Is a "Renewable Energy Standard" a good approach?

Struggling to find out how to get them to agree to reductions in GHG emissions is one thing, and I fully understand that it’s a hard road. But throwing up one’s hands and saying “we can’t hurt the poor, they have to be able to emit more CO2”, like far too many seem to do, is another.

sb can’t say I understand your point at all. For most of us having a job is the first part of wealth creation.

As to how to deal with a hypothetical China that doesn’t want to play ball at all. I will gladly defer to someone with more knowledge of the tools in the diplomatic toolkit but a way to motivate participation is needed. In general that requires the judicial application of the carrot and the stick and the stick part can only be at all motivational if most of their target markets act in concert to state that their “cheating” by not taking the actions needed to do their part and thereby keeping the playing field no more uneven than it already is will be met with their having to pay a cost anyway. That is neither protectionism or a trade war and it is also not an embargo or a boycott. It might be motivational. But I am open to other ideas because Una is right - they need to be moving in the same direction - minimally their rate of CO2 emission rise needs to be slowed down significantly.

Sam yes of course some bright ideas will come from China and India and even … gasp … Canada. But things like wind turbines (like cars today) are often easier to make here than to transport long distances and the one area where America has its best chance to compete globally in the long run is products that require the work of ideas. That’s why we still rank first in international rankings of global competitiveness according to Business Week*.

We leadthe world in biotech, hi-tech products and services, computer software, and intellectual property in general.

Yes, some will be the jobs weatherizing and building an improved transmission infrastructure and building/deploying/maintaining renewable energy generating capacity of all sorts - things that cannot be outsourced. And some will be building things that are just better built locally, like wind turbines. And for some we will be in a global competition for clever ideas and new products, and here I believe we can compete and win. Our track record gives me some confidence about that.

Anyway, back to the op. Anyone willing to defend a national renewable energy standard? The most I’ve got is Una’s pointing out how many states already have one on their own so it may be a bit superfluous since the bigger states already have state-wide ones in place. Any other comments about that in particular?

*To be fair, it must be noted that some rankings have us losing some ground, as our competition invests more in education, innovation, and research competitiveness.

Honestly, I’d need to read and think about the actual legislation as-written before I could comment substantially. However, I will make some points based on what I’ve seen happen with the States:

  1. Do they get to claim credit for buying Canadian hydropower? That’s a sticking point in some cases.

  2. How much do they rate the “renewability” of the renewables? For example, does virgin wood biomass count the same as crop wood biomass? And to what percentage? Do you have to include the carbon of transport, the nitrogen emissions from fertilizer…there are so many ways people can nitpick these things.

  3. As mentioned in your linked article, some States and utilities are going to take it in the shorts. The southeast is very wind-poor relative to the rest of the nation, and their biomass resources are strained. They have no geothermal to speak of, and solar in the southeast is not as good as it is in the southwest.

FWIW the State RPS seems to be working well in the limited cases I’ve had to deal with it, driving utilities I work for to honestly roll-out and develop plans for renewable energy. I must qualify that there is a potential bias here on my part; since I get a lot of money to do these studies, obviously a national RPS will send dump trucks full of money to my front door.

Sam, I’m glad you put it this way. Free release of CO2 into the atmosphere is a subsidy, and thus is a stimulus plan, borrowing from the future to lower costs now. But the plans we’re talking about, both the renewable portfolio standard and the cap & trade, start taking effect in the 2011-2012 time frame. But if you’re suggesting we not do so, aren’t you calling for continued stimulus into the 2011-2012 timeframe? Would you have objected more strongly to Obama’s actual stimulus program if it had continued spending at the 2009-2010 level into 2011-2012?

In other words, as best we can project now, the years that this actually starts costing us money are exactly the years when we should be ending the subsidies and not promoting further stimulus. So, as best as we know, this program won’t be dragging down an already recessionary economy, it’ll be acting as a slight counter-cyclical drag on an expanding economy, like the Fed raising interest rates a tad.

‘Having a job’ does not create wealth. If someone pays you to dig a big hole, and someone pays me to fill it in, you’ve ‘created’ two jobs, but destroyed wealth. You destroyed it because ‘job creation’ statistics only look at one side of the equation. The other side is opportunity cost. What else could have been done with the money? What jobs didn’t get created because resources were spent filling in holes?

Let’s say Obama taxes 60 billion dollars out of the energy economy, and uses that to create ‘green jobs’. What about all the uses the 60 billion would have been spent on? How do you know that they wouldn’t have created even more jobs, or more wealth? All those consumers who had to spend more for energy-intensive products now have less money to spend on other things. Companies that see their energy costs go up have less money to invest in new production and research.

Ultimately, what you’re doing is making a value judgment - that ‘Green Jobs’ are more valuable than all the uses the money used to create them would have done instead - and you’re making that judgment without even knowing what those other uses were. You’re making the assumption that Barack Obama, who has never run any kind of company, is a better judge of what to do with corporate money than are the millions of people who would choose otherwise and have to have the money taken from them by force.

This is the fundamental dishonesty inherent in any government ‘jobs’ program. ANY program can look good if you only consider the benefits and leave the costs unexamined. But governments pull this stunt all the time, and sympathetic voters buy into it because they want to believe that a firm hand at the wheel and a really smart guy in control can create wealth, solve societal problems, create jobs, look after the poor, and make all the bad things go away.

The only reason it’s not those things is because you have intentionally defined the ‘solution’ so vaguely that we don’t know what the hell it is. How about being more specific? Surely, since this is such a critical part of the plan, the government has an answer to this? Can you link to the Obama administration’s plan to use carrots and sticks to ensure Chinese compliance? Or maybe some think tank has a plan you can link to that uses carrots and sticks against China, but which is neither a trade war or protectionist?

Well, YOU think so, but the history of geopolitics suggests that it’s pretty hard to just tell other countries to accept our values and priorities - especially if it costs their economy and they’re already struggling financially. You can’t just hand-wave this problem away.

I see. So your argument is that just because Americans are really good at this technology stuff, the huge investment in ‘green’ power is guaranteed to create American jobs, and America will retain a comparative advantage in ‘green’ technology over other countries?

If you think large scale engineering projects and large industrial projects and high technology manufacture are the natural domain of Americans, perhaps you should check into who the largest shipbuilder is in the world, or compare the number of televisions and computers made in America against those made overseas, or look at this list of wind turbine manufacturers to see just how many are made in America. The only U.S. player in wind turbine technology of any real market share is GE Wind Power, which has about 15% market share in wind turbine manufacture. About 70% of wind turbine construction is done outside of the United States. So much for the U.S.'s ‘unique advantage’ in green power.

As for it being cheaper to make wind turbines in America rather than shipping them in, perhaps you could explain why American wind farms like Horizon Energy have been buying Vestas wind turbines and shipping them in from Europe, despite the fact that GE Wind turbines are available right in the country?

You might be surprised to find out just how cheap shipping is these days. Imported cars do just fine against domestics, and the weigh thousands of pounds each. Imported steel does just fine against American steel.

Ultimately, the best product wins. GE Wind makes good turbines, but so do other companies, and the decision of which one to buy boils down to which one meets the unique needs of the installation best. Shipping costs are a relatively trivial part of the overall cost.

Sam Stone hit the nail on the head concerning wealth versus jobs. But I wanted to take the opportunity to once again say, “Nukes, Nukes, Nukes!”

Unfortunately, Obama has shown no interest in nukes and has killed the Yucca Mountain program, despite Nukes being by far the most cleanest and rational power generation we have available to us. It’s competitively priced, a known technology, utterly safe today (and American reactors were only barely dangerous even in the early years), and fuel is plentiful. We can subsit for centuries or millenia on nukes, while we develop Fusion or Core Taps.

Heck, I’d rather try building a Core Tap than shove a bunch of money into Green Power. The Core Tap is more likely to work properly.

But anyway, Nuclear Power has a huge advantages. Its “pollution” is actually quite safe; the entire storage issue is ultimately a pack of nonsense because it’s not difficult to deal with nuclear waste. It requires a large plant… and that’s it. It gives inexpensive power. It’s basically the best we could possible ask for, but scientific illiterates hear the word “Nuclear” and go insane.

Let’s start with the actual op of this thread. I take it that neither of you have anything to opine about it other than positing that doing anything about CO2 emissions is going to raise prices and hurt the US economy, at least in the short run, so you’d prefer we not do anything at all.

So let’s test that hypothesis. Not so hard to do - we have the test case of the EU. In 1990 they signed the very flawed Kyoto protocol and began to implement it over the next several years. If your hypothesis is correct then we should see EU GDP decreasing as energy intensity decreased as a result of implementation. Implementation would drive up the cost of energy and drive industry out of the EU to areas without such controls, such as America. Is that what happened?


As that graph shows as energy intensity decreased the EU’s GDP grew and even picked up speed from its baseline rate. The result was a dramatic increase in EU wealth with relatively modest increased energy consumption. And that was with the world’s richest economy, the US, not playing along, and a very flawed first stab at it.

sb really, we had a thread on nukes. If you really want to discuss them take it there.

Sam as to why US wind farms have gone abroad for supply - part of it may be that the has been an ongoing shortage in the American supply chain.

There is a reason that “foreign” car manufacturers are making so many cars here.

Of course GE is a global company more than a US one anyway. Much of their wind turbine production is located close to its international markets where is competitive as well.

But hey, let’s look at this a whole different way. Let us assume that we “borrow” from the future and attempt to underwrite economic competitiveness in 2011 and 2012 by dumping the cost of waste on the next generation. How does that place us for future growth and productivity? Well one thing that ignoring the management of that waste now will assure is tat it will be a bigger issue to manage in the future which will predictably require much of the same sorts of expertise that grows out of “the green economy”. It can be reasonably predicted that those countries that are doing something about it now will have a leg up on us in any IP race for that industry in future years. As a general principle an ideal stimulus should be timely, should produce jobs in the short term, and position for long term gains in productivity and real wealth in the future. Investing in green technology now does those things. OTOH dumping our waste problems into the future in order to subsidize dirty energy production is a delayed effect, does not produce any short term jobs, and decreases long term competitiveness in a predictable future market.

But hey, we did have an op in this thread. And I still think that a national RES is the wrong way to go.

Except that the EU did not, in fact, actually implement Kyoto honestly.

Well, that’s not exactly an informative response (i.e., I have no idea about how the EU implemented Kyoto, nor any idea of the effects of their implementation).

To the OP – I always wondered how scientific…err…technological, I guess, progress could be mandated.

A “renewable energy standard” (RES) is a bad approach. I note that Obama has said that under his administration we will double the use of renewable energy in three years. It used to be four years … but I guess he’s feeling powerful.

I see three huge difficulties with that plan, and with RESs in general. What’s proposed may not be attainable. What’s attainable may not be meaningful. Either will be very costly.

Here’s the numbers. The US gets its power in the following fashion

Year                  1998       2007
Total               1.2TWh     1.4TWh (1,400,
Fossil               84.9%      85.0%
Nuclear               7.6%       8.3%
Geothermal            0.3%       0.3%
Renewable             7.2%       6.4%

So he’s set a renewable energy standard, bring renewables up to ~ 12% in three years. What’s not to like?

Well, what’s not to like is this. The renewable energy breaks down like this:

Year                  1998       2007
Hydro                 3.8%       2.4%
Bio                   3.3%       3.5%
Solar               0.078%     0.079%
Wind                0.033%     0.315%

The overwhelming majority of US renewables comes from two sources – from hydroelectricity, and from wood used for heating. Some states are restricting the use of wood for heating. The small (0.2%) gain in bio is mostly from ethanol. Solar and wind are trivial, totaling less than half a percent.

Unless you know of some secret store of rivers waiting to be dammed, there’s no big gain available there. And many people don’t want to heat their houses with wood, it’s messy and polluting, so there’s no gains available there. Ethanol is already subsidised, not much more possible there either.

So how does he plan to double renewable energy?

This is my first problem with “Renewable Energy Standards”. Since we’re just picking numbers, the numbers may not have any relation to reality. We could set a standard to use only renewable energy in three years … sorry, not achievable. Nor is Obama’s plan, unless they have some secret technology they haven’t revealed.

“Ah,” you may be saying, “but he’s not talking about hydro or bio. He’s only talking about solar and wind” … and you may be right.

So under that plan, in three years we’d go from 0.4% of our energy coming from solar and wind to 0.8% of our energy coming from solar and wind … be still, my beating heart …

Which brings me to my second problem with RESs. They may be achievable, and make people feel good, without making any meaningful difference at all. We may go from 0.4% to 0.8%.

The third problem with RESs is the cost. The reason the alternatives are not used is that they are more expensive. We know this because they have not succeeded in the marketplace. During the industrial revolution people switched from wood to coal because it was cheaper, not because there was some government program to force them to switch. Similarly, people switched from whale oil to petroleum oil in the 1800s because it was cheaper, there was no subsidy needed for petroleum oil.

This means that to make an RES work, we need to do one or both of two things. We can make renewables economically more competitive by increasing the apparent cost of fossil fuels (taxes), or by decreasing the apparent cost of renewables (subsidies, tax breaks).

Of course, given the huge, garganuan amount of energy consumed annually, to do anything significant about this will require huge money. It is a mockery to claim that this will be paid by business. This money will be paid by the consumer in the form of increased costs for everything. Many people, myself included, have problems with that.

In addition, taxing inputs to manufacturing (e.g. energy, raw materials) is harder on the economy than taxing outputs from manufacturing. In addition to discouraging the very manufacturing we want to encourage, this also increases costs to the consumer. I have a definite problem with discouraging manufacturing.

So as I said, what’s proposed may not be attainable. What’s attainable may not be meaningful. Either will be very costly. Some may say the cost is worth it … but that doesn’t make the other two problems disappear. And I question whether the cost is worth it in the current economic situation.

Belief is wonderful. But belief is no substitute for arithmetic.

intention, a quibble - your statement about the share of biomass as a renewable being “wood used for heating” is somewhat misleading. Biomass is also used electricity generation (biopower) and somewhat significantly so. This happens both in industries that use their waste products to cogenerate heat and electricity and by utilities that co-fire biomass with coal or gasify biomass to co-fire with natural gas.

Okay, some more quibbles.

We really do not know how fast production capacity and deployment of renewables can be ramped up given the market demand for cost competitive products. Your figures show that wind, for example, went up tenfold in America in the last ten years and my impression is that most of that growth was in just the last few years.

My WAG is that wind could continue that rapid ascent and that solar could rapidly catch up. That cofiring biomass with coal will become a more attractive option (A small increase of coal plants utilizing this option in that can have a surprisingly big impact on total renewable numbers in a short timeframe). And many other players will fill in the margins. I would agree with your point though that the setting of mandates only assures you of failing to meet both those targets and our real goals.

My last post in a row …

For the interested, an argument for using biomass electricity generation. (I’m going to also use this to start a thread about distributed generation vs investing in an adequate transmission infrastructure.)

And click on the executive summary for a great review of how America gets to 20% wind by 2030.

DSeid, your quibbles are correct. However, the numbers change very little, and biomass is ruled by the cost questions I discussed above. From the EIA, emphasis mine.

Also, you are right that we don’t know how fast wind and solar can be ramped up. Suppose we could quadruple both of those in say five years, that might be possible although I’d be surprised. At that point, we’d be getting some 4% of our total energy from solar/wind … but only when the wind blows or the sun shines.

Whoopee …

No, that’s not an argument for using biomass. That’s a plea from someone who sells biomass systems for a whacking great government subsidy of biomass, which is a different animal altogether.

Those cost considerations are of course without factoring in the carbon cost. Coal aint so cheap once you have to start paying for the carbon emissions, and that is coming. The driver in my scenario is not a RES but the desire to make coal burning plants less life cycle carbon emitting intensive by some fraction and thus save having to buy as many carbon credits. The issue for those plant owners is whether it is cheaper to co-fire, to sequester, to build alternative carbon neutral electricity generation (be it other renewables or nuclear), buy credits, or to cofire. I believe that some significant portion will choose to cofire and keep using their extant coal plants so modified.

Yes, the author is a shill but that ad hominem does not change the logic or illogic of his argument.

And we have covered this elsewhere but intermittency is a bit … overblown … of an issue. It would be important if wind or solar were either by themselves the sole or even the major source. But even the most optimistic cases do not see that occurring. Instead they provide a share of base power in a fairly predictable manner. Their role at this palce is not to cpompletely replace other base power or peakers but to reduce how much capacity those generating sources provide thereby preventing that many tons of CO2.

My point was that a plea from someone in some industry for a subsidy for that industry is not exactly unusual … and does not rise to the level of evidence. Hey, I’d like a government subsidy myself … but that does not show that what I do is valuable or is a good path to follow. All he has shown is that if you subsidize biomass it is economically viable … are you impressed? Because I’m not. With enough subsidy, burning dollar bills for heat would be economically viable …

Next, you talk of the “carbon cost”. What you are discussing is not a cost of carbon. It is a tax which you are proposing to place on the emission of carbon dioxide. Calling it a “carbon cost” simply obscures the fact that it is a proposed tax, not an actual cost. If you want a new tax, as it seems you do, at least have the honesty to call it a tax and not pretend it is a “cost”.

As I said above, we can change the economics of energy by such things as a carbon tax (either a direct tax, or a “cap and trade” tax). However, this only changes the apparent cost of the alternatives, disguising their true cost. While the wisdom of taxes and subsidies to change the economics of energy can be debated, it is not as simple as the proponents would like us to believe. There is no evidence that the tax will be anything but permanent. In addition, taxes on energy depress all sectors, in particular manufacturing. I do not believe this is a wise move in any economic climate, much less the current climate.

Nor do energy subsidies/taxes have a good track record. The US government has been taxing fossil energy and subsidizing renewable energy for decades. In the last decade, despite increasing subsidies, as the EIA figures in my post above show, renewables decreased as a percentage of total use … ooops.

That decrease is hardly an argument for the efficacy of either taxes or subsidies in the energy market. Artificially propping up technologies that are not ready for prime time hasn’t worked in the past, and I oppose it for the future … but YMMV …

I took the time to read this, and it’s pretty interesting. I find their estimates to be fairly conservative in the sense that they don’t depend on new miracle technologies or anything like that. In addition, I’m a big fan of wind power. I think that it’s cost-effective in the best wind regions.

However, the article does illustrate the issues we have getting wind power to be economical.

For example, it estimates that up to 600 GW of wind power could be exploited at a cost of $60-$100 per MWh, including the cost of getting the power to the grid. One problem with that is that coal can currently do it for $18-$25 per MWh. So we’re talking about an increase in the cost of electricity of at least a factor of four.

A MWh of electricity from coal results in about 1 ton of CO2 being released into the atmosphere. So for wind to be competitive with coal, you’d have to price the carbon at $40-$80 per ton. This is quite a bit higher than most experts think the externality price of carbon really is. The estimates I’ve seen for an externality-compensating carbon tax is between $10-$30 per ton. The European carbon market prices it between $25 and $40 per ton. This makes wind more expensive than coal even with a high carbon tax.

One problem with the 600GW number is that most of that 600 GW would be on the high side of the $60-$100 range. If you look at figure 1-6, you’re at $80 per MWh after the first 200MWh. The reason for this is that the cost of wind goes up dramatically as the average wind speed comes down, and there are only a few places on the mainland in the U.S. where the wind is at optimum strength.

The problem with wind is that you can’t pick where you want to build your plants. You have to go where the wind is. The problem is that some of these locations are going to be hard to reach, expensive to exploit, or be too far from the grid. That’s why offshore power, despire the abundance of high winds, doesn’t help a whole lot for the U.S.

My gut feeling is that by the time you account for NIMBY blocking, site evaluations that turn up high costs, issues of eminent domain, and other problems, you can probably cut the amount of economically-available wind by a significant fraction.

According to that paper, 20% wind energy would require 50,000 KM of land to be set aside. That alone is a significant challenge.

The bottom line is that 20% wind is possible by 2030 - but only if you include subsidies, or assume the price will come down dramatically (which I don’t think it will - wind turbines are a fairly mature technology now), or that you kick in a fairly big ongoing subsidy to make it cost-effective or raise the price of the other energy sources dramatically. In any event, it would be a major undertaking and would represent huge capital outlay and major structural changes to the electrical grid, which ties you to that technology for a long time to come.

Finally, if you do a levelized cost comparison with nuclear, wind doesn’t come out all that well. The estimates for new generation nuclear production run around $40-$70 per MWh, including estimates of cost for waste handling. If nuclear got the production tax credit wind gets, you could cut that by another $8/MWh. Still not cost-competitive with coal, but it is if you price carbon at more than $25/ton or so. Coal with carbon sequestration is currently estimated to be $70-$90 per MWh, so even compared to zero-emission coal, wind doesn’t fare all that well, except in the most efficient places.

And about that… The most efficient places already have ongoing wind power stations, so the low hanging fruit is already being consumed.

Given all that, I think you’ll eventually see 5% of energy provided by wind - maybe even up to 10%. But once you get away from the low hanging fruit, wind gets a lot more difficult, and other technologies make more sense.

Let’s put a price on carbon of $40/ton just for yucks, and see what that gets us in terms of the cost of energy, all else being equal:

Per MWh, with carbon priced in:

Coal: $58-$70
Natural gas: $60-75 (Natural gas produces less CO2 per MWh)
Nuclear: $70-$90
Wind: Average $80 or so for the first 300-600 MW, well over $100 after.
Coal with sequestration: $70-$90 (estimates vary, though. Could be more)
Solar: $100+

So even if we completely correct for carbon externalities, solar and wind are very high cost. Add in their unreliability and the large amount of area they consume and the unknown environmental effects which may push up costs, and it’s looking a bit iffy.

Solar is intriguing because the new generation of solar thermal plants promise to bring the cost down to maybe $70, putting it smack in the middle of the other alternatives. BUt once again, there are limited areas for the most efficient use of solar, so it’ll never make up the bulk of energy.

Finally, since we’ve been talking about this in terms of stimulus, how much would it cost to switch over to higher-cost energy?

In 2007, the U.S. consumed 4,157 million MWh of electricity. A carbon tax of $30 per MWh would then cost about 120 billion dollars. Shifting 20% of energy production from a cost of $25 (coal) to $80 (wind) would cost the U.S. economy about 46 billion dollars a year. Shifting it all to energy sources that average $90 (say, a combination of wind, coal/w carbon capture, solar) would cost the U.S. economy about 270 billion dollars per year. But that’s really dependent on carbon capture, since wind and solar together won’t get above 20-30%. If you want to get up to maybe 50% from wind and solar, your cost per MWh will go up to around $150, and now you’re costing the U.S. economy about 350 billion per year over current energy costs, and you’re still only getting half of it from wind and solar.

If you just built a whole bunch of nuclear plants, you could save hundreds of billions of dollars per year. Your energy ‘footprint’ on the land would be much smaller, you can put the plants exactly where they need to be. The power is clean, the risks are known. It’s feasible, because countries like France have already done it safely and cost effectively.

One more thing - It’s very important to remember what all this buys you. Does it buy a greener earth? Cooler temperatures in the future? Probably not.

The U.S. is currently constructing 7 coal plants. China is constructing 544. India is constructing 256. Between China and India along they are currently building more coal plants than the entire current inventory of coal plants in the U.S.

According to the EIA, world energy consumption is going to increase from 462 quadrillion BTU today to 695 quadrillion BTU by 2030, with almost all of that increase coming from non-OECD countries (none of which are signing on to significant carbon reductions).

Now, wind power would primarily replace coal and natural gas as a power source (no one’s cutting back on hydro or current nuclear production). Coal and natural gas produced about 44 quadrillion BTUs of energy in the U.S. in 2007. Replacing 20% of that with wind saves you about 8.75 quadrillion BTU of CO2-emitting energy. World energy consumption is projected to increase by 50 quadrillion BTU just between 2010 and 2015, meaning you’re only accounting for about 17% of the increase in energy consumption over 5 measly years.

But it gets worse than that, because higher energy costs in the U.S. will almost certainly offload more manufacturing to the non-OECD countries, which are not nearly as energy-efficient in terms of energy used per dollar of GDP. So you could wind up actually increasing the amount of energy required to make those products, and eat up all your savings in greenhouse gases.

This is a hard reality check for the ‘reality based community’. “Going Green” isn’t a panacea, isn’t going to solve global warming, and is going to cost a hell of a lot of money for very marginal benefit, which will hurt U.S. competitiveness.