Wednesday, April 30, 2008

Trashing LNG-- Literally.

Waste Management is making a $15 million investment in German technology to turn methane gas from a landfill in Livermore into LNG for its fleet of 358 trucks, and possibly for resale. Currently, the company imports LNG from Arizona for its trucks.

At full capacity, the system will produce 13,000 gallons of LNG per day, enough to fuel 300 trucks.

The landfill already captures gas from its operations and uses it to power an 8 MW generation facility on site. The power generated is sold to PG&E.

The LNG project requires the approval of Bay Area air quality regulators.

Tuesday, April 29, 2008

For Oil, Politics Trumps Economics

The oil story du jour comes from the New York Times, which paints an unsurprisingly bleak picture of a future global supply crunch that will make today's problems look benign.

The Times notes that geopolitics is driving oil prices higher at a time when basic economics should be driving them lower. Higher prices should result in curtailed demand and, while that trend is evident here in the U.S. as consumers are driving less, just the opposite is happening in devloping countries around the world:

"In the United States and through much of the developed world, the higher fuel prices have led drivers to reduce their consumption, and gasoline demand is expected to drop this year. But that drop will be more than offset by the rise in energy demand from developing countries. In the next two decades, demand is projected to jump by 35 percent, and developing countries will consume more oil than industrialized countries."

A logical response to this pattern would be to ramp up production, but OPEC is-- unapologetically--- a cartel that exists to manipulate supply and prices, and non-OPEC countries have not stepped up to the plate.

According to the Times:

"Some regions are simply running out of reserves. Norway’s production has slumped by 25 percent since its peak in 2001, and in Britain, output has dropped 43 percent in eight years. Production from the giant Prudhoe Bay field in Alaska has dropped by 65 percent from its peak two decades ago.

In many other places, the problems are not below ground, as energy executives like to put it, but above ground. Higher petroleum taxes and more costly licensing agreements, a scarcity of workers and swelling costs, as well as political wrangling and violence, are making it harder to raise production."

All of this leads experts to the inescapable conclusion that things are not getting better any time soon.

Monday, April 28, 2008

Going Bananas Over Trasmission Lines

The Economist takes a look at the challenges of building transmission infrastructure to support alternative energy like wind and solar. Not only is it expensive, but local opposition to running new lines is usually fierce (the Economist notes that developers face a hyper-NIMBY backlash called a "BANANA"-- "Build Absolutely Nothing Anywhere Near Anything.").

According to a Cambridge Energy Research Associates study, $12-$15 billion per year is spent on transmission infrastructure. The costs vary wildly. The Economist notes that it costs approximately $500,000 a mile in rural Kansas, and $20 million a mile in suburban Boston.

Friday, April 25, 2008

Ssssshhhh.....we're lobbying....

The Califronia Clean Energy Fund put out a press release this week trumpeting the formation of the "Center for Innovation and Stability," which CalCEF explains is "a new public policy arm created to address critical issues affecting the long-term transformation of the energy industry".

Basically, it looks like CalCEF has set up a lobbying arm and CalCEF VP Dan Adler has been promoted to run it. Adler is a former PUC staffer with experience on green energy, climate change, social responsibility, etc.

It makes perfect sense for CalCEF to take this step because it needs to protect its investments in green energy sector, which is more or less constantlly in play at the legilsative/regulatory level. However, I don't think I have ever read a more convoluted, circuitous press release in my life!

CalCEF goes out of its way to make the "Center for Innovation and Stability" sound like a think tank and not a lobby shop. The closest they come to actually describing what the Center will do is:

"The Center for Innovation and Sustainability will identify high-value points of intervention around key issues, seeking to become the “connective tissue” between participants in policy, technology and finance, and develop high-impact recommendations to the policy community. "

(It sounds like you're lobbying... it's ok you're a 501(c)4, you're allowed... just say it!)

I imagine some hapless PR flack cranked out the first draft of this release and sent it to his/her client for approval, then-- after 25 people weighed in with changes-- it came back in its current form, where the new venture is now described as "connective tissue." Good luck, Center for Innovation and Stability, you're going to need it!

CalCEF is a non-profit fund established out of the PG&E bankruptcy settlement that invests in "companies focusing on renewable energy, energy efficiency, energy storage, and other products and services that are designed to enhance the clean energy sector".

Thursday, April 24, 2008

Unanimous Approval for New PG&E Plant

The CEC voted 4-0 to approve a new $673 millon, 660 MW, gas-fired power plant in Colusa, CA. The plant will be built by PG&E and it will be the second plant the utility has built since being forced to sell off its generating facilities as part of the deregulation.

According to the San Francisco Chronicle:

"Since the deregulation crisis, 38 power plants have been built in California, according to the Energy Commission. Although some other, older plants have been decommissioned, enough electricity has been added to the state's grid since 2001 to power 5.2 million homes. Another six plants are under construction, capable of powering an additional 1.7 million homes. "

Wednesday, April 23, 2008

The More Things Change...

If you thought it was hard to cancel a cell phone contract or a gym membership, just try ditching a utility!

Lost amid all of the rancor over the ongoing public power battles throughout the state is a particularly annoying fact: even after you switch to a locally owned utility, the big boys will keep on billing you!

The San Jose Mercury News reported yesterday that PG&E will continue to send bills for the next three years-- and possibly longer-- to residents and businesses in the East Bay town of Hercules who left PG&E and are now receiving their electricity from the Hercules Municipal Utility.
PG&E spokesperson Nicole Tam notes, "We understand this is frustrating and isn't going to make a lot of people happy." Umm, yeah.

The Merc explains the situation:

"The bills are arriving for two reasons. First of all, if PG&E loses a customer to another electric service provider, the utility is allowed to bill the customer for what is known as "departing load" fees. This is becauses PG&E buys its electricity in advance based on how much demand the utility expects. When a customer defects, PG&E finds itself with excess expenses, and this is a way to help the utility recover its costs.

Second of all, the fees are especially high because of huge expenses that were run up when PG&E was deregulated in 2001. During California's 2001 energy crisis, PG&E went bankrupt and was no longer able to purchase electricity on credit. The Department of Water Resources and a third party paid for electricity to keep the lights on in the state of California, and the people of California are now repaying the money via these bills."

PG&E billing non-customers [San Jose Mercury News]

Tuesday, April 22, 2008

Battling It Out Over Carbon Credits

Margot Roosevelt broke down the ongoing fight over the Cap and Trade carbon credits for California utilities and public power producers.

Public power tends to rely on dirtier (read: "coal") power produced out of state, while investor-owned utilities are further down the green energy road. The new system would level the playing field, but at great cost to the public power producers and the customers they serve.
The LADWP is the nation's largest public utlility so it's not surprising that Antonio Villaraigosa and David Nahai are furiously lobbying to alter the proposed program to ease some of the pain.

One big problem, from a regulatory standpoint, is how to deal with power purchased from out of state. A potential solution is to regulate "first deliverers" who take receipt of the power when it hits California, but critics of that plan point out that often these first deliverers could be foreign entities beyond the scope of state regulation.

A battle royale, if ever there was one. Read all about it:

California utilities scuffle over cap-and-trade [Los Angeles Times via Grist Magazine]

Monday, April 21, 2008

Coastal Commission Slams PXP's Deal With Environmentalists

The unusual alliance between environmental groups and the Texas oil company PXP has taken an interesting turn as the Coastal Commission weighed in and basically slammed the confidential pact.

The Commission wants to review the fine print in the compact between the erstwhile adversaries before it moves ahead. "No deal," say the environmentalists, claiming that "legal settlements" are routinely confidential.

For groups like Get Oil Out!, the Environmental Defense Center, and the Citizens Planning Association of Santa Barbara to not only back off of PXP, but to actively lobby on its behalf, there's got to be something earth-shattering in the deal.

The highlights have been made public: PXP will shut down the oil field early, donate a ton of land, and write checks for environmental mitigation efforts. However, that's all fairly mainstream. What lurks in the details?

Coastal Commission Executive Director Peter Douglas was quoted saying "That's not going to work."
Assemblyman Pedro Nava (D-Santa Barbara), himself a veteran of the Coastal Commission, quoted Ronald Reagan, citing the need to "trust but verify."
A Democrat invoking Ronald Reagan? Nothing should be surprising in this saga.

Let drilling begin, groups urge [Associated Press via San Jose Mercury News]

Friday, April 18, 2008

The Power of McMansions

McMansions aren't just ugly...

The recent increase in the building of "McMansions" - extra-large homes that replace modest mid-last-century ranch homes and seem to swallow up an entire suburban lot - has long been controversial from an aesthetic point of view.

Now the overall environmental impact of large homes has come into question. At the heart of the debate is whether monster homes - dwellings larger than today's average of 3,500 square feet - use more energy than smaller ones.

Comparing the relative green qualities of a small home with those of a big one is complicated. How do you define the size of the homes? Are larger homes, because they tend to be newer, more efficient due to the use of state-of-the-art building materials?

That said, even Pacific Gas and Electric Co. says that if Home A is one size and Home B is twice that size, Home B will probably use double the amount of energy.

The utility bases its conclusion on what's known as a Residential Appliance Saturation Study. It shows that multi-family buildings - apartments, condos and other dwellings that have shared walls - use less energy than single-family dwellings.

This isn't the same as comparing small homes against large single-family homes, but it does show that smaller dwellings tend to use less energy.

The study has a bright side for energy-conscious owners of newer homes, defined as those built after 1996. It shows that a new 2,039-square-foot home compared with an old 1,434-square-foot home - a 42 percent difference in size - uses only about 20 percent more electricity and 2 percent more gas. This is because of the use of energy-efficient construction and appliances.
It's also difficult to discount the energy hog factor - what difference does size make as far as energy consumption is concerned if the inhabitants are blasting five plasma TVs, three computers and a space heater in every room all day long?

But even when you eliminate that factor, some fixed costs associated with maintaining a dwelling are hard to get around.

Not surprisingly, chief among these are heating and cooling.

The ability to create zones within a house with separate thermostats for heating and cooling specific rooms may seem to solve this problem, but larger homes with unheated or cooled rooms can still waste energy.

This is because the rooms can easily become an "energy sink."

"Let's say you've got a whole guest suite with the guest bedroom and the bathroom and it's adding 3,000 square feet to your house, even if we do cut off the heat and the air conditioning to it ... there's still this big volume of room that is being placed in the sun," said green architect Eric Corey Freed, author of "Green Building and Remodeling for Dummies" and a principal with Organicarchitect in San Francisco.

"If it gets hot, it'll heat up the rest of the house and if it's one of those places that's always cold, it'll cool down the rest of the house. It can really work against us."

Do monster homes use more energy? [San Francisco Chronicle]

Thursday, April 17, 2008

Politics Trumps the Environment... Even in San Francisco

The San Francisco Board of Supervisors yesterday stalled a vote on proposed solar installation grants for at least three weeks. The program up for consideration would dole out grants to private citizens and businesses in San Francisco who install solar arrays.

Total funding for the project would come from San Francisco Public Utilities Commission and would amount to a mere $3 million-- a pittance by today's municipal standards-- so what's the hold up?

The Supes trotted out all of the politically correct explanations: more time is needed to study the bill; it doesn't focus enough on low income housing; will it channel money to people who could otherwise afford to pay to install their own solar arrays, etc. etc... But the real roadblock appears to be good, old fashioned politics.

The program was conceived by, and is being pushed by, City Assessor Recorder Phil Ting, who has no authority in such matters, but who is politically aligned with Mayor Gavin Newsom and rumored to be a candidate for Mayor. Reading the tea leaves, this appears simply to be a case of pols jockying for position.

Meanwhile solar advocates lament the fact that even this borderline symbolic gesture is languishing in political limbo.

A study by the Northern California Solar Energy Association shows that San Francisco ranks last out of ten Northern California counties for per-capita solar installations. However this is more than a little misleading as San Francisco's population density no doubt dwarfs many of the other Northern California counties cited in the study.

S.F. hearings delay solar panel grants [San Francisco Chronicle]

Wednesday, April 16, 2008

Marin County Joins The Public Power Play

The trend towards public power must remind PG&E of that old carnival game "Whack a Mole" where kids "whack" moles with a mallet as they pop up randomly and with increasing speed. The latest effort to "pop up" is in Marin County where locals are launcing a communitiy choice aggregation plan called "Marin Clean Energy."

According to the San Francisco Chronicle:

"Under Marin's plan, five years in the making, a joint power authority composed of representatives of all 11 Marin County towns would oversee the program. Officials expect to submit the plan to the California Public Utilities Commission for approval next year.

Ratepayers would have a choice: "light green" or "dark green." Light green customers would get 25 to 50 percent of their energy from "qualified" renewable sources - everything other than large hydropower. PG&E estimates 14 percent of its energy will come from renewable sources this year.

Dark green would offer 100 percent renewables. PG&E would still distribute power and maintain poles and lines; Marin would simply choose other energy generators. (Technically, electrons can't be tagged "green" or "brown" - advocates say demanding renewable sources forces more into the overall grid)."

Not surprisingly, PG&E isn't happy. Calling PG&E "the player that stands to lose the most," the Chronicle notes:

"The company has a long history of successfully staving off public power efforts in San Francisco and elsewhere. This week, the utility settled a dispute with a Central Valley power authority over the company's marketing tactics, which appear to have helped persuade Tulare County and the city of Fresno to stop pursuing local control of their power. Marin officials expect the same onslaught.

"They're throwing up regulatory, legal, political roadblocks," said Tim Rosenfeld, project director for the Marin Energy Management Team"

Similar CCA efforts are underway in San Francisco, Berkeley, and Beverly Hills, and PG&E is locked in a nasty public power fight with the South San Joaquin Irrigation District that featured a recent legal settlement for some ethically questionable tactics by PG&E.

Tuesday, April 15, 2008

Piling on Ethanol

Two days, two newspapers, two stories bashing ethanol... I'm starting to see a pattern here.

Elizabeth Douglass in today's Los Angeles Times has a story about how ethanol is wreaking havoc on the boating industry by disolving fiberglass fuel tanks and ruining engines.

Not that anyone should shed a tear for the recreational yachting industry given the real challenges facing the rest of California which is having a hard time gassing up cars, let alone cabin cruisers, but you can bet the lawsuits are coming en masse.

Interesting to note CARB professes to be surprised by this development. In a bit of tragic irony, you might recall that CARB was among the agencies leading the charge against MTBE, with the idiotic claim that MTBE was causing underground storage tanks to leak. Now MTBE's replacement-- ethanol-- actuall is causing tanks to leak and CARB is completely caught off guard.

Monday, April 14, 2008

Bashing Ethanol

The Oakland Tribune runs what appears be a nice puff piece on a local biofuel company called Blue Sky. However, the article quickly turns from a small business feature into an accross-the-board indictment of ethanol!

The company has an interesting story-- small business, locally owned, that converts used cooking oil from local restaurants, the Oakland Coliseum, and UC Berkeley into biodiesel.
A brief assessment of the market niche provides a segue into a discusion of ethanol that includes a litany of facts and projections that were repeatedly ignored during the great run to ethanol over the last few years, but that are now hot stuff for the media:
  • Ethanol is diverting corn from food production and drving up the cost of corn.

  • Ethanol could actually increase global warming because the greenhouse gases released in its production and transportation are so signficant.

  • Ethanol can't be shipped by pipeline because of its chemical properties, so it relies on diesel trucks to move it around...
All the best laid plans....

Friday, April 11, 2008

A "Win-Win" or a "Slick Deal"?

Houston-based oil company PXP has cut the unlikeliest of deals with its longtime nemises in the environmental community. There is a cynical old saying that "everything is for sale, and everyone has their price"-- so it seems!

In return for agreeing to shut down its offshore drilling operation early (by 2017), donating 200 acres of coastland and 3,700 more acres in wine country (and thereby killing a proposed housing development), and donationg millions to a carbon offset program, PXP will enjoy the full supoort of some heavy hitters in the environmental activist community when it petitions for the right to start drilling the Tranquillon Ridge oil field now.

Tranquillon Ridge is about 4 miles off the Gaviota Coast and PXP already has a platform and pipelines in place. Projected yields for the field are 200 million barrels of oil and 50 billion cubic feet of natural gas.

According to the Los Angeles Times:

"PXP wants to drill 22 wells using slant-drilling technology from platform Irene, which is 4.7 miles from shore, outside the three-mile limit of state waters. These wells would burrow on average 3,000 to 5,000 feet into the seafloor and reach as far as five miles from the platform to tap the reserves beneath submerged state lands."

Before any oil can start flowing, however, the application has to be approved by the usual gaggle of regulators: the county, the State Lands Commission, the Coastal Commission, and the Department of Interior.

Thursday, April 10, 2008

LA Private Equity Firm Embracing a Different Kind of Green

Beverly Hills- based Omninet Capital (the investment company helmed by billionaire Neil Kadisha) announced an innovative redesign of the manufacturing facility for its Vernon-CA- based PWP industries which makes polystyrene packaging (not the most eco friendly product in the world).

PWP's Texas facility will now use solar power and will heat its facility with energy created by its manufacturing process. The company stated in a press release that "going green" equates with improved customer service.

Neil Kadisha has a track record of going green. His former company, Qualcomm, has earned the distinction of LEED Gold Certification for the W campus. The Leadership in Energy and Environment Design (LEED) Green Building Rating System is the nationally accepted benchmark for the design, construction, and operation of high performance sustainable building.

The trend among private equity investors who control companies that produce products with less-than-stellar environmental impacts, appears to validate the economic benefits of adopting more environmentall friendly practices in industry.

Wednesday, April 09, 2008

Public Enemy #1!!!!

Well it was just a matter of time until somebody, somewhere, in some position of authority discovered the dirty little secret about hybrid cars-- they have nothing to do with conserving energy and reducing greenhouse gas emissions-- they are merely deviously desinged instruments of death intended to exterminate the visually impaired!

Does that sound stupid to you? It should.... and so should the bill being sponsored by Rep. Edolphus Towns (D-NY) and Rep. Cliff Stearns (R-FL).

The bill would require the Department of Transportation to "establish safety standards" for hybrids which make little noise and can't be heard by blind people. Effecitvely, this will mean some expensive add-on to all hybrid cars, like the beeping sound a truck makes when backing up-- only this would beep constantly, which would probably violate a host of noise ordinances and drive people crazy, creating a new regulatory mess to deal with.

According to preliminary results of a new UC Riverside study, a hybrid car has to be 40% closer than a regular car to a blind person to be heard.

The National Federation for the Blind apparently is the driving force behind this bill, although the NFB admits it is not aware of a single case of a blind person being struck by a hybrid.

Tuesday, April 08, 2008

SDG&E Can't Lose

Sunrise Powerlink is not just controversial-- it's expensive...really expensive. And we are just talking about the permitting process!

SDG&E has reveald that it expects to sepnd over $125 million on the permitting process alone! This is not all that surprising when you consider that the project boasts a 7,500 page EIR and significant pockets of opposition all along its proposed route. And $125 million is just a drop in the bucket compared to the $1.5 billion the project will ultimately cost in total.

But don't shed a tear for SDG&E. Even if Sunrise gets killed, SDG&E plans to "recover its costs" from ratepayers across the state. According to the Union Tribune:

"SDG&E plans to recover its costs from ratepayers throughout California. Niggli said the utility can recover its skyrocketing application costs even if the California Public Utility Commission rejects the Sunrise Powerlink project.

Under law, SDG&E would ask the Federal Energy Regulatory Commission to recover its costs from the utility customers of the California Independent System Operator, which operates the state's power grid. Such customers include SDG&E, Southern California Edison and Pacific Gas and Electric."

Monday, April 07, 2008

Hold On To That Sempra Stock

The Wall Street Journal's Rebecca Smith has an homage to Sempra in today's edition, praising the company for its foresight in investing in gas (inlcuding LNG). A nice "big picture" piece but not much new other than the forecasts included at the end:

"Sempra expects net income of $835 million to $1.07 billion in 2008 and $970 million to $1.12 billion in 2009. It expects to use $3.4 billion for share repurchases and dividends, including a 9% increase in its dividend, effective in July, to $1.40 a share annually."

Friday, April 04, 2008

Reality Check

Michael Hoexter throws cold water on the immediate future of distributed energy products like wind, solar, and other renewables and concedes that more traditional grid-based, high voltage transmission (tied to fossil fuels) will continue to hang around unless we adopt a radically more efficient and conservation-oriented lifestyle.

Hoexter notes:

"Distributed energy will continue to grow in importance and popularity, but alone it is insufficient to address the climate crisis. Large-scale renewable power in combination with aggressive energy efficiency and distributed generation will be absolutely necessary to meet the very ambitious GHG reduction and energy independence goals that we are setting for ourselves."

At the root of this slow evolution is human nature:

"Some fans of self-sufficiency are willing to devote time, mental bandwidth, and money to set themselves up to live off the grid (or live in remote areas anyway). But most of the population is either not inclined to live this way nor in the position to act on the inclination. The ideal of autarky is not everybody’s social or energy utopia; however, a substantially more energy-efficient lifestyle and built environment is, in my book, a categorical imperative.

Currently, grid-tied distributed generation is the far more user-friendly option. A hidden component of the argument for these systems is “grid storage,” the notion that when your system isn’t producing energy, the grid will supply you with the energy that you need. Unfortunately, that grid is emitting some of the GHGs that you may be trying to avoid with your distributed generation system, especially in areas with coal-fired baseload, a fairly common situation in the sunny Southwest or windy Great Plains."

Thursday, April 03, 2008

California: Tax Gaz Guzzlers!

A new San Jose State University poll finds that Californians support revamping gas taxes and vehicle registration fees to reward low emission vehicle drivers and penalize high emission vehicle drivers. Specifically, the survey found support for:

- Raising vehicle registration fees, which now average $31, to an average of $62 and having higher-polluting vehicles pay higher rates and cleaner cars lower rates.

- Offering rebates of up to $1,000 for people who buy new cars that emit very little pollution and levying a surcharge of as much as $2,000 on those purchasing gas hogs.

- Levying a mileage-based tax that would replace the 18-cents-per-gallon gasoline tax. The per-mile amount would vary depending on how much a vehicle polluted the air.

Writing in the San Francisco Chronicle, Michale Cabanatuan notes:

"The idea of using incentives to persuade motorists to drive cleaner, greener vehicles is nothing new. People who buy hybrid vehicles get federal tax credits, and drivers of electric, natural gas and some hybrids are allowed access to carpool lanes even if they aren't carrying any passengers. A bill that would have offered rebates to buyers of cleaner, greener vehicles made it to the Assembly floor last fall before failing."

The poll also found:

- 63% of those surveyed said they would support raising vehicle registration fees to reward drivers of cleaner cars, compared with 40 percent support for a flat-rate increase.

- A tax and rebate system for vehicle purchases, depending on their emissions, was backed by 65 percent of those surveyed.

- A vehicle mileage fee of 1 cent per mile driven was backed by 28 percent of those surveyed, and support increased to 50 percent when the amount of the per-mile charge was varied to penalize more-polluting vehicles.

Survey methedology: Telephonic, 1,500 participants, MOE of +/- 2.5%.

Poll: Make gas guzzlers pay higher fees [San Francisco Chronicle]

Wednesday, April 02, 2008

Stockton Mayor Goes To the Mattresses

Remember the great scene in The Godfather where the Corleone family henchmen hunker down in the family compound during a war among the various crime families in New York? Well, the Stockton Record seems to think that Mayor Ed Chavez's decision to convene a war council behind closed doors to plot strategy against PG&E is eerily similar.

According to the Record, Chavez's secret proceedings violate the Brown Act and that the public has the right to know what is going on with the City's $368 million bid for PG&E's electric utility. The paper does acknowledge that this wuld give PG&E an inherent advantage due to the utility's less than perfect record on playing fair, but the law is the law.

In 2005 a PG&E consultant swiped information from computers at the South San Joaquin Irrigation District (which is involved in a takeover fight of its own against PG&E) and that led to a $400,000 settlement paid out by PG&E last September.

Tuesday, April 01, 2008

Things are really looking up...

Several interesting things to note:

Paul Rogers in the Mercury News writes about Arnold's underperforming "Hydrogen Highway"

Zach Coile in the Chronicle has a piece on the House's decision to ban offshore drilling off the Sonoma coast.

Elizabeth Douglass in the Times notes the operational difficulties being incurred by the much ballyhooed Pacific Ethanol as a result of rising corn and construction prices.

So hydrogen is a bust (so far), the already heavily subsidized ethanol is having a hard time making a go of it, offshore drilling resides with nuclear and LNG imports on the "banned list".... things are really looking up.