The arguments continue on whether or not the effects of man-made pollutants and energy policies CAUSE global warming.  Unfortunately it seems to have become a political debate with Anti Cap & Trade (mostly Republicans) on one side and Al Gore Democrats on the other.  I think whether it has raised, or will raise the globe’s temperature is not the reason to support the development of Alternative Energy.  The reason is economic.  Some simple rules to guide our continued investment in Alternative Energies and why it benefits the world economies.

My economic rules for energy production:

Economic Principle 1 – It should be as close to the source of usage as possible

This removes transportation costs and inefficiencies from our energy production.

Think of the cost of transporting you hundreds of barrels of heating oil from half way across the globe or the electricity loss carrying it hundreds of miles (estimated at 15% to 20%)

Economic Principle 2 – It should be renewable

Cost Principle 2 – This makes supply much easier to manager.  Will we run out of sunlight or wind? This removes the research (most), and exploration from the cost base.

Economic Principle 3 – The consumer harnesses energy as opposed to purchasing energy.

A big difference.  The wind and the sunlight are in the public domain.  Your investment is only in accessing the natural resources freely available. We can call this ‘Open Source Energy’.

Economic Principle 4 – It is cleaner

Whether the CO2 levels and Methane levels actually are impactful enough to cause Global Warming, doesn’t really matter.  It is still polluting and causing harm to all of us.  If there are alternatives that are clean, we have an obligation to use them.  Can anyone tell me that if they produce an affordable electric car that can go 1,000 miles on a charge, has recyclable batteries, can be charged from the Sun, and can go 200 miles an hour that people would not think it is better.  Cleaner is better, non-polluting is better.  Is this really an argument? Are we seriously debating, what we mean by ‘clean’ ?

Clean is cheaper.

Economic Principle 5 – International relations

Our foreign policy is influenced by the monetary interests surrounding energy acquisition.  I don’t think people would be surprised by this statement.  China is more aggressively pursuing the acquisition of natural resources than the USA is, and in most cases is winning.  A huge amount of time and money in both the Business sector and the halls of Government are aimed to securing energy assets.  What if this was dramatically downsized in importance?  How would our foreign policy change?  Would we accommodate the human rights violations in Russia, the economic and trade violations in Venezuela, the wars in the Middle East?

Maybe the USA could actually stand for something, be principled, disciplined and committed to the right, as opposed to compromising, look the other way policies for energy economics.

So, as they debate in Washington and actually miss the point, we as Energy Citizens, should keep in mind that we have a way forward.  A cleaner, more economical way forward that makes sense for many reasons.

Support alternative energies.

I will ignore the huge amount of waste and non stimulative items in here, (as will most of congress) and focus on the supposed investments in either Clean Energy or ‘Green Jobs’.

Weatherization Assistance Program $2,900,000 – Mostly supported by Northern State Senators including Susan Collins, previous year spending was about $240M, so 10 times the funding for this program.

The Weatherization Assistance Program is the government’s largest residential energy conservation program, and provides important assistance to low-income families facing high energy bills.  Since the program’s inception, more than 5.8 million homes have been weatherized using federal, state, utility and other monies.  Each of these households now has more money to spend on other necessities that it would have spent on heating and cooling an inefficient house.  According to the National Association for State Community Services Programs, for every dollar spent, WAP returns $2.72 in energy and non-energy benefits over the life of the weatherized home.

Review – Looks like an effective program, which will save energy.  I think the amount is a little much, not sure the program will be able to ramp up that quickly.

Advanced Battery Manufacturing   $2,000,000 – A big push from Carl Levin and the automakers.  The automakers will receive the tax credit for the purchase of a new car, a replacement of government vehicles with more efficient, worth 1.5B, but also support for this spend.  A123 in Massachusetts had asked for a 1.8B grant to build manufacturing facilities in Michigan and other places, it supports that.

Review - Would actually create jobs

FutureGen – $2,000,000 – Dick Durbin who has been involved directly in the negotiations, slipped this one in there.  The project site is in Mattoon, Illinois.

Review – CAN IT – This is a carbon sequestration project.  An attempt to build a zero emission coal based plant.  Please don’t waste are time, there are better more efficient ways to spend our money.  This is an Illinois boondoggle.  Oh, by the way, the plant startup is scheduled for 2012.  How is that for ‘timely’ ?

Renewable Energy R&D through the EERE – $2,648,000 -

Review – CUT in HALF – No idea what is in here, other than support for the Federal bureaucracy of the Energy Department.  They have 11 stated programs ranging from a Biomass program to a ‘FreedomCar’.    I am sure there are specifics, but there is the potential for overlap of programs here, with the Weatherization project for example and other than it is another department I am not sure the goals differ.

BPA Borrowing Authority – $3,350,000 – Pushed by the Northwest senators, Patty Murray in Washington.

Review – CAN IT – This is the Bonneville Power Administration.  A group of utility companies that want loans to rebuild transmission lines, projects at the Grand Coulee dam and other projects.  They talk about hundreds of jobs and there ability to repay the previous loans. Hopefully this money on grids is done per the guidelines in the SmartGrid initiative.  I am sure it is not…If these Utilities are such a good risk and repay their loans why do they need the government?  Can’t they issue bonds?

WAPA Borrowing Authority – $3,230,000 – Pushed by the Western senators, seems like abuy off of many republican senators in the West.

Review – CAN IT – Again, another agency of the US Energy Department.  Transmission line and education focused, they rent equipment to Utilities.  It is business as usual.  Government in bed with the Utilities.  There has to be a better way to use this money.  How many jobs?

SmartGrid – $4,400,000 – Pushed by the lots of people, who think they are high-tech.

Review – INCREASE  IT – This spend needs focus first.  Is it for smart meters at households, new better transmission lines, or renewable generation ?  Focus this project into the grid management technologies only.  Install monitors at homes, power distribution center monitoring, transmission line monitoring and measure, and manage the current use of power.  Monitors in 40M homes would cost more like $10B.  This should be a national goal and an incentive for all Utilities.  The previous line items for borrowing by large utilities and consortium, should be granted on the bases of what percent of their transmission network is ‘smart’

These are the major items in the current stimulus bill.  There are some continuation of tax incentives or new ones for efficient vehicle purchase, but overall this is disappointing.

I don’t see the change.  The rhetoric is there, but when push comes to shove we support the industries that lobby, such as Coal, Automobile, and Utilities.  We support pet projects  for Senators, who think locally and not nationally.  Lastly, we support the bloated, inefficient federal government.  This is not change.

This is a lot of money and it does not support the objectives of job creation, alternative energy production, and timely investment.

I differ in how much to change the gas tax, where to spend the money, and how to distribute the money, other than that I agree with the study by the National Commission on Surface Transportation Infrastructure Financing (only in Washington can they come up with a name like this).

I propose a variable federal gas tax which would create a more fixed retail gas price, how is that for political speak.  I think it is simple, let me explain.  Set a target retail price for gasoline, and vary the federal tax collected as the price of oil increases or decreases.  If market based oil prices rise, and the subsequent gas at the pump goes up then the federal tax is lower to maintain a gas price within a range.  Since the current federal tax is 18 cents on $1.60 average price, the ability to control the retail price is somewhat limited but it make logical sense to me that in the time of $4.00 per gallon pricing the tax should be less if not zero, and at $1.60, the tax should be more.  There is math required here to make sense of this and I am sure economists can come up with a model to implement.

Second, I don’t think the money should go to ‘infrastructure’ projects, whatever that means.  I say that because it is one of the overused words in Washington D.C., now.  That and ‘Investment’, tag a spending idea with one of those terms and it should be smooth sailing.

Here is the point, the Federal Government spent $50B dollars last year from the gas tax to support ‘Infrastructure’ projects in the states.  This represents 25% of ‘infrastructure’ spending last year, so the States chipped in the rest (remember the state gas tax is in many cases more than the federal), so that would equate to $200B spent last year on highways, bridges etc. These numbers are from the NCSTIF mentioned above.  Similar amount over the last five years also.  Ok, and our roads and bridges are a mess?  Why are they still a mess?  Has anyone looked into how this money is spent?  I have a simple point of view, however it is distributed, it is NOT working.  So, why would we put more money into this system?  As a business person, this current approach is not worthy of new funding.

I propose creating a Green Financing Fund.  The annual federal gas tax would be loaned out to private industry, working on alternative, cleaner, more sustainable transportation systems.  It is targeted investment (see even I can’t avoid the word!), in replacing oil based fuel.  Loans from this fund would be made to qualified companies, at a low interest rate.  Interest paid would be returned to the federal government and used for federal highway projects (the old way).

This would create a wave of Venture capital flocking to new ideas.  Low cost capital is one of the many things inhibiting growth for these companies.

We need different, bold ideas to turn things around.  Spending more money in an ineffective system is not the way to go, no matter, if the projects are ‘shovel-ready’ or not.  I can assure you the job sectors most effected by the current recession is not road builders, or bridge repairers.  These recent proposals in Washington, wrapped in the ‘save our jobs’ flag is nothing but marketing and political speak.

There is inherent waste, bureaucracy, and cronyism in the system now and we should not support it.  Shake things up !

I would double the investment below and create 1M jobs and not limit it to high school or other students.

Obama is ready to spend all the money from the war on new programs, whether it is 30 billion to bail out mortgage holders, health care, federal education dollars and Hillary will freeze rates and stop foreclosures for 90 days and then spend it on healthcare.  I appreciate that this is a campaign and people will say just about anything to people in pain.  The bigger picture is, we mess with the middle east because of oil, we should invest our hard earned money into ways to eliminate this dependency.

One way would be a summer program to drive conservation.  For how many years have you receive promotional materials from your electrical company to use lower use lighting, low flow shower heads etc..  There are probably tax dollars behind this if I were to look into it, but there is an incentive for the electrical company, it is called peak demand.  They can’t meet peak demand.  Their infrastructure is crumbling, we will not let them build any new plants, coal, nuclear, whatever, they need ways to reduce usage.  Well maybe we can help them.

Hire 500,000 high school and college students during the summer.  Provide them with all the materials, such as low usage lighting, window sealants, shower heads, a long list of materials.  Go from house to house and replace these units.  How much would this cost ?  500,000 x $10/hr x 40 hrs x 12 weeks = $2,400M, plus materials, guess of another 2,500M, plus management, coordination and Marketing of 500M. Program costs of just over $5.4B per year.  What do we gain?

Talk about a stimulus package, what are these young adults going to do with the income???  Yes, wouldn’t you like to believe save for college, not likely. They will spend it, several billion into the economy.

How many houses can they get to?  500,000 = teams of two = 250,000 teams, five places a day, two not home, they do three houses per day = 750,000 homes a day x 60 days = 45M homes.  Pretty aggressive, so say it is half that to be conservative, 22.5M homes.

111 million households in US – we get to 20% in one summer.  How much electrical savings? 1,139 (billion kWh) per year from all households.  We reduce by 10%-12%, which are numbers I have seen for conservation and what Germany has achieve with similar programs.  Per year electrical reduction = 20% of 1,139 billion x 12% = 27.3 (million kWh) or the equivalent elimination of 2,600 housholds from the grid.

We are at a key moment in our economic, political and environmental futures.  There is an increasing awareness of the need for energy independence and environmentally friendly energy.  We have an opportunity to solve these legitimate issues in a far reaching, planet saving, approach or fall back on the easy way.  I, for one, do not want to be part of a generation that takes the easy way.  We owe it to ourselves and our children to fight the right fight, however difficult that may be.  The right fight is one that makes these two issues into one issue.  We can find solutions that free us from foreign dictators AND are environmentally friendly.

Our energy plan for the future needs to be one that relies on efficiencies in our distribution and use of electricity, comes from renewable clean energy sources, and is local to the electrical users.  It will require innovation, new technology and a consumer commitment to make this happen.  The government needs to provide guidance, lofty goals, limited support where needed, and for the most part get out of the way.  Tom Friedman in his new book, “Hot, Flat and Crowded”, is calling it the ‘ET’ revolution or Energy Technology.  He compares it to the IT revolution which led to amazing productivity enhancements across our economy.

Whatever we call it, how we move forward on these issues will define us as a generation.

Drill, Baby, Drill, is a sad commentary of how things work now.  Oil companies and lobbyists, that both campaigns swear off as having no place in Washington, have made oil drilling a top topic and wrapped it in the, ‘Energy Plan for the Future’ blanket.  Although it may help with reducing oil dependency on the Axis of Oil, it does not do it in a way that is respectful of our planet. The more time we discuss this in public debates, the less time we spend on real solutions.  Solutions that can meet both goals of energy independence and renewable, clean energy.  Drill, baby, drill does not meet the basic principles outlined above, it is not clean, it is not local, and it is not renewable.

Let’s change the debate to a discussion of how we as Amercians can show humility, by admitting we have a problem, show fortitude, by applying our best resources to solving the problem, and show respect, for our planet and all of it’s residents.

American Clean Power ?

Please stop talking about Clean Coal as some kind of solution for energy independence and/or global warming issues.  It can not do either of these.  Let’s use some common sense.  Coal to replace gasoline ?  Coal to replace home heating oil?  We could build more coal fired electricity generating plants, but that does not reduce our dependency on foreign oil for the other two needs.

The picture used on the left comes from the ACCCE, a new group funded by Coal and Energy companies.  They are in the process of spending millions of dollars on ad campaigns to tell you

1.) Coal generates %50 of our electricity 2.) Coal is cleaner and can be even cleaner with investment in technology.  They run ads on TV, they have a web site http://www.americaspower.org/ Thanks for Sharing!

Clean coal !  Please.  Is there such a thing as clean coal ? It does seem peculiar to me that both Presidential candidates highlight Clean Coal, some oil drilling and nuclear plants (McCain, not Obama), for our short term energy solutions.  Other technologies are always mentioned as an afterthought, oh, yeah, “some of that Solar and Wind stuff too”. One characteristic of the commonly mentioned technologies is they exist (not clean coal), and they are backed by large existing corporate and union interests. I am sure that is just a coincidence.

Clean Coal is NOT ready for prime time.  The more we try to make old solutions work, the more money, time and energy we take away from building RENEWABLE solutions.  What is renewable about Coal, even if it was Clean.  Nothing.  It is currently plentiful so let’s use it, is the logic.  Talk about clinging to beliefs.

The same reasons many conservatives knock newer renewable energy sources, such as ‘it is not ready’, ‘it will not scale’, ‘it is to expensive’, ‘it is unproven technology’…. All apply to clean coal.

The three technologies currently being researched and mostly in a pilot phase are;

Clean it, Filter it, and Capture it.

‘IT’ is nitrous oxide, sulfur dioxide, carbon dioxide and of course your everyday mercury and other metals.

Clean it, consists of a bath for the coal prior to using.  It removes much of the sulfur, and some of nitrous oxide, BUT, it leaves a nice slurry of waste water that goes somewhere…oh yeah, in the ground, in a river, in the environment.  It does nothing to reduce carbon dioxide.

Filter it, means catalytic converter type filtering on the smokestake, or new oxygen purification systems where they cook the pollutants in a bath of oxygen.  This second approach is more effective but expensive.

Capture it, means Carbon Sequestration.  Even Al Gore talked about this during his powerpoint theater.  Is it just me, or does capturing the carbon dioxide and pumping it into the ground or better yet into active oil reserves make any sense ?  What a stupid idea.

I want to believe technology can solve most problems, and maybe it can reduce emissions so that Burning Coal produces NO pollutents.  But until that comes closer to reality, just shut up, and focus on alternative energies that actually work NOW and are clean.