Voices of Energy

Hal Harvey, President, Energy Foundation

I sometimes fear that we’re going to snatch defeat from the jaws of victory. California, in particular, poured enormous amounts of money into renewable energy technologies when the costs were exceedingly high, and now that the costs are getting completely within reach, our programs have faltered.

But let’s consider national commitments to renewable energy as a whole. The entire R&D budget in the US energy sector, private and public, is one-half of one percent of our annual energy bill. We spend $6 million a year on energy, and approximately zero on the dynamics of technology. The consequences are simple. We have environmental problems, we have supply problems, and we have a series of episodic crises in energy. If you don’t invest in choices about the future, you get what you get.

We all want the competitive market to work, but it’s a devilishly difficult thing to make it work correctly. What the private sector could do is analyze the transmission paths that it sees as most necessary for upgrading to get their power to market, and then propose them to the Federal Energy Regulatory Commission in the United States, and the equivalent bodies in Canada and Mexico.

The competitive prices for wind-powered electricity that we are all so proud of do not include new transmission lines. Neither do new coal or new gas-fired energy prices. They’re all amortizing existing infrastructure that the public paid for. It would make sense, of course, to dispatch wind where there is existing transmission first, but if we want to look at a long-term energy strategy where we decarbonize the economy progressively, then we have to think about long-term investments.

William Moomaw, Professor in the Fletcher School of Tufts University, Medford, Massachusetts

I can tell you that the scientific community around the world is convinced that climate change is really a serious problem, and the piece of it that has not reached the policymakers yet is the irreversible nature of every ton of gas we put into the atmosphere. When we point out that the lifetime of carbon dioxide in the atmosphere is about 100 years, people assume that it's gone by then. Instead, it means between 40 and 50 percent of it is still in the atmosphere after 100 years.

In the 1980s, California led the way with wind power. In the last couple years, it hasn’t grown at all—and in fact, has declined. At one point, California had 90 percent of the wind capacity in the world. There were half a dozen major US turbine producers. There are now zero. Two-thirds of all the wind turbines in the world are generated by Denmark, a country with four million people. How is it that Denmark is using 15 percent of its electricity from wind; Germany is using 5 percent; some states in Germany, 20 percent? The answer is: It’s policy, stupid. In the US, we have jerked this industry around with inconsistent policy. The boom that is occurring this year will be followed by a drought next year. Why? Because the assured price for electricity generated by the renewables vanishes.

There are some things we can see in the future. While I cannot predict the future price of natural gas, I can predict the future price of wind. It's going to be zero. Just as it is today. For all time. But for those things that we can't predict, we need to have a set of policies that is jointly agreed upon—or else, because coal is so cheap in Canada and the United States, you're going to get coal. And because of the political power of coal constituencies, you're not going to get the protections you need from coal.

T.J. Glauthier, President and CEO, Electricity Innovation Institute

We want to get rid of some of the old highly emitting plants, but the world is going to use coal, whether you like it or not, in the next 50 years or so. We need to get better coal facilities, we need to deal with the emissions, we need to deal with the carbon dioxide questions. We need to find ways to get more efficient plants and to deal with the environmental consequences, because we're not going to have any one source to solve all of our energy needs. It's going to be a portfolio continuum.

Ralph Cavanagh, Senior Attorney with the Natural Resources Defense Council

What the CEC report has done is assess the environmental performance of the North American generation base from 1995 to 2000, and show that the worst-case analysis in 1995 was too low by a substantial margin. We can debate how much the various open-grid policies contributed, but the bottom line is that this is an unacceptable level of performance. At the same time, the CEC has banished the kind of comfortable, happy talk of the mid-90s—that open-grid policies of that era would generate environmental improvement, with no intervention necessary. What’s now clear is that if we want better environmental performance, we need additional intervention.

If we draw from the CEC reports on the principle source of carbon emissions—and, indeed, all of the major air pollution emissions for North America—we can see that the dominant engine that drives them is the 300,000-megawatt coal-generation fleet of the United States. A fleet more than double the size of all the electric generation of Canada and Mexico combined. What the numbers tell us is that this fleet, through increased utilization, is the principle reason why carbon emissions for US electric generation are up 25 percent over the last decade—a rate of increase three times that of the economy as a whole.

But we also know that it is a very old infrastructure, much of it able to operate only because it is exempted from the same pollution standards that every other competitor in the market has to meet. Everyone with an interest in competition in electric generation has a stake in preventing these old plants from continuing to take advantage of exemptions. And a stake in insuring that the overdue process of capital turnover is accelerated.

Adrián Fernández Bremauntz, Director General de Investigación sobre la Contaminación y el Deterioro Ambiental, Instituto Nacional de Ecología

More than half the energy to be consumed in Mexico in the next 20 years will be produced by plants that do not yet exist. So this is a great opportunity to ensure that they have the best available technology to control their effect on the environment. We currently have many plants that you would call in the United States “grandfathered” plants. Ninety percent of our plants are similar to those US plants, some even worse. This also offers us a great opportunity. Those that are obsolete and inefficient can be eliminated, which is the plan, and substituted with new, combined-cycle plants for enormous environmental benefits.

The majority of existing plants in Mexico are thermo-electric, and the majority of those use fuel oil. In practically all the major cities and industrial corridors of Mexico we have electric-generating plants—most of them obsolete—with great contaminating emissions. When we analyze the inventory of emissions for a given airshed, invariably the electric-generating plants are great contributors. But again, this means that if we can control them properly, it will benefit our environment tremendously.

There's a great need for growth in the production and generation of electricity in Mexico. The good news is that the majority of the new generation will be combined-cycle plants, which is good news compared to fuel-oil plants. But we would like to see the agenda include renewable sources. I think the opportunity is there. The incremental costs between one technology and the other are becoming narrower all the time.

David Anderson, Minister of the Environment, Canada

During the California energy crisis, people became increasingly worried about rolling blackouts. In a one-month period, Californians managed to reduce their consumption of electricity by some 10 percent through very simple measures: turning off lights, being more efficient, and simply being more aware. This is a very powerful example of what can be done simply and individually through conservation. No policy is as flexible. No policy is lower-cost.

I believe we are on the cusp of a clean-energy revolution. Fuel cells for vehicles and stationary power generation; high-efficiency turbines, wave turbines, and efficient small-scale hydro have moved from the research labs in the ’70s and ’80s, to pilot projects in the ’90s, and now into production as viable, cost-effective alternatives to conventional technologies. And these new technologies are also transforming large-scale power production. Cleaner natural gas plants than we've ever known, and cleaner ways of using coal than we've ever known—although there is much work still to be done in making coal use and its extraction less disruptive to the environment.

As nations, as partners, and as citizens we have a responsibility to do more and to do it better. We need to develop regional strategies, and strategies for key industrial sectors; we need to break down the barriers to the development of cleaner energy sources; and, of course, we need the United States to develop a robust climate-change action plan and to develop it soon. And all of that must be done in the context of the North American approach to cleaner air.

Nancy Kete, Director, Climate Energy and Pollution Program, World Resources Institute

At the atmospheric levels of carbon we are heading for, every continental glacier on the globe will be gone. We’ve got a lot of new information about what happens to butterfly habitats, what happens to birds, what happens to a lot of the habitats and animals that all three countries here spend so much time trying to protect in other contexts. We are heading to concentrations that are unimaginable, at a rate that has never occurred through history.

There was a really frightening article about the communities of indigenous peoples off of BC, whose burial grounds have heaved up because the permafrost has melted. It’s tragic in a lot of ways, but some are concerned that it is going to stir up diseases from the 19th century, because these people had been buried quickly after smallpox or other epidemics. Nobody has looked at that in the models.

We’re in a funny position in North America. We have Mexico, which is one of the first countries in the world to ratify the Kyoto Protocol, arguably the most important country economically that has done so thus far. We have Canada, which now has the Prime Minister’s commitment to ratify. But it wasn’t very long ago that every industry association in the country sent a letter to the government saying ‘Don’t ratify the Kyoto Protocol unless the United States does.’ I don’t think that opposition has gone away; there will be tremendous resistance in Canada to moving forward. And then you have the United States, which has announced it won’t ratify the Protocol, but is promising some sort of domestic or hemispheric approach. Within the US, industry is quite split.

As for the information problem, we are missing information and I don’t know how to fix that. In Canada, there is a real problem in that they protect source-specific information that common sense says is innocuous from a business standpoint. There’s no confidential business information associated with sulfur dioxide or nitrogen and carbon dioxide. And we really do need a source-by-source and company-by-company registry of actual emissions in order to manage the problem, no matter how we plan to do that. In the US, this isn’t an issue.

John McDonald, Secretary, International Air Quality Advisory Board

Cap and trade is one tool in the toolbox. It has to be applied very judiciously. In Canada, there is not such a rigid definition of nonattainment. We wouldn’t want to see a situation where people are achieving their so-called emission requirements by buying cap credits that have degraded air quality. Cap and trade is a tool, but it needs to be shaped and it needs to take into account local factors, regional factors, and continental factors.

Ken Ogilvie, Executive Director, Pollution Probe

An article coming out shortly in Environmental Science and Technology says that in Texas, under the NOX trading system, urban power plants that buy credits can cause smog levels to rise to the point that they aggravate breathing problems. There are trades that have resulted in worse pollution than if there’d been no emission reductions at all. You have to look at things in each jurisdiction and have some way of adjusting these macro systems to avoid such problems. But you don’t want to have total inflexibility either—you have to live with the fact that there are some problems with these systems and you need adjustment mechanisms. Even at the level of setting the cap, it’s really an art more than a science. You set it, you watch it, and then you fix it up over time.

Robert Kelter (US member of CEC Electricity Advisory Board)

One of the previous comments really bothered me—that we need to exercise a little bit of patience and that renewable energy is fairly new. I’ve been working on them for about 20 years and I think Ralph Cavanagh has been working on them for longer. I’m sick of being patient; I’m sick of waiting. We’re on the verge of a lot of breakthroughs in these technologies and there’s got to be public pressure right now to push us as hard and fast as we can go. All the projections we’ve seen for the potential for renewables 15 and 20 years out look very low to me. It seems like we’re so used to losing battles that we’re fearful of making realistic projections.

Something else that’s been bothering me: I know that in open markets everybody is very positive about the opportunities for consumers to purchase renewable energies. My feeling is that we have to rely more on broader policies that force everybody to pay the price for this power, because if you go into an organic food store and buy an organic carrot at whatever premium, at least you get the benefit of that carrot. The problem with renewables is that if you pay more for renewables, you don’t get any more benefit than your next-door neighbor who doesn’t pay it.

Lew Milford, President, Clean Energy Group

When I said patience, I meant that people too often prematurely reach conclusions about failure, particularly about the markets. I see this challenge as the first few years of reversing 100 years of monopoly, regulatory control. The roots of that system are extraordinarily deep. I’m certainly not satisfied with the progress, but I think that people are too quick to conclude that these changes are either short-lived or are a failure, or that it’s the same old game.

Over the next 10 years in the United States, there will be about $3 billion of new funding support available for investment in clean energy technologies. That is an extraordinary amount of money reaching across many states. There are now 14 states that have created these funds, largely out of restructuring legislation. California’s is the largest. But from Connecticut, where there is $15-30 million a year for investment in technology, to Illinois, Massachusetts, Montana, New Jersey, New Mexico, New York, and Ohio, we have states beginning to look at renewable and clean energy technologies as an economic development opportunity.

On the question of market choice and customer behavior—the argument that you can’t rely on customers to actually drive this market—I would like to see more focus on real economic value to end-use customers, particularly commercial and industrial customers. They will drive much of the fuel-cell market on the stationary power side, and I think will also drive the PV market.

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Other articles for winter 2002

NAFTA Partnership Grounds Bird Smugglers

Taking the Pulse of North America

Clearing the Air

Voices of Energy

CEC Names Children’s Health Board

Citizen Submission Updates

Program Notes