Our View
Like the Climate Change proposals forwarded by the IPCC over the last 15 years the US Clean Energy Act proposed last week is document that looks a lost in the woods story.
The U.S. Clean Energy and Security Act of 2009 proposed by Chairman Henry Waxman of the House Energy and Commerce Committee is a mammoth 648 page nothing document that promises a lot but proposes very little. Hurriedly put together by adminstrators under political pressure , the document which often repeats itself unfortunately gives no clear direction or a basic route map of what is to be specifically achieved and how.
The legislation has four Titles the first of which on Clean Energy begins with an extremely inadequate and shallow treatment on the development and commercialisation of renewable energy resources namely wind, biomass, solar and geothermal. While placing the onus on utility companies to ensure that renewable energy sources account for 6% of production in 2012 and increase it progressively to 25 % by 2025, there is no mention on how such lofty goals shall be achieved and what would be the budgetary support for each area.
Worse, a major area of this Title spends its energy on Carbon Capture & Storage CCS Technology or Clean coal, the very expensive alternative floated by the oil lobby which has been often rejected by utility companies as commercially unviable. The parts on development of low carbon transportation fuel also is devoid of specifics which is rather strange considering that even emerging economies are implementing such measures successfully for their own public transport systems. The grid development and transmission problems for renewable energy are also discussed but left to the report of subsequent committees. Thankfully the Federal Energy Regulatory Commission has been entrusted the task of implementation and modernising this grid with promise of funding through a SEED fund to be jointly promoted with the states.
The second Title relates to energy efficiency for the Transportation, Utilities and the Industry sector which is by far the best drafted section of the legislation.
The third section spends over a 100 pages on GHG but suggest little on how to actually reduce it. It lays down the controversial carbon trading scheme under which utilities causing larger emissions will have to purchase carbon credits from others thus driving their costs upward which the consumers have to eventually bear. The Environmental Protection Agency will monitor that if a firm’s emissions exceeded its allowance, or cap, it would have to purchase more allowances, either from the government or from other firms. That appears fine on paper or till the cost of carbon credits are nominal at $ 5 to 10 per metric tonne of C02 emission, which anyway does not serve as a real deterent. The problem begins when the cost increases above $ 50 per MT, when the shoe starts pinching the producer. However when we really understand what that means it becomes worse. It would mean that utility companies either switch off two thirds of their generation capacity or risk to pay four to five times more than there generation costs which ultimately have to be footed by the consumers. The third alternative is a total switch over to renewable energy which unfortunately cannot be done by waving a magic wand.
Worse still the Bill requires that GHG production must reduce to 97% of 2005 level by 2012, 58% by 2030 and 17 % by 2050. Any individual with little knowledge of the global energy consumption trends and GHG warming will understand that these targets are incompatible with the targets defined in the first Title. In short if the GHG gasses has to be reduced by 58% in 2030, renewable energy sources must account for over 50 % of energy consumption before 2020 as the emission effects of 2020 will control the GHG levels 10 years later due to the atmospheric cushioning effect which works like a mammoth sponge that absorbs the carbon today and releases with a delayed effect over a span of time. As a matter of fact if the figures of 2050 for GHG gasses are to be achieved total conversion to renewable energy must be attempted over a 20 year time frame.
The atmosphere now contains 400 parts per million of carbon dioxide. This is more than the Earth has seen since the million years of its formation . Pre-industrial levels were about 270 ppm, which had remained pretty much constant over the thousands of years mankind has walked the Earth. Scientists say that because of a delayed reaction, we have yet to experience the full effect of what we already have put into the atmosphere. That effect will unravel in the decades to come. Meanwhile, we’re adding about 30 billion tonnes of Co 2 into the atmosphere annually, more than half of which is due to fossil fuel Last year alone, GHGs increased by 2 ppm.
The US Bill for climate change must be based on a positive plan like the Spanish Royal Decree 436, a ministerial ruling of 2004 that gave the solar energy units a big boost.It created two alternative payment schemes, both guaranteed over the 25 year life-cycle of thermal solar plants, and diminishing thereafter. The first is a fixed, guaranteed payment of 300% of the Average Reference Tariff (ART) for electricity. The second induces operators to compete on the national wholesale electricity market, where the generating company received 250 % of the ART plus a 10 % additional incentive. Such positive steps propelled Spanish companies way ahead of more illustrious US & German competitors in the solar energy market.
The Bill proposed by the US lawmakers requires re working to the micro level. It must attempt to understand the basic issues involved and the real solutions that can achieve the Climate Change goals. It requires to focus on renewable sources like wind and solar energy and formulate a workable mechanism to commit fixed resources to it. Banking support as promised is not enough. Renewable energy requires budgetary support to prosper. It needs to banish expensive and unviable propositions like CCS. It needs to produce economies of scales in real renewable energy solutions, that if given a fiscal push may become cheaper than fossil fuel in the days to come. Once that happens the market forces will take over and the Governments and IPCC’s can sit back and enjoy the magic of demand supply mechanism which will itself bring in a green energy revolution globally.
However before that happens, the Governments must play their part and pass legislation with more thought and foresight. For if US can absolve itself of its commitments by passing such a nothing document, so will India, China and the rest of the world. The world’s resolve to change its energy requirements and future will thus remain a paper tiger that can and will never be achieved.
In this blog from “ecology to economy” we deal with discussion of sustainable practices which we must adopt for climate change as well as other aspects of the economy.
We could be wrong. Tell us if we are & why? We encourage diverse opinion even if it is from commercially interested groups opposed to our thinking
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