RPS legislation (which seems to have recently died in the Senate, although could conceivably be reintroduced on amendment) is well-intended, but poorly constructed.
Roll the clock back 100 years, and assume you're the legislator tasked with figuring out how to get the population to go West. Which do you choose: (a) the Homestead Act, giving people land as soon as they prove that they can get there and cultivate it, or (b) a tax rebate to anyone who hitches five white horses to a Conestoga wagon and takes Route 66 west?
A silly question perhaps, but a good metaphor for how most RPS rules work. Rather than articulate a goal, a la the Homestead Act, they pick a series of preferred technologies to incentivize. The result is an utter mishmash at the state level, where virtually every state has a different legal definition of renewable energy. All states include wind and solar, but then the comparisons fall apart. Some like biomass, some don't, and some only if it is grown and/or combusted in the right way. Some states like hydro, some don't, and some only like it if it's small. Few like trash incineration, for understandable reasons. Many like natural gas (provided it's used in a fuel cell) for goofy political reasons.
I would argue that this has been to the detriment of renewable fuels advocates, for a couple reasons. One, it has effectively equated renewables with handouts. Virtually nothing that is included in the definition of renewable energy in any jurisdiction is truly economically competitive at current prices. This isn't a knock on those technologies, but rather an observation on what has become a self-sustaining prophecy, where those tasked with implementing RPS rules have interpreted one of their objectives as being to develop new technologies (and therefore expressly not to support economically viable ones). This need not be the case.
However, this gets us to a larger issue. RPS sounds really good politically, and is endorsed by lots of politicians. But the narrow list of technologies that they include (and the excessive focus on expensive ones) has made all RPSs really expensive, either because of inherent cost or -- more commonly -- because most RPS markets are supply constrained, thus driving up the costs of certificates. If we recast these rules in terms of goals, we would see a flood of new technologies being deployed -- and since we define the goals, we can ensure that we're comfortable with the consequences of those technologies. If noncarbon emissions are a concern, write them into the goal. If siting/zoning is a concern, write it into the goal. But frame it as a goal.
And this brings up the final problem with current rules, borne out in yesterday's Senate hearing. When all RPS is expensive, the political debate becomes one of "Can we afford it?" or, its sinister stepsister, "Why should we subsidize them?" In other words, it has now become a political article of faith that clean energy is expensive. Which isn't really true -- it's just that the particular paths we've chosen to reward are expensive.
I will be candid that there are losers in this reformulation. If we define clean energy by goal, it will lead to a flood of new technologies in the market. This will drive down the price of renewable certificates and change the debate from "Can we afford it?" to "How quickly can we roll this out?" These are all good things. But the result is that the current beneficiaries of high prices -- primarily wind and solar -- will get less money per kilowatt-hour for their projects. This may slow the deployment of those technologies. But -- to be blunt -- who cares? These are paths, not goals. We ought to seek a world that maximally uses clean energy, not one that maximally uses some particular technology.
Let's go back to our Homestead Act thought experiment, but roll the clock forward. Which would you rather have: (a) a world where energy keeps getting cheaper and relies on ever-less carbon, or (b) a world that uses lots of wind and solar?
The choice ought to be an easy one. But in order to make it, we need to rethink our approach.
Merkley wants Senate jobs bill to help finance building efficiency retrofits
Comments
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sunflower Posted 6:52 am
22 Jun 2007
It is a poison pill. Don't eat the red pill.
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Laurence Aurbach Posted 7:21 am
22 Jun 2007
That would be the investment of the century if it were to happen.
I've yet to see any financing plan or model that explains how that massive, sustained growth could be paid for. In my opinion, that's what the renewable energy policy arena needs most of all at this point.
Ped Shed Blog
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sunflower Posted 8:10 am
22 Jun 2007
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Colin Wright Posted 4:21 pm
22 Jun 2007
Option B holds promise of a decentralized ecological society. Germany embarked on this road in 1990 when they choose to heavily subsidize wind and solar (and are now world leaders). Here's a promo of German parliamentarian from TUC Radio:
Dr. Hermann Scheer
A large industrialized country already gets 10% of their electricity from renewable sources. And if the present rate of conversion is maintained, this country will have phased out nuclear and fossil fuels within the next 40 years. And this country, Germany, is not even blessed with abundant wind or sun. Germany, for 15 years now, has shown the determinations to move away from centralized to decentralized power, from commercial to non-commercial energy production, and to come up with solutions to climate change, peak oil and the dangers of nuclear power.
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Sean Casten Posted 10:11 pm
22 Jun 2007
None of these opportunities would pass an existing definition of renewable energy, and yet they are all vastly cheaper than conventional options. They are also just as clean as conventional renewables, since all could be converted into electricity with no marginal fuel consumption.
In fact, they can be even cleaner. Consider the flare example - the process of moving the combustion of those gases from an external flare to an internal steam boiler reduces overall NOx an particulate emissions because it is inherently cleaner to burn these species in a controlled environment. Or to take a personal example, we worked on a project in a steel mill recovering pressure drop in an existing steam flow. Because their steam was made from flare gas - and because any flare gas that didn't make steam had to go to expensive, EPA-mandated pollution controls - they had a very strong bias towards INEFFICIENT steam use, to divert as much gas as possible from their flares. By tightening up their steam network, we were able to find an opportunity for 10 MW of power generation that wouldn't have otherwise existed. The example is far more common than you would think - and never incentivized by RPS policy (although some rules in CT, PA and NV do get it partially right).
And to put 65 GW in perspective, our entire national fleet of nuclear power is about 100 GW. If we cast an RPS as a goal, we would expedite the deployment of all these sources.
But these are not the only options. Lots of jurisdictions have regular fights about what gets included in an RPS, not all of which are flawed. For example, Massachusetts wrote their RPS such that biomass only counts if it is burned in an "advanced combustion device", widely interpreted to mean gasification. The law made assumptions about the maturity of that technology that were flawed, which caused lots of MA biomass to get shipped up to Maine where it would be eligible for use in more robust technologies. So we burn fuel in ships to move fuel to another market with a slightly different definition. Dumb! To their credit, MA is now changing this law, but it took 10 years - during which time we have ever-more-firmly established the renewables-are-expensive belief. Put it as a goal and the markets will respond much more quickly. Had MA fixed this sooner, we would have seen more carbon reduction sooner and lower energy costs. Which is hardly a bad thing.
One final point - energy getting cheaper is only an ecological disaster if there are ecological costs per unit of energy consumption. But energy getting more expensive is an economic cost no matter what happens. Be careful what you wish for.
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amazingdrx Posted 11:54 pm
22 Jun 2007
RPS should include conservation/storage as well. For instance a system that operates with internet over the power grid that turns on appliances like freezers that can operate in off peak or whenever wind and solar peaks to store cold for the whole 24 hour cycle.
Your freezer need only run a few minutes per day in offpeak, instead of running and running all day long. Add in water heating, home heating/cooling (with geothermal), plugin vehicles, and every device in home, business, and factory....and..
This new combination of conservation with storage applied across an internet enabled grid could make large scale storage or backup generation for wind and solar unecessary.
http://amazngdrx.blogharbor.com/blog
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Jon Rynn Posted 2:06 am
23 Jun 2007
Also, to what extent is manufacturing already using their waste heat? Are there any readily available stats on that? The reason I'm asking is that most people seem to think that industry uses most of the electricity, when it fact it's more like a third, but to get it down to something sustainable -- that would be doable with solar/wind, say - it would be critical to use waste heat, particularly in the big electricity users in industry, metallurgy, chemicals, and paper.
The point Colin made about making electricity cheaper is partly the Jevons paradox, that as you make things more efficient, the use goes up and you don't wind up saving anything (or much). Look at cars over the last 30 years, instead of using more efficient engines to increase mileage per gallon, they have been used to make more powerful cars -- even the small ones. If, on the other hand, all electrical generation is coming from something environmentally benign, such as solar or wind, then increased electricity use would not be harmful. But if fuels were being made, it would tear up the planet because of the growth of biofuels. So I think some combination of on site generation, using waste heat, and wind/solar/geothermal is the long-term goal, while we use what's left of coal to construct that infrastructure (hopefully efficient use of coal, that is -- although I'd still like to get rid of coal as fast as possible).
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sunflower Posted 2:35 am
23 Jun 2007
This discussion was about cogenerating power with industrial waste heat.
A larger and less costly form of cogeneration is making industrial process heat from the rejected heat of power generation.
The best ROI is using waste industrial heat for low-grade building heat and hot water. Sweden recovers low-grade industrial waste heat and distributes the heat city-wide via district heating. They also store summer waste heat for winter distribution.
District cooling is another application of waste heat using absorption chilling technology.
Compared to bread and money, our social understanding of energy is not well developed.
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Sean Casten Posted 2:36 am
23 Jun 2007
Cars are a little bit of an awkward comparison with electric because the prices are so skewed. From a purely economic perspective, current gasoline prices really don't provide much incentive to conserve. The average american drives about 15,000 miles/year, so at 25 mpg and $3/gallon, that's $1800/year on fuel. Doubling fuel economy therefore only saves $900/year. Let's assume people will treat this as worthwhile at a 3 year payback or better (aggressive, given the above, but will prove my point). This means that you're not likely to pay more than 3 x $900 = $2700 more for a car with twice the fuel economy - and that's at $3 gas! This isn't to say that there are non-economic reasons for investing in more efficient vehicles, but note the comparison to electricity.
Average US power prices are about 7 cents/kWh. So let's assume I can save 3 cents/kWh (quite reasonable) with a more efficient and/or cheaper fuel (e.g., renewable) generator. Assume also that my generator runs for 7000 hours per year, or about 80% of the time. This saves me $210 per installed kilowatt of capacity. My same 3 year payback now requires that my investment costs me less than $630/kW, which is quite attainable with a whole host of generating technologies, and is ridiculously easy to hit with lots of efficiency investments (better lightbulbs, etc.)
A part of the reason for the disparity is chronically subsidized oil costs (your income taxes pay for Persian Gulf escapades after all, not the price at the pump), but also just capacity factor. Most of the hours of the year, your car isn't running, but a generator or efficiency investment can be sized to just about always run. (Solar is another story on this, and part of the reason why the economics on solar is so hard.) More hours of operation per year = more savings per year.
In any event, I don't hink your Jevon's paradox holds in electricity. If my electricity generation efficiency goes up, it doesn't encourage me to leave the lights on longer or buy bigger bulbs. I just save money.
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Sean Casten Posted 2:38 am
23 Jun 2007
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Jon Rynn Posted 3:39 am
23 Jun 2007
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Jon Rynn Posted 3:46 am
23 Jun 2007
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Sean Casten Posted 5:34 am
23 Jun 2007
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Sean Casten Posted 5:37 am
23 Jun 2007
It does, however, suggest that the assumption underlying the entire GHG-reduction-is-too-expensive worldview (namely "if you could make money at this, someone would have done so already") is flawed.
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