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Tag Archives: energy

Gasoline victims of circumstance?

By Carey King

The USA Today is not known to provide the most in-depth analysis of US news, but a recent article I read while traveling caught my attention. The article discussed the ‘high’ gasoline prices of $4/gallon in the United States and the economic hardship caused by spending more money on energy. I will not discuss the many reasons, some beyond personal choice and some not, that relatively lower gasoline (or petrol) prices in the US cause economic difficulty versus different prices in the EU.

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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.

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Energy-water nexus: cooling technology retrofit part of nuclear plant early shutdown

A recent story in the domain of the water-energy nexus caught my eye. The story describes the Oyster Creek nuclear power plant in New Jersey will be shutting down in 2019, 10 years earlier than planned(http://www.app.com/article/20101208/NEWS/12080378/Oyster-Creek-to-close-10-years-early-in-2019), because it otherwise would have had to install cooling towers as a retrofit to the power plant. Environmental groups seem mostly behind the decision, but the Sierra Club is an example of one group that is far from satisfied(http://green.blogs.nytimes.com/2010/12/09/oyster-creek-nuclear-deal-draws-fire/). From the website of Exelon, enough electricity to power 600,000 average American homes.”

The reason for the decision to shut down the plant instead of retrofitting it with cooling towers stems from an US Environmental Protection Agency (EPA) rule. This rule calls for existing power plants that use “once-through” or open-loop cooling to cease using that design in replacement of wet cooling towers that withdraw less water. The reason this rule exists is that that once-through and open-loop cooling systems withdraw high flow rates of water (up to tens of thousands of liters per kWh) into the power plant to cool the steam cycle, and then discharge that water, now heated, back to the water source. Cooling tower systems withdraw much less 1-5 liters per kWh. In the case of Oyster Creek the water source is Barnegat Bay seawater, and the plant has been blamed for depletion of much of the marine life of the bay.

This EPA ruling that demands conversion of cooling systems from once-through to cooling towers is meant to mitigate impacts upon marine life from sucking in marine animals into the water intake, impinging larger animals onto filter screens, and discharging warm water that disrupts the ecosystem’s normal temperature balance. The drawbacks to this retrofitting are increased capital costs, slightly less net power output, and higher water consumption. Cooling towers are generally not used with intake of seawater because the cooling mechanism is via evaporation of the water. Thus, after the water evaporates, salt and other minerals deposit onto the cooling fins of the cooling tower creating a maintenance issue. The costs of chemicals and maintenance are generally not worth using cooling towers with seawater, although the use of cooling towers with freshwater is very common.

It is not clear if the 10-year early close down of Oyster Creek nuclear station is the beginning of a trend or one of a few to be highly affected by the cooling tower ruling. Given that Oyster Creek was the first large nuclear power plant in the US, it perhaps was destined to be one of the first to be retired. Any power plant using once-through cooling with seawater and that is planning on operating more than 5 more years will have a difficult decision to make. For power plants using seawater for cooling, I think it is likely that cooling tower retrofits will benefit the environment via less impacts on marine environments and lower profits (and/or higher electricity costs) of the power plant operator passing on to consumers to lower electricity consumption. Conversions of once-through to cooling tower on rivers and freshwater lakes will have lower economic impacts and the higher water consumption will affect water flows downstream. Thus, the environmental benefits are less clear, but lean toward more beneficial.

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Summary of annual meeting of the Association for the Study of Peak Oil-USA (ASPO-USA)

This week I attended the meeting of the US chapter of the Association for the Study of Peak Oil and Gas (ASPO-USA) in Washington, D.C. (http://www.aspousa.org/worldoil2010/. With all of these backgrounds, the basic consensus of the group is that oil production is in fact peaking now as production has been within 5% of the same level of production around 83 to 85 million barrels per year over the last five years, and will begin to irreversibly decline within the next five years. Additionally, the current economic downturn and high unemployment levels are directly tied to the precipitous rise in oil price from 2003 to summer of 2008.

Simply put, the world economy, and primarily that of the US and the rest of the OECD, could not afford and is not structured to function in a world of oil price > $100/BBL. Southeast Asia is growing up in an oil economy as it peaks out, but they are adjusting from transport systems such as scooters and bicycles. Additionally, as Jeff Rubin (http://www.jeffrubinssmallerworld.com/meet-jeff/, this is how the world will get smaller. Oil simply gets too expensive to “lubricate” world transportation of goods and raw materials that is necessary for much of globalized trade.

The opinion of more and more “mainstream” organizations are accepting the reality of peak oil production. Widely mentioned and quoted at the conference was a report by the US military from the Joint Chiefs of Staff: the Joint Operating Environment (JOE) (http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf, and I quote a few passages here:

“Peak Oil
As the figure at right shows, petroleum must continue to satisfy most of the demand for energy out to 2030. Assuming the most optimistic scenario for improved petroleum production through enhanced recovery means, the development of non-conventional oils (such as oil shales or tar sands) and new discoveries, petroleum production will be hard pressed to meet the expected future demand of 118 million barrels per day.”

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.”

These statements are strong support for the oncoming peak oil scenario, but the rest of the section on energy does little to make me think that the JOE report is going too far on a limb due to the caveats and continuing discussion of possible 100 million barrel per day (MMBBL/d) production in the future. If you are a real peak oil person, then you believe we’re at the peak now near 85 MMBBL/d.

On the notion of other fossil fuels, there was a good presentation on the “true” economics and production levels from natural gas shales from Arthur Berman – who has often presented interpretations of well data and financial statements that support his view that is quite contrary to the shale gas producers. Presentations from David Rutledge and David Summers regarding much less coal production (and hence CO2 emissions from coal) than used for emissions scenarios (so-called SRES) for the various Intergovernmental Panel on Climate Change (IPCC) climate model simulations. The data are compelling, and along with the recent paper from Tad Patzek on the soon-to-peak world coal production (i.e. 2011). Granted there were audience members who greatly disagreed that we are anywhere near peak coal production, and obviously we do not precisely know the speed of development of new coal mining areas. However, I’d say the evidence is leaning toward a near term peak coal scenario given the remoteness and coal quality of some virgin coal field locations (e.g. lignite in Eastern Siberia).

Please visit the ASPO-USA website for more information as the presentations are uploaded for public viewing and download in the future (http://www.aspousa.org/worldoil2010/.

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Commentary: Public perceptions of energy consumption and savings

An interesting paper has recently been published in the Proceedings of the National Academy of Sciences entitled “Public perceptions of energy consumption and savings” (see http://www.pnas.org/content/early/2010/08/06/1001509107.shortb) by Attari et al. This paper provides insights into how people view the quantity of energy consumed for various tasks that are normal in an industrial society. The paper authors conclude that people generally overestimate the energy savings for changing habits related to saving low quantities of energy while underestimating energy savings associated with saving larger quantities of energy.

This research shows some of the difficulties in using surveys to assess perceptions and reality of how energy impacts our lives. Take for example the following in which the respondent is asked to select how strongly he/she agrees or disagrees with the statement:

“We are approaching the limit of the number of people the earth can support.”

Today, human population is approximately 6.7 billion. If you believe that the earth can only support 2 billion people, then you could strongly disagree with the statement on the grounds that we are not approaching that limit, but that we have far surpassed the limit. However, if you believe the earth can support 12 billion people, then you might also strongly disagree with the statement because you think we are far from the earth’s limits (i.e. we are not yet “approaching the limit”). So two completely different answers might prompt selecting the same response to the statement.

The results for the questions pertaining to values and behavioral questions (e.g. how hard do you think it is to change your energy consuming habits) are not presented in the PNAS paper by Attari, but these are important questions to ask. Many people believe that the vast majority of people will not willfully conserve energy without financial penalties (e.g. high prices or taxes) for consumption. I fall into that category myself. We find ourselves in an interesting time as for only the second time in the last 40 years we (in the US) have reached a point where over 10% of GDP was spent directly on primary and secondary energy.

The first time period was from the mid 1970s-mid 1980s and likely in 2008 as well (see figure). The first time over 10% of GDP was spent on energy was driven by political events – particularly the Arab Oil Embargos and the Iran-Iraq War. This most recent worldwide economic recession starting in 2008 was not driven by a particular political event, but has been a growing trend for almost a decade (at least with particular reference to the US).

The US broke out of the recessions cause by the oil shortages of the 1970s by investing in energy efficiency for vehicles (Corporate Average Fuel Economy, or CAFE, standards), only to find itself equally or more dependent upon oil for economic growth today as in 1970. Important questions are: Will the US meet its new CAFE goals (reaching 35.5 miles per gallon for vehicles sales; 39 mpg for cars and 30 mpg for trucks and sport-utility vehicles) by 2016? This targeted increase is approximately the same percentage increase in fuel efficiency as occurred from the 1970s to the late 1980s in meeting the original CAFE standards. If the US (and the world) is successful in reducing oil consumption per mile traveled by 2016 (or soon thereafter), will we only find ourselves in the same position 10-30 years down the road? In other words, will we just wait until we consume too much gasoline for it to take too much out of our wallets to again think about restructuring the way our economy functions and consumes energy?

There are reasons to think this time is different. This time we are well past peak oil production for the US. Perhaps we have reached peak crude oil production in the US and so far the statistics seem to point to that possibly being true (but it will take several more years to confirm the full truth). In reading the August 15, 2010 issue of Science which talks about scaling up of renewable energy, there are two articles about biofuels. One article in particular (“Challenges in Scaling up Biofuels Infrastructure” by Tom Richard) notes the logistical issues with making fuels out of biomass. Richard discusses much about how we are supposed to create a viable supply chain for the relatively low-density biomass materials to go from the farm to the biorefinery and finally to the consumer. The reason that this is such a hard problem is that the net energy of the biomass fuel is so low that it is not obvious that we can run our current economy as designed if using these fuels to any large degree. That is also a major difference now from the 1970s – we’re actually really trying to grow an economy using biofuels instead of just making cars run on less fuel and importing more oil.

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Current economic difficulties are not the fault of single decisions or decision-makers; it’s energy, stupid!

The current conundrum discussed in the news and the public is between (1) Western government spending to keep stimulating their economies after the decade-long period of overspending and (2) savings to prevent future collapse of governments under their own debt burden. Unfortunately, energy resource availability is rarely a part of the discussion, and pundits never point to it as a core driver. This is quite unfortunate.

There is no one consensus on the “economic growth” issue among mainstream economists as the proper choice, or series of choices, is quite unclear. There appears to be no good path, only a choice between bad paths. Ecological or biophysical economic arguments have historically been quickly dismissed as invalid, yet no other economic theories are based upon anything tangible. We hear of the need to “consumer confidence” as if that is a tangible and meaningful reason to invest. Irrational exuberance, or extreme confidence, is exactly what pushed us to two boom-bust cycles (dot-com and now housing) over the last two decades. Confidence only takes you so far, and at some point you need something tangible upon which to base economic theory. That tangible good is essentially natural resources, primarily energy, and the technologies that convert those resources to consumer products and services.

Because increasing consumption of natural and energy resources are the key driver of economic growth, if you do not increase their consumption, you do not grow. Yes, more efficient energy production and conversion systems (power plants, vehicles, mining, etc.) also induce economic growth, but the past only indicates the higher efficiency begets higher total consumption – due to Jevon’s Paradox. However, when fossil resource availability does decline due to depletion, we’ll be happy for higher efficiency services even when total consumption decreases.

Adding or switching to energy resources and technologies, where they exist, takes decades. Translation: this is longer than election cycles. Thus, a US president that implements energy efficiency or conservation policies will generally not reap the rewards or drawbacks of those policies. The next President, or perhaps a second one down the line, will be dealing with those problems. Since 2000, the United States has consumed roughly the same total amount of primary energy, about 100 quadrillion Btus per year. There has never been a time in US history at which total energy consumption was stagnant for this long. Much of the reason for the stagnation in energy consumption was offshoring of energy-intensive industries to developing countries, and thus there are less and less non-skilled jobs available after each economic downturn. The US economy restructured based upon increasing energy prices during the last decade, and companies traded cheap energy in the form of the muscle of Chinese, for more expensive energy, in the form of natural gas and petroleum.

Thus, major structural changes in the US economy have occurred over the last decade, and no policy can reverse these trends in less than another decade. The reason that economists, and even Federal Reserve Chairman Ben Bernake are calling the economic future “unusually uncertain” is that the US has never encountered the situation at which we now reside. Energy consumption is flat. World oil production is at a plateau. We have shipped jobs to China and borrow their profits to feed our consumption habit. Unemployment is high.

Policy can’t ship more jobs to China because hindering employment even further is a political death nail. Policy can promote offshore oil and renewable energy technologies, but those resources and technologies have lower energy return on energy invested (EROI) than the resources we have used in the past. Lower EROI means more of the economy must focus on energy production itself rather than producing other more discretionary economic goods. And a change in transportation mode (electric cars, electric and/or high speed trains) will take decades, and these changes can work, but they may never be as economically as productive as burning petroleum at $20/BBL to $60/BBL.

So the reason that economists see a “sluggish” or “low-growth” economy in the foreseeable future is due to energy. From 2000-2008, we pretended that high rates of GDP growth could occur without increasing energy consumption. Increasing prosperity of the developing world has strained energy resources to the point that we must adjust to a future with energy consumption that is both lower and from new resources and technologies. These technologies and resources, even without considering altering them to prevent greenhouse gas emissions, are less productive. So if you put these concepts together, you end up with the result that we must (1) invest in new energy technologies that (2) employ more people per output (kWh, liter of fuel, etc.) and produce (3) lower net energy than historical coal, natural gas, and oil (even future coal, oil, and natural gas are less productive) such that (4) the energy sector grows as a proportion of the economy and (5) by definition the rest of the economy must shrink. Either this reality we become true, or the scientists working on fusion will pull a rabbit out of hat. No tax policy of a President will do much to significantly alter this equation. Only energy consumers can wait to see if we do or do not pull off sufficient technology solutions, and adjust their habits accordingly.

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Maui as a microcosm of modern water and energy pressures

The latest Water Commission rulings have now come out on how to distribute water resources on the island of Maui, Hawaii. These rulings discuss how to distribute water from diversion ditches owned and operated by the last sugar-cane plantation of Hawaii Commercial and Sugar (HC&S) who is by far the largest water user on the island. The historical and future contexts of Maui are important in understanding why commercial and native Hawaiian interests have a very difficult time becoming aligned in any significant way.

In the late 1800s and early 1900s settlers to Hawaii established large plantations that over time grew sugar cane, pineapples and other crops. The best land for growing these crops generally lies on the leeward side of the islands that are relatively dry, sometimes almost desert-like. As a result of prevailing Northeasterly winds, the water is precipitated out of the Pacific clouds on the eastern sides of the islands before reaching the western portions of the islands. In order to provide the water required for large agricultural plantations, a series of diversions ditches over 100 miles long along takes water from the windward side of East Maui around to the central valley for the sugar-cane plantation.

However, over the last few decades, the plantations on all Hawaiian islands have been shutting down due to having difficulty competing economically on the global market. The HC&S plantation is the last of a dying breed in Hawaii, and many environmental and pro-native groups wouldn’t be surprised if the plantation shut down tomorrow – and for the most part they’d prefer that ending. As plantations on the islands have shut down the question arises as to how to allocate the water that previously diverted for agriculture. The case of reallocating some water from the previously fully diverted Waiahole Stream on Oahu has potentially set a precedent for using water for the purposes of native rights and environmental services. The native rights are primarily concerned with growing taro. Because taro is normally grown in flooded fields and patches that reside adjacent to streams and divert water into the fields before returning most of the water. Some species of taro can be grown without flooded fields, but those varieties are less common.

However influential the ruling for the partial reallocation of diverted water in the Waiahole case, it concerned water becoming available from the closing of a sugar plantation, Oahu Sugar. The water essentially became up for grabs. The cases on Maui for the Ne Wai Eha (West Maui) and East Maui concern a sugar plantation that is still operating. Furthermore, the push for renewable fuels in the US have led to federal grants going to investigate the use of Maui lands for biofuel development. This added pressure from the federal government may overcome any economic and legal pressures to either shut down HC&S the sugar plantation or divert more water to other uses on the island. Other pushes for general energy independence, an abundance of sun and water (when considering the entire island of Maui) generally make Maui as attractive as any location in the US states.

Whatever happens, the allocations of water and land use on Maui are a microcosm of the pressures of industrialized countries trying to make money and renewable energy using large plantations/farms and higher wages than countries like Brazil that also have the requisite natural resources, but currently not the same wage and environmental management pressures.

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Virtual innovation vs reality innovation: science and engineering from sitcoms to renewables

In the continuing saga of the oil leak after the April 20 explosion and subsequent sinking of the Transocean’s Deepwater Horizon drilling rig, operated by BP, there has been no shortage of people quoted in the news media wondering why we can’t just throw money at the problem and have the well plugged. We’ve heard “Why aren’t BP and the government responding?” over and over. But they have been responding, only ineffectively until BP’s “top kill” procedure that seems to be having success (as of this writing), but is not yet completed through the process of cementing the well. This thinking that we should easily be able to stop this leak stems from the fact that many people are uneducated about the principles of science and that all things new are viewed as equally innovative. If this fallacy persists it will undermine research and education in energy.

To give an example, I’ve heard prominent policy speakers on prominent talk shows say that if we’d simply hire Google employees tackle the problem of plugging the leaking oil well, then it would be completed within days. This mentality assumes that, when it comes to environmental remediation of an oil leak a mile below the sea surface, the people who invented the drilling technology itself are at some level less competent then those that make their revenue from linking advertisements to Web searches. Granted, both Google and BP are generally very good at what they do. But suggesting Google is best qualified to stop an oil leak is akin to suggesting that BP should be in charge of Google’s strategy for operating its search engine in China. This suggestion also implies that the past research on energy alternatives has been performed by buffoons.

Just as in the past “The Marine Biologist” episode of the popular 1990s US sitcom Seinfeld, we might as well ask Kramer (the clumsy neighbor) to hit a golf ball into the ocean to plug up the well just as he plugged up a whale’s blowhole with his “hole-in-one.” Oh wait, I forgot, he actually did plug up the hole. In the case of the whale – not well – unplugging the passageway was needed. The call came out for a marine biologist, a relevant expertise for the task at hand. The fact that George (who often lied of his intellectual capabilities to get ahead) solved the problem because he pretended to be a marine biologist, and did so successfully, is relevant to my point. Society perceives that we don’t need a foundation in science and engineering to solve energy problems that involve science and engineering.

We as people are more prone to act in times of crises than when continual change is required. Former President George W. Bush’ decision to go to war with Iraq to oust Saddam Hussein was based upon the highly uncertain belief that there were weapons of mass destruction (WMD) that needed confiscation before he chose to use them. As we all know today, there were no WMD in Iraq, but within a few years we at least knew the answer to the question.

We wait until financial crises occur such that we have to take drastic measures to bail out banks so that we can justify actions by saying we didn’t have time to pursue other solutions. These justifications exist even though looking at the past data shows that total debt in the US, public and private, has been continuously increasing for all practical history, and is at near 350% of GDP. And now the US public debt is at 90% of GDP. With these trends, why do we need a crisis to act? In group planning exercises, simulated crises are often created to force people to make concrete decisions to explore the effectiveness of the decisions. For example, say that your region is experiencing drought, and the demand for water is 10% higher than the supply – for whom and how much to you reduce water access to meet the supply?

In the research community we should do a much better job at explaining the differences in making decisions under uncertainty. There are measureable decisions that produce short term feedback regarding effectiveness (e.g. acts of war, plugging an oil leak) that have highly uncertain outcomes, but that history has shown people pursuing out of choice or necessity. There are also decisions where the feedbacks occur over long times and succeed due to multiple coordinated actors due to their disperse nature (e.g. climate change mitigation, energy investments, land use management to preserve aquatic environments such as prevention of hypoxic zones). We’re good at the former and bad at the latter. Because these latter decisions for environmental management require group coordination, regulation and government involvement is usually used, and those that are affected and unaware question the motives to the point of noncompliance. Only after convincing them that their personal actions make a difference as part of a coordinated effort do they believe they should change their actions.

With regard to energy investments, given the existing measures for economic growth that discount the future and keep environmental impacts external from the growth equation, oil still makes sense. As long as value is measured by the flow of goods instead of the stock goods, we will favor energy and fuel-consuming items and systems. The “innovative” energy efficient investments in web servers that lower the energy per bit have simply followed Jevons’ paradox as we now process even more bits than were saved. We stream movies on YouTube and constantly check the web on our mobile phones.

We assume that solar electric generating technologies will someday be cheaper than coal, and we assume that putting a sufficient price on greenhouse gas emissions will drive innovation in energy systems that enable continuous living at high standards in the developed world while bringing the developing world up to par. Most of these assumptions of innovation of new technologies are based upon the study of gadgets that consume, rather than produce energy. There is a reason why solar power is not cheaper than coal power – it is hard to take a diffuse energy resource such as sunlight and make it as productive as energy dense resources like fossil fuels. There are real physical constraints that limit the power that can be produced. These physical constraints can’t be removed by programming a search engine (Google) or a mimicking a sitcom (Seinfeld), or simply believing they will work.

We need to understand how well renewable energy systems can replace fossil fuels. This is not because the fossil fuel industry is necessarily evil, but because fossil resources will inevitably become uneconomical, no matter how we quantify that. And because today renewable energy technologies are manufactured by burning fossil fuels, they will also not be economical in the long run unless they are made with their own energy as an input.

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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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Energy-water nexus podcast/interview

For a 30-minute interview with myself and two others on the energy-water nexus topic, with particular focus upon renewable energy, visit Renewable Energy World.

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