Wednesday, November 26, 2008

Over the Hills...

And off to Grandma's house we go...

Gotta take advantage of some of that $2 gas!
Happy Thanksgiving!

Tuesday, November 25, 2008


Clean Energy Fuels Corp obviously learned a thing or two from the Cabrillo Port LNG debacle-- first and foremost, that if you want to build an LNG plant, stick it somewhere out of the site lines of millionaire Malibu NIMBY's and you'll be just fine.

The company has started the largest LNG plant in the Southwest and the first large-scale LNG plant in California... out in the Mojave Desert. While the company resisted the urge to name the facility after company patriarch T. Boone Pickens, as it did another of its LNG lants in Texas, this is 125 miles from Los Angeles in Boron, CA, the facility ultimately will produce up to 240,000 gallons of LNG per day, and it is home to a 1.8 million storage tank. Initial deliveries have gone to the company's clean truck LNG refueling station in Carson.

Miraculously, Pearce Brosnan and the rest of the Malibu Millionaires have been conspicuously silent in their opposition to this project.

Monday, November 24, 2008

Alternative Energy Lobby Wants Obama to Step Up

Time magazine steps up and pans President-elect Obama's ambitions energy agenda as being woefully inadequate. So much for the political honeymoon!

Time takes up the case of alternative energy producers who, depending on your point of view, are either the key to future sustainablity or rank opportunists looking to gorge themselves at the government trough.

According to Time:

In a press conference last week the leaders of the solar, wind, geothermal and hydropower industries called on Obama and the incoming Congress to look ahead. First, energy leaders asked Obama to immediately adjust the alternative-energy production credit to provide green investors with a cash rebate, rather than a tax reduction. With the economy tanking, simple tax credits — which Congress renewed in October and without which the renewable-energy industry would not survive — aren't the lure they once were for companies looking to invest in new energy projects.

Other items on the renewables industry's wish list: a national renewable-energy portfolio standard, which would require a certain percentage of U.S. electricity to come from alternative sources. (More than 20 states already have similar standards, but a national one would be tricky, given that utility regulation in the U.S. is localized.) Green energy leaders would also like to see an executive order that would greatly expand the federal government's procurement of renewable energy — a smart idea, easily doable — plus a major initiative to update and smarten the nation's aging, overworked electrical grid. That last item is a necessity, if the country has any hope of scaling up alternatives. A report published Nov. 10 by the North American Electric Reliability Corporation found that without drastic investment in a better grid, scaling up intermittent renewables like wind and solar could lead to frequent blackouts. And there's no better way to turn people off of renewable energy than to periodically plunge them into TV-less darkness.

The report cites the International Energy Agency's forecast that demand for energy will increase by 45% by 2030, and a minium cost of $26 trillion will be requied to meet that demand.

Friday, November 21, 2008

Falling Demand Spooks Utilities

The Wall Street Journal's Rebecca Smith is becoming required reading. Today she has a great piece on the effect declining electric consumption is having on utilities.

A trend is developing in pockets of the country where household and business consumption of electricity is falling. Experts concede that this shift is not necessarily a knee-jerk reaction to the worsening economy, but is perhaps a new reality that presents a serious problem for utilities.

Smith writes:

"The data are early and incomplete, but if the trend persists, it could ripple through companies' earnings and compel major changes in the way utilities run their businesses. Utilities are expected to invest $1.5 trillion to $2 trillion by 2030 to modernize their electric systems and meet future needs, according to an industry-funded study by the Brattle Group. However, if electricity demand is flat or even declining, utilities must either make significant adjustments to their investment plans or run the risk of building too much capacity. That could end up burdening customers and shareholders with needless expenses."

In response, many utilities are considering changing the way they set rates, embracing "decoupling" which ties rates to the actual cost of delivery and counts sales in excess of that hard cost as pure profit. This has been met with some resistance, however, as it would almost surely mean higher rates for consumers who use less energy.

Thursday, November 20, 2008

Economic Woes Slam Renewable Energy Agenda

Writing in the Wall Street Journal, Rebecca Smith gives a snapshot of the state of affairs in the alternative-energy-devlopment world, and speculates about what impact it will have for President-elect Obama's ambitious green agenda.

We've made mention (a lot) of Obama's aggresive plans to develop new green energy projects, and how the political stars appeared to aligning in Congress to support that effort, but all of that could be for naught if the actual companies responsible for building and implementing the projectrs can't get financing to make them happen.

Smith notes:

"Hobbled by the financial crisis, power companies across the U.S. are slashing capital budgets and canceling projects for clean electricity. Financing for new nuclear power plants appears shaky. And some energy companies are even having trouble satisfying their short-term needs for cash.

Forging a new energy future by creating vast amounts of wind, solar and, possibly, nuclear energy is one of Mr. Obama's highest priorities. But enacting that policy depends to a large degree on the ability of energy companies and utilities to finance the massive new investments that would be needed. With many of those companies cutting spending, a lot of those investments are being pared back or eliminated."

Evidencing this trend, Smith points to the cancellation of a massive solar project in the Mojave Desert by Clear Skies Solar, and points out that Calpine is hoarding cash (not spending it on development) to offset its ongoing financial woes which are illustrated by its stock price which is down 60%.

So add one more obstacle to the list of roadblocks confronting the new green-energy future. Not only is it inefficient and and poorly positioned to hook into the grid, it is capital-intensive at a time when there isn't much capital to be had.

No one will dispute that green energy is the way of the future and much-needed, but the road ahead is long and increasingly bumpy.

Wednesday, November 19, 2008

Peevey Lines Up With SDG&E on Sunrise Powerlink

Mike Peevey came out yesterday and threw his support behind Sunrise Powerlink, recommending its approval with no strings attached.

This adds a third option to the debate over the transmission line, after a PUC Adminstrative Law Judge recommended to kill it, and another commissioner recommended approving it will all sorts of green energy requirements attached.

The transmission line, which could cost ratepayers as much as $1.9 billion could be decided on as early as December 18.

The Union Trib has the story:

Regulator breathes life into Sunrise Powerlink [San Diego Union Tribune]

Tuesday, November 18, 2008

Political Maneuvering on Capitol Hill

The biggest fight playing out inside-the-beltway this week is Rep. Henry Waxman's in your face challnge to Rep. John Dingell (D-MI) for the Chairmanship of the House Energy & Commerce Committee.

Dingell is 81 and has been the Committee's top Democrat for 25 years who, hailing from Michigan draws his power from the once-influential, now-embattled automobile industry; Waxman is combative, liberal who carries a green energy in his pocket that flies in the face of Dingell's hesitation to do anything that could run counter to the interests of the auto industry.

"Waxman, on the other hand, is a partisan pit-bull. The very definition of a Hollywood liberal (that is his district, after all), he has used the committee to pursue investigation after investigation of the Bush administration, threatening countless officials with subpoenas and/or contempt of Congress. He launched the much-covered, much-criticized investigation of steroids in baseball. Waxman has pushed the very kind of environmental regulations Dingell has opposed, regulations that could further hurt the bottom lines of the American auto industry at a time when its very future is in question. And don't even think of using the word "tobacco" around Chairman Waxman, not even if you happen to be president-elect."

Jay Newton-Small notes in the Swampland blog at, that Obama's incoming Congeressional liaison is Phil Schiliro-- Waxman's former Chief of Staff. Read into that what you will.

Also, writing in Politico today, Patcik O'Conner makes a compelling case for why Waxman's history of spreading cash around to fellow Democrats could carry the day.

Reading the tea leaves, it's difficult to imagine how Waxman doesn't prevail and give the Obama Administration's ambitious alternative energy agenda a friendly ear on Capitol Hill.

Monday, November 17, 2008

Back to Square One on Trash to Energy?

The City of Sacramento sounds like it could be getting cold feet on its proposed investment in a trash to energy facility-- and rightly so.

The City Council is set to vote in early December on whether to commit to a multi-year contract with US Science & Technology, a consortium of companies that propose to build the plasma arc gasification factilty that woul vaporize trash and turn it into energy.

However, a similar project in Florida recently hit the skids after the contractor began to hedge on the viability of the facility and subsequently scaled back projections. Additionally, the company set to build the Sacramento plant was rejected outright by Los Angeles, which considered a similar project.

Perhaps the biggest red flag is US Science & Technology's refusal to divulge detailed financial information to Sacramento until after the Council votes on its contract... huh?

The Sacramento Bee describes the proposed plant as follows:

"The technology is alluring, scoring high in "gee-whiz" value and as an alternative to filling landfills. Gas heated to temperatures approaching those on the sun's surface vaporizes trash, producing a synthetic fuel. Also, the residual molten glass and metals can be sold as filler for road and building construction."

You know what they say about things that sound too good to be true...

Friday, November 14, 2008

The Golden State

In one 24 hour period, Southern California participated in the largest eartquake simulation drill in history (designed to prepare for the impending monster quake that seismologists assure is coming to destroy half of the state) and UC Berkelely released a global warming report that pretty much says that we are more or less toast. Charming.

The Golden State, indeed.

Because I'm pressed for time today and this isn't really the right forum to talk about earthquakes, I'll gently prod you to take a look at the Berkeley study which is positively"Berkeley-esque" in its dire predictions.

Some of the highlights, courtesy of the Mercury News are:

- Water: An estimated $5 billion in levees, aqueducts and other water systems are at risk, and costs could reach $600 million a year in what the researchers call the "high-warming scenario."

- Energy: $21 billion in transmission lines, power plants and grid components are at risk, with annual damage ranging from $2.7 billion to $6.3 billion. Potential impacts could include less hydropower due to less rainfall; more hot days requiring greater use of air conditioning; and more winter storms causing more power outages.

- Transportation: $500 billion at risk to ports, airports, roads and bridges.
- Tourism and recreation: $98 billion in assets are at risk, with annual damage ranging from $200 million to $7.5 billion. "In the highest warming scenario, California's ski industry collapses," Roland-Holst writes. Beaches, golf courses and state and national parks, will be impacted, too.
Real estate and insurance: $2.5 trillion in homes, office buildings, warehouses and other structures are at risk, and water damage could cost $1.4 billion a year, while fire damage could result in $2.5 billion in damages.

- Agriculture, forests and fisheries: $113 billion in crop land and orchards, livestock, forests and squid and salmon fisheries are at risk, with annual damage ranging from $300 million to $4.3 billion.

- Public health: Annual costs due to atmospheric changes range from $3.8 billion to $24 billion a year.

Thursday, November 13, 2008

Give Arnold a Break

The Associated Press is moving a story critical of Arnold's big greenhouse gas emissions conference. I'm not a big fan of conferences, per se, but on its face, this one doesn't seem to friviolous. Yet, the AP has a snarky analysis of the potential carbon footprint of the conference itself:

The AP obtained a list of the more than 1,400 invitees through a California Public Records Act request. If all of them made the trip, their round-trip air travel alone would discharge more than 2,554 metric tons of carbon dioxide - a so-called carbon footprint equivalent to that produced from 424 cars driven for a year.

How is that productive? It's not even ironic. I mean, come on.

I've had fun making fun of the rock star Sheryl Crow's in-your-face environmentalism which flies in the face of the massive carbon footprint of her concert tours, but that's a capitalist enterprise, not a policy conference.

Give Arnold a break on this one. I'm not sure anything will come out of this, but these meetings do have a purpose.

Wednesday, November 12, 2008

DeVore Gearing Up, Pickens Gearing Down

Look for energy to be front and center in the upcoming Senate race between incumbent Barbara Boxer and Assemblyman Chuck DeVore (R-Irvine). DeVore, who we have gushed over because of his efforts to promote nuclear power, cites Boxer's opposition to offshore oil drilling as evidence of how out of sync she is with the voters.

He told the L.A. Times that he plans to take a page from the Barack Obama playbook and raise money in smaller increments through the internet.

Another CalEnergyBlog regular, T. Boone Pickens is begrudingly admitting that freefalling oil and gas prices are eroding the sense of urgency for his "Pickens Plan" and he is now going to shelve some projects for now and spend a little less cash promoting it. A graceful exit? We'll see.

Pickens postpones Texas wind farm [Fort Worth Star Telegram]

Tuesday, November 11, 2008

Pacific Ethanol Hurting

New quarter, same story for Pacific Ethanol. We noted a few months ago that the high price of corn was hurting the company's margins and now the official numbers are in: a $55 million quarterly loss and a closing share price of less than $1. Ouch.

The company cites the high price of corn as the primary driver, but other problems persist as well, such as the falling price of fuel in general and ethanol in particular-- down to $1.80/gallon from $2.45/gallon earlier in the third quarter, debt, and non-cash write-downs on failed investments.

The company is pinning its hopes on a increased federal ethanol mandate that takes effect in 2010 and on the expected green-energy-largesse of an Obama administration. All of this, of course, continues to mask the basic fact that ethanol is a boondoggle that simply is not economically viable on its own.

Monday, November 10, 2008

Energy Concerns Driving Home Purchase Decisions

With the homebuilding industry swooning nationally, perhaps nowhere is the slump seen more acutely in California. Builders are pulling out all the stops trying to move inventory, but an interesting trend is developing where builders invest in energy efficiency and tout it much like car dealers tout mpg for cars.

According to an article in the Atlanta Journal Constitution:

"As builders look for ways to move homes in a lousy market, they’re increasingly taking their cue from automakers and turning toward energy efficiency as a selling tool...

Just like with car buyers, home buyers “don’t want to feel like they’re getting a house that’s like yesterday’s SUV,” said Rick Andreen, president of Shea Homes’ Trilogy division, which sells homes in Deland, Fla., as well as Arizona, California and Washington. “They want to feel like they’re getting a leading-edge, efficient product.”

The piece notes that the primary energy efficiencies in new home construction are:

- Solar: Adding solar panels can cut a typical home’s power bill by 60 percent or more.

Heating and cooling: Furnaces and air conditioners are the single-biggest energy users in a home.

- New energy-efficient models, coupled with programmable thermostats and tightly sealed ductwork, can dramatically reduce costs.

- Insulation and sealants: Extra insulation blown into walls and above ceilings are a big advantage. So are new types of caulks, windows and whole-house wraps that keep cold air out in the winter and cooled air in during the summer.

- Water: Tankless instant water heaters cut down on heating costs. Water-saving plumbing fixtures reduce water usage.

- Building materials: New types of insulated concrete forms, wall panels and flooring help seal a house.

- Appliances and lighting: Government-approved “Energy Star” appliances, reduced lighting and compact fluorescent and LED light bulbs go a long way toward cutting electricity costs.

Energy efficiency drives home building [Atlanta Journal Constitution]

Thursday, November 06, 2008

Environmental Justice Meets Cap & Trade

Writing in Capitol Weekly on behalf of the Coaltion for Clean Air, Shankar Prasad sounds the Environmental Justice alarm and offers the CCA's two cents on how a Cap & Trade system should be weighted against companies doing business in disadvantaged communities.

The CCA suggests that CARB should make a list of economically challenged communities and then charge any company/facility that emits greenhouse gas emissions in those communities a premium for the purchase of offsets. The CCA's theory is that this will curtail the use of offsets in these communities and prevent increased greenhouse gas emissions.

At the heart of the CCA's position is Prasad's notion that:

"When it comes to climate change, low-income communities are at a disadvantage. They are ill-equipped to prepare for or recover from acute climate change episodes, such as heat waves, droughts, flooding, fires or an increase of infectious diseases. On a global scale, low-income communities are increasingly unable to cope with heat episodes, as observed in the recent past in France and Chicago. In 2006, a heat wave crashed over California, killing 145 people and hospitalizing 2,537. "

But Cap & Trade is designed to be a market based solution to GHG problem. Once you start overregulating the market with all sorts of central planing, the market ceases to work. This is a policy question that surely will get more complicated and convoluted as the process grinds on.

Wednesday, November 05, 2008

"It's Not Easy Going Gren"

With wall to wall converage of Barack Obama's historic win including all sorts of speculation about the Fairness Doctrine, we thought it only appropriate to give some bandwidth to the loyal opposition. To wit, the Heritage Foundation's blog post about Obama's green energy agenda:

Commenting on the top priorities of the Obama administration, former Clinton chief of staff Leon Panetta told The Los Angeles Times: “First you’ve got to deal with the economy. If you don’t get that back on track, it undermines every other priority you want to achieve.” And just how does Obama plan to fix the economy? In his closing argument to voters last week Obama promised, “And I will invest $15 billion a year in renewable sources of energy to create 5 million new energy jobs over the next decade — jobs that pay well and can’t be outsourced.”

That $15 billion a year translates into $150 billion over ten years, and as Reason’s Jacob Sullum points out, closely matches the rhetoric of Obama’s enviro-leftist supporters:

The Apollo Alliance, a coalition of environmentalists and labor unions, wants the federal government to spend $500 billion over 10 years to “build America’s 21st century clean energy economy” and thereby “create more than five million high quality green-collar jobs.” Barack Obama says he can accomplish the same goal for only $150 billion, which gives you a sense of how reliable these projections are.

So does it take $500 billion or $150 billion in new government spending to create 5 million new “green-collar” jobs? Listening to some on the left, the answer is neither. It’s zero. A recent University of California study claims that California’s energy efficiency policies have already created over 1.5 million jobs. But as Heritage fellow David Kreutzer points out, this study’s methodology is seriously flawed:

The study notes that per capita electricity use in California is 40 percent less than the national average and attributes this reduction to efficiencies brought on by state policies. But Californians pay 36 percent more for their electricity, have watched manufacturing’s share of state output drop by 15 percent since 1980, need less electricity for heating and cooling than the rest of the nation, live in smaller houses than the national average, and pay billions of dollars to generate electricity using inefficient alternatives.

Obama wants to mandate that 10% of electricity come from renewable sources by 2012 and 25% by 2025. Currently the U.S. gets 8% of its electricity from renewable energy, but that includes 6% from hydroelectric power. Obama’s leftist allies are in the business of tearing down hydropower plants, not generating new capacity. That means biomass, geothermal, wind and solar will have to increase their share of electricity generation from a current 2% to 17% by 2025.

A recent RAND Corporation study found, without “dramatic progress in renewable energy technology,” meeting Obama’s 25% by 2025 goal would cause “significantly increasing consumer costs.” And, as Sullum points out, the study did not even consider “the transition and adjustment costs associated with initiating such a significant shift from fossil fuels to renewable energy technologies.”

Kreutzer concludes:

Energy is a valuable input to the modern economy. Cutting CO2 makes less energy available, and when the impacts are traced through the economy, some jobs are created but more are lost. Counting only the jobs that are created distorts the analysis and invalidates the conclusions.
When all is said and done, restricting CO2 cuts energy, income, and jobs. Pretending that breaking windows creates employment may make choosing among alternatives easier, but it leads to bad policy.

Tuesday, November 04, 2008

Gas Prices Suddenly a Silver Lining

Lost amid the chants of "Drill Baby Drill!" and the onslaught of television advertisements promoting Props 7 & 10 is the fact that gas in California is starting to look kind of cheap!

The Los Angeles Times reports:

"In California, home to the most expensive gas in the continental U.S., the average pump price plummeted 34.7 cents in the last seven days to $2.783. The California average had not been below $3 a gallon since Oct. 8, 2007. It was the lowest state average since $2.710 on Feb. 19, 2007."

Remember back in March when we saw $5 a gallon?

Traders are pegging the plummeting prices on a lack of demand brought on by the lousy economy. Whatever it is, we'll take it...

Monday, November 03, 2008

Nuclear and Geothermal in the news

Two interesting pieces floating in the medisasphere this morning: The Sacramento Bee takes up Arnold's renewed interest in nuclear, and the Los Angeles Times devotes a lot of ink to geothermal.

From the Bee:

Who knew nuclear power was the new green alternative?
Gov. Arnold Schwarzenegger is now pushing that notion, suggesting that nuclear plants could help the state meet its aggressive long-term goals of reducing carbon emissions.
After previously dismissing nuclear power because of waste storage problems, the Republican governor this year has said it should be considered a serious option among alternative fuels.

"I myself think that nuclear power has a great future, and I think that we should look at it seriously again," Schwarzenegger said at a Santa Barbara conference in March. "I know there are people who are scared about it, and I know there are certain environmentalists that put the scare tactics out there, and they frighten everyone that we're going to have another blowup and all of those things. But I think technology has advanced so much."

From the Times:

Geothermal energy may be the most prolific renewable fuel source that most people have never heard of. Although the supply is virtually limitless, the massive upfront costs required to extract it have long rendered geothermal a novelty. But that's changing fast as this old-line industry buzzes with activity after decades of stagnation.

Billionaire Warren E. Buffett has invested big. Internet giant Google Inc. is bankrolling advanced research. Entrepreneurs are paying record prices for drilling leases in places such as Nevada, where they're prospecting for heat instead of metals.

"This is the new gold rush," said Mark Taylor, a geothermal analyst with the consulting firm New Energy Finance in Washington. He credits high fossil fuel prices and concerns about global warming with jump-starting the U.S. industry, along with federal tax credits and state laws mandating the wider use of renewable energy.

Global investment in geothermal was around $3 billion last year, Taylor said. Although that's a blip compared with the estimated $116 billion funneled into wind and solar, it's still a 183% increase over investment in 2006. In a difficult year for alternative energy funding, the industry snagged $600 million through the first six months of 2008, Taylor said.