Eco-Prognostics: Alternative Energy

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Eco-Prognostics: Alternative Energy

One reporter’s picks for the top five alternative energy stories of 2007, as well as predictions for the new year.
by David Kates
Here are my picks for the top five alternative energy stories of 2007, in no particular order:

1. Expensive Gas

You were probably pinched at the pump enough in 2007 to realize that oil (and thus gasoline) had a record year. Pump prices ended 2007 at $3 nationally, about 65 cents more than December 2006. And crude oil hovered above $90 a barrel. Analysts were quite surprised that gas prices actually increased at the year’s end. Prices generally decrease between Labor Day and December. These extra fuel expenses are a concern for the economy. They also affect goods in stores, airline travel and indoor heating.

The causes for the upturn are varied. There was a high global demand for oil (especially in China and India), despite the higher costs. This demand was coupled with Wall Street’s worries over leadership in oil-producing nations such as Iran, Iraq, Venezuela, Nigeria and Russia. The assassination of former Pakistani Prime Minister Benazir Bhutto on December 27, for instance, sent oil prices higher. Pakistan doesn’t produce oil for the world market, but it borders Iran and the Arabian Sea where oil tankers travel. Another major factor was the declining value of the dollar. Oil prices are pegged to the dollar, so crude has been more expensive to trade on the world markets.

2. Alternative

Energy Rising

The year 2007 should be the best so far for the solar and wind industries. Rhone Resch, president of the Solar Energy Industries Association, projected 60% solar growth in the U.S., after a record year in 2006. The American Wind Energy Association predicted that 4,000 megawatts of wind generating capacity was built in the U.S. in 2007, up from 2,454 megawatts the year before. Alternative energy sources still provide only 5.5% of the world’s electricity, but this percentage has steadily grown in the last decade.

Investments in alternative energy hit $66 billion, compared with $55 billion in 2006. In fact, solar and wind are growing so quickly worldwide that there have been supply and manufacturing capacity shortages. Purified polysilicon for solar cells and steel, copper, and concrete for wind turbines have been at a premium, driving up costs. A number of analysts believe thin film solar technology is beginning to take off because it is less costly than standard silicon cells.  

Advocates argue that the industries’ tremendous growth cannot be sustained without long-term federal production and investment tax credits. Unfortunately, these credits were stripped from the energy bill passed in December. The current credits expire in December 2008.

3. The Energy Bill

Congress and President Bush came to an agreement in December on an energy bill that will mandate the biggest increase in fuel efficiency standards in three decades. Carmakers will have to average 35 mpg for their fleets within the next 12 years, a 40% increase. Biofuels such as ethanol and biodiesel will be a larger part of the nation’s fuel supply, as well. The law specifies that 36 billion gallons be available by 2022. The bill also gives research funding for cellulosic ethanol development. Additionally, light bulbs will be three times more efficient by 2020. And federal facilities will have to use Energy Star lighting and consider green building techniques.

Democratic lawmakers made a few concessions to get the bill passed (after coming up one vote short). They removed the renewable portfolio standard, which would have required that 20-25% of the nation’s electricity supply come from renewable sources. Democrats also axed the production and investment tax credits from the bill. Proponents believe the credits have been essential to the incredible growth of the wind and solar industries in the last few years. Democrats were unsuccessful in repealing tax breaks for big oil companies, as well.

4. EPA Crushes

California Emissions Law

The U.S. Environmental Protection Agency rejected California’s emissions law in December. In a news conference, EPA administrator Stephen L. Johnson said the federal energy bills (passed that same day) would do a better job of curbing vehicle emissions.

California requested a waiver to enact a strict law to reduce greenhouse gases like carbon dioxide. The California Air Resources Board claimed the law it crafted would achieve the fuel-efficiency standard of the federal energy bill-35 mpg-but four years earlier, in 2016. This would reduce emissions 30%. Under the U.S. Clean Air Act, California has the right to set its own emissions rules as long as it gets a waiver from the EPA. (This is because California, with its serious air pollution problems, began regulating emissions before the EPA came into being.)

California has submitted more than 40 waiver requests in the last few decades, and all were approved by the EPA. Sixteen other states, including Utah, have said they would adopt California’s rules if green lighted. Administrator Johnson said he wanted one national emissions standard rather than a patchwork of state limits. He pointed out that California’s previous waivers were to regulate soot and smog, "pollutants that predominantly impacted local and regional air quality." But carbon dioxide affects global air quality, so regional regulations are not going to solve the problem.

The U.S. Supreme Court and two other federal courts ruled in 2007 that the EPA and California (with a waiver) have the authority to regulate greenhouse gases, even though they’re not listed as air pollutants under the Clean Air Act.

5. Climate Change

on the World Stage

Climate change was everywhere in the news in 2007. "An Inconvenient Truth" won the Best Documentary Academy Award. Then the film’s main protagonist, former Vice President Al Gore, won the Nobel Peace Prize along with the Intergovernmental Panel on Climate Change (IPCC). The Intergovernmental Panel released its Fourth Assessment Report, which summarizes the three previous working group reports on global warming. Finally, the U.N. sponsored a large Climate Change Conference in Bali, Indonesia, to build on the Kyoto Protocol.

So, how will the top news stories of 2007 fare in 2008? Here are some predictions:

Oil Even More Expensive

Crude oil started 2008 with a bang. On the second day of the new year, crude oil traded for $100 per barrel for the first time in history. The price quickly fell below $100 again by the end of the day’s trading, but the assertion that oil could never top $100 was shattered.

Gasoline prices on January 2 averaged $3.05 nationally and $3.31 in California for self-serve regular. (California uses a more expensive blend of gas because of stricter emissions rules.) Heating oil prices will be up during 2008’s first quarter. The cost of gasoline generally surges between winter and spring, and 2008 shold be no different. Some analysts think the average price of gas nationwide this spring will be $3.40 to $3.75 per gallon, with California stations hitting $4 for regular unleaded. But observers are quick to point out that the high prices and a weakening economy are likely to lower gas consumption.

There’s disagreement about whether there’s enough gas production for the summer driving season.

Another unknown is how much high gas prices will encourage consumers to purchase gas-electric hybrid, natural gas or flex-fuel vehicles.

Alternative Energy

Rising Higher

The Worldwatch and Prometheus institutes published a report in 2007 predicting that photovoltaic costs would fall by 40% by 2010 because of technological breakthroughs and the astronomical growth of the industry in China. The dearth of silicon for solar cells and steel, copper and concrete for wind turbines should end in the next two years because of increased supply investments. But the December 2008 expiration of the federal production and investment tax credits for renewables could cause problems for the industries.

Resch predicts the U.S. solar market will be in decline by the second quarter of 2008 because of the uncertain tax credits. Investors, manufacturers and installers will be wary of large-scale solar projects that take many months of planning. Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid have vowed that they will introduce legislation for the credits in 2008.

California v. Bush

California and 15 other states wasted no time in suing the Bush Administration on January 2 over its refusal to let the state regulate greenhouse gases. The Clean Air Act lets California control emissions as long as it receives a waiver from the Environmental Protection Agency. Other states can then adopt California’s emissions laws.

Sen. Barbara Boxer and Rep. Henry A. Waxman of California have vowed to hold hearings involving EPA, White House and automaker staff. They sense that the EPA’s decision may have been politically rather than scientifically or legally motivated. Records show that carmakers met with and submitted letters to White House officials regarding California’s waiver request.

The Los Angeles Times spoke with EPA staff who said they recommended California’s waiver request be approved. But EPA administrator Stephen L. Johnson ignored their recommendation. California Air Resources Board officials and environmentalists are confident that they will prevail.

Beyond Bali

The next major United Nations climate change meetings will be in Poland in December 2008 and Copenhagen, Denmark, in December 2009.

The Bush Administration has put together its own conferences, the Major Economies Meetings (MEM) on Energy Security and Climate Change. The goal of the symposia is to strengthen the framework produced in Bali. The first meeting was in September 2007 in Washington, D.C. and featured representatives from 17 countries, the European Union and U.N.; the second meeting  end-January in Hawaii. The administration hopes to produce a MEM roadmap by the close of 2008. Analysts are concerned, though, that the MEM proposals may be in conflict with those discussed in Bali.

Congress is trying to do its part through the Lieberman-Warner Climate Security Act. u

David Kates is a reporter and blogger with AlternativeEnergy.com.

 
 
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