2009 Electricity Prices Plummet

 

By REBECCA SMITH  as reported in Wall Street Journal

Slack demand for electricity across the U.S. is leading to some of the sharpest reductions in power prices in recent years, offering a break for consumers and businesses who just a year ago were getting crunched by massive electricity bills.

On Friday, the nation’s largest wholesale power market serving parts of 13 states east of the Rockies is expected to report that electricity demand fell 4.4% in the first half of the year. That helped to push down spot market prices by 40% during the first half of this year.

Wholesale electricity — power furnished to utilities and other big energy users — cost an average of $40 a megawatt hour in the region, down from $66.40 a year earlier. The price declines in this market, which extends from Delaware to Michigan, come on top of a 2.7% drop in energy use in 2008 over 2007.

The falloff in demand represents a reversal of what has been one of the steadiest trends in business. For decades, the utility sector could rely on a gradual increase in electricity demand. In 45 of the past 58 years, year-over-year growth exceeded 2%. In fact, there only have been five years since 1950 in which electricity demand has dropped in absolute terms.

But this year is shaping up to have the sharpest falloff in more than half a century, and coming on top of declines in 2008, could be the first period of consecutive annual declines since at least 1950.

Dramatic price reductions don’t immediately mean lower power bills for all consumers. That’s because many customers pay prices based on long-term contracts. But lower prices will have a softening effect over time.

In California and Texas, a combination of cheap natural gas and lower industrial demand is putting pressure on prices.

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“ Good timing for the U.S. to move away from its carbon obesity era. ”

—Barrie Harrop

In the Houston pricing zone, which has many power-gobbling refineries and chemical plants, the spot market price was $61.82 in June, versus $129.48 a megawatt hour a year earlier. Power demand in Texas is down 3.2% so far this year due to business contraction and reductions in employment which are causing many households to economize.

Just a year ago, many businesses and residential customers were reeling from electricity prices on the spot market that had spiked to historic highs, driven by high fuel prices and hot summer weather. Some businesses curtailed their operations because electricity and natural gas were too pricey.

But the flagging economy has resulted in a slump in demand that has jolted some energy markets. American Electric Power Co. and Southern Co., for example, both reported double-digit drops in industrial electricity use for the past quarter.

Meanwhile, natural gas, which strongly influences electricity prices, has fallen below $4 per million BTUs, or British thermal units. That’s down from $12 at last year’s peak.

For many businesses, the cost of electricity represents one of the few bright spots in a dismal economy. Andy Morgan, president of Pickard China Inc. in Antioch, Ill., which makes fine china, figures his electricity cost is down 30% to 40%.

Last year, when everything was spiking, he looked at different options — including negotiating a fixed-price contract for energy with a supplier. He says he held off and now he’s happy he did.

“We’ve definitely reaped savings,” says Mr. Morgan, adding that “especially in a down economy, you’ll take whatever you can get. That’s one of the few blessings during this storm.”

Slowdowns at major industrial companies such as Alcoa Inc. help account for the decline in electricity usage this year. The recession and drop in consumer demand for products that contain aluminum has caused the company to idle 20% of its smelting capacity world-wide this year.

In the U.S. the company has cut production at smelters, which are traditionally big energy users, in New York, Tennessee and Texas. Kevin Lowery, a company spokesman, said he did not believe that Alcoa has saved much money thus far because the company primarily purchases electricity through 25- to 35-year contracts.

Steel Dynamics Inc. is benefiting from lower pricing. The company operates five steel mills, with four purchasing electricity at spot market prices in Indiana, Virginia and West Virginia. The benefit, though, is smaller than it might be because the steelmaker is producing less steel this year.

“We’re producing fewer tons, but every ton we produce we seek to minimize the costs and electricity is one of those,” said Fred Warner, a company spokesman. Its mills are running at 50% capacity this year, down from 85% capacity last year.

Some wonder whether the deregulated markets of the Eastern U.S., Midwest, Texas and California will be especially hard hit if demand comes roaring back. That’s because utilities in these markets no longer are required to build new resources. It’s left up to the power generators to determine when the market conditions are ripe.

“There’s more supply than demand and prices are really low so it doesn’t make sense to build anything,” says John Shelk, president of the Electric Power Supply Association in Washington, D.C., a group that represents power generators.

Many electricity markets throughout the country have implemented demand reduction programs that give consumers a further incentive to reduce power use. The 13-state PJM Interconnection market has been one of the most aggressive — and has seen one of the steepest price drops.

A new report from the region’s official market monitor found a strong correlation between falling prices and an increase in demand-reduction programs. In the PJM market, energy users can collect money through an auction process for pledging to cut energy use in future periods.

In May, PJM conducted an auction to ensure it will have the resources it believes it will need in 2012-13. About 6% of the winning bids came from those who pledged to cut energy use by a total of 8,000 megawatts in that future period.

Our Perspective:

For those companies faced ith rising utility prices over the past 4 years, there is finally relief in the deregulated market. Prices have fallen due to the decrease in demand.

If you look at you electric bill over the past 12 months you will see that your price to compare for electric supply was most likely over .12 cents per kWh. Current market rates will allow you to lock you supply price in the dregulated market somewhere in the .10+ cent per kWh area. This could provide a 11/2 to 2 cents per kwh savings over the next year or two.

Our clients are finding substantial savings which fall to the bottomline.

Would you like to know more? Give us a call 856-857-1230 or email george@hbsadvantage.com . Contact us for a free evaluation You will be surprised by the savings it will provide.

—Timothy Aeppel, Sharon Terlep and Kris Maher contributed to this article.

Peco, PSE&G debut ’smart-meter’ plans

By Andrew Maykuth

Inquirer Staff Writer

Peco Energy Co. yesterday offered its vision of the electrical grid of the future:

In a few years, “smart” electric meters will be able to do much more than measure the power consumed in customers’ homes. They will tell customers how much money they are spending on electricity in real time, and offer options for cutting costs.

“Your air conditioner will be able to talk to your dishwasher and sequence their usage to save money,” Glenn Pritchard, a Peco engineer, said as he surveyed a table of meters and thermostats at the utility’s Center City headquarters.

At his Souderton home, Pritchard is testing a wireless model that supplies a weather report on its digital readout. His children’s favorite is a 9-inch-high, Web-enabled plastic rabbit that can be programmed to flash red and wiggle its ears when the price of power is getting dear.

If all goes as planned, Peco will connect 600,000 customers to smart meters in three years.

The utility announced plans to spend $650 million in the next 10 years to upgrade its transmission and distribution system to incorporate “smart-grid” technology. The improvements include fiber-optic and wireless-communications systems to enable the smart meters.

To accelerate the rollout, the company applied for $200 million in federal stimulus money from the U.S. Department of Energy, which is administering the $3.3 billion Smart Grid Investment Grant Program.

“This isn’t your father’s old utility anymore, and I can say that as my father worked here for 35 years before me,” said Peco president Denis O’Brien.

The investment will generate customer savings of $500 million over 10 years and $1.5 billion over the expected 25-year life of the equipment, O’Brien said, as well as create employment equal to 4,300 “job-years.”

Peco will have competition for the stimulus money, though. Yesterday was the deadline for smart-grid applications, and other utilities also announced proposals.

Public Service Electric & Gas Co. in New Jersey applied for a $76 million grant to fund half of a $152 million project to improve the grid’s reliability and protect it against cyberattacks.

PSE&G’s plans also include communications technology that would allow for the eventual integration of plug-in electric vehicles, small-scale wind and solar generation, and smart meters.

PPL Electric Utilities Corp., of Allentown, has proposed a $38 million pilot project – half of it funded by stimulus money – that would introduce 60,000 Harrisburg customers to smart technology.

Most of the smart-grid improvements would be invisible to customers, incorporating advanced switches and digital equipment that would increase the system’s reliability, efficiency, and security from attack.

The power companies are responding to increasing pressure to meet emerging emission-reduction goals. A new Pennsylvania law requires utilities to reduce electrical-output production 3 percent by 2013 and cut peak-demand load 4.5 percent. It also provides for utilities to recoup their expenses through higher rates.

Next week, Pennsylvania’s utilities must disclose their smart-meter deployment plans, which will set the stage for discounting power during off-peak hours to encourage customers to shift consumption away from times when the electrical system’s generation and distribution systems are stressed.

Peco is still examining equipment options and pricing plans. Customers will be able to opt to keep the current flat-rate pricing scheme.

Part of Peco’s grant proposal is to incorporate a pilot project for clients of the Philadelphia Housing Authority that would become a model for low-income customers. Liberty Property Trusts and Drexel University have also signed on to integrate properties into the Peco network more efficiently.

Residential customers may have an array of smart-meter options. They might range from simple devices that provide a color-coded light signal to curtail power during peak hours to sophisticated ones that tie in major appliances so that customers could volunteer to allow Peco to remotely manage their use during peak hours.

Or customers might be able to manage their home thermostats through the Internet, or even a wireless handheld device such as a BlackBerry.

“When we all see the meter running . . . we will all be able to manage our energy much more effectively and efficiently,” O’Brien said.

Global Clean Energy Economy Won’t Wait for U.S. to Catch Up

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.

Natural Gas Market

Apr 30, 2009 –

As was the case with other industries that have been deregulated, natural gas deregulation has resulted in competition which helps lower the cost of natural gas and increase customer choices.

Deregulation is the process of lessening the amount of government restrictions an oversight applied to private companies. The natural gas industry has been gradually deregulated over the past ten years.

Before deregulation, utilities charged their customers for all the necessary steps to get the natural gas from the gas well to the customer’s home or business. This included purchasing the natural gas, delivering it to the customer, measuring the customer’s use,providing emergency service, and billing the customer.

One effect of deregulation has been that customers may now choose to purchase only part of the full line of services that are offered by the utility. This ability to choose is called
unbundling. The complete package of services has been unbundled so that a customer can choose to separate the gas purchasing transaction from the delivery — or transport — transaction.

Our Perspective:

Natural Gas prices are the lowest they have been in 3 to 4 years. For companies spending more than $3000 a month we are finding 20% to 30% saving over what they have paid over the past year.

One of our new clients signed up today and will see more that $42,000 savings over the next year.

Like to know more? Feel free to contact us. There are no additional fees, your savings fall to the bottom line.

Email george@hbsadvantage.com  or call 856-857-1230

EPA: Recession Won’t Stop Clean Energy Revolution

ANGELA CHARLTON | May 28, 2009 05:01 PM EST |

PARIS — The top U.S. environment official says it’s time for the United States to shed its energy-wasting image and lead the world race for cleaner power sources instead.

After several years with a relatively low profile under President George W. Bush, the U.S. Environmental Protection Agency “is back on the job,” EPA Administrator Lisa Jackson told The Associated Press on Thursday during a trip to Paris.

What the EPA does domestically this year will be watched closely overseas. Nations worldwide are working toward a major meeting in Copenhagen in December aimed at producing a new global climate pact. The U.S. position on curbing its own pollution and helping poor countries adapt to global warming is seen as key to any new pact.

Jackson was in Paris for international talks on how rich governments can include global climate concerns in overall development aid.

She dismissed worries that economic downturn was cutting into aid commitments or investment in new energy resources. She said the United States should take the lead on clean energy technology, recession or no.

“We have to get in the race now _ and win it,” she said. “I don’t expect a moving backwards because of recession.”

At climate talks in Paris earlier this week, European environment ministers welcomed greater U.S. commitment to environmental issues under the Obama administration _ but said it still wasn’t aiming high enough in its targets for cutting U.S. emissions.

Jackson said a shift in the American mindset is only beginning.

Talking about energy efficiency and saying companies should pay to pollute _ “that’s a revolutionary message for our country,” she said.

For a long time, she said, “People didn’t even expect the EPA to show up” at events, much less set policies that could be seen as examples for the rest of the world.

“Now it seems like every day we’re rolling back or reconsidering a Bush era policy on clean air,” she said.

She said it was time for the United States to take a more active role in limiting chemical pollutants, after falling behind Europe in that domain.

The U.S. also has lessons to learn from countries such as the Netherlands, she said, after visiting its low-lying, flood-prone lands to study ways cities like her native New Orleans can better manage water.

Our Perspective:

It is good to hear the administration making positive comments about our energy’s future. Alternative energy is a growth business and the correct path for insuring our future energy indepenence.

Let us know your thoughts? You may leave a comment or email george@hbsadvantage.com

Would you like to know more about the financial opportunities that drive this investment. Feel free to contct us.

Competition Heats Up In Race For Electric Car Dominance

JEAN H. LEE | May 18, 2009 12:57 PM EST |

SEOUL, South Korea — Urban visionaries in London and Seoul, two of the world’s busiest capital cities, foresee buses gliding through their streets with speed, ease and efficiency _ without emitting the exhaust fumes that scientists say are contributing to global warming.

Under Mayor Boris Johnson’s vision, London’s iconic red double-decker Routemaster buses would be back on the streets _ but powered by electricity, not gasoline.

Engineers at South Korea’s top-ranked KAIST university are meanwhile working on a novel prototype for an electric vehicle system: one that provides power on the go through induction strips laid into the roadway.

Cities _ which house 75 percent of the world’s population and generate 80 percent of its pollution _ must take leadership in tackling the problem of polluting emissions, Johnson said Monday in Seoul on the eve of the third C40 Large Cities Climate Summit.

“I think as a collective of cities, what we should be doing here in Seoul is agreeing that we are going to stop the endless addiction of mankind to the internal combustion engine,” he told reporters. “It’s time that we moved away from fossil fuels. It’s time that we went for low-carbon vehicles.”

“Cars form many problems that we see in Korea as well as other countries. We use hydrocarbon organic fuels, mostly petroleum, and that, in turn, creates environmental problems _ and Seoul is notorious,” said Suh Nam-pyo, president of KAIST in Daejeon, south of the South Korean capital.

Seoul, population 10 million, is getting warmer three times faster than the world average, the National Meteorological Administration said Monday.

The obvious solution, Suh said, is to “replace all these vehicles with vehicles that do not pollute the air and do not use oil.”

Back in March, Johnson zipped down a British highway in a U.S.-made electric car that he wrote marked “the beginning of a long-overdue revolution.”

He rhapsodized in a Telegraph newspaper editorial that the Tesla has no exhaust pipe, carburetor or fuel tank, and “while every other car on that motorway was a-parping and a-puttering, filling the air with fumes and particulates, this car was producing no more noxious vapours than a dandelion in an alpine meadow.”

Last month, he launched an ambitious plan to get 100,000 electric cars onto the streets of London by 2015. He pushed for the creation of 25,000 charging stations and vowed to convert some 1,000 city vehicles to make London the “electric car capital of Europe.”

“The age of the diesel-emitting bus has got to be over in London,” Johnson said.

He has promised electric motorists an exemption from the congestion charge imposed on drivers in central London, an annual saving of up to 1,700 pounds (about $2,600).

But that discount would barely make a dent in the eye-popping price tag of electric cars now on the market; the sleek Tesla that Johnson took for a spin costs more than $100,000.

And scientists are still grappling with the massive, sensitive, costly and fast-depleting batteries that take the place of international combustion engines and gasoline. Electric cars run between 40 and 120 miles (60 to 200 kilometers) on one charge, and it takes anywhere from two to seven hours to fully recharge, said Christian Mueller of the IHS Global Insight consulting firm.

“Everybody is frantically working on coming up with a viable electric car,” he said from Frankfurt, Germany.

Batteries “aren’t yet at a state where we can say they are cheap, they’re reliable and they’re easy to come by. They all still have their technical drawbacks,” said Mueller, who specializes in electrics and electronics.

The lithium supply for batteries is finite, and the question of where to charge them becomes complicated in cities where residents cannot easily plug their cars in overnight. A California company, Better Place, has introduced a promising battery-swapping technology.

Suh, an MIT-trained inventor with some 60 international patents to his name, approached the challenge from another angle.

“Why not have power transmitted on the ground and pick it up without using mechanical contact?” he said in an interview in his office overlooking the staging grounds for the university’s electric cars.

KAIST’s “online” vehicles pick up power from trips, or inverters, embedded into the road rather than transmitted through rails or overhead wires. A small battery, one-fifth the size of the bulky batteries typically used, would give the vehicle enough power for another 50 miles (80 kilometers), said Cho Dong-ho, the scientist in charge of the project.

South Korea produces its own nuclear power, meaning it can produce a continuous supply of energy to fuel such a plan.

President Lee Myung-bak, whose government gave KAIST $50 million for two major projects, including the “online” electric vehicle, took a spin in February.

Online buses are running at the KAIST campus and will begin test runs soon on the resort island of Jeju.

But Seoul, which has promised to set aside $2 million for the underground charging system, is within Suh’s sights. He said 9,000 gasoline-fueled buses now crisscross the capital, with 1,000 going out of commission each year. He envisions replacing those aging buses with electric models. Initial test runs are expected to take place this year.

Mueller, the consultant, called it a creative approach with potential.

“It sounds very intriguing; you don’t store your energy, you provide it on the go.” he said. “The (battery) storage problem is overcome instantly. That would be a very intriguing way of doing it.”

___

Associated Press writer Jae Hee Suh contributed to this report.

Obama calls for new era of energy exploration

NEWTON, Iowa — President Barack Obama, standing Wednesday in the shell of a once-giant Maytag appliance factory that now houses a wind energy company, declared that a “new era of energy exploration in America” would be a crucial to leading the nation out of an economic crisis.

With pieces of wind turbine towers as a backdrop, Obama touted the small manufacturing firm as a success and as a step toward reducing the United States’ reliance on polluting fuels. But as the president on Earth Day set a goal for wind to generate as much as 20 percent of the U.S. electricity demand by 2030, legislation to make that a reality faced a challenge back in Washington in the Democratic-led Congress.

“The nation that leads the world in creating new energy sources will be the nation that leads the 21st century global economy,” Obama said in a state that launched him on the road to the White House with a surprise upset over one-time rival Hillary Rodham Clinton.

“America can be that nation. America must be that nation. And while we seek new forms of fuel to power our homes and cars and businesses, we will rely on the same ingenuity _ the same American spirit _ that has always been a part of our American story.”

It’s an American spirit, though, that has been damped with economic downturn and financial crisis.

The president left Washington for a few hours Wednesday to visit this small Iowa town, which took a huge economic hit when Maytag Corp. shut its doors in 2007. The Maytag plant employed some 4,000 in a town of 16,000 residents in jobs that paid about $30,000 to $40,000 a year.

In its place is Trinity Structural Towers, a 90-person manufacturing firm that makes parts of wind turbines the president hopes to expand on land and at sea through the government’s first plan to harness ocean currents to produce energy.

O”Now, the choice we face is not between saving our environment and saving our economy,” Obama said. “The choice we face is between prosperity and decline. We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy.”

In Washington, the president’s plan to increase alternative energy sources and create environmentally friendly jobs hit some snags despite Obama’s fellow Democrats controlling both chambers of Congress. Energy Secretary Steven Chu, EPA Administrator Lisa Jackson and Transportation Secretary Ray LaHood reinforced Obama’s message in testimony to a House Energy and Commerce subcommittee on Wednesday.

The administration’s draft bill is designed to help stem the pollution blamed for climate change by capping greenhouse gas emissions and reducing the nation’s reliance on fossil fuels. The goal is to reduce greenhouse gases by 20 percent from 2005 levels by 2020, and by 83 percent by mid-century.

The White House wants to see movement on the legislation by Memorial Day. To help that along, aides said the president plans to personally make his case that the costs of dealing with climate change can be reduced dramatically by adopting programs that will spur energy efficiency and wider use of non-fossil energy such as wind, solar and biofuels.

In Newton, Obama proclaimed that “once-shuttered factories are whirring back to life,” although the facility he toured is a shadow of what it replaced here about 30 miles east of Des Moines.

“Today this facility is alive again with new industry,” Obama said, while noting that “this community continues to struggle and not everyone has been so fortunate as to be rehired.”

Trinity now employs about 90 people _ hardly the replacement Newton so desperately needs.

“We’ll never have another Maytag,” said Paul Bell, a Newton police officer who also serves in the state legislature. “Maybe we shouldn’t have had a company here that the majority of people worked for. We put all of our eggs in one basket.”

Recognizing the challenges remaining in Newton and scores of towns like it coast-to-coast, Obama quickly added: “Obviously things aren’t exactly the same as they were with Maytag.”

With the same root in realism, Obama acknowledged the United States’ energy policy will not change instantly, given the country’s reliance on oil and natural gas.

“But the bulk of our efforts must focus on unleashing a new, clean-energy economy that will begin to reduce our dependence on foreign oil, will cut our carbon pollution by about 80 percent by 2050 and create millions of new jobs right here in America, right here in Newton,” he said.

But it won’t come quickly. The United States imports almost 4.9 billion barrels of oil and refined products annually. That is raw energy that cannot be replaced, one windmill at a time.

Instead, Obama urged bold thinking _ and spending _ to address climate change and energy supplies.

“So on this Earth Day, it is time for us to lay a new foundation for economic growth by beginning a new era of energy exploration in America,” he said to applause.

Obama also pushed personal responsibility, calling on every American to replace one incandescent light bulb with a compact fluorescent. The president also said the leaders of the world’s major economies will meet next week to discuss the energy crisis.

In Landover, Md., on Monday, Vice President Joe Biden marked Earth Day by announcing that $300 million in federal stimulus money will go to cities and towns to purchase more fuel-efficient vehicles.

___

Associated Press writer Brian Westley in Landover, Md., contributed to this report.

Reset: Making Sustainability the Centerpiece of Our Recovery

Daniel C. Esty

Posted April 20, 2009 | 03:50 PM (EST)  As reported in Huffington Post Green

Talk has begun to turn to the new economy that will emerge from the present collapse. General Electric CEO Jeff Immelt has suggested that the current crisis is not just a recession but a fundamental “reset” of how business gets done. And Time magazine has taken up this theme with a reset cover story. But there has been little discussion of exactly what changes – in principles and practices — should be made so that we rebuild our economy on firmer foundations. As we celebrate Earth Day this week, it is a good time to commit to “sustainability” as a centerpiece of a revitalized regulatory system.

For the past three decades, debate has raged over whether and how to deregulate. But while markets offer the prospect of promoting innovation, growth, and prosperity, few now believe that capitalism is self-correcting or that the private sector needs only minimal supervision. From the demise of Lehman Brothers and AIG to the skullduggery of Bernie Madoff and Allan Stanford, the signs of inadequate regulation and market failure surround us.

Two particular forms of market failure underlie the meltdown of the past year and make sustainability the right touchstone for our regulatory reset efforts:

• Externalized costs and risks
• Incomplete information

Both of these problems require that we rethink our approach to regulation — and re-establish the fundamentals of our economy on a more sustainable basis. And note that this principle should apply broadly, not just in the financial arena.

We need regulations which ensure that companies cannot structure their operations so that any upside gains accrue to their owners (or worse yet their managers), while risks or costs get shifted onto society as a whole. In the banking sector, rules against over-leveraging are urgently required. The recently released Turner Report in the UK outlines the first steps in this direction that should be taken. More generally, financial reporting rules must be designed to expose hidden risks and externalized costs.

We should likewise insist that companies which send emissions up a smokestack or out an effluent pipe cease their pollution or pay for the harm inflicted on the community. In our “reset” world, economic success cannot come at the price of harms imposed on the public in the form of contaminated air and water or risk of climate change. Thus while we lay the foundation for a more sustainable economy, let’s similarly adopt rules that provide for a sustainable environmental future. This will require overhauling the traditional approach to environmental regulation which countenances way too much in the way of externalities by offering “permits” up to a certain level of harm.

President Obama’s call for a price on carbon dioxide emissions represents a good first step in the “no externalities” direction. But let’s broaden the push and make polluters pay for all the harm they cause. If companies — and each one of us in our personal lives — had to pay for our waste and pollution, behavior would change. Putting a price on harm-causing creates incentives for care and conservation — efficiency and resource productivity.

More importantly, these price signals will drive a market response. Companies that are positioned to help others reduce their waste or cut their emissions will find customers eager for their goods and services. And where no easy solutions are available, harm charges will motivate “cleantech” innovation as inventors and entrepreneurs recognize the prospect of making money by solving environmental problems.

In parallel with a commitment to internalizing externalities, we must adopt transparency as a watchword. Market capitalism does not work without adequate information about economic actors. This reality has been understood in theory, but now needs to be advanced in practice. Government has a critical role to play in establishing the terms of disclosure about companies, markets, products, investment vehicles, and more. Public officials must also be empowered to ensure that disclosures are complete and accurate.

Well-designed reporting rules make it easier to spot externalized costs or risks and harder to hide malfeasance. Widely available metrics also facilitate benchmarking across companies, which offers a mechanism for assessing performance, highlighting leaders and laggards, and spurring competitive pressures that drive all toward better results. Studying the leaders offers an important way to identify best practices in everything from corporate strategy to pollution control. Likewise, outliers (such as those who make 10% returns year after year without fail) can be isolated for special review and scrutiny.

Such transparency would make it easier to refine our compensation systems to reward superior performance and real value creation. Carefully constructed disclosure rules could help, on the other hand, to unmask mere financial engineering, which should not be credited with outsized rewards.

There is a great deal of work to be done to re-establish prosperity across our country and the world. Smart regulation can channel corporate behavior and individual effort toward sustainable economic growth — that is durable because it rests on solid underpinnings not hidden risks or externalized costs.

Daniel C. Esty is the Hillhouse Professor at Yale University with appointments in both the Yale Law School and the Yale School of Forestry and Environmental Studies. He is the co-author (with Andrew Winston) of the prize-winning book, Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage (just released in a revised and updated edition published by John Wiley). A former Deputy Assistant Administrator at the US Environmental Protection Agency, Professor Esty advised the Obama Campaign on energy and environmental issues and served on the Obama Transition Team.

Administration Announces $8 Billion In Weatherization, Efficiency Grants

As reported in Huffington Post

AP March 12

WASHINGTON – President Barack Obama is encouraging state officials to get on the front lines of the government’s program to revive the ailing economy.

Obama stopped by a conference Thursday with state officials gathered in the capital to discuss carrying out the $787 billion economic stimulus program. He said he believes the American people are behind his administration’s efforts but also said that officials at all levels of government must spend the money wisely.

Obama told his audience: “You’ve got this wonderful mission. And it’s rare where you get your chance to put your shoulder to the wheel of history and put it in a better direction.”

Biden and Energy Secretary Steven Chu also announced $8 billion in stimulus money to be directed to state and local weatherization and energy efficiency efforts.

From the Vice President’s press release:

Vice President Joe Biden and Energy Secretary Chu today detailed an investment of nearly $8 billion in state and local weatherization and energy efficiency efforts as part of the President’s American Recovery and Reinvestment Act. With an investment of about $5 billion through the Weatherization Assistance Program and about $3 billion for the State Energy Program, the Department of Energy will partner with state and local governments to put 87,000 Americans to work and save families hundreds of dollars per year on their energy bills.
To jump-start job creation and weatherization work, the Department of Energy is releasing the first installment of the funding – about $780 million — in the next few days. The Department will release additional funding over time as states demonstrate that they are using the funding effectively and responsibly to create jobs and cut energy use.

 

“Green Energy Done Right Is More Profitable Than Old Energy”

As reported in Huffington Post Green

Written by Dave Burdick

Green vs. greenbacks.

It’s a balance we’ve been told we have to accept. But somebody who knows a lot more about making greenbacks than the vast majority of people says it’s not so. Google CEO Eric Schmidt has patiently been telling Google investors not to worry about the company’s massive interest in the US energy grid. Changes have to be made to the way energy gets transported around the country in order for renewable sources of energy to play a larger role, and Google is in on the ground floor, along with IBM, Cisco, GE and others.

But the investors would still like Schmidt to show them the money.

At the WSJ’s ECO:nomics conference in California, Mr. Schmidt was asked how he would respond to Google shareholders who worry the Internet titan is taking its eye off the ball by paying so much attention lately to alternative energy.
“Money we save on energy goes straight to the bottom line. Lower costs mean higher earnings. Green energy done right is more profitable than old energy,” Mr. Schmidt said. “Is that a crisp enough answer for you?”

He cited Google’s own multi-trillion dollar blueprint for overhauling the U.S. energy mix. Sure, the pricetag looks hefty–but it would more than pay for itself.

“That’s $3.5 trillion, but over 22 years, not a matter of months,” Mr. Schmidt said. “And the benefit would be $4.4 trillion.”

 

But don’t blame the investors for asking — it’s a confusing issue, and one that’s bound to come up very frequently for a while, since President Obama has committed to spending some $4.5 billion on smart grid technology. Schmidt was, of course, a big Obama supporter during the election.

Grist’s David Roberts has a primer (with maps, which we all know I love) on the tangled problem of the national energy grid vs. the “smart grid.”

• First, there aren’t many high-voltage lines that go to the places where renewable energy is most abundant (e.g., the Southwest for solar, the Midwest for wind).
• Second, right now there are (depending on how you count) anywhere from three to seven distinct regional grids that make up the national grid, and they aren’t very well connected. While juice circulates relatively freely within these grids, it’s difficult to get juice from one grid to another.