Friday, July 31, 2009

Pitching A FiT Over Renewable Incentives

The solar energy website Cooler Planet, eviscerated feed-in tariffs on its blog this week. In a brilliant piece of descriptive positioning, the folks at CP refef to FiT's as "German Style Tariffs." That alone should be enough to scare anyone off...

Substantively though, the post explains what FiT's are, and why they are bad...

Given that the PUC is actively considering them as part of the RPS, the post is worth a read.

Feed-in Tariffs, Solar Boon or Boondoggle [Cooler Planet]

Thursday, July 30, 2009

Facing an 0-2 Count on Tranquillon Ridge

Can I take my mulligan now?

Say what you will about offshore drilling, but the political football that is Tranquillon Ridge is starting to become downright entertaining. I don't know how many times we can guess wrong on this project, but it appears that we've done so again!

Last week we posted that, as part of the budget deal hammered out in Sacramento, T-Ridge was a done deal. Take it to the bank. Even the man on the street spoke favorably of it. Then it was voted down in the Assembly in that frantic Friday session. Strike one!

Then, yesterday we noted that PXP put out something of a "sour grapes" press release in which it vowed to press forward with T-Ridge because the Assembly had (I'm paraphrasing here...), to borrow the President's now imfamouse phrase, ACTED STUPIDLY. That post closed with the not-so-presceint rhetorical question, "you have to wonder just how many lives this cat has?"

Well today, CalBuzz reports that a new PPIC poll shows overwhelming public support for the project and its prospects are likely greatly improved. Strike two!

According to CalBuzz:

"A PPIC survey released late Wednesday shows that 55 percent of likely voters support more oil drilling off the coast, compared to 41 percent who oppose it. Among all adults, the gap is narrower — 51-to-43 percent in favor — although this is the second year in a row that PPIC found majority backing for more drilling, which previously was a long-settled issue in the state."

What's next? We're officially out of the T-Ridge prediction business, but CalBuzz includes the following in its write-up:

"The project could return in several venues. Speaker Karen Bass said in a statement after the budget vote that the project “could be reconsidered in August.” Although Bass’s press office failed to return calls seeking clarification about exactly what this meant, it is possible the project could return in a standalone bill. With state revenues continuing to plunge, the project might also be resurrected yet again if the governor and Legislature have to craft another deficit cutting package in the fall or winter.

And as leaders of Santa Barbara’s Environmental Defense Center work to address the problems with the project cited by the State Lands Commission in January – specifically the enforceability of PXP promises to permanently end offshore drilling on four federal platforms in exchange for the state lease – the possibility that Schwarzenegger could name a replacement for Garamendi would be crucial."

Wednesday, July 29, 2009

A Tranquillon Ridge Post Mortem: "Not Dead Yet!"

By now you probably know that the on-again, off-again saga of offshore oil drilling at Tranquillon Ridge off the coast of Santa Barbara is decidedly OFF.

Last Wednesday, we posted that the pending the budget compromise in Sacramento had given the project the green light and that "man on the street" reactions to the deal were mostly positive (as reported in the Los Angeles Times). Well, call us the kiss of death, because 48 hours later, the project got killed again.

Like a cat with 999 lives, though PXP, the Texas company behind the project, is not quitting.

PXP put out a press release on Sunday that basically called out the Assembly for turning its back on a sweetheart deal for the taxpayers and vowed to continue the fight.

Writing in the Ventura County Star, Tim Herdt notes:

"It should be noted that Schwarzenegger didn’t put up a fuss after the Assembly nixed the proposal. In a news conference immediately after passage of the rest of the budget-balancing package, he didn’t mention rejection of the PXP plan.

[Assemblyman Pedro] Nava said he believes that Schwarzenegger’s enthusiasm for the plan may have wilted last week in the face of such strong opposition from environmental groups. One of their messages to the governor, who prides himself on his strong stance on fighting global warming, is that the oil deal would have ruined his environmental legacy.

The message, Nava said, was that if the deal went through, Schwarzenegger’s record on environmental issues would forever be summed up in a single sentence: “Allowed the first offshore drilling in California in 40 years.”

While PXP says that it is "committed to continue working with California's elected and appointed leaders on a potential agreement for the T-Ridge project," and that it " intends to continue pushing for the project based on its merits to the state of California and address any misconceptions that groups may have regarding the project," you have to wonder just how many lives this cat has?

Tuesday, July 28, 2009

California Gets Green Energy Accolades from EPA

The EPA yesterday recognized 20 green energy "partners" for generating the most renewable energy "0n site." These partners included private companies and government organizations, and 8 of the 20 were in California.

The list is as follows:

· Los Angeles County Sanitation Districts, Whittier, CA – 54% green power
· City of San Diego, CA – 27% green power
· San Jose/Santa Clara Water Pollution Control Plant – 56% green power
· City of San Francisco, CA – Percentage of Green Power 3% green power
· Wal-Mart Stores, Inc. / California and Texas Facilities –8% green power
· Macy's Inc. / California and Hawaii Stores – 3% green power
· Safeway Inc., Pleasanton, CA – 3% green power
· Alameda County, CA / GSA Facilities – 11% green power

Here is how the EPA defines its own terms/criteria for selection:

"Green power is generated from renewable resources such as solar, wind, geothermal, biomass, biogas, and low-impact hydropower. On-site green power is deployed directly at energy users' facilities rather than at central power plants. Green power electricity generates less pollution than conventional power and produces no net increase in greenhouse gas emissions."

The release includes more detailed write-ups on each of the named "partners."

Monday, July 27, 2009

Climate(Not So)Smart.

About a year and a half ago we posted an update on PG&E's voluntary "ClimateSmart" program and the results at the time were not so stellar. Only 17,500 people had signed up for the voluntary program to pay a little extra on their montly utility bill to fund green projects designed to offset carbon dioxide production.

Well how has the program done these last 18 months? Not so good.

The San Francisco Chronicle reports that, to date, only 31,000 customres have signed up to pay the roughly $3 a month into the program. That's a little short of PG&E's projects-- like, 5.1 million people short!

In dollar terms, PG&E has spent $9.7 million on the project and gotten $2.6 million in return.

Guess who is funding the difference?

For anyone who said, "the state of California," we completely understand why you would think Sacramento would find itself on the hook for such a boondoggle, but we're sorry to disappoint. Yup, the answer is all of the ratepayers-- whether they are part of the program or not.

While ClimateSmart makes no economic sense whatsoever, let's give credit where credit is due and at least highlight the four projects it is actually funding (as reported in the Chronicle):

So far, PG&E's ClimateSmart program has funded four projects that capture greenhouse gases:

- The Big River and Salmon Creek Forest: Conservation Fund. Sustainably manages 16,000 acres of redwood and Douglas fir trees on the Mendocino Coast, allowing the trees to grow larger and draw more carbon dioxide from the atmosphere.

- Garcia River Forest: Conservation Fund. Manages 23,780 acres of forest in Mendocino County.

- The Lompico Headwaters Forest: Run by the Sempervirens Fund. Protects 425 acres of forest in the Santa Cruz Mountains from logging.

- California Bioenergy project: Uses methane from decomposing cow manure on a dairy near Bakersfield.

Friday, July 24, 2009

Smart Grid Is Back In the News

Lost recently amid all of the other potential roadblocks to meeting the lofty renewable goals set by California and the President, is an old, familiar problem that hasn't gotten a lot of attention recently-- the aging, decrepit grid can't handle that kind of load. A new SmartGrid is required.

In testimony before Congress yesterday, SCE's Vice President for Advanced Technology, Paul De Martini, rather bluntly reminded legislators that the renewable energy goals being bandied about are well and good, but until we invest big time in the grid, it's a moot point.

According to Reuters:

"The Obama administration has called for doubling the amount of U.S. electricity produced by renewable sources, such as wind and solar power, during the next three years to reduce greenhouse emissions that cause global warming.

However, a so-called "smart" grid will be needed to transmit those power supplies from where they are generated in remote areas to consumers and businesses in cities.

"The electricity infrastructure delivering power from a variety of generating sources to our homes, businesses and communities is not suitable for today's needs," said Paul De Martini, SCE's vice president for advanced technology.

"The challenges that face our nation's energy future simply cannot be met by our aging electric grid," Martini said at a House Science subcommittee hearing on how to update the grid."

Thursday, July 23, 2009


Who needs ANWR or offshore oil rigs? Occidental has announced the biggest oil and gas find in California in the last 35 years-- in Kern County!

The field contains as much as 250 million barrels of oil and, according to the Los Angeles Times, "two-thirds of the new source was believed to be natural gas."

Oxy owns 80% of the field; Chevron has the other 20%.

The obvious question is how such a big deposit could go unnoticed for so long? The company chalks up the find to new exploration technology which might cause one to wonder if domestic oil exploration might not see a renaissance now that new technology has hit upon such a significant score...

Wednesday, July 22, 2009

Man on the Street Take on Tranquillon Ridge

The new budget deal gives the go-ahead to offshore oil drilling at Tranquillon Ridge off Santa Barbara. The on-again, off-again project has been something of a soap opera, with no shortage of innovative horse-trading, political intrigue and hardball politics.

Today's Los Angeles Times reports on community reactions from Santa Barbara to the latest news that the drilling will proceed. Now, given that it's the L.A. Times and that it's Santa Barbara, you would expect scathing reviews... but the report is surprising.

The project's long-time opponents stayed on message, but the average, everyday citizens interviewed for the piece offered unexpected report.

While one guy asked rhetorically, "Why take the chance?" (alluding to a potential spill), the other comments were mostly positive.

Here is a sampling:

"Coach Mike Maas, 57, couldn't disagree more about the so-called Tranquillon Ridge proposal. The people who complain about drilling off of Santa Barbara "are the same ones driving around in their big Escalades," he said as his team cavorted. "The economy sucks. If that is a way to get some money, why not?""

"But Reynolds Yater, who was dropping off one of his eponymous surfboards at The Beach House nearby, said Americans can't complain about oil drilling and then buy surfboards and wetsuits.Waving his arm at the store's wares, Yater pointed out that "all of this stuff is made out of oil, so it's very hypocritical to be making this stuff and then not want it drilled on our beaches."

Another person interviewed expressed concern over a spill, but his apprehension was rooted not in fear of ecological damage, but in what it would mean to Santa Barbara economically:

At Santa Barbara Trolley Tours, driver Craig Boslaugh, 60, worried that another spill like 1969 "would affect tourism, so it would definitely affect our business."

Is this just a case of selective reporting or do economic recessions trump environmental politics?

Tuesday, July 21, 2009

PG&E Seeking Rate Increase

PG&E formally notified the PUC yesterday that it will seek a whopping 6.4% rate increase this December. The increase would kick in 2011 if it is approve by the commission, which likely will vote on it in late 2010.

The rate increase would fund upkeep and maintenance of the PG&E's system infrastructure, which currently costs about $2.2 billion a year ($2.7 billion with the propsed rate increase).

But this is just the tip of the ice berg.

Additional rate increases would follow--1.4% in 2012 and 1.8% in 2013.

Writing in the San Francisco Chronicle, David Baker notes:

"Some categories of customers would see a larger increase than others. But starting in January 2011, a typical homeowner's monthly electricity bill would rise $2.20 to reach $76.27. People with larger houses that use more power would pay $16.80 more per month than they do today, for a total of $180.48. Meanwhile, monthly natural gas bills for all homes would rise by an average of $3.30."

Baker also quotes TURN which sums up the situation rather succinctly:

"Every time, they talk about reliability, and it doesn't get better," said Matt Freedman, staff attorney with The Utility Reform Network, a consumer watchdog group. "Will the commission reward them, again, for poor performance? It's like the most perverse incentive on earth."

Monday, July 20, 2009

Waste Not, Want Not...

The Pacific Coast Business Times profiles a rather unusual-- but potentially effective and very lucrative-- energy venture in Oxnard.

Gills Onions is the largest onion processor in the country. It processes about a million pounds of onions a day and employs 400 people. The company, which used to compost its "onion waste" in a field, is now turning it into energy.

We've read about all sorts of odd biofuel ventures, so the company's project in and of itself is not that interesting. However, the environmental and economic statistics rattled off by the Times, are head turners.

The old practice of composting the onion waste certainly sounds environmentally friendly, however, decaying onions creates greenhouse gas emissions and requires lots of diesel truck trips to and from the field. Factor in tipping fees and field labor and, all of a sudden, this doesn't sound like such a a great option.

The onion-to-energy process generates 600 kw of power and makes the company eligible for a pretty sizable payout from the state. The Times reports that Gills is in line to get $2.7 million from a state program that promotes programs such as this. All in, the company spent more than $9 million on the techology, but it estimates that it can pay for itself in six years.

Net-net, the Times reports that, "Turning the waste into energy instead will save the company $700,000 in electricity costs, $400,000 in land-application costs and reduce its greenhouse gas emissions by up to 30,000 tons annually."

Friday, July 17, 2009

The Politics of Offshore Drilling

Fresh off of his national "to drill or not to drill" tour, Interior Secretary Ken Salazar has announced that the Administration will proceed with plans to auction off oil drilling leases in the Gulf of Mexico.

From an energy perspective, that's good or that's bad depening on who you talk to. But form a political perspective, it's fascinating.

Consider this.

  • The original plan to drill the Gulf (and Alaska) was owned politiclally-- lock, stock and barrel-- by former President George W. Bush and it enjoyed broad support by conservatives.
    • New President Barack Obama-- arguably the most liberal president since FDR and the political antithesis of Bush-- is swept into office promising to undo everything Bush put into action. (Except the stimulus... but I digress.)
      • A federal appeals court in Washington essentially does the dirty work on the Bush offshore oil leases for the new president, invalidating them for insufficient environmental impact analysis on the Alaska portion of the plan.
        • Rather than check off "terminate the Bush offshor oil plan" from his Presidential to-do list, Obama sends out Interior Secretary on a national listening tour to guage public sentiment for drilling.
          • Now comes the announcement that Obama is going ahead with the plan-- in the Gulf, at least, which was the part of the plan the court ostenisbly did not object to. The Interior Department has no plans to appeal the court ruling, which is a de facto acceptance of the plan's illegitimacy, but it is asking for "guidance" from the court. All of this notwithstanding, the lease auctions are going ahead as planned.
            • You would think conservatives would be thrilled, right? Well, the Republicans, for their part, criticized Obama for not going far enough, with one lawmaker stating that to only drill in the Gulf puts "all of our eggs in one basket."
              • All of this has been put into play by a President who has made curbing the the use of fossile fuels and promoting renewable energy production and development the centerpiece (along with health care reform) of his legilsative agenda.

                Around and around we go...

                Thursday, July 16, 2009

                A "Government Solution" To Climate Change Still on the Table in California

                If you want to be a player in Sacramento, inserting yourself prominently in the energy agenda is a prudent place to start. Nobody has ever accused Sen. Alex Padilla of not being "prudent" (or insert your own synonym here).

                So nobody should be surprised by the longish piece in Capitol Weekly today about Padilla's efforts to take up where Don Perata left off on pushing for a massive new state agency/research institute to study potential solutions to climate change.

                Perata's bill to establish the $50 million a year insitute was killed for a variety reasons-- not the least of which was Perata himself and the implications it had for his stature in the capitol-- but he's gone now and Padilla has stepped up with a what the Weekly calls a "placeholder bill," hoping to revive negotiations over the propsoed institute next year when the economy improves.

                The Weekly reports:

                "Padilla’s bill takes a slightly different tact, but it is sure to go through a number of revisions if and when it is resurrected next year. As of now, the bill is still mostly a placeholder. It does not specify a governance structure for the Institute, the size or scope of the research to be undertaken by the Institute, or the funding source for the Institute’s operating costs or research,” according to a Senate analysis of the bill.

                Padilla says the idea of the institute would be to leverage federal stimulus dollars, and coordinate efforts to meet new state greenhouse gas requirements set forth in AB 32, the greenhouse gas reduction bill authored by now Sen. Fran Pavley, D-Agoura Hills."


                "In addition to the ratepayers’ fee, the California Climate Change Institute would have been financed with about $12 million worth - about half - of the natural gas fees that currently go to an Energy Commission research program known as PIER. The institute’s total budget would have been about $500 million dollars over the next decade. The intention was to woo federal matching money, too - a likely prospect because of the federal government’s infusion of cash into carbon emission research. Since the goal of the institute, which was written into the legislation, was to get matching money for 100 percent of its income, the CCC1 would have had authority over $1 billion. "

                All of this begs the question of whether we really need a $50 million a year state entity to combat the problem of global warming. After all, nothing says "innovation" "groundbreaking" like a California state agency.

                Wednesday, July 15, 2009

                On The Road Again... Just Can't Wait To Get On The Road Again....

                Traveling today so not much time to sift through the news...

                But for your entertainment, check out Sen. John Kerry's response to Sarah Palin's cap and trade rant... he published it yesterday in the friendly confines of the Huffington Post.

                This is like some cyber-consolaton-game between a "could have been President" and a "wow that was weird, Vice Presidential nominee"... I suspect more than a few people would prefer they just exchange email addresses and have this debate off line!!!!

                What Gov. Palin Forgot [Huffington Post]

                Tuesday, July 14, 2009

                More on Climate Change and Cap & Trade

                The opinion section of today's Washington Post is a treasure trove of energy observation.

                First, columnist Anne Applebaum takes on the notion that world leaders can do anything at all about climate change. Applebaum argues that the only thing that is going to fix the problem is money-- not treaties, speeches or conferences.

                Now, when she says "money," she doesn't mean it in the way President Obama would typically interpret it, i.e., "Let's print more tax dollars and subsidize companies in the green energy sector...and while we're at it, maybe create an extra government agency or two to perform (poorly) redundant regulatory tasks."

                Applebaum argues that the only way to fix the climate change problem is for some entrepreneur to get obsceneley wealthy running a company that actually performs in the renewable energy sector (Memo to T. Boone Pickens...).

                She states:

                "The truth is that carbon emissions will not be reduced by international bureaucrats, however well-meaning, sitting in a room and signing a piece of paper. They will not be reduced by public relations campaigns or by Oscar-winning documentaries. Above all, they will not be reduced by a complex treaty that neither the United Nations nor anyone else can possibly supervise, particularly not a treaty that effectively punishes those countries that abide by it and ignores everyone else. They can, however, be reduced by the efforts of entrepreneurs such as Pickens. If he and others can find economically viable ways to produce clean energy, then the problem will solve itself without the aid of a single international conference. To put it another way: The first solar power billionaire will have many, many imitators. "

                Chew on that.

                But the real star of the opinion pages is the "gift that keeps on giving"... Governor Sarah Palin of Alaska, who comes out firing against cap & trade:

                "American prosperity has always been driven by the steady supply of abundant, affordable energy. Particularly in Alaska, we understand the inherent link between energy and prosperity, energy and opportunity, and energy and security. Consequently, many of us in this huge, energy-rich state recognize that the president's cap-and-trade energy tax would adversely affect every aspect of the U.S. economy.

                There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn't lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America's economy.

                Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.

                In addition to immediately increasing unemployment in the energy sector, even more American jobs will be threatened by the rising cost of doing business under the cap-and-tax plan. For example, the cost of farming will certainly increase, driving down farm incomes while driving up grocery prices. The costs of manufacturing, warehousing and transportation will also increase.

                The ironic beauty in this plan? Soon, even the most ardent liberal will understand supply-side economics."

                You betcha!

                But alas, the chattering classes- as they are wont to do-- have already pounced on her, saying she has no idea what she's talking about.

                The Summit of Green Futility [Washington Post]

                The 'Cap And Tax' Dead End [Washington Post]

                Monday, July 13, 2009

                Do-It-Yourself Geothermal

                Until now, the little town of Anderson Springs in Lake County was known as a place to hike and for its seismic activity. Soon it could be known as town that revolutionized the way we harness geothermal energy.

                A start up company called AltaRock is testing a way to essentially create geothermal energy.

                Traditionally, geothermal power has come from tapping existing pockets of steam beneath the earth's crust; steam that is then used to power turbines and create electricity.

                Like any form of alternative enregy, be it solar, wind, etc., the challenge with geothermal has been that, in order to harness it, you have to go where the steam pockets are. That may no longer be the case.

                AltaRock is testing a new method whereby they drill down to superheated rock (in the case of Anderson Springs, a drill boring of 2 miles) and then inject water into shaft, creating steam off the superheted rock below.

                If it works, the upside is limitless.

                However, as we have seen with other forms of renewable energy, the project is not without its detractors.

                Solar arrays have been opposed by conservationists who fear damage to desert ecosystems; wind turbines have been opposed by animal rights advocates who fear bird strikes (and by Kennedys who like their ocean views).

                Now the residents of Anderson Springs are speaking out against the AltaRock project, fearing that it will exacerbate an already dicey seismic situation, and cause earth quakes.

                It's an interesting experiment to watch play out.

                Friday, July 10, 2009

                Are Conservationists Winning the Solar Battle?

                Reuters moved a story yesterday that posited the theory that the future of solar power in California lies in "distributed generation."

                Translated: big solar farms out in the desert cause too many political problems, don't create enough jobs, are expensive, etc., etc., so the future of solar lies in individual, small rooftop arrays.

                From Reuters:

                "Trend-setting California may be the test case for the United States. It has the most aggressive renewable ambitions of any state in terms of raw energy production. A target of 20 percent renewables may be raised to a 2020 goal of 33 percent.

                "We really may be in a paradigm shift," said Judith Ikle, program manager for procurement of renewables and climate mitigation at the state's Public Utilities Commission, which has just finished an analysis of how to build a state-wide system that gets a third of its power from renewable sources.

                California expects most of its new renewable power to come from big solar thermal desert plants, which use mirrors to focus the sun's heat and drive a generator.

                But the PUC also considered a "distributed generation" model of putting solar panels on rooftops all over the state, commenting that political roadblocks for transmission and big plants could make it more attractive and that it could be a cost-competitive solution if solar panels, now one of the most expensive renewables, continue a price dive."

                A PUC analyst quoted in the piece comments that distributed generation is great in theory, but price and grid integration issues remain.

                Thursday, July 09, 2009

                Jobs vs. The Environment - Just Another Day in California

                Playing the "jobs" card has been a standard tactic for real estate developers for years. Recently, President Obama has used it to sell his energy agenda. Now, against a backdrop of 11.5% unemployment in California, Chevron is screaming "JOBS!!!"

                After getting hit with a negative ruling on its EIR for the Richmond refinery upgrade, Chevron was ordered to halt construction on the project. The judge says the EIR was inadequate; Chevron disagrees and is appealing.

                At issue are two massive furnaces designed to create hydrogen needed to refine "sour crude." But environmentalists say the furnaces are trojan horses that are capable of processing the ultra-dirty "heavy" crude and that is Chevron's true agenda.

                Caught in the middle of the he-said, she-said are more than 1,000 workers construction workers and electricians who have been laid off.

                In the San Francisco Chronicle, one environmental activist who is driving the fight against the expansion made the comment that Chevron is flush with cash and shouldn't lay off the workers. (He doesn't address what 1,000 construction workers and electrricians would actually do with the project shut down.)

                Look for more grandstanding and demagoguery on this issue as the appeals play out.

                Wednesday, July 08, 2009

                Transmission Project Could Be History

                You know that proposed 600 mile transmission line project that is supposed to deliver green energy from the Shasta County in the northeastern part of the state down to the bay area (Santa Clara, to be exact)? As Tony Soprano would say, "Fuggedaboudit."

                SMUD, which was the biggest investor, with a 35% stake in the project, just pulled out. Citing a litany of reasons for pulling the plug, from regulatory and economic uncertanities to renewed skepticism about the overall wisdom of the project, the agency's departure from the project makes completion really, really unlikely.

                The Contra Costa Times reports:

                "The public works project in question — one of the West's largest in recent history — would extend from yet-to-be-developed wind and solar farms in the northeastern part of the state. It would wind through parts of the Central Valley and Bay Area, including protected agricultural and viticultural tracts in the Livermore Valley, to furnish power-thirsty urban areas with energy.

                The project's sponsor, the Transmission Agency of Northern California, is a group of 15 or so municipal power providers that banded in the 1980s to develop green power. Only five of those members — the Sacramento Municipal Utility, Modesto and Turlock irrigation districts, and the cities of Redding and Santa Clara — had agreed to fund the initial environmental work and, if it is ultimately approved, to finance the project.

                SMUD, the largest stakeholder by far, had been expected to shoulder 35 percent of the project's costs. The utility's withdrawal leaves a gaping hole in the project budget and raises questions about its future."

                Tuesday, July 07, 2009

                Into the Sausage Grinder...

                Paul Kane's article in the Washington Post describes what he calls a "daunting march through the Senate" this week for climate change legislation approved in the House that features, as its centerpiece, Cap & Trade.

                The bill appears to be about 15 votes short of the supermajority 60 it needs to pass, so get ready for some horse trading that could make the legislation unrecognizable by the time it exits the chamber.

                Kane notes:

                "Senators will weigh a slew of potential compromises -- everything from allowing more offshore drilling for oil and natural gas to increasing funding for nuclear energy -- that they think would inch the package closer to passage. But environmental activists warn that the 1,400-page House version of the bill already includes so many giveaways to corporate America that more horse-trading in the Senate could lead them to oppose the final version."

                What makes this debate so unusual is that the usual party loyalties do not apply-- it's all about geography. Some liberal senators who would seem like natural supporters of the bill are holding

                out for sweetheart deals for corporate interests in their home states.

                For example, the Post article points out:

                "Democrats from the Rust Belt states of West Virginia, Ohio, Indiana and Michigan are pushing for more incentives to help their depressed industries shift to alternative energy sources. The same senators also will likely want more funding for carbon capture and sequestration, a controversial and still-evolving technology described by its developers as "clean coal" but derided by many environmentalists. The technology is already slated for $10 billion in government-funded research in legislation that passed the House. A trio of Democrats from the Dakotas want more funding for wind power. "

                Given that this bill barely passed the House, it's anybody's guess what it will look like this time next week.

                Monday, July 06, 2009

                The Future of Net Metering

                Solar power might not receive subsidies of "ethanol proportions," but it certainly does get its share of government largesse. One perk, however, might be set to expire: net metering.

                Individuals who install solar panels get to sell excess power back to utilities at retail rates. This credit often wipes out nearly or entirely a monthly utility bill. It's a great deal for solar users, but, detractors argue, not so much for other utility customers.

                The argument against net-metering is that it unfairly shifts costs from solar users onto non-solar users because the utilities are using ratepayer money to compensate the solar users, and they are doing at the retail power rate, not the actual cost of solar power which is much, much lower.

                The net result is that solar customers end up paying little or nothing and non-solar customers end up paying not only for power, but for all of the other costs buried in their monthly bill, like infrastructure costs and regulatory fees.

                The Los Angeles Times reports today that the net metering program has almost reached its legislated limit and could expire unless the program is expanded: "utilities are limited by state law from buying from its customers more than 2.5% of a utility's maximum generating capacity" and "the state's $3.3-billion solar subsidy program has become so popular that the state utilities are approaching the legal limit for how much power they can buy from customers."

                Assembly Member Nancy Skinner has introduced AB 560 that seeks to increase the cap on net metering fourfold. All of the major utilities oppose the measure, citing cost shifting issues and basic consumer fairness.

                In addition to net metering, solar users also enjoy state and federal tax credits.

                Thursday, July 02, 2009

                East Coast Bias Continues-- Dissing California!

                On Monday, President Obama held up California as the model for the nation's energy future.

                Yesterday, a newspaper in the President's back yard-- the Washington Examiner-- penned a blistering editorial that called out California as an unmitigated disaster of energy policy.

                The Examiner states:

                "Obama might want to rethink his choice of a model state because it is easy to understand how California has curbed its energy use. Between 2000 and 2007, before the current recession, the state shed nearly 21 percent of its manufacturing jobs, driving down its industrial electrical consumption by 21 percent. California's industrial users pay electric rates twice as high as their Midwestern counterparts - which helps explain why so much heavy industry has fled the state. In addition to alienating its industry, California has also curbed energy use through exorbitant residential electric rates (50 percent higher than the national average) and massive net out-migration. Between 2005 and 2007, 2.14 million Californians moved to other states, while only 1.44 million people from elsewhere moved to the Golden State, according to the U.S. Census Bureau. Don't be surprised when the 2010 Census finds even more people leaving to escape California's 11.5 percent unemployment. And, as jobs and residents fled California, its tax revenues have declined, while its politicians went on a spending binge, creating a severe budget crisis."

                That's a mouthful.

                California, Here We Come [Washington Examiner]

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                Wednesday, July 01, 2009

                Republicans Stepping Out of Character to Support Cap & Trade

                First Scott McLellan, now Mike Gerson??

                In a "man bites dog" story, Michael Gerson, who was George W. Bush's most trusted speechwriter, hails the courage of the eight Republicans who voted for cap and trade last week.

                Gerson points out that "the eight Republicans who supported it were bound to feel some rapid political warming. Conservative Internet and radio accused them of single-handedly passing President Obama's "cap-and-tax" legislation..."

                But, he calls this a "myth," noting that Speaker Pelosi would have marshalled the necessary votes come hell or high water and this was a fait accompli in the House. More importantly, Gerson argues that, as patently bad as the bill was (is)-- he describes it as "a riot of loopholes, concessions and offsets -- legislative sausage-making with an excess of offal"-- it likely was the best of our bad options.

                An overnight switch to carbon-free energy production isn't going to happen. A straight carbon tax would disproportionately punish American industries already under intense pressure to compete internationally (think cement, steel, paper). So cap and trade is a stop-gap, transitional solution, albeit a flawed one.

                Gerson argues that our solution to the carbon problem is technological and that in order to spur innovation, we need to pile on still more incentives. In his words, "putting a price on carbon would make the development of cleaner energy technologies more profitable."

                All of this from W's guy...

                Cap and Traitors [Washington Post]

                p.s., We got our waiver yesterday-- but you probably knew that already.