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Illinois utility’s microgrid first to ‘island’ nearby residential customers.
Tucked away behind a research park at the University of Illinois Urbana-Champaign is a glimpse into what many industry analysts say is the future of the power industry.
Tucked away behind a research park at the University of Illinois Urbana-Champaign is a glimpse into what many industry analysts say is the future of the power industry. There on campus, a microgrid of solar panels, wind power, natural-gas generators and energy storage work in concert to balance electricity supply and demand.
Ameren Illinois, which serves power to 1.2 million customers across the state, completed the $5 million facility in December and formally unveiled it in May. The utility calls the nearly 1.5-megawatt microgrid one of North America’s most advanced distributed-energy-resource facilities.
It also serves as a physical and practical manifestation of a more connected, less centralized power system that has been discussed among Illinois policymakers and advocates for at least the past decade.
“Our focus on building a next generation energy delivery system has enabled Illinois to emerge as a national leader in smart grid innovation,” Richard J. Mark, chairman and president of Ameren Illinois, said in a statement. “As the technologies we are testing at this microgrid facility become more accessible in the future, our customers will be able to count on Ameren Illinois to help them safely install and cost-effectively operate distributed generation resources.”
In the near-term, Ameren Illinois hopes the microgrid can improve reliability for the more than 190 nearby homes it can power. In the event of a disruption to the broader power grid, the Ameren microgrid can “island” itself away from the rest of the system and continue to supply power to its local customers.
Farther down the line, the microgrid is poised to function as a cornerstone in a cleaner, smarter, more efficient power grid. This summer, Ameren Illinois plans to begin installing 83,000 smart meters in Champaign County, part of its plan to supply its entire service territory with Advanced Metering Infrastructure by the end of 2019.
The hope is that this kind of networked, distributed generation — when paired with more dynamic metering technology — can enable consumers to better manage what kind of energy they use and how they use it.
“They really will have control of their energy use … whether it be [reacting to] a price signal or [acting upon] a desire for green energy, those kinds of things that really give the customer control” says Ron Pate, senior vice president of operations and technical services at Ameren Illinois.
Customers ‘seamlessly supported’
The most visible components of the Ameren microgrid are the 100-kilowatt wind turbine, the 125-kilowatt solar array, the 250-kilowatt battery and the two 500-kilowatt natural gas generators. But the real power of the microgrid lies in the largely automated control system that ties all the pieces together, determining which sources generate power and to where based on real-time supply, demand, weather conditions and various economic indicators.
This setup allows Ameren Illinois to seamlessly transition customers from microgrid supply to the larger grid and back without any interruption.
“When a microgrid islands from the larger grid it loses all of the essential ancillary services that provide customers the quality power they need,” said David Chiesa, senior director of business development at S&C; Electric, the Chicago-based company that provided the microgrid’s battery and intelligent automation. “Ensuring that customers are seamlessly supported by the distributed generation of a cyber-secure microgrid requires expert engineering, energy storage, and intelligent equipment that can think and act quickly.”
Another unique feature of Ameren Illinois’ system is that it functions at utility-scale voltage, between 4 kilovolts and 34.5 kilovolts. It also makes Ameren Illinois the first investor-owned utility to use a microgrid to island real, paying customers on an active feeder, according to S&C; Electric.
However, Ameren’s is not the first or the only microgrid in Illinois. The Illinois Institute of Technology, a university on Chicago’s South Side, runs on an $18.5 million, 9-MW microgrid – which the school says had a payback period of five years. ComEd, Illinois’ largest utility, plans to build an adjacent microgrid that would be the country’s first pair of networked microgrids.
Across the U.S., installed microgrid capacity is expected to more than double to reach 4.3 gigawatts by 2020, according to an analysis by GTM Research.
Because of its proximity to UIUC’s highly ranked engineering school, the Ameren microgrid can also serve as an educational tool.
Tamer Rousan, a supervising engineer at Ameren Illinois and a UIUC graduate, says when he was in school the prevailing wisdom was not to go into power engineering because it was boring and hadn’t changed in decades. But now, he says, the subject draws a lot of attention from the nearby engineering students.
“Everybody is interested in solar and wind,” he says. “Everybody is interested in the smart grid … These guys come in with eyes wide open, really excited with what we’re doing here.”
From policy to practice
The story of the Ameren microgrid is also as much about legislative assertiveness as it is about engineering innovation.
Ameren’s Pate credits the 2011 Energy Infrastructure Modernization Act (EIMA) as sparking a conversation that led to the microgrid and other projects like it. The bill called on Illinois utilities to invest a combined $2.6 billion in infrastructure upgrades and smart-grid work, and is widely seen as spurring the proliferation of smart meters and efficiency programs in the years since.
The EIMA got a boost in December with the passage of the Future Energy Jobs Act. Although the final version of the legislation dropped funding for several microgrids in the Chicagoland area, it nevertheless set aside hundreds of millions of dollars for wind and solar development, particularly in low-income areas. Just a few months after the bill’s passage, the Illinois Commerce Commission, which regulates the state’s utilities, launched NextGrid, a statewide, collaborative study of the future of utilities.
Despite the hefty price tag of these updates to the grid, consumer groups have largely embraced them, hoping that investment in aging infrastructure today will pay dividends in the future.
“The energy industry is undergoing dramatic changes, and we need to make sure that consumer value is maximized,” Dave Kolata, executive director of the Citizens Utility Board, said in a statement in response to the launching of NextGrid. “This is an excellent opportunity to help lay the regulatory groundwork for an energy future that gives consumers the tools they need to take advantage of a more reliable and affordable electricity system.”
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Brace for the oil, food and financial crash of 2018.
Welcome to a new age of permanent economic recession driven by ongoing dependence on dirty, expensive, difficult oil… unless we choose a fundamentally different path.
New scientific research suggests that the world faces an imminent oil crunch, which will trigger another financial crisis.
A report by HSBC shows that contrary to the commonplace narrative in the industry, even amidst the glut of unconventional oil and gas, the vast bulk of the world’s oil production has already peaked and is now in decline; while European government scientists show that the value of energy produced by oil has declined by half within just the first 15 years of the 21st century.
The upshot? Welcome to a new age of permanent economic recession driven by ongoing dependence on dirty, expensive, difficult oil… unless we choose a fundamentally different path.
*****
Last September, a few outlets were reporting the counter-intuitive findings of a new HSBC research report on global oil supply. Unfortunately, the true implications of the HSBC report were largely misunderstood.
The HSBC research note — prepared for clients of the global bank — found that contrary to concerns about too much oil supply and insufficient demand, the situation was opposite: global oil supply will in coming years be insufficient to sustain rising demand.
Yet the full, striking import of the report, concerning the world’s permanent entry into a new age of global oil decline, was never really explained. The report didn’t just go against the grain that the most urgent concern is ‘peak demand’: it vindicated what is routinely lambasted by oil majors as a myth: peak oil — the concurrent peak and decline of global oil production.
The HSBC report you need to read, now
INSURGE intelligence obtained a copy of the report in December 2016, and for the first time we are exclusively publishing the entire report in the public interest.
(Read and/or download the full HSBC report by clicking here.)
Headquarted in London, UK, HSBC is the world’s sixth largest bank, holding assets of $2.67 trillion. So when they produce a research report for their clients, it would be wise to pay attention, and see what we can learn.
Among the report’s most shocking findings is that “81% of the world’s total liquids production is already in decline.”
Between 2016 and 2020, non-OPEC production will be flat due to declines in conventional oil production, even though OPEC will continue to increase production modestly. This means that by 2017, deliverable spare capacity could be as little as 1% of global oil demand.
This heightens the risk of a major global oil supply shock around 2018 which could “significantly affect oil prices.”
The report flatly asserts that peak demand (the idea that demand will stop growing leaving the world awash in too much supply), while certainly a relevant issue due to climate change agreements and disruptive trends in alternative technologies, is not the most imminent challenge:
“Even in a world of slower oil demand growth, we think the biggest long-term challenge is to offset declines in production from mature fields. The scale of this issue is such that in our view rather there could well be a global supply squeeze some time before we are realistically looking at global demand peaking.”
Gas shortage.
Gas shortage. Getty Images
Under the current supply glut driven by rising unconventional production, falling oil prices have damaged industry profitability and led to dramatic cut backs in new investments in production. This, HSBC says, will exacerbate the likelihood of a global oil supply crunch from 2018 onward.
Four Saudi Arabias, anyone?
The HSBC report examines two main data sets from the International Energy Agency and the University of Uppsala’s Global Energy Systems Programme in Sweden.
The latter, it should be noted, has consistently advocated a global peak oil scenario for many years — the HSBC report confirms the accuracy of this scenario, and shows that the IEA’s data supports it.
The rate and nature of new oil discoveries has declined dramatically over the last few decades, reaching almost negligible levels on a global scale, the report finds. Compare this to the report’s warning that just to keep production flat against increasing decline rates, the world will need to add four Saudi Arabia’s worth of production by 2040. North American production, despite remaining the most promising in terms of potential, will simply not be able to fill this gap.
Business Insider, the Telegraph and other outlets which covered the report last year acknowledged the supply gap, but failed to properly clarify that HSBC’s devastating findings basically forecast the long term scarcity of cheap oil due to global peak oil, from 2018 to 2040.
The report revises the way it approaches the concept of peak oil — rather than forecasting it as a single global event, the report uses a disaggregated approach focusing on specific regions and producers. Under this analysis, 81% of the world’s oil supply has peaked in production and so now “is post-peak”.
Using a more restrictive definition puts the quantity of global oil that has peaked at 64%. But either way, well over half the world’s global oil supply consists of mature and declining fields whose production is inexorably and irreversibly decreasing:
“If we assumed a decline rate of 5%pa [per year] on global post-peak supply of 74mbd — which is by no means aggressive in our view — it would imply a fall in post-peak supply of c.38mbd by 2030 and c.52mbd out to 2040. In other words, the world would need to find over four times the size of Saudi Arabia just to keep supply flat, before demand growth is taken into account.”
A 'Pumps Closed' sign in the window of a petrol station on 42nd Street and 11th Avenue, New York during a fuel shortage, 19th June 1979. The Mobil Pegasus logo is visible on the right.
A ‘Pumps Closed’ sign in the window of a petrol station on 42nd Street and 11th Avenue, New York during a fuel shortage, 19th June 1979. The Mobil Pegasus logo is visible on the right. Getty Images
What’s worse is that when demand growth is taken into account — and the report notes that even the most conservative projections forecast a rise in global oil demand by 2040 of more than 8mbd above that of 2015 — then even more oil would be needed to fill the coming supply gap.
But with new discoveries at an all time low and continuing to diminish, the implication is that oil can simply never fill this gap.
Technological innovation exacerbates the problem
Much trumpeted improvements in drilling rates and efficiency will not make things better, because they will only accelerate production in the short term while, therefore, more rapidly depleting existing reserves. In this case, the report concludes:
“…the decline-delaying techniques are only masking what could be significantly higher decline rates in the future.”
This does not mean that peak demand should be dismissed as a serious concern. As Michael Bradshaw, Professor of Global Energy at Warwick University’s Sloan Business School, told me for my previous VICE article, any return to higher oil prices will have major economic consequences.
The HSBC report takes the position that prices will have to rise eventually, because the drop in investment due to declining profitability amidst the current glut will make a supply squeeze inevitable. Better and more efficient drilling creates a glut now: but it also accelerates depletion, meaning that the lower prices and oil glut today is a precursor of tomorrow’s higher prices and supply squeeze.
There’s another possibility, which could mean that prices don’t rise as HSBC forecasts. In this scenario, the economy remains too weak to afford an oil price hike. Demand for oil stays low because economic activity remains tepid, while consumers and investors continue to seek out alternative energy sources to fossil fuels. In that case, the very inertia of a weakening economy would pre-empt the HSBC scenario, and the industry would continue to slowly crush itself out of the market due to declining profitability.
Price spikes, economic recession
But what if the HSBC supply forecast is correct?
Firstly, oil price spikes would have an immediate recessionary effect on the global economy, by amplifying inflation and leading to higher costs for social activity at all levels, driven by the higher underlying energy costs.
Secondly, even as spikes may temporarily return some oil companies to potential profitability, such higher oil prices will drive consumer incentives to transition to cheaper renewable energy technologies like solar and wind, which are already becoming cost-competitive with fossil fuels.
That means a global oil squeeze could end up having a dramatic impact on continued demand for oil, as twin crises of ‘peak oil’ and ‘peak demand’ end up intensifying and interacting in unfamiliar ways.
May 1938: An oilfield of rotary derricks in the USA.
May 1938: An oilfield of rotary derricks in the USA. Getty Images
The demise of fossil fuels
The HSBC report’s specific forecasts of global oil supply and demand, which may or may not turn out to be accurate, are part of a wider story of global net energy decline.
A new scientific research paper authored by a team of European government scientists, published on Cornell University’s Arxiv website in October 2016, warns that the global economy has entered a new era of slow and declining growth. This is because the value of energy that can be produced from the world’s fossil fuel resource base is declining inexorably.
The paper – currently under review with an academic journal – was authored by Francesco Meneguzzo, Rosaria Ciriminna, Lorenzo Albanese, Mario Pagliaro, who collectively conduct research on climate change, energy, physics and materials science at the Italian National Research Council (CNR) — Italy’s premier government agency for scientific research.
According to HSBC, oil prices are likely to rise and stabilize for some time around the $75 per barrel mark due to the longer term decline in production relative to persistent demand. But the Italian scientists find that this is still too high to avoid destabilizing recessionary effects on the economy.
The Italian study offers a new model combining “the competing dynamics of population and economic growth with oil supply and price,” with a view to evaluate the near-term consequences for global economic growth.
Data from the past 40 years shows that during economic recessions, the oil price tops $60 per barrel, but during economic growth remains below $40 a barrel. This means that prices above $60 will inevitably induce recession.
Therefore, the scientists conclude that to avoid recession, “the oil price should not exceed a threshold located somewhat between $40/b [per barrel] and $50/b, or possibly even lower.”
More broadly, the scientists show that there is a direct correlation between global population growth, economic growth and total energy consumption. As the latter has steadily increased, it has literally fueled the growth of global wealth.
But even so, the paper finds that the world is experiencing:
“…declining average EROIs [Energy Return on Investment] for all fossil fuels; with the EROI of oil having likely halved in the short course of the first 15 years of the 21st century.”
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Indian Point nuclear power plant to close by 2021.
The Indian Point nuclear plant will shut down by April 2021 under an agreement New York State reached this week with Entergy, the utility company that owns the facility in Westchester County, according to a person with direct knowledge of the deal.
Indian Point Nuclear Power Plant to Close by 2021
By VIVIAN YEE and PATRICK McGEEHANJAN. 6, 2017
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One of the two nuclear reactors at Indian Point in Westchester County will cease operations by April 2020, while the other must be closed down by April 2021. Credit Uli Seit for The New York Times
The Indian Point nuclear plant will shut down by April 2021 under an agreement New York State reached this week with Entergy, the utility company that owns the facility in Westchester County, according to a person with direct knowledge of the deal.
Under the terms of the agreement, one of the two nuclear reactors at Indian Point will permanently cease operations by April 2020, while the other must be closed by April 2021. The shutdown has long been a priority for Gov. Andrew M. Cuomo, who — though supportive of upstate nuclear plants — has repeatedly called for shutting down Indian Point, which he says poses too great a risk to New York City, less than 30 miles to the south.
“Why you would allow Indian Point to continue to operate defies common sense, planning and basic sanity,†Mr. Cuomo told reporters in June.
Despite the political opposition to Indian Point, which is perched on the edge of the Hudson River in Buchanan, N.Y., the plant is an important supplier of inexpensive power to the metropolitan area. It has the capacity to generate more than 2,000 megawatts, or about one-fourth of the power consumed in New York City and Westchester County. The prospects for replacing that power are so far unclear, but potential options include hydropower from Quebec and power from wind farms already operating across New York, according to the person.
State officials believe the Entergy agreement will help convince renewable energy providers that the state is serious about looking for new sources of energy, the person said. But without a viable replacement source, ratepayers in New York City could be burdened with higher energy prices for years.
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Entergy has agreed to make repairs and safety upgrades, including transferring spent fuel to what the state says is a safer storage system. The company will also allow safety inspections starting this year, bowing to longtime demands from the Cuomo administration; the office of the state attorney general, Eric T. Schneiderman; and Riverkeeper, the environmental nonprofit group, all of which participated in the deal.
In exchange, the state and Riverkeeper will drop safety and environmental claims against Indian Point they had previously filed with federal regulatory agencies.
Entergy, which is based in New Orleans, has been seeking a 20-year renewal of its license from the federal Nuclear Regulatory Commission since 2007. But New York State officials have challenged that renewal on several fronts and have refused to grant permits that they say the plant needs to continue operating.
Jerry Nappi, a spokesman for Entergy in Westchester County, declined to comment.
Negotiations between the company and the Cuomo administration began in early December, according to the person with direct knowledge of the deal.
The attorney general’s office and Entergy have each signed off on the agreement, but the governor’s office has indicated to the other parties that it will wait until Monday to sign it, the person said. The deal has shifted several times during negotiations, but the person said that, all that remained was the governor’s office’s signature.
Nonetheless, Richard Azzopardi, a spokesman for the governor, cautioned that nothing had been finalized.
“There is no agreement — Governor Cuomo has been working on a possible agreement for 15 years and until it’s done, it’s not done,†he said. “Close only counts for horseshoes, not for nuclear plants.â€
Mr. Schneiderman’s office has opposed Entergy’s relicensing bid in the courts, arguing that the plant poses safety and environmental hazards to the surrounding area; the agreement calls for Mr. Schneiderman to drop that challenge.
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Under the agreement with the state, Entergy has committed to applying for a six-year license renewal. The agreement may help clear the way for approval. The reactors’ licenses expired in 2013 and 2015.
The agreement would also require Entergy to establish a new emergency operations center in the Dutchess County town of Fishkill, as well as to create a $15 million fund to finance projects related to environmental protection and other community benefits. The company will be obligated to consult regularly with Riverkeeper and other local groups.
The agreement also provides for flexibility if the state cannot find a replacement for Indian Point’s energy: The deadlines in 2020 and 2021 can be pushed to 2024 and 2025 if both the state and Entergy agree.
The agreement is reminiscent of one arranged by Mr. Cuomo’s father, Gov. Mario Cuomo, in 1989. Mario Cuomo negotiated a decommissioning of the Shoreham nuclear power plant on Long Island, which was never put into service. Its owner, the Long Island Lighting Company, sold the plant to the state for $1, but Long Island ratepayers were paying higher bills for years.
Correction: January 6, 2017
An earlier version of this article misstated the county where Fishkill, N.Y., is located. It is Dutchess County, not Westchester.
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Economics to keep wind and solar energy thriving with Trump.
Environmental rules and government subsidies are no longer the key drivers for clean power. Economics are.
On the plains of West Texas, new wind farms can be built for just $22 a megawatt-hour. In the Arizona and Nevada deserts, solar projects are less than $40 a megawatt-hour. Compare those figures with the U.S. average lifetime cost of $52 for natural gas plants and about $65 for coal.
Environmental rules and government subsidies are no longer the key drivers for clean power. Economics are.
That’s why Donald Trump will have limited influence on the U.S. utility industry’s push toward renewable energy, according to executives and investors. Companies including NextEra Energy Inc., Duke Energy Corp. and others that invest billions in power plants are already moving forward with long-term plans to generate electricity with cleaner and more economic alternatives.
“We said before the election that whoever is elected president, we would be continuing our efforts to go to a low-carbon fleet and also pursue renewables,” said Tom Williams, a spokesman for Duke, the second-largest U.S. utility owner.
Wind and solar have been the two biggest sources of electricity added to U.S. grids since 2014 as utilities closed a record number of aging coal-fired generators. Trump has derided clean energy and assailed environmental regulations that hinder jobs, while pledging to revive the mining industry. In an interview Tuesday, Trump softened his view, telling the New York Times that he has an ‘‘open mind’’ on the Paris climate accord and noting that “there is some connectivity” between human activity and climate change.
And it’s not just cost that makes clean energy attractive to utilities -- it’s time. A solar farm can go up in months to meet incremental increases in utility demand; it takes years to permit, finance and build the giant boilers and exhaust systems that make up a coal plant, and they can last for a generation. A four-year presidential term is hardly a tick in that energy clock, and companies are already planning projects that will commence after Trump leaves office, even if he serves two terms.
Uneconomical Coal
Over the next four years, utilities have announced plans to close 12 gigawatts worth of coal plants, largely because cheap natural gas has made them uneconomical -- the equivalent of switching off a dozen nuclear reactors.
Trump will have some levers at his disposal to influence how they’ll be replaced. He has vowed, for instance, to kill President Barack Obama’s Clean Power Plan, which would require states to reduce emissions from power plants. And two federal subsidies -- the investment tax credit and the production tax credit -- remain key components to making solar and wind affordable.
He hasn’t indicated whether he’ll push to repeal the tax credits for wind and solar, which were extended for five years at the end of 2015 with bipartisan support. And the Clean Power Plan, which has been suspended pending a U.S. Supreme Court ruling, isn’t scheduled to take effect until 2022. Utilities, meanwhile, are marching ahead.
“We are moving forward with plans that call for replacing some of our coal generation with natural gas, low-cost wind energy and expanding solar options for customers,” said Frank Prager, vice president of policy and federal affairs for Xcel Energy Inc., which owns utilities in eight states.
Even without the Clean Power Plan, Bloomberg New Energy Finance forecasts that wind and solar energy will grow 33 percent over the next two years, adding 40 gigawatts. A lot of that will be driven by state, rather than federal, policies.
More than half of U.S. states require utilities to incorporate renewable energy into their generation mix, including the traditionally Republican strongholds of Texas, Arizona and Montana. California and New York have set goals to source half of their power from clean energy by 2030.
“I’m skeptical that there is a lot you can do to stop this coal plant replacement cycle from happening,” said Bryan Martin, a managing director at D.E. Shaw & Co., a New York hedge fund that manages about $38 billion and invests in wind and solar projects. “Renewables are the cheapest form of new power in most of these markets.”
Even if renewable energy loses support from the West Wing, it remains popular in corner offices across America. Electricity-hungry tech giants including Alphabet Inc.’s Google, Amazon.com Inc. and others have increasingly sourced energy in recent years directly from wind and solar farms, signing at least 20 power-purchase agreements totaling 2.3 gigawatts in 2015 alone. Over the next nine years, companies have pledged to buy another 17.4 gigawatts, according to New Energy Finance.
“Wal-Mart will continue to build stores, and Apple will continue to build energy-intensive data centers that will be powered by renewables,” said Kyle Harrison, a New Energy Finance analyst in New York. “We don’t expect the election to have a significant impact on renewable energy.”
There are indirect ways Trump may impede clean energy. His proposal to cut corporate tax rates could blunt the effectiveness of the tax credits for wind and solar. He could cut research-and-development funding. Rolling back environmental regulations may make coal more competitive. And Trump will have the opportunity to appoint at least two members to the Federal Energy Regulatory Commission.
Utilities aren’t waiting to see how it pans out.
“We’d love to see more funding to ensure that fossil fuels can stay in that framework,” said Nick Akins, chief executive officer of American Electric Power Co., which owns utilities from Texas to Ohio. “But as we go through this process, I think from AEP’s perspective, we’re going to continue the investments that we’re making.”
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One crisis, two futures: How Denmark and Texas answered an energy challenge.
Facing the Arab oil embargo of the 1970s, Denmark shifted from fossil fuels. Texas responded differently. Here's a look at how things went for each.
Facing the Arab oil embargo of the 1970s, Denmark shifted from fossil fuels. Texas responded differently. Here's a look at how things went for each.
by Jim Malewitz Nov. 21, 2016 12:01 AM
A wind farm generates electricity off the coast of Copenhagen. Wind energy accounted for 42 percent of Denmark's generation last year. Four decades ago, the country depended almost entirely on imported oil.
A wind farm generates electricity off the coast of Copenhagen. Wind energy accounted for 42 percent of Denmark's generation last year. Four decades ago, the country depended almost entirely on imported oil. Courtesy C.G.P. Grey
Editor’s note: This is the first story in a series about global and local efforts to conserve energy and limit pollution through energy efficiency.
COPENHAGEN — Like other Danes of a certain age, Iver Høj Nielsen clearly recalls the 1970s Arab oil embargo that plunged his Scandinavian country into an energy crisis.
Lines stretched for blocks near gas stations in this capital city. There were calls to keep the lights off in buildings. Most vividly, Nielsen says, he remembers taking quiet walks down empty streets on Sundays — when a driving ban kept cars and trucks from rumbling to and fro.
“It was very strange,” said Nielsen, who was a teenager when the Organization of Petroleum Exporting Countries (OPEC) turned off its spigot to Europe and the United States. “You got the feeling that this was very serious, and you must do something about it.”
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But Denmark, which is mostly surrounded by the sea and has few homegrown sources of fuel, did do something about it — and it went far beyond temporary cutbacks in oil distribution.
Through an elixir of policies, Denmark’s strong central government began shifting from foreign fossil fuels. Now, a country that once ran almost entirely on imported oil is considered a renewable energy powerhouse that uses those sources — and its remaining fossil fuels — more efficiently than most anywhere else.
The World Energy Council, a United Nations-accredited body, this year ranked Denmark No. 1 in its “World Energy Trilemma Index,” which scores 125 countries’ performances in “energy security, energy equity and environmental sustainability.” (The United States ranked 14th in the same index.)
These days, much of the world is focused on a less tangible but more existential crisis: Earth’s gradual warming, due in large part to soaring global emissions of carbon dioxide and other greenhouse gases. Denmark’s emissions-slashing shift to fuels such as wind and solar and focus on efficiency now plays a major role in its economy and is a source of national pride. In 2009, Denmark hosted international climate negotiations here in its bustling capital. Nielsen, a former newspaper journalist, now works for State of Green, a government-funded campaign to publicize the nation’s cleaner-energy economy.
Emily AlbrAcht
“You can grow the economy without using more energy,” he said looking out at Copenhagen from a seat atop the roof of his office building. “You don’t have to go back to the Stone Age to be environmentally friendly,” he added, reflecting on Denmark’s consciousness about energy use into day-to-day life. Here, it goes beyond efficient light bulbs and appliances. A potent symbol of that concept: Just two miles away, construction is underway for a waste incinerator that doubles as a power plant, equipped with technology that captures emissions. Atop it sits a ski slope that will be open to the public.
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Denmark was hardly alone in being bedeviled by the oil embargo. A similar energy pinch also spurred calls to cut energy use in Texas, along with a heavy dose of head-scratching about the state’s energy future, including suggestions that more renewables and efficiency should play a major role. But Texas ultimately responded differently, building a large fleet of coal plants and creating — but then discontinuing — an official body tasked with pondering the state’s energy and environmental future.
Experts caution against drawing direct a comparison between two places with different sizes, different governments, different resources and nuanced histories. Nevertheless, some advocates and energy researchers see missed opportunities in Texas’ response to the decades-ago crisis, particularly when they gaze across the Atlantic Ocean at Denmark.
“Texas lost a huge opportunity to reduce costs and pollution by looking at world-class practices to reduce energy consumption,” said Tom “Smitty” Smith, who advocated for such practices in Texas — still the nation’s biggest energy user — during his 31-year tenure leading the consumer group Public Citizen.
Crisis as opportunity
In 1973, OPEC members stopped shipping oil to the United States and a few other countries — punishment for their support of Israel, which was attacked by a coalition of Arab states led by Syria and Egypt.
Denmark, which relied on oil imports for more than 80 percent of its energy needs, was among those reeling during an embargo that stretched into 1974. Its leaders contemplated: How could they reduce their dependence on foreign supplies?
In the coming decades, the government pushed Danes — largely through tax policy and mandates — toward energy sources such as wood pellets, solar power and a rapidly growing wind sector, which last year churned out a staggering 42 percent of the country’s electricity. (Denmark was the first country to build offshore wind farms, harnessing particularly fast-blowing winds.) Natural gas, which burns far cleaner than coal or oil, also played a prominent role after discoveries in the Danish part of the North Sea, though its production is now declining.
Denmark also focused on its cheapest energy resource: efficiency. The country's parliament laid the foundation for that effort in 1976, requiring electricity generators to capture and reuse heat that escapes their spinning turbines and would otherwise waft into the atmosphere. Called “combined heat and power,” such plants can utilize up to 90 percent of the fuel put into them, compared with about 40 percent from electricity-only generation, according to the International District Energy Association.
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Danish leaders also ensured that local government would approve new heat and power plants at the centers of their communities — not on the outskirts, as is often the case in the United States — to maximize efficiency. These days, more than 60 percent of Danish homes rely on district heating networks: underground pipes that bring in hot water or steam. Those homes don’t need less-efficient boilers or furnaces. Here in Copenhagen, population 591,000, nearly every building draws heat this way. And most of that heat is the captured waste from electricity generation.
A tunnel beneath the city of Copenhagen sends heated water and steam to a building that needs it. These tunnels connect nearly every building in the capital city to central heating sources.Bill Ebbesen
“It’s utilizing energy that otherwise you could not utilize,” said Lars Hummelmose, managing director of the Danish Board of District Heating.
Over the 12 years before the oil embargo, Denmark nearly doubled its energy use. More recently, however, those numbers have plummeted, even as the nation grows its economy and population. Total energy consumption fell nearly 9 percent from 1990 to 2015, according to Danish Energy Agency data. Over the same period, energy sector carbon dioxide emissions plunged 37 percent.
In an effort to fight climate change, the country has pledged to curb emissions 40 percent from 1990 levels by 2020.
Danish policies make for far higher energy prices than Texans or any American pay per unit of energy — mostly because of taxes, which take up more than two-thirds of residential electricity bills, according to European Commission data. In 2013, Danish households on average paid more than three times what Americans did per unit of electricity, a U.S. Energy Information Administration analysis shows.
But those policies also mean Danes use less energy in the first place.
“It is the taxes that determine the way we are working,” said Lars Damkjaer, operations manager for district heating in Gram, a town of about 2,500 in southern Denmark. In 2009, the city built a solar thermal plant that has since expanded to more than 482,000 square feet.
“We are regulated by taxes in everything that we are doing.”
But many Danes see taxes on fossil fuels as accounting for their environmental costs.
“The whole energy policy turns on community interests — what is best for the society of Denmark,” said Anders Dyrelund, an energy specialist for Ramboll, a major Danish engineering firm.
A different path in Texas
In today’s Texas, it might be tough to imagine snaking lines at the gas pump and talk of energy conservation. Thanks to technology like hydraulic fracturing, the state is flush with oil and natural gas — so much that low prices have slowed the state’s fossil-fueled economic growth.
But the 1970s were far different. The Arab embargo struck as Texas feared it was running out of oil and natural gas for good. And most of the state’s power plants ran on gas. They weren’t very efficient, and fuel demands were on pace to double every decade.
In November 1973, a month after the embargo started, Gov. Dolph Briscoe Jr. lamented the “wasteful use of energy in every segment of our society.” He called on Texans to conserve, suggesting: “We can give our friend or neighbor a lift to meetings and social functions." And he asked state agencies to use less fuel, buy small cars and set thermostats to 65 degrees in the winter. School districts would also file an “energy conservation plan” with the state.
A gas station sees an early morning rush in 1973 during the Arab oil embargo, a time when OPEC producers turned off their spigot to the U.S., Denmark and other countries. Scarce oil supplies led to skyrocketing prices that prompted officials to rethink how their states used energy.David Falconer
Briscoe, a Democrat, appointed a brigadier general, James M. Rose, to lead an Energy Conservation Task Force. Rose delivered frequent updates on the electricity and natural gas use under the Capitol’s pink dome, even adjusting janitors’ schedules so they would not waste light at night.
The state ordered utilities to reduce their use of natural gas. And the power sector instead shifted to coal, a fuel now vilified by environmental advocates. Most Texas coal plants — and its two nuclear plants — were built after the oil embargo. Federal policy drove much of that transformation. In 1977, President Jimmy Carter called for energy companies to grow coal production by 400 million tons each year, and he outlined policies “to assure the greatest possible conversion of utilities and industrial installations to coal and other fuels.”
Briscoe pushed for an even more diverse fuel mix. Just before the embargo, he formed an energy advisory council chaired by Bill Hobby, his lieutenant governor. In the next few years, the group ordered studies on a variety of energy sources, including wind, solar, biomass and even exotics like algae. It pushed the Legislature to create a fund to develop the fuels — and ideas for mass transit. It also persuaded lawmakers to create the Public Utility Commission, an agency to regulate utilities.
The governor’s council eventually morphed into an agency of its own: the Texas Energy and Natural Resource Advisory Council, which brought together state officials and experts to contemplate energy and environmental policy together.
But as energy supply fears ebbed, Texas eventually abandoned its energy conservation campaign. And in 1983, lawmakers under Gov. Mark White abolished the advisory council. Some who were involved in the agency or observed it called that a setback for the state.
“Back then, we were actually talking about energy plans, how to integrate with water issues” — some of the same questions state leaders are still pondering, said Robert King, who served on the council and authored a report on renewable energy. “I think we missed an opportunity by letting the organization go.”
King, who now serves as CEO of the Austin-based South-central Partnership for Energy Efficiency as a Resource, said Texas — with its laissez faire power market — has a “very modest” set of efficiency programs with plenty of room to grow.
Former Gov. Dolph Briscoe Jr., who was in the governor's office from 1973 to 1979, is shown speaking at a news conference during his time in office.Prints and Photographs Collection, Texas State Library and Archives Commission
Texas does burn energy more efficiently than it did decades ago because of advances in technology and various federal standards. And in 1999, it became the first state to establish an energy efficiency resource standard — requiring utilities to offset a fraction of their expected energy demands through various efficiency programs. But efficiency advocates say Texas has only tightened such policies modestly more recently, putting it behind several other states.
In September, a national group that promotes energy efficiency ranked Texas 27th among states in progressive policymaking on the issue.
Ken Anderson Jr., one of three members of the state Public Utility Commission, suggests that the competitive market is spurring retail electric providers to get creative in their efficiency programs.
Some, for instance, offer lower rates (or sometimes free power) to customers who use energy during typically low-demand times — like nights and weekends. Others use “demand response,” which relies on high-tech thermostats and meters that allow utilities to power down air-conditioners, heaters or pool pumps when demand peaks. In those voluntary programs, providers compensate customers for power they don’t use.
King said such developments have helped curb energy use but that they so far fall short of what other states have achieved. In demand response, for instance, analyses show that Texas has only unlocked a fraction of its potential.
Milton Holloway, an energy consultant who oversaw research funding for the disbanded advisory council, said he “always regretted” that it didn’t continue and that his program was underfunded compared with similar ones in other states. But if it had continued, would the Texas energy world look dramatically different today? “That’s a hard one,” he said. “There’s always the debate about whether Texas ought to get out and lead the nation or whether we ought to let somebody else make the mistakes and then learn from them — and come in second or third.”
“There’s always the debate about whether Texas ought to get out and lead the nation or whether we ought to let somebody else make the mistakes and then learn from them — and come in second or third.”— Milton Holloway, an energy consultant
With its size and industrial muscle, Texas continues to lead the nation in carbon dioxide emissions, which fluctuate each year (the state polluted more in 2014 than it did in several previous years, but less than it did in 2000, according to U.S. Energy Information Administration data). A more efficient Texas, therefore, could put a significant dent in national emissions.
After the embargo, Texas built up a large wind sector in part by pouring $7 billion into power lines that carry its electricity across the state. The state’s turbines generate more power than any other state, and about 10 percent of its electricity generation in Texas. And the solar industry, after a very slow start, is growing fast.
These days, abundant natural gas is edging out less-efficient coal plants.
Anderson suggested that’s proof that the competitive market is making the state more efficient. “The market has a funny way of making those decisions,” he said. “When government policy tries to do it by predicting the future, historically, government gets it wrong more than it gets it right.”
Smith, with Public Citizen, said he’s encouraged by some of these trends, but he sees far more room for Texas to grow and he wishes Texas would have done more sooner.
“What we’ve never figured out is how to enable the big electric, oil and generating companies for energy efficiency,” he said, “and that is going to take an entirely new regulatory model.”
Reporting for this series was funded through a Transatlantic Energy and Climate Network fellowship, a project of the nonprofit Heinrich Böll Foundation in Washington, D.C. A complete list of Tribune donors and sponsors can be viewed here.
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Environmental groups call subsidies to fossil fuel industry an 'anti-carbon tax.'
A study suggests Canada's attempts to set a price on carbon are being undercut by subsidies to the fossil-fuel industry.
A study suggests Canada's attempts to set a price on carbon are being undercut by subsidies to the fossil-fuel industry.
A coalition of four environmental groups have summed up tax exemptions, investment credits and royalty breaks used by the fossil- fuel industry and compared the total against emissions data from Environment Canada.
The "carbon subsidy" averages out to the equivalent of $19 per tonne of carbon dioxide.
That almost equals the price on carbon Alberta plans to implement next year, doubles the proposed initial federal price and negates two-thirds of British Columbia's $30 carbon levy.
"These subsidies undermine the notion of a price on carbon, which is intended to give incentives to reduce our fossil-fuel use and move toward cleaner use of energy," said Dale Marshall of Environmental Defence, one of the groups involved in the study.
Still, some warn ending those benefits wouldn't reduce emissions much and would chase investment out of the country.
The report calculates the total cost of fossil-fuel subsidies at about $3.3 billion a year. Nearly $1.2 billion comes from favourable federal tax treatment of oil and gas exploration and development projects.
There's no reason for that, Marshall said. Research suggests many of current oil and gas reserves already mapped will have to be left in the ground if climate change is to be kept under two degrees of warming.
"We know from the science that the vast majority of the reserves that are already there can't be exploited."
The second-biggest subsidy comes from Alberta, which provides $1.1 billion through forgone revenues from royalty reductions. The rest comes from a mix of federal and provincial tax credits and other subsidies.
Marshall said governments should be working to gradually scale down the industry, not encourage its growth.
"Fighting climate change means managed decline in fossil-fuel sectors. There's no other way to reduce emissions."
Speaking in Marrakech at a UN climate-change conference, federal Environment Minister Catherine McKenna said Ottawa will end subsidies by 2024.
"We will do it in an intelligent way," she told reporters. "We obviously have to work with the provinces. We've already had discussions and I've had discussions with the finance minister."
But tax breaks for exploration and development are how governments share risk at the iffiest end of the industry, said Jon Stringham, economics manager for the Canadian Association of Petroleum Producers. Removing them would simply divert investment to other countries — many of which, such as a Donald-Trump-led United States, are less than keen to reduce carbon emissions.
"Any (carbon regulation) on the American side is going to hit the dustbin," said Stringham. "We're not going to see onerous regulations.
"You're going to see investment flow out of Canada into the U.S."
Finding new reserves allows industry to focus on those that are least carbon intensive, Stringham added.
Mark Jaccard, an energy economics at Simon Fraser University, points out the federal tax benefit is designed to encourage the overall mining and resource development sector. Economists dispute the actual impact on greenhouse gas emissions, he said.
Some subsidy programs are for research, he said.
"Much of the R&D; subsidies now are to find ways to produce oilsands with less emissions," he said in an email. "So (should we) eliminate that?"
It's more effective to keep raising the cost of carbon, said Jaccard.
"I see (subsidies) as a bit of a diversion."
— Follow Bob Weber on Twitter at @row1960
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Rescinding Obama regs? Not so fast, legal scholars say.
President-elect Donald Trump's vows to single-handedly gut Obama administration environmental regulations will be more difficult than he has portrayed, legal experts say.
President-elect Donald Trump's vows to single-handedly gut Obama administration environmental regulations will be more difficult than he has portrayed, legal experts say.
And any effort by Trump's U.S. EPA to rescind or revoke major scientifically based rules — like the air standard for ozone pollution — would be met with a barrage of lawsuits.
"Lots of threats of this kind have come in the past," said Jody Freeman, a Harvard Law School professor and former climate adviser to President Obama. "Virtually every Republican administration comes in and says they want to deregulate. But when the rubber hits the road, there is little of it."
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To be sure, Congress can pass legislation revoking any environmental regulation it wants, and that may be the way forward for Republicans who will now control the White House, House and Senate.
And Trump can unilaterally withdraw or abandon commitments under the Paris Agreement on climate change, which would significantly undercut the Obama administration's policies.
But history suggests that presidents have rarely sought to rescind earlier regulations under their own executive power. When they do, several legal scholars said, they run into problems — including two Supreme Court precedents.
Freeman pointed to research suggesting that President Clinton repealed less than 10 percent of the last-minute, or "midnight," regulations of his predecessor, President George H.W. Bush. President George W. Bush then repealed only 3 percent of Clinton's; more than 80 percent of Clinton's midnight regulations were not even amended by Bush's team.
And when Bush tried, he often failed. The prime example was his attempt to undo the Clinton administration's roadless rule, a Forest Service regulation adopted in the final days of the administration. It prohibited most road construction, logging and mineral leasing within 58.5 million acres of national forests across the United States.
The Bush administration officially repealed the rule in 2005 and replaced it with a state petition rule, but that sparked a decade of litigation that ultimately ended when a federal appeals court struck down the Bush reversal last year (Greenwire, July 30, 2015).
Similarly, the Bush EPA made moves to alter or rescind air regulations and Clinton's drinking water standard for arsenic.
Those moves and air rules led to countless legal challenges, and the Bush administration rarely prevailed.
"They had a horrific record at the [U.S. Court of Appeals for the District of Columbia Circuit] when it came to defending air pollution rules," said Jonathan Adler, a professor at Case Western Reserve University School of Law.
And when Bush's EPA attempted to move away from the Clinton drinking water standard for toxic arsenic, it faced significant public pushback. The agency reversed itself within a year, eventually backing the Clinton standard.
High court rulings
Under Supreme Court precedent, new administrations cannot rescind regulations with the stroke of a pen.
Two cases speak directly to the issue. In both, the high court ruled that an agency must provide a detailed explanation explaining a change in policy.
In 1983's Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Co., the court dealt with a Reagan administration decision to revoke regulations requiring either airbags or automatic seat belts in cars.
The court held unanimously that the administration's decision was arbitrary and capricious because it did not adequately explain why the rules were no longer needed.
The agency "failed to present an adequate basis and explanation for rescinding the requirement, and must either consider the matter further or adhere or amend the Standard along lines which its analysis supports," the court said.
In 2009's Federal Communication Commission v. Fox Television Stations Inc., the court dealt with an FCC policy change involving curse words on television broadcasts.
The court held 5-4 that an agency must defend the justification for a policy change — just as it must for a brand-new rule. (Notably, the opinion was written by the late Justice Antonin Scalia, and there was disagreement on the bench about whether policy changes require more extensive explanation than original rules. Scalia and the court held narrowly that they don't.)
Taken together, the rulings mean that if the Trump EPA decides to rescind Obama's rules, his administration will have to go through the same notice and public comment procedures that new rules require. That process can take years, and it's resource-intensive.
"You've got to go through a rulemaking process," Adler said. "You've got to acknowledge that you're changing your opinion. And you've got to explain why your new decision is reasonable."
Vermont Law School professor Pat Parenteau said those opinions mean that Trump can attempt to take sweeping actions in his early days in office, but they may not hold up in court.
"They can create chaos," he said. "But if they want to prevail in court in repealing rules, it'll be a steep climb."
Other obstacles
With some major Obama EPA rules, Trump would likely face pushback from industry. Utilities, for example, have nearly completed implementation of the Obama administration's landmark 2012 air standards for mercury and other hazardous air pollution — a rule that was heavily litigated.
Thomas Lorenzen, a former Justice Department environmental attorney, said there could also be a move against Obama's 70-parts-per-billion ozone standard finalized last fall.
"You clearly have an opportunity here to pull back on that," said Lorenzen, who now works for the firm Crowell & Moring. "But I could see some in industry, who have already made the investments in those scrubbers and other technologies, saying, 'That's unfair to us.'"
New administrations also run into skeptical judges when they don't fully justify policy changes, Adler said.
For example, the origins of Obama's mercury rule actually date back to the Clinton administration.
In 2000, Clinton's EPA concluded that it was "appropriate and necessary" to regulate emissions of mercury, arsenic, cadmium and other pollutants — a threshold determination under the Clean Air Act that began the rulemaking process.
Bush's administration, however, reversed that decision in 2005. A court then overturned that change when environmentalists sued.
Obama's rule came after his administration reinstated the "appropriate and necessary" finding.
"What tends to get administrations in trouble is when they try to take shortcuts," Adler said, referencing the Bush mercury rule reversal. "That's what leads to situations where courts say you can't do that."
All of those precedents suggest that any effort by Trump's EPA to undo Obama policies on everything from air rules to endangered species listings to grazing regulations would be complicated.
"This doesn't mean you can't do it," Lorenzen said. "But there are complexities that I think people aren't really thinking about."
Twitter: @GreenwireJeremy Email: jjacobs@eenews.net
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