The Oil Drum | The White House: AEI in All Its Glory (SOTU Open Thread 3)

56 comments on The White House: AEI in All Its Glory (SOTU Open Thread 3)

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dinaz on February 1, 2006 - 2:52am

A miserable amount of money...

I wonder how these measly sums thrown at research compare to the value of oil industry tax concessions in last year's energy bill?

Throw some chump change at the problem and talk it up. Same 'ol same'ol.

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Marotti32 on February 1, 2006 - 3:31am

2 billions in ten years für clean coal, around 50 millions each for solar power and wind energy (probably in one year). This doesn't sound very promising. A country that size of the USA ought be able to harness much more renewable energy sources. The american president however is a man of the fossil fuel economy, so the contributions are just a kind of lip service.

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Don Sailorman on February 1, 2006 - 9:03am

The U.S. has huge amounts of readily accessible coal deposits; it would be stupid not to devote major resources to developing these in the best ways for efficiency and minimizing damage to the environment.

In regard to research for wind power, the Danes have essentially solved the intractable problems; all the rest of the world has to do is go to Denmark and listen to their engineers.

In regard to solar energy, Germany (which does not get a great deal of sunshine) leads the way, for reasons I do not understand. Anybody who does know the path dependence story here, please let me know, because I cannot figure it out. For obvious reasons, Israel also is at the cutting edge of solar-energy research.

For turning coal into liquids, the best proven technology is found in South Africa's SASOL corporation--which they borrowed and improved upon from what was done in Germany during World War II.

Some of the most effective large-scale production of ethanol from biomass is being done in Russia--and has been going on for several decades.

Contrary to what seems to be implied by some commentators, there is no need to re-invent the wheel. And I have astonishing news for some Americans: Most of the really smart people in the world do not live in the U.S.

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wimbi on February 1, 2006 - 9:59am

Right. It is astonishing to me that we in the USA don't often bother to look at all the good stuff being done elsewhere. And in my travelling days, long past, I also noticed that most of the really smart people in the world not only didn't live in the US, but not even in Europe. Amazing!

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Don Sailorman on February 1, 2006 - 1:04pm

I sometimes wonder if prosperity makes people stupid. Some of the most ingenious solutions to survival problems I found in the poorest, the very poorest hill villages of India--amazingly clever people. The happiest people I know are Jamaicans--live music everywhere, fresh fruit, fresh fish, gardens around shacks in the hills, chickens and goats, export crops of ganja and tourism (Sex workers do very well.), a surprisingly good educational system. Furthermore, I found the average Jamaican cab driver or hotel receptionist to be smarter than the average Harvard MBA. Also, they have a great sense of humor, and surpisingly, most of them do not hate white people--or anybody, except possibly their political opponents.

Violence is low, maybe due to all the ganja, but also each Jamaican male seems to be born with a machete clutched to his fist. Were you to, for example, dishonor a Jamaican man's sister, your life expectancy would be about ninety seconds; everybody knows this, and hence manners are good.

And for food . . . their diet based on rice and beans is way way healthier than what most Americans eat. Because of extended family support, undernutrition and malnutrition is almost unknown in Jamaica; women there live longer than men do in the U.S. Now, if only the price of sugar would rise and help with their horrendous unemployment problem . . . .

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Donal on February 1, 2006 - 3:18pm

Naturally there are both good and bad sides of Jamaica. From what I recall, Jamaicans were the most ruthless of drug dealers, killing entire families of competitors.

Reports say that Jamaica is bleeding to death with more than 1,100 murders recorded last year and 100 tonnes of cocaine trans-shipped to western markets.

http://news.bbc.co.uk/2/hi/americas/1859948.stm

Jamaica, birth place for many in Toronto's black community and, according to police, birth place for the gang culture now taking hold of the city, is an exceedingly violent country. With a population roughly the same as Metro Toronto's, it has about 1200 murders a year, and likely this is an undercount. Jamaica also is home to some hateful social attitudes. A recent popular song there has words about burning alive a 'chi chi man,' the Jamaican expression for a homosexual. So, too, a favored local swear word refers to a woman's menses.

http://www.canadiandemocraticmovement.ca/displayarticle800.html

It is the Jamaica where there have already been some 531 murders for the year by the end of last month, largely related to the frightening "drug culture", spawned by the drug lords operating out of depressed inner-city communities and elsewhere. Among those killed were 10 policemen.

Worried over the record number of murders in any one year -- some 1,131 in 2001 -- and conscious of the influence-peddling of drug barons and gun-runners, the major political parties, the incumbent People's National Party (PNP) of Prime Minister P J Patterson, and the Jamaica Labour Party of Edward Seaga, have signed a historic document for a shared commitment to combat crime at all levels of the society.

http://www.jamaicaobserver.com/columns/html/20020805T200000-0500_29984_OBS_FACES_OF_JAMAICA_ON___TH_ BIRTHDAY.asp

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Don Sailorman on February 1, 2006 - 4:21pm

There is a nasty and violent Jamaican drug subculture, but nobody much cares as long as they just kill off one another. The very worst Jamaicans have been exported to Toronto and other major Canadian and U.S. cities--very clever way to get rid of your most troublesome citizens. If you check the non-drug-gang homicides, I think you'll find the rate is about half that of Mexico (again, subtracting off the narco-traffickers) and substantially below that of both Brazil and the U.S. The police in Jamiaca thoughtfully carry long double-barreled 12 guage shotguns; they seldom shoot but almost never miss. I used to live on the South Side of Chicago, near the U. of Chicago, way back in the olden days when Milton Friedman had hair, and the Blackstone Rangers used switchblade knives. Violence in that part of Chicago was 20 to 50 times that of urban Jamaica today (with the exception of a relatively few really nasty neighborhoods of Kingston. Kingston is a pit, and I do not go there--ever).

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Marotti32 on February 1, 2006 - 10:04am

The reason why Germany invests so much in solar energy is simple: A majory wants to support this technology. In the end there was a majority in the parliament for this.

The in-feed law, which was enacted 5 years ago supports not only the wind power energy (the german manufacturers account for half of the world market), but as well photovoltaics, biomass and now more and more geothermal energy. The economics of scale is very important. Germany is a technology exporting country. Thre is no other choice.

There is not only a peak oil problem. How do you think it is possible to supply the more than one billion people, who do not have access to electricity? Should we build coal-fired power plants in Africa or maybe atomic plants in rural areas of south America, or maybe in North Africa? In the long term, the only solution is renewable energy. So it is better to start now!

"Clean coal" is just a waste of money, which only maintains the current energy structures.

matthias, berlin

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Stoneleigh on February 1, 2006 - 3:54pm

As Mattias says, electricity feed laws (also called advanced renewable tariffs) have made an enormous difference in Germany and elsewhere in Europe. Feed laws allow renewables to compete by offering a 20 year supply contract, with term varying depending on the type of renewable generation. The price is set politically, but the quantity is up to the market. More is paid for expensive technology such as solar and less for technologies cheaper to implement, in order to level the playing field and bring complementary technologies online simultaneously and quickly. Doing so is recognized as a public good that the market cannot be expected to provide.

This is the reverse of the approach in Britain and Ontario, for instance, where renewables are encouraged through a formal bidding process for a set amount of capacity. The quantity is politically (and arbitrarily) determined and the price emerges through competitive bidding. Cheaper technologies would dominate and others may not be exploited at all.

The problems with the latter approach are significant. A cumbersome and bureaucratic bidding process restricts participation to the larger players with deep pockets. Those players can only participate if they have access to the highest quality renewable resources as these are the only projects which will be able to compete on price. The mindset behind this approach is one which attempts to force renewable energy into a form compatible with a traditional power system - large-scale generation at a distance from demand.

Unfortunately, this is model is not a good fit with the potential contribution of renewable energy, which is naturally small-scale and distributed. A competitive bidding process tends to set a ceiling on the penetration of renewable energy technology rather than a floor beneath it. The emphasis on low price is counterproductive - the problem is that power prices are too low for alternatives to be viable. Even winning bids often do not lead to construction of new projects as commercial financing can be difficult to find when spot-market prices are very volatile, there is no long-term visibility and a history of political interference makes potential backers nervous. Ontario has begun to recognize this and is planning to introduce feed laws as Standard Offer Contracts shortly.

Feed laws give investors the long-term visibility they are looking for. They are simple enough that the cost of entry is not prohibitive. They encourage small-scale distributed projects by paying enough to make it cost effective to build renewable capacity, even where the renewable resource available to be exploited is not ideal (Bavarian sunshine for instance).

Germany, and others, have made a political decision to use what renewable potential they possess to best effect, even if it is nowhere near competitive on cost grounds with traditional alternatives. This is a recognition of the fact that the traditional model is faltering, partly as a result of looming fossil fuel shortages. Continental Europe is taking the long-term view and planning for the future in advance of a crisis, unlike most of the anglo-saxon world where a short-term market-based view is thoroughly entrenched. Unfortunately, by the time market prices adjust sufficiently for price signals to drive renewable energy, we will probably be pitched into a state of short-term crisis managment which is incompatible with a rational programme of infrastructure replacement. We need to take action while we still have the luxury of taking the long-term view if we choose.

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Stoneleigh on February 1, 2006 - 7:07pm

The anglo-saxon approach described above is based on Ricardo's comparative advantage, in other words a person or a country should concentrate on what they do best and use the money they get for doing it to purchase the rest of what they need or want from others who are doing what they do best. It is an argument for specialization based on the most efficient use of capital. The assumption is that necessities from elsewhere will always be available, readily transportable and affordable.

Applied to electricity, pursuing comparative advantage would mean one should generate in the cheapest possible way, or perhaps rely substantially on imports. If one must encourage more expensive renewables for political reasons, then one should limit their penetration and should exploit only the best resources. This approach focuses on short-term cost comparisons, even when pertinent information about the long-term is available, and leaves its practitioners potentially vulnerable to supply disruptions.

A web of interdependency works for as long as the system is stable, or at least does not change too drastically or too abruptly for the specialists to adapt. However, when it is possible to predict very significant change with some degree of confidence, then I would argue that it is advisable to develop and make best use of all one's own resources rather than rely on others, even if it is not cost-effective in the short-term. This is what Germany, and others, have done in building distributed renewable energy capacity through feed laws. During periods of upheaval, specialists often suffer disproportionately while generalists may thrive.

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Slippery Slope on February 1, 2006 - 10:16am

Great points! Even if we grant President Bush the best of intentions, "pork barrel" spending (maximum cash payments to political constituents) works against leveraging government research and development funds. I am more hopeful about local initiatives at the US State and city level. Here in Austin there is much support for alternative energy (including solar panel subsidies), rational transportation and Plug-in Hybrid Electric Vehicle technology (from anywhere).

Austin (city level)
http://www.austinenergy.com/About%20Us/Environmental%20Initiatives/Plug-in%20Hybrid%20Vehicles/
http://www.austinenergy.com/Energy%20Efficiency/Programs/Rebates/Solar%20Rebates/index.htm

(Texas) (state level)
http://www.seco.cpa.state.tx.us/zzz_altfuels/alt.html

At the local level there is not so much research funding, but there is selective purchasing, direct or via subsidy, of state-of-the-art products that can help get manufacturers/suppliers/distributors/installers past the start-up and break-even stages.

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Marotti32 on February 1, 2006 - 10:55am

Hi Slippery Slope, indeed many local proactive groups have cemented the foundation for this development here in Germany. Almost every developing starts on a grassroots basis. Atomic energy or clean coal are no technologies to be developed like this, because it is large scale technology and needs to be protected by laws or a lot of subsidizing money.

Meanwhile the industry of renewable energy became a major investment, not only in the EU. Bankers are heavily interested in this topic. The flow of capital and a very good profit lures them. So in the end, more the big money is benefiting from this. It became a multi billion Euro industry in a few years with good local jobs.

The installed wind power in Germany accounts for roughly 5 to 6 % of the domestic electricty. Ten years ago, there was almost nothing existent. Sometimes things can happen pretty swiftly.

matthias, berlin

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Slippery Slope on February 1, 2006 - 12:04pm

It's a small world. Siemens, headquartered in Berlin and Munich, is one of the world's largest electrical engineering and electronics companies - and it operates wind farms here in Texas.

http://www.powergeneration.siemens.com/en/windpower/casestudies/king/index.cfm

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Marotti32 on February 1, 2006 - 1:00pm

Siemens was once founded in Berlin. After WW II it started to have its headquarter in Munich (München). Siemens wind power is a small player in wind energy. The largest one in Germany is Enercon, a privately owned company which once started in a garden 2 decades ago. There is also a lot of activity in Spain. There however, the installed capacity is installed by the large utility companies. In Germany, it was quite common to save taxes by investing in "Bürger Windkraftparks" =citizen wind power parks. So a lot of the wind turbines are owned privately. The utilities are obligated to buy the electricty for a certain amount of money, which decreases every year by 5%, to make sure technology will improve.

This law is now wideley accepted within the EU and is now in places like Spain, France, Italy.....and even in China.

matthias, berlin (where is no sund now, it's dark and cold...;-)

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DuncanK on February 1, 2006 - 6:53pm

IIRC, Siemens (a german electronics company) is one of the top five producers of photovoltaic (PV) solar cells (along with Sharp and BP Solar). This article suggests that they are the third largest.

Also, Germany has had a very strong Green movement since the 80s.

So it would make sense that Germany has a high uptake of solar power.

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Marotti32 on February 2, 2006 - 3:37am

Hi Duncan,

here is a link to newer data

http://www.earth-policy.org/Indicators/2004/indicator12.htm

Siemens isn't longer in the top five. The new manufacturer Q-Cells (Germany) is now (2005) number two, there is as well a chinese one, suntech which invests heavily in new factories.

matthias, berlin

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