Study: A green city needs deeper commitment
October 11, 2009
By Diane Mastrull
Inquirer Staff Writer
If Philadelphia is to fully capitalize on the business-growth and employment potential of the nascent green economy, a deeper commitment is needed from government, nonprofits, and the private sector, a study released yesterday concludes.
Help is especially needed to train a workforce for these new jobs.
The Emerging Industries Project is a 93-page analysis of three areas of the green economy: sustainable manufacturing, construction and demolition waste recycling, and energy efficiency and building retrofits.
Other sectors are planned for future study, said Kate Houstoun, green-jobs coordinator at the Sustainable Business Network of Greater Philadelphia. It directed the study, along with the Green Economy Task Force, to help guide funding that has begun to pour from Washington and Harrisburg to grow sustainable businesses and create jobs.
“Hundreds of millions of dollars are being invested,” Houstoun said. “We want to ensure that those are wise investments.”
The research was largely based on input from 40 local businesses looking to thrive in the green economy. The industry sectors highlighted in the study were selected for their growth potential and the likelihood they would create family-sustaining jobs, especially for those who have the most difficulty landing work, Houstoun said.
The report cited deregulation of electricity generation and the increasing affordability of energy-efficiency options as driving business growth in the energy-efficiency/retrofit sector. What’s needed, it said, are workers with “the ability and willingness to learn new skills and technology.”
The city could play a big role in developing a vibrant construction and demolition-waste-recovery industry, the report said, by prioritizing bids for public projects from building contractors whose plans include such materials recycling. It also suggested adoption of an ordinance mandating such recycling for private-sector building and demolition projects.
But it was manufacturing that dominated the report.
While the city has lost 400,000 manufacturing jobs over the last four decades, that sector also represents “a new and exciting era” in Philadelphia, the report said. It cited the city’s infrastructure “from its workshop-of-the-world past” among the assets that position Philadelphia to catch “this wave of green manufacturing at the forefront.”
What the city lacks, the report found, is a workforce adequately prepared for green-economy manufacturing. Rather than mass-produced goods, the factories of the green economy will be required to produce highly specialized products for such things as solar panels and wind turbines requiring sophisticated equipment and processes and well-trained employees.
In addition to calling for the creation of more workforce development programs, the report’s manufacturing recommendations include:
Changing city procurement policies to give preference to local manufacturers.
Growing and finding ways to connect local supply and demand markets so that manufacturers can be assured of buyers for their goods.
Establishing a “green clearinghouse” of resources available to manufacturers for sustainability initiatives.
Because the report had input from a number of “key stakeholders,” including the city Commerce Department, the Philadelphia Industrial Development Corp., and Select Greater Philadelphia, Elliott Gold, the author of the manufacturing and waste-recovery sections, said he was optimistic that “our recommendations will actually be read and have higher likelihood for actual implementation.”
Among those intent on seeing that the report does translate into action is Natalia Olson-Urtecho, who serves on the city’s planning and zoning code commissions. She was also an adviser to the manufacturing and construction-waste-recovery portions of the report.
On manufacturing, Olson-Urtecho said, the study makes a case for stopping what has “eroded perilously” the city’s base of industrial-zoned land: the use of such tracts for commercial and residential development. Vacant industrial lots should be converted to clean technology parks, she said.
Solar Energy Outperforming Gas in Colorado
October 10, 2009
As reported in Courier Post
DURANGO, COLO. — The sun had just crested the distant ridge of the Rocky Mountains, but already it was producing enough power for the electric meter on the side of the Smiley Building to spin backward.
For the Shaw brothers, who converted the downtown arts building and community center into a miniature solar power plant two years ago, each reverse rotation subtracts from their monthly electric bill. It also means the building at that moment is producing more electricity from the sun than it needs.
”Backward is good,” said John Shaw, who now runs Shaw Solar and Energy Conservation, a local solar installation company.
Good for whom?
As La Plata County in southwestern Colorado looks to shift to cleaner sources of energy, solar is becoming the power source of choice even though it still produces only a small fraction of the region’s electricity. It’s being nudged along by tax credits and rebates, a growing concern about the gases heating up the planet, and the region’s plentiful sunshine.
The natural gas industry, which produces more gas here than nearly every other county in Colorado, has been relegated to the shadows.
Tougher state environmental regulations and lower natural gas prices have slowed many new drilling permits. As a result, production — and the jobs that come with it — have leveled off.
With the county and city drawing up plans to reduce the emissions blamed for global warming and Congress weighing the first mandatory limits, the industry once again finds itself on the losing side of the debate.
A recent greenhouse-gas inventory of La Plata County found that the thousands of natural gas pumps and processing plants dotting the landscape are the single largest source of heat-trapping pollution locally.
That has the industry bracing for a hit on two fronts if federal legislation passes.
First, it will have to reduce emissions from its production equipment to meet pollution limits, which will drive up costs. Second, as the county’s largest consumer of electricity, gas companies probably will see energy bills rise as the local power cooperative is forced to cut gases released from its coal-fired power plants or purchase credits from other companies that reduce emissions.
“Being able to put solar systems on homes is great, you take something off the grid, it is as good as conserving,” said Christi Zeller, the executive director of the La Plata Energy Council, a trade group representing about two dozen companies that produce the methane gas trapped within coal buried underground.
“But the reality is we still need natural gas, so embrace our industry like you are embracing wind, solar and the renewables,” she said.
It’s a refrain echoed on the national level, where the industry, displeased with the climate bill passed by the House this summer, is trying to raise its profile as the Senate works on its version of the legislation.
In March, about two dozen of the largest independent gas producers started America’s Natural Gas Alliance. In ads in major publications in 32 states, the group has pressed the case that natural gas is a cleaner-burning alternative to coal and can help bridge the transition from fossil fuels to pollution-free sources such as wind and solar.
”Every industry thinks every other industry is getting all the breaks. All of us are concerned that we are not getting any consideration at all from people claiming they are trying to reduce the carbon footprint,” said Bob Zahradnik, the operating director for the Southern Ute tribe’s business arm, which includes the tribes’ gas and oil production companies. None is in the alliance.
Politicians from energy-diverse states such as Colorado are trying to avoid getting caught in the middle. They’re working to make sure that the final bill doesn’t favor some types of energy produced back home over others.
At a town hall meeting in Durango in late August, Sen. Mark Udall, who described himself as one of the biggest proponents of renewable energy, assured the crowd that natural gas wouldn’t be forgotten.
“Renewables are our future — but we also need to continue to invest in natural gas,” said Udall, D-Colo.
Much more than energy is at stake. Local and state governments across the country also depend on taxes paid by natural gas companies to fund schools, repair roads and pay other bills.
In La Plata County alone, the industry is responsible for hundreds of jobs and pays for more than half of the property taxes. In addition, about 6,000 residents who own the mineral rights beneath their property get a monthly royalty check from the companies harvesting oil and gas.
”Solar cannot do that. Wind cannot do that,” said Zeller, whose mother is one of the royalty recipients. In July, she received a check for $458.92, far less than the $1,787.30 she was paid the same month last year, when natural gas prices were much higher.
Solar, by contrast, costs money.
Earlier this year, the city of Durango scaled back the amount of green power it was purchasing from the local electric cooperative because of the price. The additional $65,000 it was paying for power helped the cooperative, which is largely reliant on coal, to invest in solar power and other renewables.
”It is a premium. It is an additional cost,” said Greg Caton, the assistant city manager.
Instead, the city decided to use the money to develop its own solar projects at its water treatment plant and public swimming pool. The effort will reduce the amount of power it gets from sources that contribute to global warming and make the city eligible for a $3,000 rebate from the La Plata Electric Association.
Yes, the power company will pay the city to use less of its power. That’s because the solar will count toward a state mandate to boost renewable energy production.
“In the typical business model, it doesn’t work,” said Greg Munro, the cooperative’s executive director. “Why would I give rebates to somebody buying someone else’s shoes?”
The same upfront costs have prevented homeowners from jumping on the solar bandwagon despite the tax credits, rebates and lower electricity bills.
Most of Shaw’s customers can’t afford to install enough solar to cover 100 percent of their homes’ electricity needs, which is one reason why solar supplies just a fraction of the power the county needs.
The higher fossil-fuel prices that could come with climate legislation would make it more competitive.
”You can’t drive an industry on people doing the right thing. The best thing for this country is if gas were $10 a gallon,” said Shaw, as he watched two of his three full-time workers install the last solar panels on a barn outside town.
The private residence, nestled in a remote canyon, probably will produce more power from the sun than it will use, causing its meter to spin in reverse like the Smiley Building’s. The cost, however, is steep: more than $500,000.
King Coal
July 28, 2009
Written by Robert F. Kennedy Jr
Over the past decade, nearly one hundred coal burning power plants have died in the proposal stage trumped by the legitimate objections of local communities fearful of a dirty deadly fuel that is neither cheap nor clean. Ozone and particulates from coal plants kill tens of thousands of Americans each year and cause widespread illnesses and disease. Acid rain emissions have destroyed the forests over the length of the Appalachian and sterilized one in five Adirondack lakes. Neurotoxic mercury raining from these plants has contaminated fish in every state–including every waterway in nineteen states–and poisons over a million American women and children annually. Coal industry strip mines have already destroyed 500 mountains in Appalachia, buried 2,000 miles of rivers and streams and will soon have flattened an area the size of Delaware. Finally, coal, which supplies 46% of our electric power, is the most important source of America’s greenhouse gases.
Beating our deadly and expensive coal addiction will be lucrative. America’s cornucopia of renewable energy resources and the recent maturation of solar, geothermal and wind technologies will allow us to meet most of our future energy needs with clean, cheap, abundant renewables. Bright Source, a solar thermal provider, has just signed contracts to provide California with 2.6 gigawatts of power annually from desert mirror farms. Construction costs are about the same per gigawatt as a coal plant and half the cost of a nuke plant. Once built, the energy is free forever. In contrast, once you build a coal plant, your biggest costs–fuel extraction and transportation and the harm from emissions–are just the beginning.
In the short term, a revolution in natural gas production over the past two years, has left America awash in natural gas and has made it possible to eliminate most of our dependence on deadly, destructive coal practically overnight–and without the expense of building new power plants.
How? Well it’s pretty easy. Around 900 of America’s coal plants–78% of the total–are small (generating less than half a gigawatt), antiquated, and horrendously inefficient. Their average age is 45 years, with many limping past 75. These ancient plants burn 20% more coal per megawatt hour than modern large coal units and are 60-75% less fuel efficient than high-efficiency gas plants. These small units account for less than 42% of the actual capacity for coal fired power but almost one half the total emission of the entire energy sector! The costs of operation, maintenance, capital improvements and repair costs of these antiquated worm-eaten facilities, if properly assessed, would make them far more expensive to run than natural gas plants. However, energy sector pricing structures make it possible for many plant operators to pass those costs to the public and make choices based on fuel costs, which in the case of coal, appears deceptively cheap because of massive subsidies.
Mothballing or throttling back these plants would mean huge cost savings to the public and eliminate the need for more than 350 million tons of coal, including all 30 million tons harvested through mountain top removal. Their closure would reduce U.S. mercury emissions by 20-25%, dramatically cut deadly particulate matter and the pollutants that cause acid rain, and slash America’s CO2 from power plants by 20%–an amount greater than the entire reduction mandated in the first years of the pending Climate Change Legislation–at a fraction of the cost.
These decrepit generators can be eliminated very quickly–in many instances literally overnight by substituting power from America’s existing and underutilized natural gas generation, which is abundant, cleaner and more affordable and accessible today than dirty coal.
Since 2007, the discovery of vast supplies of deep shale gas in the United States, along with advanced extraction methods, have created stable supply and predictably low prices for most of the next century. Of the 1,000 gigawatts of generating capacity currently required to meet national energy demand, 336 are coal fired, many of which are utilized far more heavily than for cleaner gas generation units. Surprisingly, America actually has more gas generation capacity–450 gigawatts–than coal. But most of the costs for coal-fired units are ignored in deciding when to operate these units. Public regulators traditionally require utilities to dispatch coal first. For that reason, high efficiency gas generators, which can replace a large percentage of U.S. coal, are used only 36% of the time. By simply changing the dispatch rule nationally, we could quickly reduce power generated by existing coal-fired plants and achieve massive emissions reductions. The new rule would change the order in which gas and coal fired plants are utilized by requiring that whenever coal and gas plants are competing head-to-head, the gas generation must be dispatched first.
To quickly gain further economic and environmental advantages, the larger, newer coal plants that remain in operation should be required to co-fire with natural gas. Many of these plants are already connected to gas pipelines and can easily be adapted to burn gas as 15 to 20% of their fuel. Experience shows using gas to partially fuel these plants dramatically reduces forced outages and maintenance costs and can be the most cost effective way to reduce CO2 emissions. This change can immediately achieve an additional 10 to 20% reduction in coal use and immediately reduce dangerous coal emissions.
Natural gas comes with its own set of environmental caveats. It is a carbon-based fuel and is extraction from shale, the most significant new source, if not managed carefully, can cause serious water, land use, and wildlife impacts, especially in the hands of irresponsible producers and lax regulators. But those impacts are dwarfed by the disastrous holocaust of coal and can be mitigated by careful regulation.
The giant advantage of a quick conversion from coal to gas is the quickest route for jumpstarting our economy and saving our planet.
Written by Rob Perks
The clean energy economy is upon us — but will the U.S. heed the call?
That’s the gist of today’s Washington Post story with this stark headline: Asian Nations Could Outpace U.S. in Developing Clean Energy.
Excerpt:
President Obama has often described his push to fund “clean” energy technology as key to America’s drive for international competitiveness as well as a way to combat climate change.
“There’s no longer a question about whether the jobs and the industries of the 21st century will be centered around clean, renewable energy,” he said on June 25. “The only question is: Which country will create these jobs and these industries? And I want that answer to be the United States of America.”
But the leaders of India, South Korea, China and Japan may have different answers. Those Asian nations are pouring money into renewable energy industries, funding research and development and setting ambitious targets for renewable energy use. These plans could outpace the programs in Obama’s economic stimulus package or in the House climate bill sponsored by Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.).
In due time fossil fuels will be gone – no one can dispute that. So why is it that so many people — including an alarmingly high number of those serving in Congress — would rather waste time and energy denying the clear and present danger of climate change and resisting the solutions promised by a clean energy future?
[UPDATE: This just in...A new Harvard study finds that wind energy potential is considerably higher than previous estimates by both wind industry groups and government agencies.]
In my mind I can see a television commercial with just an hour glass on screen and this narration:
“Oil is running out.”
“Coal is running out.”
“Whether we like it or not, fossil fuels are going the way of the dinosaurs.”
“But we know that the wind and the sun will never run out. And we can generate power from these natural, safe and limitless sources.”
“It’s time to move beyond the dirty energy of the past and embrace reliable clean power for the 21st century.”
“As a nation, we need to do this…before time runs out.”
Let’s all remember that America is a nation built on the foundation of freedom, independence and self-sufficiency — and those values must be at the heart of our strategy for energy policy. We shouldn’t be losing ground in the world economy, buidling up massive trade deficits to pay for foreign oil. It’s time we commit ourselves as a nation to develop clean, safe energy from the sun, wind and other natural sources that will create millions of jobs and rebuild our manufacturing base.
It just so happens that the best way to bring jobs and prosperity back to this country is also the way to end our dangerous dependence on foreign oil and protect the Earth we leave our children. Let’s get back to building things again, starting with wind turbines, solar panels, and energy-efficient products that say ‘Made in America.’ After all, we have led every technological revolution of the last two centuries — electricity, railroads, the telephone, automobiles, the television, computers — and there’s no reason we can’t lead this one.
I have to question the logic (and patriotism!) of those politicians who would do the bidding of polluting industries — Big Oil, Big Coal, Nukes — when those dirty and unsafe technologies offer only short-term energy generation benefits at an extremely high cost to our heath, air and water, and climate. The sun, the wind, and the geothermal energy at the core of the Earth provide a limitless supply of clean energy – our scientists can harness them and our workers can build them. Our leaders should harness — not hamper — the greatest source of power we have in this country: American ingenuity.
The fact is, we already have wind and solar technologies that can dramatically cut our reliance on dirty coal plants that create most of the pollution that is poisoning our lungs and damaging our atmosphere. What we need now are leaders who can build on this progress by partnering with business to develop and deploy innovative energy technologies that will recharge our economy and create jobs.
As Thomas Friedman wrote in his book “Hot, Flat and Crowded”: “[T]he ability to develop clean power and energy efficient technologies is going to become the defining measure of a country’s economic standing, environmental health, energy security, and national security over the next 50 years.”
The story in the Washington Post today is yet another wake-up call. We shouldn’t need countries in Asia or Europe or South America to show us how to compete in the emerging markets for efficient appliances and alternative fuels. We need leaders with vision and courage who will invest in technological breakthroughs that will once and for all end our reliance on oil and spur manufacturing jobs that can’t be outsourced. That way, America can start exporting clean energy instead of jobs.
As a nation, we have a choice to make. Fortunately, we don’t have to choose between clean, new energy sources and economic prosperity. The choice is between accepting the status quo by holding tight to the dirty energy of the past or boldy embarking on the path to safe, reliable clean energy — an investment which promises both immediate and long-term gains.
At this important juncture in our history, what choice will our elected leaders make? It’s up to each and every one of us to help them make the right decision.
This post originally appeared on NRDC’s Switchboard blog.
Exxon Makes 1st Big Investment in Biofuels
July 14, 2009
Written by John Porretto July 14, 2009 AP
HOUSTON — Exxon Mobil Corp. said Tuesday it will make its first major investment in greenhouse-gas reducing biofuels in a $600 million partnership with biotech company Synthetic Genomics Inc. to develop transportation fuels from algae.
Despite record-breaking profits in recent years, the oil and gas giant has been criticized by environmental groups, members of Congress and even shareholders for not spending enough to explore alternative energy options.
One of the company’s requirements was finding a biofuel source that could be produced on a large scale. It says photosynthetic algae appears to be a viable, long-term candidate. If the alliance is successful, pumping algae-based gasoline at Exxon service stations is still several years away and will mean additional, multibillion-dollar investments for mass production.
“This is not going to be easy, and there are no guarantees of success,” Emil Jacobs, a vice president at Exxon Mobil Research and Engineering Co., said in an interview with The Associated Press. “But we’re combining Exxon Mobil’s technical and financial strength with a leader in bioscientific genomics.”
Jacobs said the project involves three critical steps: identifying algae strains that can produce suitable types of oil quickly and at low costs, determining the best way to grow the algae and developing systems to harvest enough for commercial purposes.
Besides the potential for large-scale production, algae has other benefits, Jacobs said. It can be grown using land and water unsuitable for other crop and food production; it consumes carbon dioxide, the greenhouse gas blamed for climate change; and it can produce an oil with molecular structures similar to the petroleum products _ gasoline, diesel, jet fuel _ Exxon already makes.
That means the Irving, Texas-based company will be able to convert the bio-oil into fuels at its own refineries and use existing pipelines and tanker trucks to get it to consumers.
The $600 million price tag includes $300 million for Exxon’s internal costs and $300 million or more to La Jolla, Calif.-based Synthetic Genomics _ if research and development milestones are successfully met.
“Even though this is a multiyear program, we both still consider it a very aggressive timetable, and it involves a lot of basic research,” said J. Craig Venter, founder and CEO of the privately held company. “As a result, you don’t know the answers until you’ve done these tests and experiments.”
Algae is considered a sustainable source for second-generation biofuels, which go beyond corn-based ethanol into nonfood sources such as switchgrass and wood chips.
Royal Dutch Shell PLC said earlier this year it would scale back large investments in wind and solar in favor of next-generation biofuels. The European oil giant is working with Canadian company Iogen Corp. on a method to produce ethanol from wheat straw, and partnering with Germany-based Choren Industries to develop a synthetic biofuel from wood residue.
Another oil major, BP PLC, plans to team up with Verenium Corp. to build a $300 million cellulosic ethanol plant in Highlands County, Fla.
For Exxon Mobil, the world’s largest publicly traded oil company, the biofuels investment is tiny compared with its spending to find new supplies of crude and natural gas.
CEO Rex Tillerson said earlier this year Exxon’s 2009 spending on capital and exploration projects is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. The company said those levels are likely to remain in the $25 billion to $30 billion range through 2013.
Exxon Mobil shares rose 25 cents to $65.95 in trading Tuesday. They’ve traded in a range of $56.51 to $86.47 in the past year.
Fed works to speed solar development in Southwest
July 8, 2009
CHRIS KAHN | June 29, 2009 03:27 PM EST | 
NEW YORK — The government will help companies build powerful solar farms in the desert Southwest by pre-qualifying huge swaths of federal land for development.
The Department of Interior said Monday it will designate 670,000 acres of federal land in Nevada, Arizona, California, Colorado, New Mexico and Utah as study areas for utility-scale solar projects.
The land will be divided into 24 tracts called Solar Energy Study areas.
Interior Secretary Ken Salazar said the department will work with states on environmental studies and permitting to speed solar development in those areas.
Our Perspective:
This is good news. Finally, the government is stepping forward and acknowledging the opportunities provided by alternative energy development.
I hope this is only the beginning!
Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com
Swings in Price of Oil Hobble Forecasting
July 7, 2009
The extreme volatility that has gripped oil markets for the last 18 months has shown no signs of slowing down, with oil prices more than doubling since the beginning of the year despite an exceptionally weak economy.
The instability of oil and gas prices is puzzling government officials and policy analysts, who fear it could jeopardize a global recovery. It is also hobbling businesses and consumers, who are already facing the effects of a stinging recession, as they try in vain to guess where prices will be a year from now — or even next month.
A wild run on the oil markets has occurred in the last 12 months. Last summer, prices surged to a record high above $145 a barrel, driving up gasoline prices to well over $4 a gallon. As the global economy faltered, oil tumbled to $33 a barrel in December. But oil has risen 55 percent since the beginning of the year, to $70 a barrel, pushing gas prices up again to $2.60 a gallon, according to AAA, the automobile club.
“To call this extreme volatility might be an understatement,” said Laura Wright, the chief financial officer at Southwest Airlines, a company that has sought to insure itself against volatile prices by buying long-term oil contracts. “Over the past 15 to 18 months, this has been unprecedented. I don’t think it can be easily rationalized.”
Volatility in the oil markets in the last year has reached levels not recorded since the energy shocks of the late 1970s and early 1980s, according to Costanza Jacazio, an energy analyst at Barclays Capital in New York.
At the close of last week’s trading, oil futures fell $2.58, to $66.73 a barrel, after rising above $72 a barrel last month.
These gyrations have rippled across the economy. The automakers General Motors and Chrysler have been forced into bankruptcy as customers shun their gas guzzlers. Airlines are on pace for another year of deep losses because of rising jet fuel costs.
And households, already crimped by falling home prices, mounting job losses and credit pressures, are once more forced to monitor their discretionary spending as energy prices rise.
While the movements in the oil markets have been similar to swings in most asset classes, including stocks and other commodities, the recent rise in oil prices is reprising the debate from last year over the role of investors — or speculators — in the commodity markets.
Government officials around the world have become concerned about a possible replay of last year’s surge. Energy officials from the European Union and OPEC, meeting in Vienna last month, said that “the speculation issue had not been resolved yet and that the 2008 bubble could be repeated” without more oversight.
Many factors that pushed oil prices up last year have returned. Supply fears are creeping back into the market, with a new round of violence in Nigeria’s oil-rich Niger Delta crimping production. And there are increasing fears that the political instability in Iran could spill over onto the oil market, potentially hampering the country’s exports.
The OPEC cartel has also been remarkably successful in reining in production in recent months to keep prices from falling. Even as prices recovered, members of the Organization of the Petroleum Exporting Countries have been unwilling to open their taps.
Top officials said that OPEC’s goal was to achieve $75 a barrel oil by the end of the year, a target that has been endorsed by Saudi Arabia, the group’s kingpin.
“Neither the organization, nor its key members, has any real interest in halting the rise in oil prices,” said a report by the Center for Global Energy Studies, a consulting group in
London founded by Sheik Ahmed Zaki Yamani, a former Saudi oil minister.
But unlike most of 2007, when the economy was still not in recession and demand for commodities was strong, the world today is mired in its worst slump in over half a century. The World Bank warned the recession would be deeper than previously thought and said any recovery next year would be subdued.
The International Energy Agency held out the prospect that energy demand was unlikely to recover before 2014. Yet the indicators that would traditionally signal lower prices — like high oil inventories or OPEC’s large spare production capacity — do not seem to hold much weight today, analysts said.
“Crude oil prices appear to have been divorced from the underlying fundamentals of weak demand, ample supply and high inventories,” Deutsche Bank analysts said in a recent report.
Investors are betting that the worst of the economic slump may be coming to an end, and are bidding up what they perceive will become scare resources once demand kicks back again, analysts said. This uncertainty is making it difficult for companies to plan ahead, they said.
“People do not like that kind of volatility, they want to know what their costs are going to be,” said Bernard Baumohl, the chief global economist at the Economic Outlook Group.
For the global airline industry, the latest price surge is certain to translate into more losses this year, according to the industry’s trade group, I.A.T.A. Airlines are expected to post losses of $9 billion this year, following last year’s losses of $10.4 billion. “Airlines have not yet felt the full impact of this oil price rise,” according to I.A.T.A.’s latest report.
Multimedia
At Southwest Airlines, for example, fuel accounts for about a third of the company’s costs, according to Ms. Wright, the chief financial officer. The experience of the past year, she said, “has convinced us we cannot afford to not be hedged.”
The company has currently hedged part of its fuel use for the second half of the year at $71 a barrel, and for 2010 at $77 a barrel. Hedging acts as an insurance policy if prices rise above these levels.
But last year, Southwest reported two consecutive quarters of losses, as prices spiked and collapsed — all within a few months. “Prices were falling faster than we could de-hedge,” Ms. Wright said.
To survive the slump, many airlines have cut routes and raised both fares and fees, like charging for luggage, while some of the industry’s top players have merged. For example, Delta Air Lines bought Northwest Airlines last year, and in Europe, Lufthansa of Germany bought Austrian Airlines and Air France-KLM acquired Alitalia of Italy.
Likewise, automobile showrooms emptied out as gasoline prices rose, forcing General Motors and Chrysler to cut production sharply as they wade through bankruptcy. Meanwhile, they are under pressure from Washington to improve their fuel ratings.
“Do not believe for an instant that sport utilities are making a comeback,” George Pipas, Ford’s chief sales analyst, told reporters last week.
But to Jeroen van der Veer, who retired as chief executive officer of Royal Dutch Shell last week, prices are increasingly dictated by long-term assessments of supply and demand, rather than current market fundamentals. He advised taking a long-term view of the market.
“Oil has never been very stable,” Mr. van der Veer said. “If you look at history, you have to expect more volatility.”
Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com
Written by H. Josef Hebert AP 6/17/09
WASHINGTON — Legislation that would require greater use of renewable energy, make it easier to build power lines and allow oil and gas drilling near the Florida coastline advanced Wednesday in the Senate.
The Energy and Natural Resources Committee approved the bill by a 15-8 bipartisan vote. But both Democrats and Republicans expressed concerns about the bill and hoped to make major changes when it reaches the Senate floor, probably in the fall.
The measure’s primary thrust is to expand the use of renewable sources of energy such as wind, solar and geothermal sources as well as deal with growing worries about the inadequacies of the nation’s high-voltage power grid.
But the bill also would remove the last congressional barrier to offshore oil and gas development, lifting a ban on drilling across a vast area in the eastern Gulf of Mexico that Congress put off limits three years ago. Drilling would be allowed within 45 miles of most of Florida’s coast and as close as 10 miles off the state’s Panhandle area.
The Senate bill for the first time would establish a national requirement for utilities to produce 15 percent of their electricity from renewable sources, a contentious issue that is likely to attract heated debate.
Twenty-eight states currently have some renewable energy requirement for utilities, but supporters of the measure argue a national mandate is needed to spur such energy development.
The legislation also would give much wider authority to federal regulators over the nation’s electricity grid.
The Federal Energy Regulatory Commission would be given authority to approve the siting of high voltage power lines if states fail to act and would be given additional powers over cyber security on the grid.
While the bill was approved by a safe margin in the committee its prospects in the full Senate are anything but certain. Several senators called it too weak in its support of renewable energy development, while others said it ignored nuclear energy and greater domestic oil and gas production.
“None of us got all we wanted,” said Sen. Jeff Bingaman, D-N.M., the committee’s chairman, who was forced to agree to a variety of compromises to give the bill a chance of advancing. Nevertheless, he said the bill would help shift to cleaner, more secure sources of energy.
Bingaman and many of the panel’s other Democrats had wanted at least a 20 percent renewable energy requirement. The bill requires 15 percent renewable use by 2021, but also would allow utilities to avoid a fourth of that mandate by showing improvements in efficiency. Renewable energy use could be cut further for utilities that increase their use of nuclear energy either from a new reactor or increased reactor output.
“This is an extraordinary weak bill,” said Sen. Bernie Sanders, I-Vt.
But Sanders voted to advance the bill, as did Sen. Bob Corker, R-Tenn. Both senators said they hoped the bill will be strengthened.
“I suspect their definition of strengthening might be somewhat different,” quipped Sen. Evan Bayh, D-Ind., whose own support of the bill came despite strong opposition to the federal renewable energy requirements on utilities.
Sanders wants the renewable energy requirement to be much higher, at 25 percent. Corker said the bill needs more to promote nuclear energy and domestic oil and gas production.
“We simply must do more to increase our domestic (oil and gas) production and use of nuclear energy,” said Sen. Lisa Murkowski of Alaska, the committee’s ranking Republican. Still, she voted for the bill which includes a commitment to increase loan guarantees for a natural gas pipeline in her state from $18 billion to $30 billion.
The bill also calls for establishing a new office to steer grants and loan guarantees to clean energy projects, including nuclear and those using technology to capture carbon dioxide; creating an oil products reserve to be used if there are supply problems; and creating federal standards for efficiency standards for new building.
The Chamber of Commerce said the bill shows progress toward crafting a comprehensive energy policy, but some environmentalists said it falls short of shifting the country away from fossil fuels. With its new offshore drilling, support for coal and nuclear energy “this bill fails to live up to the vision of a clean energy future,” complained Brent Blackwelder, president of Friends of the Earth.
Biodiesel: All you need to know
June 15, 2009
The following is a guest post by Chelsea Green’s Makenna Goodman:
I remember a time when defenseless kids with hippie moms got made fun of for using wax sandwich bags (ehem). I remember a time when it was considered uncool to be packing carrot sticks in your tote bag. When yoga was what the weird naked guys did at the hot springs in Ouray, Colorado; you know downward-facing dogs splayed out by the pool. I remember a time, in other words, when trendy things used to be not-trendy. Like BIODIESEL. The wave of the future.
You’ve seen it station wagons clanking around town with a sign on the back window that says, “This Vehicle Runs on Veggie Oil I’m Awesome.” You probably drive by and think: Damn. Those hippies are self-important, but I’m repressing the fact that I want to be just like them. What is wrong with me? But here’s the first thing you should know about biodiesel: It’s not just white people with dreads who use vegetable oil to run their cars. It’s a movement. Dude, my boss does it.
Know this:
*Biodiesel can be made from virtually any vegetable oil
*It can be used in any modern diesel engine
*It’s America’s fastest growing alternative fuel
But really, biodiesel is a tricky thing to understand, which is why many people just plain don’t. Consider it worth your while to get versed on biodiesel, from the experts. And everything you need to know, Greg Pahl will tell you. He’s the author of Biodiesel: Growing a New Energy Economy and The Citizen-Powered Energy Handbook: Community Solutions to a Global Crisis and knows the deal.
The following is an excerpt from The Citizen-Powered Energy Handbook: Community Solutions to a Global Crisis by Greg Pahl. It has been adapted for the Web.
Biodiesel 101
Biodiesel, a diverse group of diesel-like fuels, can be easily made through a simple chemical process known as transesterification from virtually any vegetable oil, including (but not limited to) soy, corn, rapeseed (canola), cottonseed, peanut, sunflower, mustard seed, and hemp. But biodiesel can also be made from recycled cooking oil (referred to as “yellow grease” in the rendering industry) or animal fats. One Vietnamese catfish processor is even using fish fat as a biofuel feedstock.30 There have even been some promising experiments with the use of algae as a biodiesel feedstock. As long as the resulting fuel meets the American Society for Testing and Materials (ASTM) biodiesel standard (D-6751), it’s considered biodiesel in the United States, regardless of the feedstock used in its manufacture (in Europe, the standard is EN 14214). And the process is so simple that biodiesel can be made by virtually anyone, although the chemicals required (usually lye and methanol) are hazardous, and need to be handled with extreme caution.
Simply stated, here is how biodiesel is made. The transesterification process is initiated by adding carefully measured amounts of alcohol (methanol) mixed with a catalyst (sodium hydroxide lye the same chemical used to unclog kitchen or bathroom drains) to the vegetable oil. The mixture is stirred or agitated (and sometimes heated) for a specific length of time. If used cooking oil is the feedstock, the process requires a bit more testing, lye, and filtration, but is otherwise essentially the same. During the mixing, the oil molecules are split or “cracked” and the methyl esters (biodiesel) rise to the top of the settling/mixing tank, while the glycerin and catalyst settle to the bottom. After about eight hours, the glycerin and catalyst are drawn off the bottom, leaving biodiesel in the tank. The whole idea of the process is to remove the thick, sticky glycerin from the vegetable oil, so the remaining biodiesel will flow easily and combust properly in a modern diesel engine without leaving damaging deposits inside the engine.
In most cases the biodiesel needs to be washed with water to remove any remaining traces of alcohol, catalyst, and glycerin. In this procedure, water is mixed with the biodiesel, allowed to settle out for several days, and then removed. The wash process can be repeated if needed, but it is time-consuming. Not everyone agrees on whether the water wash is necessary. A few smaller producers who are making biodiesel for themselves skip the process, while commercial producers usually must do it to meet industry standards. In the case of some larger, more sophisticated manufacturing facilities, the transesterification process itself is so carefully controlled and refined that the water wash is not needed. There are, of course, quite a few technical variations on this entire process for large-scale industrial operations, but the general transesterification procedure is similar.31
As the amount of biodiesel being produced grows exponentially, the quantities of glycerin by-product grows apace. Glycerin has always been a niche market that is highly sensitive to oversupply, and the recent exponential growth of this commodity as a result of biodiesel production has caused the world glycerin market to collapse. As a result, traditional glycerin manufacturing plants around the world have been closing, while new ones that use glycerin as feedstocks for epoxy resins, propylene glycol, and other products have been opening. Recently, glycerin has even been used by one California company, InnovaTek Inc., as a source for the production of hydrogen.32 Trying to develop new uses for glycerin has been keeping a lot of people awake at night.
Our perspective:
Biofuels is the wave of the future. The federal and many state governments have provides great incentives to help start this process. Biodiesel adds the needed lubrication to low sulpher diesel, that extends the life of the engine and help it to run more efficiently.
let us know your toughts? You may leave a comment or email george@hbsadvantage.com with any questions you may have.
Obama Tours Solar Array At Las Vegas Air Force Base
May 31, 2009
CHARLES BABINGTON | May 27, 2009 06:26 PM EST |
President Barack Obama on Wednesday hailed solar energy as a cost saver for a major Air Force base, one stop on a Western trip devoted to raising political money and promoting his economic policies.
Obama’s aides had mocked reporters for making a fuss over his first 100 days in office, but the president was eager to assess the first 100 days of his $787 billion economic stimulus package.
It has “saved or created nearly 150,000 jobs,” he said, including “jobs building solar panels and wind turbines; making homes and buildings more energy-efficient.”
The White House job claims are difficult to verify because they are based on estimates of how bad the economy might have been without the stimulus rather than actual employment data. The country has lost 1.3 million jobs since February, a figure the Obama administration says would have been far higher if not for the recovery effort.
Obama also announced more spending for renewable energy after touring a large field of solar panels at Nellis Air Force Base, near Las Vegas. The sun-powered cells provide a quarter of the base’s power needs, Obama said, speaking in a large hangar warmed by the desert heat.
“That’s the equivalent of powering about 13,200 homes during the day,” he said, and it will save the Air Force nearly $1 million a year.
Obama said more than $467 million in stimulus money will be used “to expand and accelerate the development, deployment and use of geothermal and solar energy throughout the United States.”
The president sandwiched the midday event between two political fundraisers: one on Tuesday night in Las Vegas for Senate Majority Leader Harry Reid, D-Nev., and one set for Wednesday night in Los Angeles for the Democratic National Committee.
At Nellis, Obama addressed 400 people, including Air Force personnel, civilian workers and families living on the base.
The base’s $100 million public-private solar power system covers 140 acres and generates more than 14 megawatts of electricity.
As he departed the hangar, Obama bypassed his limousine and walked a quarter-mile along the tarmac to examine fighter jets, chatting with Air Force personnel as he went.
Our perspective:
Solar is the new energy growth maket. For the first time, with Federal and State incentives, the investment is solar finally makes sense.
To find out more how you can make solar your solution email george@hbsadvantage.com or call 856-857-1230. We will review your opportunity and discuss the financial options available.
