Friday, February 13, 2009

P36. Pick Points

So today was Power day at CERAweek, and the President of the Environmental Defense Fund was pressing for increased research and development for carbon capture and storage. But he recognized that there would no industrial participation until there is more guidance from the Administration. They have already given Congress a blueprint on how to enact a carbon cap and trade legislation, and urged action. He was opposed by the Marathon CEO speaking instead for a carbon tax as being more simple, since cap and trade is a market set up by the government., and would provoke more volatility (and price rises) in that market.

The CEO of Energy Future Holdings bragged on Texas’ position as a leader in wind technology, and its willingness to adapt the grid to input from renewables. Given the need for a heavy investment in new plant (sometimes just to replace old capacity not to increase it) the demands for the great amounts of capital this will require was predicted to lead to consolidation in the industry, according to the CEO of PPL Corp of Pennsylvania. There are currently some 200 companies invested in the power production business, and with the demand for new plants (which are planned to be about half coal and half natural gas) the money will have to come from somewhere (including the general public.)

Looking at the scene from Michigan the CMS Energy President noted that his coal plant fleet was an average of 50-years old, and while demand would not rise, plant needed to be replaced because of age. Trying to permit a new coal-fired power plant was like “swimming upstream.” They had a plant replacement planned for Bay City but this has been postponed two years to 2017, even though the new plant was over rock which would be suitable for CCS. Collectively the industry is beginning to accept cap and trade, and just hopes that the money goes into research and development, instead of social programs.

Nissan is anticipating rolling out an electric car next year, that will be generally available by 2012. The plant will go into Tennessee, and they hope to see 10% of the fleet sold to be electric by 2020., though this depends on an agreement for a charging network, and that hasn’t been resolved yet. That may put up pollution, since the power must come from somewhere Pacific Gas & Electric said that either drivers learned to plug in and charge in off-peak hours or the country would need a lot of new electricity generating plants. There may be meters that would control activation and thus help to solve the “plug-in time” problem.

The next topic was biofuels, BP felt that these would comprise 10 – 20% of liquid fuels by 2030. It will take a billion hectares growing sugarcane to produce the ethanol to replace gasoline totally around the world, In a recent report (Sandia and General Motors said that the country could produce 90 billion gallons of ethanol, by 2030 this would replace a third of the 140 billion gallons of gasoline being used – but five sixths of the total must come from cellulosic ethanol (which we don’t have ready even in the lab yet). “P.S.” they added, “send money.”

The economists on the panel felt that the recession though severe should turn around within the year. But the blame game on that has started.

With the Shtokman field now being scheduled for development, Total is committing to $200 million on engineering studies, while the main base for the operation may end up in Norway. Part of this recent surge in activity may because Russia is suddenly realizing it will have to increase incentives if it is to halt an anticipated drop in production. The intent is to change the tax structure so that investment in new fields will be encouraged, now it is not. Remember that in Russia oil revenue taxes provide 43% of budget revenues.

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