Friday, February 27, 2015

Europe Lays Out Vision for Climate Change -The European Union will reform its cap-and-trade system to restrain CO2 pollution

While American lawmakers have succumbed, yet again, to a preoccupation with the debate over whether a pipeline should be built through the U.S. to help Canadian tar sands miners reach intercontinental oil markets, European officials have been spending the week knuckling down on climate action.

On Tuesday, the European Parliament’s environment committee agreed on a plan to shore up the continent’s flagshipcap-and-trade program, which has been ailing for years. Coincidentally, one day later, the European Commission outlined its vision for how Europe and the rest of the world should work together under a new U.N. pact to spare the planet the worst effects of climate change.
The European Union’s executive body sent a memo to EU lawmakers and heads of state Wednesday, outlining what it called a “blueprint for tackling global climate change beyond 2020.” It was drafted to help the EU prepare for U.N. climate negotiations ahead of a key round of talks in Paris in December, when a post-2020 global agreement is due to be finalized.
The memo says the “Paris Protocol must” secure commitments from world governments to “ambitious reductions” of annual greenhouse gas emissions by 60 percent below 2010 levels in 2050, by “setting out clear, specific, ambitious and fair legally binding mitigation commitments” that ensure global warming is kept to less than 2°C (3.6°F).
European heads of state have already committed to reducing the amount of greenhouse gas pollution that their states collectively produce each year by 40 percent between 1990 and 2030. The newly-stated 60 percent goal, from 2010 to 2050, hasn’t received their formal blessing
It’s unclear whether climate negotiators from other countries would commit to the 60 percent reduction goal in Paris, though it’s among options for a new long-term climate goal that are being considered. So far, the U.S. and China, the world’s biggest climate polluters, have only stated what they’re willing to commit to do under the next agreement until 2025 or 2030.
Europe’s carbon pollution-pricing program, which is the biggest in the world, was formed to help curb greenhouse gas levels in the atmosphere—but it was created before its economy unexpectedly tanked. When the economy crashed in 2008, demand for energy fell with it, and that has meant that European industry has needed fewer carbon pollution allowances to operate under a business-as-usual scenario than had been anticipated. The glut of allowances that has resulted is keeping allowance prices and revenue low, and it is limiting the effects of the emissions trading system on global pollution levels.
Some of the carbon allowances that were planned to be auctioned off in the coming years will be withheld from the market, perhaps temporarily, beginning in 2018. Parliamentarians in the environment committee haggled Tuesday over the details of how many allowances would be withheld, and when, before settling on a compromise.
Thomson Reuters Point Carbon analysis suggests that the reforms will lead to an annual cap-and-trade revenue of about $15 billion in 2020—representing a steady growth of revenue that EU member states have so far been reinvesting heavily in clean energy and climate initiatives. Without the reforms, the analysis projected revenue in 2020 of about $9 billion.

Perhaps more importantly, the emissions trading system is now forecast to prevent 61 million tons of carbon dioxide from being pumped into the atmosphere in 2020. That’s up from a projected 12 million tons in the absence of reforms.

Climate Central
February 25, 2015.

Friday, February 20, 2015

Levelized Cost of Most Recent Contracts for New Wind Capacity in Michigan down 50% from 2010 - Weighted Average Price of Existing Renewable Energy Contracts Significantly Lower than Cost of Coal-Fired Plants

On February 13, 2015 The Michigan Public Service Commission (MPSC) issued its fifth annual report on the implementation of the state's renewable energy standard and its cost effectiveness.  Public Act 295 of 2008 (PA 295) requires the report to be issued by Feb. 15 each year.

For 2013, the estimated renewable energy percentage reached 7.8 percent, up from 5.4 percent in 2012.  For 2014, renewables are expected to have reached 8.1 percent. 

"By the end of the year, Michigan will have reached its renewable energy portfolio standard (RPS) - 10 percent by 2015," said MPSC Chairman John D. Quackenbush.  "The RPS can be credited with over 1,450 megawatts (MW) of new renewable energy projects becoming commercially operational since PA 295 took effect."

Highlights of the report include the following:  
  • Michigan's electric providers are on track to meet the 10 percent renewable energy requirement.
  • All of Michigan's electric providers accomplished the second compliance requirement successfully for 2013.
  • At the end of 2013, both Consumers Energy and DTE Electric obtained MPSC approval of power purchase agreements and company-owned renewable energy projects that provide the necessary capacity to exceed the 2015 legislative capacity requirements.
  • In July 2014, Consumers Energy reduced its renewable energy surcharge to zero for all customers. In January 2014, DTE Electric company implemented a surcharge reduction, which lowered the residential surcharge from $3 per meter per month to 43 cents.
  • At the end of 2014, there were over 1,500 MW of utility-scale wind projects in operation in Michigan. (This includes 127 MW of utility-scale projects that began operating prior to the Act.)
  • During 2014, five utility-scale wind farms became commercially operational in Michigan.
  • The growth of wind in Michigan's REC portfolio has been significant, increasing from 24 percent in 2012 to 44 percent in 2014.
  • The most recent contracts approved by the MPSC for new wind capacity have levelized costs in the lower $50s per MWh ranges, about 10 percent less than the cheapest levelized contract prices from 2011, and 50 percent of the levelized cost of the first few renewable energy contracts approved in 2009 and 2010.
  • The weighted average price of existing renewable energy contracts is $76.55 per megawatt-hour (MWh), significantly lower than the cost of coal-fired generation plants.
  • On a combined basis (renewable energy and energy optimization), the cost of $37 per MWh is less than any new generation, including new natural gas combined cycle plants, when compared to the Energy Information Administration levelized plant costs for 2014.
  • Some $2.9 billion has been invested to bring approximately 1,450 MW of new renewable energy projects online through 2014 in Michigan.
The entire report is available online, here.

Michigan Public Service Commission (MPSC)
Press Release dated February 13, 2015
via/hat tip

Wednesday, February 11, 2015

Does the Environment Still Matter? Daily Temperature and Income in the United States
It is widely hypothesized that incomes in wealthy countries are insulated from environmental conditions because individuals have the resources needed to adapt to their environment. We test this idea in the wealthiest economy in human history. Using within-county variation in weather, we estimate the effect of daily temperature on annual income in United States counties over a 40-year period. We find that this single environmental parameter continues to play a large role in overall economic performance: productivity of individual days declines roughly 1.7% for each 1°C (1.8°F) increase in daily average temperature above 15°C (59°F). A weekday above 30°C (86°F) costs an average county $20 per person. Hot weekends have little effect. These estimates are net of many forms of adaptation, such as factor reallocation, defensive investments, transfers, and price changes. Because the effect of temperature has not changed since 1969, we infer that recent uptake or innovation in adaptation measures have been limited. The non-linearity of the effect on different components of income suggest that temperature matters because it reduces the productivity of the economy's basic elements, such as workers and crops. If counties could choose daily temperatures to maximize output, rather than accepting their geographically- determined endowment, we estimate that annual income growth would rise by 1.7 percentage points. Applying our estimates to a distribution of "business as usual" climate change projections indicates that warmer daily temperatures will lower annual growth by 0.06-0.16 percentage points in the United States unless populations engage in new forms of adaptation. 

by Tatyana Deryugina, Solomon M. Hsiang
National Bureau of Economic Research (NBER)
NBER Working Paper No. 20750; Issued in December 2014

Monday, February 9, 2015

Bloomberg New Energy Finance Factbook: U.S. trend toward sustainable energy continued in 2014

Prices Fall, Deployment and Investment Rise 
The United States saw continued growth in renewable energy, natural gas and energy efficiency in 2014, according to the third annual Sustainable Energy in America Factbook. The Factbook shows that U.S. deployment of sustainable energy increased as prices continued to fall and that investment in U.S. clean energy grew at a higher rate.

Analysts at Bloomberg New Energy Finance who prepared the Factbook for the Business Council for Sustainable Energy found that “over the 2007–2014 period, U.S. carbon emissions from the energy sector dropped 9%, U.S. natural gas production rose 25% and total U.S. investment in clean energy (renewables and advanced grid, storage and electrified transport technologies) reached $386 billion.”

“The 2015 Factbook clearly shows that America is on the path to a more sustainable energy sector,” said Lisa Jacobson, President of the Business Council for Sustainable Energy. “Our energy productivity is rising along with economic growth, while energy-intensive industries are onshoring production to the United States to take advantage of low energy costs. All of this is happening as investment in clean energy continues to grow and as new natural gas infrastructure continues to come online. These are strong positive signs for America’s economy and environment.”
The full 2015 edition of the Sustainable Energy in America Factbook is available at  Key trends in sustainable energy growth noted in the 2015 Factbook include:
  • The U.S. economy is becoming more energy productive, with “an outright decoupling between electricity growth and economic growth.” Between 1990 and 2007, electricity demand grew at an annual rate of 1.9% while, between 2007 and 2014, annualized electricity demand growth has been zero. Meanwhile, over those past seven years, the U.S. economy has grown by 8%.
  • The U.S. power sector is decarbonizing, with the contribution of renewable energy (including large hydropower projects) to U.S. electricity rising from 8.3% in 2007 to an estimated 12.9% in 2014, and production and consumption of natural gas hitting record highs in 2014. Since 2000, the Factbook shows, 93% of new power capacity built in the United States has come from natural gas and renewable energy.
  • Investment in U.S. clean energy is up again. The U.S. clean energy sector has seen $35–65 billion of investment each year since 2007, a significant increase over the annual investment of $10.3 billion in 2004. Overall U.S. investment in clean energy totaled $51.8 billion in 2014, a 7% increase from 2013 levels. The United States finished the year ranked second globally for new dollars invested in clean energy, behind China.
The Factbook also discusses the collapse of oil prices in 2014. While there is no explicit link between oil (which in the United States is used mostly for transport) and most sustainable energy technologies (which are used mostly in the power sector), the oil price shock has a profound global impact and may result in “second-order” effects that could impact U.S. sustainable energy, the Factbook noted.
Energy mix of the future
“Against the backdrop of a surging economy and crumbling oil prices, major trends around decarbonization and improving energy productivity continued in the United States,” said Michel Di Capua, head of Americas research for Bloomberg New Energy Finance. “Low-carbon energy technologies stand to benefit from key policies proposed in 2014, including the U.S. Environmental Protection Agency’s (EPA’s) proposed regulation for the power sector and an innovative new vision for the electricity market in New York State.”

The Factbook also shows renewable energy and energy efficiency making significant strides across several metrics in 2014, including:
  • Renewables represent 205 gigawatts (GW) of installed capacity across the country. Wind and solar are the fastest-growing technologies, having more than tripled since 2008. Hydropower remains the largest renewable energy source at 79 GW, with biomass, geothermal and waste-to-energy representing another 17 GW but limited in new build by a lack of long-term policy certainty.
  • Wind and solar reaching grid parity in multiple regions. In 2014, wind developers secured power purchase agreements (PPAs) with utilities below the levelized cost of electricity for fossil-fired power and below the price of wholesale power in the Midwest, Southwest and Texas. Solar providers were also able to offer PPAs or leases to homeowners below the residential retail electricity price, reaching “socket parity,” while utility-scale solar plants in Texas and Utah secured PPAs at some of the lowest prices ever recorded globally ($50–55 per megawatt-hour).
  • The Pacific and New England regions made the greatest strides in energy efficiency. The Southeast and Southwest regions, meanwhile, have the greatest opportunities to increase efficiency. Across the United States, commercial buildings have showed the greatest progress on energy efficiency over the last several years.
While the United States is clearly heading toward more use of sustainable energy, the Factbook did show deviations from the larger trend. These include an increase of coal’s share in U.S. electricity generation from 37% in 2012 to an estimated 39% in 2013 and 2014; an increase in carbon emissions from the U.S. energy sector of around 3% since 2012; and a slowdown in utilities’ and states’ adoption of energy efficiency.

The Factbook notes that policy will play a central role in determining where the U.S. energy mix heads in 2015 and beyond. State, federal and international policies – including the EPA’s Clean Power Plan regulation on existing power plants; the global climate negotiations scheduled in Paris this fall; and federal and state-level support for renewables, efficiency and natural gas development – will all help determine the speed with which the trend toward sustainable energy develops in 2015.

The Factbook also contains extensive analysis, charts and data on a wide range of sustainable energy trends in 2014, including energy storage, oil and transportation, distributed energy, combined heat and power (CHP), carbon capture and storage (CCS), and natural gas infrastructure investment.
For more on the 2015 edition of the Sustainable Energy in America Factbook, get the facts at:
Bloomberg New Energy Finance (BNEF)
Press Release dated February 4, 2015

Valuation of Ecosystem Services in the Southern Appalachian Mountains

The concept of ecosystem services has become increasingly influential in conservation policy, uniting natural and social scientists in efforts to develop values for environmental benefits consistent with underlying ecological and social processes. Understanding the consequences for ecosystem services is crucial for crafting well-designed environmental policies and management practices. For example, in the United States, new air pollution policies are driving a reduction in atmospheric emissions of sulfur dioxide and reducing acid precipitation in the Southern Appalachians, which, in turn, is expected to contribute to the ecological recovery of the region. Linking detailed ecosystem modeling to stated preference methods, we illustrate how multidimensional ecosystems can be evaluated to identify policy priorities. We also report estimates of willingness to pay for these policies that can be used in benefit-cost analysis. We estimate these benefits to be $15.67 per year per household in the region to be achieved by 2060.
File:Forest on Baxter Creek Trail in Great Smoky Mountains National Park.jpg
Spruce-fir forest near Mount Sterling on the Baxter Creek Trail in Great Smoky Mountains National Park
by H. Spencer Banzhaf, Dallas Burtraw, Susie Chung Criscimagna, Bernard J. Cosby, David A. Evans, Alan J. Krupnick and Juha V. Siikamäki
RFF Discussion Paper 14-16 | September 2014

Related Publications

by H. Spencer Banzhaf, Dallas Burtraw, Susie Chung Criscimagna, Bernard J. Cosby, David A. Evans, Alan J. Krupnick and Juha V. Siikamäki
RFF Discussion Paper 14-16 | September 2014

Energy Efficient Buildings Are Expected to Reach Nearly $623 Billion in Annual Revenue by 2023 
The barriers to constructing and retrofitting energy efficient buildingscenter around cost, report concludes
A new report from Navigant Research analyzes the global market for commercial building energy efficient products and services, including global market forecasts for revenue through 2023.

Concerns about increasing energy costs are driving many organizations to look to their existing building stock for ways to reduce operating costs.  Corporate and government efforts to reduce carbon emissions and manage assets in a more strategic manner have produced global market opportunities for energy efficient buildings that are supported by country- and region-wide legislation and initiatives.  According to a new report from Navigant Research, worldwide revenue from energy efficient buildings is expected to grow from $307 billion in 2014 to nearly $623 billion in 2023.

“Services that would have seemed costly or unnecessary to building owners 5 to 10 years ago – such as corporate sustainability initiatives focused on energy efficiency – are becoming increasingly mainstream,” says Noah Goldstein, research director with Navigant Research.  “Energy efficiency can help governments to reduce the carbon intensity of local and national economies and corporations reduce costs as well as their carbon footprints.”

The barriers to broad adoption of energy efficiency measures center around cost, according to the report.  In many countries, energy costs remain less than $0.10 per kilowatt-hour for commercial customers, rendering the paybacks of many energy efficiency measures difficult to justify within stringent investment criteria.  Outside of developed economies, energy efficiency tends to be low on the list of priorities, even with significant new construction activity in regions such as Southeast Asia, Latin America, and the Middle East.
"1225 Connecticut Ave" by AgnosticPreachersKid - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons -
The report, “Energy Efficient Buildings: Global Outlook,” analyzes the global market for commercial building energy efficient products and services.  The study summarizes the market drivers and barriers for energy efficient products and services, including the services provided by energy service companies (ESCOs) through energy performance contracting, across the policy and technology landscape in seven regions.  Global market forecasts for revenue, broken out by product and service, building type, construction type, and region, extend through 2023.  The report also examines the key technologies related to energy efficient building products and services, as well as the competitive landscape.  An Executive Summary of the report is available for free download on the Navigant Research website.

Navigant Consulting 
December 11, 2014

Sunday, February 1, 2015

Renewable Energy from Landfills

Americans produce about 4.4 pounds of waste per capita every day, according to the latest information from the US Environmental Protection Agency (EPA). About 65 percent of that waste—a total of about 164 million tons each year—is disposed in landfills. ... The organic matter in landfills is eventually broken down by bacteria. This process produces an abundance of gases, including methane. In fact, landfills represent the third-largest source of methane emissions in the United States. Methane is a potent greenhouse gas and thus a concern—but it increasingly is being captured and used to power homes and other establishments.

The first landfill gas energy projects started operation in Wilmington and Sun Valley, California, in 1979. Today, more than 630 US landfill gas energy projects generate 16.5 billion kilowatt hours of electricity per year—equivalent to the electricity consumption of 1.5 million homes—and deliver 317 million cubic feet per day of landfill gas to direct-use applications. EPA has identified an additional 450 landfill sites for the potential development of energy projects.
However, these projects come at a price. Between 1991 and 2010, the average cost for a landfill gas energy project to generate a kilowatt hour of electricity was 4 to 5 cents. The wholesale electricity price was 2.5 to 3 cents during that same period.

Given the important energy and environmental benefits of these projects—and the potentially prohibitive price tag—state and local governments use various policy tools to encourage municipal landfills to adopt them. But do these incentives work?

 ... [Researchers at Resources For the Future (RFF)[ looked at policy variables, the physical characteristics of landfills, and energy prices. [Their] focus was on four types of government policies that offer incentives to landfill gas energy projects: renewable portfolio standards, production tax credits, investment tax credits, and state grants.
[Their] focus was on four types of government policies that offer incentives to landfill gas energy projects: renewable portfolio standards, production tax credits, investment tax credits, and state grants. Of the four policies, [their] analysis shows that only two—renewable portfolio standards and investment tax credits—have positive and statistically significant effects on the development of landfill gas energy projects.

Renewable portfolio standards—adopted in 30 states—require utility companies to supply a designated portion of their electricity from eligible renewable energy sources. Most states also allow utilities to use renewable energy credits to satisfy their requirements. When a landfill gas energy facility is included as an eligible technology, it can obtain revenue from the electricity it sells and the sale of renewable energy credits.
Diagram of the Jefferson City LFG energy project.
Investment tax credits are granted for installation of a renewable energy facility, usually as a percentage of the cost to construct the system. In the seven states that have adopted such a policy, the rate ranges from 10 percent (in Kansas) to 100 percent (in Kentucky), with an average of 35 percent.

These two policies account for the development of 13 of the 277 landfill gas energy projects built during [their] data period (1991 to 2010). In turn, those 13 projects have led to an estimated 10.4 million metric tons of carbon dioxide–equivalent reductions in greenhouse gas emissions. If these emissions reductions are valued at the official US social cost of carbon, they represent a net benefit of $41.8 million.

What factors have spurred development of the remaining projects? Not surprisingly, high natural gas prices help. Other factors include landfill age, weather, amount of waste, proximity to the electricity grid, and public versus private ownership. In particular, privately owned landfills are more likely than publicly owned ones to adopt landfill gas energy projects. This may reflect stronger incentives among private proprietors to pursue additional sources of income compared to public officials operating local landfills for waste management only.

Further Reading
Li, Shanjun, Han Kyul Yoo, Jhih-Shyang Shih, Karen Palmer, and Molly Macauley. 2014. Assessing the Role of Renewable Energy Policies in Landfill Gas Energy Projects. Discussion paper 14-17. Washington, DC: RFF.

Resources For the Future (RFF)
Resources Magazine; January, 2015