Japan’s nuclear dilemma

Six months since the Fukushima disaster and Japan is still in the midst of a nuclear crisis. After the earthquake and tsunami, and resulting problems at the Fukushima plant, Japan has shut down the majority of its nuclear power stations. For a country that relies heavily on nuclear power for its electricity this is nothing short of an economic disaster. The Japanese government will not re-activate the power plants until all have been cleared. For a while, rumors were that Japan may be shutting down nuclear power stations permanently, but that is not yet clear.

To compensate for the reduction in output, Japan is forced to import oil-fuel and natural gas. The increased fossil fuel demands seem to be mostly met by Qatar, Australia and the Arab states.

To avoid paying huge sums for imported fossil fuels, the Japanese government is working hard to reduce demand in the country. Industry has already cut its energy use by 20%. This is an astonishing drop. Naturally, companies are looking at alternative energy generation and/or movement of their operations overseas. For an economy already fragile, the latter is very disconcerting. Although there is a strong push to build renewable plants now, it will be some time before they could replace nuclear plants.

Japan is not the only country that is re-considering nuclear energy. Germany has moved to close its nuclear plants permanently. It is rather interesting because it is not yet clear from where Germany will get its replacement power. Ironically, the two main options are electricity from coal-fired power plants in, for example, Poland, and electricity generated by nuclear power in France.
Other large users of nuclear power have not as yet changed their views. India, China and Russia will not revise their nuclear programs. I wonder if France will, but I do not think that even today’s nuclear accident will make a difference.

In the meantime, Japan is in dire straits.

Wind is shelved from the Pickens Plan

T. Boone Pickens (left) with Senator Byron Dorgan (D-ND). Image via Wikipedia

The 2008 “Pickens Plan,” U.S. financier T. Boone Pickens’ proposal to reduce U.S. dependence on foreign oil, anticipated that 20% of American power generation could come from wind while natural gas could power the nation’s transportation sector. At the time, he received support from unlikely sources, including the executive director of the Sierra Club, Carl Pope.

Pickens’ interest in wind generation, however, has been steadily decreasing since his plan was initially announced, and in a recent interview with Roll Call, he said he’s entirely shelving the wind portion of his plan. According to Pickens, wind is not financially viable because natural gas is too cheap. Until the cost of natural gas rises, wind generation doesn’t make economic sense. In the meantime, he is focusing entirely on getting natural gas into the energy market.

The move has produced a backlash from some of the environmentalists that formerly supported the Pickens Plan. They accuse Pickens of lobbying for incentives in order to make more money off natural gas, and they complain that the natural gas industry is too unregulated to be considered a clean source of fuel. The process known as “fracking,” which is used to produce natural gas, has been questioned as a possible source of groundwater contamination.

Meanwhile, supporters of wind power say Pickens’ move shouldn’t be seen as a reflection of the health of the wind industry as a whole, but as how things happen to be playing out in Texas at this particular time. Wind industry analyst Matt Kaplan, with IHS Emerging Energy Research, told Climate Progress that it’s very difficult right now for wind farms to beat out natural gas on the spot market. It’s also difficult for developers to find long-term agreements in Texas since Texan utilities have already purchased enough wind power to fulfill their required targets. Other markets, however, still have a lot of room for renewable energy development. California and the Northeastern states, in particular, are willing to sign power purchase agreements. Overall, Kaplan thinks development will stay relatively flat until the price of natural gas begins to rise.

“We think it’s really a more healthy trajectory for the industry – this moderation is going to make wind more cost competitive over the long term by forcing companies to improve technology, build better projects, and reduce costs,” Kaplan told Climate Progress.

Peter Kelley, the vice president of the American Wind Energy Association, told Roll Call, “We agree [with T. Boone Pickens] that natural gas prices won’t stay as low as they are today for very long, and that’s one of the reasons we believe wind energy needs to be a bigger part of our energy mix all along, so electric utilities can lock in long-term low rates today.” Indeed, Pickens’ organization stresses that wind power is still an important piece of America’s energy independence. They’re just not building large wind farms in Texas for the time being. Considering Pickens expects natural gas prices to rise by 2016, however, we have to wonder why it doesn’t make sense to continue planning for wind farm construction now.

Obama’s drilling plan

Petroleum drilling rig. Image via Wikipedia

President Obama announced last Saturday that, in an effort to promote greater domestic oil production and help relieve prices at the fuel pumps, he intends to expand oil and gas drilling in the Gulf of Mexico and Alaska. The move was apparently meant to appease voters that are angry over soaring gas prices. At the same time, Obama has continued to press for repealing $21 billion in tax incentives for the big oil companies.

This isn’t the first time Obama has proposed expanding drilling. On March 31, 2010, he also announced the need to open more areas to gas and oil drilling. At that time, environmentalists sharply criticized the move and Republicans only offered lackluster support. The BP oil spill that occurred in the Gulf of Mexico a few weeks later effectively killed the proposal, with the administration placing a moratorium on deep water drilling.

This time around, Obama wants the Interior Department to allow drilling in Alaska’s National Petroleum Reserve. He also called for the faster evaluation and leasing of new oil and gas areas in the Gulf of Mexico. Obama cautioned that, “while there are no quick fixes to the problem [of high gas prices], there are a few steps we should take that make good sense.”

Some have argued that the proposal is aimed more at voter psychology than good sense. It’s unclear whether the move would have much effect on gas prices. It takes a long time for a policy change to produce a noticeable rise in oil production. Moreover, oil is a fungible global commodity. The price is determined by global supply and demand. If China is willing to pay more for oil than America, oil companies will only be too happy to send Alaskan oil overseas. The only way drilling for more oil in America would appreciably alter the price of gasoline is if the oil industry were nationalized.

However, there are ways in which the move does make good sense. Obama now looks like he’s doing something, energy markets usually respond positively to the prospect of greater future oil supplies, and real jobs will be created. The effect on the markets and the creation of jobs are especially welcome as the economy continues to slowly recover.

US State Dept. finds no new issues with Keystone XL

Keystone XL is back in the news! Keystone XL, the controversial 1,900-mile pipeline carrying Canadian bitumen from Alberta to refineries as far south as Houston TX, passed another hurdle recently when an updated environmental report from the State Department found no new issues with the proposed pipeline since a similar report was issued last year.

Environmentalists have fought the production of Canada’s oil sands, citing the destructive nature of its production (primarily through strip mining) and the intensive amounts of energy required to extract the oil (known as bitumen) from the sand. They further argue that the corrosive nature of bitumen could eventually damage the proposed pipeline and increase the risks of a spill in areas where a major aquifer (the Ogallala) is most vulnerable to contamination.

Supporters of the project point out that Canada regulates its energy production, requires mitigation and reclamation costs to be included in development, and is a stable and reliable source of energy for the U.S. The proposed pipeline could significantly reduce U.S. dependence on Middle Eastern oil. Moreover, the Canadian reserves are significant.

The Associated Press (AP) reported that Susan Casey-Lefkowitz, the international program directory for the Natural Resources Defense Council, claimed the report didn’t adequately address pipeline safety, including the risks posed to the Ogallala Aquifer. “If this round of the Keystone XL tar sands pipeline environmental review is as superficial as it seems, the State Department will need to go back to the drawing board — perhaps the third time will be a charm and they will get it right,” she told the AP. A spokesman for TransCanada, the Calgary-based company behind the pipeline, said the company was pleased with the State Department’s report but declined to comment specifically.

Approval of the pipeline has been held up since the Environmental Protection Agency asked the State Department for the additional environmental report last summer. The State Department, which has authority over the pipeline since it crosses an international boundary, is expected to decide on approval of the pipeline by the end of the year.

We’re No. 17! We’re No. 17!

Wind turbines in Vendsyssel, Denmark, help make the country a top clean energy producer. Image via Wikipedia

The Associated Press (AP) is reporting that a study (to be released May 9) commissioned by the World Wildlife Fund for Nature (WWF) and prepared by Roland Berger Strategy Consultants ranks the U.S. 17th in clean energy production. Denmark earns the top spot, with 3.1 percent of its gross domestic product (GDP) coming from clean tech (about $9.4 billion).

The report used data gathered from various energy and financial sources, like the International Energy Agency or bank and brokerage reports, to measure earnings from green energy technologies. These included not only energy production from renewable sources, such as biofuels, solar, or wind, but energy efficiency technologies as well. The countries were then ranked according to the amount of national revenue generated from these technologies. In other words, the percentage of a country’s GDP that came from clean tech determined its rank.

The report also looked at the pace of growth. The AP quotes Roland Berger Strategy Consultants’ senior research associate Ward van den Berg as saying, “Clean technologies are really growing fast, but China is responsible for the majority of that growth.” The report ranks China second, but says its production of green tech has grown a whopping 77 percent a year. This accounts for the largest earnings stated in the report, about $64 billion, which is 1.4 percent of China’s GDP. Donald Pols, an economist with the WWF, told the AP, “The Chinese have made, on the political level, a conscious decision to capture this market and to develop this market agressively.”

Pols went on to say that U.S. clean tech had grown substantially thanks to the policies of Obama, but this couldn’t compare to Chinese policies and Chinese growth. “When you speak to the Chinese, climate change is not an ideological issue. It’s just a fact of life. While we debate climate change and the transition to a low carbon economy, the debate is passed in China. For them it’s implementation. It’s a growth sector, and they want to capture this sector,” Pols told the AP. The U.S. generates about $45 billion from clean tech, representing 0.3 percent of its GDP.

According to the report, the top five producers in terms of percentage of GDP, in order of rank, are Denmark, China, Germany, Brazil, and Lithuania.