a great deal of attention.. The fact that oil prices is likely to rise again to record levels, when the world recession now engulfing the US, UK, Europe and Japan ends around 2010, is another reason for taking quick action..

 

Another piece of the puzzle, oil will soon reach its peak supply, at least for regular oil, excluding Canadian tar sands which is going to be very expensive, and digging up the Arctic to find more oil, which is going to be devastating for planet survival.

 

Auto makers in Europe in 1998 promised to cut emissions from their cars over 10 years from 190 grams of carbon dioxide per kilometre to 140. But by the end of 2007, emissions were still at 158g/km across Europe. The situation in America is a bit better, with California’s zero emission vehicle standard  (ZEV), which is to be adopted by 10 other US states from 2012.  So the goal of zero emissions is necessary, and cars which can do without gasoline would be a very positive step forward.           

 

The Bush Administration sneakily secured a US$25 bailout loan to the US auto companies in an omnibus bill, which with the tax credits to the renewable energy sector  were passed by Congress, with the $700 billion bank bailout. The loans are to be made available at a concession interest rate. Some of these funds are earmarked for green cars. There is also the $1.2 billion Hydrogen Fuel initiative in 2003, with emphasis on fuel cells.                                                                                                                       

 

But what kind of electric car? There are two candidates- the plug-in electric and the hydrogen fuel cell, with the latter another form of electric car. A number of auto companies are releasing concept cars of both plug-in electric and hydrogen.fuel cells. For example, GM is pinning hopes on the $40,000 Chevy Colt, to be released in two years, which is an electric plug-in Equinox 100, which is being loaned out to selected drivers getting everyday use in New York, Washington and California.

 

Honda is keen on its FCX Clarity hydrogen fuel-cell car with zero emissions, which has a back-up lithium-ion battery for supplemental power.  As reported by Associated Press (June 15 2008), the fuel cell draws on energy synthesized through an electro-chemical reaction between hydrogen gas in the fuel tank and oxygen in the air. The gas passes through membranes in the fuel cell, generating electricity to run the motor and produces water vapour as exhaust.  

 

The car has a range of about 450 km (270 miles) per tank. Only about 25 units will be released this year and about 200 within three years. It will be available only on a three year lease, with a price tag of $600 a month, which includes maintenance and collision coverage. The test car’s fuel efficiency is 3.11/100 km, which is outstanding. Tank holds 4.1 kg (8.8 lbs) hydrogen gas in pressurized tanks.

 

As the Green Chemistry blog points out, although hydrogen can be explosive under some conditions, it is considered safe in hydrogen cars, because a leak in the system would simply cause the hydrogen to become diluted by air, reaching concentrations that aren’t flammable.

 

Honda says the FCX Clarity is two times more energy efficient than a gas electric hybrid, and three times that of a standard gasoline powered car. The customer base is expected mainly in Los Angeles, and is already particularly popular with movie stars, some of whom have already ordered. There were 50,000 web based requests for leases, but the marketing program is to limit customers to those within areas where hydrogen filling stations are located. 

 

The US has only 61 hydrogen filling stations, of which about half are in California. The need for a network of filling stations until resolved will be a major impediment to their growing popularity. So far only California has more than 100 fuel cell hydrogen cars, light trucks and buses.

 

One item of good news is that American scientists have discovered a cheap source of producing hydrogen. The blog Hydrogen Cars and Vehicles, which had previously reported that Toronto researchers created hydrogen from biowaste at sewage treatment plants, by introducing dried sludge pellets. But the researchers at Oregon State University (OSU) have achieved a 75 per cent more efficient method of producing hydrogen than the traditional electrolysis of water.

 

“All of this was achieved through fundamental research on ‘microbial electrolysis cells,’ or MECs, that use a new ‘membrane free’ approach that costs less and is significantly more efficient than existing approaches.” Many types of biowaste could be used in this process, including food processing factory waste, woody waste and manure from farm animals. Biowaste is fed into this device and the output is clean water, electricity and hydrogen.

 

By comparison, all the hope had been on the plug-in electric car, provided there was a leap forward in battery design. While the battery in Toyota’s Prius hybrid is a nickel metal hybride, it was agreed by the industry that the battery of choice would be lithium-ion. Sounds fine, but this battery has a potential for instability. As Popular Mechanics’s Jennifer Bogo pointed out in the September 28 2008 issue: “as the lithium-ion battery ages, its negative electrode chemically reacts with the electrolyte, potentially touching off  a heat-generating thermal runaway event that could send the car up in flames.”

 

Even apart from the issue of instability, Toyota’s Prius hybrid plug-in electric to go sale in 2010 is limited to an EV-only range of about 16 km (10 miles). The car will be tested on North American fleets in about a year. The car’s range before recharging is very disappointing, and more research is needed to solve the battery’s problems. Popular Mechanics October 2 2008 issue interviewed Toyota’s Bill Reinert, national manager of the Advanced Technology Group.

 

“Current lithium-ion batteries still can’t tolerate large swings in the electric charge cycle. So before the gas in modern hybrids kicks in, and as drivers expect their plug-in cars to operate at higher speeds and longer distances in electric-only mode, battery life will be strained significantly. As a result, the li-ion packs grows larger, which adds expense and makes them hard to package in a small car. For example, at 6-ft 5-in long and 300 pounds, the battery in the Chevy Volt is downright huge”.

 

The eureka moment hasn’t come. The aim is to produce a $20,000 commuter or family car, which reduces demand for gasoline and has zero emissions. Neither the plug-in or hydrogen fuel-cell car can yet compete at the popular selling range. Both the plug-in and hydrogen.fuel-cell cars will appeal to some business leaders, entrepreneurs, along with the niche buyer and the entertainment crowd, who always must have the latest model.

 

But the race is on for the battery of choice, and it is one which will be won. There is too much investment at stake to lose out.

 

 

 

 

 

 

y Ray Block

Posted under Economies, Global Warming, Low Carbon Economy, Renewable Energies, World Inflation

By Ray Block

 

There is a strong relationship between government incentives, including mandating renewable energy targets, and ultimate success in renewable energy developments. The more farsighted governments are in terms of incentives, the greater a country’s achievements, not only in reducing greenhouse gas, but in developing large scale new industries.

 

Having taken advantage of its neighbour Denmark’s success with wind energy, Germany became the trendsetter in renewable energy, and effectively carried the European Union along with it. Energy policies such as the 1990 Electricity Feed Law and 2000 Renewable Energy Law played major roles in advancing the deployment of renewable energy technologies. These laws mandated the purchase of renewable generated electricity by electric utilities, and also offered large subsidies and government loans to renewable power producers.

 

At the European Union level, the 1997 Directive on Renewable Energy Sources aimed to boost the renewable energy share of total energy has been a catalyst for major change. Signing of the Kyoto Protocol in 2001 was another step forward in directing attention to the direct cutting of greenhouse gas emissions.

 

In a similar way, Japan has been the trendsetter in solar energy. In 1994, Japan introduced incentives for solar energy. Over the years, this has resulted in a 72 per cent reduction in the average cost of solar energy systems, and in return Japan has become global leader in solar photovoltaics. As solar becomes competitive in Japan, the government is reducing the size of the incentives.

 

Now it is Germany, which is following the lead of Japan in introducing incentives to encourage the use and popularity of solar. The only disadvantage of being too successful in product leadership is that the current rate of accelerated deployment in renewable energy technologies can lead too quickly to a point of countries reducing their commitment to new research and development.

 

While this won’t interfere with the current momentum for renewable energy, it may come at the expense of future generations of energy technologies.

 

In the US, the hot and cold attitude of the Bush Administration and Congress in inconsistent and half hearted support for renewal energies, has seen the year by year renewal of the production tax credit (PTC) on wind technology frequently in peril of not being renewed. This has led to peaks and troughs in the rate of new investment. For example, between 1999 and 2004, the PTC was allowed to expire.

 

Until last week, it looked as if the PTC wouldn’t be renewed. But that has finally been remedied. As the Wall Street Journal’s blog Environmental Capital pointed out on October 6 2008, last Friday was a good day in Washington for renewable energies.

 

The passage by Congress of the US$700 million Wall Street Bailout allowed the Senate not only to sneak into the omnibus bill, the annual production tax credits for wind power, but an eight year extension to the solar investment credits, including tax incentives for home owners to install solar panels. Because, the House of Representatives had initially failed to pass the bailout, the second time around they had to swallow their pride and pass the bill, with the clean energy tax credits intact.  

 

 

 

 

 

 

 

 

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Posted under Carbon Abatement Scheme, Climate Change, Economies, Global Warming, Renewable Energies

by Ray Block

Everything about the Amazon is big. If you take the river, it is by far the greatest in the world .by so many measures. The volume of water it carries is a high 20 per cent of all the freshwater into the oceans.

 

The tropical rainforest itself, home of the most biodiverse and intact wilderness of 5.5 million square kilometres is the largest in the world, the last big space covered with tropical plants and animals. In the 10 years from 1991 to 2000, about 500,000 sq km of the Amazon was lost to deforestation. Since 1970, at least 17.1 per cent of the rainforest has been illegally cleared, or cultivated, with the cutting down of forests. And in the western Amazon, over 180 oil and gas blocks zoned for exploration and development await the oil rigs.

 

60 per cent of the Amazon is located in Brazil, with the balance shared by eight other countries- Bolivia, Ecuador, Peru, Colombia, Venezuela, Suriname, French Guiana and Guiana.

 

Reporter Brazil, a non governmental campaign group says that the total acreage of soya crops in northern Brazil increased 20 per cent in the 2007-08 season compared to the previous year, reflecting further encroachment of the forest area.  45 per cent of the country’s cropland is devoted to soy. Other areas, similarly stolen are earmarked for rice growing. To clear the land, plantation owners commonly stretch a long chain between two bulldozers, and rip out the vegetation along their path. Then the roots and top layer of soil are swept together and set on fire.

 

Apart from cropland, ranchers are using 50 million hectares for grazing cattle. It is estimated that if deforestation continues, the Amazon rainforest will shrink by up to 40 per cent by 2020. Deforestation adds greatly to greenhouse gas, because a partially decimated Amazon as a huge carbon sink reduces nature’s capacity to lock away C02.

 

Both CBS News and International Herald Tribune of August 4 2008 reported that Brazil was on the “brink of civil war”. The two news groups said that in the most northern area of the Amazon, a land conflict between Indians, who want to maintain their traditional life style in the jungle and rice farmers had turned violent.  

 

The conflict is over possession of a 1.7 million hectare Indian reservation decreed by President Luiz Inacio Lula da Silva in 2005. To the indigenous, this was the reclamation of ancestral land.

 

The dispute has gone to the country’s Supreme Court for resolution. But the court itself is concerned that if the violence of the dispute doesn’t dissipate, it could escalate into civil war. Brazil’s 1988 constitution decreed that all Indian ancestral lands must be demarcated and turned over to the tribes within five years. While that process has yet to be completed, in 2008 Indian tribes already control 11 per cent of Brazilian territory and 22 per cent of the Amazon.

 

If the Indians lose the case, they will be up in arms. But there are a lot of forces including retired generals of the Army, and governors of the states who support the farmers. There is a great amount of tension in this case.

 

An interesting website http://forestpolicyresearch.org/2008/09/22/404-latin-america reported that the official launch of the website Globo Amazonia and the interactive map Amazonia.vc in the Fantastico television show on September 7, registered 13 million protests against fires and deforestation in the Amazon.

 

The protests came from more than 230,000 users who installed Amazonia.vc, which allowed them to follow the devastation of the forests in real time. The users can record their protests, which can then be used by the news team of the website as material in the production of new programs.

 

In 2008, there has been more vigorous attempts by Brazilian authorities to clamp down on illegal logging. Satellite imaging equipment enable the authorities to have in real time speedy information on where the latest areas of deforestation are appearing, so they can target enforcement efforts on the ground.

 

However, given the huge size of the Amazon, and the support given to loggers by local officials, it is an extremely difficult policing task to keep the unruly ranchers, loggers, and farmers from further poaching of the Amazon. Norway will give Brazil US$1 billion by 2015 to preserve the Amazon rainforest, as long as they keep trying to stop deforestation.

 

The $1 billion will be the first of other donations to raise $21 billion to protect nature reserves, persuade loggers and farmers to stop destroying trees and to finance scientific and technological projects.

 

“Efforts against deforestation may give us the largest, quickest and cheapest reductions to greenhouse gas emissions,” said the Norwegian Prime Minister. “Brazilian efforts against deforestation are therefore of vital importance if we shall succeed in our campaign against global warming.”  

 

Another deterrent to further deforestation has been the role of the Brazilian vegetable oils industry in the Amazon to place a moratorium on the purchase of soybeans produced on rainforest lands deforested, which came in effect in October 2006. This was in response to a campaign by Greenpeace.

 

Another positive step was the decision of the Brazilian state of Para, which in July 2008 announced a ban on the sales of illegally logged timber from the Amazon. The agreement, which was signed by the Association of Timber Export Industries and the Para Federation of Industries is known as the Pact for Legal and Sustainable Timber. As much as 80 per cent of timber produced in the Amazon is illegal.

 

“Greenpeace welcomed the announcement. “In a country where intention and action don’t always meet, the implementation of this agreement by industry and Government will be vital for establishing effective protection for the forests while preserving jobs,” said Paulo Adario, Greenpeace Amazon campaign director. “It will benefit local communities and promote legal and sustainable logging activities.” 

 

 

 

 

 

Posted under Climate Change, Economies

by Ray Block

Over a number of years, investment bankers in America and England created toxic securities, almost as deadly as weapons of mass destruction, and the consequences are now tipping the world economy into a severe and prolonged recession.

 

The immediate countries engulfed are United States, United Kingdom and European Union. The S&P Case-Shiller home price index in 10 major US metropolitan areas fell by a record 17.5 per cent in July 2008 from a year ago level, and there are more price falls to come. Home prices are also tumbling in the UK, Spain and Ireland.  

 

The secondary consequences involve a slow down in China and India, as European and American customers reduce demand for imported goods. In turn, metal commodity prices are falling steadily with commodity suppliers Russia, Brazil, Canada, Australia, and South Africa being affected as well. Agricultural prices fell again in August, with the FAO food price index falling nearly 6 per cent, and if this trend is repeated in September, the whole world will feel the ill winds of recession.

 

The US Congress will ultimately pass a taxpayer bailout to banks of US$ 700 billion. With $300 billion already outlaid by the US government on Fannie Mae, Freddie Mac and American International Group, and write offs by banks already of $500 billion, these sizeable funds are still not enough to stabilise the world economy.

 

International trade is slowing. The Baltic Dry index, which measures dry bulk shipping costs plunged by nearly a quarter last week, 10per cent on September 30 alone. The index has become very volatile, twice doubling and then falling back within 15 months. The slide also reflects a weakening in Chinese raw material demand.

 

Chinese prices for key steel products have been falling 15 per cent to 20 per cent in the last two months. Indian steel prices are similarly falling. Some base metal prices have fallen by more than 50 per cent. The Chinese and Indian economies slowed in the June quarter, and this trend of further slowing is expected in coming months.

 

Indeed, the single most dramatic indicator of slowdown in Asia has been China’s reversal of its previous monetary policy. Instead of the Chinese central bank constantly raising interest rates to curb excess demand and inflation, September 2008 has seen for the first time in six years interest rates falling, and banks have been allowed to set aside smaller reserves, as weakening export demand slows the economy.                                                                                                                                                                                                 

The consequences of the world downturn is that countries will slow their efforts to reduce greenhouse gases (GHG). We will all be the losers for that. The inevitable result is that the pace of cutting GHG emissions will be substantially lower than what scientific advisers are constantly urging, and almost pleading.

 

The chances of a successful world agreement on cutting emissions at the Copenhagen meeting in November 2009 are not very high.

 

But not all hope is lost. There is a way out. If other countries were to follow the lead of the US in introducing investment tax credits on installation of renewable energy solutions, there is no need to sit idly by as greenhouse gases gets steadily worse.

 

Investment tax credits, available to homeowners and businesses that invest in solar power equipment, and the production tax credits based on kilowatt hours of energy produced by wind, solar, geothermal, biomass and other renewables have been the catalyst for the US to grow its renewable share of electricity consumed.

 

The result has seen dramatic increases in installation of wind power and solar energy technology in the US over the last two years, thanks largely to the investment tax credits. But because the tax credits require yearly renewal in Congress, there is no consistency in US growth of renewables.

 

The US Congress allowed the credits expire in 2000, 2002 and 2004. In those three years, wind capacity installation dropped 93 per cent, 73 per cent and 77 per cent respectively from the previous year.

 

A consulting company advising on renewable energy technology estimated that US investments in wind and solar power in 2009 would amount to $26.6 billion with tax credits, but fall to $7 billion without them. These credits are expected to total $334 million, according to congressional estimates.

Posted under Carbon Abatement Scheme, Climate Change, Commodity Prices, Economies