Archive | Energy Industry

Biden Hustles in Russian Footsteps for Terms on Iraq Oil Contracts

BAGHDAD, Sept. 18 (UPI) — U.S. Vice President Joe Biden’s visit to Baghdad earlier this week — his third this year — came hot on the heels of a lightning visit by Russia’s energy minister as the scramble for Iraq’s oil riches heats up.

Just as Sergei Shmatko sought favorable terms for Russian companies in an upcoming oil contract auction, Biden was hustling on behalf of the U.S. oil giants who have long dreamed of getting their hands on what may be the largest untapped oil reserves in the world.

Biden urged Prime Minister Nouri al-Maliki to resist the temptation to demand hefty payments from the international oil companies as the price for doing business with the new Iraq when a new auction of contracts is held in Baghdad in December.

The first auction in June fizzled when only one consortium — BP and China National Petroleum Co. — made a deal by accepting Baghdad’s offer of only $2 for every barrel of oil it produced. Nine other licenses were rebuffed by major oil companies.

Like every other bidder in that auction, BP and CNPC had wanted $4 per barrel. The others refused to budge from their bids.

Iraqi officials have said Baghdad has lowered its demands for the December auction. But it is not known what figure they will go with when they put up 10 projects covering more than a dozen fields for development.

There is speculation that this time around the oil companies will demand higher fees to compensate for the worsening security situation, a crisis that is likely to worsen as U.S. forces continue their withdrawal.

Still, Oil Minister Hussain Shahristani remains optimistic. “We expect a better match between our expectations and what the companies will bid in the second round,” he said this month.

Biden stressed that the Iraqis must make their terms more attractive to foreign investors if they are to amass the $50 billion they say they need to upgrade their long-neglected energy industry and boost production to provide the revenue required for reconstruction.

A senior official with Biden calculated that a deal on a single oil field could reap $50 billion to $60 billion in outside investments, produce $600 million a year in revenue and create as many as 200,000 jobs if Baghdad lowered its demands at the December auction.

Another major problem is the government’s failure to produce an oil law that would regulate foreign participation in Iraq’s oil industry.

It languishes in Parliament, paralyzed by sectarian rivalries, particularly between the Kurds, who claim the northern Kirkuk oil fields, and Iraq’s Shiite-dominated Arabs.

In the absence of a parliamentary ruling, the Oil Ministry has decreed that a Cabinet decision will be sufficient to legitimize foreign participation stemming from the auctions.

But the oil companies remain extremely wary of investing vast sums of money in those circumstances.

Biden apparently went out of his way in meetings with Maliki and half a dozen other top officials during his three-day visit to emphasize that the critical hydrocarbon law must be passed at the earliest possible date if Iraq is to determine its economic future.

But there was no sign that an agreement on this was in the cards any time soon to ward off the possible fragmentation of the country into Shiite, Sunni and Kurdish zones.

Maliki is increasingly beleaguered and seems powerless to find a solution to the problem.

He is currently fighting for his political survival amid a deteriorating security crisis triggered in part by the U.S. troop withdrawal and being abandoned by his Shiite political allies who will challenge him in the January polling.

Before he left, Biden conceded that “a number of problems, whether it is the oil law or some of the disputed internal boundaries, are going to have to wait for final resolution until after the election.”

His visit ended on that note of uncertainty, with the senior American official commenting, seemingly with more hope than expectation, “Ultimately, in our judgment, it’s in the interest of every Iraqi to accept a smaller piece of a much bigger pie.”

Copyright 2009 by United Press International

Posted in Energy, Energy & Fuels, Energy Industry, Other0 Comments

Shell Oil Board Member Quits Following Shareholder Revolt

The world of petroleum products is directly tied to that of renewable energy sources, particularly as companies like BP and Shell make movements to impress on society that the oil companies themselves are often leaders in the green energy industry. News this week out of the Netherlands though informs us that Shell Oil board member Peter Job is resigning under pressures stemming from a shareholder revolt:

THE HAGUE, Netherlands, Sept. 12 (UPI) — Shell Oil board member Peter Job has retired following a shareholder revolt over management bonuses, company officials said.

A statement from the oil company, whose board met Friday in The Hague, Netherlands, indicated Job has stepped down from its remuneration committee. His place on the board of directors will be taken by Hans Wijers, a former Dutch economics minister who is chief executive of chemicals and paints group AkzoNobel, The Times of London reported.

The newspaper said Job, 65, formerly chief executive of Reuters, had sparked shareholder anger by moving to give a $2 million bonus to outgoing Shell Chief Executive Officer Jeroen van der Veer even though the company had failed to meet performance targets for 2006 to 2008.

Shareholders voted in May to reject van der Veer’s bonus, The Times said.

Posted in Energy & Fuels, Energy Industry, Other0 Comments

Labor Secretary Hilda Solis: Green Jobs Forecast to Pick Up

Mixed reaction has come from Monday’s National Clean Energy Summit in Las Vegas when Labor Secretary Hilda Solis said she believed hiring in the alternative energy industry will pick up in the next 12 months, but it would take much longer than that for green jobs to become a bigger part of the U.S. job market.

Tulsa World writer Oskar Garcia published an article that summarized the topic on green jobs as it related to Solis’ comments:

Solis said that new government incentives will kick-start hiring in the fledgling industry as companies regain confidence and find it easier to borrow money.

“Once you start seeing more investments made in our economy recovering, as we stabilize and we get people back to work, then I think there’ll be more interest in expanding,” Solis said. “There’ll be more, hopefully, credit available for this expansion, because there will be more confidence because that’s what we’re lacking right now — that investment and confidence in the market.”

After a terrible start to the year, there are signs of a rebound for alternative energy, in part because of a push from the Obama administration.

The second National Clean Energy Summit in Las Vegas drew a high-profile list of alternative energy backers, including former President Bill Clinton, Energy Secretary Steven Chu and U.S. Senate Majority Leader Harry Reid.

“The economic crisis, the security crisis and the climate crisis are all intertwined, and the common thread running through them is our absurd and dangerous overdependence on carbon-based fuels,” said Al Gore, Clinton’s vice president.

“If your grab hold of that thread and pull on it all three of these crises will unravel,
and we’ll hold in our hand the solution to all three of them — that is to make a transition to a low-carbon economy and to put people to work doing it,” he said.

Posted in Energy Industry, Policy, Law, & Government0 Comments

Research & Development: Transforming Energy Markets or Betting on Mistakes?

There’s no better way to take the pulse of innovation than to survey R&D spending. And there’s no better time than during a downturn, because history tells us that this is the opportunity for businesses to gain advantage by investing and growing.

Two recent R&D surveys, one from the Wall Street Journal and the other from McKinsey were released recently and both confirm that many companies are still spending on R&D (for now).

(Photo: Battelle Institute)

So what about green investment? Are companies spending on cleantech? They should be, since transforming energy markets (which is critical) will require an unprecedented level of R&D.

But the challenges are enormous. The energy industry is the largest on the planet, with sales of more than $2 trillion a year, and industrial labs and government have scaled back R&D drastically over the past 20 to 30 years.

Still, the Obama administration seems at least to recognize the need. It has outlined an ambitious policy to invest in energy R&D, a big reversal from previous years of shrinking energy R&D budgets. Whether the government can sustain the investment is unclear (R&D is expensive) but the gains from R&D today will far exceed the up-front cost 20 years down the road.

Encouragingly, the Battelle Institute, which tracks R&D investment, predicts cumulative spending by companies, government and universities will rise 3 percent this year, although it predicts a decline in 2010. Battelle notes that R&D cuts during the downturns of the 1980s and 1990s took more than five years to return to prior spending levels.

Companies keeping up R&D funding include Microsoft, which spent 21 percent more in fourth quarter 2008 over 2007, while revenue was virtually flat. IBM is also spending on R&D, partly because of government-stimulus money. IBM says it plans to keep its R&D spending at the same level it was last year. Corning claims it will cut everything else possible before cutting R&D. Corning executives devised a strategy last summer called “rings of defense” to put into play during this downturn. In this strategy, R&D is in the innermost ring.

On the flip side, McKinsey cites evidence that some companies are pondering reductions in R&D spending. In its survey, 40 percent of respondents say their companies are actively seeking to reduce R&D costs. Some 34 percent of executives surveyed said R&D budgets are lower in 2009 than they were in 2008. The majority also said they’re taking a new approach to R&D in the current economic circumstances, with many turning to shorter-term, lower-risk projects.

That’s a little alarming, considering the historical benefits of investing in long-term innovation. But at least some realize that slowing R&D amounts to gradual self-destruction. “Companies by and large realize that large reductions in R&D are suicidal,” said Jim Andrew, senior partner at the Boston Consulting Group, in the WSJ story. “It is the last shoe to drop.”

Posted in Business & Economics, Energy, Energy Industry, Other0 Comments

Epic Correction Leads to Depressed Solar Sector

How epic has this correction been? The answer is worse than the 1987 programmatic crash (S&P -32%) but not as bad, to-date, as the 1973 oil crisis (S&P -48%) or the dot-com bubble (S&P -49%). For an excellent graphic of these events and the current housing bubble (S&P -45%) visit Calculated Risk. In this graph each of the indices starts at the same point on the top of the vertical axis, which represents the percentage amount of drop in index value. With the horizontal axis representing time, it can be seen that while the percentage drop of the S&P 500 is not quite as severe as in the case of the corrections of ’73 or ’00, those corrections took 2-3 years to hit bottom. We are less than one year into this correction and the S&P is down 44%.

For sustainable energy the correction to-date has been even more severe. Our graph from the October 7, 2007 S&P 500 peak to the end of October 2008 shows the changes to the four sectors we have been tracking since the S&P peak. At their minimums the four indices were down between 65 – 80%.


CAMINO INDICES VS. S&P 500
Camino Renewable Energy Indices vs. S&P 500 for the period
9-07 through 10-31-08. Camino’s solar index is down 60%.
(Copyright: Camino Energy)

The month of October was particularly bad for sustainable energy where 100% of the companies in our indices had negative returns.


CAMINO’S RENEWABLES INDICES – LAST 30 DAYS THROUGH 10-31-08
Down 32-85% in one month, Camino Renewable Energy Indices
performance for the period Oct. 1st, 2008 through Oct. 31st, 2008
(Copyright: Camino Energy)

So what am I optimistic about? Simple, I’m optimistic the sustainable energy industry will continue to exist and at some point prices get so low that the stocks represent attactive buys. I think this is particularly true for solar as the statistics below show for 10 of the US traded companies I track in the Camino SOLAR index (detail here).


CAMINO’S SOLAR INDEX – TOP TEN AVERAGE RATIOS
Earnings growth would have to fall dramatically
for Caminos’s top ten solar stocks to not be good buys.
(Copyright: Camino Energy)

SOLAR growth rates would have to slow dramatically to make the companies overpriced at current levels. Even if their earnings growth slows by a factor of 4 these ten companies would still be fairly priced. And I don’t see many reasons to expect such a slowing. Modules prices are expected to fall which should boast sales and improve customer ROI. Retail electric prices are virtually unaffected by oil prices in many economies so the basic economic benefit of solar isn’t going away. Subsidies are locked in in the US. Financing should be available with the massive governmental pushes to create liquidity while lowering rates. And the technology continues to improve further driving down costs and improving solar’s competitive position.

There may be other bargins in the sustainable energy sector but the solar sector is a good place to start with plenty of potential investment targets.

Mark Henwood is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. Disclaimer: Henwood has positions in JASO, SOL, CSIQ, STP, SOLF, and LDK.

Posted in Business & Economics, Energy, Energy Industry, Other, Retail, Science, Space, & Technology, Solar0 Comments

Wind Power Surges

As the winds of change blow through America on this historic election day, here’s an update on wind energy. The last two years have seen an astonishing growth in wind capacity worldwide, particularly since the installed base of wind generating capacity now constitutes a substantial denominator over which to calculate percentage growth. Sometime this year, the installed base of wind generating capacity worldwide crossed 100 gigawatts. By comparison, the estimated total installed base of photovoltaic capacity worldwide at the end of 2007 was only about 10 gigawatts – and the yields from wind energy are now reliably over 25% – in some cases much higher – whereas the yields from solar average well under 20%.

If you want to learn everything there is to know about wind, the first place to go is read “Annual Report on U.S. Wind Power, Installation, Cost & Performance Trends,” issued every spring by the DOE’s Office of Energy Efficiency and Renewable Energy. This report provides comprehensive information on the U.S. wind energy industry and includes a lot of useful information on worldwide wind energy. Today I had the opportunity to talk with one of the principle authors of this report, Ryan Wiser, who was able to shed some light on what is happening with wind in 2008.

As of 12-31-07, the total installed base of wind energy in the world was 94 gigawatts, and total new installations in the world probably will exceed 2007′s 20 gigawatts, meaning as of 12-31-08, the total installed base of wind energy in the world will be about 120 gigawatts. In the U.S., in terms of percentage growth, the story is even more dramatic. During both 2005 and 2006, not quite 2.5 gigawatts of wind capacity was installed in the U.S. Then in 2007 another 5.0 gigawatts of wind capacity was added. Estimated total installations for 2008 are at least another 7.0 gigawatts, putting total estimated U.S. wind capacity as of 12-31-08 at around 22 gigawatts; 77% of that in just the last four years; 55% of that in just the last two years!

The installed cost for wind energy has been in flux – but increased demand combined with increases in commodity prices led to cost increases in the past few years, something that will continue into 2009 since most of the turbines that will be installed in 2009 have already been ordered. The U.S. average in 2008 was about $2.0 million per megawatt ($2.0 billion per gigawatt). In 2007 the average was $1.7 million per megawatt, and in 2006 it was $1.5 million per megawatt.


INSTALLED WIND PROJECT COSTS OVER TIME
Since 1982 the cost for wind energy has dropped about 50%.
(Source: NREL)

Getting from cost per installed capacity to cost per kilowatt-hour is a subjective exercise, but the variables requiring assumptions are relatively finite: installation cost (including land), operating & maintenance costs, transmission costs, the yield, the life, and the cost of financing and return to investors. In the U.S. in 2006/2007 the costs per kilowatt-hour for wind energy installations came in between $.045 and $.05 per kilowatt-hour; the 2008/2009 installations may come in about two cents higher than that, between $.065 and $.07 per kilowatt-hour.

An interesting fact regarding wind power is the question of costs for onshore vs. offshore. There aren’t any offshore windfarms yet in the U.S., but there are plenty of them in Europe, and basically the installation cost for an offshore windfarm is about twice what it would cost onshore. This disparity is mitigated however by higher yields offshore, as well as zero costs for acquiring the land. Also helping the economics of offshore wind is the presumably lower cost to market. A windfarm can be just offshore from a major metropolitan area, with a transmission distance of 50 miles, for example, whereas land-based wind is sited in areas where land is cheap and wind is plentiful, and these areas may be hundreds or even thousands of miles removed from major population centers.

As with solar, the installed base of wind energy, despite impressive percentage gains in recent years, is still minute compared to total energy demand in the world. At a yield of 25%, as of 12-31-08 wind energy will deliver 30 gigawatt-years of electricity. If we round this total up to 33.4 gigawatt-years, which is the energy equivalent of 1.0 quadrillion BTUs (known as “quads” by energy economists), then by early 2009, wind energy will constitute 1.0 quad of annual energy production, which is probably going to exceed 500 quads next year. Wind energy is up to one-fifth of one percent of global energy production.

When comparing solar energy to wind energy, the most interesting fact is that solar energy’s percentage growth is even more dramatic than wind. As wind turbine production grows by 20% or more annually, production of photovoltaics is growing at 50% or more annually. A very interesting bet would be when total solar output, currently only about 15% that of wind, will surpass wind. Prices for solar energy also are becoming competitive with wind – the prices to install utility scale solar are highly proprietary, but some credible estimates go as low as $3.0 million per megawatt, which is getting within striking distance of the installed prices for wind turbines. While solar still has a somewhat lower yield than wind, it has far more potential to deliver energy in decentralized applications, in addition to utility scale applications. And both thin film and solar thermal technologies are just beginning to take off. Nonetheless wind electricity is still demonstrably cheaper than solar electricity and, at least in absolute terms, is still extending its lead.

For more information on wind energy read our recent report “Multi-megawatt Wind Turbines.”

Posted in Electricity, Energy, Energy & Fuels, Energy Efficiency, Energy Industry, Office, Solar, Wind0 Comments

Free Markets: The Solution to America's Credit Crisis

America’s credit crisis should come as no surprise to anyone whose been paying attention. We discussed this about a year ago in our post “Inflation vs. Deflation,” and if you read that post, you will see links to discussions we’ve had on this topic that go back as far as 1998. Because this has been brewing for a long, long time. And the question still remains – inflation or deflation – pick your poison. Our belief is inflation is a far more palatable option.

Back around 2003 I remember debating economic policy with a business reporter for the Wall Street Journal. I still recall the shock this person displayed when I downplayed the mitigating value of the “current account” when discussing America’s trade deficit. Apparently the conventional wisdom held that since foreign investment makes up the difference between how much America pays for imports vs. how much America collects from exports, the trade deficit of some $60 billion per month that America has racked up now for years on end is of no consequence. The problem with that sanguine assessment of our trade deficit is the fact that Americans borrowed all this money to make all these purchases, and eventually there is no financial instrument left to facilitate more borrowing. Quite simply, we can no longer borrow at a faster rate than we can afford to make repayments.

America’s debt binge really began about 30 years ago, in the mid 1970′s, which is the last time Americans exported more than they imported – also about the time credit cards started to really get popular. For a long time, America’s trade deficit was relatively insignificant, and foreign investment indeed more than made up for the shortfall. And if the monthly trade deficits hadn’t widened precipitously over the last ten years or so, they might have been sustained indefinitely. After all, America provides an enduring safe haven for investors, and exports security to the world. We keep the sea lanes open, we have a democracy that works, we are stable, we are innovators. And our perennial trade deficits mean our dollars finance the industrialization of emerging nations. Almost everybody was happy.

Alan Greenspan, Chairman
Federal Reserve Bank, 1987-2006

It isn’t possible to quickly summarize where things started to slip out of control, but in ticking through the factors, it is very, very important to recognize there was no single party, nor a single ideology, that ought to be held solely accountable.

The repeal of the Glass Steagall Act in 1999, which lifted crucial restrictions on the degree to which banks were permitted to make speculative investments, combined with the refusal of then Federal Reserve Bank Chairman Alan Greenspan to raise interest rates so as to contain “irrational exhuberance” (his words) in the stock market, probably started to accelerate the slide that has resulted in the current predicament.

When the internet bubble burst, which any financially literate curmudgeon would have seen coming for years, the damage to the economy was severe – but rather than endure a downturn, mortgage lending entered a dangerously aggressive phase to pick up the slack. Replacing the collateral of inflated internet stocks, without skipping a beat, came the collateral of inflated home equity. Some would call these loans predatory, and they would be right to say so, but these “no doc,” “introductory rate,” “negative amortization,” “fixed but resetting in 2-3 years,” loans were also permitted thanks to intense pressure from both sides of the aisle to make housing “affordable.” Since it was impossible to make home prices fall, the only solution was to make home mortgages cheap. And since there is no such thing as a cheap home mortgage, “introductory rates” were the only way left to “get people into a home.”

So who enjoyed this mess that it is so easy to blame on Wall Street? People who suddenly thought they needed a 3,500 square foot McMansion and didn’t care if they were borrowing 10x their annual income? People who thought they would borrow against their inflated home equity at a floating rate so they could drive around in a 6,000 lb. SUV? Economic planners in Washington who didn’t dare tell the American people that an economy can’t live forever on credit – that it doesn’t work that way in the real world? What about all the public employee unions who used the ersatz prosperity of the internet bubble followed by the housing bubble to negotiate pensions that have created another crippling liability for the American people – and who used their financial might to take control of our elections and politicians at the state and local level? Or who didn’t want to lobby for mortgage lending reform because that might lower home prices, which in turn would lower property tax revenues? There were a lot of pigs at the trough, and none of them apparently cared about what would happen when it was time to pay the piper. And plenty of them knew better.

For these reasons, blaming the “free market” is a futile, shallow, potentially dangerous exercise. Power corrupts equally, and if popular sentiment leads our politicians to thoughtlessly eviscerate the prerogatives of our free market while leaving big government and big labor more powerful than ever, it will be a mistake of historic proportions.

The solution is to regulate mortgage lending and derivative trading in measured, not draconian steps. And any “solution” to Wall Street “greed” is empty if done without also recognizing and attempting to regulate the greed that is endemic in all sectors. To nationalize the banking industry without merging every public employee pension fund with the social security fund – newsflash, at this point only social security is even slightly solvent – is almost as absurd as the proposed nationalization of our energy industry to supposedly fight an alleged climate crisis. In both cases the villian is the market, and the good guys – translation, beneficiaries – are the government and public sector labor. Such blind scapegoating ignores the nature of man. To embrace such simplicity would be tragic for the United States and the world.

We need free markets, and good regulations, and good deregulation. We need to recognize that inflation is our only way out of this, because only through inflation can we systematically and somewhat equitably erode the real value of these mountains of debt we’ve collectively incurred. Failure to avoid this calamity should not be another excuse to bash free markets because responsibility for this failure is shared by everyone in this imperfect world. To paraphrase Winston Churchill, free markets are the worst economic system known to man, except for all the other ones.

Posted in Business & Economics, Energy Industry, Other, People0 Comments

Novel Thermal Storage

Believe it or not, with hundreds upon hundreds of entries – most of them lengthy diatribes filled with quantitative factoids – we have never posted a press release. Well everything comes in good time, and this is an interesting press release. Heat transfer and heat storage fluid indeed! This is the missing link, the central point, the integrative catalyst for a competitive alternative energy industry. This is energy storage and management at a level where thermal and electric are equally managed on one system. This is cheaper at macro and micro levels because systems are integrated and thermal-electric conversion is efficient. This is PVs cooled with fluid that harvests heat and routes it everywhere. See “Thermal Circulation Systems,” and “Redistributing Thermal Mass.”

The flower of innovation in full bloom.
(Borago officinalis)

Well it isn’t just us, it’s them too, the U.S. Dept. of Energy, who want to know where the next generation designs are for building-scale or even city-scale (witness neighborhood thermal distribution systems using co-gen heat from coal plants in Denmark, for example) thermal systems. Harvesting, managing and storing energy at various scales using a thermal transfer fluid. Sweet. Where are the credible companies already innovating these crucial technologies – systems to perform building and neighborhood integrated thermal energy management? Here goes:

Funding Opportunity Announcement:

Advanced Heat Transfer Fluids and Novel Thermal Storage Concepts for Concentrating Solar Power Generation

The U.S. Department of Energy (DOE) Solar Energy Technologies Program has released a Funding Opportunity Announcement (FOA) entitled, “Advanced Heat Transfer Fluids and Novel Thermal Storage Concepts for Concentrating Solar Power Generation.” This FOA solicits proposals from industry and academia to take on key challenges related to this growing need in concentrating solar power (CSP). It will support research, development, and demonstration of novel thermal energy storage concepts and improved heat transfer fluids to further increase the efficiency and reduce the cost of promising CSP technologies.

About $60 million is expected to be available for new awards under this announcement during a project period of 3 to 4 years. DOE anticipates making 10 to 25 awards under this announcement, depending on the size of the awards. Awards will be made for both long-term research and development and near-term demonstrations, with awards ranging from $125,000 to $14,000,000, including cost-sharing.

The Solar Program considers CSP technologies to be the most attractive option for meeting utility-scale electricity needs in the U.S. Southwest. Currently, 350 megawatts of generating capacity are located in California’s Mojave Desert, with portions of this capacity generating electricity for more than the last 20 years (see Assessment of Potential Impact of Concentrating Solar Power for Electricity Generation (PDF 1.4 MB). Download Adobe Reader. CSP technology is currently in various stages of development or deployment throughout the U.S. Southwest, as well as in Spain, Israel, Africa, and the Middle East.

The current cost of energy for CSP plants is in the range of 13–17 cents per kilowatt-hour. The goal is to achieve cost-competitive power in intermediate power markets by 2015 and in carbon-constrained baseload power markets by 2020. Critical to achieving these goals is the development of inexpensive thermal storage.

Applications for this solicitation are due on or before Thursday, July 10, 2008. For more information on this FOA, visit the Financial Opportunities page or Grants.gov. The Funding Opportunity Number (FON) is DE-PS36-08GO98032.

Posted in Coal, Electricity, Energy, Energy & Fuels, Energy Industry, Science, Space, & Technology, Solar0 Comments

The 25x'25 Alliance

A STATEMENT OF SUSTAINABILITY PRINCIPLES TO APPLY WHILE STRIVING TO PRODUCE 25% OF ALL ENERGY FROM RENEWABLE SOURCES BY 2025

Released March 2008 by the 25x’25 Alliance, republished with permission.

Biofuel Field with Tractor
Biofuel, especially via cellulosic extraction
from crop residue, has huge potential.
(Photo: 25x’25 Alliance)

Editor’s Note: If you have boundless faith in the power of technology, innovation, and free enterprise, like we do, it shouldn’t seem difficult to accomplish the goal of generating 25% of all energy from renewable sources by 2025. The real question would be which sources might dominate: biofuel, solar, wind, geothermal, hydropower, ocean waves, currents and tides – who knows? Fusion? The devil is in the details, however, hence sustainability principles are very, very important as we rush to completely transform the global energy industry with renewables.

Biofuel is a perfect example of a renewable fuel that has great potential but also is not sustainable in every manifestation we’ve seen. Over the past ten years as the demand for renewable energy has risen relentlessly, driven by a variety of compelling motives – energy diversity, energy security, environmental concerns, resource constraints, national economic interests – biofuel has been a promising option, enthusiastically pursued. Production of biofuel from crops in an agriculturally rich, relatively underpopulated nation like America, on land that otherwise lies fallow and is irrigated with ample summer rains is one thing. Production of biofuel from crops where rainforest stood a year earlier, in order to feed the market for carbon credits – when rainforest left intact might better accomplish the goals for which carbon credits were supposedly set up, is something else entirely.

The basic algebra of biofuel cannot be ignored if sustainability is a goal – biofuel can make compelling economic sense, but at yields of 5,000 BBLs per square mile, biofuel will not make a significant dent in global energy production, yet because it is profitable to produce, we can rip out every forest left on earth to grow it. To say other forces are consuming our forests – population growth, timber harvesting, food production, is true but beside the point. Biofuel is also playing its part in rainforest destruction, and if we’re all set to regulate CO2 emissions, we need to put at least equal energy into monitoring the health and extent of our rainforests. Sustainability principles for biofuel are absolutely essential.

It is important as well to recognize that the power of technology and innovation will not leave us reliant much longer on crops to produce biofuel. We are quickly learning how to economically extract biofuel from crop residue, forest tinder and timber industry byproducts, animal wastes and municipal wastes. Policies that encourage biofuel production need to be carefully structured to accelerate these 2nd generation methods of extracting and refining biofuel, rather than creating vested interests in perpetuating a reliance on 1st generation biofuels from crops. Better yet, technology and innovation needs to deliver 3rd generation biofuels that are grown in factory environments, where a square mile complex might deliver not 50,000 BBLs per square mile per year (the most promising 2nd generation estimates we’ve every heard of), but 500,000 BBLs per square mile.

If these sorts of innovations are allowed to happen, then the goal of producing 25% of all energy from renewable sources by 2025 may turn out to not have been ambitious enough. One of the biggest challenges as the renewables revolution delivers energy abundance to the world will be to watch for unintended environmental consequences – and these sustainability principles recently set forth by the 25x’25 Alliance are an important contribution raising the level of the global discussion. – Ed “Redwood” Ring

25% Renewable by 2025 – A statement of sustainability principles to apply while striving to produce 25% of all energy from renewable sources by 2025
- by the 25x’25 Alliance, March 2008
Cows in Field
Biodiesel & methanol from
livestock waste is a promising
source of alternative fuel.
(Photo: 25x’25 Alliance)

In September of 2007, the 25x’25 Alliance’s Steering Committee chartered a work group composed of a cross section of agricultural, forestry, industry, environmental and conservation leaders to help further define sustainability in a 25x’25 renewable future.

The mission of the work group was to develop recommendations for sustainability principles that would help guide the evolution of 25x’25.

The sustainability principles outlined in this report are the product of the 28-member 25x’25 National Steering Committee. Though the assumptions and principles were drawn from the consensus recommendations developed by the work group, they represent the views and position of the 25x’25 National Steering Committee rather than any individual 25x’25 Alliance partner.

Sustainability Principles for a 25x’25 Energy Future

Preamble

In the Energy Independence and Security Act passed in December 2007 the U.S. Congress formally adopted 25x’25 as a national goal, affirming that it is the goal of the United States to derive 25 percent of its energy use from agricultural, forestry and other renewable resources by 2025.

The 25x’25 Action Plan Charting America’s Energy Future, authored and released by the 25x’25 National Steering Committee in February 2007, outlines specific steps that need to be taken to put the United States on a path to secure 25 percent of its energy needs from renewables by the year 2025. The 25x’25 goal and Action Plan stand on a foundation of five key principles – efficiency, partnership, commitment, sustainability, and opportunity.

Sustainability has always been considered as central to the success of the 25x’25 renewable energy initiative and is defined as follows in the Action Plan:

Sustainability: To be a long-term solution for America, renewable energy production must conserve, enhance, and protect natural resources and be economically viable, environmentally sound, and socially acceptable.

Underpinning the concept of sustainability is the ideal of stewardship or the responsible use and orderly development of natural resources in a way that takes full and balanced account of the interests of society, future generations, and other species, as well as private needs, and accepts significant answerability to society.

In developing these principles, a number of basic underlying assumptions were identified and agreed to:

Renewable energy production must comply with all existing federal, state, and local laws
and regulations.

All regions will have an opportunity to engage in the production of bioenergy feedstocks
and renewable energy.

Renewable energy production should address the multiple-values of the land-base
including environmental, economic, social, and historical.

Balance of stakeholder interests must be a central theme in renewable energy production.

The principles set forth for sustainability are mutually reinforcing.
The 25x’25 National Steering Committee recommends the following principles to 25x’25
partners and would support their adoption by renewable energy producers and policy makers.

Windmill
Wind power is already becoming cost
competitive with conventional energy.
(Photo: 25x’25 Alliance)

25x’25 Sustainability Principles

Access: Renewable energy producers and consumers should have fair and equitable access to renewable energy markets, products, and infrastructure.

Air Quality: Renewable energy production should maintain or improve air quality.

Biodiversity: Renewable energy production should maintain or enhance landscape biodiversity and protect native, rare, threatened, and endangered species and habitat.

Community Economic Benefits: Renewable energy production should bolster the economic foundation and quality of life in communities where it occurs.

Efficiency and Conservation: Renewable energy production should be energy efficient, utilize biomass residues and waste materials when possible, and conserve natural resources at all stages of production, harvesting, and processing.

Greenhouse Gas Emissions: Renewable energy production should result in a net reduction of greenhouse gas emissions when compared to fossil fuels.

Invasive and Non-Native Species: Introduced or non-native species can be used for renewable energy production when there are appropriate safeguards against negative impacts on native flora and fauna, and on agricultural and forestry enterprises.

Market Parity: Renewable energy production should have parity with fossil fuels in access to markets and incentives.

Opportunities: All regions of the nation should have the opportunity to participate in renewable energy development and use.

Private Lands: Renewable energy production on private working farm, forest, and grasslands should improve the health and productivity of these lands and help protect them from being permanently converted to non-working uses.

Public Lands: Renewable energy production from appropriate public lands should be sustainable and contribute to the long-term health and mission of the land.

Soil Erosion: Renewable energy production should incorporate the best available technologies and management practices to protect soils from loss rates greater than can be replenished.

Soil Quality: Renewable energy production should maintain or enhance soil resources and the capacity of working lands to produce food, feed, fiber, and associated environmental services and benefits.

Special Areas: Renewable energy production should respect special areas of important conservation, historic, and social value.

Technology: New technologies, including approved biotechnology, can play a significant role in renewable energy production, provided they create land use and production efficiencies and protect food, feed, and fiber systems, native flora and fauna, and other environmental values.

Water Quality: Renewable energy production should maintain or improve water quality.

Water Quantity: Renewable energy production systems and facilities should maximize water conservation, avoid contributing to downstream flooding, and protect water resources.

Wildlife: Renewable energy production should maintain or enhance wildlife habitat health and
productivity.

Geothermal Energy Shoots out of Ground
Enhanced geothermal using advanced drilling
techniques could be a gigantic surprise.
(Photo: 25x’25 Alliance)

Reference Materials Reviewed

25x’25 Action Plan: Charting America’s Energy Future. 25x’25 National Steering Committee.
Washington, DC. February 2007.

Achieving Sustainable Production of Agricultural Biomass for Biorefinery Feedstock.
Biotechnology Industry Association. Washington, DC. 2006.

Bioenergy. NCR-SARE Bioenergy Position Paper. Nov. 2007.

http://www.sare.org/ncrsare/bioenergy.htm

Getting Biofuels Right: Eight Steps for Reaping Real Environmental Benefits from Biofuels.
Natural Resources Defense Council. Washington, DC. May 2007.

Ken Cairn, B. Biomass Energy – Critical Issues for Consideration in Developing Biomass
Energy and Energy Policy in Colorado and the West
. Community Energy Systems, LLC. Oak
Creek. CO. 2007.

Natural Resources: Woody Biomass Users’ Experiences Offer Insights for Government Efforts
Aimed at Promoting Its Use
. U.S. Government Accountability Office. Washington, DC. GA)-06-
336. March 2006.

Principles for Bioenergy Development. Union of Concerned Scientists. Cambridge, MA. April
2007.

Roundtable on Sustainable Biofuels: Ensuring That Biofuels Deliver on Their Promise of
Sustainability
. Ecole Polytechnique Federale De Lausanne. July 2007.

Sample, V. Alaric. Ensuring Forest Sustainability in the Development of Woody-Based
Bioenergy
. Pinchot Institute for Conservation. Washington, DC. Vol. 12, No. 1, 2007.

Sample, V. Alaric. Bioenergy Markets: New Capital Infusion for Sustainable Forest
Management
. Pinchot Institute for Conservation. Washington, DC. Vol. 11, No. 2, 2006.

Science, Biodiversity, and Sustainable Forestry: A Findings Report of the National Commission on Science for Sustainable Forestry. National Commission on Science for Sustainable Forestry.
Washington, DC. January 2005.

Sustainability: Meeting Future Economic and Social Needs While Preserving Environmental
Quality
. National Corn Growers Association. Chesterfield, MO. 2007.

The Rush to Ethanol: Not All Biofuels Are Created Equal. Food & Water Watch and Network for New Energy Choices. Washington, DC, and New York, NY. 2007.

The Environmental, Resource, and Trade Implications of Biofuels. Woods Institute for the Environment. Stanford University. Stanford, CA . 2007.

http://woods.stanford.edu/ideas/biofuels.html

Solar power is the wildcard – it possibly
could experience exponential growth.
(Photo: 25x’25 Alliance)

25x’25 National Steering Committee

William Richards – Circleville, OH (Committee Co-Chair)

Corn and soybean producer; former Chief, U.S. Department of Agriculture Soil Conservation
Service

J. Read Smith – St. John, WA (Committee Co-Chair)

Wheat, small grains and cattle producer; former President, National Association of Conservation Districts

Duane Acker – Atlantic, IA

Farmer; former President, Kansas State University; former Assistant Secretary of Agriculture for Science and Education, U.S. Department of Agriculture

R. Bruce Arnold – West Chester, PA

Consultant, woody biomass utilization for the pulp and paper industry; retired engineer and
manufacturer, Scott Paper Company

Peggy Beltrone – Great Falls, MT

County Commissioner- Cascade County Montana; member, National Association of Counties
Environment, Energy and Land Use Steering Committee

John R. “Jack” Block – Washington, DC

Former Secretary of Agriculture, 1981-1986

Michael Bowman – Wray, CO

Wheat, corn and alfalfa producer; Steering Committee member, Colorado Renewable Energy
Forum; Rural Chair, Colorado Ag Energy Task Force

Charles Bronson – Tallahassee, FL

Commissioner, Florida Department of Agriculture and Consumer Services; member, Florida
Cabinet; member, Florida Governor’s Council on Efficient Government; former President,
Southern Association of State Departments of Agriculture

Glenn English – Arlington, VA

CEO, National Rural Electric Cooperative Association; former Co-Chair, U.S. Department of
Agriculture, DOE Biomass R&D Federal Advisory Committee; former Member of Congress (6th-OK) 1974-1994; Chairman, House Agriculture Subcommittee on Environment, Credit, and Rural Development

Tom Ewing – Pontiac, IL

Immediate past Chairman, USDA, DOE Biomass R&D Federal Advisory Committee; former Member of Congress (15th/IL) 1991-2001; Chairman, House Agriculture Subcommittee on Risk Management and Specialty Crops

Barry Flinchbaugh – Manhattan, KS

Professor of Agricultural Economics, Kansas State University; Chairman, Commission on 21st
Century Production Agriculture

Robert Foster – Middlebury, VT

Dairy farmer, composter, anaerobic digester; President, Vermont Natural Ag Products; Vice-
President, Foster Brothers Farm Inc.; President, AgReFresh

Richard Hahn – Omaha, NE

Retired President, Farmers National Company

Harry L. Haney, Jr. Austin, TX

Consultant, non-industrial private forestland management; emeritus professor, Department of
Forestry, College of Natural Resources, Virginia Tech; past president, Forest Landowners Association

Ron Heck – Perry, IA

Soybean and corn producer; Past President, American Soybean Association

Bill Horan – Rockwell City, IA

Corn and soybean producer; former Board Member, National Corn Growers Association

A.G. Kawamura – Sacramento, CA

Orange County specialty crops, produce grower and shipper; Secretary, California Department of Food and Agriculture; Vice Chairman, Rural Development & Financial Security Policy Committee, National Association of State Departments of Agriculture; founding Partner, Orange County Produce, LLC

Jim Moseley – Clarks Hill, IN

Managing Partner, Infinity Pork, LLC; former Deputy Secretary, U.S. Department of Agriculture; former Director of Agricultural Services and Regulations, Purdue University’s School of Agriculture; Assistant Secretary of Agriculture for Natural Resources and the Environment, U.S. Department of Agriculture

Allen Rider – New Holland, PA

Retired President, New Holland North America; former Vice President, New Holland North
America Agricultural Business Unit

Nathan Rudgers – Batavia, NY

Senior Vice-President, Director, Business Development, Farm Credit of Western New York;
former Commissioner, New York State Department of Agriculture and Markets; former President, National Association of State Departments of Agriculture

Bart Ruth – Rising City, NE

Corn and soybean producer; Past President, American Soybean Association; 2005 Eisenhower
Fellow for Agriculture

E. Dale Threadgill – Athens, GA

Director, Faculty of Engineering, and Department Head, Biological & Agricultural Engineering, the Driftmier Engineering Center, and the Biorefinery and Carbon Cycling Program, University of
Georgia; private forest landowner

Mike Toelle – Brown’s Valley, MN

Chairman, CHS; past Director and Chairman, Country Partners Cooperative; operator, grain and hog farm, Browns Valley

Gerald Vap – McCook, NE

Chairman, Nebraska Public Service Commission; former Chairman, National Conservation
Foundation; President, Vap Seed & Hardware

Don Villwock – Edwardsport, IN

Grain and soybean producer; President, Indiana Farm Bureau Federation; former Chairman,
Farm Foundation

Sara Wyant – St. Charles, IL

President, Agri-Pulse Communications, Inc.; former Vice-President of Editorial, Farm Progress
Companies

Ernest C. Shea – Lutherville, MD (Project Coordinator)

President, Natural Resource Solutions, LLC; former CEO, National Association of Conservation

25x'25 America's Energy Future

About the authors: The “25×25 Sustainability Principles” was released in March 2008 by The 25x’25 Alliance, and is republished with permission. The 25x’25 Alliance began in 2004 as a group of volunteer farm leaders who first envisioned the goal of America achieving 25% renewable energy by 2025, and the group quickly gained the support of a broad cross-section of the agriculture and forestry communities. Now leaders from business, labor, conservation and religious groups are joining this alliance as well.

The 25x’25 Alliance is supported financially by the Energy Future Coalition, a non-partisan public policy initiative funded by foundations. For general inquiries, email info@25×25.org. The 25x’25 Alliance is headquartered at 1626 Bellona Avenue, Lutherville, MD 21093, (410) 252-7079.

Additional EcoWorld reports on Biofuel:

- Food vs. Fuel?

- Biofuel’s Mixed Blessings

- The Biofuel Bonanza

- Factory Farmed Biofuel

- Bioethanol vs. Biodiesel

- Growing & Refining Biofuel

- India’s Biodiesel Scene

- Biodiesel: The Alternative Fuel That’s Already Here

- Jatropha in Africa

- Europe Adopts Jatropha

- Jatropha – Biofuel Grown in the Desert

Also reference over 40 Editor’s posts on the topic of biofuel:

- Biofuel Posts, EcoWorld Editor’s Blog

Email the Editor about this Article
EcoWorld - Nature and Technology in Harmony

Posted in Biodiversity, Conservation, Energy, Energy & Fuels, Energy Industry, Engineering, Geothermal, Ideas, Humanities, & Education, Office, Other, Policies & Solutions, Population Growth, Science, Space, & Technology, Services, Soil Erosion, Solar, Wind0 Comments

India's Ministry of New & Renewable Energy Incentivizes Alternative Energy

Earlier this month at the Delhi Sustainable Development Summit 2008, heads of state, ministers, policymakers, corporate leaders, NGO’s and financiers met for three days to address the issue of climate change. During the event, the REEEP South Asia Regional Secretariat organised a workshop to discuss financial risk management in renewable energy and energy efficiency projects. Risk is a major concern for financiers and investors.

The Indian renewable energy sector has shown impressive growth in the last few years and investment in the sector have increased significantly. However, investment still lags behind expectations and market potential is not being fully realised. According to the Government of India’s Ministry of New and Renewable Energy the country’s short term goal is to add approximately 24GW of new capacity from renewables by 2012. Currently installed capacity is about 11 GW. The planned increase in capacity requires more than Euro 3 million in investment.

Mr Creon Butler, UK Deputy High Commissioner, spoke about the UK government’s intent to establish an £800 million environmental transformation fund, which will be made available to developing countries for transition to a low carbon growth path.

Mr. Chadrashekar Iyer, Associate Director, PricewaterhouseCoopers said, “The renewable energy sector in India has been increasing at 20% annually and the annual turnover of the renewables industry is reaching Euro 1.7 billion. Policy and regulatory frameworks are an important factor to promote investment and policies must guide investment into projects that can improve energy production.”

Fuel supply, performance and technology, regulatory and credit risks were some of the major risks identified in the Indian context during the event. In order to address the issue of risk mitigation, the Renewable Energy and Energy Efficiency Partnership (REEEP) recently provided funding to a two year project in India to analyse the risks and barriers facing the renewable energy industry. The project is expected to develop risk management instruments and policy recommendations.

The finance community has shown great interest in the project. Mr Debashish Majumdar, Chairman and Managing Director of the Indian Renewable Energy Agency (IREDA) emphasized the enormous potential of renewable energy and urged the finance community to enable the renewables industry to tap into this potential efficiently.

Dr. Marianne Osterkorn, International Director of the Renewable Energy and Energy Efficiency Partnership (REEEP), underlined the partnership’s commitment to “proactive cooperation with financial institutions and development agencies, and mainstreaming technology transfer into REEEP projects.”

Posted in Business & Economics, Energy, Energy Efficiency, Energy Industry, Policies & Solutions, Regional, Science, Space, & Technology1 Comment

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