Block’s Indicator of Sustainable Growth

By Ray Block

 

There is a strong relationship between government incentives, including mandating renewable energy targets, and ultimate success in renewable energy developments. The more farsighted governments are in terms of incentives, the greater a country’s achievements, not only in reducing greenhouse gas, but in developing large scale new industries.

 

Having taken advantage of its neighbour Denmark’s success with wind energy, Germany became the trendsetter in renewable energy, and effectively carried the European Union along with it. Energy policies such as the 1990 Electricity Feed Law and 2000 Renewable Energy Law played major roles in advancing the deployment of renewable energy technologies. These laws mandated the purchase of renewable generated electricity by electric utilities, and also offered large subsidies and government loans to renewable power producers.

 

At the European Union level, the 1997 Directive on Renewable Energy Sources aimed to boost the renewable energy share of total energy has been a catalyst for major change. Signing of the Kyoto Protocol in 2001 was another step forward in directing attention to the direct cutting of greenhouse gas emissions.

 

In a similar way, Japan has been the trendsetter in solar energy. In 1994, Japan introduced incentives for solar energy. Over the years, this has resulted in a 72 per cent reduction in the average cost of solar energy systems, and in return Japan has become global leader in solar photovoltaics. As solar becomes competitive in Japan, the government is reducing the size of the incentives.

 

Now it is Germany, which is following the lead of Japan in introducing incentives to encourage the use and popularity of solar. The only disadvantage of being too successful in product leadership is that the current rate of accelerated deployment in renewable energy technologies can lead too quickly to a point of countries reducing their commitment to new research and development.

 

While this won’t interfere with the current momentum for renewable energy, it may come at the expense of future generations of energy technologies.

 

In the US, the hot and cold attitude of the Bush Administration and Congress in inconsistent and half hearted support for renewal energies, has seen the year by year renewal of the production tax credit (PTC) on wind technology frequently in peril of not being renewed. This has led to peaks and troughs in the rate of new investment. For example, between 1999 and 2004, the PTC was allowed to expire.

 

Until last week, it looked as if the PTC wouldn’t be renewed. But that has finally been remedied. As the Wall Street Journal’s blog Environmental Capital pointed out on October 6 2008, last Friday was a good day in Washington for renewable energies.

 

The passage by Congress of the US$700 million Wall Street Bailout allowed the Senate not only to sneak into the omnibus bill, the annual production tax credits for wind power, but an eight year extension to the solar investment credits, including tax incentives for home owners to install solar panels. Because, the House of Representatives had initially failed to pass the bailout, the second time around they had to swallow their pride and pass the bill, with the clean energy tax credits intact.  

 

 

 

 

 

 

 

 

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Posted under Economies, carbon abatement scheme, climate change, global warming, renewable energies

by Ray Block

Everything about the Amazon is big. If you take the river, it is by far the greatest in the world .by so many measures. The volume of water it carries is a high 20 per cent of all the freshwater into the oceans.

 

The tropical rainforest itself, home of the most biodiverse and intact wilderness of 5.5 million square kilometres is the largest in the world, the last big space covered with tropical plants and animals. In the 10 years from 1991 to 2000, about 500,000 sq km of the Amazon was lost to deforestation. Since 1970, at least 17.1 per cent of the rainforest has been illegally cleared, or cultivated, with the cutting down of forests. And in the western Amazon, over 180 oil and gas blocks zoned for exploration and development await the oil rigs.

 

60 per cent of the Amazon is located in Brazil, with the balance shared by eight other countries- Bolivia, Ecuador, Peru, Colombia, Venezuela, Suriname, French Guiana and Guiana.

 

Reporter Brazil, a non governmental campaign group says that the total acreage of soya crops in northern Brazil increased 20 per cent in the 2007-08 season compared to the previous year, reflecting further encroachment of the forest area.  45 per cent of the country’s cropland is devoted to soy. Other areas, similarly stolen are earmarked for rice growing. To clear the land, plantation owners commonly stretch a long chain between two bulldozers, and rip out the vegetation along their path. Then the roots and top layer of soil are swept together and set on fire.

 

Apart from cropland, ranchers are using 50 million hectares for grazing cattle. It is estimated that if deforestation continues, the Amazon rainforest will shrink by up to 40 per cent by 2020. Deforestation adds greatly to greenhouse gas, because a partially decimated Amazon as a huge carbon sink reduces nature’s capacity to lock away C02.

 

Both CBS News and International Herald Tribune of August 4 2008 reported that Brazil was on the “brink of civil war”. The two news groups said that in the most northern area of the Amazon, a land conflict between Indians, who want to maintain their traditional life style in the jungle and rice farmers had turned violent.  

 

The conflict is over possession of a 1.7 million hectare Indian reservation decreed by President Luiz Inacio Lula da Silva in 2005. To the indigenous, this was the reclamation of ancestral land.

 

The dispute has gone to the country’s Supreme Court for resolution. But the court itself is concerned that if the violence of the dispute doesn’t dissipate, it could escalate into civil war. Brazil’s 1988 constitution decreed that all Indian ancestral lands must be demarcated and turned over to the tribes within five years. While that process has yet to be completed, in 2008 Indian tribes already control 11 per cent of Brazilian territory and 22 per cent of the Amazon.

 

If the Indians lose the case, they will be up in arms. But there are a lot of forces including retired generals of the Army, and governors of the states who support the farmers. There is a great amount of tension in this case.

 

An interesting website http://forestpolicyresearch.org/2008/09/22/404-latin-america reported that the official launch of the website Globo Amazonia and the interactive map Amazonia.vc in the Fantastico television show on September 7, registered 13 million protests against fires and deforestation in the Amazon.

 

The protests came from more than 230,000 users who installed Amazonia.vc, which allowed them to follow the devastation of the forests in real time. The users can record their protests, which can then be used by the news team of the website as material in the production of new programs.

 

In 2008, there has been more vigorous attempts by Brazilian authorities to clamp down on illegal logging. Satellite imaging equipment enable the authorities to have in real time speedy information on where the latest areas of deforestation are appearing, so they can target enforcement efforts on the ground.

 

However, given the huge size of the Amazon, and the support given to loggers by local officials, it is an extremely difficult policing task to keep the unruly ranchers, loggers, and farmers from further poaching of the Amazon. Norway will give Brazil US$1 billion by 2015 to preserve the Amazon rainforest, as long as they keep trying to stop deforestation.

 

The $1 billion will be the first of other donations to raise $21 billion to protect nature reserves, persuade loggers and farmers to stop destroying trees and to finance scientific and technological projects.

 

“Efforts against deforestation may give us the largest, quickest and cheapest reductions to greenhouse gas emissions,” said the Norwegian Prime Minister. “Brazilian efforts against deforestation are therefore of vital importance if we shall succeed in our campaign against global warming.”  

 

Another deterrent to further deforestation has been the role of the Brazilian vegetable oils industry in the Amazon to place a moratorium on the purchase of soybeans produced on rainforest lands deforested, which came in effect in October 2006. This was in response to a campaign by Greenpeace.

 

Another positive step was the decision of the Brazilian state of Para, which in July 2008 announced a ban on the sales of illegally logged timber from the Amazon. The agreement, which was signed by the Association of Timber Export Industries and the Para Federation of Industries is known as the Pact for Legal and Sustainable Timber. As much as 80 per cent of timber produced in the Amazon is illegal.

 

“Greenpeace welcomed the announcement. “In a country where intention and action don’t always meet, the implementation of this agreement by industry and Government will be vital for establishing effective protection for the forests while preserving jobs,” said Paulo Adario, Greenpeace Amazon campaign director. “It will benefit local communities and promote legal and sustainable logging activities.” 

 

 

 

 

 

Posted under Economies, climate change

by Ray Block

Over a number of years, investment bankers in America and England created toxic securities, almost as deadly as weapons of mass destruction, and the consequences are now tipping the world economy into a severe and prolonged recession.

 

The immediate countries engulfed are United States, United Kingdom and European Union. The S&P Case-Shiller home price index in 10 major US metropolitan areas fell by a record 17.5 per cent in July 2008 from a year ago level, and there are more price falls to come. Home prices are also tumbling in the UK, Spain and Ireland.  

 

The secondary consequences involve a slow down in China and India, as European and American customers reduce demand for imported goods. In turn, metal commodity prices are falling steadily with commodity suppliers Russia, Brazil, Canada, Australia, and South Africa being affected as well. Agricultural prices fell again in August, with the FAO food price index falling nearly 6 per cent, and if this trend is repeated in September, the whole world will feel the ill winds of recession.

 

The US Congress will ultimately pass a taxpayer bailout to banks of US$ 700 billion. With $300 billion already outlaid by the US government on Fannie Mae, Freddie Mac and American International Group, and write offs by banks already of $500 billion, these sizeable funds are still not enough to stabilise the world economy.

 

International trade is slowing. The Baltic Dry index, which measures dry bulk shipping costs plunged by nearly a quarter last week, 10per cent on September 30 alone. The index has become very volatile, twice doubling and then falling back within 15 months. The slide also reflects a weakening in Chinese raw material demand.

 

Chinese prices for key steel products have been falling 15 per cent to 20 per cent in the last two months. Indian steel prices are similarly falling. Some base metal prices have fallen by more than 50 per cent. The Chinese and Indian economies slowed in the June quarter, and this trend of further slowing is expected in coming months.

 

Indeed, the single most dramatic indicator of slowdown in Asia has been China’s reversal of its previous monetary policy. Instead of the Chinese central bank constantly raising interest rates to curb excess demand and inflation, September 2008 has seen for the first time in six years interest rates falling, and banks have been allowed to set aside smaller reserves, as weakening export demand slows the economy.                                                                                                                                                                                                 

The consequences of the world downturn is that countries will slow their efforts to reduce greenhouse gases (GHG). We will all be the losers for that. The inevitable result is that the pace of cutting GHG emissions will be substantially lower than what scientific advisers are constantly urging, and almost pleading.

 

The chances of a successful world agreement on cutting emissions at the Copenhagen meeting in November 2009 are not very high.

 

But not all hope is lost. There is a way out. If other countries were to follow the lead of the US in introducing investment tax credits on installation of renewable energy solutions, there is no need to sit idly by as greenhouse gases gets steadily worse.

 

Investment tax credits, available to homeowners and businesses that invest in solar power equipment, and the production tax credits based on kilowatt hours of energy produced by wind, solar, geothermal, biomass and other renewables have been the catalyst for the US to grow its renewable share of electricity consumed.

 

The result has seen dramatic increases in installation of wind power and solar energy technology in the US over the last two years, thanks largely to the investment tax credits. But because the tax credits require yearly renewal in Congress, there is no consistency in US growth of renewables.

 

The US Congress allowed the credits expire in 2000, 2002 and 2004. In those three years, wind capacity installation dropped 93 per cent, 73 per cent and 77 per cent respectively from the previous year.

 

A consulting company advising on renewable energy technology estimated that US investments in wind and solar power in 2009 would amount to $26.6 billion with tax credits, but fall to $7 billion without them. These credits are expected to total $334 million, according to congressional estimates.

Posted under Economies, carbon abatement scheme, climate change, commodity prices

by Ray Block

Kevin Rudd, Australia’s Prime Minister announced on September 19 2008 the formation of a Global Carbon Capture and Storage (CCS) Institute, to help facilitate the setting up of 20 at scale international CCS projects to be up and running by 2020. An initial $100 million has been allotted to the institute, with annual contributions of around the same amount.

 

While Greenpeace is dismissive of CCS initiatives calling them a “false hope” in its pamphlet of May 10 2008, saying the technology is largely unproven and will not be ready in time to save the climate, both WWF and the Climate Institute are more positive. The reality is that CCS is being proven up now and the demonstration stage will continue over the next 10 years. By 2020, CCS will be ready for installation of new power plants and retrofitting of older ones over the period through to 2030.

 

The essential point is that CCS is only one of a handful of solutions in carbon reduction. There will also be need for large scale exploitation of wind power, solar, biomass, hydropower, geothermal, even nuclear energy to maximise the opportunities.

 

Coal’s cheap costs by comparison with competitive technologies, before the application of a carbon emission tax has one overwhelming advantage. It is the preferred technology of providing baseload power generation, something solar and wind power cannot do. Geothermal also provides the ability for baseload power, but because of its location disadvantages, it would be more costly in transmission costs. 

 

The July 2008 G8 meeting of leading nations in Hokkaido, which Rudd attended as an observer, had called for CCS demonstration plants, and Australia wants to facilitate their quick development. Australia, as the world’s largest coal exporter has a lot at stake, being heavily dependent  on coal fired power for 80 per cent of the nation’s electricity.  

 

In a study of the world’s largest carbon emitters, the Centre for Global Development in Washington, says Australia, which ranks as the world’s eighth biggest carbon polluter, and in per capita terms is almost on a par with America in carbon pollution has a great deal to do to reduce carbon emissions.

 

There are three different types of carbon capture and storage (CCS) technologies in development- post combustion, pre-combustion, and oxy-fuel combustion. Trials are proceeding around the world on all three technologies. In post-combustion, the CO2 is removed after coal is burned in conventional power plants. This is an expensive technology to deploy.

 

In pre-combustion, the coal is partially oxidised in a gasifier, the resulting syngas consisting of carbon monoxide and hydrogen is transformed into CO2 and H2. The CO2 can be captured relatively easily prior to the combustion of the H2, which can also be used for industrial processes or to fuel transportation.

 

In oxy-fuel combustion, coal is burned in an atmosphere of pure oxygen instead of air. This is the first time an oxyfuel boiler is being used in a power station. The resulting waste gas is almost pure CO2, and can be buried, preventing it from entering the atmosphere and contributing to global warming.

 

However, the initial step of separating oxygen from air requires considerable energy, with the result that final electricity costs from such a system are likely to be high. After CO2 is captured, it must be transported to a suitable storage site, which is usually via pipeline.

 

Permanent storage for captured CO2 include gaseous storage in deep geological formations, including saline formations and exhausted gas fields, liquid storage in the ocean, and solid storage by reaction of CO2 with metal oxides to produce stable carbonates.

 

Geological storage, also known as geo-sequestration, involves injecting carbon dioxide directly into oilfields, gasfields, saline formations, coal seams which can’t be mined, and saline-filled basalt formations. Several pilot programs are testing the long term storage of CO2 in non-oil producing geological formations.

 

The International CCS technology survey issue 3 July 2008 lists over 70 demonstration sites. 14 of these are in Australia-seven CO2 capture and storage projects, four capture projects, and three others limited to storage only.

 

In China, there are five major projects to develop CCS.  Greengen was founded in 2005, with the managing partner China Huaneng Group, and six other coal and power generating companies. The first stage (2006-2009) is a 250MW integrated gasification combined cycle (IGCC) plant. This is to be eventually expanded to a 400 MW IGCC plant.

 

NZEC are the initials for the Near Zero Emissions Coal project involving 20 Chinese participants including universities, government, and industry, with funding from the UK Department of Environment, Food and Rural Affairs. In stage three, the intention is to construct and operate a demonstration plant by 2014-2015.

 

EU COACH  is a  demonstration of near zero emissions coal technology. The project has 20 Chinese partners and 12 EU partners. The intention is to eventually construct C02 capture in a IGCC post-combustion plant, with transport and storage in a mature oil and gas reservoir.

 

Yantai IGCC is a US$420 MW plant in Yantai, Shandong province, which has been included in China’s 10^th 5 year plan as a key element in developing and deploying CCS. The European Commission sees the project as an opportunity to promote European technology, and Mitsubishi Heavy Industry in Japan is also involved.

 

Japan-China enhanced oil recovery project signed by the two countries in May 2008 will be involved in a project to inject C02 emitted from a thermal power plant in China into an oil field. The start date is 2009.The intention is to capture annually from 1 to 3 million tons CO2 from the Harbin Thermal Power plant in Heilungkiang province and potentially other plants, and then transport it by pipeline about 100 km to China’s largest oil field-Daqing, for injecting and storing in the oil field.

 

Another international collaboration project is Australian-China Joint Coordination Group on clean coal technologies, which was announced in April 2008.

 

Japan has 18 CCS projects, including a joint venture in Australia, two in China, one in Vietnam, two in Malaysia, one in India, and one in Abu Dhabi.

 

In Europe, there are 26 CCS projects- five in Germany, two in France, 11 in the UK, two in Italy, four in Netherlands, and two in Norway.  

 

Perhaps the most interesting is the Sleipner project in the Norwegian oil zone of the North Sea, which was the first commercial scale project dedicated to geological CO2 storage in a saline formation.

 

Approximately 1 million metric tons is removed annually from the produced natural gas and injected under the sea at Sleipner. The project started in 1996, and over the lifetime of the project a total of 20 million tons CO2 is expected to be stored.

 

Other CCS projects are in Canada, the US and the Middle East.

 

The greatest level of progress has been in Europe, where there is common agreement that CCS is now a proven solution. This level of confidence has been reached through:

Ø      Large cooperative research programs, including international collaborations;

Ø      Amount of data and information acquired, shared knowledge;

Ø      Best practice manuals;

Ø      European demonstration projects and field laboratories;

Ø      Networks of research –CO2Net, CO2 GeoNet and national networks.

 

The next stage of cooperation is to:

Ø      Implement 10-12 large scale CCS demonstration projects Europe wide;

Ø      Prove beyond doubt that CO2 storage is both practical and safe, with zero tolerance for CO2 leakage;

Ø      Create the regulatory framework for storage;

Ø      Establish short and long term commercial incentives for commercial operation.

 

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Posted under World Inflation

by Ray Block

Wind energy is the fastest growing renewable energy technology in the world, and its generation quadrupled between 2000 and 2006. Current annual growth is around 30 per cent. The Economist (June 19 2008) says that world wind energy generating capacity will exceed 100 gigawatts (GW) this year.

The US Department of Energy in its Renewable Energy Data Book September 2008 said: “that after a decade of trailing Germany and Spain, the US re-established itself as the world leader in new wind energy. This resurgence is attributed to increasingly supportive policies, growing interest in renewable energy, and continued improvements in wind technology and performance.”

In 2007, Germany remained No1 in world wind capacity, with the US replacing Spain as No2. This year is seeing a complete change about, with the US emerging as No1. The American Wind Energy Association announced on September 4 2008 that US wind energy installations had reached 20.1 GW, with over 7.5 GW new wind capacity to be added this year. West Germany’s generating capacity installed is currently about 23 GW.

In the US, where renewable energy in 2007 represented 14.9 per cent of total energy consumption, (nuclear 8.3%, hydropower 2.4%, non-hydro renewables 4.2%), wind power generating capacity grew 45 per cent last year, with 5.24 megawatts (MW) new capacity installed. Wind power in 2007 represented just over 1 per cent of US electricity supply. Over the seven years 2000-2007, compound annual growth in US wind energy rose 30.7 per cent increasing 6.5 times over the seven year period.

In the DOE’s technical report “20%Wind Energy by 2030” July 2008, the department set out an agenda of how US wind energy could grow to the stage of having 20 per cent of total US energy consumption over the 24 years 2006 to 2030. This would require an installation rate of 16 GW, that is 16,000 MW every year after 2018. That is a very rapid rate of growth. It would involve increasing wind capacity from 16.8 GW in 2007 to more than 300 GW by 2030.

The US has more than 8,000 GW of available land based wind resources that the wind industry estimates can be captured economically. The US Energy Information Administration estimates that US electricity demand will grow by 39 per cent from 2005 to 2030, reaching 5.8 million GW by 2030. The 20 % wind scenario would require delivery of nearly 1.16 million GWh of wind energy in 2030.

Wind energy of this magnitude would allow the displacement of 18 per cent of US coal consumption by 2030, and about 50 per cent of electric utility natural gas consumption. There would be costs involved in wind energy growth, particularly in incremental transmission costs. The market cost of wind energy currently remains higher than that of conventional energy sources in many areas across the country.

As the DOE’s technical scenario suggest, the 20% wind scenario would involve higher initial capital costs to install wind capacity, and associated transmission infrastructure in many areas. But at the same time, it would open the door to lower ongoing energy costs, including maintenance costs.

The Department of Energy says that despite the considerable advances so far made in current turbine capacity, there would be need for considerable further advances, along with enhanced system reliability, and reducing capital costs. Today’s wind turbines currently being installed have three-bladed rotors with diameters of 70 to 80 metres, typically installed in arrays of 30 to 150 machines.

“Drag based devices and simple lift based designs have given way to experimentally designed and tested high lift rotors, many with full span pitch control. Blades that once had been made of sail or sheet metal progressed through wood to advanced fiberglass composites. The direct current alternator gave way to the grid synchronised induction generator, which has now been replaced by variable speed designs employing high speed solid state switches of advanced power electronics.

“Designs moved from mechanical cams and linkages that feathered or furled a machine to high speed digital controls. A 50 kW machine, considered large in 1980, is now dwarfed by the 1.5 to 2.5 MW machines being routinely installed today.”

In 2007, Texas consolidated its position as the leading wind state, followed by California, Minnesota, Iowa and Washington state. Along with Texas’s commitment to spend over the next four to five years US$ 4.93 billion on transmission lines for wind power delivering 18.46 GW of electricity to metropolitan areas of the state, there is a bonanza of new investment in wind power.

Billionaire T Boone Pickens (80 years young) who made his money from oil, but now convinced of Peak Oil, is on a crusade to end US reliance on foreign oil replacing it with renewable energies. Pickens’ current enthusiasm is wind power, his dream in the process of becoming reality is to create the world’s largest wind farm. Location is Nolan County, Texas, housing the largest number of wind turbines in the US. Pickens’ Pampa Wind Project is already spending $2 billion this year on turbines.

The overall plan, which will take four years to complete is to produce 4GW, enough to power one million homes at an all up investment of $10 billion. The wind farm, five times larger than the current largest wind farm, will have 2,700 turbines across 200,000 acres of the Texan panhandle.

Another massive wind farm, this time of 4 GW announced this year is a joint venture between Shell Oil and the largest Texan electricity utility,TXU, which is to be located in Briscoe County.

There remains one critical impediment to the exceptional rate of growth in wind power and solar. The House of Representatives has passed H.R. 6049, the Renewable Energy and Job Creation Act of 2008. This would extend the renewable production tax credits due to expire at the end of 2008. The wind and solar lobbies are saying that failure to extend the renewable energy tax credits will result in the loss of approximately 116,000 jobs-roughly 40,000 jobs in the solar industry and the remaining 76,000 in wind energy.

Whether the Senate passes the House Bill before Congress rises for the November elections is not known at this time of writing.

Posted under Economies, World Inflation, global warming