Thursday, May 31, 2012

Ceres White Paper On Investor Risks From Oil Shale Development

May 30: A new white paper from Ceres, the coalition of investors and others advocating sustainability leadership, supports a Federal agency's proposal to take a "cautious approach" to oil shale production in the western U.S. and cites "technological uncertainties and a wide range of other risks." At issue is the Bureau of Land Management's (BLMs) proposal to focus oil shale production in Wyoming, Utah and Colorado on "Research, Development, and Demonstration" (RD&D) leases only and to reduce the available acreage to about 500,000 acres from nearly two million acres under an earlier plan [See WIMS 2/3/12].

    Ceres president Mindy Lubber, citing regulatory risks, water constraints and numerous other questions about various technologies being pursued to extract a non-liquid form of oil from shale rock said, "Given the wide array of uncertainties, BLM's proposed leasing approach on oil shale makes sense. Investors should be similarly cautious in evaluating future investment in this space." Paul Bugala, senior sustainability analyst, extractive industries, at Calvert Investments said, "Oil shale technologies are still highly speculative, and proving them to be commercially viable will be difficult and require a long period of time with uncertain outcomes. The little that state and federal regulators know about the environmental impacts, especially in the areas of water use and land reclamation, further indicates that caution should be exercised."

    While oil shale reserves beneath the three states in the Green River Formation are vast, holding more than three times the proven reserves of Saudi Arabia, the Ceres white paper, Investor Risks from Oil Shale Development, sends a strong cautionary message to policymakers, investors and companies alike. The white paper, prepared by David Gardiner & Associates, LLC, identifies five key risks to oil shale development:

  • Core technological uncertainty: Despite decades of efforts, surface and in-ground technologies for producing oil shale still face many uncertainties. The report states: "The uncertainties around continued testing and development of new technologies and processes for producing oil from oil shale leave a great deal still unknown, including the amount of the resource that is recoverable, the efficiencies and costs of various methods, the impacts on natural resources, and the effects of various technologies on the costs of final products (and thus the competitiveness of oil shale)." The white paper cites an earlier report by the Task Force on Strategic Unconventional Fuels (comprised of federal, state, and local officials) which states: "[t]echnology uncertainty is the largest single risk factor associated with oil shale development. This uncertainty remains even after 50 years of government and industry research to develop a commercially viable retorting technology."
  • Market risks: Production of oil shale is characterized by significant capital investment, high operating costs, and long payback periods – at least a decade. Uncertainties about the costs associated with developing a first-generation commercial facility, combined with oil price volatility and other uncertainties, pose investment risks that make oil shale investment less attractive than other potential uses of capital. Sporadic attempts to commercialize oil shale have repeatedly failed once oil prices fall.
  • Water constraints: Oil shale development's need for water is a particular concern in water-stressed states such as Colorado and Utah. The report cites estimates showing that surface technologies may require 2 to 4 barrels of water for every barrel of product produced while in-ground technologies may require up to 12 barrels of water per barrel produced. The U.S. Government Accountability Office has suggested that the size of the oil shale industry in Colorado and Utah may be limited by water availability.
  • Regulatory risks: Lifecycle carbon emissions for oil shale fuels are likely to be 25 to 75 percent greater than for conventional petroleum. This means oil shale development could face risks as carbon-reducing rules and regulations take hold – whether low-carbon fuel standards, a price on carbon emissions, lifecycle emissions requirements, or other measures. Other federal and state environmental regulations, including those related to air and water quality, also pose risks to oil shale development.
  • Risks from public opposition: Public opposition to oil shale based on the actual or perceived environmental impacts could "derail, delay, or increase the costs of such projects," says the white paper.
    Ceres points out that more than 70 percent of the Green River Formation oil shale resources lie beneath Federal lands. BLM is presently considering public comments on its Programmatic EIS proposal to limit development to RD&D leases on 252,181 acres in Utah, 174,476 acres in Wyoming and 35,308 acres in Colorado. The comment period ended on May 4. A decision is expected in fall 2012. The Ceres white paper contains three key recommendations for investors:
  • They should "analyze their equity investments and engage with relevant companies (e.g., oil and gas companies, end users) in which they are shareholders, to further understand the risks that companies are assuming related to oil shale and the ways in which companies are mitigating those risks."
  • They should "pay close attention to the potential for risks to emerge in their fixed income portfolios from state and municipal bonds, to the extent such bonds are used to directly or indirectly support development of oil shale."
  • They should "advocate for public policies that create a clearer low-carbon regulatory framework and provide long-term investment certainty.
    On May 10: The House Committee on Science, Space, and Technology, Subcommittee on Energy and Environment held a hearing entitled, "Challenges and Opportunities of Unconventional Resources Technology." [See WIMS 5/11/12]. The Subcommittee Chairman Andy Harris (R-MD) said, "The Green River Basin, located in Colorado, Utah, and Wyoming, may contain up to three trillion barrels of oil -- more potential oil than the rest of the world's current oil reserves combined. If this energy -- which is overwhelmingly on Federal lands -- made available, I am confident American ingenuity will find ways to responsibly explore and produce this resource."
    Access a release from Ceres (click here). Access the complete 4-page white paper (click here). Access a lengthy release from BLM with contact and commenting information, and links to the Draft PEIS, FR notice and related information (click here). Access complete information on the PEIS (click here). [#Energy/OilShale, #Energy/TarSands]
32 Years of Environmental Reporting for serious Environmental Professionals

Wednesday, May 30, 2012

IEA Says Industry "Exemplary Performance" Needed With Fracking

May 29: A report released in London by the International Energy Agency (IEA), a special World Energy Outlook report on unconventional gas entitled, Golden Rules for a Golden Age of Gas; indicates that exploiting the world's vast resources of unconventional natural gas holds the key to a golden age of gas, but for that to happen governments, industry and other stakeholders must work together to address legitimate public concerns about the associated environmental and social impacts.
    IEA Executive Director Maria van der Hoeven said, "The technology and the know-how already exist for unconventional gas to be produced in an environmentally acceptable way. But if the social and environmental impacts are not addressed properly, there is a very real possibility that public opposition to drilling for shale gas and other types of unconventional gas will halt the unconventional gas revolution in its tracks. The industry must win public confidence by demonstrating exemplary performance; governments must ensure that appropriate policies and regulatory regimes are in place."

    The reports Golden Rules underline the importance of full transparency, measuring and monitoring of environmental impacts and engagement with local communities; careful choice of drilling sites and measures to prevent any leaks from wells into nearby aquifers; rigorous assessment and monitoring of water requirements and of waste water; measures to target zero venting and minimal flaring of gas; and improved project planning and regulatory control.

    According to a release, at their recent Camp David Summit [See WIMS 5/21/12], G8 leaders welcomed and agreed to review this IEA work on potential best practices for natural gas development. The G8 members said, "We are committed to establishing and sharing best practices on energy production, including exploration in frontier areas and the use of technologies such as deep water drilling and hydraulic fracturing, where allowed, to allow for the safe development of energy sources, taking into account environmental concerns over the life of a field."
Van der Hoeven said, "To build on the Golden Rules, we are establishing a high-level platform so that governments can share insights on the policy and regulatory action that can accompany an expansion in unconventional gas production, shale gas in particular. This platform will be open to IEA members and non-members alike".

    IEA Chief Economist Fatih Birol, the report's chief author said, "If this new industry is to prosper, it needs to earn and maintain its social license to operate. This comes with a financial cost, but in our estimation the additional costs are likely to be limited." Applying the Golden Rules could increase the cost of a typical shale-gas well by around 7%, but, for a larger development project with multiple wells, investment in measures to reduce environmental impacts may in many cases be offset by lower operating costs. The report argues that there is a critical link between the way governments and industry respond to these social and environmental challenges and the prospects for unconventional gas production. Accordingly, the report sets out two possible future trajectories for unconventional gas:

    In a Golden Rules Case, the application of these rules helps to underpin a brisk expansion of unconventional gas supply, which has far-reaching consequences:
  • World production of unconventional gas, primarily shale gas, more than triples between 2010 and 2035 to 1.6 trillion cubic meters.
  • The United States becomes a significant player in international gas markets, and China emerges as a major producer.
  • New sources of supply help to keep prices down, stimulate investment and job creation in unconventional resource-rich countries, and generate faster growth in global gas demand, which rises by more than 50% between 2010 and 2035.

    By contrast, in a Low Unconventional Case where no Golden Rules are in place, a lack of public acceptance means that unconventional gas production rises only slightly above current levels by 2035. Among the results:

  • The competitive position of gas in the global fuel mix deteriorates amidst lower availability and higher prices, and the share of gas in energy use barely increases.
  • Energy-related CO2 emissions are higher by 1.3% compared with the Golden Rules Case but, in both cases, emissions are well above the trajectory required to reach the globally agreed goal of limiting the temperature rise to 2°C.
    Several groups of investors with about $1 trillion in assets under management commented on the IEA report and said they are "seeing much they can support." On May 16, 2012, Boston Common Asset Management (Boston Common), the Investor Environmental Health Network (IEHN) and the Interfaith Center on Corporate Responsibility (ICCR) announced that 55 major investment organizations and institutional investors had united in support of "best practices" for the fracking of shale gas. The issued their own guidelines entitled, "Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations." They said the IEA "Golden Rules" recommendations are "in the same spirit as the IEHN/ICCR guidelines."

    Steven Heim, managing director and director of ESG Research and Shareholder Engagement, Boston Common, said, "Investors require full disclosure in accordance with IEA's golden rules in order to make fully informed judgments about wise investments in the energy sector that take full account of companies' management of environmental risks and social impacts."
    Richard Liroff, PhD., executive director, Investor Environmental Health Network, said, "The substantial alignment between IEA's recommendations and 'Extracting the Facts' means that 'Extracting the Facts' provides companies with a practical tool for implementing the IEA recommendations." Sister Nora Nash, director of corporate social responsibility, Sisters of St. Francis of Philadelphia, and member of the ICCR, said, "The IEA golden rules reinforce the core messages of the investor guidelines we put forth in "Extracting the Facts" that companies need to fully engage communities to secure their social license to operate, and a critical element of such engagement is responding to community concerns and reporting fully on operational practices."
    Access a release from IEA and link to videos of the announcement presentation, Q&A's and opening remarks (click here). Access links to the complete 150-page report, annex and presentation slides (click here). Access a release from the investors (click here). Access the 36-page Extracting the Facts investor guidelines (click here). Access a White House blog posting on the G8 Summit with links to extensive information including the G8 Declaration or Camp David Declaration, a slideshow from the weekend, President Obama's Remarks at the close of the G8 Summit and more (click here). [#Energy/Frack]
32 Years of Environmental Reporting for serious Environmental Professionals

Tuesday, May 29, 2012

GOP Senators Claim Victory In Stopping DOD Use Of Alternative Fuels

May 25: Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works (EPW) and a Senior Member of the Senate Armed Services Committee, welcomed what he called "successful bipartisan votes on amendments that he sponsored to the Defense Authorization bill which will hold the Obama administration accountable for forcing the Department of Defense (DoD) to spend scarce resources on a far left green agenda."  Last week, Senator Inhofe took to the Senate floor to express his concern and vowed that he would introduce a number of amendments that would prevent President Obama from making DoD go green at an exorbitant price tag, especially when he has cut funds for essential military programs.

    Senator Inhofe said,  "Through passage of these amendments to the Defense authorization bill in committee, the Senate has taken a significant step to rein in the radical green agenda that President Obama is attempting to impose on our military. As Ranking Member of the Senate Committee on Environment and Public Works and a Senior Member of the Senate Armed Services Committee, I have been committed to stopping President Obama from forcing the Department of Defense to spend enormous amounts of scarce resources on pointless global warming efforts, all while he is gutting our military, drastically reducing DoD's budget, and cutting core programs that are vital to our troops' safety. The good news is that we have been able to come together in a bipartisan fashion to prevent President Obama from achieving many aspects of his war on affordable energy at DoD. President Obama's efforts to green the military just further represent the separation between his phony reelection rhetoric and his true agenda. There is nothing 'all-of-the-above' about him trying to destroy fossil fuel use in the military so that he can impose his radical green regime.  Once again, his actions speak louder than his words.

    Sen. Inhofe said, "I would like to applaud my friend, Ranking Member Senator McCain [R-AZ], for his important work on this issue.  As he rightly said, we were able to 'restrict the Department of the Navy to a reasonable approach rather than spending $244 a gallon' - it was a pleasure teaming up with him to achieve this. I will continue to work with my colleagues to build on the success of today and look forward to making more progress reining in President Obama's failed far left green agenda."
    In fact, the amendments were very controversial and were narrowly approved by the Senate Armed Services Committee. One amendment: To make certain alternative fuel procurement requirements, as required by Section 526 of the Energy Independence and Security Act of 2007, inapplicable to the Department of Defense failed on a roll call vote, 13-13. A second amendment: To include a provision that would prohibit the use of funds authorized to be appropriated to the Department of Defense in FY 2013 from being obligated or expended for the production or sole purchase of an alternative fuel if the cost exceeds the cost of traditional fossil fuels used for the same purpose, except for continued testing purposes, passed on a roll call vote, 13-12. And, another amendment: To prohibit the construction of a biofuels refinery or any other facility or infrastructure used to refine biofuels unless the requirement is specifically authorized by law passed on a roll call vote, 13-12.
    On May 23, Senator Mark Udall (D-CO), a supporter of the Department of Defense's development and use of renewable fuels, issued a statement saying, "The United States has always maintained its strategic superiority in the world by refusing to be satisfied with the status quo. Our energy policy -- for consumers at home and our military -- should take the same approach. We need to change the way we approach energy policy now, so our military and our economy are not beholden to just one fuel source -- especially one that overwhelmingly is located in unstable parts of the world. It is time for Congress to recognize that saving energy saves lives, especially when it comes to our troops in harm's way."
    Sen. Udall said, "Leaving our armed forces vulnerable to swings in the energy markets is neither fiscally prudent, nor is it a sound approach to national security. I plan to continue to work with the armed forces and my colleagues to make renewable energies part of our national defense strategy." He said the rising and unpredictable cost of energy "has a steep price tag for the Department of Defense." The U.S. military consumes more than 300,000 barrels of oil every 24 hours. Each time the price per barrel of oil rises by a single dollar, the annual Pentagon budget jumps by more than $130 million. According to the U.S. Energy Information Agency, the price of oil has risen $72 dollars since May 2001.

    In a guest column for Stars and Stripes, Sen. Udall said in part, "Alternative energy sources such as biofuels, tactical solar arrays and state-of-the-art batteries save lives by reducing the number of convoys and resupply missions in combat zones. In fact, Marines who had recently returned from Afghanistan told me that using portable solar technology allowed them to shed 10 to 15 pounds of batteries from their packs -- dead weight they were able to replace with critical ammunition and supplies. . . Not allowing the military to pursue alternative fuel sources leaves our defense budget and our national security in the dark ages. An addiction to volatile supply lines allows foreign governments, such as Iran, to hold our military and our budget hostage."
    The Pew Project on National Security, Energy and Climate, urged Senators to support the DOD efforts to accelerate production of American-made, advanced, "drop-in" biofuels for use in military jets, ships, and vehicles. Advanced biofuels can help power our military, address security of supply, mitigate price volatility, diversify military fuel supplies and enhance U.S. national security. Pew said in a letter, "U.S. advanced biofuel producers have made rapid progress toward cost-competitiveness. Per gallon cost of test quantities of advanced biofuels under Navy contracts has declined more than 90 percent over the past two years and will continue to decline as these technologies scale to commercial production. Bloomberg New Energy Finance, the premiere clean energy data and analysis firm, forecasts that advanced biofuels will be cost competitive by 2018."
    The Advanced Biofuels Association, the Algal Biomass Organization, Airlines for America, the American Farm Bureau Federation, the Biotechnology Industry Organization, Growth Energy, and the Pew Charitable Trusts all expressed disappointment that the Senate Armed Services Committee adopted amendments to the National Defense Authorization Act blocking the Department of Defense's (DoD) use of domestically produced alternative energy. The groups released this joint statement:

    "Continued reliance on foreign oil puts U.S. national security at risk. Oil market volatility has already wreaked havoc on military budgets, which came at the cost of new equipment and training for our troops and reduced military readiness. In fiscal years 2011 and 2012, DoD came up $5.6 billion short in its budget for military operations and maintenance because it spent more on fuel than anticipated. Moreover, the United States sends $1 billion overseas each and every day to pay for foreign oil, further draining resources from the U.S. economy.

    "U.S. advanced biofuel producers have made rapid progress toward cost-competitiveness. The per-gallon cost of test quantities of advanced biofuels under DoD contracts has declined more than 90 percent over the past two years and will continue to decline as these technologies scale to commercial production. DoD's efforts to reduce use of foreign oil and increase use of American biofuels can lead the nation's effort to achieve energy security. We will work with Members of the Senate to restore support within the NDAA for the DoD's commitment to accelerate production of American-made, advanced, 'drop-in' biofuels for use in military jets, ships, and vehicles." 

    Access a release from Sen. Inhofe with links to additional information and the amendments (click here). Access a release from Sen. Udall with links to related information (click here). Access a 33-page release and summary of the markup of the National Defense Authorization Act (NDAA) for FY 2013 (click here). Access the roll call votes on various amendments (click here). Access the Pew Project letter and links to related information (click here). Access the joint statement from the industry groups and organizations (click here). [#Energy/Alternative]
32 Years of Environmental Reporting for serious Environmental Professionals

Friday, May 25, 2012

CRS Report On GHG Emissions & Canadian Oil Sands

May 24: The Congressional Research Service (CRS), has prepared a report entitled, Canadian Oil Sands: Life-Cycle Assessments of Greenhouse Gas Emissions, and it has been released via the OpenCRS project. The report is dated May 15, 2012. According to the report, recent Congressional interest in U.S. energy policy has focused in part on ways through which the United States could secure more economical and reliable crude oil resources both domestically and internationally. Many forecasters identify petroleum refined from Canadian oil sands as one possible solution.
    The report says, "Increased petroleum production from Canadian oil sands, however, is not without controversy, as many have expressed concern over the potential environmental impacts. These impacts may include increased water and natural gas use, disturbance of mined land, effects on wildlife and water quality, trans-boundary air pollution, and emissions of greenhouse gases (GHG) during extraction and processing. A number of key studies in recent literature have expressed findings that GHG emissions from the production of Canadian oil sands crudes may be higher than those of other crudes imported, refined, and consumed in the United States. The studies identify two main reasons for the increase: (1) oil sands are heavier and more viscous than lighter crude oil types on average, and thus require more energy- and resource intensive activities to extract; and (2) oil sands are compositionally deficient in hydrogen, and have a higher carbon, sulfur, and heavy metal content than lighter crude oil types on average, and thus require more processing to yield consumable fuels."
    CRS indicates that it surveyed the available literature, including the U.S. Department of State-commissioned study in the Environmental Impact Statement for the Keystone XL pipeline project. The report that the literature reveals the following:
  • despite differences in the design and input assumptions of the various studies, Canadian oil sands crudes are on average somewhat more GHG emission-intensive than the crudes they would displace in the U.S. refineries, with a range of increase from 14%-20% over the average Well-to-Wheel emissions of other imported crudes;
  • discounting the final consumption phase of the life-cycle assessment (which can contribute up to 70%-80% of Well-to-Wheel emissions), Well-to-Tank (i.e., production) emissions from Canadian oil sands crudes have a range of increase from 72%-111% over the average Well-to-Tank emissions of other imported crudes;
  • Canadian oil sands crudes, on a Well-to-Wheel basis, range from 9%-19% more emission-intensive than Middle Eastern Sour, 5%-13% more emission-intensive than Mexican Maya, and 2%-18% more emission-intensive than various Venezuelan crudes;
  • the estimated effect of the proposed Keystone XL pipeline on the U.S. GHG footprint would be an increase of 3 million to 21 million metric tons of GHG emissions annually (equal to the annual GHG emissions from the combustion of fuels in approximately 588,000 to 4,061,000 passenger vehicles); and
  • the estimated effect of the Keystone XL pipeline on global GHG emissions remains uncertain, as some speculate that its construction would encourage an expansion of oil sands development, while others suggest that the project would not substantially influence either the rate or magnitude of oil extraction activities in Canada or the overall volume of crude oil transported to and refined in the United States.   
    CRS notes regarding the "Scope and Purpose of This Report" that, "After discussing the basic methodology of life-cycle assessments [LCAs] and examining the choice of boundaries, design features, and input assumptions, this report compares several of the publicly available assessments of life-cycle emissions data for Canadian oil sands crudes against each other and against those of other global reference crudes. Further, as congressional concern over the environmental impacts of Canadian oil sands production may encompass both a broad understanding of the global resource as well as a specific assessment of the proposed Keystone XL pipeline, the report surveys both the general scientific literature as well as the individual findings of the State Department's Keystone XL Project Environmental Impact Statement. Finally, as life-cycle assessments have become an influential -- albeit developing -- methodology for collecting, analyzing, and comparing GHG emissions, the report concludes with a discussion of some tools for policymakers who are interested in using these assessments to investigate the potential impacts of U.S. energy policy choices on the environment."
    In a concluding comment for further consideration, CRS indicates, ". . .because of the complex life cycle of hydrocarbon fuels and the large number of analytical design features that are needed to model their emissions, LCAs retain many variables and uncertainties. These uncertainties often make comparing results across resources or production methods problematic. Hence, the usefulness of LCA as an analytical tool for policymakers may lie less in its capacity to generate comparative rankings, or 'scores,' between one source and another, and more in its ability to highlight 'areas of concern,' or 'hot spots,' in the production of a given hydrocarbon fuel. In this way, LCA can serve to direct policymakers' attention to those areas in resource development that present the greatest challenges to GHG emissions control, and hence, the biggest potential benefits if adequately managed."
    Access the complete 30-page report (click here). [#Climate, #Energy/OilSands]
32 Years of Environmental Reporting for serious Environmental Professionals

Thursday, May 24, 2012

IEA Indicates Global CO2 Emissions Up; U.S. Emissions Down

May 24: Preliminary estimates from the International Energy Agency (IEA) indicate that global carbon-dioxide (CO2) emissions from fossil-fuel combustion reached a record high of 31.6 gigatonnes (Gt) in 2011. This represents an increase of 1.0 Gt on 2010, or 3.2%. Coal accounted for 45% of total energy-related CO2 emissions in 2011, followed by oil (35%) and natural gas (20%). However, IEA reports that emissions in the United States fell in 2011.

    According to a release, the 450 Scenario of the IEA's World Energy Outlook 2011, which sets out an energy pathway consistent with a 50% chance of limiting the increase in the average global temperature to 2°C, requires CO2 emissions to peak at 32.6 Gt no later than 2017, i.e. just 1.0 Gt above 2011 levels. The 450 Scenario sees a decoupling of CO2 emissions from global GDP, but much still needs to be done to reach that goal as the rate of growth in CO2 emissions in 2011 exceeded that of global GDP. IEA Chief Economist Fatih Birol said, "The new data provide further evidence that the door to a 2°C trajectory is about to close."

    In 2011, a 6.1% increase in CO2 emissions in countries outside the OECD was only partly offset by a 0.6% reduction in emissions inside the OECD. China made the largest contribution to the global increase, with its emissions rising by 720 million tonnes (Mt), or 9.3%, primarily due to higher coal consumption. Dr. Birol said, "What China has done over such a short period of time to improve energy efficiency and deploy clean energy is already paying major dividends to the global environment." China's carbon intensity -- the amount of CO2 emitted per unit of GDP -- fell by 15% between 2005 and 2011. Had these gains not been made, China's CO2 emissions in 2011 would have been higher by 1.5 Gt.

    India's emissions rose by 140 Mt, or 8.7%, moving it ahead of Russia to become the fourth largest emitter behind China, the United States, and the European Union. Despite these increases, per-capita CO2 emissions in China and India still remain just 63% and 15% of the OECD average respectively.

    CO2 emissions in the United States in 2011 fell by 92 Mt, or 1.7%, primarily due to ongoing switching from coal to natural gas in power generation and an exceptionally mild winter, which reduced the demand for space heating. US emissions have now fallen by 430 Mt (7.7%) since 2006, the largest reduction of all countries or regions. This development has arisen from lower oil use in the transport sector (linked to efficiency improvements, higher oil prices and the economic downturn which has cut vehicle miles travelled) and a substantial shift from coal to gas in the power sector. CO2 emissions in the EU in 2011 were lower by 69 Mt, or 1.9%, as sluggish economic growth cut industrial production and a relatively warm winter reduced heating needs. By contrast, Japan's emissions increased by 28 Mt, or 2.4%, as a result of a substantial increase in the use of fossil fuels in power generation post-Fukushima.
    Access a release from IEA (click here). Access the IEA website for more information (click here). [#Climate]
32 Years of Environmental Reporting for serious Environmental Professionals

Wednesday, May 23, 2012

Government Investment In Long-Term Energy Breakthroughs

May 22: The Senate Energy & Natural Resources Committee, Chaired by Senator Jeff Bingaman (D-NM), with Ranking Member, Lisa Murkowski (R-AK) held a hearing to receive testimony on the report, produced by the American Energy Innovation Council (AEIC) entitled, Catalyzing American Ingenuity: The Role of Government in Energy Innovation. The report, released late last year by AEIC, a group of America's top business executives including Bill Gates, details the case for government investment in research to produce long-term energy breakthroughs, arguing that even in times of budget austerity such investments are crucial to US economic competitiveness and to the development of clean, affordable, and secure supplies of energy [See WIMS 5/15/12].

    AEIC is an independent and informal group of seven members who came together because of their common concern that America is providing an "insufficient response to one of the greater challenges facing our nation today; namely, the provision of energy." Members included: Norman Augustine, Retired Chairman & CEO for Lockheed Martin Corp.; Ursula Burns, chairman and CEO of Xerox; John Doer, partner at Kleiner Perkins Caufield & Byers; Bill Gates, chairman and former CEO of Microsoft; Charles Holliday, chairman of Bank of America and former chairman and CEO of DuPont; Jeff Immelt, chairman and CEO of GE; and Tim Solso, chairman and CEO of Cummins, Inc. The groups work was provided administrative and technical support by the Bipartisan Policy Council.

    Witnesses testifying at the hearing included: Norman Augustine, Retired Chairman & CEO for Lockheed Martin Corp., Bethesda, MD; Ethan Zindler, Head of Policy Analysis, Bloomberg New Energy Finance, Washington, DC; and Jesse Jenkins, Director of Energy and Climate Policy, at the Breakthrough Institute, Oakland, CA.

    In an opening statement, Chairman Bingaman said, "As all the witnesses today point out in their written testimony, there is a global race going on to produce the next generation of energy technologies. Though prices on our electricity bills or at the pump do not always fully reflect it, our current energy system is very expensive. The costs all of us pay in national energy and climate and economic insecurity are unacceptably high, and it's likely that the fast-growing economies throughout the developing world will be looking to a new generation of technologies that avoid these costs. It's not only a concern about costs, it's also a significant commercial opportunity for U.S. entrepreneurs. Fortunately, developing new technologies has historically been a great strength of the United States and, as the witnesses have pointed out, an area where the government has been an effective partner. 

    "Although I think there has been a broad consensus in Congress in the past in favor of investing in these emerging technologies, we have been sending much more uncertain signals recently. Important support programs have either already expired or appear to be in danger of expiring and, despite repeated calls to address the real problems of the so-called 'Valley of Death' [that period where an idea appears promising but has not yet been demonstrably shown to be workable in practice—and therefore is deemed too risky by most investors] in initial technology deployment, instead of expanding on crucial current programs, some in Congress are looking to end the programs that we have in place. Meanwhile, our competitors and potential competitors in the developing world continue to press ahead aggressively to court new energy companies and the talent that will develop the next innovations.

    "As these technologies continue to improve and become more cost competitive, we should view this as an opportunity to take a global leadership position.  We have some of the best minds in the world working on this problem. It's very much in our national interest to show them a clear pathway toward developing and deploying these technologies here and exporting them abroad rather than forcing them to go overseas to find opportunities. I've said many times, I believe the only losers in the clean energy technology race will be those that fail to participate, and I hope that the recent paralysis we've seen in this place doesn't lead to miss this opportunity."

    Ranking Member, Senator Murkowski issued an opening statement saying, "I'm aware that even if we do decide to spend more on energy innovation, we will have to make some truly difficult decisions about the amount and duration of spending as well as what our priorities are for it. I have just a few comments in each of those areas. First, the obvious: 'Investment' has become a code word for spending – and that requires taxpayer dollars. With our nation more than $15 trillion in debt right now, greater spending in this area will need to be fully offset. It will be challenging to find space in the budget, but that also presents an opportunity to be financially creative.  

    "For years now, I've suggested that a portion of the revenues from increased domestic energy production should be devoted to energy innovation. That's a key part of my ANWR legislation, which would raise an estimated $150 billion for the federal treasury at today's oil prices. Even a fraction of those revenues could go a long way towards developing the resources and technologies that we will rely on in the future. And so I was glad to see the revenues from energy production listed as a possibility in the 'Catalyzing American Ingenuity' report.

    "Beyond how much we spend, we'll also need to think carefully about our priorities. When we look back at where taxpayer dollars have been spent in recent years, it's clear that we're not even close to an 'all of the above' policy. We can see that in how much the federal government has spent on solar and wind, as opposed to unlocking the potential of methane hydrates. And we can see that in how much this administration has spent on electric vehicles compared to other promising alternatives. 

    "Finally, a point about how long we should be involved here. It makes good sense to invest in energy R&D. That's in our interest. But it's against our interest to keep subsidizing the same resources and technologies year after year without a clear path toward allowing those technologies to stand on their own in the market. To strike the right balance will require reform of existing programs, and the phase-out of many of the subsidies currently in place. Some experts believe that federal efforts should be oriented more towards basic research, and away from deployment, because in a tight fiscal climate the government should spend on priorities that no other institution will fund. I tend to agree with them."

     Norman Augustine testified, ". . .I must confess that I, and I believe my colleagues, are strong devotees of free enterprise as opposed to government involvement in markets to the extent practicable, the energy dilemma seems to be exactly the sort of issue which governments are designed to help solve, at least in democracies with free enterprise markets. That is, this is a case wherein there is an important benefit to be had by the citizenry as a whole but private resources cannot, or will not, provide that benefit because of financial risk, extensive delays in receiving returns, small or even negative returns and the possibility that the returns will not even accrue to the investor or performer. The latter is particularly true in the pursuit of basic research. . .

    "The members of the American Energy Innovation Council are aware of the intense fiscal problems facing the nation—and you as its leaders. But we are also aware that in our own business responsibilities that during difficult times it may be necessary and appropriate to increase spending in some areas while at the same time making overall reductions. There is an important distinction to be made between investment and spending for consumption. . ."

    Ethan Zindler testified, ". . .The clean energy sector has seen significant growth in recent years. New investment into the industry, which totaled $54bn in 2004 and $189bn in 2009, rose to $263bn last year. In fact, in the fourth quarter of 2011, our firm counted the one trillionth new dollar invested in this sector. Meanwhile, we have seen clean energy technologies make important progress down their respective learning curves. The price of a solar module at the factory gate has dropped by more than half in the last 16 months. The efficiency of wind turbines continues to improve. Prices for lithium ion batteries used in electric vehicles are starting to tick down. . ." He posed the questions, ". . .will the US be home to the most critical new energy technologies and the associated manufacturing capacity? Will the US be a market maker for these technologies or a price taker, buying the equipment from companies overseas?"
    Jesse Jenkins submitted 26-pages of testimony with extensive links to referenced information.
Access the hearing website for a webcast and links to all testimony (click here). Access the statement from Sen. Bingaman (click here). Access the statement from Sen. Murkowski (click here). Access a release on the report with more details (click here). Access the complete report and individual sections and the 2010 report (click here). [#Energy]

Tuesday, May 22, 2012

Benefits Of DOE's Nuclear Weapons Safety Reform Are Not Clear

May 22: The U.S. Government Accountability Office (GAO) released a report entitled, DOE Needs to Determine the Costs and Benefits of Its Safety Reform Effort (GAO-12-347, April 20, 2012). The report was requested by Representatives Fred Upton (R-MI) and Henry Waxman (D-CA), the Chair and Ranking Member of the House Committee on Energy and Commerce and other members of the Committee.

    GAO indicates that the Department of Energy (DOE) carries out many of the nation's most critical missions, including stewardship of the nation's nuclear weapons stockpile and the environmental remediation of radioactive and hazardous legacy waste left over from the Cold War. DOE uses a system of regulations and internal directives that lay out requirements and guidance for ensuring the safety of staff and contractors, the public, and the environment. Over the past 10 years, GAO and others have repeatedly made recommendations for DOE to improve safety performance. In March 2010, DOE announced a reform effort to revise safety-related directives to increase productivity and reduce costs while maintaining safety.

    The report examines: (1) how DOE revised safety directives under its reform effort; (2) the costs of the reform effort and the benefits DOE hoped to achieve; and (3) the extent to which its reform effort addresses safety concerns GAO and others have identified. GAO reviewed relevant DOE reform effort documents, visited selected DOE sites to interview site office and contractor officials, and analyzed past GAO and other reports on DOE's safety problems.

    GAO found that under its safety reform effort, DOE reduced the number of safety directives by eliminating or combining requirements it determined were unclear, duplicative, or too prescriptive and by encouraging the use of industry standards. DOE reduced the number of its safety directives from 80 to 42, and for some of the directives DOE retained, it made extensive revisions. For example, DOE deleted requirements from its quality assurance directive addressing a corrective action program because another safety directive adequately covered these requirements. DOE obtained comments on its proposed revisions from DOE and contractor staff and from the Defense Nuclear Facilities Safety Board (Safety Board).

    GAO indicates that the benefits of DOE's reform effort are not clear. DOE intended to enhance productivity and reduce costs while maintaining safety, but DOE did not determine how the original requirements contained in safety directives impaired productivity or added costs before undertaking the reform effort. Moreover, DOE did not assess whether the cost to implement the revised directives would exceed the benefits, but officials said they had launched an initial study to determine, among other things, the costs associated with implementing selected safety requirements. DOE also did not develop performance measures in order to assess how the reform effort will lead to improved productivity or lower costs while maintaining safety. Instead, DOE is measuring success by using output-oriented measures, such as the number of directives eliminated, and not outcome measures, such as specific productivity improvements or cost savings. In the absence of clear measures linking the reform effort to productivity and safety improvements, DOE is not well positioned to know that its reform effort will achieve the intended benefits.

    DOE's reform effort did not fully address safety concerns GAO and others have identified in three key areas: (1) quality assurance, (2) safety culture, and (3) Federal oversight. Regarding quality assurance, DOE strengthened its quality assurance directive by clarifying that contractors must follow specific industry quality assurance standards, but quality assurance problems persist. For example, DOE proposed a nearly $250,000 fine against a contractor in July 2011 after identifying quality assurance problems in an incident where a worker punctured his hand with a sharp object contaminated with plutonium.

    With regard to safety culture, DOE revised its Integrated Safety Management directives to attempt to strengthen the safety culture at its sites, but DOE removed requirements for contractors to follow the directives because contractors already had to comply with safety management requirements in federal regulation. Safety Board officials raised concerns that the requirements in federal regulation are less detailed and, as a result, contractors may not implement safety practices as rigorously as if they were subject to the more specific requirements in DOE's directives.

    Finally, regarding Federal oversight, DOE revised its approach to place greater emphasis on having its independent oversight staff review safety design documents before facilities are constructed, rather than after they are built. Other changes, however, such as requiring oversight staff to coordinate their assessment activities with DOE site office and contractor staff, raise concerns about the oversight staff's ability to provide a critical review of safety at DOE's sites that is independent from DOE site office and contractor staff.

    GAO recommends that DOE analyze the costs and benefits of its safety reform effort and identify how the effort will help address safety concerns. DOE agreed with the recommendations but commented that it had significant concerns about the accuracy of the report's findings and conclusions. GAO said it stands by its findings and conclusions for the reasons discussed in the report.

    Access the complete 53-page GAO report (click here). [#Haz/Nuclear]

Monday, May 21, 2012

Nuclear Regulatory Commission Chairman Jaczko Resigns

May 21: The Chairman of the U.S. Nuclear Regulatory Commission (NRC), Gregory Jaczko, announced his resignation which he said would be effective upon the confirmation of his successor. Jaczko has served on the NRC for nearly eight years. Jaczko, one of five commissioners has been under attack from Republicans for months because of his position against two new nuclear reactors which were approved by the other commissioners and his strong stance on the recommendations following the Japanese lessons of Fukushima nuclear disaster. In his resignation statement Jaczko said:

"My responsibility and commitment to safety will continue to be my paramount priority after I leave the Commission and until my successor is confirmed. After an incredibly productive three years as Chairman, I have decided this is the appropriate time to continue my efforts to ensure public safety in a different forum. This is the right time to pass along the public safety torch to a new chairman who will keep a strong focus on carrying out the vital mission of the Nuclear Regulatory Commission.

"During this last year alone, the agency has responded with an impressive focus on safety under my leadership to a number of diverse challenges including the accident at the Fukushima Da-ichi reactors in Japan, and a number of severe incidents at reactors in the United States ranging from flooding, an earthquake and tornados to damaged plant structures and steam generator problems. In addition to this vigilant oversight, together we identified and began to implement lessons learned from Fukushima and completed our rigorous safety reviews for the first new reactor licenses in 30 years.

"Throughout my time on the Commission as both Chairman and Commissioner, the agency finalized regulations to ensure new reactors are designed to withstand an aircraft impact, completed the development and implementation of a safety culture policy statement, enhanced our focus on openness and transparency, and enhanced awareness of and worked to resolve some of the most long-standing generic issues facing the nuclear industry, including sump strainer issues and fire protection. Beyond the power reactor work, substantial progress was made in establishing a more transparent and effective oversight program for fuel cycle facilities. In addition, radioactive sources of concern are now fully protected with our new security regulations and source tracking system. We stand as a stronger and more decisive regulator now because of these years of efforts. I am truly humbled by the agency's success.

"Serving the American people as the Chairman of the U.S. Nuclear Regulatory Commission has been an honor and privilege. The mission of this agency -- protecting people and the environment, and providing for the common defense and security -- could not be more clear, or more critical. Our collective focus on that mission was, I believe, one of the primary reasons the Nuclear Regulatory Commission was one of the best places to work in the federal government throughout my tenure. The highly talented and dedicated professional staff, including dozens who have served on my personal staff over the years, have been instrumental in fulfilling the agency's mission.
"I will always be grateful for the opportunity of having served alongside the staff for all of these years, and for all that we accomplished together. I am looking forward to bringing all I have learned from my work and focus on safety at this agency with me as I move forward."
    House Energy and Commerce Committee Chairman Fred Upton (R-MI), Energy and Power Subcommittee Chairman Ed Whitfield (R-KY), and Environment and the Economy Subcommittee Chairman John Shimkus (R-IL) issued a joint statement in response Jaczko resignation saying:

"We are hopeful that the resignation of Chairman Jaczko signals a return of comity and collegiality to the Nuclear Regulatory Commission that has been unfortunately absent over the last three years. We are eager for the NRC to return its focus back to safety and policy and away from personal feuds, internal struggles, and controversy. If we can learn anything from the past few years, it is that there is no place for politics at the Nuclear Regulatory Commission. We are hopeful that with a new chairman, the commission's proud tradition of excellence will be restored.

"The commission is at a critical point in its history as it works to improve safety in the wake of Fukushima and license new plants for the first time in over 30 years. We must have a smooth transition to the new chairman to ensure regulatory stability within the nuclear sector. Commissioners Magwood, Ostendorff, Svinicki, and Apostolakis are distinguished public servants and have always and will continue to put the safety interests of the American public first. Chairman Jaczko's resignation also underscores the urgency for the Senate to swiftly confirm Commissioner Kristine Svinicki before June 30 to ensure her service is not interrupted.

"We have been actively monitoring the NRC during these tumultuous times and will continue our oversight. With these latest developments along with numerous outstanding issues, we look forward to hearing directly from all of the NRC commissioners at some point soon."

    Senator Barbara Boxer (D-CA), Chairman of the Environment and Public Works Committee, and a supporter of Jaczko, issued a brief statement saying, "I thank Chairman Jaczko for always fighting for the health and safety of the American people. I look forward to the President's nomination of a successor that will carry the same level of concern in this post-Fukushima era."
    Representative Ed Markey (D-MA), senior member of the Energy and Commerce Committee and a Congressional leader on nuclear safety, also released a statement in support of Jaczko. He said:
"Greg Jaczko has been one of the finest NRC Chairmen in the history of the Commission. His nearly eight years of service has marked a high point in the Commission's work to ensure the safety and security of our nation's 104 nuclear reactors. Greg's leadership, particularly during and since the Fukushima meltdowns, has embodied the Commission's mission to ensure public safety, transparency and accountability.
"Greg has led a Sisyphean fight against some of the nuclear industry's most entrenched opponents of strong, lasting safety regulations, often serving as the lone
in support of much-needed safety upgrades recommended by the Commission's safety staff. Greg's dedication is unparalleled, and his vision and accomplishments have set a standard for the Commission and future Chairs. I call upon the White House to nominate a successor with the same dedication, independence and safety record. His shoes will be very hard to fill.
"Greg's departure is an immeasurable loss for the Commission. I wish him all the best in his future endeavors
    Senator James Inhofe (R-OK), Ranking Member of the Senate Committee on Environment and Public Works and a staunch critic of Jaczko issued a statement saying his resignation makes expediting the re-nomination process of Kristine Svinicki, which is currently under consideration in the Senate, is "all the more urgent." He said:
"Given the numerous reports of Chairman Jaczko's failed leadership at the NRC, it was right of him to step down today. Throughout his time at the NRC, it was abundantly clear that Chairman Jaczko used his office to undermine the NRC to the point that all four of his fellow commissioners wrote to the President to ask for assistance as a last resort. With his resignation today, the NRC can focus on its mission of safety without the distractions of Jaczko's inappropriate behavior. 

"Jaczko's resignation just makes it all the more urgent that there are no further delays in the re-nomination process for Kristine Svinicki to continue to serve in her role as an NRC Commissioner. Commissioner Svinicki's paperwork arrived at the Environment and Public Works Committee late last week, so there is no reason now to put off her re-nomination hearing. The White House has said that we need to make sure that the NRC is 'functioning effectively' and that the President does not want to see a 'break in service.' Especially in light of today's news, I'm calling on Chairman Boxer to hold this Environment and Public Works hearing immediately to ensure that such a break in service does not happen."
    Access the statement from Jaczko (click here). Access the statement from House Republican E&C Committee leaders (click here). Access the statement from Sen. Boxer (click here). Access the statement from Rep. Markey (click here). Access the statement from Sen. Inhofe (click here). [#Energy/Nuclear]
32 Years of Environmental Reporting for serious Environmental Professionals

Friday, May 18, 2012

Report On Air Emissions At Old & New Electricity Generating Units

May 18: The U.S. Government Accountability Office (GAO) released a report requested by Senator Sheldon Whitehouse (D-RI), Chairman OF THE Subcommittee on Oversight Committee of the Committee on Environment and Public Works regarding, Air Emissions and Electricity Generation at U.S. Power Plants (GAO-12-545R, Apr 18, 2012). The report responds in part to Senator Whitehouse's request for information on electricity generation and emissions at U.S. electricity generating units and the implementation of NSR. Our objective is to provide information on how older fossil fuel electricity generating units compare with newer units in terms of their air emissions and electricity generation.
    To respond to the objective, GAO reviewed selected data elements in the Ventyx Velocity Suite EV Market-Ops database. The proprietary database contains consolidated energy and emissions data from EPA, the Energy Information Administration (EIA), and other sources. Specifically, GAO analyzed how older plants compare with newer plants in their emissions, energy production, location, and fuel type. GAO reviewed energy and emissions data from calendar year 2010. It reviewed data from units that: (1) listed a fossil fuel (coal, natural gas, or oil) as a primary fuel; (2) generated electricity in 2010; and (3) had a net summer capacity greater than 25 megawatts, making them subject to EPA emissions monitoring and reporting requirements.
    In all, GAO examined the characteristics of 3,443 electricity generating units -- 1,485 older units and 1,958 newer units. GAO focused the analysis on power plant emissions of three regulated pollutants: sulfur dioxide (as a proxy for sulfur oxides), nitrogen oxides, and carbon dioxide (a greenhouse gas). To assess the reliability of the Ventyx data, GAO reviewed existing documentation about the data and the system that produced them, interviewed Ventyx staff who were knowledgeable about the data, and consulted with EPA and EIA agency officials knowledgeable in energy issues. We determined the Ventyx data to be sufficiently reliable for the purpose of this report.
    GAO indicates that older electricity generating units -- those that began operating in or before 1978 -- provided 45 percent of electricity from fossil fuel units in 2010 but produced a disproportionate share of emissions, both in aggregate and per unit of electricity generated. Overall, in 2010 older units contributed 75 percent of sulfur dioxide emissions, 64 percent of nitrogen oxides emissions, and 54 percent of carbon dioxide emissions from fossil fuel units. For each unit of electricity generated, older units collectively emitted about 3.6 times as much sulfur dioxide, 2.1 times as much nitrogen oxides, and 1.3 times as much carbon dioxide as newer units. The difference in emissions between older units and their newer counterparts may be attributed to a number of factors.
  • First, 93 percent of the electricity produced by older fossil fuel units in 2010 was generated by coal-fired units. Compared with natural gas units, coal-fired units produced over 90 times as much sulfur dioxide, twice as much carbon dioxide and over five times as much nitrogen oxides per unit of electricity, largely because coal contains more sulfur and carbon than natural gas.
  • Second, fewer older units have installed emissions controls, which reduce emissions by limiting their formation or capturing them after they are formed. Among coal-fired units -- which produce nearly all sulfur dioxide emissions from electric power generation -- approximately 26 percent of older units used controls for sulfur dioxide, compared with 63 percent of newer units. Controls for nitrogen oxide emissions were more common among all types of fossil fuel units, but these controls vary widely in their effectiveness. Among older units, 14 percent had installed selective catalytic reduction (SCR) equipment, the type of control capable of reducing the greatest amount of nitrogen oxides emissions, compared with 33 percent of newer units. In addition, approximately 38 percent of older units did not have any controls for nitrogen oxides, compared with 6 percent of newer units.
  • Third, lower emissions among newer units may be attributable in part to improvements in the efficiency with which newer units convert fuel into electricity. Nonetheless, older units remain an important part of the electricity generating sector, particularly in certain regions of the United States.
    Access the complete 30-page (click here). [#Air, #Energy/Electric]
32 Years of Environmental Reporting for serious Environmental Professionals

Thursday, May 17, 2012

Clean Energy Standard Act Gets Mixed Reviews At Hearing

May 17: The Senate Energy and Natural Resources Committee, Chaired by Senator Jeff Bingaman (D-NM), with Ranking Member Lisa Murkowski (R-AK), held a hearing on the Clean Energy Standard Act of 2012 (CESA), S.2146, introduced by Senator Bingaman introduced the bill on March 1, 2012  [See WIMS  3/1/12]. Witnesses included U.S. Department of Energy, Assistant Secretary for Policy & International Affairs; Energy Information Administration; Resources for the Future; Center for Climate and Energy Solutions; Delaware Department of Natural Resources and Environmental Control; American Iron and Steel Institute; Duke Energy; and Jacksonville Electric Authority, Jacksonville, FL.
    Sen. Bingaman opened the hearing with a statement saying, "The purpose of the Clean Energy Standard is to establish a national standard for electricity to make sure that we leverage the clean resources we have today and provide a continuing incentive to develop the cheaper, cleaner energy technologies of the future.  By design, it would drive continued diversity in our sources of energy, and it would also allow every region to deploy clean energy using resources appropriate to that region. The Clean Energy Standard does this in a way that is intended to support home-grown innovation and manufacturing, and keep America competitive in the global clean energy economy.
    "This is not the first Clean Energy Standard [CES], and it certainly is not intended to be a partisan proposal. In the last Congress, during the discussion of a Renewable Electricity Standard [RES] in the Senate, several Senate Republicans publicly voiced their support for a more inclusive standard, such as a Clean Energy Standard, that would encompass all cleaner forms of electricity production, and not just renewable energy but other types as well, including nuclear power and hydropower and a variety of other options. At the beginning of this Congress, President Obama moved in that direction by calling for a proposal for a Clean Energy Standard in his 2011 State of the Union address. He endorsed that proposal again, and urged Congress to move ahead on something of this type, in this year's State of the Union address.
    "As part of the development process for the Clean Energy Standard, we received input from hundreds of stakeholder groups and citizens. The Energy Information Administration conducted a comprehensive set of policy analyses, and clean energy standard design was the topic of several academic workshops and industry meetings. And we tried to take all of this feedback and incorporate it into the proposal we are discussing today.
    "The Clean Energy Standard will take all electricity generating technologies that exceed the carbon efficiency of the current state-of-the-art supercritical coal generation and award them credits scaled to their relative improvement in carbon intensity over that baseline.  Zero-carbon sources such as new nuclear and renewables will get a full credit per kilowatt-hour produced. Advanced coal technologies, such as oxyfuel combustion, will get partial credit; natural gas will get about a half-credit, and so on.
    "Utilities that sell electricity at retail will acquire and turn those credits in to meet a standard that, overall, will start off being fairly easy to meet.  The standard, though, will become cleaner and more stringent over time.  The result is intended to be a realistic and a predictable market-pull on advanced energy technologies.  By having a long-term, predictable market for advanced electricity generation, the legislation is intended to provide innovators with confidence and the ability to make their best case to investors and project financiers.
    "This proposal is only 25 pages in length. We believe it is simple and straightforward, but would have a transformative effect on the power sector.  The Energy Information Administration projects that adopting the CES would drive substantial amounts of clean energy production across a diverse set of sources, including wind, solar, nuclear, biomass and natural gas. It would also drive enhanced energy efficiency, in particular in the industrial sector. EIA projects that it would reduce emissions from the power sector by 20 percent below their reference case in 2025, and by 44 percent in 2035. This mix of benefits has led to support for the legislation from a diverse group of stakeholders, several of whom we will be hearing from today. . ."
    Dr. Karen Palmer with Resources for the Future (RFF) summarized her testimony saying, "Our modeling suggests that the act will result in substantial reductions in emissions from the electricity sector, resulting in 21 percent fewer cumulative emissions by 2035. The policy has very little effect on national average electricity price for the first decade and leads to lower prices in the near term in some regions of the country. However, after 2025, national average electricity prices will increase as a result of the policy, rising to 18 percent above baseline levels by 2035. The alternative compliance payment (ACP) mechanism will be triggered in all years, generating substantial revenue for states to invest in energy efficiency, while reducing the share of clean energy and the amount of CO2 emissions reductions compared to a CES policy without an ACP. The small utility exemption, which applies to roughly 17 percent of electricity sales initially and roughly 12.5 percent after 2025, creates a difference in electricity prices between exempt and non-exempt utilities under the policy that grows to roughly 50 percent on average by 2035. The exemption results in electricity prices at exempt utilities that are lower with the CES policy than without it for the life of the policy. This large price savings provides an incentive for groups of electricity consumers to create their own small utility, an unintended consequence of the bill."
    Keith Trent with Duke Energy testified that, "I have heard the concern that a Clean Energy Standard is the wrong policy because it picks winners and losers. I believe this claim is a fallacy. A standard does two things. It sets a target for how much power must be derived from a basket of clean energy technologies. It also specifies qualifying criteria for those technologies. If it is structured correctly, the utilities, working with the states will decide how best to meet their obligations under a federal Clean Energy Standard, using the resources that are most appropriate. In deregulated states, technologies would be selected based solely on their relative competitiveness. In Arizona, solar power likely fits the bill. South Carolina could satisfy requirements by continuing to invest in nuclear power. The winners or losers allegation is only accurate if the Clean Energy Standard determines carve-outs for each technology, or it selects which company will supply the technology. . . I commend the Committee for pursuing a Clean Energy Standard that strives to put the U.S. on a coherent path to investment and job creation. Spurring investment in a diverse mix of clean energy sources and technologies -- including nuclear, renewables and cleaner coal -- will go a long way toward improving our economic and environmental outlook."
    James Dickenson with the Jacksonville, FL Electric Authority (JEA), a not-for-profit, community-owned utility with an electric system that serves more than 400,000 customers in northeast Florida said he is, "concerned that any national clean energy standard will create substantial competitive impacts between regions, favoring those that are situated to take advantage of geographic assets that more readily support development of solar, wind and hydropower." He said, "While applauding the inclusion of nuclear energy and the partial credits for natural gas technologies in the Clean Energy Standard Act of 2012 (CES), the move away from existing coal generation, including JEA's, will strand not only large capital investments but the nation's abundant supply of a secure domestic fuel that will be exported to other countries."
    Additionally, Dickenson said, "We are also concerned that the proposed CES requiring large-scale phasing in over a short 20-year time frame is too aggressive." He concluded, "JEA is very concerned that the Clean Energy Standard, as described in S. 2146, is too aggressive and too costly to electric consumers across the country, especially in our service area. The CES further isolates our country's abundant coal resources from being a viable source of energy production. It would require that large capital assets not only be scaled in over a mere 20-year period but would also require existing capital assets to be retired or abandoned before the end of their useful economic lives. All this cost would be borne by electric consumers - our customers, your constituents - in uncertain economic times. The ever-changing focus of environmental concerns and the long-term uncertainty of fuel availability and pricing impact a basic life resource that in part defines our quality standard of living."
    In advance of the hearing, the American Chemistry Council (ACC) issued a statement indicating its concerns with the bill and said it was concerned about "the absence of energy efficiency" and said it "falls short on domestic energy diversity. It discourages the use of coal from the start, and natural gas in later years." [See WIMS 5/16/12].
    The National Alliance of Forest Owners (NAFO) submitted written comments urging the Committee to include a definition of biomass in the legislation "that will promote rather than discourage the use of biomass to meet America's renewable energy goals." NAFO said, "this bill discourages the use of forest biomass. . . The bill defines 'Qualified Renewable Biomass,' using terms and criteria from national forest management that have been the source of protracted litigation for decades. The new definition would overlay the existing framework of well–established federal, state and local laws, which currently govern private forest practices."
    Access the statement from Sen. Bingaman (click here). Access the hearing website for links to all testimony and a webcast (click here). Access legislative details for S.2146 (click here). Access the full text of the Clean Energy Standard Act of 2012 (click here). Access the CES Two-Page Summary (click here). Access the CES Section-by-Section Summary (click here). Access a release from ACC (click here). Access a release and comments from NAFO (click here). [#Energy/CES]
32 Years of Environmental Reporting for serious Environmental Professionals

Wednesday, May 16, 2012

Modeling Shows Regional Varying Climate Impacts On Watersheds

May 16: A release from U.S. Geological Survey (USGS) states that climate change projections indicate a steady increase in temperature progressing through the 21st century, generally resulting in snowpack reductions, changes to the timing of snowmelt, altered streamflows, and reductions in soil moisture, all of which could affect water management, agriculture, recreation, hazard mitigation, and ecosystems across the nation. Despite some widespread similarities in climate change trends, climate change will affect specific water basins in the U.S. differently, based on the particular hydrologic and geologic conditions in that area.

    New USGS modeling studies project changes in water availability due to climate change at the local level. So far, the USGS has applied these models to fourteen basins, including: Sprague River Basin, Oregon; Sagehen Creek Basin, California; Feather River Basin, California; Naches River Basin, Washington; Yampa River Basin, Colorado; East River Basin, Colorado; Black Earth Creek Basin, Wisconsin; Flint River Basin, Georgia; Pomperaug River Watershed, Connecticut; Clear Creek Basin, Iowa; Cathance Stream Basin, Maine; Trout Lake Basin, Wisconsin; Starkweather Coulee Basin, North Dakota; and South Fork of the Flathead River, Montana.

    USGS Director Marcia McNutt said, "The advantage of these studies is that they demonstrate that there is not just one hydrological response to climate change: the predictions account for essential local factors that will govern the timing, severity, and type of impact, whether it be water shortage, drought, or flood. This is exactly the sort of information communities need to know now, because we are unlikely to see a 'water-as-usual' future." 

    The local projections are based on General Circulation Models (GCM) that predict how climate change will affect temperature, precipitation, and emissions for large regional areas. The USGS's Precipitation Runoff Modeling System (PRMS) applies information from the downscaled GCM projections to local watersheds, where impacts of climate change on water availability will depend on local conditions. These local-scale hydrologic projections will allow managers to plan for changes in water resources that are specific to their area.

    USGS states for example, the models project that changes to snow pack in the Sprague River Basin in Oregon could cause annual peak streamflows to occur earlier in the spring as overall basin storage decreases, which may force managers to modify storage operation and reprioritize water deliveries for environmental and human needs. Reduced snowpack in headwaters of the Colorado River could affect the amount and timing of streamflow to the Colorado River and also impact important recreation areas. Portions of Maine may see higher streamflows which could affect populations of endangered Atlantic salmon. Areas of the already drought-stressed Flint River Basin, one of Atlanta's primary drinking water supplies, are projected to become even drier. The results for each basin present a complex story due to uncertainty associated with the future climate projections and their effect on the hydrological response of the different geographical regions of the nation.

    The downscaled GCM models are obtained from the World Climate Research Programme's Coupled Model Intercomparison Project phase 3 multi-model dataset archive. The USGS PRMS models were developed as part of the USGS National Research Program (NRP) in cooperation with USGS Water Science Centers. The NRP develops new information, theories, and techniques to anticipate, understand, and solve problems facing resources managers and is a national leader in understanding the effects of climate change on water resources. 

    Access a lengthy release from USGS with links to details on each of the 14 basin and related information (click here). [#Climate, #Water]

32 Years of Environmental Reporting for serious Environmental Professionals