NewEnergyNews: Holiday Reading: With the Utility Regulators, Day 3: Oil and Renewables Debate Subsidies; Quiz: Which type of energy got the first U.S. subsidy? Which got the most? Has the U.S. ever ended a subsidy?

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge: To make every day Earth Day.

YESTERDAY

THINGS-TO-THINK-ABOUT THURSDAY, Oct. 23:

  • TTTA Thursday-EVANGELICALS IN ‘CREATION CARE’ CLIMATE FIGHT
  • TTTA Thursday-ADVANCED WIND-MAKERS MAKANI, SHEERWIND READY DEMOS
  • TTTA Thursday-TEA PARTY BACKS SOLAR, ATTACKS UTILITY MONOPOLIES
  • TTTA Thursday-WHAT DRIVERS DON’T KNOW HOLDS BACK THE FUTURE
  • THE DAY BEFORE

  • THE STUDY: THE IMPACT ON REAL PEOPLE OF RISING POWER PRICES
  • QUICK NEWS, Oct. 22: SCHOOLS SAVE W/GEOTHERMAL HEAT PUMP SYSTEMS; BUILDING FOR NEXT-GEN U.S. BIOFUELS; ENERGY STORAGE MARKET EMERGING
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    GET THE DAILY HEADLINES EMAIL: CLICK HERE TO SUBMIT YOUR EMAIL ADDRESS OR SEND YOUR EMAIL ADDRESS TO: herman@NewEnergyNews.net

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    THE DAY BEFORE THE DAY BEFORE

  • THE STUDY: WHERE U.S. OFFSHORE WIND WILL CONNECT
  • QUICK NEWS, Oct. 21: SOLARCITY TO CROWDFUND WITH $1,000 BONDS; NEW JERSEY LOOKS AT OCEAN WIND; SMART LED LIGHTING MRKT TO DOUBLE
  • THE DAY BEFORE THAT

  • THE STUDY: NEW OPPORTUNITIES IN TRANSMISSION
  • QUICK NEWS, Oct. 20: ELEVEN GOOD THINGS ABOUT SOLAR ENERGY; YAHOO BUYS WIND; SMART THERMOSTATS’ BILLION DOLLAR FUTURE
  • AND THE DAY BEFORE THAT

  • Weekend Video: The Ocean Speaks Out
  • Weekend Video: Adapting To The Inevitable
  • Weekend Video: The Joy Of Driving EVs Powered By The Sun
  • THE LAST DAY UP HERE

  • FRIDAY WORLD HEADLINE-HOTTEST SEPTEMBER EVER; WORLD’S HOTTEST MONTHS STREAK AT SIX
  • FRIDAY WORLD HEADLINE-EU WIND BEATS FOSSIL, NUKE ENERGY PRICES
  • FRIDAY WORLD HEADLINE-DESERTEC SUCCUMBS TO MIDEAST TURMOIL
  • FRIDAY WORLD HEADLINE-JAPAN UPS PUSH FOR GEOTHERMAL
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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge

    2013-11-05-Figure_ES2_FULL.jpg

    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here (http://www.huffingtonpost.com/anne-butterfield). Thanks.

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    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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    Your intrepid reporter

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  • Thursday, January 03, 2013

    Holiday Reading: With the Utility Regulators, Day 3: Oil and Renewables Debate Subsidies; Quiz: Which type of energy got the first U.S. subsidy? Which got the most? Has the U.S. ever ended a subsidy?

    Holiday Reading: With the Utility Regulators, Day 3: Oil and Renewables Debate Subsidies; Quiz: Which type of energy got the first U.S. subsidy? Which got the most? Has the U.S. ever ended a subsidy?

    Herman K. Trabish, July 27, 2012 (Greentech Media)

    To provide U.S. regulators a basis for decisions they will be making on controversial subsidies and incentives in state energy policies that may make or break renewables, a debate was added to the agenda at the National Association of Regulatory Utility Commissioners (NARUC) summer committee meetings.

    “Energy subsidies have existed in the U.S. from the early days of wood,” DBL Investors Managing Partner Nancy Pfund said in reviewing the historical role of federal energy subsidies. “In wood, it was land grants and warrants for timber lands.” (What would Jefferson do?)

    Over the first fifteen years of their subsidies’ durations, Pfund said, “federal support for non-renewables was much greater than for renewables.”

    The oil and gas industry got five times what renewables got and nuclear got ten times the subsidies (in 2010 dollars). “Nuclear spent an average of about $3.3 billion a year, oil and gas about $1.8 billion, and renewable energy just under half a billion.”

    Total subsidies to oil and gas, in place for nearly a century, are by far the most, Pfund said. And, she added, “as a percent of the federal budget, subsidies have always been at least 25 percent higher for oil and gas than for renewables.”

    Coal’s “cumulative capital gains treatment on royalties from 2000 to 2009 totaled over $1.3 billion,” Pfund said, “compared to annual expenditures for renewables in those years of less than $1 billion.”

    The oil and gas industries have Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), Pfund said, two low-capital-cost ways of financing infrastructure now rapidly expanding in the financial services world. Neither is available to renewables investors, Pfund said, and both cost less than the tax equity funds derived from solar’s Investment Tax Credit (ITC) and wind’s Production Tax Credit (PTC).

    “The U.S. government has also played a huge role in subsidizing natural gas infrastructure and technology,” Pfund added. “The combustion turbine was developed for aircraft and heavily subsidized. It was later reapplied to the gas sector.”

    “In energy, the free market never has and never will meet all our energy needs,” Center for American Progress Clean Energy Investment Director Richard Caperton said.

    Withoutgovernment intervention, energy-related externalities like climate change, environmental problems, and the needs of low-income consumers are likely to go unaddressed, he explained. “Subsidies are one way to do that.”

    “Washington spin” and “misinformation and disinformation” were how American Petroleum Institute Chief Economist John Felmy characterized descriptions of his industry’s subsidies. “The oil and gas industry,” Felmy said, “employs, directly and indirectly, nearly nine million Americans.” And, he reminded listening state commissioners, “your state pension funds are heavily invested in oil and gas companies, [so] when you hear arguments that they are going to take money from oil companies because they don’t need it, it’s going to come out of your pockets.”

    Calling on regulators “to think thoughtfully about our policies,” he added, “We hear these arguments about whether or not we’re going to produce oil sands. Of course we’re going to produce oil sands. The oil sands of Canada are worth $14 trillion. The GDP of Canada is $1.4 trillion. The notion they wouldn’t be developed is silly.”

    “When a technology shows promise but needs to get to the point where it will be cost-effective on its own, that may be a case for subsidy,” said Carnegie Mellon University Department of Engineering and Public Policy’s M. Granger Morgan, referencing recent studies.

    Two other good cases for subsidies, Morgan added, are when an existing technology could reduce CO2, health or environmental damage but existing compensation schemes offer no way to pay for it and when planned new technology could reduce risks to critical services.

    Historical evidence shows that sometimes, with economies of scale, a “technology will become competitive.” But sometimes a technology “is never going to get there.” Over the last two decades, Morgan said, wind “has been in that first category. Solar photovoltaic has not been.”

    Before approving subsidies, Morgan cautioned, regulators must “address how a subsidy will be turned off once it is no longer needed.”

    “What is the definition of a subsidy?” Felmy snapped. “In our industry, most of what is being characterized as a subsidy is not a subsidy; it’s a tax provision that every other industry gets.”

    Subsidies for oil and gas are not simply tax provisions that everyone else gets, Caperton said, contradicting Felmy. He argued that they add the cost depletion allowance and the section 199 manufacturing tax deduction to Pfund’s mention of MLPs and REITs.

    Regulators in the audience asked for more about when and how to turn a subsidy off.

    “To think about when you are going to turn a subsidy off, you have to be clear about why the subsidy exists and what goal you’re trying to achieve,” Caperton said. “We don’t have that with a lot of subsidies right now.”

    “A new study,” Pfund noted, “shows the ITC, when you look at it over the life of the credit, by creating these solar leases, provides a 10-percent return to the federal government. They are actually making money through this incentive through the revenues from all the companies in the solar supply chain.”

    It is not when and how subsidies end, the study suggests, but when and how they transform. “It blows apart the notion that this is welfare at the taxpayer’s expense,” Pfund said. “Quite the opposite -- it’s a revenue generator.”

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