Tuesday, January 23, 2007

EIA - Energy Basics - Renewable Energy Basics

Energy Information Administration - EIA - Official Energy Statistics from the U.S. Government

DOE Report on Cap n Trade System

Recommendations from us-cap.org

Mirage of Enegy Independence

WSJ.com : Energy Independence

Excerpts :

But what does "energy independence" mean for a $13 trillion economy that uses the equivalent of 50 million barrels of oil every day? Is it realistic and achievable? Or is it rhetorical overreach that will lead, as in the past, to disappointment and cynicism, the kind that drives the cycles of inconsistency in energy policy and leaves the U.S. no less vulnerable? The latter is more likely -- at least without a realistic appraisal of the U.S. position and the country's possibilities. But "energy independence" can provide a constructive framework for policy if it is properly thought through and the realities are recognized.

The idea was introduced by Richard Nixon in November 1973, three weeks after the Arab oil embargo, when he introduced "Project Independence" and pledged that the U.S. would, within seven years, "meet our own energy needs without depending on any foreign energy source." Nixon knew that energy independence was something that Americans would crave after the 1973 oil shock: He deliberately modeled his Project Independence on John F. Kennedy's Apollo goal of getting a man on the moon within a decade.

Back then, the goal may have seemed only somewhat unlikely. After all, when Nixon began his political career after World War II, the country already had a long history of energy independence -- and then some. For it had actually been the world's No. 1 oil exporter; indeed, out of seven billion barrels of oil used by the Allies in World War II, six billion were produced in the U.S. By the late 1940s, the U.S. had become a net importer of oil, although the real surge in imports did not begin until the 1970s.

In the three and a half decades since Nixon, the U.S. has gone from importing a third of its oil to importing 60%, and that share is set to continue rising. The country is on a similar path for natural gas (which is about 25% of our total energy usage).

This means growing imports of liquefied natural gas -- LNG -- rising from 3% of our current demand to more than 25% by 2020.

How dependent is the U.S.? If we look at total energy -- including coal, nuclear and a small but growing share from renewables -- the country is over 70% self-sufficient. Oil -- refined into liquid fuels for transportation -- is where most of the current dependence comes from. The risks do not owe to direct imports from the Middle East, contrary to the widespread belief. Some 81% of oil imports do not come from that region. Thus, only 19% of imports -- and 12% of total petroleum consumption -- originates in the Middle East

Our largest source of oil imports is Canada. Our second largest source is Mexico. The picture becomes more complex when one turns to our third largest source of oil imports, Venezuela.

Yet the source of imports is significant only up to a point. Energy security is a global issue. Although oil around the world varies greatly in terms of physical qualities and transportation costs, there is only one world oil market. So disruptions and loss of supply in one place radiate throughout the global market -- and global politics -- affecting consumers everywhere. Even if the U.S. did not import a drop of oil, it would still be vulnerable to turmoil involving oil outside its borders.

What are the prospects for "energy independence"? Based on where we are today, very small, at least for a couple of decades. only about 8% of the auto fleet turns over every year. So the lead times are long for more efficient vehicles to enter the fleet. Ethanol, derived from corn, is on track to grow to about 10% of our total gasoline pool in a few years. This is certainly not inconsequential; it represents diversification and is equivalent to creating a new Indonesia-level oil-producing country in America's Midwest. But signs are already evident of an upper bound on corn-based ethanol, as the fuel-versus-food trade-off pushes up corn prices, setting off vocal protests from livestock growers and dairy farmers and, in due course, from those who buy breakfast cereals and soft drinks made with high fructose corn syrup.

There is a "great bubbling" all along the innovation frontier of energy, ranging from conventional energy and efficiency to, especially, renewables, alternatives and "clean tech." Activity this wide-ranging has never been witnessed before. The impact could well be considerable, or even transformative. One would be very hard-pressed today, however, to say when and what form this impact will take.

Today, quite simply, cutting ourselves off from global energy markets is not realistic.

But, if the goal of energy independence is understood differently, to mean energy security -- resilience, robustness, reduced vulnerability -- then it is much more useful.

This kind of definition recognizes that trade, in itself, is not bad. At the same time, it emphasizes the central goal of diversification -- encouraging investment and higher levels of research and development in both alternative and conventional energy sources. It means a new push for energy conservation, higher energy efficiency, lower energy intensity.

And it requires an understanding that this kind of energy independence -- as measured in energy security -- actually requires interdependence with other nations, both consumers and producers of energy. Indeed, how we manage our relations with other countries and other regions is a very essential ingredient for our own energy well-being.

US Companies fighting for self-preservation

WSJ.com : In Climate Controversy, Industry Cedes Ground

Excerpts :

The global-warming debate is shifting from science to economics.

A growing number of these companies are pushing for a mandatory emissions limit, or "cap." Some see a lucrative new market in clean-energy technologies. Many figure a regulation is politically inevitable and they want to be in the room when it's negotiated, to minimize the burden that falls on them.

The biggest question going forward no longer is whether fossil-fuel emissions should be curbed. It's who will foot the bill for the cleanup -- and that battle is heating up.

In the center of the regulatory cross hairs are utilities. They're the world's biggest emitters of carbon dioxide, the global-warming gas that's produced whenever fossil fuels are burned. Written one way, a cap would help utilities in the Southeast or the Midwest, which burn lots of coal, a particularly carbon-intensive fuel. Written another way, a rule would help utilities on the West Coast, the Northeast and the Gulf Coast. They use mainly natural gas, which produces lower CO2 emissions than coal, and nuclear energy, which produces essentially no CO2.

The Big Three auto companies are making speeches and running advertisements calling on Big Oil to crank out more low-carbon alternative fuels such as corn-based ethanol. Big Oil, in its own speeches and ads, says the auto makers should build more-efficient cars.

The American Iron and Steel Institute, which opposes any emission cap, this month assigned an executive who had been working broadly on environmental issues to focus specifically on global warming. Some companies that oppose a cap argue it would raise their costs and hurt their competitiveness against rivals in developing countries such as China, where no cap exists.

DuPont Co., the chemical giant, heartily endorses a cap in part because it figures it would help boost demand for energy-efficiency products the company makes.

Entergy Corp., a utility that's also pushing for a cap, would likely benefit from her measure because the company's fuel mix includes a lot of low-carbon fuels.

Fossil fuels provided 80% of global energy in 2004, and they're on track to provide 81% in 2030.

Significantly curbing their emissions would require sweeping technological change, from more-efficient power plants and cars to the potential injection and burial of massive amounts of CO2 underground.

Another possibility would be to reduce the rate of growth in fossil-fuel consumption by supplementing the fuel mix with alternatives, from nuclear power to crops to the wind and the sun.

Outside the U.S., many countries already have modest experience in emissions caps, thanks to the Kyoto Protocol. The treaty, which hasn't been ratified by the U.S., requires ratifying nations collectively to cut their emissions 5% below 1990 levels by 2012.

Several Northeast states and California already have announced plans to impose emission caps of their own. And a handful of proposed federal caps are under consideration in Congress.

The federal proposals differ in the structural details of the "cap and trade" system they would set up to regulate CO2 emissions. Under such a system, the government would set a ceiling on how much CO2 the U.S. economy -- or whichever sectors lawmakers pick -- could emit each year. It would ink a corresponding number of pollution permits, each entitling the bearer to emit one ton of the gas.

Then, based on complex allocation rules it devises, the government would divide up the permits among companies. Those companies could buy and sell permits among themselves on a greenhouse-gas market like a Kyoto-related one already under way outside the U.S. Companies that decide it's too expensive to cut their own emissions enough to comply with their government cap would go to the market and buy extra emission permits from companies that ended up with more than they needed. The theory behind the market is to create an economy of scale that reduces everyone's cost.

Other regulatory structures are possible, including a straight tax on CO2 emissions. Politically, a cap-and-trade system is more popular than a tax. Environmentalists like the severity of an absolute ceiling on the amount of CO2 companies can emit. Industry likes the flexibility of a market in which permits to pollute can be bought and sold.

And cap-and-trade systems already are in use. The U.S. has had one for more than a decade to curb the pollution that causes acid rain, a regulation widely viewed as successful.

Duke Energy Corp., based in Charlotte, is the country's third-largest burner of coal, though it also has significant nuclear assets. It's pushing for permits to be distributed based on the amount of CO2 a utility has emitted in the past -- a system that would protect big coal burners such as itself.

Fighting Duke and other coal-burners are utilities such as Entergy. Based in New Orleans, it uses a lot of natural gas and nuclear fuel. Unlike Duke, Entergy wants permits to be distributed based on a utility's total electricity output -- a system likely to give low-carbon generators such as itself excess permits they could sell.

They already face a kind of carbon limit in the federal government's longstanding fuel-economy standards for cars and trucks, because vehicles that burn less gasoline emit less CO2. Those rules give auto makers extra credit for building versions of their conventional vehicles they've modified to run on either gasoline or ethanol. Very few of those vehicles actually wind up running on anything but gasoline. But the credits let the auto makers build more thirsty sport-utility vehicles and pickup trucks -- the industry's bread and butter, particularly when oil was cheaper.

Auto officials who declined to be named said the industry probably will accept some toughening of the fuel-economy standards. But in return, it may seek bigger credits for selling vehicles that burn less oil, including those that can run on ethanol.

In November, Rex Tillerson, Exxon's chairman and chief executive, called in a speech for "steps now to reduce emissions in effective and meaningful ways." Then he listed two: boosting automotive fuel economy and cutting emissions from coal-fired power plants.

Vinod Khosla : War On Oil

wsj.com : The War on Oil
Excerpts :

Corn ethanol can only supply about 10% of our gasoline needs.

We need cellulosic biofuels to win the war on oil.

My research has convinced me that the benchmark $1.25 per gallon or cheaper cellulosic fuels are less than three years away .

We have seen proposals to make ethanol from corn stalks, switchgrass and other grasses, woodchips, waste carbon monoxide from steel mills, municipal sewage, orange peels and other creative ideas from entrepreneurs.

We must encourage research on biomass feedstocks, tomorrow's "energy crops." Switch grass or miscanthus grass are economic for farmers at the yields of six tons per acre today, but we need even higher yields and "grass cocktails" to avoid the problems of monoculture agriculture. We need significantly more research in agronomy practices focused on energy crops. Miscanthus already yields 15 tons per acre in a wide variety of regions, including the U.K., and in Illinois test plantings.

We have found scientists working on energy breakthroughs at Dartmouth (Mascoma), in pipe-fitting shops in Denver (Kergy), using platforms developed for malaria drugs in Berkeley (Amyris), in other university labs (Gevo and LS9), in India (Praj), in New Zealand and in Brazil.

President Bush must set a very aggressive target for biofuels with an enhanced Renewable Fuel Standard (RFS). My analysis shows 39 billion gallons of biofuels production is possible in the U.S., at reasonable cost, by 2017 on 19 million acres; and 139 billion gallons by 2030 on 49 million acres. Soon we will replace all 150 billion gallons of gasoline that we use on a very small fraction of our agricultural lands while improving the environmental quality of our agriculture (through corn/soy and biomass crop rotation schemes) and improve our rural economy. Consumers can be protected by the RFS if prices get too high by including a price "relief valve" that will also protect livestock producers (who depend on reasonable corn prices).

Such a goal will ensure an attractive market for any company that meets its cost target for biofuels. If all the entrepreneurs fail, the relief valve will protect consumers and related agricultural markets. More importantly, Americans, both Democrats and Republicans, care about energy security. Many of the presidential candidates for 2008 will also support such policies.

Shell CEO on CO2 reducion

FT.com -States should create a climate for change

Excerpts :
Policies need to accelerate society’s search for CO2 solutions and greener fossil fuels.These fall into two broad categories: standards and market mechanisms.

One approach could be to toughen regulations on the energy efficiency of everything from buildings to consumer appliances. This would help to encourage conservation. Japan, which has promoted conservation through a variety of rules since the 1970s energy crisis, provides a good example of how effectively they can influence consumption. Japan used the equivalent of 2.8 tonnes of oil per person in 2004, compared with 5.4 tonnes per person in the US, according to the International Energy Agency.

Carbon trading needs to become global in order to be truly effective.

Governments can partner with industry on large-scale projects to capture and store CO2 from sources such as power plants. Indeed, power generation offers one of the biggest opportunities for limiting emissions. Generation is now responsible for 41 per cent of global energy-related carbon emissions, according to the IEA. That could rise to 44 per cent by 2030, as electricity takes a bigger share of energy consumption. Unlike vehicles, power plants are stationary, making it easier to capture the carbon they emit.

Under Europe’s current carbon trading scheme, companies that undertake projects to capture and store CO2 receive no credit for the reduction in emissions. That must change.

Biofuels made from plants and organic waste also have the potential to lower transport emissions. Today, however, many are made from food crops such as corn and sugar cane that require lots of energy to produce. Although these fuels can reduce emissions, second-generation biofuels made from non-food sources could offer even greater reductions.

At Shell we focus on second or even third-generation biofuels that squeeze more litres out of fewer acres.

Since 2000, we have invested more than $1bn (£503m) in alternative energy sources such as wind, solar and hydrogen. Our aim is to turn one of them into a substantial business over time.


Wednesday, January 17, 2007

Green energy investment roundup

Booming sales for wind turbines ... Tesco devoting $100m for renewable energy use in its stores ... global investment reaching $70.9b in green energy ... 34% companies of NEX index are not profitable ... NEX index growing at 30 percents over the last 4 years ... EU targets 12 percent renewable energy usage by 2010, double current levels ... Stern report estimates that cost of reducing carbon emission will be 20-24 euros per tonne of CO2 ... Goldman Sachs takes a 10% stake in Climate Exchange, which trades on carbon emissions ... wind has been the best performing sector so far ... expectations that the wind sector will grow 21 per cent next year and the solar power sector by 25 per cent ... more and more companies are becoming profitable ... check www.investability.org and www.eiris.org for information about clean energy funds

Excerpts from : Cleaning up on energy investments

Rising concerns over actual benefits of carbon credits

There are rising concerns over the actual environmental benefits of some of the carbon credits being traded.
Most prominent concerns are :
1. HFC scrubbers (critics are complaining that these should have happened anyway, and should not be used to earn millions in carbon credits as they involve very little effort)
2. Some voluntary market schemes, like tree planting, which are not verifiable and not evaluated in details.

Also read : Concern as carbon traders scoop billions

Chinese way of reducing global warming

Chinese factories and some carbon traders are minting money by installing HFC scrubbers, a cheap but very lucrative area in terms of carbon credit. HFC as a greenhouse gas is much more dangerous than carbon dioxide. European companies are buying these credits to meet their carbon emission target.
Also read : China ‘exploiting Kyoto loophole’

Green-Mart

Wal-Mart is planning to use solar panels at many of its stores. In the process, it will generate 150 megawatts of power. Wal-Mart is exploring the options of owning its solar energy systems, leasing them, or simply buying power from Wal-Mart roof panels owned by the solar company. In comparison, Google solar scheme would only generate 1.6 megawatts of power.

Read BusinessWeek for more : Wal-Mart: Let The Sun Shine In?

Green Money

Excerpts from Investing in climate change

The preconditions exist for another alternative-energy boom. Climate change is rarely out of the headlines. Even sceptical governments are interested in the field, if only for the sake of energy security. High oil and gas prices have made alternatives look more economically viable. And the sector is so diverse that even if one technology disappoints, others can take over.

The sector can be divided into six parts : wind power, solar, biofuels, carbon trading, “blue sky” (developing technologies such as fuel cells) and energy efficiency. This latter category can include well-established companies, such as those providing insulation to new buildings.

These various sub-sectors go in and out of fashion. Wind-turbine companies had mini-busts in 2000 and 2004, for example. The Impax index of environmental stocks reached its peak in 2000, and is now trading at around only half that level. Another mini-boom appeared to peter out last May. In 2006 biofuels were briefly hot, thanks to high oil prices, which started to make ethanol look an attractive alternative to petrol. That caused a flurry of investment in ethanol plants and the price of sugar (the basis for Brazil’s ethanol production) soared.

But the ethanol bubble was quickly popped when oil prices came down and investors realised the barriers to entry in the industry were fairly low. Investor interest has been switching to the companies that develop the enzymes which break down plant matter and turn it into fuel. “Novozymes, a Danish company, was considered a boring old speciality chemicals company until the enzymes operation was recognised,” says Ronnie Lim, head of sustainable-investments research at Morley, a fund-management group.

The wind market is probably the most developed. Three of the four largest environmental companies by market value (Suzlon from India, Gamesa from Spain and Vestas from Denmark) are wind groups, according to Impax. Turbine manufacturers should prosper in 2007, says Bruce Jenkyn-Jones, Impax’s director of investments: 28 different countries are growing wind capacity, which means that turbines are sold out to 2008. So manufacturers can push through price increases.

In the solar sector, one problem has been a shortage of silicon, which has made panel production very expensive. Eventually, thin-film technology may prove a cheaper replacement, but that is years away from mass production. However, there may be other solar opportunities. Stephen Mahon of the Low Carbon Initiative, which recently launched a £44.5m ($82.5m) environmental fund, says it is investing in Heliodynamics, a company which uses mirrors to focus the sun’s rays and thus increase the power generated.

Investors’ enthusiasm for “blue sky” projects like fuel cells tends to be limited because products will neither have an immediate environmental impact nor produce instant profits. Although the holy grail of fuel cells for cars may be some way from mass production, they are being used in laptops and fork-lift trucks.

The most controversial area is that of carbon credits, which requires energy producers to buy permits to emit greenhouse gases. In 2006 the European Union’s emissions-trading scheme was crippled by the over-allocation of permits by member countries, prompting the price to plunge by two-thirds. But James Cameron, a founder of Climate Change Capital, is optimistic. He has just raised an $830m fund to invest in carbon trading

Tuesday, January 16, 2007

Exit Ramp From Oil Expressway

How the world will reduce its oil dependency in future? A nice overview is in Getting Off Oil.

Excerpts :

Yet in 2007 20 new hybrid models will enter the American market, and operating efficiency will finally become entrenched as carmakers’ top design priority, locking in oil savings for decades. Biofuels, too, will continue double-digit growth as Brazil’s 2006 oil independence and Sweden’s 2020 off-oil goal spur emulation.

Tripled-efficiency, ultralight petrol-hybrid SUVs were designed in 2000, paying back in one year at European and Japanese fuel prices or two years at America’s much cheaper pump prices. In 2007 the Automotive X Prize will start moving such designs to market.

In 2007, too, Toyota will emerge as the leader in super-efficient plug-in hybrid cars: electric for short commutes, petrol-hybrid for long trips. This could double the already doubled petrol efficiency of a Prius. Next, make that car ultralight and its petrol efficiency redoubles. Biofuel it and you quadruple petrol efficiency again, to 30 times today’s norm.

That transition already shapes competitive strategy. Wal-Mart’s new heavy trucks will be a quarter more efficient in 2007 than in 2006. By 2015 they will be twice as efficient, saving over $300m a year. Next will come trebled efficiency, which yields a 60% internal rate of return.

Alan Mulally, whose efficiency-based Boeing strategy is beating Airbus, will bring to Ford Boeing’s focus on ultralight materials (the 787 is 50% advanced composites), systems integration and breakthrough design.

In Washington, DC, a surprisingly strong voice in 2007 for getting off oil will be the world’s biggest buyer both of oil and of renewable energy—the Pentagon. The risk and cost of vulnerable fuel convoys, easy prey to roadside bombs, will persuade military leaders that only super-efficient platforms dragging dramatically slimmer fuel logistics tails, or none, can fight persistent, dispersed, affordable wars. This strategic shift will not just save hundreds of lives and tens of billions of dollars a year. It will also speed key technologies, like ultralight materials, that can triple the efficiency of civilian cars, trucks and planes—just as military R&D created the internet, GPS, and the jet and chip industries. Thus the Pentagon will start to lead America, and the world, off oil so nobody need fight over it.

China’s 2005 adoption of energy efficiency as a top development priority will start paying off.

Monday, January 15, 2007

Price Surge in Grains

Excessive demand for corn to produce ethanol is fueling its price. Farmers are devoting more land to produce extra corn creating pressure in the soyabeans and wheat market also. Soyabeans are in demand to produce biodiesel. China is expected to become a net importer of corn. It is devoting substantial resources to produce more ethanol from it. It has recently signed a deal to invest $3.83bn in one million hectares of land in the Philippines for higher-yielding corn, rice and sorghum.

Source : FT.com : Grains fuelled by alternative uses

New Carbon Trading Venture from Gazprom

Excerpts from FT.com : Gazprom launches carbon trading venture

1. What is the deal?

The joint venture between Gazprombank, part of the Gazprom Group, and Dresdner Kleinwort will invest in projects generating “carbon credits” under the Kyoto protocol, mainly in Russia and eastern Europe.

Analysts have estimated that companies could generate up to 1bn tonnes worth of credits. At current forward prices for 2008 under the European Union’s emissions trading scheme, that would be worth €15bn.

2. What will be the impact on the carbon market?

The emissions credits from Russia and eastern Europe could represent an additional supply of up to 10 per cent of the EU market, putting downward pressure on the price of carbon in the trading scheme. This would have the effect of making it cheaper for European companies to emit greenhouse gasses.

3. How will Gazprom do it?

Gazprombank had clients in the oil and gas, petrochemicals and metals industry that were interested in carbon trading.

Gazprom can benefit directly, by selling credits it has earned.

Olga Gassan-Zade, head of the Kiev office of carbon analysts Point Carbon, said Gazprom had the potential to reduce its emissions by fixing leaks and overhauling its compressors, which could generate up to €2bn through carbon credits.

4. Who will buy these credits?

Hedge funds and other institutional investors, as well as governments and companies covered by the emissions trading scheme are expected to be among the eventual buyers of the credits.

Gazprom wants to build its London-based trading arm into a full-service energy trader, dealing in oil, power and liquefied natural gas as well as carbon permits and conventional gas.

The Carbon Market

Excerpts from FT.com : Europe hopes to avert a false economy in carbon

1. What is EU Carbon Trading Scheme?

The scheme works by issuing companies in some energy-intensive sectors with tradeable permits for each tonne of carbon dioxide they are allowed to produce. If they want to emit more, they must buy permits from companies with spares.

The EU’s emissions trading scheme is just part of the worldwide trading system envisaged under the Kyoto protocol. The clean development mechanism, a key component of the treaty, encourages the introduction of low-carbon technology in poor countries by allowing rich nations to offset the emissions thus avoided against their own Kyoto targets.

2. How are some companies making money from this scheme?

Enterprising companies are embarking on low-carbon projects in developing countries in the hope of generating credits, which they will then be able to sell to the highest bidder on the international carbon markets. Lafarge, the cement company, for example has built wind turbines on a cement plant in Morocco.

3. Will America go the way of Europe?

Several American states are working on plans to limit their own greenhouse gas emissions and could embrace emissions trading. The appointment of Hank Paulson, who has strong environmentalist credentials, as Treasury secretary has also heartened the treaty’s supporters.

4. What is the future of Carbon Market?

Businesses will have to prepare seriously for the effects of the carbon economy which, trends suggest, will only grow stronger over the next few years. According to a World Bank report, countries traded more than $10bn of the gas with one another last year and there are predictions that carbon worth $25bn-$30bn will be traded this year.

As the 2012 deadline to meet Kyoto targets approaches, more and more countries have a vested interest in entrenching the trading system. If it continues on its current course, it could even offer the best hope the world has of limiting the ravages of climate change.