The Environmental Defense Fund (EDF) praised New York City Mayor Michael Bloomberg for addressing the issue of toxic heating oil in New York City during his State of the City speech this afternoon. The mayor pledged that his administration will be "greening the heating fuels used in our schools and big buildings."
The mayor's announcement follows an EDF report last month showing that just one percent of New York City's buildings -- those burning the dirtiest grades of heating oil -- produce more pollution than all the city's cars and trucks combined.
"Mayor Bloomberg's pledge to green the dirtiest types of heating oil is one of the biggest steps New York can take to reduce soot pollution linked to asthma and heart disease," said Isabelle Silverman, an attorney for Environmental Defense Fund. "The dirtiest grades of heating oil must be phased out by 2020. Ten years is a long enough timeframe for buildings to convert and get the best use out of the older burners that can't burn cleaner fuel right away."
More information on toxic heating oil is available on the EDF Website.
John Howley
Orlando, Florida
Wednesday, January 20, 2010
Northeast and Mid-Atlantic Governors Commit to Low-Carbon Fuel Standard
Governors of 11 Northeast and Mid-Atlantic states signed a Memorandum of Understanding (MOU) on December 30 that commits their states to developing a regional Low-Carbon Fuel Standard (LCFS), a market-based, fuel-neutral program addressing the carbon content of fuels.
The proposed regional LCFS would involve a market-based, fuel-neutral program to address the carbon content of fuels. If adopted by states, it would apply to the transportation sector, and potentially to fuels used for heating buildings. According to a press release issued by the Governors, a regional LCFS has the potential to reduce transportation-related greenhouse gas emissions, which represent approximately 30 percent of emissions in the region, reduce regional vulnerability to petroleum price volatility, and facilitate the long-term transition from petroleum-based fuels in the transportation sector. In addition, the Governors expect that the regional LCFS will spur economic growth related to development of advanced technologies and green energy jobs.
The Low-Carbon Fuel Standard initiative began in June 2008, when Massachusetts Governor Deval Patrick sent a letter to the governors of all 10 member states of the Regional Greenhouse Gas Initiative (RGGI) inviting them to work together on developing a Low-Carbon Fuel Standard that would apply to the entire region, creating a larger market for cleaner fuels, reducing emissions associated with global climate change, and supporting the development of clean energy technologies. Based on Letters of Intent signed in December 2008 by state environmental commissioners, the participating states - the 10 RGGI states plus Pennsylvania - have been doing preliminary work toward designing a regional LCFS program.
The LCFS MOU signed on December 30 establishes a process to develop a regional framework by 2011 and to examine the economic impacts of an LCFS while getting input from business and environmental stakeholders. The 11 signatories include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.
Click here for more information on the LCFS work in the Northeast and Mid-Atlantic region.
John Howley
Orlando, Florida
The proposed regional LCFS would involve a market-based, fuel-neutral program to address the carbon content of fuels. If adopted by states, it would apply to the transportation sector, and potentially to fuels used for heating buildings. According to a press release issued by the Governors, a regional LCFS has the potential to reduce transportation-related greenhouse gas emissions, which represent approximately 30 percent of emissions in the region, reduce regional vulnerability to petroleum price volatility, and facilitate the long-term transition from petroleum-based fuels in the transportation sector. In addition, the Governors expect that the regional LCFS will spur economic growth related to development of advanced technologies and green energy jobs.
The Low-Carbon Fuel Standard initiative began in June 2008, when Massachusetts Governor Deval Patrick sent a letter to the governors of all 10 member states of the Regional Greenhouse Gas Initiative (RGGI) inviting them to work together on developing a Low-Carbon Fuel Standard that would apply to the entire region, creating a larger market for cleaner fuels, reducing emissions associated with global climate change, and supporting the development of clean energy technologies. Based on Letters of Intent signed in December 2008 by state environmental commissioners, the participating states - the 10 RGGI states plus Pennsylvania - have been doing preliminary work toward designing a regional LCFS program.
The LCFS MOU signed on December 30 establishes a process to develop a regional framework by 2011 and to examine the economic impacts of an LCFS while getting input from business and environmental stakeholders. The 11 signatories include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.
Click here for more information on the LCFS work in the Northeast and Mid-Atlantic region.
John Howley
Orlando, Florida
DOE Says Grid Needs Upgrade to Handle Wind Power
The U.S. Department of Energy's National Renewable Energy Laboratory today released a major study of the technical, operational, and economic issues facing the integration of large amounts of wind energy into the power system.
The bottom line is: The existing grid serving most of the United States east of the Rockies would need a multi-billion dollar upgrade before it could handle even 20% wind-generated power.
The DOE's Eastern Wind Integration and Transmission Study (EWITS) evaluates the impacts of wind energy penetration into the power system through 2024. The study encompasses the majority of the utilities in the Eastern Interconnection, one of the two major alternating current (AC) power grids in North America. The Eastern Interconnection reaches from Central Canada eastward to the Atlantic coast (excluding Québec), South to Florida, and back West to the foot of the Rockies (excluding most of Texas).
About a year ago, a Joint Coordinated System Plan study group concluded that a 20-percent wind energy scenario would “require 15,000 miles of new extra-high voltage lines, at an estimated cost of $80 billion, in addition to $1.1 trillion in total generation capital costs by 2024.”
The new DOE study increases those numbers to 22,000 miles of new transmissions lines at a cost of $90 billion. But it argues that the $90 billion cost for transmission upgrades is only a small percentage of the total cost to build the wind generation capacity.
The new study also cautions that wind farms must be spread out geographically so they will not account for a large percentage of power generation at any given point in the grid. According to the new DOE study, "increasing the geographic diversity of wind power projects in a given operating pool generally makes the aggregated wind power output more predictable and less variable, while also reducing the variation in load and increasing the number of generation assets that can be committed and dispatched."
Other highlights from the new DOE study include:
John Howley
Orlando, Florida
The bottom line is: The existing grid serving most of the United States east of the Rockies would need a multi-billion dollar upgrade before it could handle even 20% wind-generated power.
The DOE's Eastern Wind Integration and Transmission Study (EWITS) evaluates the impacts of wind energy penetration into the power system through 2024. The study encompasses the majority of the utilities in the Eastern Interconnection, one of the two major alternating current (AC) power grids in North America. The Eastern Interconnection reaches from Central Canada eastward to the Atlantic coast (excluding Québec), South to Florida, and back West to the foot of the Rockies (excluding most of Texas).
About a year ago, a Joint Coordinated System Plan study group concluded that a 20-percent wind energy scenario would “require 15,000 miles of new extra-high voltage lines, at an estimated cost of $80 billion, in addition to $1.1 trillion in total generation capital costs by 2024.”
The new DOE study increases those numbers to 22,000 miles of new transmissions lines at a cost of $90 billion. But it argues that the $90 billion cost for transmission upgrades is only a small percentage of the total cost to build the wind generation capacity.
The new study also cautions that wind farms must be spread out geographically so they will not account for a large percentage of power generation at any given point in the grid. According to the new DOE study, "increasing the geographic diversity of wind power projects in a given operating pool generally makes the aggregated wind power output more predictable and less variable, while also reducing the variation in load and increasing the number of generation assets that can be committed and dispatched."
Other highlights from the new DOE study include:
- There are no fundamental technical barriers to the integration of 20% wind energy into the electrical system, but transmission planning and system operation policy and market development need to continue to evolve in order for these penetration levels to be achieved;
- Without transmission enhancements, substantial curtailment of wind generation would be required for all of the 20% wind penetration scenarios;
- Although the costs of aggressive expansion of the existing grid are significant, they make up a relatively small piece of the total annual power system costs in any of the scenarios studied;
- Wind generation displaces carbon-based fuels, directly reducing carbon dioxide emissions. Emissions continue to decline as more wind generation is added to the energy supply; and
- Reduced expenditures on fossil fuel costs more than pay for the increased costs of transmission in all wind scenarios.
John Howley
Orlando, Florida
Wednesday, January 13, 2010
Windmills on Office Buildings?
Solar panels on office buildings and homes have become almost commonplace. But windmills?That is what SC Johnson is doing at its corporate headquarters in Racine, Wisconsin. The company has launched a wind energy pilot program with the installation of three new wind turbines. The objectives are to reduce greenhouse gas (GHG) emissions and raise awareness that renewable energy is not just for factories, but also office buildings in urban settings.
The three wind turbines are located on the roof of one of the seven buildings on SC Johnson's international headquarters campus, which has an approximate eight block radius and where more than 1,300 employees work. The wind turbines are expected to be fully functioning by the end of the month. Once fully operational, the turbines will be connected to the company's electrical distribution system. The output they generate will power a small portion of the company's campus.
Admittedly, this is a test project and it is difficult to project how many computers, machines and other basic office resources can be powered by renewable energy. "While we are not sure how much alternative energy these turbines will produce, we expect to have clear, consistent results within a year," said Johnson. "This pilot program will help provide useful information on ways we can develop more sustainable solutions for our campus."
The turbines are expected to be fully installed and connected in late January and will be monitored closely throughout the year. Depending on the impact of the turbine's energy output, it is possible the company will extend the project to additional local SC Johnson facilities.
This is not SC Johnson's first foray into sustainable energy. Its largest global factory, based in Racine, Wisconsin, is partially powered with cogeneration using methane gas from a local public landfill. The company's Bay City, Michigan plant is powered with wind energy, reducing the annual purchase of coal-fired electricity by nearly half. In Indonesia, waste palm shells are burned as a substitute for fuel, using 80 percent less diesel fuel, and in Mijdrecht, The Netherlands, the company's largest European manufacturing facility is operated by an 80 meter-tall wind turbine which is expected to eliminate 3,900 tons of carbon dioxide annually.
Through these efforts, approximately 36 percent of SC Johnson's total electricity usage worldwide came from renewable energy. The company cut GHG emissions at its worldwide factories by 27 percent during the last eight years, including all its United States operations by 17 percent since 2005. These reductions -- achieved three full years ahead of the company's 2011 target -- are the equivalent of taking approximately 11,100 U.S. cars off the road for one year.
John Howley
Orlando, Florida
Friday, January 8, 2010
More Good News for Vehicle Fuel Efficiency
Yesterday I reported on a survey by KPMG suggesting that the automotive industry sees great promise in consumer demand for hybrid and other alternative fuel vehicles, and that the industry plans to build and promote more hybrid and alternative fuel vehicles over the next 5 years.
Today comes another story that puts a little meat on those bones. According to a study by Thomson Reuters, alternative power and pollution control have become the biggest source of patent activity in the automotive industry, surpassing perennial leaders such as engine design, braking systems and safety in 2009. Together they accounted for 23% of the patents issued within the automotive industry last year, with alternative power accounting for 14% and pollution control accounted for another 9%.
The report notes that "Only unique patent inventions were counted, providing the truest picture of innovation activity."
While it is too soon to tell whether any of these patents represent significant technological breakthroughs, the trend is encouraging. Obtaining patents is an expensive and time-consuming process. The issuance of patents in the areas of alternative power and pollution control means, at a minimum, that the automotive industry is serious about these technologies. It also suggests that the industry has been shifting R&D money to these areas for some time.
The Thomson Reuters study, 2009 Innovation Report: Twelve Key Industries and Their States of Innovation, tracks unique inventions in granted patents and published applications within 12 key industries. Click here to gain access to the full report.
John Howley
Orlando, Florida
Today comes another story that puts a little meat on those bones. According to a study by Thomson Reuters, alternative power and pollution control have become the biggest source of patent activity in the automotive industry, surpassing perennial leaders such as engine design, braking systems and safety in 2009. Together they accounted for 23% of the patents issued within the automotive industry last year, with alternative power accounting for 14% and pollution control accounted for another 9%.
The report notes that "Only unique patent inventions were counted, providing the truest picture of innovation activity."
While it is too soon to tell whether any of these patents represent significant technological breakthroughs, the trend is encouraging. Obtaining patents is an expensive and time-consuming process. The issuance of patents in the areas of alternative power and pollution control means, at a minimum, that the automotive industry is serious about these technologies. It also suggests that the industry has been shifting R&D money to these areas for some time.
The Thomson Reuters study, 2009 Innovation Report: Twelve Key Industries and Their States of Innovation, tracks unique inventions in granted patents and published applications within 12 key industries. Click here to gain access to the full report.
John Howley
Orlando, Florida
Thursday, January 7, 2010
KPMG Survey Suggests Shift Towards Hybrid and Alternative Fuel Vehicles
Senior automotive executives are expected to increase their investment in new technologies to produce more environmentally-friendly, fuel-efficient vehicles. This is the conclusion reached by the 11th annual global automotive survey conducted by KPMG LLP, the US audit, tax and advisory firm.
Of the 200 senior executives surveyed worldwide, nine in ten expect manufacturers and suppliers to focus on new technologies, while 88 percent predict manufacturers will increase investment on new models/products and 78 percent say suppliers will do the same.
Hybrid Seen As Most Important Fuel Technology
When asked to rate the importance of alternative fuel technologies over the next five years, hybrid fuel systems came out on top (almost 85 percent), followed by battery electric power (68 percent), fuel cell electric power (63 percent), and biodiesel (42 percent).
"The consumer mindset on fuel efficiency is forcing automakers to build more fuel efficient cars and to create new product that satisfies demand,"said Gary Silberg, National Automotive Industry leader for KPMG LLP.
The survey results come on the heels of sales data released earlier in the week showing that 2009 industry sales in the US were 21.2% lower than sales in 2008.
Fuel Efficiency Cited As Key Purchase Factor
The key question of course is: How much of the emphasis on fuel efficiency is the result of economic conditions, how much is due to stubbornly high fuel prices, and how much is due to climate change and environmental concerns?
The survey suggests that both fuel efficiency and environmental friendliness are driving consumer demand. When asked what would influence consumer purchase decisions over the next five years, fuel efficiency was most frequently cited (94 percent), fairly flat from last year's high of 96 percent, followed by environmental friendliness (just over 80 percent). Other consumer desires were significantly lower including safety innovation (71 percent) and vehicle styling (61 percent).
When asked which vehicles the executives expect will see sales increases over the next five years, hybrid fuel vehicles (almost 93 percent) were most frequently named, followed by other alternative fuel vehicles (83 percent), low cost or introduction cars (82 percent), cars (66 percent), cross-overs (46 percent) and small pick-up trucks (just under 45 percent).
Most surprising were the responses on incentives, including discounts, rebates and free offers. When asked to name which vehicles might see an increase in incentives during the next year, the top prediction was SUVs (53%). But almost an equal number of the auto executives surveyed responded that incentives would be increased for hybrid fuel vehicles (almost 50 percent) and other alternative fuel vehicles (48 percent).
Wednesday, January 6, 2010
New Jersey Getting 12 More Megawatts of Grid-Connected Solar Power
New Jersey’s largest regulated gas and electric utility is adding 12 megawatts of grid-connected solar energy. PSE&G hopes to start construction at its sites in Edison, Hamilton, Linden and Trenton this spring, with projects completed this summer and fall.
The four ground-mounted solar farms will be among the largest to be developed in New Jersey, with the Hamilton project being the largest in the state and the project in Linden the second largest. All four sites will utilize crystalline solar panel technology and have monitoring and communications functionality.
Together, the four projects will add 48,000 solar panels on 38.2 acres of property. They will produce enough energy to power about 1,300 homes and eliminate some 6,700 tons of CO2 emissions, the equivalent of removing nearly 1,200 cars from the road for one year.
The State of New Jersey has become a leader in solar energy installations in the last few years, installing more than 100 MW of solar energy, making it second only to California in terms of the amount of solar capacity installed.
"We're moving ahead with clean energy projects that will put people to work, installing tens of thousands of solar panels that will help the environment and stimulate the economy," said Ralph LaRossa, president and COO of PSE&G.
The latest projects are part of PSE&G's Solar 4 All program, which was approved by state regulators in July. The program involves a total of $515 million investment in 80 megawatts of solar, creating green jobs and nearly doubling the size of New Jersey's installed solar capacity.
The four ground-mounted solar farms will be among the largest to be developed in New Jersey, with the Hamilton project being the largest in the state and the project in Linden the second largest. All four sites will utilize crystalline solar panel technology and have monitoring and communications functionality.
Together, the four projects will add 48,000 solar panels on 38.2 acres of property. They will produce enough energy to power about 1,300 homes and eliminate some 6,700 tons of CO2 emissions, the equivalent of removing nearly 1,200 cars from the road for one year.
The State of New Jersey has become a leader in solar energy installations in the last few years, installing more than 100 MW of solar energy, making it second only to California in terms of the amount of solar capacity installed.
"We're moving ahead with clean energy projects that will put people to work, installing tens of thousands of solar panels that will help the environment and stimulate the economy," said Ralph LaRossa, president and COO of PSE&G.
The latest projects are part of PSE&G's Solar 4 All program, which was approved by state regulators in July. The program involves a total of $515 million investment in 80 megawatts of solar, creating green jobs and nearly doubling the size of New Jersey's installed solar capacity.
Tuesday, December 29, 2009
When Big Oil Buys the Gas Company
Earlier this week ExxonMobil, the world’s largest publicly traded oil and gas producer, announced that it had agreed to buy XTO Energy, the second-largest producer of natural gas in the US. ExxonMobil will acquire XTO for stock valued at $31 billion, making this the biggest oil and gas deal in four years.
This acquisition (and more like it) will have very significant impacts in at least three areas: energy prices; advances in natural gas innovation; and climate change legislation.
1. The Impact on Energy Prices
By acquiring the second-largest natural gas producer in the US, ExxonMobil will increase its ability to influence natural gas prices.
Prices for natural gas under long-term contracts are currently fairly close to prices for oil when measured on a cost per BTU basis. But prices for natural gas on the spot market are much lower -- often as much as 400% lower -- than prices for oil. The more natural gas that remains available on the spot market, the more likely it is that prices for natural gas under long-term contracts will come down.
When independent natural gas companies like XTO selling gas on the spot market, there is pressure on prices for natural gas to go down. Which makes gas a nice alternative to oil and coal. Which ultimately puts pressure on oil and coal prices.
ExxonMobil and other major oil companies that buy natural gas companies could influence prices by simply selling less natural gas on the spot market. The major oil companies have plenty of cash, so they could hold onto their natural gas inventories until the gap between gas and oil narrows. That is not good for consumers . . . or for the country.
2. The Impact on Natural Gas Innovation
Over the last decade, a handful of the nation’s small energy companies discovered huge amounts of natural gas in new fields stretching from Texas to Pennsylvania. XTO was one of these companies. It grew almost unnoticed into the nation’s second-largest gas producer by amassing a substantial portfolio of gas fields and developing expertise in the complex technology needed to extract the gas from shale beds.
If the major oil companies buy up these smaller, innovative companies that are making all the new natural gas discoveries, then who will pursue new natural gas technologies in the future?
Good question.
3. The Impact on Climate Change Legislation
Oil is one of the major contributors to carbon emissions worldwide. Gas is a much cleaner fuel.
The oil industry and its trade organization, the American Petroleum Institute, have vehemently opposed any aspect of climate change legislation that would raise the price of petroleum-based products. In contrast, the natural gas industry has supported many aspects of climate change legislation. Because natural gas has relatively low carbon emissions, any restriction on carbon emissions will give it a competitive advantage over oil and coal.
If the major oil companies buy up all the significant natural gas companies, then who will advocate for climate change legislation?
Another good question.
John Howley
Orlando, Florida
Saturday, December 19, 2009
More Important Than Copenhagen
I told you so.
Four months ago, I predicted that, "Those looking for simple solutions to climate change will be very disappointed by the absence of firm emission reduction targets in Copenhagen later this year. . . . But at the same time, [the US and China] will pursue a second path of cooperation towards achievable solutions with or without an agreement on targets." See US and China Forge a New Path on Climate Change.
That is exactly what the US and China did in Copenhagen yesterday.
Why? Because nothing this important and this complicated ever gets resolved by a committee.
Consider for a moment the race to put a man on the moon. Thomas Friedman and others have said that this should be our model for the Green energy revolution.
I agree. But we did not get to the moon by holding international conventions and listening to dictators and despots like Iran's Ahmadinejad, Zimbabwe's Mugabe, and Venezuela's Chavez lecture us on the evil nature of our plans to be the first to put a man on the moon. Nor did we wait until we could reach the lowest common denominator consensus with Russia, China and 180 other nations on how and when to put a man on the moon.
If we had followed the path of seeking international consensus before we went to the moon, then we probably never would have achieved the goal.
So, now that we have gotten Copenhagen out of our system, let's get down to the serious work of pursuing the Green energy revolution the old fashioned way. With vigorous competition among nations to be the most energy efficient and energy independent economies in the world.
Walmart has given us a good first step. The company has sent out a Sustainability Index survey to 100,000 of its suppliers. The survey asks each supplier to provide information about their carbon footprint, energy and water usage, plans and goals to reduce their carbon footprint, energy consumption and water usage, and other factors that affect the sustainability of their operations. For now, Walmart will review this data internally. But it plans in later stages to release the data to consumers and possibly even disclose a ranking of individual products based on a Sustainability Index for the product and the company that manufactured it.
If you were a factory owner in China, what would provide a better incentive for you to reduce your carbon footprint and use of energy and water? (a) An international treaty that committed China to nation-wide carbon reduction targets over a 20 or 30 year period? Or (b) a Walmart Sustainability Index that made your products unsellable to the world's largest retailer unless you reduced your own company's carbon footprint and use of energy and water?
Forget Copenhagen. We need barriers to entry that will make it difficult for producers around the world to sell their products unless they are made using non-polluting energy sources and sustainable manufacturing practices.
We also need to alter the economics of energy at home. Yes, solar and wind are more expensive than most carbon-emitting alternatives right now. But only because those carbon-emitting alternatives do not pay the full cost of their pollution. If we make coal and oil companies include in their pricing the cost of eliminating their products' emissions (either with cap and trade or a carbon tax), then solar, wind and other non-emitting alternatives would seem very inexpensive by comparison.
Lastly, we need to use government funding and regulations to promote sustainable energy based on the long-term benefits -- just as we did when we used government funds to finance space exploration.
Imagine, for example, if all new construction and renovations in the US had to be "net zero" in terms of direct and indirect carbon emissions. By "net zero" I mean that the amount of energy used by a facility from non-carbon-emitting sources like solar and wind is equal to or exceeds the amount of energy from carbon-emitting sources. This could be accomplished by a combination of building codes requiring higher levels of efficiency in buildings (which many local governments are already imposing) and subsidies for investments in solar, wind and other non-carbon-emitting energy sources.
Yes, this would cost us in the short term. But think for a moment about the competitive advantage this would give us in the longer term. What if five or ten years from now our factories used highly efficient buildings that required less energy, and that energy was supplied by solar and wind plants that had ZERO fuel costs. Our factories would have a tremendous competitive advantage over factories in China and elsewhere that continued to use power generated by coal and petroleum fuels.
I hear all those out there who say that climate issues are different because they transcend borders. But space travel transcended borders too. And we did not succeed with space travel by waiting for everyone to agree. We went out and did it.
John Howley
Woodbridge, New Jersey
Four months ago, I predicted that, "Those looking for simple solutions to climate change will be very disappointed by the absence of firm emission reduction targets in Copenhagen later this year. . . . But at the same time, [the US and China] will pursue a second path of cooperation towards achievable solutions with or without an agreement on targets." See US and China Forge a New Path on Climate Change.
That is exactly what the US and China did in Copenhagen yesterday.
Why? Because nothing this important and this complicated ever gets resolved by a committee.
Consider for a moment the race to put a man on the moon. Thomas Friedman and others have said that this should be our model for the Green energy revolution.
I agree. But we did not get to the moon by holding international conventions and listening to dictators and despots like Iran's Ahmadinejad, Zimbabwe's Mugabe, and Venezuela's Chavez lecture us on the evil nature of our plans to be the first to put a man on the moon. Nor did we wait until we could reach the lowest common denominator consensus with Russia, China and 180 other nations on how and when to put a man on the moon.
If we had followed the path of seeking international consensus before we went to the moon, then we probably never would have achieved the goal.
So, now that we have gotten Copenhagen out of our system, let's get down to the serious work of pursuing the Green energy revolution the old fashioned way. With vigorous competition among nations to be the most energy efficient and energy independent economies in the world.
Walmart has given us a good first step. The company has sent out a Sustainability Index survey to 100,000 of its suppliers. The survey asks each supplier to provide information about their carbon footprint, energy and water usage, plans and goals to reduce their carbon footprint, energy consumption and water usage, and other factors that affect the sustainability of their operations. For now, Walmart will review this data internally. But it plans in later stages to release the data to consumers and possibly even disclose a ranking of individual products based on a Sustainability Index for the product and the company that manufactured it.
If you were a factory owner in China, what would provide a better incentive for you to reduce your carbon footprint and use of energy and water? (a) An international treaty that committed China to nation-wide carbon reduction targets over a 20 or 30 year period? Or (b) a Walmart Sustainability Index that made your products unsellable to the world's largest retailer unless you reduced your own company's carbon footprint and use of energy and water?
Forget Copenhagen. We need barriers to entry that will make it difficult for producers around the world to sell their products unless they are made using non-polluting energy sources and sustainable manufacturing practices.
We also need to alter the economics of energy at home. Yes, solar and wind are more expensive than most carbon-emitting alternatives right now. But only because those carbon-emitting alternatives do not pay the full cost of their pollution. If we make coal and oil companies include in their pricing the cost of eliminating their products' emissions (either with cap and trade or a carbon tax), then solar, wind and other non-emitting alternatives would seem very inexpensive by comparison.
Lastly, we need to use government funding and regulations to promote sustainable energy based on the long-term benefits -- just as we did when we used government funds to finance space exploration.
Imagine, for example, if all new construction and renovations in the US had to be "net zero" in terms of direct and indirect carbon emissions. By "net zero" I mean that the amount of energy used by a facility from non-carbon-emitting sources like solar and wind is equal to or exceeds the amount of energy from carbon-emitting sources. This could be accomplished by a combination of building codes requiring higher levels of efficiency in buildings (which many local governments are already imposing) and subsidies for investments in solar, wind and other non-carbon-emitting energy sources.
Yes, this would cost us in the short term. But think for a moment about the competitive advantage this would give us in the longer term. What if five or ten years from now our factories used highly efficient buildings that required less energy, and that energy was supplied by solar and wind plants that had ZERO fuel costs. Our factories would have a tremendous competitive advantage over factories in China and elsewhere that continued to use power generated by coal and petroleum fuels.
I hear all those out there who say that climate issues are different because they transcend borders. But space travel transcended borders too. And we did not succeed with space travel by waiting for everyone to agree. We went out and did it.
John Howley
Woodbridge, New Jersey
Friday, November 13, 2009
Lessons From the History and Economics of Oil
My first assignment as a young lawyer -- and my introduction to the history and economics of the oil industry -- was on a behemoth antitrust case against the major oil companies. In re Petroleum Products Antitrust Litigation involved allegations that the major oil companies conspired to fix prices by "signaling" price changes to one another and by manipulating supplies and refinery operations during the 1970's.
In between days of reviewing thousands of documents, my fellow young lawyers and I had the pleasure of working with Daniel Yergin, who was retained as one of our expert witnesses and who had just written The Prize: The Epic Quest for Oil, Money and Power, for which he would win the Pulitzer Prize. His book is a comprehensive and fascinating account of the history and economics of the oil industry. It is still about the best book you can find on the subject, and anyone interested in any aspect of the green energy movement must read it.
Recently, I came across a short video of Daniel Yergin reflecting on lessons that can be learned from previous shifts in energy usage as we try to move towards a more sustainable energy future. He describes the environmental concerns of the 1950's that forced a shift from coal to oil, followed by a shift back to coal as the principal fuel for electricity generation due to coal's cost advantages and emerging technologies that ameliorated some of the environmental harms. He also talks about the sunk costs in our existing energy infrastructure and how that creates inertia and limits our willingness and ability to change.
Click here to view the video. Short and to the point . . . . . and definitely worth watching.
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