Tortoises for Global Warming (tm)

I’ve previously written about the perverse goals of some environmentalists and politicians to block RE development protect wildlife. or, worse yet, to save views in Cape Cod or the Mojave Desert. Some of the same activists who want government to force through spending and approval on RE facilities cringe when there’s a tradeoff between reduced CO2 emissions and other environmental goals.

The NYT’s green blogger, environmentalist Todd Woody, does an unusually good job of capturing both sides of this dilemma in his blog posting and article today about how more than 4 gigawatts of newly-authorized capacity (mostly solar thermal) will likely transform the Mojave Desert — despite repeated objections by the Sierra Club and other environmentalists.

The flashpoint of the Mojave controversy is the California Desert Tortoise. As Woody writes:

The protected desert tortoise has become the totemic animal for environmentalists fighting to ensure that the huge solar farms don’t eliminate essential habitat for the long-lived reptile and other wildlife, like the bighorn sheep and flat-tailed horned lizard.

The tortoise has been in decline for decades, and the rampant development of the desert – from casinos and strip malls to subdivisions and off road recreational vehicle areas – took their toll long before construction began late last month on the Ivanpah solar power plant, the first large-scale solar thermal project to be break ground in the United States in 20 years.

However, as Woody also notes, the new plants will provide resources, funding and data to better understand the tortoise and how to preserve it. (In other words, much as building a shopping center sometimes funds archaeological digs that otherwise would not have happened.)

The article suggests that the controversy is far from over. In the short run, it may get stronger as Gov. Brown appoints one or more wildlife environmentalists to replace Schwarzenegger appointees who consi entire favor RE over wildlife. In the long run, the actual evidence gathered by the newly-funded scientists should resolve the debate one way or the other.

Profiting from environmental catastrophe

The Chicago Climate Exchange has collapsed and is going out of business. It originally announced last month that it was scaling back, but now the plans are apparently to close up shop in December.

The exchange was created to trade carbon emission credits, in anticipate of a US cap-and-trade bill, but the bill died in the 111th Congress and its prospects are non-existent in the 112th.

Popular Science sees this as a bad thing: if the US won’t trade carbon credits, other countries will. Investor's Business Daily sees it as a good thing, further evidence that “job-killing” environmental regulation is temporarily on the back burner.

Like anything profiting from a government-created market, the major investors were among the most politically well-connected. According to IBD, the financial losers in the death of the CCX are its two main investors,Al Gore's Generation Investment Management and Goldman Sachs. Also losing out is Franklin Raines, Fannie Mae CEO during the subprime fiasco, who owned a patent on trading related to trading carbon emissions of residences.

Perhaps with the retrenchment of the CCX, the investors and regulators can solve the inherent problems of the carbon-trading schemes, including their potential for money laundering and the risk of fraud in countries with low transparency and/or weak legal enforcement.

Never believe a politician

The NY Times ran a story Saturday (picked up by the Merc) about the dedication of the new BMW electric car factory in the former East Germany. If nothing else, it proved that political hyperbole is not just endemic to the US but apparently a disease that afflicts the would-be ruling class the world over.

Just as our president has visited the shiny new PV plant of the (now-troubled) Solyndra, so Chancellor Andrea Merkel was on hand for the opening of the Leipzig plant scheduled to crank out EVs starting in 2013. Merkel’s picture was used in the dead tree Merc (I don’t get the dead tree Times).

There were no quotes from Merkel in the story, but the Times found the prerequisite hyperbole from the local governor:

“We’re at the beginning of an auto revolution,” said Stanislaw Tillich, the prime minister of the state of Saxony.

Despite this glowing prediction, NYT Germany correspondent Jack Ewing interpreted the company’s announcement as predicting limited production of only tens of thousands of units each year. Politicians notwithstanding, BMW appears to see this as a limited niche for now. (Various web sources suggest that BMW sells about 1 million cars/year, the majority of those 3-series sedans.)

Also, the new car seems like it will be less of a BMW and more a new subbrand, Megacity, a sister to the BMW-owned Mini brand. The factory already produces the BMW economy car, the 1-series, that we don’t see here in the US. I don’t know if this is to start a new brand for electric cars or (more likely) protect the performance reputation of the main BMW brand.

The Merc headline (but not the story) also trumpeted this as competition for Palo Alto-based Tesla Motors. While the rumored volumes dwarf anything yet demonstrated by Tesla, it’s hard to see how an electric econobox will draw demand from the existing Roadster.

We would have to see the actual list prices of the vaporware Megacity — as well as Tesla’s planned sedan — to predict whether the former will cannibalize sales of the latter. Based on what I’ve heard so far, this would be like asking whether Camry drivers will trade down to a Yaris — it’s possible if there’s a $30k difference but probably not if there’s a $10k difference.

However, a planned BMW PHEV sounds like a direct competitor for the Roadster:

BMW said it had also decided to produce a plug-in hybrid sports car known provisionally as Vision Efficient Dynamics. The car, which has been displayed at auto shows as a design study, will accelerate from zero to 60 miles per hour in less than five seconds, but be more fuel-efficient than most economy cars now on the market, BMW said.

The fabled BMW image, engineering and track record (in both senses of the phrase) could give it an edge over the fledgling Silicon Valley firm.

The three-cylinder diesel BMW would not be available until “2013 or 2014” at a price above €100,000. So for now, the limited-range all-electric Roadster has some breathing room.

An expensive way to not save the planet

In Monday’s Washington Post, Robert Samuelson wrote about administration plans to make a $10.5 billion down payment on a $200 billion cost of constructing 13 high speed rail corridors (including $19 billion for California).

A few choice quotes:

What would we get for this huge investment?

Not much. Here's what we wouldn't get: any meaningful reduction in traffic congestion, greenhouse gas emissions, air travel, oil consumption or imports. Nada, zip. If you can do fourth-grade math, you can understand why.
…
We are prisoners of economic geography. Suburbanization after World War II made most rail travel impractical. …Trip origins and destinations are too dispersed to support most rail service.

Only in places with greater population densities, such as Europe and Asia, is high-speed rail potentially attractive. Even there, most of the existing high-speed trains don't earn "enough revenue to cover both their construction and operating costs," the Congressional Research Service report said. The major exceptions seem to be the Tokyo-Osaka and Paris-Lyon lines.

President Obama calls high-speed rail essential "infrastructure" when it's actually old-fashioned "pork barrel." The interesting question is why it retains its intellectual respectability. The answer, it seems, is willful ignorance. People prefer fashionable make-believe to distasteful realities. They imagine public benefits that don't exist and ignore costs that do.

Samuelson predicts economic disaster for California if it spends $43 billion to build a high-speed rail system it can’t afford to operate. Or rather he predicts that the current economic disaster will get worse.

America's RE problem: consistency, not dollars

Over the weekend, the NY Times ran an article summarizing the great building boom of utility-scale solar projects for the Mojave desert that has been approved in the past 60 days.

It minimized the difficulties the developers have faced getting federal, state and local approvals, and instead focused on the gun to their head: the looming expiration of federal subsidies.

As reporter Todd Woody wrote:

The Ivanpah plant is the first of nine multibillion-dollar solar farms in California and Arizona that are expected to begin construction before the end of the year as developers race to qualify for tens of billions of dollars in federal grants and loan guarantees that are about to expire. The new plants will generate nearly 4,000 megawatts of electricity if built — enough to power three million homes.

But this first wave may very well be the last for a long time, according to industry executives. Without continued government incentives that vastly reduce the risks to investors, solar companies planning another dozen or so plants say they may not be able to raise enough capital to proceed.

“I think we’re going to see a burst of projects over the next two months and then you’re going to hear the sounds of silence for quite a while,” said David Crane, chief executive of NRG Energy, on Wednesday after he announced that his company would invest $300 million in the Ivanpah plant.
…
With both Democrats and Republicans promising to rein in the federal budget, it is unclear whether lawmakers will extend the programs in any form. “That could stall a number of projects and even lead to the failure of some,” said Ted Sullivan, an analyst with Lux Research, a consulting firm in New York.

Reading this in my Sunday Merc was eerie, because it exactly echoed what I read Saturday night about the beginning and end of the first wave of Mojave solar thermal development during the 1980s, where the nine plants of the Solar Electricity Generating Systems developed by Luz International once accounted for 95% of the world’s solar electricity generation capacity.

Writing in a technical report for Sandia National Laboratories, Luz’s former business development VP, Michael Lotker, summarized how the company was repeatedly forced to plan its projects in between the institution of subsidies (such as RE tax credits) and their expiration. Often this meant that a 18 month project had to be completed in ten months — and in one case seven months — as the company was squeezed between knowing that the credit was available and the deadline for generating electricity before the credit expired.

Knowing that Luz had a gun to its head, investors, suppliers and even the unions exploited the company’s desperation knowing that it had to agree to almost any terms to make the project happen. As a result, the company ran out of money, which helped discourage any future company from taking the risks that it did.

If the government is paying for something — whether directly via procurement contracts or indirectly via tax subsidies — it has a strong interest in helping its suppliers (in this case of renewable energy) improve their efficiency. More efficiency is a win-win — either the government can get more of it supplied or it can get the same quantity at a lower price. So with the unpredictable, irregular or erratic policy — such as “temporary” credits renewed one year at a time — pushes up costs both for the firms and the society that is subsidizing those firms.

Both Woody’s story and the earlier report by Lotker highlight an important point for US renewable energy policy: the most important thing (as with any policy that impacts business) is consistency and predictability.

GE: green energy or greenwashing?

For more than five years, GE has been branding its green/environmental/sustainability efforts as ecomagination. It has custom domain, a Twitter feed and a prize contest (using open innovation ideas). It event spent nearly $3 million for a 2009 ecomagination SuperBowl ad.

When GE rolled out the campaign, a grad student writing in Monthly Review (which proclaims itself an “Independent Socialist Magazine”) was more than a little skeptical

As environmental degradation continues to expand in tandem with global capitalism, environmental consciousness becomes a new marketing strategy. GE's newest invention is to present itself as an environmental crusader. "Ecomagination" is its latest moniker, proclaiming that one of the world's largest corporations has gone green, embracing environmentally-friendly policies and promising to provide the world with solutions to environmental problems. All we have to do is trust the company and continue our lives, preferably as its customers, and it will bring us the clean, pure world shown in its advertisements.

An anti-envirnomentalist’s op-ed in the New York Sun was equally skeptical:

Environmental activists are cheering General Electric's new "Ecomagination" initiative. That's a hint that the rest of us should beware of the gimmicky-sounding program.

"Ecomagination is GE's commitment to address challenges such as the need for cleaner, more efficient sources of energy, reduced emissions and abundant sources of clean water," CEO Jeffrey Immelt said. "And we plan to make money doing it. Increasingly for business, 'green' is green."

Skepticism or not, there is a substance behind the ad campaign of the $150 billion/year conglomerate.

After selling its first turbine in 1901, GE quickly moved into renewable energy by selling a turbine for hydroelectric power generation. Its turbine expertise also led to its involvement in nuclear plants, as well as a range of fossil fuel power generation systems. Its decades-long experience with power transmission has also made it one of the most aggressive corporate backers of smart grid — the subject of the 2009 Super Bowl ad.

GE’s position in wind is more recent. In 2002, it spent $358 million to buy the wind energy assets of the bankrupt Enron Corporation, which had bought the business five years earlier. Founded in 1980 by Jim Dehlsen, Zond Energy shipped its first turbine in 1981. (Early on, Zond also purchased turbines from Vestas to install in its pioneering Tehachapi wind farm).

While GE’s wind business is the market leader in the US, 80% of its sales are in the US — perhaps a legacy of the lack of global focus by Zond or Enron. In its home market, it seems to be losing share to foreign competitors like Siemens of Germany and Suzlon of India. Like other Western makers, it has minuscule share in China due to trade barriers, and so last month formed a 51/49 joint venture with a Chinese partner.

GE also entered the PV industry via acquisition, with its 2004 purchase of the bankrupt AstroPower and its process for thin-crystalline silicon cells. More recently it has invested in various thin film processes, including CdTe and CIGS. A year ago, a GE R&D exec said solar was “the next wind for us.”

GE mentions solar thermal as a line of business but doesn’t say much about it publicly.

The contribution of these RE efforts to GE are a mystery, as it doesn’t break out wind or solar financials. Overall, the energy infrastructure segment of GE accounted for 24% of its $155 billion in 2009 revenues — but 62% of its $11 billion in profits. In mid-2008 it predicted $1 billion in solar revenues by 2011, but no progress report on how close it is to reaching that milestone.

To nuke, or not to nuke?

Nuclear power’s disadvantages — technical, economic, social acceptability — will probably prevent it from making much difference in solving climate change problems. Energy, both literal and metaphorical, spent on nuclear power is energy not spent working on other parts of the menu of choices for addressing climate change issues.”
— Lee Clarke, “The Nuclear Option,” in Routledge Handbook of Climate Change and Society

In a countries like France and Japan, the lynchpin of efforts to reduce carbon emissions (and imports of fossil fuels) is electricity generated from nuclear power. Overall, Clarke says that fission reactors generate 14% of the world’s electricity, and 20% of that in the US.

In the US, proponents of nuclear power argue that it’s a proven technology, it substitutes directly for the dirtiest of electric sources (coal), and the greenhouse gas emissions are zero. This option is particularly salient for moderate environmentalists (or at least liberal Republicans) who worry about GHGs but consider the nuclear question long since settled.

Of course, opposition to nuclear power in the US dates back more than three decades. I recall rock concerts and traffic jams in a futile effort to block PG&E from building the 2.2 gigawatt plant in the isolated Diablo Canyon — opening in 1985 as one of the last new nuke plants in the US.

Some of the environmental opposition is dispassionate and logical, focusing on the lack of political will (and technical uncertainties) regarding storage of spent nuclear fuel. Other opposition is hysterical, right up there with the anti-vacinnation campaigners who worry about imagined mercury risks (from vaccines that no longer use mercury as an antibacterial).

Similarly, some of the economic arguments are more sound than others. Nuke plants have huge capital budgets, long approval processes, and require complex and expensive technical and security training to operate safely. As with all economic policy arguments, the arguments against (or for) plants are subject to the usual lies and distortions because no one checks who was right 30 years later.

Some try to combine the approaches. Just as death penalty opponents claim (rightly or wrongly) that death penalty litigation is more expensive than 40 years of room and board, some environmentalists say that whether or not the plants are safe, they put too much of a rate burden on ratepayers.

In his chapter from the Routledge Handbook of Climate Change and Society, sociologist Lee Clarke is openly skeptical of environmentalists (such as Stewart Brand) who believe the threat of global warming is greater than the threat of nuclear power. While not anti-corporate like some authors in this edited volume, he clearly has the same objections to nuclear power today as did leading environmental groups 20 years ago long before IPCC, Kyoto and “An Inconvenient Truth.”

Still, one doesn’t have to agree with the motivations of people like Prof. Clarke to agree with his conclusions. Even if nuclear power is the right solution, is it a feasible one? Even with a major push, given the restrictions on where plants can be placed American voters and regulators are unlikely to approve more than a modest increase in the number of reactors. Another complication is the need to replace 40+ year old reactors as they come up for decommissioning, perhaps (as in Southern California) building them alongside the old ones.

Meanwhile, US (and IAEA) policy is not going to promote putting up fission reactors across South America, Africa, Asia and the Middle East.

If politics is the art of the possible, then the reality is that nuclear power (at best) will make a small difference. While those who want to reduce manmade global warming might want to support any proposed nuclear projects, they can’t be counted on to solve the entire problem.

Meanwhile, from a business standpoint, the stagnant industry already concentrated with four manufacturers consolidated to three: GE Hitachi, Westinghouse and Areva NP of France. What business there is will go to incumbents, not new entrants.

And even these companies recognize the long odds: none are placing all their eggs in a nuclear basket. GE has leveraged its turbine skills to remain (for now) the dominant seller of wind turbines in the US market, one of five major players overall, while Hitachi is concentrating on turbines for the Japanese niche market. It also has a solar business, as does Westinghouse (through its partnership with the company formerly known as Akeena) and Areva (which bought the SV firm Ausra in 2009).