Here’s an update on energy policy from the remaining GOP presidential candidates:
Romney: http://www.mittromney.com/issues/energy
Paul: http://www.ronpaul2012.com/the-issues/energy/
Santorum: http://www.ricksantorum.com/unleashing-america%E2%80%99s-domestic-energy
Newt: http://newtgingrich360.com/american-energy-plan
I wrote earlier about how the candidates at the time compared specifically on climate change. The field has changed since then. Bachman, Cain, Perry, and Huntsman have dropped out. Gingrich and Santorum have picked up.
The D.O.E. cited a study that traffic congestion wastes nearly 3 billion gallons of fuel a year in the U.S.
There are a few ways to interpret the numbers:
- That’s about 30 million tons of CO2 emissions per year. If an average car emits 5 tons of CO2 a year, then traffic congestion emits 6 million cars worth of CO2.
- Focusing on a 50 mpg car may be the wrong goal. We may save more fuel and lower emissions by having cars that perform better under congested conditions.
- Reducing congestion can be an effective energy conservation technique. This could include building more roads or having smarter traffic lights.
USA Today reports that for the first time since 1978, construction for a new nuclear reactor has been approved in the U.S. The Nuclear Regulatory Commission approved two reactors, estimated at $4 billion, and targeted for completion by 2017. President Obama has guaranteed about 8 billion in loans.
The U.S. has a total of 5400 power plants, but only 65 (roughly 1%) are nuclear plants. There are about 103 reactor, as a plant may have multiple reactors. Yet despite that only 1% of the power plants and nuclear, nuclear produces 20% of the U.S. electricity. [1]
This is because of the incredibly high efficiency and capacity factor of a nuclear plant. According to the Nuclear Energy Institute, the average cost at a nuclear power plant in 2010 was about 2.1 cents / kWh [2]. (To put it in perspective, we pay about 7.54 cents / kWh in WA state).
Nuclear power is mixed bag from an environmental perspective. On one hand, nuclear power is theoretically no CO2 emissions, and so makes great progress towards any carbon reduction goals motivated from climate change. (The physics of a nuclear plant is fundamentally different from coal and other hydrocarbons). But there’s also a waste management and disposal problem.
[1] http://tonto.eia.doe.gov/ask/electricity_faqs.asp
[2] Fuel costs were .65 cents / kWh, non-fuel O&M costs were 1.49 cents / kWh.
USA Today reported that according to an audit by the Department of Labor, the government spent $500 million in training for green jobs and only filled 8,035 jobs. That’s about $62,000 of training per job. That’s more expensive than the average public four-year college degree.
The goal was to train 124,893 jobs, which would have been about $4000 / job. The program has not performed to goal. I mark this with a “sloppy reporting” tag because the article didn’t really explain why there was such a systematic failure. Was it poor quality of training? Training in the wrong fields? Overestimating demand?
Supporters of the President claim the D.O.L’s audit is poor and the numbers may improve.
The backdrop here is that unemployment has risen to 8.6%, and President Obama is taking significant debt to invest in areas that are not producing jobs, while simultaneously suppressing areas where the free market would create jobs (such as the keystone pipeline extension).
The Seattle Times ran an article announcing that President Obama rejected the Keystone pipeline extension project.
What is the keystone pipeline?
The Keystone XL Pipeline is a proposed $7 billion oil pipeline extension that would transport oil from oil sands in Alberta to Texas refineries 1700 miles away.
What are the pros and cons?
My impression is that this is primarily a Jobs vs. Potential Environmental damage issue.
Supporters for the pipeline include organized labor, oil industries, the Canada government, energy producing states, and many Republicans. They argue:
- It will create jobs immediately. There’s debate over the exact number, but range from 6,000 jobs to 20,000 jobs.
- The pipeline is ecologically safe. In particular, this is transporting existing oil produced in Canada, and not increasing domestic oil production in the U.S.
- Canada is producing the oil regardless, so if the U.S. doesn’t build the pipeline, Canada will just send the oil to China instead.
- The finished pipeline could displace up to 8% of supplies from other countries
Opposition to the pipeline is primarily from environmentalist who argue:
- The specific route routes through ecologically sensitive wetlands and aquifers in Nebraska. Reuters “As much as 27 percent of U.S. irrigated land overlies the water source, which yields nearly a third of U.S. groundwater used for irrigation, according the U.S. Geological Survey”
- Building further oil infrastructure only encourages further oil dependence and impedes the U.S.’s transition to a non-oil economy. Furthermore, this is oil from tar sands, which is more environmentally destructive than conventional sources.
Obama’s decision:
President Obama has rejected the proposal, prioritizing ecological concerns above job concerns, although he may still approve it later. This has a stark contrast to his job panel’s recommendation to increase domestic drilling from earlier this week.
This is politically tricky:
- This splits his Democrat base. Environmentalists are against it. Labor is for it.
- Unemployment is high (~8.5%) and Obama is actively suppressing job creation.
His decision drew immediate criticism. For example, House Speaker John Boehner, R-Ohio, said, "President Obama is destroying tens of thousands of American jobs and shipping American energy security to the Chinese. There’s really just no other way to put it. The president is selling out American jobs for politics."
Here’s a map of the pipeline:
Reuters reports that “President Barack Obama’s jobs council called on Tuesday for a corporate tax overhaul, expanded domestic drilling and new regulatory reforms”. Since this is an energy blog, I found the inclusion of domestic drilling especially interesting.
The backdrop for this is that the U.S. unemployment rate is high at 8.5%, the labor force has contracted at 6.1 million jobs below the pre-recession level, and the election is only 10 months away. The recommendation is interesting because President Obama is a Democrat, whereas Democrats traditionally oppose both domestic drilling and cheap energy.
Fossil fuels are still the goto energy sources when you need to address economic concerns. For example, ANWR has about a trillion dollars worth of oil, and the only thing preventing drilling there is government regulation. Whereas alternative energy sources are not yet economically viable, and the only thing that keeps them afloat is government regulation (see recent example with windmills).
Reuters notes:
"The Jobs Council recommends expanding and expediting the domestic production of fossil fuels – including allowing more access to oil, gas, and coal opportunities on federal lands – while ensuring safe and responsible development of those sites," the report said.
Here’s another example that If something is not financially sustainable, it’s not environmentally sustainable.
The N.Y. Times reports that a Vestas, a wind turbine company, is cutting 2,300 jobs. That’s about 10% of its labor force.
The article reports that it was a result of “cash-strapped governments” needing to cut subsidies for alternative energy. The government couldn’t sustain the subsidies, so the jobs ran out.
And the trend might continue: “[Vestas] also warned that it could lay off a further 1,600 employees at factories in the United States if an important subsidy for the wind sector, known as a production tax credit, was pared back at the end of this year.”
This is just a reminder that if a government is going to have a clean energy industry on life support with subsidies, it had better make sure the rest of the economy is in healthy shape to support those subsidies. Governments should not villainize the economic sectors that are subsidizing their green energy efforts.
The N.Y. Times reports that the E.P.A. is fining companies $6.8 million for not using a biofuel that doesn’t exist.
As U.S. unemployment is at record highs and the labor force is contracting, E.P.A. actions like this fuel frustration that the E.P.A. is harming job-growth while pursuing policies that don’t actually benefit the environment. For example, Governor Perry of Texas, the state that’s created the most jobs in U.S. , called the EPA a “job-killing agency”.
After all, that penalty certainly doesn’t create jobs, probably will cost jobs, and doesn’t help the environment.
The article brings up another good lesson: “The underlying problem is that Congress legislated changes that laboratories and factories have not succeeded in producing. This is not for want of trying, and efforts continue.”
This is a reoccurring theme in energy policy. Government mandates may make nice election rhetoric, but they don’t change the laws of physics, and can even become a distraction from making real progress. For example, see almost any statement about reducing carbon emissions, such as former Seattle Mayor Nickels 2005 pledge to meet carbon reduction goals by 2012 (which Seattle didn’t meet).
The Seattle Times ran a New York Times story, “Biodiesel demand fuels theft of used fryer oil”. Restaurants used to pay to dispose their used fryer oil, and now they can sell the oil for $300 a container. The increase in demand is because fryer oil can be used to make biodiesel, which serves as an alternative to gasoline for certain engines. Demand will go up as biodiesel engines become more common and as the price of gasoline goes up.
The article reports “fryer oil now trades on a booming commodities market, commanding around 40 cents per pound, about four times what it sold for 10 years ago.” (emphasis mine).
According to the National Biodiesel Board, demand for Biodiesel has almost tripled from 112 million gallons per year in 2005 to 315 million gallons per year in 2010.
This theme of "converting waste products into energy” is playing out in other areas too:
- Waste-to-Energy is about burning waste to get energy rather than throwing it into a landfill.
- This is what TerraPower is trying to do with nuclear waste. Nuclear waste is currently a huge liability. But there’s still tremendous energy potential left in the waste. If we can find a way to harness that energy, nuclear waste would be converted from an liability to an asset.
Further reading:
- Department of Energy factsheet on biodiesel.
- http://www.fueleconomy.gov/feg/biodiesel.shtml
There seemed to have an abnormally high number of energy-related stories in today’s Seattle times:
- “End of Cheap gas in Nigeria fueling unrest”.
- “Biodiesel demand fuels theft of used fryer oil”
- “Nickels, McGinn have different green visions for city”
- “40-year age limit sought for Japan nuclear reactor”
- “Iran reported to enrich uranium at underground lab”
Each of the articles also has a different theme: economics and livelihood, social impacts, political promises, safety and infrastructure, national security. That variety illustrates how critical energy is to our lives.
energypolicygeek 