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Tag Archives: clean technolgoies

Industrial strategy: greening industry

By Dave Elliott

Following on from an earlier Green paper and its Clean Growth Strategy, the UK government has now produced a White Paper on Industrial Strategy. Although examples are provided of specific infrastructure projects and opportunities, it’s mostly couched in very general policy terms, identifying four ‘Grand Challenges’. It says we must put the UK at the forefront of the artificial intelligence and data revolution; maximise the advantages for UK industry from the global shift to clean growth; become a world leader in shaping the future of mobility; and harness the power of innovation to help meet the needs of an ageing society’.  (more…)

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Obama’s state of clean electricity – not as different as it sounds

By Carey King

During the annual State of Union address on January 25, 2011, United States’ President Barack Obama spoke briefly about energy policy and a future energy transition. I will focus on a short excerpt of the speech here:

State of the Union: “We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. (Applause.) I don’t know if — I don’t know if you’ve noticed, but they’re doing just fine on their own. (Laughter.) So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.

Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources. (Applause.)

Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all — and I urge Democrats and Republicans to work together to make it happen. (Applause.)”

First the President is calling for elimination of subsidies to oil companies. Some of these subsidies include decreased royalties and depreciation rules that are not too dissimilar to non-oil energy generation projects. The point of the excerpt I will briefly focus on here is the President’s challenge to generate 80% of US electricity from “clean energy” sources by 2035. The President then defines these clean energy sources where the only one not in commercial production is “clean coal” which we can assume is discussing the capture and sequestration of carbon dioxide from coal-fired power plants.

(more…)

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Can the government get a return on risky energy technologies?

One current climate and energy bill in the Committee on Energy and Natural Resources of the United States Senate is S. 1462, the American Clean Energy and Leadership Act of 2009. The stated purpose of this bill is to:

” … promote the domestic development and deployment of clean energy technologies required for the 21st century through the improvement of existing programs and the establishment of a self-sustaining Clean Energy Deployment Administration that will provide for an attractive investment environment through partnership with and support of the private capital market in order to promote access to affordable financing for accelerated and widespread deployment of–
(1) clean energy technologies;
(2) advanced or enabling energy infrastructure technologies;
(3) energy efficiency technologies in residential, commercial, and industrial applications, including end-use efficiency in buildings; and
(4) manufacturing technologies for any of the technologies or applications described in this section.”

To achieve the goal of the deployment of clean technologies, not research, a Clean Energy Deployment Administration (CEDA) is proposed to be established in the Department of Energy. The agency will be an independent administration within the DOE with a Technology Advisory Council to advise on the technical aspects of new technologies. CEDA is to provide different types of credit such as loans, loan guarantees, other credit enhancements as well as secondary market support such as clean energy-backed bonds that are aimed at allowing less expensive lending in the private sector.

The mission of CEDA is to help deploy (not research) technologies that are perceived as too risky by commercial lenders. Thus, the agency aims to promote riskier technologies but with high potential to solve climate and energy security needs. At the same time, a portfolio approach is supposed to mitigate risk and enable CEDA to become economically self-sustaining over time after getting initial seed capital allocated by Congress (possibly up to $16 billion from existing funds reallocated to CEDA).

If other private investors are also pursuing balanced portfolios of risky and safe energy investments, what exactly might be the difference between the government CEDA and a private equity energy investor? Would it be that CEDA has a mandate to only invest in energy and climate technologies whereas a private fund can invest mostly in energy technologies or even change it energy-related portion of its portfolio over time? No doubt many would be skeptical that the government, even with private advice via the Technology Advisory Council, could make a profitable investment fund for clean energy, much less specifically having to invest in technologies that are too risky for the private market. It is also not clear how far $16 billion can go in this endeavor. For instance, for a wind turbines (not a risky clean energy technology) at a cost of $2000/kW, $16 billion could purchase 8 GW of installed capacity. Riskier and unproven technologies would be much more expensive such that the CEDA fund could invest no more than the order of 10s to maybe 100s of MW of installed effective capacity (via energy conservation or generation technologies) or less. If a new technology were deployed and operated successfully for a year or two at a scale of 0.1 – 1 MW, then it would begin to get established as less risky from an investment standpoint, and more business model and upscaling issues could take over in importance with CEDA divesting and hopefully handing the reigns to private capital. Thus, possibly up to a few dozens of technologies could get funding from CEDA to expedite their deployment.

It is not clear what the returns to CEDA will be in what will surely be rare cases of success. CEDA is meant to be more creative and flexible than existing government programs that have loan guarantees as the only funding and assistance mechanism. On the grand scale of problems and budgets, $10-$20 billion on CEDA may be a worthwhile bet. After all, that’s only about a dozen stealth bombers!

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