Clean Economy Capitol

White House Reaches CAFE Deal: 54.5 mpg by 2025

noreply@blogger.com (Clean Economy Capitol Staff) — Thu, 28 Jul 2011 16:28:00 +0000

Following months of negotiation, President Obama is due to announce the next round of fuel-economy standards this Friday, according to the White House.

"This program, which builds on the historic agreement achieved by this administration for model years 2012-2016, will result in significant cost savings for consumers at the pump, dramatically reduce oil consumption, cut pollution and create jobs," White House spokesman Jay Carney said at Wednesday's press briefing.

According to individuals familiar with the plan, auto fleets will have to average 54.5 CAFE mpg by 2025, representing about a 40 percent cut in fuel consumption and a 50 percent reduction in carbon pollution from today’s vehicles.

The White House had, for the past few weeks, been pushing for a 56.2 mpg by 2025 standard. That proposal, however, came under fire from the Alliance of Automobile Manufacturers and the Michigan congressional delegation, which called it “overly aggressive and not reasonably feasible.”

The easing of the standard arises from concessions to makers of light trucks, including SUVs, which would be permitted a slower rate of fuel economy improvement—3.5 percent annually from 2017 to 2021, and 5 percent annually from 2022 to 2025. Cars would still have to meet 5 percent annual increase beginning in 2017 under the plan.

The White House has also agreed to perform a “midterm review” by spring 2018 to assess progress meeting the standards. That joint assessment—conducted by the EPA, NHSTA, and the California Air Resources Board—will be used by EPA to determine if the standards need to be softened.

Mild- and strong-hybrid pickups will receive extra mileage credits and special credits will be issued for technologies such as louvered grills, solar roof cells, and capturing thermoelectric waste from exhaust.

A cap will be placed on the number of electric vehicles considered zero-emissions.

Although officials at the Auto Alliance were not commenting on the deal, its reception appears to have been largely positive among the large automakers, including General Motors, Ford, Chrysler, Toyota, Hyundai, Nissan, and Honda.

Chris Hosford, a spokesman for the Seoul-based Hyundai Motor Co., said “these higher standards are good for the country, good for the auto industry and good for consumers.”

Ford spokeswoman Meghan Keck called the talks productive, but added that “there are a couple of details that we’re still ironing out and […] we hope to be able to say more soon.”

Reaction from environmental groups was cautiously optimistic.

“We have not seen a final document yet, but based on what we have heard so far, the White House is taking a strong step toward lowering drivers' gas bills and cutting dangerous pollution," says Roland Hwang, transportation program director for the Natural Resources Defense Council. "But we need to run the numbers before we give our seal of approval."

The White House proposal represents a compromise for environmentalists, who had been advocating for a 62 mpg CAFE standard by 2025—one that analysis by the EPA and DOT found was both achievable and cost-effective for consumers.

Critics of that higher standard were emboldened by the release of a report by the Center for Automotive Research (CAR), which forecast that such a standard would increase average vehicle prices by $9,790, result in the loss of 260,000 industry jobs, and require building mainly electric and hybrid vehicles (covered previously).

However, a recent report by the Boston Consulting Group (covered previously) found that automakers could meet 2020 targets mainly through improvements to internal combustion engines.

And, according to the International Council on Clean Transportation, the “BCG estimates are largely consistent with those from EPA/DOT; somewhat higher for modest technology increases, but a little lower for larger increases. The CAR estimates are over three times higher, even though they are for 2025 instead of 2020 and one would expect technology-driven costs to continue to decline in those five years.”

Comparing fuel economy cost estimates for 2020–2025

FERC Issues Landmark Rule to Encourage Building of New Transmission Lines

noreply@blogger.com (Clean Economy Capitol Staff) — Wed, 27 Jul 2011 18:38:00 +0000

The Federal Electricity Regulatory Commission (FERC) issued a major rule last Thursday, Order No. 1000, that revamps the agency’s guidelines for planning and allocating costs of new transmission lines (for more background on the ruling, see last Thursday’s post).

“This rule is an important step forward, building on FERC’s successful market reforms over the past 15 years,” said FERC Chairman Jon Wellinghoff.

The 620-page rule, which was approved by a 5-0 vote, aims to facilitate the building of transmission lines, particularly in tricky cases where the lines may cut across states and electricity jurisdictions.

Such issues have become increasingly prevalent as states seek to integrate renewable energy, typically generated far from load centers in cities, into their energy mix—twenty-eight states and the District of Columbia have renewable portfolio standards.

“While these state policy choices will necessarily shape future energy supply, existing planning rules do not always allow for these policy choices to be considered as drivers of transmission needs,” said FERC Commissioner Cheryl LaFleur.

The new rule removes that impediment by helping regions account for all the benefits new transmission provides in determining cost allocation including, for the first time, those that arise from meeting state clean energy standards.

As such, Order No. 1000 has proven particularly popular among renewable developers and advocates:

"The rule removes one of the obstacles to developing the grid that the U.S. needs for the 21st Century—narrow cost allocation that does not recognize the way the grid operates and impedes cost recovery for grid investment," J. Jolly Hayden, president of transmission industry group Wires, said in a statement.

The industry group Solar Energy Industries Association said the regulation “will facilitate the development of utility-scale solar power in the Southwest, where some of the best solar resources are found, but are restricted by lack of adequate access to the nation's rapidly aging transmission infrastructure.”

While about one-quarter of new transmission facilities likely to be built over the next two decades will service wind and solar farms, half of that new transmission capacity will be needed just to maintain grid reliability.

Additionally, depending on regional planning and reliability needs, lines carrying power from nuclear plants or gas facilities are just as likely to be approved as those carrying power generated by renewables, according to Wellinghoff.

The rule does not address the basic challenge of siting proposed power lines, said Commissioner Philip Moeller, in voting for the measure while voicing partial dissent.

“It takes too long and is way too expensive to site transmission,” he said during the session. “The rule doesn’t address state laws that may inhibit the building of transmission or delays caused by other federal agencies,” adding that “the commission lacks the legal authority to require other federal agencies to act.”

Wellinghoff, however, called the rule “an important step forward,” which “promotes efficient and cost-effective transmission planning and the fair allocation of costs for new transmission facilities. These changes will provide consumers with greater access to efficient, low-cost electricity.”

Order No. 1000 is one of several new rules that FERC is working on to help overhaul the nation’s electricity system.

Many utilities have come out in support in the measure, but not all. "Where utilities have relatively high prices, if markets get opened up, cheaper power may come in and they'll make less money," said Bill White, manager of the National Clean Energy Transmission Initiative for the Energy Future Coalition.

FERC officials are meeting with members of Congress to assuage any remaining concerns about the rule, chief among them that Order No. 1000 defines too broadly what constitutes a “benefit.”

Sen. Bob Corker (R-TN) introduced legislation (S.400) in February, which would prevent the commission from allocating costs of new transmission to consumers “unless the costs are reasonably proportionate to measurable economic and reliability benefits.”

As we wrote in last Thursday’s post, proponents of Order No. 1000 worry that Corker’s proposal is overly restrictive, requiring quantification of benefits of benefits that may accrue over a long period of time and, therefore, may not be presently “measurable.”

Sen. Corker’s bill, which has been referred to the Senate Energy and Commerce Committee, is co-sponsored by Sens. Wyden (D-OR), Burr (R-NC), Murkowski (R-AK), Chambliss (R-GA), Graham (R-SC), Isakson (R-GA) and Lee (R-UT).

Order No. 1000 takes effect within 60 days of publication in the Federal Register.

Despite Hysteria over Strong CAFE Standards, More Good News about Advanced Vehicle Technologies

noreply@blogger.com (Clean Economy Capitol Staff) — Tue, 26 Jul 2011 13:41:00 +0000

As we reported last week, the Alliance of Automobile Manufacturers (AAM) is back to attacking the White House proposal to set a 56.2 mpg CAFE standard for 2025. But their allegation that the standard would have detrimental consequences for “preserving jobs, affordability, safety and vehicle choice” continues to be undermined:

1. The United Auto Workers, along with a coalition of other unions and NGOs, submitted a joint letter to the President supporting “strong standards.”

2. Hyundai Motor America and GM North America have strayed from the official AAM-party line—GM North America president Mark Reuss painted the proposed standard as tough, but achievable and issued the reminder that this “is a volume scale industry. What was very expensive in the past is no longer very expensive.”

3. In line with this last statement, the technology and business of clean vehicles keep moving forward:

From Autoblog Green: Toyota sets 2012 Prius Plug-in U.S. sales target at 16,000+

According to Toyota spokesman John Hanson, Toyota expects U.S. sales of its new Prius Plug-in to hit at least 16,000 in 2012.

“We think it's going to be a strong seller and we'll deliver to whatever level the market wants,” Hanson told Bloomberg News.

Reportedly, the Prius Plug-in will have an electric-only range of at least 13 miles and, like a standard Prius, the plug-in version will achieve approximately 50 miles per gallon in city and highway driving.

Unlike the Chevrolet Volt and the Nissan Leaf, the Prius Plug-in will be smartly priced at below $30,000—the standard Prius starts at $23,520. It should launch "very early" in 2012.

From Green Car Congress: Chevrolet confirms diesel variant for Cruze in North America in 2013

Chevrolet confirmed it will be introducing a diesel variant to the North American Cruze lineup in 2013. The diesel will shore up the already fuel-efficient Cruze lineup; the Cruze Eco with a standard six-speed manual transmission delivers an EPA-rated 42 mpg on the highway.

It would be the first Detroit passenger-vehicle diesel since the 2006 Jeep Liberty CRD sport-utility, and the first diesel car from Detroit since the 1980s.

The only US-market compact car currently offering a diesel option is the Volkswagen Jetta, rated at 30 mpg city, 42 highway.

The wildly successful Cruze recorded a total of 24,896 sales in the United States in June, the fifth consecutive month with sales above 20,000. Last month, it was the best-selling car in the nation.

From GigaOm: Tesla Scores $100M supply deal with Toyota for RAV4 EV

Tesla Motors’ stock shot up over 5 percent to $29.30 when the news broke that it secured a $100 million supply deal with Toyota to produce an electric version of Toyota’s RAV4.

While Tesla already had a R&D agreement with Toyota for the RAV4 EV, this is the first time the companies have revealed a much more extensive supply agreement.

The arrangement calls for Tesla to provide an electric powertrain system for the car, which includes a battery, a charging system, an inverter, a motor, a gearbox and software. Manufacturing of the RAV4 EV is expected to begin in 2012 and continue into 2014.

From Autoblog Green: Nissan picks site in Tennessee for Leaf electric motor production

During last week’s Plug-in 2011 Conference in Raleigh, NC, Nissan announced a $67.9 million investment in its powertrain assembly plant in Decherd, TN that will create up to 90 new jobs. The money will be used to add the Nissan Leaf's electric motor into the facility’s production mix.

Work on the Decherd plant will begin immediately and will coincide with the completion of expansion at Nissan's facility in Smyrna, TN. Beginning in late 2012, the Smyrna site will assemble Leafs and its lithium-ion battery packs.

According to Brian Carlin, Nissan’s senior vice president for sales and marketing, up to 150,000 electric motors will be produced annually at Decherd beginning in early 2013.

From Autoblog Green: Report: Mitsubishi expects to profit on sales of plug-in vehicles in 2 years

According to Japan's Nikkei business daily, Mitsubishi Motors expects its plug-in vehicles to turn a profit in two years. In the US, the company's i EV will be priced at $27,990 (only $20,490 after the federal tax incentive).

Mitsubishi projects it will sell 25,000 “green vehicles” by the end of 2011. With the addition of a plug-in hybrid version of its Outlander Sport in 2013, that number will keep rising in coming years.

Fuel Economy Standard Debate Heating Up: A Round-up

noreply@blogger.com (Clean Economy Capitol Staff) — Fri, 22 Jul 2011 19:11:00 +0000

The White House wants a framework deal on fuel economy by the end of the week. But the debate is as heated as ever, with the Auto Alliance and the Michigan congressional delegation painting the 56.2 mpg CAFE standard as a death knell. Meanwhile, California has approved millions of dollars to promote the purchase of clean vehicles and demand for fuel-efficient cars is reportedly helping to drive an auto-industry hiring spree. That and more in this week’s round-up:

Letter from the Michigan Congressional Delegation to President Obama

The White House has floated a CAFE standard of about 56.2 mpg by 2025 but Michigan’s congressional delegation believes such a standard is "overly aggressive".

They sent a letter to the White House late Thursday night detailing their objections to the standard in which they called the 56 mpg target “not reasonably feasible.” Citing the findings of the June Center for Automotive Research (CAR) report, they claimed such a standard would hurt both consumers and the US auto industry.

The CAR report was thoroughly rebutted by the NRDC and the ICCT, who found it to be “fundamentally flawed by improper use of data, incorrect methodologies, erroneous assumptions, and unsound appraisal of technological and other tendencies.” Nevertheless, it has been extensively circulated in the media.

The letter argues against setting fuel economy targets out to 2025, which they say is too long a horizon. They express support for five-year incremental standards or, barring that, a mid-term review in 2022.

The delegations also criticizes the role of California, with lawmakers calling its ability “to wield undue influence […] simply not acceptable.”

According to the letter, the Administration is now considering a 3.5 percent annual increase for light duty trucks for 2017 to 2021, lower than the 5 percent annual increase for the overall standard. However, the Michigan lawmakers criticized these measures as well, claiming that they “may exceed what is technologically achievable” for U.S. automakers when it came to trucks.

Analysis by the EPA and NHTSA found that in 2025, under a 56 CAFE mpg fleet target, the average vehicle would cost roughly $2,000 to $2,500 more, but that those costs would be recouped within 2 to 3 years through fuel savings.

Tim Greeff, Political Director of the Clean Economy Network, responded to the letter with the following statement:

"Strong fuel economy standards are good for business: they create American jobs, unleash technological innovation, and make the U.S. auto industry more competitive. A strong, predictable standard—without loopholes like a "midterm review"—will send a market signal that will deploy existing technologies and unlock private capital for cleaner, more advanced vehicle technologies, putting Americans back to work in parts of the country hit hardest by the recession."

From The Detroit News: Automakers resume fuel economy ad campaign

Meanwhile, the Alliance of Automobile Manufacturers is resuming a radio campaign to urge the Obama administration to back a lower, "attainable" fuel efficiency standard.

"After tough times, today's auto industry is on the road to economic recovery. But an upcoming decision threatens that progress," says the ad.

The group previously opted not to run the ads, with talks between the Obama administration automakers over the 2017-25 fuel efficiency standards ongoing. But today, Gloria Bergquist, a spokeswoman for the group, said the ads would resume on Friday in an unspecified number of states "where there are many auto jobs or a high proportion of truck buyers."

The decision came after one automaker, Ford, reversed its opposition to the ads.

The alliance previously planned to launch ads in Michigan, Arizona, Colorado, Florida, Indiana, Illinois, Montana, Missouri, Nevada, New Mexico, North Carolina, Utah and Virginia—auto states or states where residents buy large numbers of light trucks.

They will also air ads in the Washington, D.C. market aimed at policy makers.

From Switchboard: Demand for Fuel Efficient Cars Drives Hiring Spree

In spite of the messages of doom and gloom coming from the Auto Alliance, the auto industry has become one of the brightest spots in the country’s jobs picture. Auto industry jobs are up 12 percent since 2009, compared to .2 percent across the economy as a whole.

According to the NRDC, much of that growth is coming from consumer interest in fuel-efficient cars, such as the Honda Civic and Chevy Volt. Honda is adding a second shift at its Greensburg, Indiana plant, where Civics are built, and plans to hire 1,000 people by the end of the year. GM will be adding 2,500 workers at its Detroit-Hamtramck plant as it increases production of the plug-in hybrid (PHEV) Chevy Volt. The company also announced last year that it was hiring 1,000 engineers and researchers in Michigan to work on electric vehicles. Parts suppliers and other auto-related industries are experiencing a ripple hiring effect as well.

From Green Car Congress: California ARB approves $40M in additional funding for clean vehicles

Yesterday the California Air Resources Board (ARB) approved up to $40 million for the third year of funding to promote the purchase of next-generation clean cars, trucks and off-road equipment.

Californians will be able to use vouchers or rebates on a first-come, first-served basis toward the purchase of zero-emission or plug-in hybrid cars, and zero-emission or hybrid trucks and buses.

“This money is going to put thousands of ultra-clean vehicles on our roads within the year,” said ARB Chairman Mary D. Nichols. “That means better air quality sooner, and real progress in making a dent in our dependence on petroleum.”

The Air Quality Improvement Program, established by AB 118, is in its third year of operation. In its first two years, the program funded approximately 2,000 zero-emission passenger vehicles and more than 1,000 hybrid and zero-emission trucks and buses, totaling $58 million.

Funding for these programs, which have proven to be extremely popular with California consumers, is generated from expected revenues from smog abatement, vehicle and vessel registration fees.

Developing New High Voltage Transmission: FERC, Cost Allocation & the U.S. Senate

noreply@blogger.com (Clean Economy Capitol Staff) — Thu, 21 Jul 2011 22:42:00 +0000

Last June, the Federal Energy Regulatory Commission (FERC) proposed a set of rules [PDF] that would revamp the process for developing new high-voltage transmission lines. Renewable energy developers have come out strongly for the reforms but others, including Sen. Corker (R-TN), have expressed concern about how the costs of expanded transmission will be allocated.

While FERC is due to address the thorny issue at a meeting today, we provide here more background ("The 411", if you will) concerning the ruling and the controversy it has provoked.

FERC’s authority to regulate interstate transmission is derived primarily from Sections 205 and 206 of the Federal Power Act (FPA). Section 205 provides that, where FERC holds jurisdiction, all rates and charges for the transmission of electricity, as well as rules and regulations affecting those rates, must be “just and reasonable,” and that no public utility’s rates “unduly discriminate” against any customers. Upon finding that the existing rates or practices are “unjust, unreasonable, unduly discriminatory, or preferential,” Section 206 permits FERC to make (just and reasonable) changes to those rates or practices.

Cost allocation was unlikely to cause argument prior to the 1970s, when restructuring of the electric power generation and transmission industries began. Both the Public Utility Regulatory Policies Act of 1978 and the Energy Policy Act of 1992 included the goal of introducing competition into generation service, which was generally controlled by monopolistic investor-owned utilities. To promote the ability of non-utility generators to access the transmission grid, in 1996 FERC issued Orders 888 and 889.

These policies had the effect of breaking the formerly firm link between the entities that built transmission and their captive ratepayers. Further weakening these links was the emergence of regional transmission organizations (RTO) in the 1990s and 2000s in the Northeast, Midwest, Texas, and California. In RTO markets, utilities retained ownership of the transmission grid, but operational control was placed under the jurisdiction of the RTO so as to further ensure fairness in grid operation.

Historically, FERC has decided cost allocation on a case-by-case basis. In recent years, however, FERC has begun to move toward promulgating cost allocation principles. Order 890, issued in February 2007, established nine transmission planning principles, one of which concerns cost allocation.

In 2009, the Senate Committee on Energy and Natural Resources reported out of committee S.1462, the American Clean Energy Leadership Act. The bill contained an amendment proposed by Senator Bob Corker of Tennessee that would direct FERC to issue a new electricity transmission cost allocation rule allowing for “allocation of the costs of high-priority national transmission projects to load-serving entities within all or a part of a region, except that costs shall not be allocated to a region, or sub-region, unless the costs are reasonably proportionate to measurable economic and reliability benefits.”

The original text would have required only “that any cost allocation methodology, and any rates affected by the cost allocation methodology, shall be just, reasonable, and not unduly discriminatory or preferential.” This directive, unlike that contained in the Corker Amendment, would not have significantly constrained FERC discretion in cost allocation rulemaking beyond the requirements already found in the FPA.

Advocates of expanded electricity transmission expressed concerns that the amendment would require a quantification of benefits and limit FERC’s ability to spread costs widely among ratepayers in a given region. Benefits from a new transmission project may accrue over a long period of time and, thus, may not presently be “measurable.” In a letter, three former FERC chairmen also expressed concern that the language could imperil planned infrastructure due to uncertainty about cost recovery.

S.1462 never advanced to the Senate floor, but in February 2011, Senator Corker revisited the cost allocation issue with the introduction of S.400, which would similarly amend the Federal Power Act. The bill, which has been referred to the Energy and Natural Resources Committee for discussion, is co-sponsored by Sens. Wyden (D-OR), Burr (R-NC), Murkowski (R-AK), Chambliss (R-GA), Graham (R-SC), Isakson (R-GA) and Lee (R-UT).

Senator Corker, in a recent letter to Senator Bingaman, stated that FERC’s "proposed rule so broadly defines benefits that the principles by which electric transmission costs have traditionally been allocated may be nullified."

A coalition of 84 electric utilities, environmental groups, manufacturing and transmission groups, and renewable energy developers, however, is urging Senate leaders to block Corker’s bill. In a letter [PDF] sent last week to Sens. Reid and McConnell, they said that S. 400 adopts an unreasonable benefit standard that could freeze millions of dollars in electric grid investments.

“Overall, FERC's proposal requires that only those who benefit from new electric transmission facilities pay for those facilities and that the amount paid should be ‘roughly commensurate with the benefits received,’” the letter says. “Under this standard, those who do not benefit from new transmission do not pay the cost of that transmission. Thus, once finalized, FERC’s rule change would render S.400 unnecessary.”

Shipping Industry Adopts First-of-its-Kind GHG Reduction Requirements

noreply@blogger.com (Clean Economy Capitol Staff) — Tue, 19 Jul 2011 22:34:00 +0000

Following more than ten years of debate, the International Maritime Organization (IMO) has released details regarding new requirements aimed at reducing greenhouse gas (GHG) emissions from international shipping. These measures constitute the first mandatory global greenhouse gas reduction regime for an international industry.

The regulations, with numerous loopholes to expedient implementation, resulted in only muted praise from the environmental community. "This much delayed action puts into question if the IMO want to be part of the solution in a carbon constrained future or risk becoming climate laggards," said Svend Soeyland of the Bellona Foundation, an Oslo, Norway-based international environmental NGO.

International shipping accounts for between 2.7 and 3.3 percent of global greenhouse gas. If left unregulated, this figure is expected to reach 6% of global emissions by 2020 and shipping emissions could double or triple by 2050, according to a 2009 IMO analysis.

The amendments make mandatory the Energy Efficiency Design Index (EEDI) for new ships and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. The regulations apply to all ships exceeding 400 gross tonnes and are expected to enter into force on January 1, 2013. Under SEEMP, new and existing ships will be required to keep on board a ship-specific energy use management plan during operation.

The IMO’s EEDI is a non-prescriptive, performance-based measure that allows industry to choose the technologies required for reducing energy use. Ship designers and builders are allowed to use the most-efficient solution for the ship to comply with the regulations as long as the required energy-efficiency baseline is attained.

The EEDI will require ships built between 2015 and 2019 to improve their efficiency by 10 percent, rising to 20 percent for those built between 2020 and 2024 and 30 percent for ships delivered after 2024.

However, intense lobbying on the part of China, Brazil, Saudi Arabia and South Africa resulted in a waiver for new ships registered in developing countries. If countries choose to apply the waiver for a newly delivered ship, implementation of the EEDI is delayed for 6.5 years.

Critics charge that this could result in significant weakening in the impact of EEDI, since ship owners based anywhere could elect to have their new ships flagged in countries that provide a waiver. The first guaranteed effective date of the EEDI as a global shipping efficiency standard would therefore be 2019. Additionally, because the standard only applies to ships replacing older ones at end life (typically 30 years), the full effects of the decision will take a long time to have any marked impact.

This has led numerous environmental NGOs to call for further action at the regional level:

"The International Maritime Organization is moving at a glacial speed to reduce greenhouse gas emissions effectively,” said Jenny Cooper, Policy Associate at the Environmental Defense Fund. “Passing an efficiency standard and merely discussing market-based measures in meetings isn't enough—countries need to take further concrete actions in their own regional policies.”

Jacqueline Savitz, Senior Campaign Director at Oceana called the EEDI vote “bittersweet,” saying that “there will be no change to existing ships which are currently pumping a billion tones of CO₂ each year, and for new ships it will take another dozen years until the EEDI is really delivering benefits. Operational changes could be delivering major benefits today. The United States should stop hiding behind the IMO and begin to regulate shipping emissions."

Similarly, Bill Hemmings, Programme Manager for Transport & Environment, cautioned, “if the IMO does not deliver action quickly now on existing ships, it will be up to the EU to take the lead at a regional level."

More extensive market-based measures to cut emissions, that is, using a levy on bunker fuel or emissions trading, were due to be further considered at the meeting but were not broached.

Brookings Quantifies the Clean Economy, Finds More Jobs Than Fossil Fuel Sector

noreply@blogger.com (Clean Economy Capitol Staff) — Fri, 15 Jul 2011 21:56:00 +0000

In his State of the Union address in January, President Obama spoke of “the promise of renewable energy” and the clean economy to “strengthen our security, protect our planet, and create countless new jobs for our people.” But the state of the clean economy, let alone its progress, remains hard to assess; with no standardized definitions and data, it can be difficult to quantify its size, nature, and growth at the regional level.

A new report and interactive website from the Brookings Institution attempts to bring clarity to some of these issues. The study, conducted in partnership with the Technology Partnership Program of research and development company Battelle, covers the years 2003 to 2010 for every county in the United States.

According to the report, “Sizing the Clean Economy” [PDF], the clean economy now employs some 2.7 million U.S. workers—300,000 more than the fossil fuel sector and 1.3 million more than the biosciences sector.

Most clean economy jobs reside in mature segments, such as wastewater and mass transit. But the fastest-growing segments are in the clean energy sector. These segments, which include the wind, photovoltaic, smart grid, biofuel, and battery industries, grew 8.3 percent annually from 2003 to 2010, far outstripping the 4.2 percent rate for the national economy.

An unusually large share of these jobs—26 percent—are in manufacturing, compared to just 9 percent of jobs in the economy as a whole. And, on a per job basis, the clean economy is about twice as export-oriented as the national economy—$20,129 worth of exports is sold for each job in the clean economy, versus just $10,390 in exports for the average U.S. job. The biofuels industry, the most export-oriented segment, generates an estimated $189,000 in exports per job.

These jobs also offer better pay for low-skilled workers than the national economy as a whole. The median wage of a typical clean economy job approaches $44,000, far exceeding the national median of $38,616 (weighted by averages of the medians). And almost half of all jobs in the clean economy held by workers with a high school diploma or less, compared to only 37.2 percent of U.S. jobs.

Although the clean economy permeates all of the nation’s metropolitan areas, it manifests itself in varied configurations: Service oriented cities include New York (mass transit), San Francisco (professional services), and Las Vegas (architectural services). Many Midwestern and Southern metropolitan areas, like Louisville, Cleveland, and Little Rock have manufacturing oriented clean economies. State capitals (e.g. Harrisburg, PA, Sacramento, CA, and Raleigh, NC) have a disproportionate share of clean jobs in the public sector. Other metro areas, including Atlanta, Salt Lake City, Portland, and Los Angeles, have balanced and multi-dimensional clean economies

Brookings found that strong clustering of industries (geographic concentrations of firms in similar or related industries) boosts metro area growth performance in the clean economy. Overall, clustered establishments grew at a rate that was 1.4 percentage points per year faster than non-clustered establishments (4.6 percent annual growth from 2003 to 2010, versus 3.2 percent). Among the most clustered metropolitan areas are Houston (providing a clustered environment for 74 percent of its clean economy establishments), Los Angeles (73 percent), Seattle (45 percent), and Pittsburgh (37 percent).

Although the report finds that the private sector will lead in catalyzing faster and broader growth across the U.S. clean economy, governments must play a role in mending policy uncertainties and gaps. Other nations are already bidding to secure global productions and the jobs that come with it. Meanwhile, the United States risks failing to exploit growing world demand.

To address these concerns, the report recommends that Congress and the federal government step up “green” procurement efforts, institute a national clean energy standard, put a price on carbon, and create a funding mechanism to help bridge the commercialization “Valley of Death.” Congress should also embrace continued incremental growth of key energy and environmental R&D budgets, as well measured expansion of such recent institutional start-ups as the Energy Frontier Research Centers, ARPA-E, and Energy Innovation Hubs programs.

On the regional level, states may adopt or strengthen their own clean energy standards, work to reduce the initial costs of energy efficiency and renewable energy adoptions, and pursue electricity market reform to facilitate the use of clean and efficient solutions. Localities can help support adoption by expediting permitting for green projects, adopting green building and other standards, and adopting innovative financing tools to reduce the upfront costs of investing in clean technologies.

Underlying all these efforts, parties must emphasize detailed knowledge of local industry dynamics and regional growth strategies. By pursuing this bottom-up course, the report concludes, “the nation can and will build the domestic clean economy.”

Investigate your own region using Brookings’ interactive Sizing the Clean Economy Indicator Map.

Report: Autos Can Meet Fuel Economy Standards by 2020 at Lower Cost than Predicted

noreply@blogger.com (Clean Economy Capitol Staff) — Wed, 13 Jul 2011 16:30:00 +0000

A report issued last Wednesday by Boston Consulting Group (BCG) makes the case that automakers can meet 2020 emissions targets predominantly through improvements to internal combustion engines (ICE) and at much lower cost than predicted previously. They predict a growing market for electric vehicles in the near term--their polling also shows substantial demand for electric vehicles in the US and abroad--and an even larger market in the longer term.

According to the report, “Powering Autos to 2020: The Era of the Electric Car?” [PDF], advanced-combustion technologies alone could reduce tailpipe emissions of carbon dioxide by approximately 40 percent from current average levels for new-vehicle fleets. At a cost of $50 to $60 per percentage point of emissions reduction, a 40 percent cut would add $2,000 to $2,400 to the up-front price of a passenger vehicle. This cost is roughly half of what BCG predicted three years ago, reflecting rapid recent progress in the advancement of ICE technologies.

At the same time, to meet 2020 targets, original equipment manufacturers will need to make further modifications to transmissions, vehicle mass, aerodynamics, and power management.

The study projects that battery pack costs will continue to fall sharply, if linearly, (approximately 64 percent from 2009 levels) to between $360 and $400 per usable kilowatt-hour by 2020. This would represent a cost of $9,600 per vehicle for the typical 20-kWh battery used in a pure battery-electric vehicle (EV), an potential hurdle for broad consumer adoption.

The authors predict, however, that EVs will see a relatively strong uptake from some consumers segments, which they term ‘green’ consumers, representing 6% of those in America, 9% of those in Europe, and 13% of those in China. Through polling, the authors also find that 40 percent of car buyers in the U.S. and Europe and 50 percent in China are willing to pay on average up to $4,000 more up front for a green car if this investment is paid back through lower operating costs.

While most consumers expect payback within three years, a significant minority—15 to 20 percent—are willing to accept a payback of five years or longer, in line with current hybrid electric vehicle (HEV) pay horizons.

These values are sensitive to a number of factors:

The price of oil—this study assumes a base case of $130 per barrel in 2020, though analyst estimates vary widely.
Battery pack costs—a breakthrough in battery technology would really turn this study on its head.
Government actions—financial or non-financial incentives, e.g. preferred parking or the use of high occupancy-vehicle lanes in urban areas

Though perhaps limited by ICE advances, the study’s authors acknowledge that the automotive landscape is evolving. They envision three possible paths:

The Pragmatist Path. Governments focus on energy independence and oil conservation. They also place growing emphasis on well-to-wheel emissions. In this environment, small, efficient ICEs and HEVs are increasingly viewed as optimal solutions. The focus on well-to-wheel emissions and energy independence also benefits advanced biofuels. EVs maintain a relatively modest share of the overall market and are viewed primarily as a hedge against spiking oil prices.
The Technology Breakthrough Path. New technology drives battery costs below $250 per kWh, making EVs a more widely attractive option for consumers. EVs ultimately take a significant share of the market (from 10 to 30 percent by 2020), barring unexpectedly low gasoline prices.
The Green Path. Oil prices surge above $250 per barrel, and governments invest in clean sources of electricity. Investing to support the development of EVs becomes a win-win economic and environmental solution for all players: consumers, OEMs, and governments. A mix of small-model EVs and larger-model HEVs could capture up to a third of the market by 2020. Given its abundant supply, CNG could take a more significant share of ICE powertrains if its price continues to decouple from the price of oil.

As such, the study concludes that OEMs and suppliers will have to retain the flexibility to meet consumer demand in the face of some unpredictability in the market.

But with Nissan expecting their all-electric LEAF to reach over 10,000 sales this year and Ford and Toyota envisioning that hybrid and plug-ins could make up as much as 25 and 30 percent of their global fleets, respectively, that path is already becoming clear.

California Delays Implementation of Carbon Cap; Emission Reductions Unaffected

noreply@blogger.com (Clean Economy Capitol Staff) — Mon, 11 Jul 2011 23:53:00 +0000

Last Thursday, the California Air Resources Board (CARB) released an updated proposal [PDF] detailing its plan for implementing California's cap-and-trade system for greenhouse gases. The announcement made news when, on June 28th, Chairwoman Mary Nichols indicated that, although the agency expects the cap-and-trade system to be in place in January, covered polluters—businesses emitting over 25,000 metric tons per year of CO2 equivalent—will not have to comply with the program until 2013.

This proposal amends CARB’s draft plan, approved in December, that gives the state the means to reduce greenhouse gas emissions to 1990 levels by 2020, as instructed by California’s 2006 climate law, AB 32.

Chairman Nichols indicated that this delay will allow stakeholders to weigh in and provide for a full year of practice trading before finishing touches are made, which will allow the process to run more smoothly. She made clear, however, that this delay will not affect the stringency of the program or the amount by which industries will be forced to cut greenhouse gases by the end of the decade.

“Companies will need to make the same reductions, but they will face a steeper slope,” said Josh Margolis, chief executive of CantorCO2e, an emissions-trading company.

Thursday’s update covers several key aspects of the program including how to ensure carbon offset’s validity, how many emissions allowances each emitter will receive, and the timing and format of auctions.

The first auction would be held on August 15, 2012, rather than February 14, 2012. In 2013, auctions will begin in mid-February instead of mid-January.

Utilities, who receive most of their permits for free, will be awarded allowances mainly based on the expected cost to ratepayers and also utilities' existing investments in renewable energy and energy efficiency.

According to Jon Constantino, a former climate change manager at ARB and currently a senior adviser at the law firm Manatt, Phelps & Phillips in Sacramento, the plan is “a big step forward in getting the process done. It’s not every detail, but a lot of the information that people have been clamoring for is in there.”

CARB will hold a public workshop on July 15 to discuss the draft proposal with interested parties. A proposed final regulation will be presented sometime in August, with more public comment and a board vote to follow some time before the end of October.

Lighting Efficiency Law under Attack from House Republicans

noreply@blogger.com (Clean Economy Capitol Staff) — Fri, 08 Jul 2011 18:37:00 +0000

House Republicans will hold a vote next week on legislation that would repeal provisions in a 2007 law requiring increased light bulb efficiency. The Better Use of Light Bulbs (BULB) Act (H.R. 2417), sponsored by Texas Rep. Joe Barton and cosponsored by 14 fellow Republicans, would repeal sections of the Energy Independence and Security Act requiring traditional incandescent light bulbs to be 30 percent more energy efficient beginning in January.

Rep. Fred Upton (R-MI), current chairman of the House Energy and Commerce Committee, was central to crafting the light bulb efficiency law in 2007. In response to a 2009 Washington Post op-ed by columnist George Will, Upton and Democratic Rep. Jane Harman (CA) wrote:

We designed a national energy-efficiency standard specifically so that the compact fluorescent bulbs (CFLs) that Mr. Will and others gripe about are not the only efficient bulbs available. The standard we set can be met by American-made bulbs that don't contain mercury, are long-lasting, are dimmable and provide the quality of light we've come to enjoy. Some of these bulbs -- most notably halogens -- are available to consumers now.

Others, such as super-efficient light-emitting diodes (LEDs), should be on the market by 2014.

The benefits of switching to these new bulbs are self-evident. Current incandescent bulbs on store shelves are obsolete and highly inefficient -- only 10 percent of the energy consumed by each bulb is for light, and 90 percent is wasted on heat. Today's incandescents employ the same technology as the bulbs Thomas Edison created more than 120 years ago. By upgrading to 21st-century technology, we will help preserve energy resources and reduce emissions, all the while saving American families billions of dollars in their electric bills.

Naysayers aside, in a few short years, every home will be on the front lines of reducing pollution and saving energy -- one light bulb at a time.

On May 4, 2010, Harman and Upton introduced the Outdoor Lighting Efficiency Act (H.R. 5201). Upton was quoted in Harman’s news release as saying, “We must continue to put the spotlight on energy savings. As our nation’s energy needs are expected to jump significantly over the next two decades, it is imperative that we take advantage of burgeoning efficient technologies. With American industry taking the lead, we will help create jobs here at home and save communities billions of dollars each year in their energy bills.”

But Upton’s support for the bulb efficiency measures began to wane as he sought support for his bid to chair the House Energy and Commerce Committee later that year and found little of it coming from his Republican colleagues.

Now, as chairman, Upton has joined Barton and others in saying the law limits consumers’ choices. He explained his change of heart in a statement to The Hill:

It was never my goal for Washington to decide what type of light bulbs Americans should use. The public response on this issue is a clear signal that markets—not governments—should be driving technological advancements. I will join my colleagues to vote yes on a bill to protect consumer choice and guard against federal overreach.

Republicans, including Republican presidential candidate Rep. Michele Bachmann, have portrayed the 2007 law as a “light bulb ban.” Bachmann, who has been pushing a repeal of her own—the Light Bulb Freedom of Choice Act (H.R. 849)—said at the Southern Republican Leadership Conference in June, “President Bachmann will allow you to buy any light bulb you want.”

Of course, the 2007 law does not actually ban incandescent light bulbs. As Upton previously said, halogen incandescents that would meet the increased efficiency standard are already widely available—Phillips, Sylvania, and General Electric all make them and the cheapest cost $1.49 each.

In any case, efforts to repeal the efficiency law may not change what manufacturers are doing to create more efficient bulbs using halogen, LED, CFL, and other new technologies. “Manufacturers have already moved down the road,” said Larry Lauk, spokesman for the American Lighting Association.

Nationally, over 2,000 jobs have already been created at new lighting factories. Later in 2011, TCP, one of the world’s largest CFL manufacturers, will open a new CFL factory in Ohio, its first in the United States. GE recently invested $60 million to create a Global Center of Excellence for linear fluorescent lamp manufacturing at in Bucyrus, Ohio, doubling the number of jobs at that plant.

According to the Alliance to Save Energy, meeting the 2007 standards will also save the average American family around $100 each year—$12 billion nationwide—and eliminate the need to build 30 large power plants.

Setting the Record Straight: Government Investment & the U.S. Cleantech Sector

noreply@blogger.com (Clean Economy Capitol Staff) — Wed, 06 Jul 2011 20:14:00 +0000

On June 27, 2011, the Washington Post story titled “Obama’s focus on visiting clean-tech companies raises questions” spent a lot of time attacking clean technology businesses while omitting any mention of the U.S. cleantech sector’s significant progress. Taken alone, this article paints a distorted picture about the state of the clean economy. While the federal government invested in certain clean technology companies in response to the economic recession, the U.S. cleantech sector as a whole is growing, attracting private capital, and creating American jobs.

The cleantech sector is real and expanding vigorously. Domestic cleantech start-ups attracted $4.9 billion in venture capitalist investment last year, up 40% from 2009. The amount of investment made prior to initial public offering (IPO) increased 21% in the first quarter of 2010 compared to the first quarter of 2009. And, more than half a dozen cleantech companies have gone public this year so far.

Major corporations are investing in clean technology and see it as an economic opportunity. Google has made extensive investments in the cleantech sector, including $700 million invested in clean energy projects this year alone. French oil giant Total—the world’s fifth largest oil and gas company—purchased 60% of SunPower, Silicon Valley’s dominant solar-power maker, for $1.3 billion, amounting to one of the largest investments by an established energy industry company in clean technology.

Foreign countries see the value of cleantech sector, too: A report released in March by the Pew Energy Group found that China and Germany both beat the United States in clean technology investments in 2010. The report, which used data compiled by Bloomberg New Energy Finance, put China in first place, with $54.4 billion invested in 2010, up from $39.1 billion in 2009. Germany came in second at $41.2 billion, with the U.S. trailing in third place with $34 billion. Total global investments tallied up to $243 billion in 2010, up 30% from 2009 during the recession, and Asia—namely China—led this jump with a 33% increased investment amounting to $82.8 billion.

For this reason, and also because of more favorable energy policies abroad, the largest cleantech companies are not American companies. Only one of the three largest wind farm owners, NextEra Resources, is based in the United States. And, only one of the top largest wind component manufacturers, General Electric, is based in the U.S. Other countries are betting on clean technologies and, as a result, the next generation of energy companies is taking root overseas.

This is all to say that the U.S. cleantech industry is growing despite the relative lack of federal commitment to the industry—not because of it. Renewable energy subsidies are wildly unpredictable (thanks to Congress) and have only existed 20 years, compared to legacy industries that have received substantial, reliable subsidies for almost a century.

Furthermore, subsidies for renewable energy sources are comparable in size to subsidies for emerging fossil fuel technologies, such as refined coal technologies and carbon sequestration. These fossil fuel technologies require substantial subsidies for viability. That being said, it is important to note that embryonic technologies should receive government assistance—government investment gave birth to the Internet, airplanes, telecomm, and other mainstream technologies. Subsidies for clean technologies in the short term foster their advancement and level the playing field when competing against legacy energy sources.

Lastly, the June 27^th article relied on selective reporting to tell the story the Washington Post writers wanted. The story paid excessive attention—all negative—to one company that has received federal investments and gave no time to other companies and their success stories. The story also relied heavily on quotes from the competitors of companies that received government dollars; it should come as no surprise that companies who did not win grants would criticize those programs and the recipients.

To conclude, this Post story mislead readers about the state of the U.S. clean technology industry. American cleantech companies are growing despite a relative dearth of investment by the federal government compared to foreign economies. Federal programs supporting clean technologies are not larger than subsidies for fossil fuel technologies, and those subsidies have existed more than 70 years longer. Furthermore, the fact that one recipient of a government loan has hit a turbulent patch does not discredit all federal investments in clean technology or the cleantech sector as a whole. To suggest otherwise would only be telling one side of the story.

Google Forecasts Economic Growth from Innovation & the Costs of Policy Inaction

noreply@blogger.com (Clean Economy Capitol Staff) — Thu, 30 Jun 2011 13:30:00 +0000

“What is the value of clean energy innovation? How much could cheaper clean energy technologies contribute to our economy and energy security? How much could they reduce GHG emissions to mitigate global warming?” Google attempted to answer these questions in a study released yesterday by their philanthropic arm, Google.org.

Using McKinsey’s Low Carbon Economics Tool (LCET), Google found that, when compared to “business as usual,” a combination of energy breakthroughs could:

Create over 1.1 million full-time jobs
Grow GDP by over $155 billion per year
Reduce household energy costs by 942
Decrease US GHG emissions by 13 percent by 2030.

If these breakthroughs are supported by a policy of federal mandates and funding for clean technology projects, the economic, security, and pollution reduction benefits become much more pronounced:

1.9 million jobs created
US GDP growth of $244 billion per year
Household energy cost reductions of $995 per year
US GHG emissions reduction of 21%

According to the report, “speed matters and delay is costly.” Just a five year delay in accelerating clean technology innovation would leave $2.3 to $3.2 trillion in GDP on the table, 1.2 to 1.4 million net unrealized jobs, and 8 to 28 additional gigatons of GHG emissions by 2050.

The analysis does not provide a roadmap of best practices to drive innovation and, by the authors' admission, breakthrough levels used in the report were quite ambitious and "would be challenging to reach even with a much more concerted push on innovation than at present."

Nevertheless, they expressed hope that their analysis would encourage further discussion and debate on these important issues. You can test some of your own assumptions using Google's Public Data Explorer.

Michele Bachmann: 2012 Republican Presidential Hopefuls & the Clean Economy

noreply@blogger.com (Clean Economy Capitol Staff) — Wed, 29 Jun 2011 17:13:00 +0000

On Monday morning in her birthplace of Waterloo, Iowa, Minnesota Rep. Michele Bachmann formally announced her presidential candidacy, casting herself as the “bold choice” for the Republican nomination. And, according to a new poll of Iowa Republicans published in The Des Moines Register, Bachmann enters the contest in a virtual tie with current frontrunner Mitt Romney.

We take a closer look at Bachmann’s positions on the clean economy, including her voting record, in this eighth installment of our “2012 Republican Presidential Hopefuls” series. Of all the candidates we have profiled so far, Bachmann's record shows that she may be the most opposed to the development of the clean economy.

On Cap-and-Trade

In 2009, Bachmann voted against the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey Bill, which proposed the creation of a national cap-and-trade system. The non-partisan Congressional Budget Office found that the tax burden on individual households would be limited, with overall net costs averaging 0.2 percent of households’ after-tax income and those in the lowest income quintile seeing an average net benefit of about $40 in 2020.

Bachmann repeatedly characterized the program as a “cap-and-tax,” which she claimed would have severe impacts on low- and middle-income Americans.

She also signed the Contract from America in 2010, whose second agenda item calls for the rejection of cap-and-trade.

On the Energy Mix

Bachmann, like many of her Republican colleagues, has called for an “all-of-the-above” energy strategy. But, as Rep. Markey has lately quipped, her policies may be better characterized as “oil-above-all.”

She has repeatedly voted against incentives for renewable energy deployment. In 2008, she voted against giving tax credits for renewable energy as part of a “pay as you go” plan and also voted against the Renewable Energy and Energy Conservation Tax Act of 2008, which would have provided tax incentives for renewables and conservation measures.

On the other hand, Bachmann has maintained consistent support for the fossil fuel industry. In 2007, she voted no on the Creating Long-term Energy Aternatives for the Nation (CLEAN) Act, which would have removed subsidies for oil and gas. And in 2008, she introduced the Getting Resoruces Efficiently and Effecticely Now (GREEN) Act, which would have limited administrative and judicial proceedings with respect to onshore and offshore oil and gas leases if a project is given the President’s green light.

On Bulb Efficiency Standards

Lately, Bachmann has been touting her Light Bulb Freedom of Choice Act, which would repeal a provision of the Energy Independence and Security Act of 2007 requiring traditional incandescent light bulbs to be 30 percent more energy efficient beginning in 2012.

President Obama has said that efficient LED lighting “is going to make a huge difference, not just for businesses who use the technology, but also for a country that needs to figure out how do we operate in a more energy-efficient way.”

But Bachmann would hear none of that, arguing, “Congress overstepped its bounds by mandating that only 'energy efficient' light bulbs may be sold after January 1, 2012. This mandate has sweeping effects on American families and businesses and needs serious consideration before taking effect."

Key Votes and Actions

Signed the Contract from America (Jul 2010)

Voted NO on $2 billion more for Cash for Clunkers program. (Jul 2009)

Voted NO on American Clean Energy and Security Act of 2009 (Cap-and-Trade)

Signed HR 391 to bar greenhouse gases from Clean Air Act rules. (Jan 2009)

Voted NO on the Energy Improvement and Extension Act of 2008.

Voted NO on the Renewable Energy and Energy Conservation Tax Act of 2008.

Voted NO on the Renewable Energy and Job Creation Tax Act of 2008.

Voted NO on $9.7B for Amtrak improvements and operation through 2013. (Jun 2008)

Voted NO on the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007.

Voted NO on the Energy Independence and Security Act of 2007.

Voted NO on the Creating Long-term Energy Alternatives for the Nation (CLEAN) Act. (Jan 2007)

White House Considers Increasing CAFE Standards to 56 MPG by 2025

noreply@blogger.com (Clean Economy Capitol Staff) — Tue, 28 Jun 2011 15:25:00 +0000

The White House is pushing forward with its discussions regarding new Corporate Average Fuel Economy (CAFE) standards for 2017-2025, revealing on Monday a proposal to increase average fuel economy from 34.1 mpg by 2016 to 56.2 by 2025. That would constitute a reduction of greenhouse gas emission by about 5 percent per year, continuing the rate of improvement the automakers agreed to for 2012-2016.

The latest proposal is not a definitive one. According to White House spokesman Matt Lehrich, “no decision has yet been made, but our goal remains to propose the rule this September.”

“With that target in mind, we are ramping up engagement with auto companies, Members of Congress, labor unions and others as this important proposal is developed,” Lehrich said in a statement.

Ford called its discussions with the Administration productive, but did not comment further on the specific numerical target. “Ford is proud to continue offering our customers the very best fuel economy and supports increasing fuel economy requirements with one national program that is data driven and factors in the impact of this rule-making on jobs, the economy, consumers, and safety,” the company said in a statement.

The 56.2 mpg standard is below the highest standard of 62 mpg set forth by the Environmental Protection Agency (EPA) and the National Highway Safety and Traffic Administration (NHTSA). That higher standard would have constituted a 6 percent per year decrease in emissions.

Groups pushing for the highest standard include environmental groups, such as the Natural Resources Defense Council and the Union of Concerned Scientists, the Consumer Federation of America, and the Truman National Security Project.

Last week, a group of fifteen moderate Republicans urged President Obama in a letter to pursue the 62 mpg standard, saying that “strong, forward-looking standards for new vehicle fuel efficiency and emissions will provide industry with needed certainty for investment in new technologies while also driving reductions in oil consumption and carbon pollution that fuels climate change.” The Clean Economy Network also brought in a group of advanced technology vehicle companies, including A123 Systems and Tesla, to meet with key Administration staff and advocate for strong fuel economy standards.

Although an analysis by the EPA and NHTSA, as detailed in their October 2010 Notice of Intent and the corresponding Technical Assessment Report, found that the 62 mpg standard was both achievable and cost-effective for consumers, a widely circulated report by the Center for Automotive Research (CAR) forecast that such a standard would increase average vehicle prices by $9,790 and result in the loss of 260,000 industry jobs.

The CAR report was quite thoroughly rebutted by the NRDC and the ICCT, who found it to be “fundamentally flawed by improper use of data, incorrect methodologies, erroneous assumptions, and unsound appraisal of technological and other tendencies.” David Vieau, President & CEO of A123 Systems, has also been critical of the National Research Council study on which the CAR report is based.

Nevertheless, CAR's findings closely mirror claims already made by the Alliance of Automobile Manufacturers, an industry advocacy group, who told the EPA and NHTSA in May that the 62 mpg standard would cause a “loss of almost a quarter of a million auto jobs.”

According to Gloria Berquist, spokeswoman for the Alliance, environmentalists have consistently overestimated how much consumers want “green” vehicles and the problem truly lies on the demand side. In 2010, Berquist said, pickup trucks outsold all 30 hybrids combined.

Along those lines, GM CEO Dan Akerson recently expressed support for a federal gas tax of as much as $1 per gallon, saying that he believes such a move would be more effective than raising CAFE standards.

If gas prices are increased, he said, “people will start buying more Cruzes and they will start buying less Suburbans.”

Akerson is not the first auto executive to suggest some form of gas tax to encourage consumers to buy more fuel-efficient vehicles. Ford Chairman Bill Ford Jr. expressed support for a price floor in 2009, saying that, “When gasoline went to $3.50 a gallon we saw a sea change in customer behavior. Now people are turning away from more fuel-efficient vehicles and taking the bigger vehicles. I've been talking for five years now about the need for a gas tax. We have to have some predictability on fuel pricing and that price signal has to be strong enough so customers will continue buying smaller, fuel-efficient cars.”

A gas tax doesn’t appear feasible, particularly given conservative opposition. Akerson joked that his suggestion “will make my Republican friends puke,” to which Glenn Beck responded, “a 50-cent gas tax would make everyone puke. A dollar might make me puke my heart and lungs.”

U.S. Department of Energy Unleashes Support for Solar: A Round-up

noreply@blogger.com (Clean Economy Capitol Staff) — Fri, 24 Jun 2011 21:53:00 +0000

The U.S. solar energy industry continues to be one of the fastest-growing sectors of the economy. According to a report released last week by the Solar Energy Industries Association, 252 MW of grid-connected photovoltaics were installed in the first quarter of 2011 alone. With the Department of Energy announcing billions of dollars in support this month, the rate of growth shows no sign of slowing. This week’s round-up provides an overview (in chronological order) of DOE's expanded investment in solar energy.

June 1, 2011

From Greentech Media: DOE Going After Solar Permitting with $27M

As part of the Obama Administration’s SunShot Initiative to make solar energy cost-competitive with fossil fuels within the decade, DOE Secretary Steven Chu announced at the start of the month the availability of over $27 million in new funding for the reduction non-hardware costs of solar energy projects.

Although the prices of photovoltaic modules have fallen over the past few years, the so-called soft costs of installing solar, including permitting, coding, legal, and regulatory costs, have stagnated.

The funding will support a “$12.5 million [Rooftop Solar Challenge] to encourage cities and counties to compete to streamline and digitize permitting processes, as well as $15 million that will be made available to advance innovations in information technology systems, local zoning and building codes and regulations, and more,” the DOE said in a press release.

The announcement followed legislation introduced in late May by Sens. Sanders (I-VT), Boozman (R-AK), and Bingaman (D-NM), the 10 Million Solar Roofs Act of 2011, which similarly aimed to reduce the non-hardware costs of solar.

While the bill was developed independently of the SunShot Intiative, “they’re very much related,” said Darren Springer, Sanders’ Legislative Assistant for Energy and Environment, “We talked with DOE as they ramped up the SunShot Initiative.”

June 2, 2011

From Clean Energy Authority: Fotowatio wins $45.6 million conditional loan guarantee from DOE

The following day, it was announced that Fotowatio Renewable Ventures, Inc. (FRV) won a $45.6 million conditional commitment loan guarantee from the DOE to support the 20 MW “Apex” photovoltaic solar facility in Nevada.

The DOE will not actually commit the loan guarantee until a number of benchmarks are reached, including breaking ground on the project by September 31, 2011.

“One of the objectives of the loan-guarantee program was to create jobs right away. Speed is critical,” Fotowatio Senior VP Mark McClanahan said. The project is expected to create 250 jobs at peak construction. “We’re planning to break ground in the second half of this year and be online within the next 12 months.”

Week of June 13, 2011

From Greentech Media: $2 Billion in DOE Conditional Loan Guarantees for Two 250MW CSP Plants

From EcoSeed: Mesquite Solar 1 PV project gets $359.1 million D.O.E. loan guarantee

From GigaOm: Calisolar snags $275M loan guarantee for solar silicon factory

From Reuters: Silicon wafer startup wins latest DOE solar loan guarantee

The week of June 13 saw five more conditional commitments, totaling over $2.6 billion.

The first conditional commitments were offered to two concentrating solar power (CSP) projects. The Mojave Solar Project, sponsored by Abengoa Solar in San Bernardino County, California, was offered a conditional commitment for a $1.2 billion loan guarantee. The Genesis Solar Project, sponsored by NextEra Energy Resources on land managed by the BLM in Riverside County, California, received a conditional commitment for up to $681.6 million.

At 250 MW each, the combined capacity of the projects would double the nation’s currently installed CSP capacity, as well as displace 40 percent of the output from a typical 500 MW coal-fired plant. Both projects employ parabolic trough solar thermal technology and have power purchase agreements with Pacific Gas & Electric.

Abengoa Solar Inc. estimates that the Mojave project will create more than 830 construction jobs and 70 operating jobs, while NextEra Energy Resources estimates that Genesis project will create approximately 800 construction jobs and 47 operating jobs.

The next day, DOE Secretary Chu announced the offer of a conditional commitment for a $359.1 million loan guarantee to Mesquite Solar 1, LLC for a 150 MW photovoltaic project, the first phase of what will eventually be a 600 MW solar complex in Maricopa County, Arizona.

Construction on the project, which is expected to generate nearly 350,000 megawatt-hours of electricity for over 31,000 homes, is expected to begin in 2011 and end in 2013.

Last year, Arizona ranked fourth in terms of installed PV capacity with 54, behind California, New Jersey, and Nevada. The state’s renewable portfolio standard calls for 15 percent of its energy needs to be met by renewables by 2025.

Later that week, the DOE offered a conditional commitment for a $275 million loan guarantee to Calisolar Inc. in order to help commercialize its innovative solar silicon manufacturing process. Their process could produce silicon for use in solar cells at less than half the cost of traditional processes.

At peak capacity, Calisolar’s manufacturing plant is expected to produce 16,000 metric tons of solar silicon each year, equivalent to over two gigawatts of annual solar power generation.

Despite the offer, Calisolar said that they were evaluating an offer from another lender.

The DOE also offered a $150 million conditional commitment to 1366 Technologies, which is working on a method for fabricating silicon-based wafers directly from molten silicon. The process could cut the manufacturing costs of the wafers in half.

“With this loan, 1366 will realize its goal to make solar energy as cheap as coal while helping the US to reclaim a key part of the silicon supply chain and restore the nation's dominance in photovoltaics,” Frank van Mierlo, 1366’s president, said in a statement.

June 22, 2011

From GigaOm: DOE backs largest rooftop solar project in U.S.

The latest announcement came on Wednesday when the DOE said it will offer a partial guarantee for a $1.4 billion loan to fund Project Amp, which will put solar panels on hundreds of rooftops around the nation. The project will be co-owned by Prologis, the leading global industrial real estate provider, and NRG Solar.

The approximately 733 MW of electricity generated from those panels will go directly into the electrical grid, as opposed to the buildings on which they are installed. Project Amp is expected to produce up to one million megawatt hours each year, sufficient to power over 88,000 homes.

This is the first conditional commitment from the DOE not going to a large, centralized solar plant.

CleanPath Ventures Launches $800 Million Fund for Large-Scale Solar

noreply@blogger.com (Clean Economy Capitol Staff) — Thu, 23 Jun 2011 20:24:00 +0000

CleanPath Ventures, a San Francisco-based renewable energy investment firm, announced yesterday the creation of an $800 million fund for the development and financing of over 1,000 megawatts in large-scale solar power projects around the US and the Americas. The announcement came as clean energy companies and financiers met at this year’s Renewable Energy Finance Forum in New York.

Speaking with Brian Merchant for Treehugger.com, Karin Berardo, the firm’s CFO, said “a lot of people are coming into the development process that are really good at selecting land and selecting good sites to develop projects on. Where they run into trouble is what we call the ‘capital intensity wall,’ when they need to start posting more capital to move their projects forward.”

The economic crisis exacerbated these challenges, subjecting large solar projects to severe financial bottlenecks. Although the tax equity market, the principal financing tool used by solar developers, has largely recovered, solar financing activity still lags behind the levels enjoyed before the crisis.

Even if they are able to raise capital, Berardo said, “they may not have a lot of experience working something through the more complicated later stage development, and that’s where we could come in and solve the problem.”

In an interview with TechCrunch on Tuesday, a managing director with CleanPath Ventures, John Baldach (formerly a managing partner at The Cleantech Group) explained, “we’re in a new era in cleantech investment where it’s less about innovation and more about financial solutions to put things in the ground at scale. The build out of solar in the U.S. is just hitting a stride like it did in Europe 5 years ago. We see tremendous potential in emerging markets in the U.S., and just south and north of the border.”

Texas and the Midwest will become very interesting markets over the next five years, according to Baldach, both areas that have become hotbeds of US wind development. Texas, while first in solar power potential, sits all the way back in tenth place in terms of installed photovoltaic capacity.

Matt Cheney, the company’s CEO, and Karin Berardo co-founded CleanPath after working with MMA Renewable Ventures, an energy investment firm that was sold in 2009 to the Spanish solar power developer Fotowatio, in a $19.7 million deal. MMA Renewable Ventures was responsible for the financing and construction of fifty US solar projects over a ten-year period.

CleanPath will be focused on developing and investing in photovoltaic projects ranging in size from 5 to 100 megawatts, which will eventually be sold.

“We came to the realization that there were a lot of buyers looking to own these built assets,” Cheney said. “Providing liquidity and mitigating development risks for these segments is the sweet spot for CleanPath.”

Debunking the Myths and Misperceptions Behind Cap-and-Trade Opposition

noreply@blogger.com (Clean Economy Capitol Staff) — Wed, 22 Jun 2011 19:18:00 +0000

To help maintain momentum for clean energy growth in California and address an apparent information gap in Sacramento surrounding cap-and-trade, EOS Climate and Climate Wedge have developed a white paper, “Debunking Myths and Mis-Perceptions: How a Robust Cap-and-Trade System is Vital to California’s Economy.”

Under AB 32, the California Global Warming Solutions Act, three quarters of the emission reductions are projected to arise from direct regulations, including vehicle economy standards, low-carbon fuel standards, and renewable portfolio standards. The remaining reductions will largely be achieved through a cap-and-trade system.

But this cap-and-trade provision has become a flashpoint for litigation and, according to this paper, “political posturing, and in many cases, misperceptions.” The authors systematically address some of the major questions on cap-and-trade in the “hope of fostering a more reasoned assessment.”

A general consensus has been reached that some form of carbon pricing is needed to meet the goals of AB 32. Cap-and-trade, the authors say, is an economically efficient policy tool, which, unlike a carbon tax or renewable portfolio standard, ensures adherence to emission reduction targets while also allowing for flexibility in how those targets are met.

The paper disputes the notion that cap-and-trade will penalize people with lower income, an allegation at the center of a lawsuit brought forth by a set of environmental justice groups. Under a cap-and-trade, revenues from emission allowances can be returned to middle- and low-income households who bear the brunt of higher fuel and electricity costs. Additionally, emissions of conventional pollutants will continue to be subject to extensive air, water, and waste permits under federal, state, county, and district laws. These should prevent the creation of pollution “hot spots” in low-income and minority communities.

Unlike the new institutions developed elsewhere to implement the Kyoto Protocol, the authors argue that “the California Air Resources Board is a strong and experienced regulator, with extensive enforcement powers.” And, CARB has been able to absorb lessons from the EU experience, federal GHG emission trading legislation, the Western Climate Initiative, the Regional Greenhouse Gas Initiative, the British Columbia carbon tax, and an extremely successful US acid rain program.

The result, according to the authors, is a cap-and-trade program that “will have the highest levels of performance, transparency, enforcement, and integrity.”

The paper concludes:

For California, a cap-and-trade system can directly harness the entrepreneurial energy of the State’s companies and people and channel them towards searching for emissions reductions and developing the next generation of clean technologies. In doing so, California will mobilize the next wave of innovations across all sectors of the low carbon economy.

The Politics of Ethanol Subsidies, Part 2: GOP Presidential Candidates at Odds

noreply@blogger.com (Clean Economy Capitol Staff) — Sat, 18 Jun 2011 14:07:00 +0000

So far in the nascent 2012 Republican presidential primary, there are few energy issues on which GOP candidates disagree. Federal ethanol subsidies are a notable exception. Of the current field of candidates, only two--Mitt Romney and Herman Cain--have expressed support for these subsidies.

Cain has framed his support for ethanol subsidies as part of an “all of the above” strategy, saying in May, “Let’s be honest, ethanol is not going to save this country from its dependence on foreign oil,” Cain said. “I believe we need to take advantage of all the resources that we have and the Congressional Research Service has indicated we have plenty of resources, including ethanol. We need to look at all of it and put together a plan for energy independence.”

Romney, who supported the subsidy when he ran for president in 2008, has called ethanol “an important part of our energy solution in this country.” However an opinion articulated in his book No Apology, published this year, has led to accusations of pandering to voters: "we should acknowledge that subsidies for one form of energy also discourage investment in alternatives that don't receive subsidies, which may undermine innovation. And because taxpayers ultimately have to pick up the tab for government spending, subsidies are in fact a hidden form of energy tax. Once an industry is up and running, the disadvantages of subsidies outweigh their benefits."

That argument is not all that different from Sen. Rick Santorum’s, who voted against subsidies for the ethanol industry both as a member of the House and the Senate. Recently, he called for them to phased out within five years, arguing that “the current technology is actually very efficient and so efficient that I believe [the ethanol industry] can be weaned off the subsidy.”

Former Minnesota Gov. Pawlenty, who announced his candidacy in Iowa, voiced a desire to eliminate ethanol subsidies, saying that it demonstrated his willingness to tell voters the hard truths.

Huntsman has said that he will not even bother campaigning in Iowa, because of his long-held opposition to subsidies for ethanol, corn, and soybeans. “I think they destroy the global marketplace,” Huntsman said in New Hampshire. “We probably won’t be spending a whole lot of time in Iowa. I guess I understand how politics work there.”

A recent Slate article suggests, however, that neither Pawlenty’s nor Hunstman’s position is all that gutsy, given that opposition to ethanol subsidies has become the mainstream Republican position in Iowa.

Minnesota Sen. Bachmann, meanwhile, has reticently expressed her opposition to the subsidies and has called for their “re-examination.”

The most vocal opponent has been Texas Rep. Ron Paul, who has long maintained an anti-subsidy stance. Asked in 2008 about his views on subsidizing ethanol farmers, Paul responded: “Under the constitution, there is no authority to take money from one group of people and give it to another group of people for so called economic benefits. So, no, I don't think we should do that.”

His camp has framed this history of opposition as a selling point. According to Gary Howard, a spokesman for Paul, “We are sure to see increased calls from political opportunists for eliminating ethanol subsidies, but Dr. Paul was against ethanol subsidies before it became politically advantageous.”

In the big picture, divergent positions regarding ethanol may derive more from campaign strategy than from real difference of opinion. As Hunstsman suggested, opposition to ethanol subsidies might seriously disadvantage candidates hoping to make a strong showing in Iowa--the first primary state and a key determinant for shaping the field of Presidential candidates.

The Politics of Ethanol Subsidies, Part 1: Parochialism Wins in the US Senate

noreply@blogger.com (Clean Economy Capitol Staff) — Thu, 16 Jun 2011 17:26:00 +0000

On Tuesday, the Senate rejected a proposal to do away with $6 billion in annual ethanol subsidies. Sen. Coburn’s (R-OK) amendment would have eliminated the 45-cent per gallon Volumetric Ethanol Excise Tax Credit for ethanol blenders, as well as the 54-cent tariff on imported ethanol.

Coburn has been trying for months to have the subsidy eliminated, which he said “would be a big step toward restoring fiscal sanity in Washington” and called “bad economic policy, bad energy policy and bad environmental policy.”

Although the amendment had a wide range of supporters including the Sierra Club, the free-market Club for Growth, and Koch Industries, it gathered just forty votes, twenty short of the sixty that were needed.

The vote was notable, however, in that thirty-four Senate Republicans supported the measure, an apparent violation of Americans for Tax Reform’s (ATR) pledge. The pledge, which all but seven Senate Republicans have signed, requires signatories to oppose “any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” The savings from Coburn’s amendment would instead have gone toward deficit reduction.

“You’ve got 34 Republicans that say they’re willing to end this, regardless of what Grover [Norquist, President of ATR] says,” Coburn said. “That’s 34 Republicans that say this is more important than a signed pledge to ATR.”

More problematic was the opposition of Senate Democrats, who voted 46-5 against the measure. Although the amendment mirrored legislation Coburn introduced with Sen. Feinstein (D-CA) last month, Senate Democratic leadership was allegedly angered by the “uncommon procedural tactic” Coburn used to force a vote and urged their fellow Democrats to oppose it.

Coburn had filed cloture in order to avoid a fillibuster, which, though not against the rules, is a privilege generally reserved for the leaders. Feinstein, who ultimately voted no, insisted, “if it weren’t for the process, we would have 60 votes.”

Another proposal for the ethanol subsidy, introduced this week by Sens. Thune and Klobuchar (D-MN), has garnered greater support from farm-state Congressmen. Their plan, called the Ethanol Reform and Deficit Reduction Act, would switch the ethanol tax credit to a variable rate subsidy that would kick in only when oil prices fall below $90 a barrel.

The subsidy would be 6-cents per gallon at that point and would increase a further 6 cents for each $10 drop in oil futures prices, up to a maximum of 30 cents. In addition, the variable tax credit would fall by 2 cents each year after 2011.

In any case, it seems certain that change is coming soon to ethanol subsidies.

Gov. Rick Perry: 2012 Republican Presidential Hopefuls & the Clean Economy

noreply@blogger.com (Clean Economy Capitol Staff) — Tue, 14 Jun 2011 17:41:00 +0000

Rick Perry has held the office of Governor of Texas since December 2000, when then Governor George W. Bush resigned to become President of the United States. After a record three full terms is Perry hoping to follow Bush’s path into the Oval Office?

As Governor, Perry has taken a vehement states-rights stance, condemning what he sees as increasing federal interference. His small government, anti-Washington rhetoric has endeared him to tea-party activists, and many GOP strategists see him as well positioned to capture those voters, who do not appear to have coalesced on a presidential candidate.

Perry has disavowed for months any plans to run for the Republican ticket, but friends of the Governor have indicated that he is “warming to the idea” of running. The departures of Newt Gingrich’s campaign manager, Rob Johnson, and New Hampshire Director, David Carney, both former Perry aides, have only intensified those rumors.

We’ll leave the speculation to the political chattering class, but in light of a possible presidential run, we've delved into Perry’s clean economy legacy with this seventh installment in our “2012 Republican Presidential Hopefuls” series.

Texas has seen some clean energy successes under Gov. Perry. In 2005, Perry signed into law a new renewable portfolio standard requiring 5,880 MW of new renewable generation to be built in the state by 2015, expected to meet 5 percent of Texas’ projected electricity demand (their first RPS came in 1999 under Bush). The law also establishes a cumulative target of 10,000 MW of installed renewable generation capacity by 2050, of which 500 MW must be from non-wind sources. Texas now produces 9,727 MW of wind power, the most of any state.

Also in 2005, Perry established the $200 million Emerging Technologies Fund, much of which has gone toward clean tech projects. And in 2008, Perry announced a $600,000 grant for the development of the Texas Clean Energy Park in Austin, a clean energy business, research, education, and training facility.

Still, Texas remains the biggest polluter in the country and leads the nation in carbon dioxide emissions. The state has been out of compliance with federal air quality standards since 1994, when it submitted a system of “flexible air pollution limits” to the EPA, allowing a general emissions cap on toxic pollutants for an entire facility instead of setting specific emissions limits for each of the plant’s processing units.

Soon after President Obama took office, the EPA published its formal “disapproval” of the state’s permitting rules and invalidated operating permits for 122 facilities. Gov. Perry responded in his January 2009 “State of the State” speech with a familiar states-rights refrain:

Unfortunately, our strength in petrochemical production and refining makes us a big target on the radar of an increasingly activist E.P.A., whose one-size-fits all approaches could severely harm our energy sector; an agency whose potential to harm our state with punitive actions will only increase in the months and years to come.

Perry then went on to praise an “all of the above approach to energy,” in line with GOP leadership.

Last year, Perry entered into an even more acrimonious battle with the EPA, announcing that he, along with Attorney General Greg Abbott and Agriculture Commissioner Todd Staples, would sue the EPA in order to overturn their CO₂ endangerment finding. The suit is ongoing.

In November 2010, after his third gubernatorial victory, Perry announced, "People are tired of the government cooking up new ways to micromanage their lives. They're tired of the government killing jobs with their do-gooder policies that have nothing to do with science or economics." Unlike some other Republican Presidential hopefuls we have discussed, Perry's positions don't lack consistency.

Drama at OPEC Raises Oil Price, National Security Concerns: A Round-up

noreply@blogger.com (Clean Economy Capitol Staff) — Fri, 10 Jun 2011 19:49:00 +0000

A meeting of OPEC ministers this week failed to result in agreement on future production quotas, leaving the Obama administration and a former U.S. intelligence director worrying about supply meeting demand. That and more in this week’s round-up:

From the Wall Street Journal: Oil Prices Jump After OPEC Fails to Increase Production Quotas

A Wednesday meeting of the Organization of the Petroleum Exporting Countries (OPEC) dissolved into bickering as ministers failed to agree on plans to raise production quotas in order to meet increasing world demand.

Saudi Arabia, with the backing of Kuwait, Qatar, and the United Emirates, began the meeting pressing for a change in production quotas, last set nearly three years ago. They were opposed by Venezuela, Ecuador, Iraq, and Iran, the current leader of OPEC, who argued that the world’s markets were already well provided for and that high prices were the fault of speculators.

Following the meeting, which Saudi oil minister Ali al-Naimi called “one of the worst meetings we’ve ever had,” U.S. light crude prices rose from $98.02 to $100.74 a barrel.

According to some analysts, however, the short-term impact of the meeting is unlikely to be more than symbolic. “OPEC meetings are like the royal weddings. You watch them for the spectacle, not for the significance,” said Tom Kloza, chief oil analyst for the Oil Price Information Serve. “OPEC is in disarray, and that means the production ceilings are going to be meaningless.”

Indeed, as a group, OPEC members are already pumping around 1.5 million barrels a day over their quota levels and Saudi Arabia promised to continue raising its output in spite of the meeting’s outcome.

From The Hill: US Energy Future Being Dictated by OPEC, Says Former Intel Director

Retired Admiral Dennis Blair, who previously served as Obama’s director of national intelligence before resigning last year, nevertheless expressed concern that “America’s future is being determined with no Americans in the room.”

According to Blair, who works with the group Securing America’s Future Energy, “these meetings that take place in foreign capitols run by people who have no interest in American national security are affecting us.”

“The OPEC meeting with the chairmanship by Iran—a country that not only has no concern about the interests of the United States, but also has been openly hostile to those interest—just dramatizes these concerns,” he said.

Blair called on policymakers to enact policies aimed at reducing the country’s oil dependence, including an increase in fuel economy standards.

From The American Independent: Udall-Giffords Security Act Urges Military to Move Away from Fossil Fuels

A bill introduced on Wednesday by Sen. Mark Udall (D-CO) may provide one answer to Blair’s call. The Department of Defense Energy Security Act would require “the military to step up efforts to find alternatives to oil.” The military is the federal government’s largest consumer of oil, spending $20 billion a year on energy and consuming 135 million barrels of oil and 30 million MWh of electricity.

The bill, co-sponsored by Rep. Gabrielle Giffords (D-AZ), would add a $3 billion provision to the Senate’s military spending plan encouraging efficiency, biofuels, and other alternative energy. In his announcement, Udall called attention to the unnecessary risks oil dependency poses for troops. His statement echoed remarks made by military officials, including Navy Secretary Ray Mabus who said last year, “fossil fuel is the No. 1 thing we import to Afghanistan and guarding that fuel is keeping the troops from doing what they were sent there to do, to fight or engage local people.”

From Politico: President Obama Leaves Oil-Reserve Door Open

In light of the OPEC meeting and the conflict in Libya, President Obama has expressed a willingness to tap the Strategic Petroleum Reserve.

Speaking before a group of finance writers, Obama said “my general view has been that the Strategic Petroleum Reserve is to be used when you don’t just have short-term fluctuations in the market, but where you have a disruption. Libya has taken 125 million barrels off the market. We’re examining broadly what that means in terms of the oil market.”

Asked to comment on OPEC’s failure to raise production quotas, White House spokesman Jay Carney told reporters at Wednesday’s briefing that the administration has been in “regular contact” with both International Energy Agency and oil companies.

“We believe that we are in a situation where supply is not meeting demand, and there are a variety of reasons for that, including disruption caused by the situation in Libya, which has removed 1.5 million barrels a day from the market,” Carney said.

The Strategic Petroleum Reserve was last tapped in 2005 by former President George W. Bush following Hurricane Katrina.

Report: Potential Consumer Benefits and Oil Savings of New CAFE Standards

noreply@blogger.com (Clean Economy Capitol Staff) — Thu, 09 Jun 2011 20:24:00 +0000

Anticipating the forthcoming Notice of Proposed Rulemaking on fuel economy standards for years 2017-2025, Securing America’s Future Energy (SAFE), a nonpartisan organization advocating for decreased American oil dependence, issued a policy brief analyzing the potential impacts of the proposal. The Rulemaking will be released in September of this year, and the SAFE's brief offers a number of policy recommendations.

In October of last year, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) jointly published a Notice of Intent (NOI) on 2017-2025 fuel economy standards for light-duty vehicles (LDV). These standards would expand on an earlier rulemaking, which increased LDV fuel economy standards from 27.5 mpg today to approximately 35.5 mpg by 2016, while also reducing greenhouse gas emissions.

The NOI identified four possible rulemaking scenarios requiring either a three, four, five, or six percent per year tightening of fuel economy and GHG emission standards from 2017 through 2025. An analysis of the four scenarios by the EPA and NHTSA found fuel savings ranging from 0.7 to 1.3 billion barrels over the lifetime of model year (MY) 2025 vehicles. GHG emissions reductions would range from 340 to 590 million metric tons.

For each of the scenarios, the agencies also identified four “technological pathways” by which automakers might achieve the reduction goals. Path A emphasizes hybrid electric vehicles; Path B focuses on advanced gasoline vehicles as well as mass reduction; Path C further leans on advanced gasoline technology and mass reductions; and Path D emphasizes plug-in hybrid electric vehicles (PHEV), electric vehicles (EV), and HEVs.

The agencies’ preliminary estimates hold that the increased cost of a MY 2025 vehicle would range from $770 to $3,500, depending on the scenario and “technological pathway” followed. However, higher upfront costs would be offset by reductions in fuel and maintenance costs such that net lifetime savings would range from $5,000 to $7,400 with a payback period of between 1.4 and 4.2 years.

In the brief, SAFE provides estimates of oil savings accruing to the economy from 2017, when the new standards first take effect, through 2050, when the average MY 2025 vehicle is no longer on the road. Assuming a baseline fuel economy of 35.5 mpg, the minimum required in 2016, it finds savings ranging from 0.8 to 1.6 million barrels per day (MBD) in 2025, 2.3 to 4.4 MBD in 2040, and 2.8 to 5.2 MBD in 2050, depending on the scenario used.

The brief concludes by suggesting several issues the agencies ought to address so as to determine the strongest rule for which the benefits of regulation exceed its costs:

Upstream emissions: The EPA should determine if it will regulate upstream emissions from LDVs. Since the emissions profile of EVs and PHEVs depends critically on the power source used by the utility, unlike that of gasoline powered vehicles, it cannot be controlled by the auto manufacturers. SAFE therefore advocates against such regulation. However, if the EPA does decide to regulate upstream emissions from EVs and PHEVs, the brief says that they should regulate upstream emissions from all other vehicles as well.
Battery costs: Given that battery costs account for a major portion of an EV’s and PHEV’s total cost (35 percent for an EV with a 24 kWh battery), understating these costs could have a large impact on the cost-effectiveness of the agencies’ proposal and impact market uptake scenarios. The brief recommends that the agencies revisit the issue before issuing their final rule.
Discount rate: In their evaluation of benefits to consumers from reduced fuel consumption, the EPA and NHTSA used a discount rate of 3 percent, a rate below that which most consumers would pay on a loan to finance a new vehicle. SAFE suggests that the agencies follow guidelines provided by the Office of Management and Budget in providing estimates of net benefits using discount rates of both 3 percent and 7 percent.
Market appeal and midstream review: There exists substantial uncertainty regarding future battery prices, the price path of oil, and pace and feasibility of technological innovation. As such, the brief recommends that the agencies incorporate into the rule a midstream review of progress made under both the 2012-2016 standards and the early years of the 2017-2025 standards and that they adjust the requirements as needed.

Can Reverse Auctions Break Congress' Partisan Deadlock over Energy?

noreply@blogger.com (Clean Economy Capitol Staff) — Wed, 08 Jun 2011 16:50:00 +0000

Deep within a measure introduced in March by California Republican Representative Devin Nunes, H.R. 909: Roadmap for America’s Energy Future, sits a provision--called a "reverse auction"--that may be able to attract bipartisan consensus in Congress. Although Democrats criticized the broader Republican proposal as being too reliant on nuclear energy and fossil fuels, California Representative Henry Waxman, the Energy and Commerce Committee’s senior Democrat, lent support to the reverse auction provision this week.

The provision sets up a competitive reverse auction process under which grants are distributed to private firms who put forth the lowest cost-per-megawatt bid for a renewable energy project of a given size. Funding for the program would come from royalties collected from expanded oil and gas leasing on federal land.

Reverse auctions are not a new idea; Congressional Democrats have proposed the idea of a reverse auction for renewable energy in the past. Now, however, it is being put forth by a Republican majority that has, by and large, disputed climate science—Nunes’ website refers to “the man-made global warming scam.”

Rep. Nunes framed his support for renewables not as an environmental move, but as a tactic for expanding the energy supply and keeping down prices. In his testimony before the House Energy and Commerce Subcommittee on Energy & Power, Nunes said the reverse auction process “would ensure that the cheapest and most efficient technology thrives while simultaneously opening the alternative energy market to greater innovation and competition.”

The bill, introduced in March, counts Paul Ryan (R-Wis.), chair of the House Budget Committee, among its 72 co-sponsors. Although House Speaker John Boehner (R-Ohio) has yet to sign on, he floated a similar idea earlier this month: “Why wouldn’t we have a bill that would encourage more oil and gas exploration, where the royalties would go to support more green energy development? Why wouldn’t we do that by itself?”

Along those lines, Nunes suggested that the reverse auction provision might be moved separately from the energy package’s more contentious aspects, among them increased incentives for coal-to-liquid fuels.

The idea has found an initially receptive audience in Washington. Waxman told Nunes, "I do want to consider your idea because I have long believed that we need to have market mechanisms to try to drive the results we want." DOE Assistant Secretary David Sandalow also welcomed the use of reverse auctions, but added that details still need to be worked out: “From our experience with reverse auctions, it’s important to protect the taxpayers by requiring adequate assurance from bidders that they’ll perform.”

In reference to H.R. 909’s reverse auction provision Eric Milito, a spokesman for the American Petroleum Institute, took a neutral stance: “When it comes to how the government uses the proceeds and revenues from offshore leasing, we usually like to defer to the policymakers in Congress.”

In testimony to Congress, Neil Auerbach, Managing Partner of Hudson Clean Energy Partners, a global private equity that invests exclusively in the clean energy sector, conveyed other benefits offered by a reverse auction mechanism:

First, without the need to resort to a limited market of tax equity lenders, the U.S. market for clean energy project finance would become much more liquid, resulting in lower funding costs. In addition, without the spected of perennial expiry of Federal tax incentives, the comfort of a solvent trust fund as envisioned by H.R. 909 would give all market participants, including manufacturers of value chain products, more confidence in the longevity of the U.S. market, increasing capital commitments to the sector with long term payoff profiles. The market values of most companies with significant clean energy investments in the U.S. would likely improve.

Nunes’ proposal would not end the production tax credit, but, if an alternative energy entrepreneur does choose to receive the PTC, they would not be eligible for support through the reverse auction. Bidders must also have a power-purchase agreement with their local utility specifying how much electricity the utility will buy and certifying that the bidder has the necessary permits. Other than the aforementioned restrictions and the requirement that the energy come from a renewable source, the bidding is open to anyone.

Under the bill’s design, the DOE would hold two auctions a year in each of the ten electric power markets identified by the Federal Energy Regulatory Commission. In each auction a small, medium, and large project would be up for bids, making for a total of 60 auctions per year. The total amount of funding awarded is contingent on how much oil and gas is produced, though Nunes predicts the amount will be in the tens of billions of dollars each year.

Reverse auctions have been used in the past by a number of government entities, including the Department of Defense, the U.S. Postal Service, and some state governments. Other countries, including the United Kingdom and Brazil, have also used the mechanism specifically for renewable energy.

Recently, the California Public Utilities Commission approved a reverse auction mechanism for small-scale (between one and 20 MW) solar power projects. Under the scheme California’s three large investor-owned utilities would be required to hold auctions twice a year in which developers bid on projects that can be built quickly and integrated into the existing grid.

Some concerns have been expressed. A reverse auction might favor corporations with lower costs but weaker technology than smaller firms, and companies might also collude so that the government issues them a larger subsidy. With proper auction design, however, economists say these problems can be avoided. According to Dallas Burtraw, a senior fellow with Resources for the Future, “with any kind of prudent oversight and care, [the reverse auction is] a marvelous institution and is becoming increasingly popular.”

A Very Important Article About Cleantech Policy in the US

noreply@blogger.com (Clean Economy Capitol Staff) — Mon, 06 Jun 2011 14:23:00 +0000

This post is authored by guest blogger Rob Day and was originally published by Greentech Media.

Take the time to read this Politico article. It's an important glimpse inside the world of the environmental funding community, and the role the community plays in energy policy.

Just a few quick thoughts and questions:

1. Flooding D.C. with funding on a very periodic basis to support one or two specific legislative efforts is not, um, a terribly effective policy strategy.

2. "[W]ho spent about 30 minutes with the group before racing out to watch a Chicago Bulls playoff game" ... No comment.

3. By reactively pulling back so hard on funding, environmental foundations are basically pulling the rug out from under many organizations that are only now hitting their stride. Foundations need to take a venture capital mindset. No early-stage VC thinks it'll take only two years to get their latest bet up and running and proven out. This is especially true for membership-driven organizations, which take a few years to start getting momentum.

4. The environmental foundation community needs to decide whether or not they support market-based (i.e., entrepreneurial) solutions. Otherwise, they end up finding allies in strange places: Carbon cap and trade is being rolled back in New Jersey and New Hampshire by anti-environmental groups, and it is also under attack in California by environmental groups that decry specific attributes of AB32. Letting the perfect be the enemy of the good is not, um, a terribly effective policy strategy.

5. No U.S. energy and climate policy reform effort will be successful unless it is truly bipartisan. That doesn't mean having one or two votes from the "other" side; it means a truly bipartisan approach -- which will require compromise and incremental changes, as well as a supportive business voice.

6. When will the cleantech business community step up to speak up as one voice on these issues, instead of relying upon the environmental community and sector-specific trade associations? Anti-cleantech efforts don't differentiate between cleantech sectors.

Rob Day is a Partner at Black Coral Capital, based in Boston, and is the Co-Chair of the Clean Economy Network Education Fund Board of Directors.

National Fuel Economy Standards And Proposed Oil Reduction Policies: A Round-up

noreply@blogger.com (Clean Economy Capitol Staff) — Fri, 03 Jun 2011 21:42:00 +0000

Despite their apparent inability to address them, politicians in Washington haven't forgotten about high gas prices, and inaction has not stifled their debate. Meanwhile, the Administration continues to move forward with setting new fuel economy standards, a crucial tool for reducing American oil use. Read on for more on these stories in this week’s round-up:

From The Detroit News: Mullaly urges Capitol Hill to adopt national fuel standards

Ford Motor Co. CEO Mullaly paid a visit to Washington earlier this week to push for national unity on fuel efficiency standards for automakers. Having multiple U.S. standards, Mullaly told legislators, puts unnecessary burdens on automakers. Mullaly insisted “we’re not talking about specific numbers,” but that he did want “unified standards across all the states.”

This push comes as Rep. Fred Upton’s (R – Michigan) Energy and Commerce Committee considers legislation that would prevent California officials from establishing a higher fuel efficiency standard. Although in 2009 California and federal regulators were able to agree on common rules for 2012-16, officials in California are contemplating setting their own standards for 2017 and beyond.

From Politico: Barack Obama, Detroit on Collision Course

As Politico reports, California is still at the bargaining table for a national fuel economy standard. While some speculate they could pull out of negotiations, the White House emphasized that the process is going smoothly. That being said, Politico implies that the government has less bargaining power with the big autos this time around because the government no longer owns as large a stake in their companies.

Yet polls show that a strong fuel economy standard agreement would be popular with the public. Last week, Mark Mellman released two polls indicated that more than 60 percent of important voting demographics in Michigan and Ohio support a minimum 60 mpg fuel standard by 2025 for light duty vehicles.

Freedom From Oil: Policy Solutions from the Livable Communities Task Force

Meanwhile, the Livable Communities Task Force (LCTF), chaired by Democratic Representative Earl Blumenauer of Oregon, released a set of policy recommendations to address the impact of high gasoline prices on American households. “With less than 2 percent of oil reserves,” the study explains “there is little that the U.S. can do to increase the supply of oil and almost nothing to reduce its costs over the long term.” So instead of addressing the supply shortage of cheap oil, the study proposes a number of federal policy recommendations focusing on consumer demand.

One of these is to continue to increase fuel efficiency of passenger vehicles. The majority, however, aim to expand the range of transportation choices. These include increasing investment in advanced fuel vehicles, supporting “Complete Streets” policies that allow for a range of modes of transportation, and using the tax code to encourage businesses to offer commuter benefit programs that “level the playing field for alternative, non-gas transportation.”

From Politico: A Different Royalty Plan for Oil

Passing comprehensive energy policy is perpetually fraught with difficulty, and the ongoing debt crisis certainly has not made it any easier. Even if some bipartisan consensus emerged in Congress, finding or authorizing new federal funding for energy investments is near impossible in this political environment.

In an op-ed, former Senators Trent Lott (R - Mississippi) and Byron Dorgan (D - North Dakota), both Senior Fellows at the Bipartisan Policy Center and co-chairs of the group’s Energy Project, suggest that the way forward may involve “changing the royalty allocation formula for revenue from expanded oil and natural gas development.” They propose that a “small percentage” of such royalties could be directed to fund alternatives to oil, “including electrification of transport and natural gas for long-haul trucks and buses.”

From Politico: Haley Barbour: Give states control in spills

While Mullaley pushes for unified efficiency standards for automakers, Mississippi Governor Haley Barbour told a congressional panel Thursday that states should be allowed greater control over the recovery effort after the Deepwater Horizon oil spill last year. When it comes to natural disasters such as hurricanes and floods, Barbous said, Gulf States have typically operated under the Stafford Act, which gives state and local authorities the primary role. Following the Deepwater Horizon spill, however, the Obama administration took the lead under the Oil Pollution Act, passed in 1990 following the Exxon Valdez disaster.

Gov. Barbour also argued that the federal drilling ban following the disaster in the Gulf did more to damage the regional economy than the spill itself. Asked by Oversight and Government Reform ranking member Elijah Cummings whether he supports an Interior Department requirement that oil companies prove their ability to cap a well prior to receiving a drilling permit, Barbour replied, “I would not be in favor of anything that reduces the production of domestic oil. I think the risks are way too small, compared to what you give up.”