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November 29, 2007

Straw Poll: How much do you pay for electricity?

In light of my most recent post about the so-called "externalities" of coal-fired power, I thought I might add a participatory element the discussion that'll add some context. So, in the name of 'science' please visit ecopolitology (if you're not already here) and answer one simple poll question: How much do you pay for your electricity? (2 seconds and no strings!)

If you don't know, look at your most recent electric bill. Otherwise you can probably find your rates online. I encourage and welcome votes from all cities, counties, states, provinces, territories and countries. Thanks!

Source: Energy Information Administration, Form EIA-861, “Annual Electric Power Industry Report.”(2006)

November 27, 2007

Consumer choice and the eco-social "externalities" of coal (part one)

It is quite common for the end-user of a commodity to have no idea where the good was actually produced, never mind how it got from point A to point B. But some consumers might prefer to get their vegetables them from a local farmers’ market, instead of the supermarket. A person might want to support a business because they have received exceptional service there in the past; or, because they know the signature dish is made with the freshest local ingredients. The global commodities market has separated the consumer and the producer across both time and space. Goods can be shipped all the way around the globe and many can be stored away for future use/sale. When consumers do not see where the good is produced, how it is produced, and the byproducts of that production, they are less likely to have the knowledge that will alter their own spending habits. Not only that, but it may not be so easy to buy something even though it is all around you (as my search for locally-grown soybeans proved). Why does this matter? It all boils down to consumer choice. On one hand, the modern globalized economy consists of consumers that are primarily concerned with getting a given commodity for the best price possible. On the other hand, some may want to choose something other than the least expensive product - and that's where coal comes in.

There are increasing numbers of people who want to weigh other variables or 'social costs' such as the ecological sustainability of a good and the process of manufacturing it; the human rights records in the country where the good is produced or workplace health and safety records of the company making the product. The global economy lives and dies at the level of uncertainty a consumer will accept before choosing to not buy a good. Coal may be less expensive in terms of how much you pay every month for electricity, but those bills do not accurately reflect all of the electricity’s costs or, what economists call, “externalities,” like sulfur dioxide, mercury, carbon dioxide Externalities occur when neither the producer nor the consumer bear
all of the costs of an economic transaction and these costs are inimical to the provision of such 'public goods' as air, water, streetlights, and public safety.

As consumers, we are constantly being bombarded with choices that can challenge the strength and conviction of our beliefs. Most of the choices seem minute, but depending on how loud that little voice inside your head shouts, other choices may present some rather sticky cognitive dissonance at an uncomfortable level. Don't believe me? What is the first thing you think of when you are faced with the ubiquitous inquiry 'paper or plastic?' Concerned about the consequences of all that Styrofoam, do you calculate differences in total resource depletion when asked 'dine-in or carry-out?' Do you buy organic or conventional fruits and vegetables? always? why? why not? Do you buy your gas at Exxon/Mobil or BioWillie? Would you rather have a Budweiser or a Fat Tire? Do you prefer coffee from Starbucks, the coffee cart, or your French press? Would you rather go to to WAL-MART or AL-MART?(*) Would you choose fresh, crisp apples from New Zealand or last autumn's apples from upstate? Would you like bananas that were grown by a company that pays extortion money to violent crime syndicates? or would you rather have no bananas at all?

As electricity consumers, we have no way of determining exactly where the electricity that powers our homes and businesses is generated. Unless you live off the grid or you’ve got the ability to completely disconnect from the grid and generate your own electricity, you cannot distinguish between an electron generated from coal and one generated from wind, natural gas, solar, hydro, or any other source. We can determine the probability that our electricity is of a specific mix, but that is about it. Electricity consumers also often lack any specific knowledge of when electricity is expensive and when it is cheap; we generally know that electricity is more expensive in the morning and in the evening but most of us do not have the ability to monitor those price fluctuations and act accordingly. Fortunately, there is some hope in all of this, as barriers to markets are removed and electricity providers are held accountable for their externalities.

As the issues of energy use and its relationship to climate change are achieving greater acceptance among the general public, consumers want more control over how the energy they consume is produced and how they consume energy. People would be much more interested in the production cost of coal if they were paying the actual cost of coal-fired electricity. Energy generated from “traditional” fossil fuels is only cost-effective because the formula used to determine those costs omits too many of the social and ecological externalities of production...(to be continued).

(*) AL-MART is a small store located in Alma, CO (locals
at the South Park would remind me to tell you that Alma's elevation of 10,578 feet above sea level makes it the highest incorporated town in North America, despite what any other towns might claim).

November 15, 2007

Madisonian 'stability' in American gov't. still doing its job.

Like it or not, the spectre of James Madison still haunts the parliamentary reality of modern American politics. A case in point: the current legislative dance going on between the farm bill, the energy bill, rural senators, and (sub) urban representatives is slowing down lawmaking, and the effects of this delay could be enormous. This is nothing new, and unless there is some sort of constitutional overhaul, American government will continue to plod along incrementally. Not only is the system showing its stickiness but it is also showing its institutional overlap. The energy and farm bills are doing a little cannibalizing of each other. What are people saying about the farm and energy bills?:
"In this bill, we make it a priority to help farmers who are serious about getting into organic production, and we help them overcome the challenges of transitioning into this industry." --Sen. Tom Harkin (D-IA)

"Most importantly, significant resources in [the Lieberman-Warner] bill must be explicitly allocated for Energy Efficiency and Sustainable Energy, the areas where we can get the greatest and quickest bang for our buck." -- Sen. Bernie Sanders (VT)

"I cannot think of an amendment more relevant to the economic security of the American farmer than an amendment to increase the renewable fuel standard" --Sen. Pete Domenici (R-NM)

" may have an energy bill that doesn't really have incentives for renewable energy and high value energy efficiency – and that would be tragic."
-- Scott Sklar, President of the Stella Group Ltd.

"What these gentlemen are trying to do is outsource our food and fiber" --Sen. Blanche Lincoln (D-AK) referring to the two sponsors of the $250,000 cap on farm subsidies.

"We elect Congress to move the country forward, not entrench the past, and we believe they will." --Michael Eckhardt, President ACORE

"I think we're looking at a December timeline for anything, the question is, what's going to be in it?" --Karl Gawell, Exec. Dir. of the Geothermal Energy Association.

"The time is slowly evaporating." --Sen Harry Reid (D-NV)

November 14, 2007

An Energy Bill in Farm Bill's Clothing?

If you have ever gone on a whale-watching trip, then you have an idea what it is like to try and follow the elusive politics of energy during this 110th Congress. If I may elaborate; every once in a while you can follow a whale as it swims along the surface just long enough to spout a burst of effluent and pose for a couple photos before it disappears into the darkness. But most of the time is spent waiting, not watching. Waiting and staring in the direction of where you last saw the whale, expecting it to resurface. The whale eventually resurfaces, but it is nowhere near where you were looking, perhaps even on the other side of the boat. You assume, correctly, that while underwater the whale must have been swimming. But it must have done so differently than you expected it to, for it to have ended up where and when it did. Before I beat this metaphor to death, let me just add that while it is hardly uncommon for deal-making and deliberating to occur behind closed doors, one can easily get caught off guard by only looking in one direction waiting for something to resurface.

Reports spinning in the blogosphere have indicated that renewable energy provisions are in danger of being removed from the energy bill by congressional leaders, who are willing to cede the bill’s better provisions in order to get it passed. All this is occurring while numerous energy issues have surfaced and are bubbling around the Senate Farm Bill.

This is where it gets a little tricky. Sen. Pete Domenici (R-NM) wants to migrate two of his favored energy provisions -- the ethanol mandate and $50 billion in nuclear power loan guarantees -- into the more viable farm bill. Big-Ag has been lobbying heavily in support of the restructuring, but opponents fear that transferring the ethanol mandate to the farm bill would weaken bipartisan support for the energy bill and doom it to failure.

But also buried away in the farm bill is the often overlooked small wind tax credit. This year, identical bills were introduced in the Senate by Salazar (D-CO) and Smith (R-OR) and in the House by Blumenauer (D-OR) and Cole (R-OK) that would provide an investment tax credit of $1,500 per ½ kilowatt of capacity for small wind systems. This incentive could make small-scale wind energy generation viable for many, but it would not create the same kind of explosive growth in large-scale wind installations that an RPS or feed-in tariff would.

Late Tuesday, Blog for Rural America reported that the Senate Ag. Committee had agreed upon a list of amendments, and that debate on the farm bill should proceed in the morning. The first thing to be debated in the morning will most likely be the hotly contested Dorgan-Grassley amendment that would close loopholes for corporate farmers and put a 'hard cap' on farm subsidies at $250,000. Roughly half of the suggested $1.15 billion savings would be spent on social programs like emergency food assistance and food stamp enhancements. The rest of the money would be invested in programs for beginning farmer development, rural microenterprise assistance, farmers markets, organic certification cost share, community food grants, grasslands reserve, and farmland protection.

Not willing to give up hope for a more robust renewable energy program, Congressman Mark Udall (D-CO) has said that he will meet with Speaker Pelosi on Wednesday to talk about the future of the wavering energy bill. Co-chair of the Renewable Energy and Energy Efficiency Caucus, Udall is also meeting with senators to share his experiences with Colorado's successful Renewable Electricity Standard. Udall is positioning himself to run for the senate seat being vacated by Republican Wayne Allard, so he will do whatever he can to keep renewable energy targets in the energy bill – he could certainly use a legislative victory to earn some political capital to spend in the upcoming campaign.

November 13, 2007

Denial of Kansas Plant Seen as Opportunity for Co-ops

coal-fired power plant, coal
TOPEKA, Kan. – Supporters of a proposed coal-fired power plant in Kansas that would provide power to most parts of rural Colorado are working to revive it after the Kansas Department of Health and Environment (KDHE) became the first government agency in the United States to cite carbon dioxide emissions as the reason for rejecting an air permit for a proposed coal-fired electricity generating plant. Tri-State Generation and Transmission’s partner in the project, Sunflower Electric, has filed papers with the KDHE Secretary Rod Bremby to reconsider his rejection of the air permit.

In the written decision to deny the Tri-State/Sunflower permit last Friday, Secretary Bremby said that “it would be irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change and the potential harm to our environment and health if we do nothing.” Sunflower and Tri-State have already begun the appeal process. "We are disappointed with the Secretary's arbitrary and capricious action," said Earl Watkins, Sunflower's president and chief executive officer.

I see the denial of the air permit as an opportunity for Tri-State's 44 member owned co-ops to seize opportunities in efficiency and renewable energies. Not only is Northern Colorado blessed with excellent wind, solar, and biomass resources that can all be harnessed to make clean, reliable, and cost-effective energy, much the same can be said for most of Tri-State's coverage area. Tri-State needs to see the writing on the wall that carbon-emission legislation is coming, and that it is only a matter of time before we are living in a carbon-constrained world. In stead of frittering away member-owners' valuable resources fighting for the construction of new coal-fired power plants, Tri-State should be investing in efficiency, smart-grid technologies, distributed generation, and other ways in which its many members can directly capitalize on the new energy economy.

Exactly how the co-ops will be able to take advantage of the upcoming energy legislation remains to be seen. Rumors continue to swirl that the final bill may be only a skeleton of its former self. I am not playing prognosticator here, but it is quite possible there may be no RPS, no solar tax credit, no extension of the federal production tax credit, and only a meager increase in CAFE standards. I believe that something useful will be passed out of the legislature, I'm just a little skeptical about how many of those good things will make it.

Yet there may be one kernel of hope for renewable energy that is tucked away in the otherwise much-maligned farm bill that would grow renewables by incentivizing distributed microgeneration through a tax credit for small wind. More on this later this week...

Photo Credits:
1. Brian Brainerd, Denver Post

November 11, 2007

Energy Bill: Losing its luster?

I was hopeful yet somewhat skeptical when I last wrote about the chances of meaningful energy legislation making its way through both houses and avoiding the president's recently discovered 'veto pen.' For much of Bush's tenure in the White House, the administration has had little or no need to break out the veto pen. But even when Bush does pass a bill that he has serious reservations about, he has preferred to use the 'signing-statement pen,' despite the fact that there is no Constitutional provision, federal statute, or common-law principle explicitly permitting or prohibits signing statements. Signing statements give an opportunity to the president to add a 'P.S.' that allows the president to voice rhetorical disagreement or otherwise evade proper execution of the laws. Despite the fact that Article II, Section 3 of the Constitution requires that the executive "take care that the laws be faithfully executed", the President has made clear on several occasions that he does not need to execute laws that he does not believe are constitutional.

In the preceding sixteen years of the Reagan, Bush I, and Clinton presidencies, the three produced 347 signing statements between the three of them. By October 4, 2006, Bush II had signed 134 signing statements that challenged 810 federal laws. If you have more time and are really interested in this topic, I highly recommend Boston Globe columnist Charlie Savage's new book, Takeover: The Return of the Imperial Presidency and the Subversion of American Democracy .

But before the president even has a chance to see a bill come across his desk, there are some serious substantive differences between the two bills that need to be reconciled, but it is quite possible the differences will not even have a chance to get ironed out before the impending vote some time this week. It appears as though Speaker Pelosi and Senate Majority Leader Reid are ready to call for a vote on this before Thanksgiving break, without a conference committee on the subject ever have been convened. It looks like an extension of the production tax credit, and the establishment of aggressive renewable energy targets may be overlooked. Major obstacles to the successful passage of quality energy bill include:

1) The Senate version proposes the increasing of new vehicle fuel efficiency (CAFE) standards. Some House members have been trying to ratchet back the Senate-endorsed 35 mph mileage standard. The House version contains no CAFE standards.

2) The house version of the bill included a 15% renewables portfolio standard (RPS) for investor-owned utilities by 2020. States were also permitted to invest in energy efficiency in lieu of renewable energy. The Senate passed no RPS in their version, largely because Senators from the southeast states argued that they do not have adequate renewable resources.

3) There is a proposed repeal of oil, coal, and gas subsidies in the form of tax credits to big energy companies. Pres. Bush has said he would veto a bill with any such repeal and he may get the help he needs as K. Bailey Huthinson of Texas may have the ability to block a joint committee.

4) Perhaps the biggest issue for renewable energy advocates is the apparent lack of tax incentives such as the production tax credit (PTC) and the investment tax credit (ITC). I would be very surprised to see the PTC be passed over for extension, although some large wind energy manufacturers have already shown that they are not waiting to find out.
You can have an impact on what this energy bill looks like. These are not insurmountable obstacles. Urge your Representatives and Senators to consider the RPS, the PTC, and cuts in coal, oil and gas subsidies.

November 7, 2007

New and Improved! Vestas Plant in Colorado

Strong third quarter profits have enabled Danish wind energy giant Vestas to announce the planned expansion of their first and only North American blade plant. The Danish company made the announcement on Tuesday despite the fact that the Windsor, CO facility has yet to produce a single turbine blade. Construction of the plant began in June and Vestas officials say it will be online by early 2008.

Vestas originally planned to hire about 400 full-time employees to operate four production lines, producing 1,200 blades per year. The ramped-up plan would add another 250 full time employees and produce 1800 blades per year; an increase that represents a roughly 50 percent expansion of its production capacity.

Vestas is not waiting for an extension of the federal production tax credit, which is set to expire at the end of this year. Or perhaps they know something we don't. According to the report,

"Vestas is now launching an international information campaign aimed at putting wind power at the top of the global energy agenda, where the political targets in many countries have already been defined. Detailed legislation still needs to be put in place for the industry to make investments in the necessary capacity and the skills required."
The report also states:
"Our goal is that at least ten percent of the world’s power production should be based on wind energy by 2020. To achieve this, the wind turbine industry must install a total of more than 900,000 MW over the next 13 years."
Vestas is no stranger to even the most casual observer of the renewable energy business and anyone who invested in the company (listed on the Copenhagen OMX exchange) should be smiling broadly as the value of the stock has more than tripled in the last year. I am no Jim Cramer, but it is my guess this stock is not done climbing. I will be following Vestas closely as they move into the broadening North American market.

November 5, 2007

The New Politics of the New Energy Economy

Last week I attended a sold-out conference in downtown Denver that addressed the future of Colorado's 'New Energy Economy.' In the absence of any substantial federal legislation to cut U.S. greenhouse gas emissions, state-level government initiatives in such states as California, Vermont, New Jersey, Minnesota, Massachusetts and Colorado to name a few, are giving shape to a technological 'race to the top' scenario where states are competing with each other to attract the type of businesses that can spur the development of a regional new energy economy.

While renewable energy technologies are receiving much needed attention from Wall St. to Main St. and from Cape Cod to Capitol Hill, the consensus at the conference seemed to be that planners, policymakers and investors should focus their immediate gaze on the 'low hanging fruit' of energy efficiency.

A rather interesting group was assembled for this event; it attracted CEOs of major utilities, well-known environmental advocates (and lesser known ones), coal advocates, reps from big oil, governors, farmers, mayors, contractors, energy researchers, policy wonks, etc. It is these sort of interdisciplinary events that have the effect of expanding the green movement beyond the constraints of its traditional boundaries.

In a smart political move, the Governor's Energy Office and the Colorado Public Utilities Commission have already posted links to PowerPoint presentations and high-quality audio of the conference sessions. I have no intention of pouring through the entire conference agenda for you, but if you are interested, I can suggest some worthwhile speeches and panels. The morning began with a pep-talk from Colorado Gov. Bill Ritter who touted a few of the state's legislative initiatives passed in the last session which included a doubling of the renewables portfolio standard (rps) for publicly owned utilities. Ritter delivered his remarks in a high-energy, high-spirited address that started the event off on the right foot. The governor did hint at the proposed policies in his new climate change initiative, but refrained from getting too specific about the details, which will be appropriately announced Monday at Coors Field in Denver. If you do listen to the Governor's talk, pay attention to the Q&A at the end and see if you can pick out which one of the questioners was yours truly! Other worthwhile talks in the morning plenary session came from Ron Binz from the Co. Public Utilities Commission, and from the Director of the Governor's Energy Office, Tom Plant.

If you are interested in traditional fuel sources, you might be interested in listening to the session titled "Coal and Gas: What are the Challenges..." I personally did not attend this session but instead attended the "Consumer Demand" session which featured political analyst Floyd Ciruli and was moderated by the excellent environmental historian Patricia Limerick. During the same time period there was another session for the technically-minded featuring "New Generation Technologies." In the second afternoon session I attended "Meeting Future Demand" which featured some spirited debate between Matt Baker, Executive Director of Environment Colorado and Jim Sims, who is best known as being a part of Vice President Dick Cheney's infamous energy task force (you remember, the one that was criticized for being cloaked in secrecy). This last session was informative but, unfortunately, the equivocating and loquacious Mr. Sims prevented too many questions from being asked by the audience because he was too busy reiterating his redundant messages.

Image Credit: Alexsandar Rodic