Here's a provocative thought for those who accuse the energy utilities of profiteer-ing at the expense of hard- pressed consumers. If gas and electricity prices were still regulated, as they used to be and as some politicians believe they should again, the regulator would in all probability have allowed even bigger prices increases than the ones that are now being implemented.
Britain faces a massive programme of energy investment, made all the more burdensome by the Government's environmental targets. The renewable and nuclear programmes promise to be particularly expensive. The existence of competition in the provision of gas and electricity may have delivered a better result for the consumer than the regulator would have done, as some companies seem willing to sustain poor returns for a while to gain market share.
Small wonder that some utilities are so resistant to the Government's proposed levy to help alleviate energy poverty. The demands being placed on them are already extreme. The real culprit in the present row about high energy prices is not profiteering utilities, but the Government's abject failure until it was too late to recognise the massive investment programme faced by the industry to deliver energy security and environmental goals.
The Government simply buried its head in the sand and hoped the prospect of steeply rising fuel bills would go away. If it now whacks the industry for a windfall tax, having failed to persuade utilities to cough up the money voluntarily, it will only provoke higher bills still.
Thursday, 4 September 2008
Recessionary forces are bringing the oil price back to reality, despite China
Thursday, 4 September 2008
The oil price has taken longer to start falling back to earth than any of us who have long believed commodities to be the next big investment bubble would have thought, but finally the process seems to be under way. Since the peak a couple of months back, the price has already fallen some 25 per cent.
Not that we in Britain are enjoying the benefits of this phenomenon. Oil is universally priced in dollars – one of the reasons the price rose so high is that oil was seen by traders as a hedge against the collapsing dollar. The fall in the pound against the dollar that has occurred over the past few months has therefore cancelled out most of the effect. In sterling terms, we are still paying nearly as much for our oil as we were when the price was above $130 a barrel.
All the same, things are not quite as bad as they were. How low might the price go? One thing seems clear. Despite the now global nature of the downturn, it's not going to go back to previous cyclical lows. In previous cycles, new investment in capacity prompted by high oil prices has tended to come on stream just as demand begins to slow, compounding the subsequent collapse in prices.
What makes things very different this time around is the new ingredient of Chinese and Indian demand, which, even if it slows in the short to medium term, must further out continue to accelerate.
For these fast industrialising societies, the alternatives to hydrocarbons are still very limited, and even where they do exist they tend to have a higher marginal cost than oil even at present elevated prices. Most of the world's cheap reserves of oil are already being tapped. The much higher costs of developing new sources of supply have to be paid for somehow or other.
Even so, as the world economy slows, production and supply may for the first time in years be starting to outstrip demand. This may be only a temporary phenomenon, which will reverse if the Asian supertanker manages to steam through the economic woes afflicting the developed world. But for the time being, if there is more of the black stuff being produced than we actually want to use, then logically the price must fall, whatever the longer-term fundamentals. Already some producer nations, both Opec and non-Opec, are talking about cuts to production to support the price above $100 a barrel.
Neither Hurricane Gustav, which in any case managed to inflict only minor damage on Gulf of Mexico production, nor reports of a fire at a key Middle Eastern installation, have managed to halt the slide in the oil price as economic worries gain the upper hand.
The oil price is not alone. Virtually all commodity prices have been on the slide in the past few months. We must assume that the determination of the developing nations to achieve Western standards of living will put a floor under these prices which is much higher than previous cyclical downturns. Even so, prices may slip quite a bit further than commonly assumed.
There has been extreme speculative activity in these markets as still buoyant levels of worldwide liquidity, burnt by the experience of the sub-prime meltdown, has sought out high-yielding alternative homes. It seems that these days there are no safe havens left, or none that provide a decent return, in any case.
The oil price has taken longer to start falling back to earth than any of us who have long believed commodities to be the next big investment bubble would have thought, but finally the process seems to be under way. Since the peak a couple of months back, the price has already fallen some 25 per cent.
Not that we in Britain are enjoying the benefits of this phenomenon. Oil is universally priced in dollars – one of the reasons the price rose so high is that oil was seen by traders as a hedge against the collapsing dollar. The fall in the pound against the dollar that has occurred over the past few months has therefore cancelled out most of the effect. In sterling terms, we are still paying nearly as much for our oil as we were when the price was above $130 a barrel.
All the same, things are not quite as bad as they were. How low might the price go? One thing seems clear. Despite the now global nature of the downturn, it's not going to go back to previous cyclical lows. In previous cycles, new investment in capacity prompted by high oil prices has tended to come on stream just as demand begins to slow, compounding the subsequent collapse in prices.
What makes things very different this time around is the new ingredient of Chinese and Indian demand, which, even if it slows in the short to medium term, must further out continue to accelerate.
For these fast industrialising societies, the alternatives to hydrocarbons are still very limited, and even where they do exist they tend to have a higher marginal cost than oil even at present elevated prices. Most of the world's cheap reserves of oil are already being tapped. The much higher costs of developing new sources of supply have to be paid for somehow or other.
Even so, as the world economy slows, production and supply may for the first time in years be starting to outstrip demand. This may be only a temporary phenomenon, which will reverse if the Asian supertanker manages to steam through the economic woes afflicting the developed world. But for the time being, if there is more of the black stuff being produced than we actually want to use, then logically the price must fall, whatever the longer-term fundamentals. Already some producer nations, both Opec and non-Opec, are talking about cuts to production to support the price above $100 a barrel.
Neither Hurricane Gustav, which in any case managed to inflict only minor damage on Gulf of Mexico production, nor reports of a fire at a key Middle Eastern installation, have managed to halt the slide in the oil price as economic worries gain the upper hand.
The oil price is not alone. Virtually all commodity prices have been on the slide in the past few months. We must assume that the determination of the developing nations to achieve Western standards of living will put a floor under these prices which is much higher than previous cyclical downturns. Even so, prices may slip quite a bit further than commonly assumed.
There has been extreme speculative activity in these markets as still buoyant levels of worldwide liquidity, burnt by the experience of the sub-prime meltdown, has sought out high-yielding alternative homes. It seems that these days there are no safe havens left, or none that provide a decent return, in any case.
Gordon Brown forced to abandon fuel aid plan after EU ruling over pollution permits
The Times
September 4, 2008
Siobhan Kennedy
Gordon Brown’s plan to help families struggling with rising fuel bills was in tatters last night after a scheme to make energy companies pay more for pollution permits was dismissed as unworkable, The Times has learnt.
The Prime Minister had hoped the scheme would raise about £500 million, which could be used to help to fund fuel vouchers for vulnerable families faced with big increases in gas and electricity bills this winter.
The initiative was expected to form the centrepiece of Mr Brown’s second big effort to restore his political fortunes after a lukewarm response to his housing measures this week.
But The Times understands that those plans have now been scrapped after senior government figures were told that Britain would not be allowed to increase the number of emissions permits it plans to sell under EU regulations.
“The EU have said that they are not prepared to reopen the book on that,” one source familiar with the negotiations said.
Initially, the permits were given away but ministers announced proposals in March to auction 7 per cent of them – a measure that could raise £2 billion over four years. The plan had been to increase that figure to 10 per cent, the maximum amount under EU rules, for an extra £500 million.
Ministers had already committed to 7 per cent this year, however, so it was deemed too late for them to change their minds, only two months before the auctions are due to begin. “It would be very tricky,” one government source said.
The collapse of the scheme will be a blow to Mr Brown and will no doubt renew pressure on him to impose a windfall tax on energy companies’ profits. Already about 90 Labour MPs have called on the Prime Minister to impose the tax.
Mr Brown is reluctant to do so because he believes that the energy companies will simply pass on the cost to consumers.
The Prime Minister is also under pressure from the Chancellor, Alistair Darling, and John Hutton, the Business Secretary, who have said that the levy would damage relations with the energy companies at precisely the time government is relying on them to help to fund Britain’s £100 billion investment in renewables.
Negotiations with the “big six” energy companies: Centrica, which owns British Gas, EDF, of France, E.ON, of Germany, and Scottish-Power, Scottish and Southern Energy and npower, have been going on all week. The fuel package was to be announced yesterday, but this has been put back to early next week.
“Things have moved up and down and from side to side,” a source at one of the “big six” said.
Mr Brown is refocusing efforts on expanding measures to help families to make homes more energy efficient as a way of cutting bills. He wants energy companies to commit to more money under the carbon emissions reduction target (Cert) scheme, to which companies have pledged £900 million a year for the next three years.
It is thought Mr Brown will increase that total by about 30 per cent, or £270 million, and the extra funding will be used to help the most needy households. As well as the “big six” companies, which both generate and supply energy, Mr Brown wants to include generation-only groups, such as Drax and International Power, which have benefited in the past from the free pollution permits.
Jeremy Nicholson, the director of the Energy Intensive Users Group, said that energy companies would be relieved that the sale of emissions permits was off. Consumers would want reassurances, though, that the scheme “was a genuine net benefit to consumers paid for out of the windfall profit of the energy companies, not simply a cross-subsidy for the vulnerable paid for by other consumers, as is the case with Cert at the moment”.
September 4, 2008
Siobhan Kennedy
Gordon Brown’s plan to help families struggling with rising fuel bills was in tatters last night after a scheme to make energy companies pay more for pollution permits was dismissed as unworkable, The Times has learnt.
The Prime Minister had hoped the scheme would raise about £500 million, which could be used to help to fund fuel vouchers for vulnerable families faced with big increases in gas and electricity bills this winter.
The initiative was expected to form the centrepiece of Mr Brown’s second big effort to restore his political fortunes after a lukewarm response to his housing measures this week.
But The Times understands that those plans have now been scrapped after senior government figures were told that Britain would not be allowed to increase the number of emissions permits it plans to sell under EU regulations.
“The EU have said that they are not prepared to reopen the book on that,” one source familiar with the negotiations said.
Initially, the permits were given away but ministers announced proposals in March to auction 7 per cent of them – a measure that could raise £2 billion over four years. The plan had been to increase that figure to 10 per cent, the maximum amount under EU rules, for an extra £500 million.
Ministers had already committed to 7 per cent this year, however, so it was deemed too late for them to change their minds, only two months before the auctions are due to begin. “It would be very tricky,” one government source said.
The collapse of the scheme will be a blow to Mr Brown and will no doubt renew pressure on him to impose a windfall tax on energy companies’ profits. Already about 90 Labour MPs have called on the Prime Minister to impose the tax.
Mr Brown is reluctant to do so because he believes that the energy companies will simply pass on the cost to consumers.
The Prime Minister is also under pressure from the Chancellor, Alistair Darling, and John Hutton, the Business Secretary, who have said that the levy would damage relations with the energy companies at precisely the time government is relying on them to help to fund Britain’s £100 billion investment in renewables.
Negotiations with the “big six” energy companies: Centrica, which owns British Gas, EDF, of France, E.ON, of Germany, and Scottish-Power, Scottish and Southern Energy and npower, have been going on all week. The fuel package was to be announced yesterday, but this has been put back to early next week.
“Things have moved up and down and from side to side,” a source at one of the “big six” said.
Mr Brown is refocusing efforts on expanding measures to help families to make homes more energy efficient as a way of cutting bills. He wants energy companies to commit to more money under the carbon emissions reduction target (Cert) scheme, to which companies have pledged £900 million a year for the next three years.
It is thought Mr Brown will increase that total by about 30 per cent, or £270 million, and the extra funding will be used to help the most needy households. As well as the “big six” companies, which both generate and supply energy, Mr Brown wants to include generation-only groups, such as Drax and International Power, which have benefited in the past from the free pollution permits.
Jeremy Nicholson, the director of the Energy Intensive Users Group, said that energy companies would be relieved that the sale of emissions permits was off. Consumers would want reassurances, though, that the scheme “was a genuine net benefit to consumers paid for out of the windfall profit of the energy companies, not simply a cross-subsidy for the vulnerable paid for by other consumers, as is the case with Cert at the moment”.
Investors blow cool on energy
By Rachel Morarjee
Published: September 4 2008 03:00
Renewable energy stocks led a broad retreat among European equities yesterday as investors unwound positions that hedged against the rising price of oil. Weak eurozone growth figures also knocked consumers stocks.
Norwegian solar industry bellwether Renewable Energy tumbled 8.2 per cent to NKr145.50, Germany's Q-Cells slipped 4.9 per cent to €63.84 and peer German Solarworld lost 5.6 per cent to €32.83. Danish windpower company Vestas Wind shed 4.5 per cent to DKr644.
Oil stocks lost ground. Norway's StatoilHydro , which was added to Goldman's "conviction buy" list, dropped 0.5 per cent to NKr152.30, Austria's OMV lost 2.2 per cent to €41.26, France's Total fell 2.3 per cent to €46.27 and Portugal's Galp Energia shed 1.9 per cent to €12.63.
Published: September 4 2008 03:00
Renewable energy stocks led a broad retreat among European equities yesterday as investors unwound positions that hedged against the rising price of oil. Weak eurozone growth figures also knocked consumers stocks.
Norwegian solar industry bellwether Renewable Energy tumbled 8.2 per cent to NKr145.50, Germany's Q-Cells slipped 4.9 per cent to €63.84 and peer German Solarworld lost 5.6 per cent to €32.83. Danish windpower company Vestas Wind shed 4.5 per cent to DKr644.
Oil stocks lost ground. Norway's StatoilHydro , which was added to Goldman's "conviction buy" list, dropped 0.5 per cent to NKr152.30, Austria's OMV lost 2.2 per cent to €41.26, France's Total fell 2.3 per cent to €46.27 and Portugal's Galp Energia shed 1.9 per cent to €12.63.
ExxonMobil to contest ban on ad for liquefied natural gas
John Plunkett
guardian.co.uk,
Wednesday September 03 2008 07:19 BST
US oil giant ExxonMobil is standing by a TV ad suggesting that liquefied natural gas was "one of the world's cleanest fuels" and threatening to appeal against a ban by the UK advertising watchdog.
ExxonMobil said the ad was "accurate and truthful", after the Advertising Standards Authority today upheld four complaints from viewers saying the ad misleadingly implied that liquefied natural gas was environmentally friendly when in fact it caused significant carbon emissions.
The TV campaign featured three employees talking about the energy challenges facing the world today, ending with the message: "ExxonMobil ... Taking on the world's toughest energy challenges."
In its ruling, the ASA said viewers would not see the claim about liquefied natural gas as a comparison with other fossil fuels, but with all the energy sources listed in the advert, including wind and solar power.
The ASA added that the ad should not be shown again in its current form.
However, ExxonMobil is disputing the ASA's ruling, saying the ad "does not make any claims about the environmental characteristics of liquefied natural gas - it simply makes the point that LNG will play an important role in delivering energy supplies to meet growing world demand.
"This is widely accepted by international energy experts," the company added.
Nick Thomas, the corporate affairs director for ExxonMobil subsidiary Esso UK, said the company was "very disappointed" with the ASA's decision.
"Our advertisement accurately stated that natural gas is one of the world's cleanest fuels, that liquefied natural gas will play an important role in delivering new energy supplies, and that all forms of energy will be needed to meet growing demand," Thomas added.
· To contact the MediaGuardian news desk email editor@mediaguardian.co.uk or phone 020 7239 9857. For all other inquiries please call the main Guardian switchboard on 020 7278 2332.
guardian.co.uk,
Wednesday September 03 2008 07:19 BST
US oil giant ExxonMobil is standing by a TV ad suggesting that liquefied natural gas was "one of the world's cleanest fuels" and threatening to appeal against a ban by the UK advertising watchdog.
ExxonMobil said the ad was "accurate and truthful", after the Advertising Standards Authority today upheld four complaints from viewers saying the ad misleadingly implied that liquefied natural gas was environmentally friendly when in fact it caused significant carbon emissions.
The TV campaign featured three employees talking about the energy challenges facing the world today, ending with the message: "ExxonMobil ... Taking on the world's toughest energy challenges."
In its ruling, the ASA said viewers would not see the claim about liquefied natural gas as a comparison with other fossil fuels, but with all the energy sources listed in the advert, including wind and solar power.
The ASA added that the ad should not be shown again in its current form.
However, ExxonMobil is disputing the ASA's ruling, saying the ad "does not make any claims about the environmental characteristics of liquefied natural gas - it simply makes the point that LNG will play an important role in delivering energy supplies to meet growing world demand.
"This is widely accepted by international energy experts," the company added.
Nick Thomas, the corporate affairs director for ExxonMobil subsidiary Esso UK, said the company was "very disappointed" with the ASA's decision.
"Our advertisement accurately stated that natural gas is one of the world's cleanest fuels, that liquefied natural gas will play an important role in delivering new energy supplies, and that all forms of energy will be needed to meet growing demand," Thomas added.
· To contact the MediaGuardian news desk email editor@mediaguardian.co.uk or phone 020 7239 9857. For all other inquiries please call the main Guardian switchboard on 020 7278 2332.
Chrysler circulating plug-in hybrids to dealers
The Associated Press
Published: September 3, 2008
NEW YORK: Chrysler LLC has been demonstrating plug-in hybrid prototypes to some dealers that are further developed than those previously shown by the automaker, the company's president said.
In comments Tuesday at the Motor Press Guild in Los Angeles, Chrysler Vice Chairman and President Jim Press said the vehicles are being developed by Chrysler's Envi unit, which the automaker created last year to create electric vehicles and other advanced propulsion technologies.
Chrysler spokesman Rick Deneau confirmed the comments and said the prototypes are further along than the concepts the company unveiled in January.
"We are excited about the Envi organization, and we continue to work toward electric vehicles," Deneau said in an interview Wednesday.
Press said the vehicles can reach 60 mph (100 kph) in less than four seconds and have a range of at least 300 miles (480 kilometers), The Los Angeles Times reported. He said the technology would be useful in off-road vehicles and might be used in the Jeep brand, the Times reported.
Auburn Hills, Michigan-based Chrysler, along with General Motors Corp. and Ford Motor Co., have been working frantically to develop new hybrid electric powertrains as consumers shun the automakers' traditionally popular large vehicles.
In January, Chrysler showed three concept cars at the North American International Auto Show in Detroit featuring pure electric and hybrid electric powertrains. The company has not provided a timeframe for development of the Chrysler ecoVoyager, the Dodge Zeo and the Jeep Renegade, but spokesman Nick Capa said Wednesday the company would have Envi products on the road within three to five years.
Chrysler also is working to develop hybrid and diesel versions of its top-selling Dodge Ram truck. It has also invested more than $3 billion in investing in new powertrains, including a fuel-saving engine called the Phoenix that it expects to arrive in the 2010 model year.
___
AP Auto Writer Tom Krisher in Detroit contributed to this report.
Published: September 3, 2008
NEW YORK: Chrysler LLC has been demonstrating plug-in hybrid prototypes to some dealers that are further developed than those previously shown by the automaker, the company's president said.
In comments Tuesday at the Motor Press Guild in Los Angeles, Chrysler Vice Chairman and President Jim Press said the vehicles are being developed by Chrysler's Envi unit, which the automaker created last year to create electric vehicles and other advanced propulsion technologies.
Chrysler spokesman Rick Deneau confirmed the comments and said the prototypes are further along than the concepts the company unveiled in January.
"We are excited about the Envi organization, and we continue to work toward electric vehicles," Deneau said in an interview Wednesday.
Press said the vehicles can reach 60 mph (100 kph) in less than four seconds and have a range of at least 300 miles (480 kilometers), The Los Angeles Times reported. He said the technology would be useful in off-road vehicles and might be used in the Jeep brand, the Times reported.
Auburn Hills, Michigan-based Chrysler, along with General Motors Corp. and Ford Motor Co., have been working frantically to develop new hybrid electric powertrains as consumers shun the automakers' traditionally popular large vehicles.
In January, Chrysler showed three concept cars at the North American International Auto Show in Detroit featuring pure electric and hybrid electric powertrains. The company has not provided a timeframe for development of the Chrysler ecoVoyager, the Dodge Zeo and the Jeep Renegade, but spokesman Nick Capa said Wednesday the company would have Envi products on the road within three to five years.
Chrysler also is working to develop hybrid and diesel versions of its top-selling Dodge Ram truck. It has also invested more than $3 billion in investing in new powertrains, including a fuel-saving engine called the Phoenix that it expects to arrive in the 2010 model year.
___
AP Auto Writer Tom Krisher in Detroit contributed to this report.
Greenhouse scheme could see crops produced in the desert
By Aislinn Simpson
Last Updated: 6:01pm BST 03/09/2008
Vast swathes of the desert could become areas of lush vegetation and crop cultivation under an ambitious scheme hatched by a team of architects and engineers.
Seawater Greenhouse demonstration plant in Oman
Last Updated: 6:01pm BST 03/09/2008
Vast swathes of the desert could become areas of lush vegetation and crop cultivation under an ambitious scheme hatched by a team of architects and engineers.
Seawater Greenhouse demonstration plant in Oman
The plan would see greenhouses and solar panels spread for miles along the sand and its developers claim the technology is not only sustainable but beneficial to the environment.
The panels would harness sunlight to make electricity, while the excess heat they produced would be used to evaporate seawater to pump through the greenhouses as damp, cool air before being collected as vapour to become clean, fresh water.
Those at the helm of the Sahara Forest Project - which include former Eden Project architects - claim it could provide a solution to the global water shortage that is threatened by population growth and climate change.
At present, agriculture uses around 70 per cent of the world's water, and much is generated from underground wells, which depletes the water table.
Charlie Paton, a member of Seawater Greenhouse, said demonstration plants in Tenerife, Oman and the United Arab Emirates are already producing lettuces, cucumbers, peppers and tomatoes, and other countries are now expressing interest in them.
"The crops sitting in this slightly steamy, humid condition can grow fantastically well," he said.
The two technologies of the Seawater Greenhouse and the solar panels complement each other since the panels heat the water used in the greenhouses, a fresh version of which is then used to clean the solar panel mirrors and keep the electricity-generating turbines functioning.
The Sahara Forest Project team estimate that building 20 hectares (50 acres) of the technology would cost £65 million.
Mr Paton said the system produces more than five times the amount needed in the greenhouses which could be used to cultivate other crops outside.
"In places like Oman, they've effectively sterilised large areas of land by using groundwater that's become increasingly saline," he said. "The beauty of the Sahara Forest scheme is that you can reverse that process and turn barren land into biologically productive land."
Neil Crumpton, an energy specialist at Friends of the Earth, said the potential of the scheme was huge and called on governments to consider its benefits rather than focusing on "dangerous nuclear power".
Brown must halt new coal power stations, scientist tells court
John Vidal and agencies
The Guardian,
Thursday September 4 2008
One of the world's leading climate scientists yesterday called for an immediate halt to the building of all coal-fired power stations to prevent catastrophic global warming.
James Hansen, a former White House adviser and Al Gore's science adviser, giving evidence in a British court, said sticking to a "business as usual" approach would see the planet passing its climate change tipping point.
Hansen was giving evidence in the case of six Greenpeace supporters charged with causing £30,000 of criminal damage when scaling the 200-metre Kingsnorth power station chimney in Kent last October.
The group admit causing the damage when painting the name "Gordon" on the chimney but argue that they were acting legitimately to prevent widespread climate change. The prosecution claims the group went beyond the bounds of acceptable protest.
Asked what his message to Gordon Brown would be, Hansen said: "I would ask him to make a clear public statement for a moratorium on new coal-fired power plants that do not capture CO2. There is enough potential in renewables for our energy requirements. The moratorium should be immediate. We do not need new coal-fired power plants. They all need to be phased out over the next 20 years."
Hansen, director of the Nasa Goddard Institute for Space Studies and a professor at Columbia University, said the man-made rate of change of atmospheric CO2 was 10,000 times greater than natural.
He warned that 1m species would be made extinct because of climate change and calculated that Kingsnorth, which emits 20,000 tonnes of CO2 a day, would be responsible for 400 of these. He told the jury that sea levels were rising at a rate of 3cm per decade, twice as much as the rate in the 20th century. "[If nothing is done] we would be handing our children, our grandchildren and the unborn, a situation that would be out of their control".
He said he agreed with Al Gore's statement that more people should be chaining themselves to coal-powered stations.
Tackling the issue of why one UK plant was so important, when China and India were building large numbers of plants, he said the UK, US and Germany were most responsible for today's climate change on a per capita basis. He said: "We have to get the rest of the world to cooperate but somebody has to take the lead."
The case continues.
The Guardian,
Thursday September 4 2008
One of the world's leading climate scientists yesterday called for an immediate halt to the building of all coal-fired power stations to prevent catastrophic global warming.
James Hansen, a former White House adviser and Al Gore's science adviser, giving evidence in a British court, said sticking to a "business as usual" approach would see the planet passing its climate change tipping point.
Hansen was giving evidence in the case of six Greenpeace supporters charged with causing £30,000 of criminal damage when scaling the 200-metre Kingsnorth power station chimney in Kent last October.
The group admit causing the damage when painting the name "Gordon" on the chimney but argue that they were acting legitimately to prevent widespread climate change. The prosecution claims the group went beyond the bounds of acceptable protest.
Asked what his message to Gordon Brown would be, Hansen said: "I would ask him to make a clear public statement for a moratorium on new coal-fired power plants that do not capture CO2. There is enough potential in renewables for our energy requirements. The moratorium should be immediate. We do not need new coal-fired power plants. They all need to be phased out over the next 20 years."
Hansen, director of the Nasa Goddard Institute for Space Studies and a professor at Columbia University, said the man-made rate of change of atmospheric CO2 was 10,000 times greater than natural.
He warned that 1m species would be made extinct because of climate change and calculated that Kingsnorth, which emits 20,000 tonnes of CO2 a day, would be responsible for 400 of these. He told the jury that sea levels were rising at a rate of 3cm per decade, twice as much as the rate in the 20th century. "[If nothing is done] we would be handing our children, our grandchildren and the unborn, a situation that would be out of their control".
He said he agreed with Al Gore's statement that more people should be chaining themselves to coal-powered stations.
Tackling the issue of why one UK plant was so important, when China and India were building large numbers of plants, he said the UK, US and Germany were most responsible for today's climate change on a per capita basis. He said: "We have to get the rest of the world to cooperate but somebody has to take the lead."
The case continues.
Solar power companies face end of Spanish subsidies
Reuters
Published: September 3, 2008
VALENCIA, Spain: Growth in solar power installations in Italy may not be enough to offset shrinking global demand, Italian industry experts say.
Part of that reduced demand could come in Spain, where solar power companies face a drastic slowdown next year because the government is preparing to sharply reduce subsidies.
Some companies are now pinning their hopes on the Italian market, but manufacturers and government officials in Italy are cautious over growth prospects.
Gerardo Montanino, operations director at Gestore dei Servizi Elettrici, the agency overseeing the rates paid for electricity fed into the grid, said he expected modest growth.
The agency forecasts that no more than 450 megawatts of solar power will be installed in Italy by the end of next year, and Montanino told an energy conference here that a 1,200-megawatt cap on Italian subsidies would probably be reached in 2012. A megawatt, or MW, is equal to a million watts.
Italian manufacturers said they faced considerable bureaucratic hurdles. Angelo Nogara, managing director of one of them, Solkraft Italia, said many Italian solar plants had to wait a year after being built to be connected to the grid. He also cited the case of a local authority's asking for a study on the acoustic impact of a solar plant, which is silent in its operation.
"I hope we can have 1,000 MW, but I am not sure because of bureaucratic problems," said Nogara, who is also international affairs officer at Assosolare, an industry group.
Generous subsidies in Spain will expire this month after the subsidies encouraged the installation of 1,000 megawatts in new solar plants this year. That has made Spain the world's biggest market after Germany, where the government expects 1,350 megawatts of new solar plants to go online this year.
Now the Spanish government wants no more than 300 megawatts of new plants to be eligible in 2009 for so-called feed-in tariffs under which producers are paid at fixed rates for electricity generated from renewable resources and are designed to make solar power competitive. Those tariffs will be reduced.
David Wortmann, head of renewable energy at the German government investment agency, said he was cautious about growth prospects in Germany. The country has no cap on feed-in tariffs, but they are set to slide and will depend on how much is installed.
"It is adventurous to make predictions, but we could say around 1,500 MW next year," Wortmann said at the conference.
That would keep Germany as the world leader but implies growth of just 150 megawatts, or not nearly enough to offset an expected drop of 700 megawatts in Spanish demand.
On a brighter note, an investment banking firm, Piper Jaffray, said it expected strong growth in France in 2009 and 2010, partly because of an expected decline in the price of solar panels and partly because of subsidies introduced in 2006 making themselves felt.
"'We believe France should be a key driver for solar together with Italy during 2009-2010," the firm said in a report. Piper Jaffray said it believed that France would add 500 megawatts of capacity in both 2009 and 2010. France has just 50 megawatts of solar power capacity now.
Some solar power companies said they were still pinning hopes on a swift expansion in Italy next year, from 170 megawatts currently installed to 1,200 megawatts, the level where the government said it will cap feed-in tariffs.
"That sort of growth you could almost say it's compensating entirely for the slowdown in sales into Spain," said Steve Chan, chief strategy officer at Suntech Power Holdings, a Chinese manufacturer of solar panels.
Spain accounted for 40 percent of Suntech's second-quarter sales this year.
Analysts estimate that Spain will account for 30 percent of sales for another solar panel maker, SunPower, which is based San Jose, California. The company's chief executive, Thomas Werner, said he was confident that sales in Italy would make up for the sharp drop in the Spanish market.
"We are able to replicate our entire Spanish business in Italy, year-on-year," Werner said. "We have a presence in Italy already."
Chan said he also saw opportunities in Germany, where his company had not been able to meet demand this year because of the high volume of its sales in Spain.
Published: September 3, 2008
VALENCIA, Spain: Growth in solar power installations in Italy may not be enough to offset shrinking global demand, Italian industry experts say.
Part of that reduced demand could come in Spain, where solar power companies face a drastic slowdown next year because the government is preparing to sharply reduce subsidies.
Some companies are now pinning their hopes on the Italian market, but manufacturers and government officials in Italy are cautious over growth prospects.
Gerardo Montanino, operations director at Gestore dei Servizi Elettrici, the agency overseeing the rates paid for electricity fed into the grid, said he expected modest growth.
The agency forecasts that no more than 450 megawatts of solar power will be installed in Italy by the end of next year, and Montanino told an energy conference here that a 1,200-megawatt cap on Italian subsidies would probably be reached in 2012. A megawatt, or MW, is equal to a million watts.
Italian manufacturers said they faced considerable bureaucratic hurdles. Angelo Nogara, managing director of one of them, Solkraft Italia, said many Italian solar plants had to wait a year after being built to be connected to the grid. He also cited the case of a local authority's asking for a study on the acoustic impact of a solar plant, which is silent in its operation.
"I hope we can have 1,000 MW, but I am not sure because of bureaucratic problems," said Nogara, who is also international affairs officer at Assosolare, an industry group.
Generous subsidies in Spain will expire this month after the subsidies encouraged the installation of 1,000 megawatts in new solar plants this year. That has made Spain the world's biggest market after Germany, where the government expects 1,350 megawatts of new solar plants to go online this year.
Now the Spanish government wants no more than 300 megawatts of new plants to be eligible in 2009 for so-called feed-in tariffs under which producers are paid at fixed rates for electricity generated from renewable resources and are designed to make solar power competitive. Those tariffs will be reduced.
David Wortmann, head of renewable energy at the German government investment agency, said he was cautious about growth prospects in Germany. The country has no cap on feed-in tariffs, but they are set to slide and will depend on how much is installed.
"It is adventurous to make predictions, but we could say around 1,500 MW next year," Wortmann said at the conference.
That would keep Germany as the world leader but implies growth of just 150 megawatts, or not nearly enough to offset an expected drop of 700 megawatts in Spanish demand.
On a brighter note, an investment banking firm, Piper Jaffray, said it expected strong growth in France in 2009 and 2010, partly because of an expected decline in the price of solar panels and partly because of subsidies introduced in 2006 making themselves felt.
"'We believe France should be a key driver for solar together with Italy during 2009-2010," the firm said in a report. Piper Jaffray said it believed that France would add 500 megawatts of capacity in both 2009 and 2010. France has just 50 megawatts of solar power capacity now.
Some solar power companies said they were still pinning hopes on a swift expansion in Italy next year, from 170 megawatts currently installed to 1,200 megawatts, the level where the government said it will cap feed-in tariffs.
"That sort of growth you could almost say it's compensating entirely for the slowdown in sales into Spain," said Steve Chan, chief strategy officer at Suntech Power Holdings, a Chinese manufacturer of solar panels.
Spain accounted for 40 percent of Suntech's second-quarter sales this year.
Analysts estimate that Spain will account for 30 percent of sales for another solar panel maker, SunPower, which is based San Jose, California. The company's chief executive, Thomas Werner, said he was confident that sales in Italy would make up for the sharp drop in the Spanish market.
"We are able to replicate our entire Spanish business in Italy, year-on-year," Werner said. "We have a presence in Italy already."
Chan said he also saw opportunities in Germany, where his company had not been able to meet demand this year because of the high volume of its sales in Spain.
Assessing the value of small wind turbines
By Kate Galbraith
Published: September 4, 2008
SAN FRANCISCO: With the California blackouts of 2001 still a painful memory, Chris Beaudoin wants to generate some of his own electricity. He marveled the other day at how close he is to that goal, gazing at two new wind turbines atop his garage roof. They will soon be hooked to the power grid.
Published: September 4, 2008
SAN FRANCISCO: With the California blackouts of 2001 still a painful memory, Chris Beaudoin wants to generate some of his own electricity. He marveled the other day at how close he is to that goal, gazing at two new wind turbines atop his garage roof. They will soon be hooked to the power grid.
"I don't care about how much it costs," said Beaudoin, a flight attendant with United Airlines. That would be $5,000 a turbine, an expense Beaudoin is unlikely to recoup in electricity savings anytime soon.
No matter. After shoring up the roof and installing the two 300-pound, or 135-kilogram, steel-poled turbines in January, Beaudoin found himself at the leading edge of a trend in renewable energy.
Fascination with wind turbines small enough to mount on a roof is spreading from coast to coast in the United States. Mayor Michael Bloomberg of New York last month proposed dotting the city with them. Small turbines have already appeared at the Brooklyn Navy Yard in New York, atop an office building at Logan International Airport in Boston, and even on a utility pole in the small New Hampshire town of Hampton.
These tiny turbines generate so little electricity that some energy experts are not sure the economics will ever make sense.
By contrast, the turbines being installed at wind farms are getting ever larger and more powerful, lowering the unit cost of electricity to the point that they are becoming competitive with electricity generated from natural gas.
The spread of the big turbines and a general fascination with all things green are helping to spur interest in rooftop microturbines, creating a movement somewhere on the border between a hobby and an environmental fashion statement.
Some people have long stuck relatively modest turbines on towers in the countryside. Those are capable of generating enough electricity on a windy day to provide a fair portion of a home's needs and can eventually pay for themselves. The new rooftop turbines are much smaller, however, and few statistics are available yet on their performance.
Beaudoin hopes to get 30 percent of his electricity from the turbines on a windy day, but whether that will happen remains to be seen.
Jay Leno, the host of "The Tonight Show," recently installed a prototype wind turbine (as well as solar panels) atop a garage in Burbank, California, where he works on his car collection. He senses public interest in small-scale wind power that does not have much to do with dollars-and-cents analysis.
"People seem fascinated by the turbines," Leno said. "You go, 'Look! It's spinning!' "
Perched high above a building, wind turbines serve as a far more visible clean-energy credential than solar panels, which are often hard to see. At least a dozen small manufacturers have sprouted up to supply the market, though rooftop turbines still account for only 1 percent or so of the 10,000 small wind turbines that are sold each year in the country, according to Ron Stimmel, an advocate of small wind systems at the American Wind Energy Association.
That number seems poised to grow, given the recent interest.
"We're prebleeding-edge early," said Todd Pelman, founder of Blue Green Pacific, the maker of Beaudoin's turbine. The technology, he conceded, is not yet "something that would be bought at Home Depot."
Pelman has sunk $200,000 of his own money into the start-up, which has just three turbines in operation — Beaudoin's pair, and one above Pelman's own bedroom in a Victorian house in San Francisco.
In accordance with urban sensibilities, many of the new designs are stylish. The six turbines peeping over the edge of a building in the Brooklyn Navy Yard, installed this summer, look as if they are covered with dainty white parasols, a design touch that doubles as a bird shield. The French designer Philippe Starck has plans to introduce an elegant plastic turbine in Europe this fall.
Bloomberg's proposal calls for wind turbines on the city's skyscrapers and bridges, though it is unclear how big they will be and just where they will go.
"It's the Wild West out there in small wind these days," said David Rabkin, director of innovation, strategic partnerships and sustainability at the Museum of Science in Boston. Aided by a $300,000 state grant, the museum plans to put a total of nine turbines, of five types, on its roof by next April as an educational project.
Harvard University also plans to put some atop its Holyoke Center office complex and on a parking garage. Harvard views the experimental installations as "outward symbols of our commitment to renewable energy and sustainability here on campus," said Jim Gray, associate vice president for Harvard real estate services.
In San Francisco, another coastal city with abundant wind, the local government is considering introducing incentives to increase urban wind power.
"You're seeing the birth of a movement," said Jared Blumenfeld, director of the San Francisco Department of Environment, who hopes to put a turbine on his own home. "Ten years from now, you could probably see 2,000 to 3,000 rooftops with wind."
But many experts caution that rooftops, while abundant, are usually poor places to harness the breeze. Not only are cities less windy than the countryside, but the air is choppier because of trees and the variation in heights in buildings. Turbulence can wear down a turbine and make it operate less efficiently. This is particularly problematic for houses with pitched roofs.
"In an urban environment, more times than not you're better off with a solar panel," said Stimmel, of the wind industry association.
A recent British study of wind on home roofs found that turbines generate less power than installers projected because of lower-than-expected wind speeds. Ian Woofenden, a senior editor at Home Power magazine who teaches wind workshops, estimates that electricity from rooftop turbines may cost $1.50 a kilowatt hour or more. (That is enough electricity to run a hair dryer for an hour, roughly.)
By comparison, he said, power from a well-sited, tower-mounted turbine would cost 10 to 50 cents a kilowatt hour, and power from utility-scale wind farms costs less than 10 cents a kilowatt hour.
"Rooftop wind economics are abysmal, since the resource just isn't there," he said in an e-mail message.
Rooftop wind advocates argue that output will turn out to be healthy in windy areas, and they also think that prices for small turbines will come down as the market grows, altering the economics.
The most established company selling rooftop turbines is AeroVironment, a California company better known for making unmanned aerial vehicles. It has installed demonstration projects on about a dozen commercial rooftops, including those at Logan airport and the Brooklyn Navy Yard.
According to Paul Glenney, director of the company's clean energy technology center, the edge of a long, flat roof (above, say, a big-box store or warehouse) can experience up to 40 percent extra wind, much like the stiff breeze at the edge of a cliff.
Demand for AeroVironment's rooftop turbines, which it sells for about $6,500 each, is strong, he said. "We've hidden our Web site very carefully, and yet people find us," Glenney said.
AeroVironment officials say that rooftop turbines at windy sites in states with costly electricity could pay for themselves in four to eight years, but acknowledge that in places with low power prices, the turbines may never recoup their costs.
In May and June, the 20 Logan turbines combined produced just 1,430 kilowatt hours — less than the average home would use over that time. Airport authorities said, however, that the Boston winds pick up in the fall and winter. Leno thinks his turbine has generated about 725 kilowatt hours in six months of operation.
"You can say, 'That's not a lot,' or 'Every bit helps,' " Leno said.
British studies have recently suggested that making and transporting turbines for cities may lead to more carbon dioxide emissions than the turbines save.
A special challenge of urban turbine manufacturers is to make machines with minimal noise and vibration. At Logan, the only complaint has come from a person with an office right under a turbine.
"Basically he said it just sounds like he's in a Stephen King movie — that howling when there's a lot of wind," said Sam Sleiman, director of capital programs at Massport, the agency overseeing the airport project.
But the more common reaction to these small turbines is envy. Reino Niemela, a San Franciscan, has a direct view of Beaudoin's turbines from his backyard.
"I was thinking of doing something like that myself," he said.
India's Suzlon Speeds REpower Takeover
By TOM WRIGHTSeptember 4, 2008;
Suzlon Energy Ltd., the world's fifth-largest wind-turbine manufacturer by sales, is moving ahead of schedule to consolidate its takeover of Germany's REpower Systems AG, a move that will speed the transfer of technology between the two companies.
Suzlon, based in Pune, India, has faced concerns about its technology after blades on 2.1-megawatt turbines sold in the U.S. to Deere & Co. and Edison International's Edison Mission Energy began splitting last year. Customers in India also have complained their turbines don't generate as much power as expected.
In a bid to improve its technology, Suzlon agreed last year to take over Hamburg-based REpower in a deal that valued the German company at $1.7 billion. Analysts applauded the tie-up, which will give Suzlon access to REpower's cutting-edge technology, including blueprints for large offshore wind turbines.
But Suzlon has been unable to draw on REpower's technology because of a strict German corporate law aimed at protecting minority shareholders. The law requires that foreign investors taking over German companies reach a so-called domination agreement before they can transfer technology or profits out of a target company. Such an agreement involves getting 75% of shareholders on board and making a tender offer to buy out minority shareholders.
Suzlon said this week it plans to push for a domination agreement to be concluded in "due course" according to German law. And it is setting up the agreement to be in place faster than originally planned. Under last year's deal, Suzlon was to increase its initial 34% stake in REpower in stages until May next year. But the company also said this week that it has reached a deal to pay Portugal's Martifer SGPS SA €270 million ($392 million) for Martifer's 22% stake in REpower, five months ahead of schedule. That purchase will take Suzlon's overall holding in REpower to around 90%.
Analysts said Suzlon's move was a positive one aimed at assuaging concerns over its technology.
A spokesman for Suzlon, Vivek Kher, said the REpower takeover was driven by a desire to penetrate the European market and get access to large offshore wind turbines, not for other technology.
"Transferring technology or manufacturing REpower products in India were never the objectives of the takeover," Mr. Kher said. "The domination agreement however, will ease all round cooperation between the two companies for the mutual benefit of all stakeholders in both companies."
Write to Tom Wright at tom.wright@wsj.com
Suzlon Energy Ltd., the world's fifth-largest wind-turbine manufacturer by sales, is moving ahead of schedule to consolidate its takeover of Germany's REpower Systems AG, a move that will speed the transfer of technology between the two companies.
Suzlon, based in Pune, India, has faced concerns about its technology after blades on 2.1-megawatt turbines sold in the U.S. to Deere & Co. and Edison International's Edison Mission Energy began splitting last year. Customers in India also have complained their turbines don't generate as much power as expected.
In a bid to improve its technology, Suzlon agreed last year to take over Hamburg-based REpower in a deal that valued the German company at $1.7 billion. Analysts applauded the tie-up, which will give Suzlon access to REpower's cutting-edge technology, including blueprints for large offshore wind turbines.
But Suzlon has been unable to draw on REpower's technology because of a strict German corporate law aimed at protecting minority shareholders. The law requires that foreign investors taking over German companies reach a so-called domination agreement before they can transfer technology or profits out of a target company. Such an agreement involves getting 75% of shareholders on board and making a tender offer to buy out minority shareholders.
Suzlon said this week it plans to push for a domination agreement to be concluded in "due course" according to German law. And it is setting up the agreement to be in place faster than originally planned. Under last year's deal, Suzlon was to increase its initial 34% stake in REpower in stages until May next year. But the company also said this week that it has reached a deal to pay Portugal's Martifer SGPS SA €270 million ($392 million) for Martifer's 22% stake in REpower, five months ahead of schedule. That purchase will take Suzlon's overall holding in REpower to around 90%.
Analysts said Suzlon's move was a positive one aimed at assuaging concerns over its technology.
A spokesman for Suzlon, Vivek Kher, said the REpower takeover was driven by a desire to penetrate the European market and get access to large offshore wind turbines, not for other technology.
"Transferring technology or manufacturing REpower products in India were never the objectives of the takeover," Mr. Kher said. "The domination agreement however, will ease all round cooperation between the two companies for the mutual benefit of all stakeholders in both companies."
Write to Tom Wright at tom.wright@wsj.com
Wind Power May Gain Footing Off Coast of U.S.
Federal Government Prepares to Lease Tracts for Turbines
By JEFFREY BALLSeptember 3, 2008;
Amid a national debate over offshore oil drilling, the federal government is preparing to unleash development of another offshore energy source: wind.
The Interior Department, the agency that handles oil-and-gas leases in U.S. waters, is preparing to lease swaths of the outer continental shelf to companies that want to erect massive wind turbines. With the public-comment period for the proposal scheduled to end Monday, competition is heating up to develop wind projects on the shelf, the same underwater formation largely covered by an oil-drilling ban that has become a contentious issue in the presidential race.
QUESTION OF THE DAY
If you had to choose one, which method of offshore energy production would you support?
The federal program signals the start of a broad push to develop offshore wind energy in the U.S. The country often is dubbed by renewable-energy experts as "the Saudi Arabia of wind" because of its vast, windy expanses, particularly in the Western plains. Now, rising interest in renewable energy is spurring exploration of the ocean, where the winds typically are heavier but the technological hurdles to tapping it are higher. That shift mirrors the oil industry's move to offshore wells decades ago.
The offshore-wind race is centered on the Northeast. In June, an electricity producer and a wind-energy developer in Delaware signed a contract for a project of some 67 turbines to be built about 11.5 miles off the state's coast. Over the next two months, Rhode Island and New Jersey are expected to choose wind-energy developers to work with as the states try to put together offshore projects.
And New York City officials are talking with wind-power developers about erecting turbines on a massive tract of the Atlantic Ocean about 25 miles from Manhattan. Offshore wind power seems likely to be the largest source of renewable energy for the city, says James Gallagher, senior vice president for energy policy for the New York Economic Development Corp. The idea is part of a broader plan by New York Mayor Michael Bloomberg to curb the growth in the city's demand for fossil-fueled energy.
The New York City plan also envisions installing smaller wind turbines atop buildings. But Mr. Gallagher says offshore wind provides a far bigger potential energy source.
These projects would require leasing ocean territory through the Interior Department, because they would be far enough out from the shore that they would sit in federal waters. Industry officials expect it would be three to five years before the first turbines were installed.
The Interior Department's Minerals Management Service expects to finalize its proposed rule governing leasing of offshore acreage for alternative-energy production by the end of the year, clearing the way for development to start soon after. Already, the agency is doing environmental analyses on 10 offshore parcels that it is considering leasing this fall for wind projects. If the agency approves the leases, companies could begin exploring the areas for possible wind-turbine sites.
Wind power is booming in the U.S. That is because of rising fossil-fuel prices, federal renewable-energy tax breaks and mounting opposition to new coal-fired power plants that emit greenhouse gases. Last year, 35% of the electricity-generation capacity added in the U.S. was from wind -- a percentage second only to natural gas, according to the American Wind Energy Association, a trade group.
But wind accounts for only about 1% of total electricity generated in the U.S. And so far, all the wind power in the U.S. is produced onshore. The states that crank out the most -- Texas, followed by California -- boast vast stretches where the wind blows hard and where there is enough land to install hundreds of turbines to catch it.
But the onshore wind industry in the U.S. is beginning to be hampered by a lack of electrical-grid capacity to carry the power from the isolated places where wind typically blows hardest to the population centers that need the juice. Offshore wind provides a potentially big source of energy close to major coastal cities.
That explains why roughly two dozen offshore wind projects are operating in Europe, a place with comparatively little open land. The Northeastern U.S., with similar land constraints, is starting to follow suit.
Big obstacles remain. Wind power is more expensive than fossil-fueled energy. In the U.S., the tax breaks necessary to make it competitive are due to expire Dec. 31. Several proposals to renew the wind-power tax breaks have failed to pass Congress, typically because the bills also included controversial measures to remove existing tax breaks for other industries, notably oil producers. Whether Congress will resolve the dispute and extend the wind-power tax breaks when it returns from its recess is unclear. In the past, it has let the tax credits expire three times, prompting a lull in wind-power construction until the credits later were renewed.
If offshore wind power can fly in the U.S., industry experts say, it is likely to take off in the Northeast. The region has high electricity prices, making it easier for wind-power developers to turn a profit. It has large coastal cities thirsty for more juice. And its offshore territory offers some of the strongest wind in the U.S.
In addition, the outer continental shelf extends out from the Northeast at shallow depths for long distances -- in contrast to the West Coast, where the shelf drops off quickly to great depths. Putting a wind turbine in shallow water is easier and less costly than putting one in deeper water.
And putting wind turbines far out from the coast could assuage opposition from coastal residents who don't want their seaside views obscured -- an issue the oil industry is also facing. Some proposed offshore wind projects have sparked significant opposition, notably one off Cape Cod.
Bluewater Wind, a Hoboken, N.J., company recently bought by Australia's Babcock & Brown Ltd., won the bid to develop the project off Delaware. It is waiting to hear, probably in the next month, whether it won the bid in Rhode Island and is among the companies talking with New York City.
Write to Jeffrey Ball at jeffrey.ball@wsj.com
By JEFFREY BALLSeptember 3, 2008;
Amid a national debate over offshore oil drilling, the federal government is preparing to unleash development of another offshore energy source: wind.
The Interior Department, the agency that handles oil-and-gas leases in U.S. waters, is preparing to lease swaths of the outer continental shelf to companies that want to erect massive wind turbines. With the public-comment period for the proposal scheduled to end Monday, competition is heating up to develop wind projects on the shelf, the same underwater formation largely covered by an oil-drilling ban that has become a contentious issue in the presidential race.
QUESTION OF THE DAY
If you had to choose one, which method of offshore energy production would you support?
The federal program signals the start of a broad push to develop offshore wind energy in the U.S. The country often is dubbed by renewable-energy experts as "the Saudi Arabia of wind" because of its vast, windy expanses, particularly in the Western plains. Now, rising interest in renewable energy is spurring exploration of the ocean, where the winds typically are heavier but the technological hurdles to tapping it are higher. That shift mirrors the oil industry's move to offshore wells decades ago.
The offshore-wind race is centered on the Northeast. In June, an electricity producer and a wind-energy developer in Delaware signed a contract for a project of some 67 turbines to be built about 11.5 miles off the state's coast. Over the next two months, Rhode Island and New Jersey are expected to choose wind-energy developers to work with as the states try to put together offshore projects.
And New York City officials are talking with wind-power developers about erecting turbines on a massive tract of the Atlantic Ocean about 25 miles from Manhattan. Offshore wind power seems likely to be the largest source of renewable energy for the city, says James Gallagher, senior vice president for energy policy for the New York Economic Development Corp. The idea is part of a broader plan by New York Mayor Michael Bloomberg to curb the growth in the city's demand for fossil-fueled energy.
The New York City plan also envisions installing smaller wind turbines atop buildings. But Mr. Gallagher says offshore wind provides a far bigger potential energy source.
These projects would require leasing ocean territory through the Interior Department, because they would be far enough out from the shore that they would sit in federal waters. Industry officials expect it would be three to five years before the first turbines were installed.
The Interior Department's Minerals Management Service expects to finalize its proposed rule governing leasing of offshore acreage for alternative-energy production by the end of the year, clearing the way for development to start soon after. Already, the agency is doing environmental analyses on 10 offshore parcels that it is considering leasing this fall for wind projects. If the agency approves the leases, companies could begin exploring the areas for possible wind-turbine sites.
Wind power is booming in the U.S. That is because of rising fossil-fuel prices, federal renewable-energy tax breaks and mounting opposition to new coal-fired power plants that emit greenhouse gases. Last year, 35% of the electricity-generation capacity added in the U.S. was from wind -- a percentage second only to natural gas, according to the American Wind Energy Association, a trade group.
But wind accounts for only about 1% of total electricity generated in the U.S. And so far, all the wind power in the U.S. is produced onshore. The states that crank out the most -- Texas, followed by California -- boast vast stretches where the wind blows hard and where there is enough land to install hundreds of turbines to catch it.
But the onshore wind industry in the U.S. is beginning to be hampered by a lack of electrical-grid capacity to carry the power from the isolated places where wind typically blows hardest to the population centers that need the juice. Offshore wind provides a potentially big source of energy close to major coastal cities.
That explains why roughly two dozen offshore wind projects are operating in Europe, a place with comparatively little open land. The Northeastern U.S., with similar land constraints, is starting to follow suit.
Big obstacles remain. Wind power is more expensive than fossil-fueled energy. In the U.S., the tax breaks necessary to make it competitive are due to expire Dec. 31. Several proposals to renew the wind-power tax breaks have failed to pass Congress, typically because the bills also included controversial measures to remove existing tax breaks for other industries, notably oil producers. Whether Congress will resolve the dispute and extend the wind-power tax breaks when it returns from its recess is unclear. In the past, it has let the tax credits expire three times, prompting a lull in wind-power construction until the credits later were renewed.
If offshore wind power can fly in the U.S., industry experts say, it is likely to take off in the Northeast. The region has high electricity prices, making it easier for wind-power developers to turn a profit. It has large coastal cities thirsty for more juice. And its offshore territory offers some of the strongest wind in the U.S.
In addition, the outer continental shelf extends out from the Northeast at shallow depths for long distances -- in contrast to the West Coast, where the shelf drops off quickly to great depths. Putting a wind turbine in shallow water is easier and less costly than putting one in deeper water.
And putting wind turbines far out from the coast could assuage opposition from coastal residents who don't want their seaside views obscured -- an issue the oil industry is also facing. Some proposed offshore wind projects have sparked significant opposition, notably one off Cape Cod.
Bluewater Wind, a Hoboken, N.J., company recently bought by Australia's Babcock & Brown Ltd., won the bid to develop the project off Delaware. It is waiting to hear, probably in the next month, whether it won the bid in Rhode Island and is among the companies talking with New York City.
Write to Jeffrey Ball at jeffrey.ball@wsj.com
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