Archive for October, 2009

As posted to CleanTechBlog.com

Although much of the ink these days about innovative vehicles relates to plug-in hybrids, work continues to explore the potential for hydrogen-based fuel cells to play a key role in the transportation sector – particularly in light of the recent decision by Congress to reauthorize funding for hydrogen autos.

Admittedly, as hydrogen critics and skeptics are quick to point out, the vision for personal automobiles running on hydrogen is very long-term and thus quite murky because of a number of factors, perhaps most notably the lack of a ubiquitous hydrogen refueling infrastructure. The challenges facing hydrogen vehicles are real, but for fleet vehicles with limited service radii, the lack of refueling infrastructure is less of a problem, as one dedicated refueling system can fit the bill. As a result, fleet vehicles – especially inner-city buses – are the primary focus of current testing activities for hydrogen fuel cells in transportation.

Of course, to achieve the full environmental benefits of the hydrogen economy vision, the hydrogen will need to be derived by electrolyzing water via renewably sourced electricity (e.g., from the sun or the wind) to power the electrolyzer.

Although conceptually straightforward, renewably powering electrolyzers turns out to be a non-trivial challenge. This is mainly because solar and wind electricity voltage and current are highly variable, and the electronics of the control systems in electrolyzers tend not to like fluctuations in input power.

To address this challenge, a team here in Cleveland is spearheading a project to install a solar/wind-powered electrolyzer to generate hydrogen from Lake Erie water, with the hydrogen to supply a refueling station that will power a fuel cell bus serving Cleveland-area riders.

With seed funding from the Cleveland Foundation, the project is being managed by the Ohio Aerospace Institute. The team includes NASA’s Glenn Research Center in Cleveland, Cleveland’s Regional Transit Authority (RTA), the Great Lakes Science Center in Cleveland, Cleveland-based Parker Hannifin, and United Technologies. The Great Lakes Science Center is already home to a 225kw wind turbine and a 32kw photovoltaics installation, and will be home to the electrolyzer-fed fueling station.

RTA will run the fuel cell bus on the recently renovated Euclid Corridor. United Technologies will provide bus, and Parker Hannifin is providing key control systems for the fueling station. If all goes well – meaning, primarily, raising an additional $1 million or so to fully complete the project – the hydrogen fueling station and fuel cell bus will operate on a demonstration basis in a couple of years.

Of particular note, NASA is providing the intellectual expertise in developing the algorithms for controlling the electrolyzer to match the variable input power from the solar- and wind-generating systems. This expertise comes from considerable mission experience in which photovoltaic systems generate electricity from the sun to power spacecraft, and energy storage and charge control systems must accommodate power supply interruptions as planetary bodies transit in front of the sun.

To the team’s knowledge, because managing the intermittency of electricity supply in electrolyzer operation is non-trivial, there is only very limited experience with renewable electrolysis for hydrogen production, and virtually none involving more than a little bit of hydrogen production daily. So this Cleveland project could be an important step along the path to developing truly carbon-free, hydrogen-fueled transportation solutions.

As posted to Huffington Post

To an economist, subsidies are powerful and dangerous things. They are powerful because they work. They are dangerous because they encourage economic actors to take actions that have direct impacts that are often unanticipated and wanted, and at the expense of other positive actions that could otherwise be taken but aren’t because of resource constraints.

In the case of energy, subsidies are legion, though hard to identify. A recent report by the Environmental Law Institute (ELI) titled “Estimating U.S. Government Subsidies to Energy Sources” attempts to do just that.

The ELI report estimates that the U.S. government subsidized energy with $101 billion during the period 2002 to 2008, with $72 billion to fossil fuels and $29 billion to renewable energy.

A $29 billion figure to renewable energy sounds fairly impressive, particularly when renewable energy represents only about 10 percent of overall U.S. energy supply. However, underlying these statistics are three important observations:

• The fossil fuel industry is over 100 years old and is still receiving sizable subsidies even though enormously profitable, whereas the renewable energy sector is young, developing, and (by most accounts) worthy of encouragement by public support to make more financially attractive to market participants. 
• Most of the subsidies for fossil fuels are permanently embedded in the tax code, whereas the renewable subsidies tend to have finite durations that undercut their effectiveness in providing clear incentives for long-term investment or behavioral decisions.
• About half of the renewable subsidies are for corn-based ethanol, prompted by support from the agricultural community, but at questionable cost-effectiveness and impact on greenhouse gas emissions.

So the amount of funding support received by renewable energy is less impressive than initial impressions would suggest.

The forces supporting the preservation of fossil fuel energy subsidies are unbelievably strong, so the topic of energy subsidies is a potent political boogeyman that few have dared to touch. However, that may be changing.

In a Sept. 10 statement to the Senate Subcommittee on Energy, Natural Resources, and Infrastructure by Alan Krueger (Assistant Secretary for Economic Policy and Chief Economist) of the U.S. Department of Treasury, the Obama Administration is clearly aiming to unwind several provisions of beneficial tax treatment that the U.S. oil and gas industry receives.

As Krueger concludes, current tax subsidies for the oil and gas industry “divert resources from other, potentially more efficient investments and they are inconsistent with the Obama Administration’s goals to reduce [greenhouse gas emissions] and build a new, clean energy economy…Removing these subsidies will have a very small effect on the price of oil and gas, the production of oil and gas, and domestic jobs. In fact, removing these subsidies could actually make our economy more efficient by reducing distortions in the tax code.”

On a global basis, as widely reported from the recent G-20 meeting in Pittsburgh (see Washington Post article), world leaders pledged to phase out fossil fuel subsidies in the “medium term.” As bad as the situation in the U.S. is, energy subsidies in developing economies are arguably much worse: According to estimates by the International Energy Agency, $310 billion per year is spent on subsidizing energy, mainly transportation fuels.

Of course, these subsidies are implemented in the name of aiding poor citizens in these countries, but they cause massive distortions in public sector budgets, national trade balances, private sector investments and behavior, global security, and environmental protection. And frankly, the main beneficiaries of the subsidies are urban upper- and middle-income citizens, as the poor are much too poor to afford cars anyway.

Removing subsidies on fossil fuels will not, in itself, drive the world economy to full implementation of desirable energy efficiency and renewable energy options. But it will definitely help, a step in the right direction. Let’s hope our leaders can summon and sustain the political will to overcome the inevitable opposition and phase these fossil energy subsidies down and out so we can get on with building the clean energy economy in a more efficient manner.

As posted to CleanTechBlog.com

On Oct. 5, FirstEnergy announced a planned energy efficiency program involving the delivery of two compact fluorescent lightbulbs (CFLs) to each of its residential and small commercial customers in Ohio. This was to be a part of FirstEnergy’s revived energy efficiency programs, stimulated in large part by the 2008 passage of Ohio SB 221, which stipulates that utilities must reduce their customers’ energy consumption by 22.5 percent by 2025. 

Approved in a case by the Public Utilities Commission of Ohio (PUCO) without comment on Sept. 23, the plan would have had each customer pay $21.60 in bill surcharges over 36 months for this package of two CFLs – whether they were used or not, or even wanted or not.

The story accompanying the rollout of this program in the Plain Dealer went into considerable detail about its economics. The $21.60 in extra charges not only covered the cost to FirstEnergy of acquiring and delivering the two CFLs, but also would reimburse FirstEnergy for the reduction in revenue associated with the use of these more efficient CFLs in lieu of traditional incandescent bulbs.

Although seemingly shocking to Ohio readers, the provisions of SB 221 do in fact allow for utilities to recover lost revenues associated with energy efficiency implementation, in recognition of some basic utility economic realities.

In traditional regulatory approaches, utilities earn more profits by selling more electricity. As is the case with most businesses, the company succeeds by selling higher volumes of its product. Thus, if we agree that we want to encourage less electricity consumption, we have to eliminate the financial motivations that utilities have against that desirable goal. In other words, we have to make it equally attractive for utilities to promote saving energy instead of consuming energy; we have to “decouple” electricity volumes from utility profitability.

Recovery of lost revenues from energy efficiency is by no means a novel concept. Indeed, California pioneered such “decoupling” ratemaking treatment all the way back in 1982 with the adoption of its Electric Revenue Adjustment Mechanism. But in Ohio, it is very new, only now being adopted in the wake of SB 221. And neither FirstEnergy nor the PUCO made significant effort to educate the public that ratemaking practices of this type have been employed for decades, and are being increasingly employed around the country, for very sensible reasons.

At least equally concerning is FirstEnergy’s claim that each bulb was costing the company $3.50, for a total of $7 for the package of two. A little snooping around area stores revealed that a five-pack of CFLs could be bought at Ace Hardware (hardly the lowest-cost source) for $13.99, or about 20 percent lower on a per-bulb basis than what FirstEnergy was proposing to charge customers for similar products sourced elsewhere – at presumably higher volumes and more favorable pricing.

In the wake of the initial article, reader reaction was overwhelmingly negative. People didn’t want to pay for light bulbs they didn’t request and may not use. They didn’t want to get gouged on the cost of the bulbs. And they didn’t want to pay FirstEnergy for kilowatt-hours that weren’t being sold.

Not only did readers call the Plain Dealer in complaint, they called their elected officials as well – including all the way to Gov. Ted Strickland, who asked the PUCO to stop the program. Within a couple of days, the resulting political pressure prompted PUCO Chairman Alan Schriber to ask FirstEnergy to withdraw this proposed energy efficiency program. And so, in compliance with the PUCO order, First Energy postponed it.

As reported in a follow-up Plain Dealer article, John Paganie of First Energy admitted that “we didn’t do a good enough job in helping customers understand the purpose, the reason for [the program] and the impact.” Yep:  First Energy didn’t sufficiently communicate to customers – or engage with trusted advocates such as the Ohio Consumers Counsel in working out the details of the program so they could offer their support – before the program rollout appeared in newspaper ink.

In the same article, Schriber noted that “although the PUCO allowed FirstEnergy to implement its program, we did not approve the charge that will appear on monthly bills as a result.” In other words, PUCO gave FirstEnergy the go-ahead to do the program, but PUCO didn’t consent to how First Energy would be compensated. Huh?

So the net result of this program announcement was a lose-lose-lose: FirstEnergy came off as being greedy, the PUCO came off as being inattentive to program details, and promoters of energy efficiency came off as imposing unwanted economic burdens on customers. Certainly, Thomas Suddes’ editorial in the Plain Dealer makes everyone look bad.

I thus submit this little vignette as a classic case study of how NOT to implement energy efficiency.

In my humble opinion, this would not have been such a public relations debacle if FirstEnergy and the PUCO had both accumulated a greater store of citizen goodwill over the preceding decades. Unfortunately, this hasn’t been the case. And resulting from this bungling by distrusted players, the generally favorable cause of energy efficiency gets a public black eye in Ohio.

As a big sports fan, I’ve become an enthusiastic listener of Mad Dog Radio on Sirius, enjoying the rantings and ravings of both hosts and callers alike. It’s quite an eyehole (or earhole) into an interesting segment of Americana.

Unfortunately, one disconcerting aspect about this segment is reflected by the advertisers that choose to send their messages to this audience. Advertisers include such products and services of dubious veracity as the Hollywood Cookie Diet, the California Psychic Hotline, and water vapor cigarettes.

Clearly, the demographic of the Mad Dog Radio listening audience is such that discriminating intelligence is not its hallmark characteristic.

To this apparently intellectually-challenged audience, an organization called the Institute of Policy Innovation has begun to run a 30-second soundbite called “Is the Earth Actually Cooling?” narrated by Dr. Merrill Matthews. Dr. Matthews, whose stated credentials are in health care policy (in contrast to climatology, a more useful background for someone who’s going to opine on this topic), alleges – without substantiation, other than the offhand comment that unnamed “Russian scientists” are increasingly convinced – that the evidence is now suggesting that the earth is “on the verge of a mini-Ice Age,” rather than warming. He closes with the following cheap shot:

“But at least all those global warming scolds may leave the rest of us alone allowing them to fly around in their private jets openly and guilt free.”

This dreck I find very annoying and insulting. By affiliation with its fellow advertisers, I put the Institute of Policy Innovation right alongside the California Psychic Hotline in terms of credibility. However, to an audience inclined to believe that psychics can provide good personal advice, no doubt Dr. Matthews’ asinine and unsupportable message is compelling to many.
This is not to say that cleantech advocates don’t also offer up their share of absurdities. As an example, I can’t tell you how fatigued I’ve become with “green job” mantras, almost implying that such jobs can be created by whim or fiat. No, they can’t: jobs (at least, good long-term non-governmental ones) are created only after economic opportunities for profit- and wealth-creation emerge. Instead of focusing on creating green jobs, the debate should be about creating a healthy market environment within which employers can/will hire people to pursue those economic opportunities.

I don’t know about you, but for me, I want people in key positions affecting my life – such as my doctors, for example – to be both smart and educated in their disciplines. Why don’t more of us insist that those who are debating our political and social futures, on key issues such as climate change and the future green economy, also be among the most intelligent and well-informed?

More of us need to take a stand: fight stupidity now!

Our future increasingly depends on wise choices in a complex world. We cannot abide those who pollute airwaves with misleading or erroneous statements on critical civic topics — especially to listeners whose judgment on matters more important than sports is probably not highly refined, but who nevertheless vote and otherwise make their voices heard in the political arena.