Thursday, April 16, 2009

The Post and the Secretary - a comment on a discussion

One of the major planned bastions of the Obama Administration is intended to center about a change in the Energy Policy of the country. Given that the folk that are now in charge of a number of issues come from California Congressman Waxman (the 30th District which includes Beverley Hills and Malibu); Senator Boxer from California, and Secretary Chu of the Department of Energy; there is a predilection to call the new policy California-based, rather than the Texas-based orientation of the Bush Administration. And the experiences of the key players will likely color the thinking and planning that will take policy forward. (Recognizing as was noted in the EIA meeting last week, that given the need to get 60 votes out of the Senate, that such a process will dictate adopted policy). So it is interesting, with that filter in mind, to listen to the interview that Secretary Chu gave to the Washington Post today.

The interview begins (the Post listing is not in order, so this was the top bit) with a question on getting folk to use public transport, and conservation as a necessary early step in reducing the national energy demand. The question illustrates the difficulty between setting an overall goal, and the problems in trying to implement those goals in a time of financial exigency. Consider that while, in order to save money in tougher times folk recognize that they are better off taking public transport. The problem is that as that demand goes up, from Washington D.C to Florida, and all across the country, it bumps into the harsh reality that cuts in municipal income are forcing the services to become more restricted. As someone noted “it makes no sense to hire a construction worker, and fire a bus driver.” Unfortunately that part of the question was not fully addressed by the Secretary, though he did note that 60-70% of transportation fuel is used in the private sector, but then focused on the more fundamental theme, that he has expounded upon before, about conservation of energy. In this case he would replace the construction worker with someone that can weatherize your home. (Though still not helping the bus driver). But even here I think he has difficulty. Because to sell this message (that weatherizing your home can pay for itself in a year or eighteen months), requires that he get people to hire folk to work on their homes.

The difficulty with this when times are tougher, is that it is requiring individual members of the public to become involved and actually spend their own money in the process. (We had some small remodeling done over the winter, and according to the folks we hired, there is very little work out there at the moment). In tough times that is going to be a hard sell, high return or not. And while the sale that the Secretary talks about hinges on folk seeing the payback in lower energy bills after the investment, or getting a bank loan to make the improvements, which is a group that also needs to be persuaded.

In regard to the use of solar energy, and particularly photo-voltaics, the Secretary plays around with words. At the moment solar is much more expensive than conventional other fuels. But he notes that if you look instead at the energy supply for peak power then, instead of costing $0.10 per kwh, that currently costs $0.40 per kwh. So that instead of replacing other power sources if one instead makes the comparison with solar (at say $0.23 per kWh) then solar becomes a logical choice. The problem with that argument is that I suspect that solar is only considered as being at $0.23 if the investment can be paid off by continuous supply of power into the grid at the time that the sun is shining, in which case it is displacing existing, lower cost systems. If it is installed and then only run in times of high demand, then ROI would surely drive the costs over $0.23 and it would still not be economical.

Turning to oil dependence he tried to distinguish between folks reducing their driving habits purely because the price went up, over their decision to do so because of the dependence on foreign oil. He recognized that countries are now jockeying for guaranteed access to the increasingly limited supply, and this dependency is a “very scary proposition” particularly if it starts to define our geopolitical stance. He did suggest that people conserve in personal travel by driving more fuel efficient cars and car pooling, but when challenged as to whether folks would, he merely hoped so. And then he spoke up for the use of bio-waste as well as specifically grown crops to generate bio-energy.

In looking at the benchmark of 100-day accomplishments he is proud of getting the loan guarantee program to actually start making loans, whereas when he came in the likely start date had been projected as sometime next year.

For climate change, and carbon reduction he still holds to the target of reducing carbon emissions by 80% by 2050. He still sees energy conservation, in things like buildings, as the lowest hanging fruit. He thinks we can reduce building energy costs by 80%, with today’s technologies and without solar panels. He feels that the Department can design tools that will help people do this., and that the added investments to make them efficient will then pay for themselves in 10-years or less.

But as with cars, and the change to higher mileage vehicles with improved batteries, there is no recognition that this problem needs an immediate solution. Rather the Department is going to continue developing battery technology, with the hope that in time the cost differential for a hybrid will be small enough that it will become more attractive to the public. As it will continue to work on the design tools for buildings, but there is no sense of emergency in the talk, no sense that the time where we will need to have answers is in the relatively immediate future. Interestingly when he was selling the concepts of hybrids he argued that they were only $5,000 more expensive than conventional models, and yet when arguing the need for research on batteries he put the price of current batteries in hydrids as being on the order of $10,000. (Tsk!) But new batteries are at least 5 years away.

I must confess that I do find it a little odd that he would have us concerned over climate change, with a potential for that impact being towards the back end of this century, with much less concern over the more imminent arrival of fossil fuel shortages, which may well occur within the period of the current Administration.

And in that regard he talked of the differences between regulatory and legislative paths towards reducing carbon emissions. He anticipates that the EPA will move on the regulatory process, which may, in turn stimulate more legislative activity. And looking further into coal, the rate of advance of “clean”coal’ is going to depend on the costs and the technologies that show that they can work. These are pilot demonstration plans going forward that will initially be expensive, but will come down with use. And he thinks that as a result clean coal could happen. He thinks that the economic and social consequences of continuing to burn coal are becoming more evident and more pressing. (One wonders what he is thinking of in particular) But again this is quite generalized, and not focusing on the shorter term path forward, and, as I keep listening to the Secretary the more I worry that he does not see the time scale over which changes need to be made.


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