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It’s the IRA’s First Birthday. Here Are Five Areas Where Progress Is Piling Up.

The Inflation Reduction Act promised an unprecedented wave of clean energy investment. One year in, here’s where we’re seeing progress.

Originally published on August 16, 2023 at RMI.org: https://rmi.org/its-the-iras-first-birthday-here-are-five-areas-where-progress-is-piling-up/

By  Hannah Perkins,  Adam Aston,  Vindhya Tripathi

“Unprecedented.”  “A landmark.” “The Super Bowl of clean energy.”

Those are just a few of the superlatives that hit the headlines when the Inflation Reduction Act (IRA) was signed into law on August 16, 2022.

The act’s passage came as a surprise both politically — emphasizing lower energy costs helped the bill clear years of oppositional brinksmanship — and for its unprecedented scale. Toward the goal of shifting the US grid to 80 percent clean electricity and cutting climate pollution by 40 percent by 2030, the act mobilized an estimated $370 billion in federal incentives.

A year in, the early fanfare has resolved into unprecedented progress. Twelve months after passage, the IRA’s impact — in industrial investment, new jobs, and other economic activity — already exceeds early estimates. To date, we have seen:

  • $278 billion announced in new private clean energy investments.
  • Projects announced accounting for 170,000 new jobs.
  • The availability of $70 billion was announced in grants, rebates, and other non-loan funding.

And while politics could yet alter its trajectory, the impact to date has been weighted towards traditionally Republican-leaning regions, a bias which may ensure its longevity in years to come. Given the rapid uptake, Goldman Sachs earlier this year upped their estimate of public IRA investment over the next decade to more than $1 trillion, with private sector spending potentially a multiple of that.

By design, incentives are drawing this investment widely across the United States, with a focus on disadvantaged, low-income, and energy communities. RMI estimates that, if they take full advantage of the IRA and adopt clean energy at the pace and scale needed to meet national climate targets, by 2030, each state could see:

  • Cumulative investment of from $1 billion (for smaller states) up to $130 billion (for the largest beneficiaries).
  • Per capita new investment of $1,500 to $12,000.
  • The creation of 2,000 to 100,000 new jobs.
  • Lower healthcare costs and impacts by avoiding 4,000 to 300,000 negative health outcomes avoided.

On the ground, IRA incentives have already translated into a rush of announcements and projects spanning regions and industries, including both legacy and cleantech sectors. On the advent of the IRA’s first birthday, here’s a rundown highlighting the breadth of this progress.

Manufacturing boom

Nourished by the IRA, manufacturing announcements have mushroomed across the country. While heavy on electric vehicles (EVs) and batteries, the greenfield factories and upgrades also include wind and solar sites, along with semiconductors, electronics, and others. The new capacity promises to boost US energy security and independence by reshoring key supply chains and strengthening US competitiveness as global leader in clean energy technologies. To date, 272 new clean energy projects have been announced, including:

  • 91 new battery manufacturing sites.
  • 65 new or expanded EV manufacturing facilities.
  • 84 wind and solar manufacturing announcements.
Electrifying transportation

Globally, sales of internal combustion vehicles peaked in 2017, and are now in long-term decline, according to Bloomberg NEF. As older cars and trucks are retired, the world’s combustion vehicle fleet will start to shrink after 2025. In the United States, the IRA is supercharging this shift, with incentives that span from electric school buses to battery factories and new charging infrastructure:

  • For consumers, the IRA offers rebates on new and used electric vehicles, peaking at $7,500. Juiced by this incentive, US sales of new EV passenger cars are expected to surge by 50 percent in 2023 to over 1.5 million, the White House estimates. The incentives will help heavier vehicle classes electrify more quickly too. By 2032, RMI estimates that the share of EV sales using IRA credits will be close to 100 percent for Class 1–3 commercial fleets, and 84 percent for medium- and heavy-duty trucks.
  • To supply incentive-amped demand, global automakers such as GM and Ford and their battery partners are leveraging the act’s $45-per-kilowatt battery production tax credit to turbocharge construction of new plants across a “battery belt,” stretching from Michigan to Georgia (see map, in above section). Increased output of US-made batteries is, in turn, helping carmakers boost output of popular EVs, such as Ford’s F-150 Lighting electric pickup (image, top of page).
  • IRA also provides funding for the federal government to lead by example. The US Postal Service(USPS) received $3 billion for clean vehicles. And starting in 2026 the post office will buy only EVs.
  • RMI analysis shows IRA credits will help electric passenger cars and light-duty trucks achieve total cost of ownership (TCO) parity with ICE vehicles between 2023 and 2025. Without the IRA credits, EVs would have reached TCO parity with ICE vehicles between 2024 and 2027.
Total Cost of Ownership parity for EVs and ICE passenger cars chart
Greening buildings

Buildings account for around a third of US emissions, making it one of our largest, most complex sectors to decarbonize given the age, diversity, and costs to retrofit America’s stock of millions of buildings. The IRA is tackling this challenge on multiple fronts:

  • Guidance on funding for the Home Energy Rebate programs is being rolled out and has generous carve-outs for low-income households. States are currently designing programs based on this guidance to help consumers save money and live more comfortably. The first state programs could be rolled out as early as the end of this year.
  • Appliance efficiency standard programs like CEE and ENERGY STAR, which some IRA incentive programs rely upon, continue to align with decarbonization efforts that ensure the most efficient HVAC systems and appliances are installed in homes across the country.
  • New HUD programs prioritize healthy, efficient, electrified retrofits for affordable housing HVAC and appliances; more than $800 million is available and funding from these programs can’t go towards in-unit fossil fuel appliances.
  • The General Services Administration (GSA) — which oversees the federal government’s vast portfolio of buildings and properties — is using $1 billion of IRA funding to shift federal facilities towards electrification, with near-term plans to electrify over 100 buildings, including one of their largest, the Ronald Reagan Building in DC.
Decarbonizing electricity

Clean electricity is essential to decarbonize the wider US economy, whether to charge EVs and power greening buildings (see above), or to decarbonize industry (below). The shift is advancing steadily. In the first five months of 2023, wind and solar produced more power than coal, a first for the US. The IRA is continuing this shift:

  • Commercial solar is on pace to grow by 12 percent in 2023, and over the next seven years, we expect twice as much wind, solar, and battery deployment as there would have been absent the IRA.
  • The IRA-linked credits reinforce renewable powers’ long-standing price edge over gas- and coal-fired generation, an advantage which endures despite some demand-led inflation in the price for new solar and wind.
  • With IRA funding, USDA is making the largest investment in rural electrification since the New Deal — nearly $11 billion for rural electric co-ops. In particular, the Empowering Rural America (New ERA) program gives rural electric cooperatives an unprecedented opportunity to modernize aging grid infrastructure to maintain reliability, lowering costs for members and reduce emissions.
  • Michigan’s largest investor-owned utility, DTE, filed the first resource plan in the country that attempts to demonstrate the IRA’s intended changes to the economics of clean energy, projecting $500 million in savings for customers over 20 years. The proposal includes building 15 gigawatts (GW) of new solar and wind, improving DTE’s exploration of battery pilots, and moving up the retirement of the Monroe Power Plant – the fourth largest coal plant in the US.
  • Energy Infrastructure Reinvestment announced funding for solar and storage in Puerto Rico, replacing a retired coal power plant.
Transforming industry

Steel, cement, petrochemicals, and other hard-to-abate heavy industries pose a special challenge to decarbonize. For now, many rely on raw materials and/or high temperatures that only fossil fuels can affordably deliver at scale. The IRA aims to scale up affordable alternatives — such as hydrogen which, if implemented cleanly, offers a clean alternative — along with greener raw materials and recycling options:

  • Incentives for industry and hydrogen have had a big impact on economic analyses. Many projects have been announced, focused on advancing US global competitiveness. Policies are meant to drive applications and interest in first-of-a-kind projects and hubs demonstrating industrial decarbonization opportunities.
  • From the IRA and Bipartisan Infrastructure Law, the Office of Clean Energy Demonstrations (OCED) has been allocated $6.3 billion for Industrial Demo Grants. OCED funds will de-risk technologies that are not yet demonstrated on a commercial scale.
  • A range of tax credits is being clarified that will spark investment. For hydrogen, guidance on the Hydrogen Production Tax Credit (45V) is forthcoming. And the  Advanced Manufacturing Production Credit (45X) will unlock a major buildout of the lithium-ion battery supply chain, stationary storage manufacturing, and solar and wind supply chains.
  • Likewise, guidance has been released and the first round of applications reviewed for the Advanced Energy Project Credit (48C), which offers $4 billion for projects that expand clean energy manufacturing and recycling, expand critical minerals refining, processing, and recycling, and reduce emissions at industrial facilities. The U.S. Energy Department’s roster of funding opportunities, among other things, prioritizes heat pump manufacturing, signaling a clear shift towards supporting beneficial electrification.
Finance

The act has also unlocked financing via the reform of tax credits and innovative financing that prioritizes climate-friendly investment in historically disadvantaged communities:

  • For the first time, the IRA widens access to investment and production tax credits (ITCs and PTCs) for non-taxable entities, such as states, local governments, coops, and non-profits that in the past had little or no way to use the credits to finance new renewables. Historically, constrained demand for tax credits has limited the scale of ITC and PTC financing. For instance, RMI analysis of 2019 financial disclosures found that US investor-owned utilities had aggregate tax liabilities sufficient to build less than 4 GW of new solar and storage per year, barely enough capacity to replace one or two coal plants. Later this year, Treasury will release final guidance for organizations to tap into these direct pay and transferability options.
  • The Notices of Funding Opportunity (NOFOR) for the Greenhouse Gas Reduction Fund’s three grant competitions are now live, with deadlines in September and October. These grants will be disbursed in 2024, capitalizing a national network of clean energy financiers who will be focused on mobilizing private capital at scale to fund emissions-reducing projects, especially in low-income and historically disadvantaged communities.
Looking ahead

The IRA is not only the most ambitious climate bill in US history. It is one of the most ambitious and complex efforts at economic and industrial reinvestment ever. By these standards, the progress the act has already made is enormous, but years of work — and meaningful obstacles — remain to fully deploy the IRA at the pace and scale needed to reach climate targets.

Chief among these obstacles is permitting. As project timelines stretch into the years — whether to connect renewables projects onto the grid, or site new critical mining and industrial facilities — streamlining the thicket of overlapping regulatory and administrative approvals is emerging as a make-or-break challenge for the US energy transition.

Despite challenges in implementation, the hundreds of announced projects and hundreds of billions of dollars in investment show the energy transition is out of the starting gate and gaining speed.

The challenge is increasingly shifting to subnational players — such as states and cities as well as businesses and non-profits — to mobilize the funding the IRA has unlocked. Ultimately, the IRA’s full potential will be limited only by our own ambition to realize a clean energy future.

Jigar Shah Is Making the DOE’s loans office mighty again. Here’s how | GreenBiz

By Adam Aston

Maybe you first knew him as chief executive of the Carbon War Room or as the co-founder of Generate Capital. Or maybe you came across him as a LinkedIn mega-influencerGreenBiz contributor or even as a former co-host of The Energy Gang podcast — he’s the one with the ready laugh and the sharp takes.

Chances are, you already know Jigar Shah. He’s spent the past two decades making a compelling case for the climate-fixing, profit-generating potential of clean energy, all the while batting down ill-informed skeptics and bad business models.

Now, as part of the Biden administration’s effort to jump-start economy-wide decarbonization, Shah has been granted more capital — and a bigger platform — than he might ever have thought possible. 

The total: $46 billion, according to Shah. That’s the lending capacity he can mobilize at the Department of Energy’s Loan Programs Office (LPO), which he was appointed to oversee in March. 

To make the “once-mighty” office — as his boss, Energy Secretary Jennifer Granholm, put it — mighty again, Shah faces big challenges. The office has been all but dormant for much of the past decade, due in part to Trump-era deprioritization but also hampered by a lingering reputation for bureaucratic dysfunction. 

Barely three months into his new role, Shah joined this week’s VERGE Electrify virtual event to kick off the conference and share his plans to get the loans flowing once again, in a keynote conversation with GreenBiz Group’s Senior Transportation Analyst Katie Fehrenbacher, who co-chaired the event. 

Re-booting the LPO. Following a decade of dormancy, the office has moved into a fast-forward mode, fueled by Biden’s climate agenda and Shah’s contacts — he’s reached out to over 100 CEOs since he joined. “People are starting to realize that we’re open for business,” he said. “If we got maybe three applications all of last year, we’ve gotten three a week recently. That comes from people trusting the program will be there for them.” 

A catalytic role. Deep as LPO’s loan pool may be, Shah sees his office’s role as narrowly targeted — providing catalytic funding at a key stage, before companies are able to access commercial debt. Consider the example of nuclear energy innovators such as OkloNuScale or Holtect. “Small modular reactors are going to be built across the country,” said Shah. But they’re not likely to be able to raise commercial debt until the technology is de-risked. Shah sees LPO’s role as building a bridge to bankability: “Then, we’re done.”

Streamlining the process. By pushing an easier, more user-friendly approach, Shah is tackling head-on the office’s lingering reputation for being too costly, too complex and too long-odds. “We’ve dropped all the application fees,” he said. “And we don’t charge any of the other fees that we used to until you’ve received the loan and started to draw it down.”

Energizing climate justice. Shah sees a space where the LPO has the potential to both modernize the grid and benefit historically disenfranchised communities. Virtual power plants offer an opportunity to advance grid-scale energy services while helping cities and communities upgrade energy infrastructure and cut energy costs. That could mean building solar with storage on low-income housing or affordably financing grid-responsive smart air conditioners or water heaters. Models such as these promise to “not only get essential appliances affordably into the hands of people who need them,” said Shah, “you’re also able to get higher utilization rates from the existing distribution infrastructure.” 

Swings at bat. To the vexing question of how to pick winners from among emerging technologies, Shah brings the perspective of a seasoned climate tech entrepreneur. “We have to take a lot of swings at bat,” said Shah, “and we are going to have misses.” But misses — with a nod to the failure of Solyndra, a Obama-era solar startup — can be offset by towering successes, such as Tesla, to which the DOE lent $465 million in 2010, a moment when the then-nascent EV maker was far closer to failure than world domination. Today, it’s the world’s most valuable carmaker and has sparked a competitive race to electrify the automotive industry. “That’s what the president has talked about,” said Shah. “We want to make sure from a technology standpoint, we’re leading the pack worldwide.”

Tips for loan candidates. “Don’t be scared! Come in early,” advised Shah. To be sure: There will be many forms, but Shah’s team is working to ensure that the process is easier to navigate than before. Over the past month, the office has added more than 10 people to escort applicants through the loan process. “We want every person who thinks they have a good idea that deserves funding to have a shot.”

If you’re one of those people, the initial review process takes six weeks, typically. Once qualified, getting the approval stage takes four to five months of diligence.

By that timeline, Shah’s office will announce the first batch of new loans under the Biden administration by autumn, if not sooner. 

Published May 28, 2021 at https://www.greenbiz.com/article/how-jigar-shah-sees-making-energy-departments-loans-office-mighty-again.

Looking Ahead: CCS’ Prospects Under Ernest Moniz, Energy Secretary Nominee | Global CCS Institute

Ernest Moniz, President Obama’s newly nominated Energy Secretary, shares much with his predecessor, Steven Chu, outgoing head of the Department of Energy (DOE) and who is returning to an academic chair at Stanford University. Both men are prominent academic physicists, with long track records of advancing energy technology.

Chu proved to be a vocal advocate for clean energy technologies, especially in the realms of renewables and transportation, funneling billions in stimulus dollars into early stage R&D through DARPA-e and buoying mid-stage companies such as Tesla with federal loans. Under Chu’s watch, carbon capture and storage (CCS) remained a priority, with efforts to press ahead with FutureGen 2.0, but lacked the urgency that many stakeholders wanted to see.

Assuming a quick Senate approval—Moniz is widely regarded to face a relatively easy confirmation—so what’s in store for CCS under a Moniz-led DOE? On the downside, Moniz takes charge in a period of ever-tightening fiscal policy, so will all but certainly have less public money to deploy than did Chu.

If the conditions of the recent sequester hold, the budget for the DOE’s Fossil R&D program—under which FutureGen and other carbon capture programs are funded—will be cut by 5 per cent, or US$25 million.

On the upside, Moniz enters his new post with far more experience in rough-and-tumble Beltway tactics than did Chu. Moniz served in the second term of President Clinton’s cabinet, first as Under Secretary of Energy, and later as Associate Director for Science in the Office of Science and Technology. Moniz has frequently testified before Congress, as well.

In terms of CCS, if past is precedent, there’s reason to be hopeful, maybe even a little optimistic.

I spent some time conducting some research to map out Moniz’ work and statements on CCS. Here’s what I found. If you have other examples, please comment and add more in the comments.

As Tamar Hallerman notes at GHG Monitor, Moniz has co-authored several high-profile works on energy technology and policy in which carbon is a central issue. In The Future of Coal (2007, MIT Energy Initiative) CCS is addressed front and center, vital to extending coal’s tenure in an environmentally tolerable way. The report formally recommends both a carbon price and that the Energy Dept. alter practices in its Fossil R&D regime to accelerate the development of CCS. Retrofitting of Coal-Fired Power Plants for CO2 Emissions Reductions (2009, MIT Energy Initiative) offers far more detail on these issues. In the Summary for Policy Makers section which Moniz co-authored, he makes a detailed case for increased federal emphasis on CCS. A few quotes (emphasis added):

“The US Government must move expeditiously to large-scale, properly instrumented, sustained demonstration of CO2 sequestration, with the goal of providing a stable regulatory framework for commercial operation.”

“Real world” retrofit decisions will be taken only after evaluation of numerous site-specific factors.

CO2 capture cost reduction is important.

A robust US post-combustion capture/oxy-combustion/ultra-supercritical plant R&D effort requires about US$1 [billion per] year for the next decade.

The Federal Government should dramatically expand the scale and scope for utility-scale commercial viability demonstration of advanced coal conversion plants with CO2 capture.

The program should specifically include demonstration of retrofit and rebuild options for existing coal power plants. New government management approaches with greater flexibility and new government funding approaches with greater certainty are a prerequisite for an effective program.

Time is of the essence.

About a year ago, Moniz sat down with The Energy Switch Project to document his views across the full range of conventional and renewable energies, and related technologies. I’ve pasted below two out-takes, where he comments on coal, CCS and carbon pricing.

In the video above, Moniz makes the following statements (abridged transcript):“Coal of course is a very widely used fuel, particularly for the power sector, with the US China and India combined using about 60 per cent of the world’s coal. So if we’re going forward particularly with carbon control in the future, we simply have to figure out a way to employ coal.

The answer has to be then for a serious solution: the ability to capture CO2 and sequester it underground. The problem right now is cost. Today we would probably be adding six, seven, eight cents per kilowatt-hour to electricity produced by coal… For a brand new coal plant, we’re probably talking that’s on top of six to seven cents. So let’s call it a doubling of the cost at the plant of the production of electricity.

We might or might not be willing to pay that in the United States, but it is very difficult to understand China and India being willing to pay this kind of a premium.

Do I believe today we can start safely injecting billions of tons into an appropriate reservoir? Absolutely. That’s a different statement however to do with 30, 40, or 50 years, however, and I think those things will work out as we do it.

The other near-term issue is that we really have very little idea as to how to regulate, how to assign liability [for CCS]. The EPA is in fact working on this, but certainly it cannot be based on the old types of regulatory structures put in place for water injection.”

From the same interview, he also comments on carbon pricing, saying:

“Certainly it will never be cheaper to capture and store CO2 than it is to release it into the atmosphere so the reason we’re doing it in fact is because carbon will have a price and ultimately it has to be cheaper to capture and store it than to release it and pay a price.

If we start really squeezing down on carbon dioxide over the next two decades, that [price] could double, it could eventually triple.

I think inevitably if we squeeze down on carbon, we squeeze up on the cost, it brings along with it a push towards efficiency, it brings along with a push towards clean technologies in a conventional pollution sense. It brings along with it a push towards security. After all, the security issues revolve around carbon-bearing fuels.

Now, I think it is very important that any funds associated with that be recycled efficiently to productive uses and to address distributional questions because some of the poor may bet hit harder. There’s a lot of work to do, but in the end, if you take one simple thing, that’s the direction I think we need to go in.”

You can check out a continuous stream of Moniz’ full 22-minute interview on Vimeo, or pick and choose Moniz’ comments on a single topic, in short 1-2 minute segments, the interview is conveniently split into shorts by topic.

~

Check out the original post here:

http://www.globalccsinstitute.com/insights/authors/adamaston/2013/03/19/ccs%E2%80%99-prospects-under-energy-secretary-nominee-ernest-moniz

Jeffrey Sachs’s bright vision at Climate Week | Global CCS Institute

In this post, Adam Aston takes a look at some of the singular messages contained withing Professor Jeffrey Sachs’ important address at Climate Week in New York. Below Adam’s analysis is a lightly edited transcript of Professor Sachs’ address.

I write and read about the climate every day. Yet, even after years of tracking the complex cast of climate issues, every now and then my perspective is dramatically re-booted by what I think of as a ‘cathartic climate message’. It happens when a remarkable mind can yank your mind’s eye back up to the highest level of concern for the planetary risk posed by carbon pollution. For many people—myself included—An Inconvenient Truth did just this, synthesizing vast frontiers of information into a single, lucid, alarming message that sparked a fundamental awakenings.

At Climate Week NYC a few weeks ago, Jeffrey Sachs did likewise, forcefully reminding an audience of 200 or so climate veterans of the scale of the risk ahead, and that both technical and political solution are at hand.

Nearly 20 years ago, The New York Times dubbed Sachs “probably the most important economist in the world”. Now based at Columbia University, Sachs earned this reputation by applying economic theory to real-world development problems with remarkable fervor. In so doing, he has married the often-at-odds worlds of quantitative academic economics with the vexing, on-the-ground challenges of humanitarian development.

In his world-view, poverty, hunger, disease, and environmental degradation are not merely painful dynamics happening far away, they are solvable problems with knowable causes and testable solutions. Accordingly, Sachs has not been shy to role up his sleeves, and apply dramatic economic medicine on a large scale, and not always successfully.

Sachs’ blend of pragmatism and penetrating intelligence has won him influence across the globe, from the U.N. to the White House. At Columbia, Sachs is the nodal center of much of the university’s work on international economics, public health and climate. He is head of the school’s Earth Institute, as well as the Quetelet Professor of Sustainable Development at Columbia’s School of International and Public Affairs and a Professor of Health Policy and Management at Columbia’s School of Public Health.

Accordingly, Sachs has strong convictions about the failure of U.S. policy to deal with carbon pollution, and accelerate carbon capture and renewables. Though Sachs was speaking roughly a month before the recent U.S. presidential elections, he was highly critical of cap-and-trade policy proposals. Though palpably frustrated with federal climate policy, Sachs publicly supported President Obama and has lobbied the White House to impose a carbon tax.

Amidst post-election jockeying to overhaul the U.S. tax code, Sachs’s take on carbon taxes looks prescient. Immediately following the election, conservative Washington think tanks have been exploring the impacts of a carbon tax with unprecedented seriousness. As Keith Johnson observes in The Wall Street Journal:

Today [Nov. 13] the conservative American Enterprise Institute is holding an all-day, on-the-record discussion of the idea [of a carbon tax]. And the Brookings Institution is unveiling a slate of new measures meant to make the government more effective, including a carbon tax that could raise $1.5 trillion over ten years. All that follows a cascade of carbon-tax advocacy in recent days from the chattering classes and a slate of academic work over the summer…

Sachs is confident a carbon tax could be deployed—and, importantly, sold to the public—by back-loading the tax so that it scales gradually. By using revenues to subsidize renewables and by giving investors a clear signal about future carbon costs, Sachs argues a tax will be more effective than cap-and-trade at steering investment towards low carbon technologies such as CCS.

Sachs spoke for an hour, without notes, reeling off reams of detailed economic and climate data from memory. However sharp his views, they offer an invaluable reference for why work on low-carbon technologies must continue, and quite possibly useful advice to help shape a future carbon policy. After his speech, he was interviewed by Climate Week, the video of which is below.

Following, find a lightly-abridged transcript of Sachs’s presentation to Climate Week.

Climate change is here, now

Thank you.

I’m pleased to be here and to know this group is grappling with these complicated topics. There are no known answers to this problem yet, so I could just sit down. [laughter]

Climate change is certainly the most complicated challenge that humanity has ever had to take on because the problems go to the core of our economic system. Energy is the most important sector of the modern economy.

And yet we have grown up for 200 years on a fossil fuel-based economy. So far, that has been a great thing for the world. Except now, it could ruin the world. We don’t have a clear pathway out of this and unfortunately time is short.  We have already filled the atmosphere with greenhouse gases to a level of dangerous anthropogenic interference in the climate system.

In other words, the urgency of climate change is not as we first spoke about it 20 years ago, as a threat to our children and our children’s children. Rather, it is here now. We’ve entered what the geologists call the Age of the Anthropocene, meaning the period in Earth’s history when a single species—homo sapiens—has major Earth dynamics under our strong, and not so beneficial, influence.

Greenhouse gas emissions have already risen to a level that, in past history of the world, coincided with ocean levels many meters higher than they are now. This shows that we’ve already reached a level of human-induced change that, if it now unfolds over decades or perhaps centuries with all of the feedbacks included, we’ve already fundamentally changed the planet.

We’ve already emitted enough carbon dioxide to reduce the pH of the ocean by 0.1 units and we’re on a path to reduce the pH by about 0.4 units perhaps by mid-century. This could destroy a tremendous amount of the marine life around carbonate-needing species. Even aside from anticipated changes to the atmosphere, ocean acidification is coming from CO2 dissolving in the ocean surface and affecting the carbonate balance, the buffering function of the ocean. This dynamic, on its own, is enough to do tremendous harm.

Climate arithmetic

The point I want to make is that we’re already in the middle of dramatic change. We have not yet succeeded mentally, we have not yet succeeded technologically, and we certainly have not yet succeeded politically in finding a way forward.

The arithmetic is not all that complicated. It’s the solutions that are complicated.

The arithmetic is that the world economy is now amounts to $70 trillion per year. That’s seven billion people, on average, producing $10,000 per person in common units of purchasing power. We use about 200 kilograms of oil-equivalent energy for each $1,000 of GNP globally. It’s not so different across all scales of poor to rich countries actually, because energy scales with the level of production more or less proportionately.

For each kilogram of oil-equivalent energy unit, we emit about 2.4 kilograms of CO2. That’s a measure of the carbon intensity of our energy.  If you multiply our energy use–the roughly 200 kilograms of oil-equivalent energy per $1,000 of output—by the roughly 2.4 kilograms of CO2 per kilogram of oil-equivalent energy, you see that we use about 0.46 kg of oil equivalent energy per dollar of GNP and emit about 460 kilograms of CO2 for every $1,000 of income.

Multiply that factor by global GDP, or $70 trillion, and that turns out to be about 33 billion tons of CO2 that we emit per year. Given the holding capacity of the atmosphere, that rate of emissions is raising the CO2 concentration in the atmosphere by about 2.5 parts per million per year.

The result is fairly simple math. We went from about 280 parts per million in the pre-industrial era to about 395 parts per million now. We’re on a path of increasing that number by roughly 2.5 parts per million every year.

How dangerous, at what level?

Now, what level is dangerous? It depends who you ask.

I regard my colleague [at Columbia University], Jim Hansen, as the premier climate scientist in the United States. He has taken the most flak from climate skeptics and that’s a good indication that he’s the most important and the most accurate of all the climate scientists. Twenty-four years ago Hansen told the U.S. Congress for the first time what our planet would be like if we went on with business as usual for another quarter century. It’s a quarter century later now, and it’s clear, he nailed this prediction almost to a decimal point.

Ask Hansen what is a dangerous level CO2 accumulation, and he’ll tell you that we passed the safe level by about 45 parts per million. He puts the threshold back at about 350 parts per million. Every time in Earth’s history when we’ve been above that threshold, ocean levels have been several meters higher.

So why aren’t they higher now? They’re haven’t risen yet because there are feedbacks that take time. For example, given the CO2 that we’ve emitted so far, the Earth’s temperature has warmed by about 0.8°C from the recent historical average. If we allow even the relatively short feedbacks to accumulate further to what we’ve already done—not adding any additional CO2, just including emissions to date—we’re going to have about twice that amount in warming.

In other words, we’ve already built in planetary warming of about 1.6°C, but we’ve observed only about half of that so far because the ocean takes time to warm up. It’s a big bathtub. It has a tremendous heat capacity. It’s warming, but it takes time.

That only accounts for changes to date, however. As Hansen points out, we need to factor in longer-term feedbacks: the loss of polar ice, changing the albedo of the Earth’s surface; the possible degassing of CO2 from deep oceans; methane release from permafrost; and others. These happen in highly non-linear ways.

Taking into account these effects as well, and we’re talking about a massive change of the planet, a massive change of sea level, a massive change of ocean chemistry, and a massive loss of species diversity.

Denial has real costs

We tell ourselves, “It’s okay. We have time. Maybe we’ll get to 450. That’s okay. What’s a couple degrees Centigrade among friends?”

In this country, we have our leading business newspaper, The Wall Street Journal, propounding these sorts of myths every day in its editorials, with a directly antiscientific propaganda. At the same time, it’s a wonderful newspaper—it’s got great news stories. But its opinion pages are extremely damaging because we’re already into the midst of massive climate disruption.

For example, this year, we had our 12 warmest months in U.S. history, spanning from July 2011 through to July 2012. In fact, July 2012 has turned out to be the single warmest month recorded in U.S. history.

We’ve had the worst drought in modern history, which has done great damage to the corn crop. Food prices are soaring.

We’ve had a presidential campaign where this issue has barely been mentioned—perhaps in one speech, in one paragraph. We have willful neglect because of the power of the lobbies. Politicians’ main job is to raise money to run advertisements and that costs a lot of money and the oil companies have a lot of money.

So here we are in the middle of this disaster and we can’t even talk about it. Now if we could talk about it we’d find out, “God, this is harsh. What are we going to do?”

The fact of the matter is that this is not in U.S. hands, even though the U.S. remains the largest economy, at least for a few more years. China may overtake the United States by 2017 or 2018 in total purchasing power.

In total carbon emissions, China has already overtaken the United States. China is by far the largest emitter and its emissions will continue to rise dramatically because—even with all of the innovative, renewable energy coming on line there, as well as all of the nuclear plants it is building—China is also increasing massively its use of coal. China is a coal-rich country, and what it can’t get domestically it’s importing from Australia.

The developing countries as a whole are now in the driver’s seat of the world climate in the future. They ask:

Why should we do anything? The most powerful country in the world—the United States, the richest country, the one with the highest per capita emissions of any major economy—won’t do anything. Why should we do anything? We need to catch up. We’re still poor. We’re still only one-fifth the per capita income of the United States. Why look to us? We just happen to have a lot of people.

They have a point. Except that this kind of relentless prisoner’s dilemma logic—“You first. No, you first. Thank you, no. I’ll do it after you”—is going to wreck the planet.

Destabilizing Africa

Before I turn to a couple of the possible solutions, I should say that the impacts are not just things like the heat wave in Europe, which took many lives, or the crop failures here in the U.S. this year.

There is also devastation occurring in drier, poorer parts of the world, especially in the horn of Africa and the Sahel [a region spanning the northern third of the African continent, where desert transitions into savannah].

Nobody knows for sure but the evidence seems to be that the warming of the Indian Ocean has pulled the rainfall off the coast of East Africa into the Indian Ocean. It’s led to a significant drying of what is already one of the driest places in the world: Ethiopia, Somalia, northern Uganda, northern Kenya and that area.

There have been horrendous droughts in recent years. That’s contributed to lots of violence, lots of extremism, and Al Qaeda. Then the drone missiles fly and we’re into a kind of a mind-boggling spiral of places in the world becoming almost uninhabitable. Instead of working on their resiliency, digging bore wells and helping with agriculture, instead we see war taking over.

In West Africa it’s a similar story, albeit with a different underlying mechanism. The Sahel has also faced a massive drought this year. We have already lost one country to collapse. Mali experienced tremendous violence in the form of coup in the south and an insurrection in the north.

If there’s a message from these cases, it’s this: Don’t be complacent. Don’t think we’re going to work it all out. Don’t expect that we’re going to learn, or that everything will be fine, or that we’ll get our act together.

Our capacity to wreck things is very high. The world’s economy keeps growing, there’s a lot of fossil fuel, and we’re very good at finding new ways to dig it up and burn it. We have the hydrofracking boom right now, as well as oil sands and oil shale. Anything we can find to burn, we will burn.

If we do that we will completely wreck the planet. And we’re already well advanced in doing that.

So that’s the problem. Now what’s the solution?

Low carbon technologies: CCS and renewables

The solution is we need alternatives. We have lots of candidates. We need to de-carbonize the global energy system.

By 2050, today’s world economy of $70 trillion should be maybe $200 trillion, if poor countries grow successfully. They will need a tremendous amount of energy. Even if we’re highly energy-efficient, the need for primary energy will grow tremendously.

To grow, we must turn to low-carbon energy. There are basically two ways to do that. One is to use primary energy sources that are not coal, oil, gas or things like it. That could be renewables, wind, solar, or geothermal. It could be nuclear.

The other alternative is to use those sorts of fossil fuels but to clean up after ourselves using carbon capture and sequestration, or CCS.

There are two logical chains of carbon capture and sequestration. One is to capture the CO2 as you burn it, at power plants, and sequester it safely geologically. The other, which one of my colleagues is working very hard to do, is to try to capture CO2 directly from the air. That’s more expensive because you have a diffuse source of CO2: it’s only 395 parts per million molecules in the atmosphere. If this can be done, it has an advantage because then you don’t need pipelines to transport it. Also, you can put the collectors in places best suited to geologically sequester it directly.

There is nothing wrong with fossil fuels. This is not a moral question, except for the CO2 issue. Using fossil fuels would be great—it’s gotten us a long way in the world, except it’s dangerous if we don’t clean up.

CCS is an extremely important potential technology for doing this. I think the overall logic of what to do is fairly clear. The overall logic is to clean up our power grid and convert our internal combustion to some form of electricity because cars can’t capture their own CO2 out of their exhaust. If we want to handle the roughly 25 percent of CO2 that’s emitted by our vehicles, the transport sector has to use a low-carbon power source. And that can be electrification.

The basic path of what we is this: We must move from a fossil fuel-emitting electric power sector and internal combustion-driven transportation sector to an electric power sector that is essentially carbon free and a transportation that is fuelled by carbon-free electric power sector.

Tipping the balance towards carbon free power

We’re not getting there right now because it requires extra resources to get there. You need to tip the balance to get moving in the right direction go by making market signals that us in that direction rather than in the current direction.

Right now, the market signals are pretty clear. If you want base-load electric power, burn coal. It’s cheap. It gives you reliable electricity at the lowest possible cost. Your industry will be competitive and our planet will end up destroying itself.

We need to put a signal that is much more powerful and at the same time, do a lot of research and development to figure out which of these pathways is viable and at what cost.

It’s not enough, by the way, to just put a price on carbon. We have to make societal decisions as well. For example, what do we think of nuclear power? Who is in favor? I am. Anybody else? Okay, a few people. Who’s against? All right.

The price of carbon will not decide this question. We’re going to need to vote, to debate it. We’re going to need to have a plan. There are valid arguments on both sides of this issue, but we’d better decide it and it’s not enough to have Cap and Trade to decide it. We actually need to have public decision-making and much more rational scrutiny of the options.

Other technologies pose tough decisions too. For instance, if we’re going to deploy renewables at scale, we need public right-of-ways for high-voltage transmission lines. We need to carry wind from the Dakotas to the populated centers.

We need to decide what we’re going to do with the Mojave Desert. How many solar panels are going to fill the desert and in which way? Yet not many people live in the Mojave. So you have to move energy to where it’s needed. That requires right-of-ways, land management, public decisions, ecosystem protection and so forth.

I’m in favor of these low-carbon options. But to be clear, all of them all require consensus and public investment.

U.S. policy paralysis

So what do people here [at this talk] think about the U.S. energy plan, the Obama plan? Have you read it?

It doesn’t exist. Obama’s rhetoric—“All of the above”—is not a plan. All of the above is to get past the election. There is no plan here.

It’s worse than my first year students by far, who easily can put together spreadsheets and give options and decide what to do. We have a Nobel Laureate Secretary of Energy in this country. Who has seen him recently?

Of course, he’s not been visible during the election because he might say something real. That could upset somebody and that could trigger advertisements by Super PACS.

So we have nothing. No plans energy, no policy documents, no long-term strategy, no honest speeches, no discussion at all. I have never seen anything like it. It’s almost a complete collapse of politics in this country. Or I should say it’s almost a complete collapse of policy in this country. There is no policy, by design. Policy is dangerous. Somebody might object. Somebody might not contribute to the campaign.

And so neither side says a word right now. But four years ago, this President wanted to do something. The one thing they tried to do—cap and trade—was the wrong thing. I want to emphasize this: Cap and trade is absolutely the wrong approach for this problem. Cap and trade puts a spot price on an issue that needs a 25-year price. These cap-and-trade systems were all proposed for one reason: because American politicians didn’t want to say the word “tax”.

An analogy has been made with the sulfur dioxide reductions of the 1990s, which used cap-and-trade. But that’s a completely different phenomenon from carbon emissions. Here’s why. Sulfur dioxide emissions are a flow pollutant. They don’t stay up in the air. In fact, they come down in the rain and cause acid rain. So if you put a current price on that pollution, you trigger a current decision to install smokestack scrubbers. You get the result that you want, which is reduction of sulfur oxides.

With CO2 though, you don’t want to define today’s level of CO2 emissions. What we really care about is emissions 20 years from now. What will our power system look like? Will we have made a fundamental transformation?

It actually doesn’t matter so much what we emit today because that’s already baked into our infrastructure: our energy systems, our buildings, our power plants, our cars. The question is, what are we going to have 20 years from now? And today’s price doesn’t determine that. The price 20 years from now does, along with the regulatory environment in effect then.

We need a different strategy. This is why Australia’s done the right thing to put a carbon tax, although they err by planning to convert it to a cap-and-trade system by 2015. Cap and trade does not make deeper, future choices evident. It’s not promoting the long-term technological changes that are needed.

Real costs, but ‘not worth wrecking the planet for’

As I said, climate change is just about the most complicated thing imaginable. Yet I should stress clearly, that if we really went to all the next-best energy alternatives—even using today’s technologies—we could probably de-carbonize the energy system substantially at a cost of maybe 2 percent of our GNP.

That’s a big cost. In the United States we’re a $15 trillion economy and so 2 percent is $300 billion a year of outlays. People would raise their eyebrows at that. But for a $15 trillion economy, that’s not such a big deal. It’s not worth wrecking the planet for.

The issue is complicated because it requires decisions. It requires collective action. It requires pathways. It requires a change of how we do things. It requires taking on vested interests. It requires new technologies.

That’s what makes it complicated, not that it’s going to break the world economy, or that it’s going to be the end of prosperity or anything like that. The only thing that could end prosperity is business as usual.

If we started the changeover now, at full-speed, with technologies we have right now, we could do it. The truth is we’d barely notice, although shareholders of some companies would take pretty heavy losses, a lot of Congressmen would be voted out of office. It might be quite interesting actually. But it would not break our economy or our society.

So there is fundamentally good news, which is that we have a lot of ways to proceed. We have a lot of solutions on the drawing board. Even though we will bear a cost to do this, we will still come out a happier, healthier, more robust society in the end, not only for having avoided the worst, but actually for having introduced more efficient, superior technologies.

We talked about green buildings and energy efficiency. I would add that electric vehicles add a startlingly exciting horizon for us in new forms of transport that are going to be much higher quality. Indeed, that newspaper that I like so much, The Wall Street Journal—except for its miserable op-ed section—had a wonderful insert today about the inevitability of self-driving vehicles.

As my engineering colleague says, it’s dangerous to text and to drive at that same time, so stop driving. That’s what the technology is going to allow us to do. And because it’s electric you can do wonderful things that you can’t do with mechanical transmission and internal combustion engines.

This is not the end of prosperity. This is actually an exciting avenue ahead but we’re going to have to take some decisions. We haven’t been able to take them yet. As I look around, my thought is that maybe Washington will be the last place to act on the planet, I’m sad to say.

Even within the United States, many places are moving ahead. They’re not waiting for China. They’re not waiting for Washington. They want to have a clean and responsible energy system even if it’s more costly for them right now. They know that ultimately the world’s going to have to move in that direction, and better to be an early mover than a late mover. I find all over the world that there are early movers who are ready to step up now.

Maybe we’ll feel better when we pay less attention to U.N. climate negotiations, of which I’m a part, where we wait for total unanimity, which never comes. Rather maybe we’ll feel better when we start championing those who will move ahead first. We should draw attention to them, give them support, and change the question to one of “Who can get there fastest?” In the end, those are going to be the ones that are going to benefit most.

Thanks very much. I’ll take questions now.

Can natural gas be a bridge to a lower carbon system?

With the right rules, yes. But we don’t have those rules in place today.

If there were a framework of a gradually rising prices on carbon emissions that started low today but rose predictably to a tens of dollars per ton of CO2 by 2025, that would be meaningful.

In this case, if decision-makers today were building power plants and thinking about the future—of the grid, of transport systems and the like, and could see ahead 20 years to know the impact of carbon costs on their decisions—then I think natural gas could well be used as a short-run substitute to replace coal and it could become a stepping stone.

Without that kind of plan, natural gas will become another entrenched, carbon-emitting infrastructure, protected by yet more vested interests. What we’ll probably do is build more dedicated pipelines and more dedicated infrastructure so that it becomes even harder to get off of the natural gas habit down the road.

As natural gas grows more profitable, it becomes bigger, and more entrenched. This is a very basic point: things that can be both profitable and very bad for us. This is because the profit is based on market prices. It’s not based on true social costs. When you have something like climate change, the environmental harm is an externality, and the market price is a miserable signal for what should be done.

Those who remain zealously committed to “market prices” do so denial of basic science. At this point, it is sheer willful propaganda that drives the skeptics. It’s not about scientific doubts. It’s not about what we’re observing, nor what we’re measuring, nor what our satellite systems are telling us, nor what energy balance data are showing us, nor what’s happening to ice sheets, nor what’s happening all over the world. This is willful denial because it’s profitable right now to deny it.

It’s really the height of irresponsibility given the moral implications for future generations. I don’t know whether they think their children are going to be in a different climate zone? A different Earth? Whether they think that climate change stops at the gates of their community? Whether it only affects poor people?

I don’t know what they’re thinking, but at this point it’s so bizarre, it’s beyond any normal behavior. It’s driven by a lot of money.

How will utilities evolve?

The utilities are not really the main agents of resistance actually. The utilities are regulated. They have a pretty straightforward mandated responsibility. If pricing were to change, they would change along with it. They’d be happy to run different kinds of power plants and many utilities are not resistant to these changes.

In fact some utilities have been part of the corporate coalitions on the side of pressing for a clear framework to reduce the carbon intensity. For many years a lot of utilities like Duke have said, “Give us the right price [including carbon]. We’ll make a different decision.” They’ve been very, very clear.

I don’t regard utilities as the main agents. They buy fuel so that they transform it, they’re not really playing the same role that the Koch brothers play or that the oil sector in general plays or the coal industry, which is really the powerful resistance in the country.

How can leaders better sell smarter climate and energy policy?

There are three things that can make proper energy and climate policy more palatable and they have not been done. One is the good, solid, economic logic to backload the carbon tax. Let it build up over time. There are rigorous economic reasons to do that, and it’s also politically correct.

Phase this in. This is not about today’s emissions. This is about the kind of energy system we will have in 2025 and especially the kind we will have in 2040. We have to make a technological transition that’s quite deep: to new energy systems, to new transport systems, to more efficient buildings.

A simple calculation shows the logic of what I think is the right political strategy also. You could promise today significant reductions in tariffs to give an incentive for the transition, and totally pay for those reductions with a back loaded carbon tax.

That would work because the current base of the clean technologies you aim to subsidize is tiny. As you increase the size of the renewable sector, you need a higher tax to pay for it. You can decrease the subsidy over time, and raise the level of the tax in parallel. If you keep constant the gap between subsidies for renewables and tax revenues from carbon, you’re always saying to industry:

There is going to be a $30 or $40 or $50 per ton CO2 advantage to go to the de-carbonized source. We guarantee that for the next 30 years. Today it will come via a big feed-in tariff. In the future it’ll come by a tax, and it will gradually substitute along the way.

Second, very closely related: I’m happy to have the future pay for a lot of this. This can be bond-financed. It doesn’t have to be current-financed because the future can bear some of this. It’s not only the current generation that needs these changes, so you can use inter-temporal fiscal policy—not in an irresponsible way, but to show that the load will be paid also by those who are going to bear the benefits of the cleaner environment,

The third point that I find completely missing right now is an idea of a framework and a plan. I’ve been involved in public policy for 30 years and have contributed to large-scale transformation.

You can’t tell the public that our plan is cap-and-trade. That’s not a plan. That’s frightening. That just means, “Oh. Our electricity prices are going up. What do you mean? Why? What’s that for? That doesn’t sound good.”

You have to explain to the public, “Look. We’re going to have better vehicles, smarter buildings, a smart grid. We’re going to be able to tap into renewable energy. We’re going to be able to get off of our Middle East dependency, and here’s how, quantitatively.”

I urged the Administration to do that in 2009. I went to the White House on several occasions and I put in my two cents to say, “Have a framework. Have a plan. Waxman-Markey is not enough. You have to explain not just the policy tool. You have to explain what America’s going to look like in 20 years, how we can live better, cleaner, more independent, longer-term resources and a safer climate.”

That is missing until today. And that, to my mind, is the biggest weakness here. It’s not leveling with the public. But it’s also not explaining that this is an all-grid story. There’s a lot of exciting new technology, exciting things to do. This isn’t going to break the economy.

I think the public would rally to this. Yes, the public would. The vested interest would not. To win this game is to win the public.

~

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http://www.globalccsinstitute.com/insights/authors/adamaston/2012/11/27/jeffrey-sachs%E2%80%99s-bright-vision-climate-week

How SolarReserve Navigates Darkening Prospects for Big Solar in the US | GreenBiz

How SolarReserve Navigates Bleak Predictions for Solar in the US

On the sun-baked plains outside Tonopah, Nevada, a huge white pillar is inching upwards, as concrete piles up towards an ultimate height of some 60 stories. The slender structure is evidence of the tangible progress — and rising risks — facing a dwindling number of developers of large-scale power plants in the deserts of the western U.S. slated to make electricity by converting the sun’s heat into power.

I recently caught up with Kevin Smith, the Chief Executive Officer of SolarReserve. The Santa Monica, Calif. company is building the tower that will sit at the heart of its $900 million Crescent Dunes Solar Energy Project. Smith emphasized that while the tower attracts a lot of attention, it may be that the project’s ability to store the sun’s energy will become its most competitive virtue, particularly at a time when as the solar market is being rocked by plummeting prices for photovoltaic panels, a competing technology.

Topping out at over 600 feet, the Crescent Dunes solar tower will rank among the tallest structures in Nevada. It has to be that tall to absorb the reflected light from some 10,000 billboard-sized mirrors that will be installed in concentric half circles around its base. Once complete, the pillar will be capped with a collector, at which all those mirrors will point, focusing the sun’s rays. Where the reflected rays converge, temperatures will hit over 1,000 degrees Fahrenheit.

To make electric power, this thermal energy can be used immediately to generate steam in a turbine. Or the heat can be stored, absorbed in molten salts kept in insulated containers. This trick solves the intermittency problem that bedevils most renewables. Drawing on this stored heat, the facility can control when and how much electricity to make, and command a higher price from utilities by supplying power when demand is highest.

This ability to deliver power on demand makes the Tonopah project different from all but a very few large-scale renewable energy installation in the U.S. Windmills and other kinds of solar farms can store energy only by using costly battery banks, or pumped air storage or pumped hydro, both of which require relatively rare sighting conditions. Tonopah’s design is the largest of its kind, building on precedents set by a pair of smaller solar towers that have been operating in Spain and Arizona.

Since construction started in Tonopah last August, Smith would seem to have plenty to celebrate. Once the tower is complete, laying out the field of reflecting mirrors will follow. Come December 2013, the project is slated to begin feeding up to 110 megawatts of power into the western grid. What’s more, Tonopah is just one of a backlog of some 3,000 megawatts of energy projects SolarReserve has in its pipeline, including contracts to build two other solar towers in Spain and California.

But, when asked there would expect to see more projects in the U.S. further out, Smith was pessimistic. While financing for current projects is locked in, the Dec. 31 expiry of the so-called 1603 Treasury grant program — which offers a 30 percent federal cash grant to qualified renewable energy projects — threatens to stall the development of future large-scale solar plants.

The grant, along with many other renewable energy subsidies has been drawn into the toxic politics stemming from the failure of Solyndra, which was granted $535 million federal loan guarantee to commercialize a novel design for tube-based solar panels. Critics have gone on the warpath, questioning practically all renewable-energy projects that have received federal funds. SolarReserve was offered a $737 million loan guarantee by the DOE last May to help build the Tonopah project.

The hostile partisanship, together with shrinking federal funding, is souring a hot market here. “Unfortunately, U.S. policy is going in the opposite direction of much of the world,” Smith told me. “We’d love to have our home market continue to develop, but it looks like the next 12 months will be pretty flat.” In response to this uncertainty, SolarReserve has been expanding its development efforts overseas.

Were SolarReserve to de-emphasize U.S. projects, it would be another in a series of setbacks for U.S. solar technology and developers. Beyond the partisan backlash and broader economic recession, a key cause for these woes has been the plummeting cost of conventional photovoltaic panels, which have collapsed by roughly half over past two years.

The downward price spiral was the key culprit and Solyndra’s crash, and others have followed suit. U.S. players Evergreen Solar and SpectraWatt have likewise gone under. Just before Christmas, energy giant BP, once famous for a commitment “Beyond Petroleum”, fully exited the solar business, saying it “can’t make money” selling panels. Analysts agree that this brutal shakeout will continue, jeopardizing mature and startup solar players alike.

Plummeting PV prices are affecting SolarReserve’s competitors too. Indeed, its progress in Tonapah is all the more notable given the attrition rate of other efforts to build very large concentrated solar thermal (CST) projects. Once regarded as a low-cost way to capture the sun’s energy, many CST facilities have been done in by the tumbling price of conventional solar panels. To date, solar farms totaling 3,000 megawatts of capacity have switched from CST to conventional panels. That SolarReserve has avoided having to make such a switch is partly due to the edge offered by its ability to store energy.

Complicating any discussion on the future of solar is that, for all the harm ultra-cheap PV panels have done to some U.S. manufacturers, they have provided windfall savings for many panel buyers and many project developers. In the U.S., the industry is closing out its biggest ever year, with upwards of 1,700 megawatts worth of solar brought on-line, nearly double the 887 megawatts installed in 2010. Blue-chip investors continue to pile into new projects, too. Last week, Google laid out $94 million to fund four new solar power farms near Sacramento, Calif.

Come 2013, when SolarReserve’s solar tower starts to glow, the sight will surely attract tourists, press and industry attention. Here’s hoping the tall tower won’t mark the nadir of home-grown U.S. solar technology, as well.

New Jersey pulls out of multi-state greenhouse gas trading regime – signs of 2012 election? | Global CCS Institute

In what could prove to be an early signal of carbon policy dynamics in the 2012 presidential race, the Regional Greenhouse Gas Initiative, the sole multi-state, cap-and-trade program operating in the U.S., was dealt a setback when the governor of New Jersey announced plans to exit the program late last month.

Against a backdrop of record fiscal deficits, New Jersey’s Republican Gov. Chris Christie announced plans to end the state’s participation in the two-year old program, calling it a gimmicky and costly failure.  The move culminated months of political pressure from Republican state legislators as well as campaigns sponsored by conservative national groups to exit the program.

This is not a deathblow to the program but the withdrawal of the second largest state economy in RGGI—pronounced like Reggie—hurts momentum to build low-carbon energy technologies, from renewables to carbon capture and storage (CCS) pilots.  If the governor’s decision survives anticipated legal challenges, it could set a precedent for others. Earlier in May, legislators in three other states rejected bills to pull those states out of the 10-state program too.

RGGI’s ten members, prior to New Jersey’s exit, are shown in dark green. Observer states and provinces are in lime.

As a policy experiment, RGGI was heralded as a potential template for the development a nation-wide carbon cap and trade program, and as such has emerged as a key target for opponents of climate change policy. If the program derails, green energy funding would suffer, too. To date, RGGI has conducted 11 quarterly auctions that have raised nearly $861 million from sales of carbon allowances. According to RGGI data, almost two thirds of the proceeds have been steered to fund energy efficiency and alternative energy technologies.

In the national context, Gov. Christie’s move provides a snapshot of the paradoxical politics of climate change in the U.S. at the moment. While announcing plans to exit the carbon-trading program, the governor simultaneously reversed an earlier position doubting the science behind global warming.
At the RGGI news conference, Christie also pledged to maintain the state’s commitment to renewables, to support the build out of more solar and offshore wind energy, while also pledging to prevent the construction of any new coal-fired power plans in his state. In early June, however, Christie slashed the state’s goal to develop renewable sources of electric power. From a minimum of 30% of all supply by 2021 — one of the most ambitious in the nation — the governor wants to aim for 22.5%, calling the new target more “achievable”.

The governor also released a report saying the state’s emissions had already fallen below goals for 2020, but discounted RGGI’s role in the shift. Quoted by Christa Marshall of ClimateWireNews, Christie said:

“We remain completely committed to the idea that we have a responsibility to make the environment of our state and world better,” Christie said. “We’re not going to do it by participating in gimmicky programs that don’t work.” He said New Jersey would depart RGGI by the end of the year.

“Reduced emissions have been due to increased use of natural gas, and the decreased use of coal. We’re seeing that the market, and not RGGI, has created incentives to reduce the use of carbon-based fuels,” Christie added.

Christie’s decision highlights the dramatic shift in the politics of climate in the Republican Party over the past decade. Keep in mind that RGGI was first championed by George Pataki, top Republican governor of New York in the early 2000s. That was a time, barely a decade ago, when Senator and eventual Republican presidential nominee John McCain also backed climate policy.

A decade later Christie, who has repeatedly denied any intention to run for president, is a darling of the Republican punditry.  And of the few Republican candidates who have officially declared a bid to seek the presidency, Mitt Romney also withdrew from RGGI while he was governor of Massachusetts—although it was before trading had begun and the state later re-joined.

Gov. Christie’s move was not a surprise. An early sign that New Jersey may pull our of RGGI came last year when, like a handful of other governors of deficit-strapped RGGI member states, Gov. Christie redirected $65 million raised from auctions of carbon credits for use in the general ledger.

All that said, RGGI continues to operate, with its next quarterly auction dated June 8. Nine states remain active in the trading pool. These are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. Pennsylvania acts as an “observer”, along with three Canadian provinces along the U.S. north-eastern border: Québec, New Brunswick, and Ontario.

It’s worth noting there are two other multi-state climate initiatives in North America. Both are less evolved than RGGI and both face similarly rocky political prospects. They are:

  1. Western Climate Initiative, which includes 11 U.S. and Canadian regions, is larger than RGGI and is slated to come on line in 2015. Its goal: to lower greenhouse gas emissions by 15% by 2020, from a 2005 base.
  2. Midwestern Greenhouse Gas Accord includes six more heavily industrialized U.S. states and one Canadian province, but is the least evolved of the three.

Check out the original post here: http://www.globalccsinstitute.com/community/blogs/authors/adamaston/2011/06/06/new-jersey-pulls-out-multi-state-greenhouse-gas-trading