Saturday, February 22, 2014

Financing the Green Economy.

Please click on the following link in order to get to an article on Project Syndicate about Financing the Green Economy. The article was written  during January 2013.

Sunday, February 16, 2014

Is Thermal Solar Price Competitive?


A few years ago Thermal Solar had lots of promise. Not any longer. Before you write the technology off please keep in mind that all the competitiveness is based on pure financial flows that do not take into consideration the total cost of Thermal as compared to PV. What is needed in this case is a serious and detailed cradle to grave analysis.

The Ivanpah solar power plant stretches over more than five square miles of the Mojave Desert. Almost 350,000 mirrors the size of garage doors tilt toward the sun with an ability to energize 140,000 homes. The plant, which took almost four years and thousands of workers assembling millions of parts to complete, officially opened on Thursday, the first electric generator of its kind.
It could also be the last.

Since the project began, the price of rival technologies has plummeted, incentives have begun to disappear and the appetite among investors for mammoth solar farms has waned. Although several large, new projects have been coming online in recent months — many in the last quarter of 2013 — experts say fewer are beginning construction and not all of those under development will be completed.
“I don’t think that we’re going to see large-scale solar thermal plants popping up, five at a time, every year in the U.S. in the long-term — it’s just not the way it’s going to work,” said Matthew Feinstein, a senior analyst at Lux Research.

“Companies that are supplying these systems have questionable futures. There’s other prospects for renewables and for solar that look a lot better than this particular solution,” he said, including rooftop solar systems that are being installed one by one on businesses and homes.

Executives involved in Ivanpah — a venture among BrightSource Energy, NRG Energy and Google — 
say that once the facility proves that the technology can work, it will become easier to finance others, especially as repetition brings the cost down.

When BrightSource and other companies asked NRG to invest in a second thermal project, said David Crane, NRG’s chief, he responded: “We’ve got $300 million invested in Ivanpah — let me see that work for a few months and then we’ll decide whether we want to be involved in more.”
At the same time, BrightSource has shifted its focus, pursuing markets overseas like China, South Africa and the Middle East and designing smaller plants involving one tower rather than Ivanpah’s three.

Addressing a tent full of officials and industry executives, including those from the construction giant Bechtel, the engineering and building contractor on the project, David Ramm, BrightSource’s chief executive, acknowledged the risk at the dedication ceremony about 50 miles south of Las Vegas.
“We will have failed as a company if the last project we built was at Ivanpah,” he said. “The challenge for BrightSource going forward, and hopefully some of the partners who worked with us here, is to enable this technology commercially and in multiple locations around the world.”

It is a daunting challenge. The Ivanpah project was conceived in the early days of the Obama administration, when dreams of creating a thriving renewable energy industry were backed by the federal government’s financial support. Ivanpah received a $1.6 billion federal loan guarantee, without which it would not have gone forward, the developers said.

Ernest Moniz, the energy secretary, toured a tower and said the plant was an example of how the loan program — which set off a political maelstrom after the prominent failure of one of its borrowers, the solar panel maker Solyndra — was supposed to work.

“Our job is to kick-start the demonstration of these different technologies to have them available to the private sector,” he told reporters, standing on a tower platform, soaring above a dry lake bed, two huge boilers atop the other towers glowing in the distance like something out of a clean-tech version of “The Lord of the Rings.”

But he acknowledged that solar thermal technology only worked at large scale and in certain locations.
The loan program that financed Ivanpah has now ended, and the underlying economics shifted during its construction as the price of conventional solar panels dropped. It’s a familiar story in government-sponsored energy projects, going back to efforts to make gasoline from coal in the late 1970s, which were doomed by the retreat of oil prices.

And as federal support has waned, so, too, has demand for similar large-scale projects. What’s more, an important tax credit worth 30 percent of the cost is set to decline after 2016.
“There have been some big changes in both the market and policy dynamics since we made our investment that, I think, on balance, are not terribly positive for BrightSource,” said Dan Reicher, executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford. Mr. Reicher oversaw an early investment in BrightSource in 2008 when he was director of climate and energy initiatives at Google. (The company went on to invest $168 million in Ivanpah.)
“Clean tech investing is way off,” he said.

Still, experts say, BrightSource’s solar thermal technology — which focuses sunlight from mirrors onto 2,200-ton boilers 339 feet in the air to make steam that drives turbines to produce electricity — may have an advantage over conventional panels, which convert sunlight directly into electricity.

The increase in renewable sources of energy, which produce intermittently, coming into the grid, has also increased the need for other services crucial to reliable operation, services that solar thermal plants could provide. Those needs include the ability to start and stop quickly, at any season or hour, when human operators give the order.

Utilities pay power plants for some of those jobs, and some conventional generating stations earn a significant income, in addition to what they receive for producing energy. Around the country, coal plants — of which there are fewer and fewer — were well suited to that work. And government regulators can simply require utilities operating on the grid to show that they have the ability to accomplish some of those jobs, which industry executives call “ancillary services.”

“In the future, there will be money to be made from technologies and systems that contribute to integrating and balancing renewables on the grid,” said Samuel Thernstrom, the executive director of the Energy Innovation Reform Project, a nonprofit in Washington that evaluates electricity policy. “That’s going to be an increasing issue as the percentage of renewables on the grid increases.”

Ivanpah could stabilize voltage but has little storage, though it does have natural gas backup. At the dedication, Mr. Ramm said that in the future, BrightSource’s boilers would use molten salt to store the heat longer. Last year, Arizona Public Service opened a solar thermal plant, Solana, that lets customers brew their morning coffee with the previous afternoon’s sunshine.

At the California Independent System Operator, the company that manages the grid on a moment-to-moment basis, Stephen Berberich, the president and chief executive, said that “on an apples-to-apples basis, it is more expensive than photovoltaic, but it has a heck of a lot more capabilities than photovoltaic does.”

Another expert, Ron Binz, an energy consultant based in Denver and the former chairman of the Colorado public service commission, said that storage would indeed be needed as intermittent renewables grew. But solar thermal plants were not the only way to meet that need, he said, and a competition would follow. “You can’t look at any element of this without looking at all the others,” he said.
(NYT Feb. 14, 2014)
As for the federal loan guarantee program, the government has already changed its approach, looking to emphasize a range of cleaner technologies, especially in fossil fuels and nuclear power.
To that end, Mr. Moniz encouraged the crowd of industry executives to pursue new projects that would qualify for the loan guarantees. “Bring them on,” he said. “We’re ready.”

Saturday, February 8, 2014

Is Climate Change Denial "skepticism"? No, it is "motivated reasoning".

David Grimes of the Guardian makes a great point that I have personally held for many years.. I am going to post this to more than one class since I do believe that the distinction between "scepticism" and "motivated reasoning" is a fundamental one. GK

Burying your head in the sand about climate change does not qualify as scientific scepticism.
The grim findings of the IPCC last year reiterated what climatologists have long been telling us: the climate is changing at an unprecedented rate, and we're to blame. Despite the clear scientific consensus, a veritable brigade of self-proclaimed, underinformed armchair experts lurk on comment threads the world over, eager to pour scorn on climate science. Barrages of ad hominem attacks all too often await both the scientists working in climate research and journalists who communicate the research findings.
The nay-sayers insist loudly that they're "climate sceptics", but this is a calculated misnomer – scientific scepticism is the method of investigating whether a particular hypothesis is supported by the evidence. Climate sceptics, by contrast, persist in ignoring empirical evidence that renders their position untenable. This isn't scepticism, it's unadulterated denialism, the very antithesis of critical thought.
Were climate change denialism confined solely to the foaming comment threads of the internet it would be bad enough, but this is not the case – publications such as the Daily Mail, Wall Street Journal and other Murdoch publications give editorial support to this view. Worse still, a depressingly large number of denialists hold office around the world. Australia's Tony Abbot decreed climate change to be "a load of crap", and a sizable chunk of the US Republican Party declare it a fiction. Even in the UK, spending on climate change countermeasures has halved under the environment secretary Owen Paterson, who doubts the reality of anthropogenic climate change, despite the fact the vast majority of scientists say unequivocally that the smoking gun is in our hands.
So given the evidence is so strong against them, then why do these beliefs garner such passionate, vocal support? It's tempting to say the problem is a simple misunderstanding, because increasing average global temperature can have paradoxical and counterintuitive repercussions, such as causing extreme cold snaps. The obvious response to this misunderstanding is to elucidate the scientific details more clearly and more often.
The problem is that the well-meaning and considered approach hinges on the presupposition that the intended audience is always rational, willing to base or change its position on the balance of evidence. However, recent investigations suggests this might be a supposition too far. A study in 2011 found that conservative white males in the US were far more likely than other Americans to deny climate change. Another study found denialism in the UK was more common among politically conservative individuals with traditional values. A series of investigations published last year by Prof Stephan Lewandowsky and his colleagues – including one with the fantastic title, Nasa Faked the Moon Landing – Therefore, (Climate) Science Is a Hoax: An Anatomy of the Motivated Rejection of Science – found that while subjects subscribing to conspiracist thought tended to reject all scientific propositions they encountered, those with strong traits of conservatism or pronounced free-market world views only tended to reject scientific findings with regulatory implications.
It should be no surprise that the voters and politicians opposed to climate change tend to be of a conservative bent, keen to support free-market ideology. This is part of a phenomenon known as motivated reasoning, where instead of evidence being evaluated critically, it is deliberately interpreted in such a way as to reaffirm a pre-existing belief, demanding impossibly stringent examination of unwelcome evidence while accepting uncritically even the flimsiest information that suits one's needs.
The great psychologist Leon Festinger observed in 1956 that "a man with a conviction is a hard man to change. Tell him you disagree and he turns away. Show him facts or figures and he questions your sources. Appeal to logic and he fails to see your point." This is the essence of the problem, and sadly, Festinger's words ring true today: the conviction of humans is all too often impervious to the very evidence in front of them.
Motivated reasoning is not solely the preserve of conservatives. While nuclear power has been recognised by the IPCC as important in reducing carbon dioxide emissions, staunch and uninformed opposition to nuclear power arises often from the liberal aisle. In the furore over the Fukushima nuclear disaster (which has claimed no lives and probably never will) many environmentalists lost sight of the fact that it was a natural disaster, very possibly exacerbated by climate change, that cost thousands of lives. Instead, they've rushed to condemn nuclear power plants.
Angela Merkel's decision to cut nuclear power stations was celebrated by Green activists, but this victory was utterly pyrrhic as they were replaced by heavily polluting coal plants. Nor could it be considered a health victory, as while nuclear power kills virtually no one, 1.3 million people a year die as a result of pollution from coal-burning plants.
Greenpeace remains stubbornly opposed to even considering nuclear power, and has said it is simply too dangerous claiming a figure of over 200,000 deaths and hugely increased incidence of cancers due to the Chernobyl disaster, a statistic exposed as an utter shambles by the journal Radiation Protection Dosimetry.
The health effects of Chernobyl have been well studied over 25 years by the UN Scientific Committee on the Effects of Atomic Radiation: 28 workers died from acute radiation syndrome, and there were 15 fatal thyroid cancers in children. Those who ingested radioiodine immediately after the disaster are at elevated risk of thyroid cancer. No increase has been observed in solid cancers or birth defects.
That this toll is considerably less than people might expect does not take away from the tragedy, but highlights the fact that motivated reasoning occurs on all sides.
The problem is that a vital discussion on a scientific issue can be hijacked as a proxy for deep-seated ideological differences. Depressingly, increasing communication of science merely tends to harden existing opinion. Part of the solution may be to take into consideration the values that impede meaningful progress; there is some evidence that climate change denialists become less hostile when given options which do not obviously threaten their world view.
If the facts of the matter inspire an emotional threat reaction, perhaps this can be mitigated by framing it as something not incompatible to one's world view. A free-market advocate, for example, might respond better to an argument outlining the economic cost of climate change or the fact inaction has a higher price tag than action.
Nor is there any inherent contradiction in an environmentalist being in favour of nuclear power – George Monbiot, Mark Lynas and James Lovelock have written eloquently on the importance of nuclear power in mitigating the ravages of climate change.
If we truly wish to avoid catastrophe, we must be pragmatic and take action. Ideological differences need to take a back seat if decisive action is to be taken. When one's house is on fire, the immediate priority should be putting the flames out, not squabbling about the insurance. Let us hope we realise this before it's too late.

Sunday, February 2, 2014

Flood Insurance: Should It Be Repealed?

As reported by the NYT  Jan 29, 2014
A major flood insurance bill was a rarity when it passed what is widely derided as a do-nothing Congress in 2012, but a year and a half later, there is now an enthusiastic bipartisan effort to gut it.
This week the Senate is expected to approve a measure that would block, repeal or delay many of the key provisions of the Biggert-Waters Flood Insurance Reform Act, which was sponsored by Representative Judy Biggert, an Illinois Republican, and Representative Maxine Waters, a California Democrat.

Tucked into broader transportation legislation, the bill had enthusiastic support across the political spectrum, from liberal environmentalists to fiscal conservatives.
But Ms. Waters is now leading an effort in the House to gut the legislation she sponsored. And this week, the Senate is expected to pass a measure that would stymie the law, an effort that has support from across the political spectrum, from prominent liberals like Senator Elizabeth Warren, Democrat of Massachusetts, to conservatives like Senator Marco Rubio, Republican of Florida.

What happened?
It appears to be another Washington story of unintended consequences, and a warning, environmentalists say, of the rising costs of climate change. Most important, the bill may be a preview of the fights to come over who will pay those costs.

The Biggert-Waters measure sought to reform the nation’s nearly bankrupt flood insurance program, ending federal subsidies for insuring buildings in flood-prone coastal areas. Over the past decade, the cost to taxpayers of insuring those properties has soared, as payouts for damage from Hurricanes Katrina, Irene, Isaac and Sandy sent the program $24 billion into debt.

The aim of the measure was to shift the financial risk of insuring flood-prone properties from taxpayers to the private market. Homeowners, rather than taxpayers, would shoulder the true cost of building in flood zones.

Deficit hawks liked the idea because it would curb a rapidly rising source of government spending. Environmentalists liked the bill because they said it would reflect the true cost of climate change, which scientists say is ushering in an era of rising sea levels and more damaging extreme weather, including more flooding.

But a year after the law passed, coastal homeowners received new flood insurance bills that were two, three, even 10 times higher than before.

In Beach Haven West, N.J., for example, Diane Mazzuca, a furniture showroom designer, had been paying $595 annually for flood insurance on her $90,000 home. After Biggert-Waters ended federal flood insurance subsidies last June, she got an updated bill — for $4,492.

“Our house never flooded before Sandy,” Ms. Mazzuca said. “The new insurance statement said we were in the storm surge line.”

Ms. Mazzuca is still struggling with her insurance company over payments to repair damage to her home from Sandy, and cannot pay the costs on her own, or the new insurance rates.

“I’m going to have to walk away from my house and my life savings,” she said.

Ms. Mazzuca has plenty of company. The insurance rate increases hit many of the 5.5 million coastal home and business owners covered under the National Flood Insurance Program, and came as the Federal Emergency Management Agency, which runs the program, was updating flood maps and placing thousands of homes inside flood zones for the first time. Last summer and fall, homeowners near coasts, rivers and wetlands saw their insurance rates soar and their property values plummet.
The homeowners’ frustration erupted into a grass-roots lobbying campaign to roll back the Biggert-Waters act, and lawmakers in Washington quickly got the message.

“Never in our wildest dreams did we think the premium increases would be what they appear to be today,” Ms. Waters said.
Similarly, in Louisiana, where hurricanes and flooding have devastated coastal residents and the new insurance rates were viewed as a further affront, Senator Mary L. Landrieu, a Democrat who faces a tough re-election fight this fall, paid close attention to angry constituents.
Ms. Landrieu teamed with Senator Robert Menendez, Democrat of New Jersey, and Senator Johnny Isakson, Republican of Georgia, to sponsor a bill that would delay most insurance rate increases by four years.

“The Biggert-Waters bill is not going to save the flood insurance program. It’s going to collapse it,” Ms. Landrieu said. Supporters of her effort to delay Biggert-Waters say that the spike in flood insurance rates will drive homeowners out of coastal zones altogether.
But budget watchdogs, insurance groups and environmentalists are fighting the effort. They say that while the original Biggert-Waters law was imperfect, the effort to delay it would bankrupt the program and leave coastal property owners more vulnerable to future damages, and that taxpayers would be forced to pay the bill.

On Monday, the White House released a statement criticizing the effort to gut the law, saying it would further erode the financial position of the national flood insurance program, and that it would reduce the government’s ability to pay future claims. But the administration did not threaten a veto.
The Senate bill is expected to pass on Wednesday or Thursday, after which it will head to the Republican-controlled House.

Although the effort there is being led by Ms. Waters, she already has more than 180 co-sponsors from both parties, and House Speaker John A. Boehner, Republican of Ohio, indicated that G.O.P. leadership may consider the effort.