Translating renewables and energy efficiency into dollars and good sense

Left to my own devices, I could spend a good deal of time immersed in new studies of renewable power and energy efficiency, announcements for which land in my email box or turn up on my Twitter feed almost daily.

As Marilyn would undoubtedly have done were she still here.

But even without her, I received two this week that underline current efforts to quantify the value of green technology within our existing economy specifically in terms that will make sense to financial institutions, investors and policy makers.

The first, from Bloomberg New Energy Finance and funded by energy giant, BP, aims to set out a method for comparing coal, oil and gas reserves with renewable reserves, an effort emerging from an industry group called the Renewable Reserves Initiative. BP is apparently a leading member.

The study points out that renewables constitute an increasing amount of the world’s primary energy — that is the underlying energy sources needed to generate the electricity required to power the world’s economy. In 2010, renewables accounted for 13 percent of primary energy, a figure expected to rise to at least 20 percent by 2035, according to the International Energy Agency.

“In spite of this, the world still lacks a widely-agreed upon methodology for comparing renewable energy projects with each other, and with fossil fuels. The increasing popularity of renewable technologies presents a challenge to companies, governments and investors more used to thinking in terms of finite fuel reserves,” the Bloomberg report says.

What the powers that be need, the report says, is a method that will nail down the “total quantities of energy achievable” from renewables. While clearly stating that its results are intended only as an initial, hypothetical model, the report shows the challenges of comparing finite fossil fuel reserves to inexhaustible renewables.

For example, while daily output from an oil well tapers off over its productive lifetime, the output of a wind farm, an example used in the report, while intermittent, remains stable. Another point of inequal comparison is that fossil fuels, once out of the ground may not necessarily be used to produce directly usable power; renewables for the most part are.

The Bloomberg report proposes going at the problem by looking at the financial viability of projects, comparing proven fossil fuel reserves with wind and biomass projects either in operation or likely soon to be, and converting the total energy output of renewables into an equivalent measure of barrels of oil. Again, for hypothetical purposes, the report provides results from the U.S. and Brazil.

In the U.S., as might be expected, wind and biofuels are dwarfed by coal and natural gas reserves, but together exceed oil. Wind reserves are calculated at the equivalent of 23 billion barrels of oil, while biofuels come in for 26 billion barrels. Oil stands at 31 billion barrels.

While the numbers might seem to still favor fossil fuels, it is encouraging to remember that the renewable resources will continue to grow while fossil fuel reserves are finite, and the report doesn’t touch solar and geothermal potential or compare the social and environmental costs of  fossil fuels vs. renewables.

The U.S. is also a mature economy compared to an emerging economy such as Brazil where the report shows biofuel reserves at the equivalent of 28.6 billion barrels versus 22 billion barrels for coal and 15 billion barrels for oil.

Such numbers indicate the kind of global shift toward renewables that may be occuring — another report from China this week showed that new wind generation exceeded new coal-fired power in the country for the first time last year. The fact that fossil fuel companies such as BP are attempting to quantify the potential of renewables speaks volumes in and of itself.

The second study strikes a bit closer to home, literally, speaking to ongoing efforts to qualify the economic impacts of energy efficiency for homeowners and mortgage lenders.

Funded by the Washington, D.C.-based Institute for Market Transformation, a nonprofit promoting energy efficiency, researchers from the University of North Carolina found that energy efficient homes were 32 percent less likely to go into default than standard homes.

Using a national sample of 71,000 home loans drawn from CoreLogic, a leading source of information tracking for the lending industry, the study compares default risks for standard homes with homes that earned an Energy Star rating, meaning they were at least 15 percent more energy efficient than a standard home.

How to define standard versus Energy Star is based on something called a HERS rating, which stands for Home Energy Rating System. A standard home, presumably one meeting the building code for any specific state or jurisdiction, is rated at 100, with energy efficiency lowering the score. An Energy Star home typically earns at least an 85 HERS score.

The study was carefully designed to weigh and balance for a range of variables. The homes chosen for review covered 38 states and the District of Columbia and included both older and newer single-family homes with prices averaging about $220,000 and 30-year, fixed-rate mortgages originating between 2002 and 2012. That is, the standard homes were not all old and in ill repair and the Energy Star homes were not all new and upscale.

California was one of 12 states not included, apparently due to privacy regulations and address inconsistencies.

Not only were Energy Star homes 32 percent likely to default, but the researchers found that the more efficient the home, the less likely it was to default or prepay its mortgage, which banks don’t like as it cuts into their profit.

The default rate for Energy Star homes was about 8 percent, compared to 15 per for standard homes. About 23 percent of Energy Star homes prepaid their mortgages vs. 33 percent for standard homes.

Such results suggest that mortgage lenders should “require information about energy costs and encourage an energy audit or energy rating during the process of mortgage underwriting,” the report says.

It also recommends that financial institutions – specifically major home mortgage lenders Fannie Mae and Freddie Mac –take into account the higher value of energy-efficient homes to provide “the underwriting flexibility needed to cover the modest additional cost of energy efficiency features.”

Translation: Provide better and more affordable financing for middle-income homeowners for home energy retrofits. Energy efficiency pays for itself and will prop up, not hurt, the housing market.

 

The Obama victory: green relief and rallying cries

In the immediate aftermath of President Barack Obama’s election victory, the clean and green tech press were quick to hit the Internet with a collective sigh of relief and rallying cries for a second-term agenda that includes serious action on climate change.

Writing on ClimateProgress.org, Joe Romm laid down the second-term challenge for the President and the country:

Obama’s legacy — and indeed the legacy of  all 21st century presidents, starting with George W. Bush — will be  determined primarily by whether we avert catastrophic climate change.

If we don’t, then Obama — indeed, all of us — will be seen as failures, and rightfully so.

The clean tech sector is also breathing easier, writes Katie Fehrenbacher on Gigaom.com.

But it’s beyond just a victory — it’s a chance of survival for next-gen energy innovators and startups, which have had an extremely difficult past 18 months. Many of them will now at least continue to have an opportunity to compete on their merits. . . . cleantech will soon start turning a corner. With this news, it just has — the chief who clearly supports the development of these technologies, will be returning. Now we just need to get him talking about climate change, again.

Meanwhile, on the Huffington Post website, Kieran Suckling, executive director of the Center for Biological Diversity, set out a five-point action plan for Obama’s second term, with aggressive policies to halt climate change leading the list.

The urgency of this crisis is manifested in the devastation of Hurricane Sandy, record droughts, massive wildfires, disappearing coral reefs, floods and a terrible, continuous stream of bleak headlines. Left unchecked, climate change threatens millions of people around the globe and countless species already on the brink of extinction. It’s time to stop waiting for someone else, including Congress, to lead. The best way to start: Fully harness existing laws like the Clean Air Act and the Clean Water Act to reduce carbon pollution.

Frances Beinecke, president of the Natural Resources Defense Council, also on the Huffington Post, observed another key aspect of the Obama victory — it came in the face of massive election spending by fossil fuel interests mostly supportive of Mitt Romney.

As opposed to the frequent press criticism about “climate silence,” Beinecke wrote:

Energy issues figured prominently in this election. Candidates mentioned it frequently on the stump and it was among the top three topics discussed in campaign ads.  Oil, gas, and coal companies tried to influence the debate by spending more than $150 million in campaign ads by mid-September. Polluters’ anti-environmental messages were reflected on the campaign trail, where Governor Mitt Romney ran on a platform of more drilling, more coal-fired power plants, more climate paralysis, and weaker pollution standards.

Yet despite the dirty ad blitzes and the anti-environmental policy proposals, voters rejected this outdated vision for our country. Poll after poll has identified people’s preference for a clean energy economy.

The question now is whether Obama might be willing to use the political capital raised by Superstorm Sandy and this solid election win to put forward an aggressive climate change and green-tech agenda and fight for it.

Drilling into Romney’s energy plan

The media has been having a field day drilling into Mitt Romney’s energy plan, released Aug. 23, and it’s hard to blame them. The GOP’s presidential candidate left himself wide open on too many counts.

Boiled down to its main points, Romney wants to transferr the authority to approve energy development on public lands from the federal government to individual state governments, which, he contends, will unleash new coal, oil and gas exploration and drilling.

The reason, he says, is that state permitting processes are faster than the federal process (he’s never been to California, has he?) The result, he claims, will be a gusher of new fossil fuel resources, adding three million jobs and $500 billion to the national economy.

Let’s start with the $500 billion.  An article on the Information Daily website notes that the Congressional Budget Office has estimated that even if we pulled all the oil we could out of federal lands, total revenues would be $7 billion.

The Atlantic tracked down Edward Morse, an energy analyst with Citi, whose report,  ”Energy 2020: North America, The New Middle East?” is cited six times in Romney’s energy plan.  In the an unedited interview, Morse’s reactions were decidedly mixed.

Yes, Romney’s plan acknowledges the nation’s huge resources in natural gas, shale and off-shore oil, and the ongoing role it will play in the nation’s economic development, Morse said.

But, the idea of transferring permitting authority to the states leaves him puzzled.  Simply saying states permit energy projects faster than the feds ignores the complexity of energy development on public lands, he said.

Federal lands include all deep water. There’s no deep water in any state territory. Any kind of planning for deep water is bound to have more planning associated with it, so it’s going to be a longer process than anything on land, or in shallow water . . . The second area is the collection of revenues for minerals exploitation. This is one of the single most important sources of revenue for the federal government. How readily should the federal government devolve that to the state level and how much less revenue is going to be associated with it? And is this something that ought to be considered a tradeoff in this moment in time?

Asked if President Barack Obama is doing anything right now that is impeding fossil fuel exploration and development, Morse said, “No.”

Another uncertain premise of the Romney plan is that unleashing national oil and coal production will bring down energy prices.

In a column in the The Washington Post, writer Stephen Stromberg explains energy self-sufficiency based on fossil fuels could mean higher prices.

Participating in the global oil market is a crucial way to keep prices down across the board — market forces determine which fields to tap, how to transport which barrels of crude to which refineries and then on to which markets, meeting the particular requirements of the world’s various economies for the least cost. If America wasn’t hooked into the system, our gas prices would probably jump, since we would be inflexibly dependent on North American supplies that are relatively expensive to develop.

A case in point, Hurricane Isaac now chugging toward New Orleans, and closing down hundreds of off-shore oil platforms in the Gulf of Mexico, according to a release from the federal Bureau of Safety and Environmental Enforcement.

The amount of oil “shut-in,” meaning not pumped out, is estimated at more than 1.2 million barrels per day.

Another problem, Romney’s plan does not take into account falling oil demand in industrialized countries, based on more efficient technology and the development of renewables, Stromberg said.

Instead of bragging about how much coal and oil he’s going to pull out of the ground, Romney should be talking about something much harder — how to cut America’s consumption. But that would require political effort and, probably, higher prices. So, instead, the Republican is pigeon-heartedly ceding the critical question of how to cut fossil-fuel dependence to the left.

Then there’s the glaring absence of any mention of climate change or how much more carbon dioxide and other greenhouse gases all that mining, transportation and fossil fuel burning will cause.

The reason for that is that Romney is getting millions from energy company executives and lobbyists, many of whom are also on the committee consulting with him on energy policy.

Think Progress names names, beginning with Romney’s chief energy adviser, Harold Hamm, an oil-shale billionaire, whose company Continental Resources controls the most drilling acreage in North Dakota.

Others include

– Jack Gerard, a long-time friend of Romney’s and as president of the American Petroleum Institute, the top oil lobbyist in the country

– Coal lobbyist Jim Talent, who  contributed a chapter Romney’s economic plan that called for amending the Clean Air Act to exclude carbon emissions, increased coal and oil production, and loose safety regulation

– Tar sands lobbyist David Wilkins, who represents the interests of Canadian oil corporations on the Romney team.  He is seen as a likely source for Romney’s pledge to approve the Keystone XL pipeline as soon as he gets into office.

Who’s not on the committee? A single wind, solar or renewable energy executive or lobbyist. Romney’s plan calls for federal funding for research on renewables, but no incentives, such as the production tax credit, a key incentive for the wind industry. A one-year extension of the credit has significant bipartisan support.

The Romney campaign said the energy team’s role was primarily consultative, but the fossil fuel industry is banking on a huge pay-off if their man is elected.

Exactly who will benefit was made abundantly clear earlier this month when Romney campaigned at an Ohio coal mine, with a small phalanx of miners backing him up on stage.

Turns out, the miners in question, who work for Murray Energy, not only were told by their employer that attending the rally was mandatory, but had to take a full day off, without pay, to attend the event. Romney may not have been aware of the situation, according to a report on Think Progress.

In a New Yorker article on the enormous amounts of money Republican super PACs are raising, Tom Perriello, a former Virginia Democratic congressman unseated by a flood of conservative spending in his district, makes the connection clear.

“They’re not giving money just to elect Romney — they’re doing so on a platform of bashing clean energy.”

Which made a conciliatory statement from the Solar Energy Industries Association more than a little puzzling, as noted by Rich Hessler on RenewableEnergyWorld.com.

Sifting through Romny’s plan, the SEIA managed to find a few crumbs on which they at least build an argument for support for solar energy, when in fact renewables are not part of the Romney plan, for example –

We also applaud Governor Romney’s recognition that the federal government can help ensure access to diverse, reliable sources of energy.  Every energy source, from oil and coal a century ago to modern natural gas drilling operations, receive federal support to help power our economy. According to a study this year by the Howard Baker Center at the University of Tennessee, federal support for solar deployment is consistent with federal support received by all other major energy sources.

The SEIA, responding to  questions from Hessler, said their response was intended to be a “tactful approach” that did not endorse the policy as a whole and is in line with its commitment to working both sides of the aisle.  Rhone Resch, president and CEO of the SEIA, seems to think the best thing the solar industry can do to win the conservatives over is tell them  “how you have grown, how many people you employ and have added and how many customers are saving money after going solar.”

Thought the industry has already been doing that — for quite a while – but Romney and his energy advisors don’t seem to be listening.

 

 

State of the Union — the green preview

The emails from green and clean energy groups are flying in fast and furious this morning in advance of President Barack Obama’s State of the Union address. And the message from them all is that clean-green tech is good for the economy and creates jobs.

A sampling –

The Natural Resources Defense Council’s president Frances Beinecke has issued her own Environmental State of the Union.

The questions she think policy makers should be asking are:

“Is America’s air getting safer to breathe than it was a year ago? Are we building the wind farms and solar plants that put Americans to work and curb pollution at the same time? Do we have a plan to encourage fuel efficient technologies that allow cars to go farther on a tank of gas?

“Looking ahead, the question becomes: will our leaders seize opportunities to protect our families from polluters and build a cleaner energy system for America?”

The key point of her piece is –

“The coming year will be filled with campaign-fueled debates about jobs and the recession. Clean energy can deliver what both parties are looking for: greater prosperity and market growth.

“Let’s abandon once and for all the false choice of pitting economic progress and environmental protection. The two actually go hand-in-hand.”

In the meantime, the Pew Environment Group has banded together with about 200 businesses and clean energy groups to promote energy efficiency through co-generation — capturing the heat from power generation and using it for heating or to produce more energy. The group has paid for full-page ads in three of the top inside-the-Beltway publications — The Hill, Politico and Roll Call — timed for SOTU.

The ad reads:

“Each year, America’s utilities and factories send enough heat up their chimneys to power all of Japan. But with existing, proven technologies, we can harness that wasted energy, dramatically cut electricity costs, and make our manufacturers more competitive.

 “According to Oak Ridge National Laboratory, significantly increasing our industrial energy efficiency would spur more than $200 billion in new private investment in the U.S. and create up to 1,000,000 jobs. Harness the heat to create new jobs and make our country more competitive.”

Then, from the American Wind Energy Association,  an industry trade group, a press release announcing –

“Several media outlets are reporting that President Obama will mention wind power and manufacturing jobs in his State of the Union address this evening, including reports that Bryan Ritterby of American Wind Energy Association (AWEA) member company Energetx Composites of Holland, MI will be First Lady Michelle Obama’s guest for the speech.”

 The AWEA is lobbying hard to get the wind industry’s major federal incentive, the production tax credit, extended beyond its planned expiration date at the end of 2012.  The PTC, as it is referred to, gives renewable energy companies a 2.2 cent credit per kilowatt hour for the first 10 years of an installation’s generation.

“A recent report by Navigant Consulting finds that if Congress allows the PTC for wind to expire, jobs in the wind industry will be cut in half, meaning a loss of 37,000 American jobs and a one third cut to American wind manufacturing jobs, while private investment in the industry would drop by nearly two thirds. And Navigant found that these job losses will begin now and accelerate with each month the PTC nears the expiration deadline. Meanwhile, extending the PTC will allow the wind industry to grow to almost 100,000 American jobs in just four years and stay on track toward supporting 500,000 American jobs by 2030.”

The good news here is, with the spread of wind power to more conservative states  such as Texas and Iowa, AWEA is seeing growing bipartisan support for an extension, which makes it more likely that a PTC law could make it through Congress even with election year politics raging.

Finally, while not directly SOTU-related, but certainly relevant, Greentech Media has done a quick rundown on the energy policies of GOP frontrunners Mitt Romney and Newt Gingrich.

Both basically are all about supporting domestic oil and natural gas development, cutting environmental regulations and redirecting federal support for renewable energy development — loan guarantees — into basic research.

Romney comes out slightly ahead in so far as he actually acknowledges the human role in climate change, though he says he’s not sure of the extent, while Gingrich’s most recent pronouncement on the issue is that he believes we don’t know if human carbon emissions are part of the picture.

And Gingrich offers the intriguing ideas of funding renewable energy research from gas and oil royalties and changing the Environmental Protection Agency into the Environmental Solutions Agency “that would use incentives and work cooperatively with local government and industry to achieve better environmental outcomes while considering the impact of federal environmental policies on job creation and the cost of energy.”