Top Five 2014 Energy/Environmental Priorities of the EU

I thought that it’s instructive for anyone interested in US energy/environmental policy to look at what the EU has on its 2014 agenda. Environmental journalist Sonja van Renssen outlines the top 5 EU energy/environmental issues. The issue priorities are:

  • The biggest issue on the agenda will be the climate and energy package to be unveiled by the European Commission on January 22nd.

  • ETS and how to include emissions from international aviation will also be high on the agenda, with  the European Parliament and the biggest Member States disagreeing on the way forward.

  • Shale gas will be back on the agenda with a long-awaited proposal to be tabled by the European Commission also on January 22nd.

  • In 2014, DG Environment’s priority will be waste and resource efficiency with a ‘circular economy’ package expected to be presented by environment Commissioner Potočnik in spring.

  • The alternative fuel strategy with difficult trialogue negotiations between the Council, European Parliament and Commission lying ahead.

View environmental journalist Sonja van Renssen talk about the energy/environment priorities:


 

The Continuing Saga of the Utilities’ Death Spiral

For those of you who are fighting numerous proposed high-voltage (HV) transmission projects, take some solace in the idea that “time is on our side”. There are lots of reasons for that, but one of them has always been that technology and the market would unfold and develop in ways that would, and should, make HV transmission largely unnecessary. As I’ve said before in other Geopostings’ blogs, I think that is exactly what’s currently happening with the disruptive challenge and the death spiral related to on-site solar and energy efficiency. Every day that passes increases the chances that more HV transmission will never be built. To elaborate on this, I’ve included a soon-to-be published op-ed in the Bozeman (Montana) Daily Chronicle by John Vincent (a frequent contributing author to Geopostings):

The Continuing Saga of the Utilities’ Death Spiral

– by John Vincent,  former Montana state legislator, Bozeman mayor,Gallatin County Commissioner and Montana Public Service Commissioner

Recently two opinion pieces published by the Bozeman Chronicle have addressed energy issues from a single perspective; increasing the supply of electricity. One article advocated for more power from wind. Another, while not dismissing wind power, made the case for coal fired generation.

Certainly reliable energy supply is important, the cleaner and cheaper the better.  But increasing supply isn’t what’s getting the most attention or generating the greatest concern in the utility industry today.

Here’s what is:  The industry is becoming more than a little troubled by the fact that energy efficiency and on-site and locally generated and distributed energy (which reduces demand for the power they sell) is beginning to threaten the way they’ve done business for over 100 years. They see this trend starting to cut into their profits, (profits made possible primarily by building large, centralized power plants and long distance transmission lines at handsome rates of return guaranteed by government regulation of electricity rates).

Consultants for the private utilities’ owned trade group, the Edison Electric Institute, recently acknowledged this threat. They call it a “disruptive challenge.” Others have dubbed it a “death spiral” for the utility industry.

What is “disruptive challenge” or the “death spiral”?

As more and more people and businesses use less and less energy and generate more of what they do use on their own, utilities will sell less power. Rates will have to go up in order to keep profits healthy and stockholders happy.

Customers who haven’t become more energy efficient, or who’ve been unable to find ways to utilize on-site or distributed energy systems, will bear the brunt of these higher rates. But because the cost of distributed energy and improved efficiency will continue to drop, increasing numbers of these customers will become empowered, motivated
and enabled to significantly reduce the amount of power they purchase from their traditional utilities.

The customer base for traditional utilities will shrink, profits will decline, expensive (and previously profitable) power plants and long distance transmission projects will no longer be needed and investors will look elsewhere for the kind of safe, profitable investments
government regulation of utility rates has guaranteed them for decades.  Utilities, as we know them, will no longer exist.

Because one key component of the “disruptive challenge/death spiral” is on-site solar, some may counter that what’s going on in the broader utility industry won’t apply to Montana.

Don’t bet the farm on it. New Jersey, under Republican Governor Chris Christie, trails only California in on-site solar installations; state of the art energy efficient office buildings using on-site solar are going up in Seattle; the chairman of the Federal Energy Regulatory
Commission said last week that on-site “solar will overtake everything” and so the cost of on-site solar will continue to drop. The utility industry’s Edison Electric Institute has warned its own constituency that they have a big problem on their hands; In Georgia, the Tea Party is going to bat for more on-site solar to reduce dependence on the grid; and Bloomberg BusinessWeek just  published an especially timely article, “Why The U.S. Power Grid’s Days Are Numbered”.

On top of all that, and of even more immediate concern for Montana, is the fact that substantial amounts of our state’s electric generation are exported to markets where, for decades to come,  85 to 100 percent of new energy demand is expected to be met through conservation and efficiency.

The grid isn’t going to disappear altogether and technology will make what remains of it smarter and more efficient.  But our reliance on the grid (the world’s largest machine but also a vast, interconnected system highly vulnerable to cyber attack and terrorism) will become a small fraction of what it is today. The signs are there for all to see and more than a few  industry leaders have started to adapt in order to survive and remain profitable in the coming decades.

We’ve seen this kind of paradigm change before, most recently in the phone industry. Land lines out, wireless in. A quantum leap. We are about to see it again in the utility industry. You can bet the farm on it.

China’s Coal Appetite Continues To Grow

china coal growth

Source: U.S. Energy Administration

“Chinese financial website Finet quotes Phil Ren, chief of the China Coal Importers Association, as saying at an industry conference in Singapore, China’s coal imports may reach 400 million – 500 million tonnes within three years. That would constitute massive growth from current levels.” – from Mining.com, 29 January 2013.

The statement made by Phil Ren coincides with the U.S. Energy Information Administration (EIA) announcing today that China continues on its upward trend in coal consumption. Figures released by the EIA to support China’s growing appetite for coal include:

“Coal consumption in China grew more than 9% in 2011, continuing its upward trend for the 12th consecutive year, according to newly released international data. China’s coal use grew by 325 million tons in 2011, accounting for 87% of the 374 million ton global increase in coal use. Of the 2.9 billion tons of global coal demand growth since 2000, China accounted for 2.3 billion tons (82%). China now accounts for 47% of global coal consumption—almost as much as the entire rest of the world combined.

Robust coal demand growth in China is the result of a more than 200% increase in Chinese electric generation since 2000, fueled primarily by coal. China’s coal demand growth averaged 9% per year from 2000 to 2010, more than double the global growth rate of 4% and significantly higher than global growth excluding China, which averaged only 1%.”

Where does China get its coal? The China National Coal Association gives in country coal production for 2012 as 3.66 billon tons, which is 4% higher than coal production in 2011. According to Platts, China also imported 289 million tons of coal in 2012. Most of the coal imported came from Indonesia (33.05%) and Australia (38.18%), with additional imports coming from South Africa (12.4%), Russia (6.58%), Mongolia (2.1%), Canada (0.92%), Colombia (2.45%), the US (4.24%) and others (0.08%).

Coal Could Overtake Oil As Number 1 Global Energy Source By 2017

I watched a coal unit train zip through the Belgrade-Bozeman, Montana, area yesterday. The Montana Rail Link unit train was 125 cars in length and presumably bound for Pacific Northwest seaports. The coal is sourced from the Powder River Basin, an approximately 20,000-acre part of Wyoming that supplies about 40 percent of U.S. coal. An informative guide to the Montana-Pacific Northwest coal train situation is the July 2012 Western Organization of Resource Councils’ publication – RAIL IMPACTS OF POWDER RIVER BASIN COAL TO ASIA BY WAY OF PACIFIC NORTHWEST TERMINALS.

My viewing of the coal train passage coincided time-wise with a press release on the International Energy Agency’s (IEA) Medium-Term Coal Market Report. The IEA contends that by 2017 coal will closely rival oil as the number one global energy source.

“Thanks to abundant supplies and insatiable demand for power from emerging markets, coal met nearly half of the rise in global energy demand during the first decade of the 21st Century,” said IEA Executive Director Maria van der Hoeven. “This report sees that trend continuing. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today – equivalent to the current coal consumption of Russia and the United States combined. Coal’s share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade.”

The growth trend for coal will increase globally except for in the U.S. where cheap natural gas will bring a decline to coal usage. China and India will be the big markets for coal over the next five years, accounting for than 90 percent of the increase in coal demand.

In a Huff Post Green Blog, van der Hoeven notes that although affordable coal has aided emerging economies …” the surge in coal burning is not good news. Despite industry’s effort to promote “clean” coal, the black matter remains the dirtiest of all fossil fuels. The average coal-based power plant emits a tonne of CO2 per MWh generated, about twice the level of a power plant using combined-cycle gas turbines.”

The relentless growth trend for coal currently appears untouched by either climate policy or the economic slowdown. Given the present political situation, it may well be that cheap natural gas continues to be our biggest hope for carbon emission reductions.

U.S. Coal Exports

For those concerned about coal use and the environment, the U.S. Energy Administration recently released information on U.S. coal exports. A brief summary follows:

“U.S. 2012 coal exports, supported by rising steam coal exports, are expected to break their previous record level of almost 113 million tons, set in 1981. Exports for the first half of 2012 reached almost 67 million tons, surpassing most annual export volumes dating back to 1949. U.S. coal exports averaged 56 million tons per year in the decade preceding 2011. If exports continue at their current pace, the United States will export 133 million tons this year, although EIA forecasts exports of 125 million tons.”  Source: Today In Energy, U.S. Energy Information Administration, 10/23/2012. Read more at: U.S. Coal Exports