Weekly Post: Oct. 11-17

COMMENTARY ON NUCLEAR

Not every week, but on occasion, I’ll have a post that’s accompanied by a short commentary. This week’s commentary is on nuclear (Link: Commentary: Nuclear Support).

  • I’m a Former EPA Administrator and I Approve of This Fuel
    Former U.S. EPA administrator Christine Todd Whitman recently promoted nuclear energy as a clean, safe resource that meets power generation needs in ways renewables can’t. Whitman joins another former U.S. EPA administrator, Carol Browner, in voicing support for nuclear. Browner served under President Bill Clinton and Whitman served under President George W. Bush.

[Sources: Detroit Free Press; Times Union; Climate Progress]
Link: Whitman on Nuclear; Browner on Nuclear; Whitman on CPP

Gattie Note: This is one of those cases where politics gives way to pragmatics. It’s also worth noting that Whitman is on record as a supporter of EPA’s Clean Power Plan, saying that it’s the most flexible thing EPA has ever done. For more, see Commentary: Nuclear Support.

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FOLLOW-UP TO LAST WEEK

  • CA SB-350 Cedes Authority to Feds
    This is a follow-up post to last week’s CA SB-350 post. Loretta Lynch, former President of the California Public Utilities Commission and not the current U.S. Attorney General, co-authored an article for the San Diego Union-Tribune pertaining to amendments that were slipped into the recently signed CA SB-350 requiring that 50% of power generated in the state come from renewable resources.

[Source: The San Diego Union-Tribune]
Link: SB-350 Article

Gattie Note: Loretta Lynch was CPUC President during the debacle that was the deregulation of California’s power industry–aka, “the energy crisis”. The following excerpt from Lynch’s article is the crux of her article:

“On the very last day of the legislative session – with no debate, staff analysis or hearing – amendments were added to the bill. Those amendments effectively cede California’s remaining authority to control its energy destiny to the Federal Energy Regulatory Commission (FERC) by requiring California’s Independent System Operator (CAISO) to subsume its operations into a regional organization legally under FERC’s control. These last-minute amendments attempt to complete the federalization of power that the sons of Enron have lusted for since before the energy crisis.”

The phrase, “federalization of power’ should concern anyone who believes that society’s energy needs are better served by private industry than the federal government, particularly with respect to power generation. Lynch’s concerns should be shared by any and all who are committed to maintaining the separation of state and federal powers in the power generation sector. States should always be the deciders of what’s best for its own citizens and economy. In Georgia, the regulated utility model works well.

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CARBON & CLIMATE

  • Steyer Calls for Democratic Debate Focused on Climate Change
    From the Democratic debate, Bernie Sanders was the only candidate to reference climate change as the greatest national security threat facing the U.S. while Hillary said it’s the spread of nuclear weapons. Tom Steyer has called for an additional Democratic debate focused on climate change and clean energy.

[Source: NextGen Climate]
Link: Steyer Statement

Gattie Note: Tom Steyer, President of NextGen Climate, is an ardent and passionate supporter of taking aggressive action to address climate change. NextGen Climate has posted their vision of what they believe the energy economy should be. Their stated position on nuclear is not that nuclear should be expanded; rather, it is that as nuclear plants are retired they should be replaced with renewables. A NextGen Climate Orange Paper Video (orange is the signature color for NextGen Climate) proposes that 50% of America’s energy should be from “clean energy” sources by 2030. The definition of clean energy is being hijacked and displaced as renewable energy only. Within the climate change debate, the issue is carbon—plain and simple. To omit nuclear from the clean energy category reflects more of a political maneuver by environmentalists who share the same stated goals and objectives as Sierra Club President Michael Brune: “That they fight each other to their mutually assured destruction.” In my opinion, Brune’s position is irresponsible and reflects something other than carbon reductions and climate change issues.

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  • Carbon Pledges, Energy Miracles and Climate Change
    In separate interviews, Bill Gates and the European Climate Action and Energy Commission point out that current carbon reduction pledges are insufficient for avoiding temperature rises above 2 degrees.

[Sources: The Atlantic; Reuters]
Link: Gates Article; Carbon Pledges Not Enough; Climate Enforcement

Gattie Note: Comments from the European Commission were made in an attempt to buffer concerns that the upcoming Paris talks would Copenhagenize and devolve into a repeat of the 2009 conference where nothing was accomplished. Other concerns revolve around whether there is any leverage to actually enforce pledges and agreements. Paris Conference detractors are skeptical that soft pledges will actually become discernible action across the growing number of countries who have submitted INDC’s. Bill Gates, who harbors sincere concerns about the potential consequences of climate change, concurs and goes further to say that initial pledges are insufficient, particularly if those pledges are non-binding. Gates makes the observation that initial carbon reduction (the first one-third) will be the easy task while deeper cuts (the remaining two-thirds) will be where the greatest innovation is needed. Gates, who calls for an energy miracle, minces no words and spreads the responsibility and ineptness across the board from government to private industry to clean energy enthusiasts to individuals. But, even though I agree with much of what Gates says, he’s only using words. And, just like the carbon pledges, words will remain just that until some operationalizing forces put the solution machine in motion. My opinion is that this machine must include nuclear and carbon capture and storage. These technologies are operationalizing forces that can be brought to bear on meeting the dual objectives of reliability and reduced carbon for a developing world, although environmental hardliners will resist this notion down to the last U-235 neutron and monoethanolamine molecule.

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  • COP 21 Paris Climate Talks: It Ain’t Gonna Work
    In a paper published through the Manhattan Institute, Oren Cass, former advisor to then presidential candidate Mitt Romney, examines the likelihood of success for the present framework for international negotiations to be held in Paris concerning climate change and emissions reduction strategies.

[Source: Manhattan Institute]
Link: Cass Article

Gattie Note: Among other things, Cass reiterates a point that, to me, is fundamental and is reflected in several of my own posts and editorials. That being, the divide between developed and developing countries and the lack of enforceable reductions that require developing countries (e.g., India and China) to reduce their emissions. Also, the issue of financing; any agreements coming out of the Paris talks should not lay the financial burden predominantly on the backs of the U.S.

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  • EPA Carbon Rule: State Impacts
    Fitch Ratings has released version 2.0 of its Carbon Cost Recovery Index, which “measures the size and cost of emissions reductions, retail electricity rates and the affordability of electricity”.

[Sources: Electric Co-op Today; Fitch Ratings]
Links: Electric Co-op; Fitch Ratings

Gattie Note: Georgia is in the Top 10 of states facing the greatest challenges in meeting EPA’s carbon rule. This isn’t surprising, but does confirm concerns that have been expressed since the original draft rule was released. While that draft was improved, particularly with respect to under-construction nuclear, one of my concerns has been that Georgia could become overly-dependent on natural gas. From this Co-op article, one of the most worrisome aspects for Georgia has to do with just this: “Fitch noted that the actual cost of complying with the EPA plan remains elusive and said the agency has been “aggressive” in its assumptions on energy efficiency gains, renewable energy development and costs. Should these assumptions, together with the economics of gas-fired generation, prove overly optimistic, compliance costs could soar.” [Electric Co-op Today]

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  • Energy Policy and CCS
    The Brookings Institute has released a study on Carbon Capture & Storage and the need for energy policy to include next generation technologies such as CCS.

[Source: Brookings Institute]
Link: Brookings CCS Policy

Gattie Note: It’s good to see one of the think tanks reaching out and extending their thinking to include CCS.

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POLITICS

  • Overview of Democratic Candidates’ Positions on Energy
    The Washington Examiner published an overview of the energy positions taken by the Democratic Presidential candidates.

[Source: The Washington Examiner]
Link: Dem Candidates Energy Positions

Gattie Note: This is an information item only—no opinions, yet. Also, I’m not sure if there is a companion publication of energy positions taken by Republican candidates, although Rubio recently released his energy platform. [post below]

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  • Rubio Releases Energy Platform
    Presidential candidate Marco Rubio released his energy platform this week. His overall priorities are to optimize resources, minimize bureaucracy, and maximize innovation.

[Source: National Review; Marco Rubio for President]
Link: Rubio Energy Platform; Avik Roy Article

Gattie Note: Rubio holds to predictable conservative principles of the Republican Party. One line from his platform, however, is worth noting: “Nowhere is the disconnect between the potential of our people and the priorities of politicians as large as in energy”. Rubio’s statement is an understatement of a divide that could redefine our economy and undermine our national security if industry is forced to re-tool or change its energy DNA to meet environmental objectives while other economies mature, grow and expand with no regard for adhering to pledges such as those about to be discussed in Paris.

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UTILITY-SCALE

  • This Week in Net Energy Metering: Hawaii
    Hawaii PUC issues rule to cap net energy metering (NEM) for rooftop solar.

[Source: Pacific Business News]
Link: Hawaii NEM 1; Hawaii NEM 2

Gattie Note: Hawaii and Arizona are the current spotlight states dealing with net-metering issues. In last week’s post, I referenced an article from IEEE Spectrum where Arizona’s commission withdrew their bid to charge solar customers for grid utilization. (Link: IEEE Spectrum Article). This week, Hawaii takes front-and-center as its Public Utility Commission has issued a decision to “cap the net metering regime for rooftop solar to current customers”. The decision closes out net-metering for new customers while proposing other options, including energy efficiency, demand response, electric vehicles, and storage systems. Surprisingly, some representatives from the solar industry support the decision saying that the NEM subsidy has served its purpose and it’s time to retire it. Sierra Club, however, is not happy because, in their opinion, it ends a program that can facilitate the shutting down of the fossil fuel industry, which is one of their ultimate objectives.

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  • A Deeper Dive into DG and NEM
    A few links to Net Energy Metering (NEM) articles.

[Source: Utility Dive; Fortnightly; Black & Veatch]
Links: NEM Utility Dive; NEM Fortnightly;
NEM Black & Veatch

Gattie Note: The net energy metering issue is involved, to say the least, and much of the debate is not purely objective. It often comes down to a subjective position based on personal and professional preferences. The economics and environmental details can be argued nine ways to Sunday, but at some point in the argument it will probably settle into some level of subjectivity. Personally, I support the vertically integrated, regulated monopoly model and have strong reservations about net metering due to the impacts of cross-subsidies on non-solar customers. The Utility Dive article dismisses these cross-subsidies as a problematic issue associated with net metering and provides links to additional articles. You’ll get both sides of the argument from these articles.

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  • SCOTUS Troubled By FERC Order 745?
    The U.S. Supreme Court heard arguments this week on FERC Order 745, the Demand Response (DR) Rule. At issue is whether or not the rule, which offers financial incentives to reduce demand during peak energy periods, is indirectly manipulating electricity rates. The actual rule can be accessed at this link: FERC Order 745.

[Source: Forbes; US News; Yahoo Finance; Washington Post]
Links: DR Conca Forbes; DR SCOTUS; DR Yahoo; DR Washington Post

Gattie Note: Demand Response and energy efficiency are included as tools, among others, in EPA’s recently released Clean Power Plan (CPP). The inclusion of energy efficiency, to a great extent, places on the backs of consumers some of the burden for reaching state carbon reduction goals. With demand response, grid operators pay customers to reduce consumption during peak times. While FERC is allowed to regulate the wholesale market, DR may impinge on state rights to regulate retail markets. While supporters of FERC 745 point to cost savings, emissions reductions and reduced energy consumption, detractors are concerned that feds are trespassing into the regulatory space reserved for, and restricted to, states. Moreover, this is a financial issue for generators as it represents a loss in revenue.
This issue is deeply subjective as it could be argued from either side depending on what someone actually believes the goals and objectives should be: environmental or financial–or, both.

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  • Some Utilities Shrug At Carbon Rules
    While some utilities prepare to fight EPA’s Clean Power Plan in court, other utilities are rolling with the flow and just adapting. But, why? And, how?

[Source: The Wall Street Journal]
Link: Some Utilities & CPP

Gattie Note: This Wall Street Journal article highlights one of the cases where regulated natural monopolies and merchant markets bifurcate. For reasons that are more involved than I want to (or can) go into in a blog post, I’ll leave it at the following. In merchant markets, prices are competitive and subject to short-term fluctuations in the market due to such factors as fuel prices. In regulated monopolies, regulation replaces competition within a monopolized market where electricity prices are regulated by a utility commission. As such, regulated monopolies are afforded a time horizon that allows them to make long-range energy resource plans based on long-term considerations that include projected economic goals and objectives that can be agreed upon as the regulated utility works with government leaders, economic developers and citizens to ensure that power generation is sufficient to meet future demands. This accommodates investment in capital projects such as nuclear and carbon capture and storage. Merchant markets, which by nature are focused on competitive short-term prices, are less likely to invest in long-term capital projects, choosing rather to invest in projects that are less capital intensive and utilize cheaper fuels. This generally precludes consideration of projects such as nuclear and, under current fuel costs, favors or incentivizes natural gas projects. Since natural gas emits about 50% less carbon than coal-fired plants, merchant markets are investing in the short-term as it meets both financial and environmental objectives. In my opinion, there are serious long-term concerns with this strategy as it leads to an almost single-source energy-dense resource (natural gas) and doesn’t hedge against future volatility in natural gas prices or disruption in natural gas supplies. While the U.S. is certainly well-positioned in natural gas reserves, I have reservations about being in a single-source position for power generation. Moreover, any path that precludes nuclear and carbon capture and storage technologies bodes very poorly for making strides in reducing global carbon emissions. The U.S. should not compromise its power generation system through a regulated restructuring that eliminates either nuclear or coal.

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POLITICS & OIL

  • House Moves to Lift Oil Export Ban
    The U.S. House recently moved to lift the ban on U.S. oil exports, although a sure veto awaits any such bill that lands on Obama’s desk.

[Source: Politico]
Link: House Moves to Lift Oil Ban

Gattie Note: This will amount to little more than a political statement as Obama will almost certainly veto any bill that lifts the ban on oil exports. Obama’s recent vote against KXL represents a similar political maneuver. The House vote also came amid Exxon’s exit from the Arctic region. This was then followed by an announcement from the U.S. Department of Interior [next post].

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  • Obama Pivots Away From Arctic Oil
    The Department of Interior has canceled plans to sell new oil and gas drilling rights for 2016 & 2017 in the Arctic. Interior Secretary Sally Jewell pointed to Shell’s recent decision to pull out of the Arctic (Shell Arctic Story) as part of the rationale behind the administration’s decision.

[Source: Politico]
Link: Arctic Oil Leasing

Gattie Note: Chair of the House Natural Resources Committee, Rob Bishop (R-Utah), and Senator Lisa Murkowski (R-AK) pushed back against the decision. Sierra Club will leverage this for everything it can to show that environmentalists are the ones making progress in the overall effort to end the fossil fuel age. Michael Brune, Sierra Club President, said efforts by activists “showed that people power can and will continue to overcome Big Oil. Bill McKibben of 350.org tweeted: “I think great activists are big reason why. Huge win!” Shell’s decision to end their Arctic drilling campaign, however, was driven by results at the Burger J well and the overall economics; not just the expense that has gone into the search for Arctic oil, but also plummeting oil prices. This comes on the heels of the House’s recent endorsement of a bill to allow oil exporting, as pointed out in the previous post. Arctic drilling, oil exporting, and Keystone—energy is politics. More data indicating that the battle between fossilists and non-fossilists is a highly subjective, and oftentimes deeply political, issue based on personal beliefs and the direction that and individual believes our country and the world should take.

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  • Congressional Calls for Investigation into Exxon
    Some members of Congress are calling for an investigation into allegations that Exxon was aware of the potential impact of carbon emission on climate change, and whether it violated the law by “failing to disclose truthful information’.

[Source: The LA Times]
Link: Calls for Exxon Investigation

Gattie Note: Oil is Politics. It used to be that oil was energy, but not anymore.

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  • Did You Know?
    The Oil and Gas Climate Initiative? Well, there is one and they have an agenda.

[Source: Oil and Gas Climate Initiative]
Link: Oil & Gas Climate

Gattie Note: Contrary to what you may have heard preached in environmental activist sermons—Big Oil does have a climate conscience. Whoodathunkit?

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…ilyh…

 

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