Friday, 8 January 2010

EPA Proposes Tighter, Costlier Smog Limits

Agency Argues Changes Will Improve Health; Business Groups Warn of Pending 'Punch in the Nose' for Struggling Economy
By MARK W. PETERS and STEPHEN POWER
Reuters
Smog covers downtown Los Angeles in April 2009.
The Obama administration on Thursday proposed tougher standards for reducing smog in a move it said would save lives and reduce respiratory illness, but businesses said the change would inflict new costs on employers and consumers in a weak economy.
The proposal is the latest shift toward stricter standards promised by the White House, which environmentalists have applauded but industry groups dislike.
The new smog standards, proposed by the Environmental Protection Agency, could compel power plants, refineries, gas stations and other businesses to take steps to reduce emissions of chemicals that help form smog. The EPA estimated that the costs of complying with the new standards could range between $19 billion and $90 billion annually, depending on the final standard. Much of the cost will be in the form of new technologies.
The standards could also lead to new restrictions on construction, farming and other activities that generate what is known as ground-level ozone, a primary cause of smog.
The proposal would lower the permitted level for ground-level ozone, which has been linked to respiratory illnesses. By reducing smog, the EPA hopes to reduce the incidence of asthma, particularly in children, whose developing lungs are more sensitive to smog.
WSJ's Joe White reports the EPA is cracking down on smog, which he tells Simon Constable will affect business costs throughout the nation. Plus, the future of 3-D comes into focus at the Consumer Electronics Show in Las Vegas.
Under the proposal, the EPA would set the acceptable ozone level in the air between 0.06 and 0.07 parts per million, stricter than the current 0.075 ppm. EPA officials and public-health groups claim the new standards would mean fewer visits to the emergency room for children with asthma, and longer lives for people with chronic lung disease -- saving the U.S. $13 billion to $100 billion annually. "Using the best science to strengthen these standards is a long-overdue action that will help millions of Americans breathe easier," EPA Administrator Lisa Jackson said.
According to the agency, more than twice the 322 counties that violate current federal ozone standards would fail to comply if the new standard were set at 0.06 ppm. For areas thrown into noncompliance for the first time, the standards could result in new pollution controls on large factories, or requirements for retail gasoline outlets to sell cleaner-burning fuel. Under federal law, states are required to submit plans to the EPA that detail how they will comply with the government's ozone standards. Those that don't submit such plans or fail to implement them risk losing highway funds.
Business groups were quick to challenge the EPA proposal and said it could lead to unnecessary energy-cost increases and job losses at large facilities such as refineries and factories, as well as small businesses. "States will have to cast a very wide net when targeting sources for emissions cuts, in part because utilities already have made substantial reductions in ozone-related emissions," said John Kinsman, senior director for the environment at the Edison Electric

The National Association of Manufacturers, citing EPA data that show a 25% fall in smog concentrations nationwide from 1980 to 2008, said the announcement shows that "with EPA, no good deed goes unpunished."
Chemical makers complain the standards are too tough to be met with existing technology. They fear this will make the process of obtaining permits to expand or modify their facilities virtually impossible. "This will absolutely present a permitting challenge," said Christina Wisdom, general counsel for the Texas Chemical Council, a trade group.
Charles Drevna, president of the National Petrochemical & Refiners Association in Washington, called the new rules "a stop sign on the road to economic recovery." He said the added costs associated with the tighter ozone standards will limit the ability of refineries and petrochemical plants -- which make plastics and materials for a variety of manufactured goods -- to expand their output when the economy revives.
"When you start getting down to these levels, it is going to be an across-the-board punch in the nose to everybody -- big business and small business -- and all of it will impact the everyday consumer," he said.
Supporters of the new standards argue the EPA is more likely to overstate the costs of compliance, partly because of the difficulty of projecting how quickly the costs of pollution controls will fall. They note that when Congress debated the Clean Air Act Amendments of 1990 -- legislation establishing a system to curb sulfur-dioxide emissions that cause acid rain -- studies from the EPA estimated the legislation's annual costs at between $2.7 and $4 billion a year. A decade later, an EPA analysis determined reaching the sulfur-dioxide goals set by the 1990 law cost an estimated $1 billion to $2 billion a year.
"Agencies tend to use worst-case scenarios," said William Becker, executive director of the National Association of Clean Air Agencies. "When it's time for the industry to comply, they find the cheapest way possible."
Ground-level ozone is created by a reaction between nitrogen oxides and volatile organic compounds, which come from a variety of sources including unburned fuels emitted by vehicles. Leading emitters of ozone-creating pollutants are industrial facilities, coal-fired power plants and motor vehicles. The power sector, for example, accounts for around 20% of nitrogen-oxide emissions in the U.S.
The EPA plans to issue final standards by the end of August. Then, the federal and state governments will spend the next three-and-a-half years putting in place plans to meet the new standards.—Ann Davis and Ana Campoy contributed to this article.
Write to Stephen Power at stephen.power@wsj.com

Obama administration proposes strict new smog standards

EPA scraps lax Bush-era regulations that outraged environmental groups and state governments

Suzanne Goldenberg, US environment correspondent
guardian.co.uk, Thursday 7 January 2010 19.17 GMT
The Obama administration proposed tough new smog standards today, scrapping a lax Bush-era regulation that had outraged both environmental groups and state governments.
The new standard - once eventually approved - would compel state and local authorities to act to reduce smog, which is produced when pollutants from factories, power plants and cars, including ozone and nitrogen oxide, react to sunlight.
The airborne stew has been linked to asthma and other lung diseases, which are especially dangerous to children and the elderly. It also travels hundreds of miles, spreading out from cities and industrial parks to damage wilderness areas.
"Using the best science to strengthen these standards is a long-overdue action that will help millions of Americans breathe easier and live healthier," the head of the Environmental Protection Agency, Lisa Jackson, said in a statement.
"EPA is stepping up to protect Americans from one of the most persistent and widespread pollutants we face."
The proposed new standard would set the acceptable ozone limit in the air at between 0.06 and 0.07 parts per million. That is roughly what scientists recommended. But in early 2008 George Bush personally intervened to override the unanimous opinion of a scientific advisory panel that the EPA needed stronger smog controls. The agency then set the cap at 0.075 parts per million.
Today's proposal would offer significantly stronger protections for human health as well as plants and trees which are damaged by smog, environmental organisations said. Cleaning up smog would also contribute to fighting climate change. A major source of smog are ageing coal power plants, which are also responsible for greenhouse gas emissions.
"This rule will help ensure that all major sources of pollution get cleaned up; it is another indication that the Obama administration sees the big picture and is working hard to put safeguards in place to build the clean energy future," the Sierra Club said in a statement.
The proposal now undergoes 60 days of public comment before becoming final - and oil industry organisations were already mobilising to defeat it today. Once it is enacted, the new regulation - depending on its stringency - will have huge implications for local governments which will be charged with ensuring industry and even motor vehicles come into line.
The EPA estimates the costs of introducing stronger smog controls from $19bn to $90bn a year by 2020, but these would be offset by savings between $13bn and $100bn on healthcare costs each year.

CME Details Plans for Its Carbon Market

By JACOB BUNGE
CME Group Inc. announced plans Thursday to launch its standalone emissions-trading exchange in the first quarter of 2010, amid continuing efforts to kick-start the U.S. carbon market.
Green Exchange Holdings LLC, a joint venture between CME and a group of banks and brokers, would take over a number of products handled by the Chicago group's New York Mercantile Exchange unit, according to a company notice.
The Green Exchange plan was launched with much fanfare in late 2007, aiming to tap what some industry observers say could become one of the largest asset classes in derivatives, driven by efforts to combat global warming.
While emissions trading is relatively vibrant in Europe, the U.S. market remains small and voluntary as Congress continues to debate a cap-and-trade plan to price and ultimately reduce the release of greenhouse gases.
The Green Exchange still requires U.S. regulatory approval, and its backers are also seeking clearance from U.K. authorities.
The rival Chicago Climate Exchange, owned by Climate Exchange PLC, runs the dominant European emissions platform.
Former Ameritrade chief executive Thomas Lewis was tapped last year as CEO of the Green Exchange, charged with building an executive team and securing additional equity partners in the venture.
The platform's current roster of products routed through Nymex include futures and options on European Union Allowances, carbon allowances tied to the Regional Greenhouse Gas Initiative, and other greenhouse gas markets.
Write to Jacob Bunge at jacob.bunge@dowjones.com

Energy companies will stop UK hitting CO2 targets

Energy, utilities and materials companies in the FTSE 100 will prevent the UK from hitting its 2020 emissions reductions targets for another decade, according to a new report.

By Rowena Mason, City Reporter (Energy)Published: 6:16PM GMT 07 Jan 2010
The Carbon Disclosure Project , which audits company emissions, has found that these key sectors will need to double their efforts to cut greenhouse gases if the UK is to meet its commitments.
Just 24 energy, utilities and materials companies are responsible for almost 90pc of the FTSE 100's total emissions. Their annual CO2 reduction rate is just 1.2pc, but they will need to raise this to 2.4pc to meet national targets.

"If we continue on this trajectory, we will not deliver in line with government requirements for 2020, until 2030," the report said.
Paul Dickinson, chief executive of the project, said there was a "carbon chasm" between the emissions being cut and what needs to be done by big companies.
"It is crucial that those sectors responsible for nearly 90pc of FTSE 100 reported emissions set aggressive reduction targets," he said.
"Although we see some individual companies setting strong targets, the sector-average reduction targets for materials, energy and utilities sectors are lagging behind what is required to meet UK government targets."
The materials sector, responsible for more than a quarter of reported emissions, will actually be responsible for a 1.5pc increase in emissions.
Energy companies, accounting for 29pc of emissions, have a reduction rate of 2pc, and utilities businesses, with almost a third of the emissions, are only making cuts at a rate of 1.8pc
The report comes after European leaders backed down from tightening the 2020 targets from a 20pc reduction in CO2 to a 30pc cut at the Copenhagen climate change conference . However, utility companies are expected to cut their emissions gradually over the next decade as a new raft of nuclear and renewable power stations are built

Electrics, Hybrids to Star at Car Show

Some Say Emphasis on Pricier 'Green' Models Is Out of Synch With Consumers
By KATE LINEBAUGH
DETROIT—Electric vehicles, hybrids and small cars are slated to take center stage at the big Detroit auto show that opens Monday as car makers try to forget the bleak year gone by and look to the future.
Fiat SpA, Volkswagen AG's Audi, BMW AG and Chinese auto maker BYD Auto Co. all plan to show new electric vehicles in various stages of development. Nissan Motor Co. will display its small Leaf electric car that is slated for production later this year. Toyota Motor Corp., Honda Motor Co. and Volkswagen will show new gas-electric hybrids, while General Motors Co. and Ford Motor Co. plan to promote new gasoline-powered subcompacts and compacts.
But the rough year the industry just endured, which saw GM and Chrysler Group LLC go through bankruptcy and U.S. car sales fall to historic lows, won't be far from mind.

The space at the show that historically was used by GM's discarded brands Hummer, Saturn, Pontiac and Saab will hold "Electric Avenue," a showcase for electric vehicles. And for the first year in memory Chrysler won't unveil a new vehicle at the Detroit show. Instead it will display a Maserati and a Ferrari among its Dodges, Jeeps and Chryslers, a reflection of its new management under Italian auto maker Fiat.
It is far from clear that the gas-efficient or gas-free cars the auto makers are promoting will lure consumers away from their large rides. The electric and hybrid models cost much more than similar gas-powered versions, and many consumers have moved back to larger vehicles after flocking to small cars during the brief period when gas hovered around $4 a gallon in 2008.
Last year, hybrid vehicles, which have been sold in the U.S. for 10 years, accounted for just 2.7% of all vehicles sold in this country, according to Autodata Corp. And sales of small cars fell last year from 2008, while sport-utility vehicles gained just under four percentage points of market share, according to Autodata.
"We are really seeing more and more vehicles available in smaller sizes," said Rebecca Lindland, an analyst at IHS Global Insight. The risk for car makers is that they aren't seeing "significant changes in consumer demand for those vehicles."
A report released Thursday by Boston Consulting Group cast doubt on the mass appeal of electric vehicles unless there is a major breakthrough in battery technology, which still costs too much to make such vehicles widely affordable.
The consulting firm estimates that fully electric vehicles will make up just 2.8% of the global market in 2020, while hybrids and range-extended vehicles—which use a small gasoline engine to recharge the batteries—will account for 23%.
Even so, car makers are charging ahead with electric-vehicle plans. GM on Thursday started production of the lithium-ion battery pack for its range-extended Chevrolet Volt, and the company's board is weighing an earlier launch of the long-awaited vehicle, said people familiar with the discussions.
The Volt initially was expected to come out late this fall, but the first cars could be on the road by late summer or early fall, these people said. An earlier launch would involve few vehicles and would likely be on a lease basis or involve a corporate fleet.
GM is seeking to beat to market the Leaf from rival Nissan, which is slated to go on sale in December, according to people familiar with the discussions.
The company may also be able to sell the Volt at less than the expected $40,000 price tag, Jon Lauckner, GM's head of global program management, said Thursday.
Others that are joining the electric-vehicle movement recognize their mass-market potential may be limited. "It is popular at the moment to think battery-powered cars hold the solution. We have a long way to go before it is a reality," said Johan de Nysschen, head of Audi's North American operations.
Mr. de Nysschen expects the electric-vehicle market to be bifurcated. At one extreme will be compact, light commuter vehicles with short driving ranges. At the other end will be high performance cars that command a high price to help recoup their investment costs.
Audi's first electric vehicle will fall in the latter category, according to a person familiar with the plans.
BMW, which put out a limited fleet of two-seat electric Mini Coopers last year, plans to display at the show a four-seat BMW electric concept car based on its 1-Series that will be leased to fleet customers next year. Rich Steinberg, BMW North America's manager of electric vehicle operations and strategy, said consumer anxiety over the limited range of all-electric vehicles continues to be a stumbling block.
Amid all the buzz ahead of the Detroit show, car makers continue to question whether auto shows are effective marketing tools.
"I asked a question: do we sell any cars though the auto show?" General Motors Chairman Edward E. Whitacre Jr. told reporters this week. "Nobody had an answer to that. But I guess we do through the cars and the media. It's certainly important from a perspective of who is the new GM." —Sharon Terlep and Jeff Bennett contributed to this article.
Write to Kate Linebaugh at kate.linebaugh@wsj.com

Clean Energy Sources: Sun, Wind and Subsidies


As Governments Increase Spending and Support for Renewable Power, Even Fans Wonder If Aid Could Be More Efficient

In frigid water four miles off England's east coast, a floating crane is installing the last of 48 wind turbines. The 40-story-tall pinwheels are driven by two plentiful resources: ocean breezes and public funds.
Government subsidies are turning renewable energy into big business. Although fossil fuels remain by far the dominant energy source and generate big profits, in some markets government price supports are making renewable power a less-risky corporate bet than conventional fuels.

Renewable energy is becoming big business and one of the biggest bets these days is offshore wind farms. WSJ's environment columnist Jeff Ball reports.
Wind farms "have a better return on investment than coal plants," says Anders Eldrup, chief executive of Dong Energy, a company based in Denmark that is shutting down coal-fired power plants and building wind farms, including this one in the U.K., called Gunfleet Sands. But that is true only in places with hefty subsidies, he says. "Without that, they wouldn't work."
Critics say subsidies of any kind waste taxpayer dollars. But even fans of renewable energy worry this public largesse is costing too much. They say renewable energy deserves subsidies to help it mature to the point where it can compete against fossil fuel. But they are concerned that society, in its haste to roll out wind turbines, solar panels and other forms of clean power, is spending billions of dollars without spurring as much renewable energy as it could. The recession has worsened the waste, they say, as governments increase subsidies to meet renewable-energy targets and create "green" jobs.
Some renewable-energy subsidies have been "enormously wasteful," says Michael Liebreich, chief executive of Bloomberg New Energy Finance, a London-based research firm. "As you get more and more renewable energy, the state is setting energy prices," he says. "That worries me enormously."
Common government practice today, especially in Europe, is to guarantee renewable-energy providers that they can sell their power for more than the normal electricity rate -- often several times more. To trim costs, some governments are experimenting with parsing out subsidies, auction-style, to whichever renewable-energy firms are willing to accept the least aid.

Virtually all energy is subsidized. Fossil fuels, which provide about 80% of total global energy, have enjoyed favorable tax breaks and other incentives for decades. The International Energy Agency estimates that fossil-fuel subsidies in developing countries -- government money to reduce the price of energy -- totaled $310 billion in 2007, the most recent year for which the IEA has statistics. Last fall, the Group of 20 leading economies called for phasing out fossil-fuel subsidies world-wide.
Yet for every unit of energy renewable energy produces, it is often subsidized more heavily than fossil fuel. Government spending and price supports accounted for about one-third of the roughly $145 billion invested world-wide in clean energy in 2009, New Energy Finance estimates. Though renewable energy gets fewer subsidy dollars than the IEA says fossil fuels receive, the price supports are covering a larger portion of renewable energy firms' costs.
Many in the renewable-energy industry say it is high time they got that extra help. The industry needs the "economies of scale that make this a viable and effective source of electricity," says Robert Beisner, vice president for the U.S. unit of SolarWorld, a solar-panel maker. It is planning to expand its U.S. factories to feed global demand driven by incentives.
The company is based in Germany, which has more solar panels in use than any other country despite often-overcast skies. That is because Germany offered a sweet deal: a "feed-in tariff." It guarantees renewable-energy producers an above-market price for their power and that they can sell the power into the electrical grid at that price for 20 years.
Many countries have adopted feed-in tariffs; some are as much as five times the wholesale price of power. The governments typically reduce the rate by a few percentage points yearly. But the cost of renewable energy is falling far more quickly than that; the lifetime cost of producing some types of solar power fell 50% during 2009; most other renewable technologies fell 10%, New Energy Finance says. Moreover, once a renewable-energy producer has locked in a rate for a particular project, it gets that rate for the full life of the subsidy.
The upshot, analysts say: A feed-in tariff can guarantee a renewable-energy producer rising profits that can top 20%, far more than most conventional energy projects.
In Germany, renewable energy from projects that qualified for feed-in tariffs between 2004 and 2008 will cost consumers [euro ]122.3 billion (about $175 billion) between 2008 and 2030 -- 46% more than the same amount conventional energy would cost, New Energy Finance predicts. In Spain, renewable energy from projects started under the country's feed-in tariff between 2006 and late 2008 will cost [euro ]53 billion over the Spanish tariff's 25-year life, the firm projects, a 75% premium over the likely cost of the same amount of conventional power.
The U.S. is a potentially massive renewable-energy market. It has windy plains, sunny deserts and areas rich in other renewable resources, such as wood. But it has lower rates of renewable-energy production than much of Europe, largely because the U.S. has smaller subsidies.
Now, as part of the Obama administration's stimulus plan, renewable-energy producers are eligible for cash grants totaling 30% of the cost of projects they this year -- however high those costs go.
Before the stimulus, the government subsidized renewable-energy producers with tax credits. But financial institutions typically partnered with small renewable-energy firms and took a cut of the government money, reducing the amount left to fund projects.
So the temporary cash grant is more efficient, says Jason Grumet, president of the Bipartisan Policy Center, a Washington think tank. Still, he says, even the grant program is "probably providing a much greater subsidy than particular projects require."
The Obama administration says renewable-energy companies face a strong market pressure to minimize their costs: They have to compete with falling natural-gas prices. "What we're seeing is the market price keeping the capital cost of these projects down," says Matthew Rogers, the Energy Department official overseeing energy spending under the stimulus plan.
Some governments are experimenting with trimming subsidies by auctioning them to the lowest bidder. California and China have dabbled with this approach. But those auctions remain the exception rather than the rule. More often, renewable-energy subsidies are rising. A case in point is the London Array, a U.K. project that, if built, would be the biggest single offshore wind farm in the world.
It would sit off the coast of London, in the Thames Estuary, the same water body where Dong Energy is finishing the Gunfleet Sands wind farm. As the recession set in, companies involved in the project, including Dong, told the U.K. government they needed more aid. Early last year, the government agreed to increase the subsidy developers will get for all new offshore wind farms in the U.K.
Dong plans to start offshore construction on the project next year. Says the company's Mr. Eldrup: "The government listened to us."
Write Jeffrey Ball at powershift@wsj.com. Discuss this topic, and see a video about offshore wind farms, at WSJ.com/Currents.

National Grid threat to Scottish renewables

Peter Jones

Punitive new charges proposed by the National Grid could kill off Scotland’s nascent alternative energy industry, The Times has learnt.
Sources within the industry called on ministers at Westminster yesterday to intervene and prevent the substantial increases, described by one authority as “lunatic”.
The proposals could double or even treble the cost of putting power in the grid — which would make many renewable projects, including planned wind farms, uneconomic.
The charges have been devised as a response by National Grid to the big spending required for new transmission lines to transport power from the growing number of renewable generators in the north of Scotland.
They will come as a body blow to the SNP government which regards its alternative energy plans as the key to Scotland’s future economic success.
Alex Salmond has criticised the high charges levied on Scottish wind and hydro power, but to learn that these charges will be increased is set to provoke a confrontation with the National Grid and Westminster. A spokesman for the First Minister said: “The idea that connection charges should increase in the north of Scotland is totally ridiculous, and flies in the face of the need to remove the gross discrimination that already exists through locational charging.
“If there is any truth to this suggestion, we will raise it as a matter of urgency. It is completely contradictory to the need to meet climate change targets, and places serious question marks about whether National Grid should have anything to do with these matters in the first place.”
The controversial £350 million Beauly to Denny power line upgrade, which the Scottish government approved on Wednesday, is only one of the projects needed to transmit the power expected to be produced from renewables.
Last year, an energy industry study group said that another north-south power line running from Beauly to central Scotland and down the east coast would have to be upgraded.
In addition, two sub-sea cables, one running from the Scottish west coast to north Wales and another from Peterhead to Teesside in north east England would be needed at a cost of about £5 billion.
National Grid, a private company regulated by Ofgem, has been looking at how the costs of providing this infrastructure can be recovered from electricity producers and consumers. It has been using its existing pricing, which is already controversial in Scotland because it imposes higher charges on Scottish electricity producers to compensate for the cost of sending power to the main areas of demand in southern England.
Electricity producers in the north of Scotland have to pay £21.59 per kilowatt (kW) to transmit to the grid whereas producers in Cornwall receive a subsidy of £6.68 per kW. The discrepancy arises partly because Scotland produces more electricity than it consumes, but Cornwall has to import electricity. The new price proposals, according to an executive with a wind power company, would raise the cost of transmitting to the grid to up to £50 per kW and in the Scottish islands to as much as £100 per kW. “These are prohibitively high costs which would make some projects impossible.”
He gave warning that uncertainty caused by the prospect of higher charges would be a significant deterrent to wind and wave power projects now at the experimental stage in Orkney.
The major Scottish electricity companies, ScottishPower and Scottish and Southern Energy, are understood to have been told of the proposals. They refused to comment yesterday. But a highly-placed power industry source confirmed the plans, saying: “This is lunatic. We are already facing ridiculously high charges. Now they could double or even triple from 2015.”
Niall Stuart, chief executive of lobby group Scottish Renewables, said that the current system discriminated against generators in the north of Scotland and that the proposals would cause investors to think twice about the north of Scotland. “We would urge UK ministers to look at this in the light of the targets they have set for increasing renewable generation.”
A spokesman for National Grid said that the company published in December indicative figures for taking power from the Scottish islands to the grid which were about £100 per kW. “The islands are not on the grid at the moment and these are purely indicative figures reflecting the costs of connecting the islands to the grid.”
He disputed the figure of £50 per kW for energy projects in the north of Scotland, but confirmed that there was a recent meeting with industry groups which discussed the cost implications of the two sub-sea cables. He said that two extreme cost models had been discussed, one with a zero cost to users and the other which had used a figure of £50 per kW.

Energy infrastructure needs renewing

Energy interruptions occur when there is a lack of gas storage

Nils Pratley
guardian.co.uk, Thursday 7 January 2010 20.01 GMT
If a tale of energy shortages during winter sounds familiar, that's because it is. The story takes matters to a new level – factories in the north-west and east Midlands have had supplies cut off. These industrial customers knew the risks when they signed "interruptible" supply contracts in exchange for lower tariffs, but it is nevertheless shocking that the infrastructure is so creaky that these contracts even exist. The basic problem is a lack of gas storage facilities.
National Grid also mentioned transmission problems, but that's a variation on the same theme. Transmission problems become significant when there is an inadequate buffer in the system. The buffer is meant to be storage – as has long been recognised.
As far back as 2002, the old DTI select committee said: "Concerns over bottlenecks in the gas transmission system seem to us to be well founded. The government should keep under review the need for more gas landfall facilities and the advisability of greater diversity in the siting of such facilities. It should consider whether the market alone will provide the necessary incentives, given the lead times needed for such construction projects."
In 2008, the business and enterprise committee concluded that little had changed: "Significant additional storage, beyond that currently planned, is needed … It is now an issue of national importance and should be a high priority in domestic energy policy."
In 2010 we are grateful that recession, by reducing industrial demand, has not made these problems worse. Yes, let's have investment in renewables – but let's also renew the parts of the existing infrastructure that will still be needed.

Coal is dirtying Scotland's carbon-neutral plans

Scotland has the potential to be a world leader in developing low-carbon fuels, but Alex Salmond's reliance on coal is an albatross around its neck

Fred Pearce
guardian.co.uk, Thursday 7 January 2010 11.29 GMT
There were a lot of big names at the UN's climate change conference in Copenhagen last month: Barack Obama, Gordon Brown, Angela Merkel and the rest. So not a lot of attention was paid to Alex Salmond, the first minister of Scotland. But he played a blinder, at least for domestic audiences, by linking up with the president of the Maldives, Mohamed Nasheed, to create a "climate partnership".
Much of the Maldives, an archipelago of some 1,200 low-lying islands in the Indian Ocean, is likely to disappear beneath the rising seas within the next century. But its government is doing its best to hold back the tides with a national plan to go carbon-neutral by 2020. Salmond too has a 2020 plan, to cut Scottish emissions by 42% on 1990 levels.
Salmond said: "We are delighted to help the Maldives in their endeavour to become the world's first carbon-neutral country". But maybe he needs a reminder of the definition of carbon-neutral, because many would say that his own plans are flawed. The problem can be summed up in one word: coal.
Now don't get me wrong. The Scottish government's enthusiasm for renewable energy is genuine and first class. But a lot of people in the Highlands hate it. And anger was heightened this week with news that Holyrood has approved a line of 600 pylons through the Cairngorms from Beauly to Denny that will connect wind and wave power to the grid.
Although Salmond wants to generate half his country's electricity from renewables, he wants to generate the other half with fossil fuels, mostly coal. By some estimates, Scotland has one-tenth of Europe's total coal reserves. And he wants to use them.
I've mentioned this before. But as his plans firm up – for instance in the latest Climate change in Scotland annual report (pdf) – his fixation with coal looks an increasing liability.
Around 90% of Scotland's power comes from just five power stations (pdf): two old coal stations at Longannet and Cockenzie, a gas-fuelled station at Peterhead and two ageing nuclear power plants at Hunterston and Torness.
Coal is high-carbon; nuclear is low-carbon. Whenever the two nuclear stations go offline, the country's carbon dioxide emissions will surge as coal plants replace their power. But Salmond has ruled out replacing the old nuclear plants. "Our aim is a non-nuclear Scotland," he says.
Instead he wants to extend the lives of the two existing coal plants, while adding a third to replace the Hunterston nuclear plant.
But Salmond says coal can be green. He is among the keenest in a big field of world leaders anxious to talk up the potential of developing carbon capture and storage (CCS) for coal power generation. This proposed technology would capture carbon dioxide as it goes up the power station stack and transport it for burial in disused oil wells beneath the North Sea.
This time last year, one of the world's leading climate scientists, Nasa's Jim Hansen, wrote to Salmond, pleading with him to abandon plans for more coal-fired power stations in Scotland, at least until CCS technology was up and running.
Salmond's view is this: : "Coal is king ... If you can use clean-coal technology, coal has a dynamic future. It means coal, far from being environmentally unacceptable, is becoming environmentally attractive."
One day, maybe. CCS is likely to prove such an energy-intensive technology that, rather like biofuels, its benefits may prove illusory. But not even its biggest enthusiasts expect CCS to be functioning on anything more than a pilot scale this side of 2020. Most reckon the 2030-40s are more likely.
Salmond's political career will be over by then. And his new coal-fired power plants are likely to be ending their lives having captured little - if any - of the millions of tonnes of carbon dioxide they will have emitted.
Scotland genuinely does have the potential to be a world leader in developing low-carbon fuels. And Salmond has the political charisma and nous to make it happen. But he has an albatross round his neck: coal. It may sink his green reputation, just as surely as it threatens to sink the Maldives.

Sea Energy - One to Watch

SeaEnergy, up 10p to 71p, has had a good start to the new year and could rise further. Earlier this week the offshore wind group said its joint venture with EDP Renov├íveis expected to win rights to develop a project in Scotland as part of the Crown Estate’s third offshore wind farm leasing round, which is expected to be confirmed today.

US scientists demand government ban on mountaintop mining

Analysis of damage done leaves Obama no choice but to ban the highly destructive practice, say the authors of a new study
Suzanne Goldenberg, US environment correspondent
guardian.co.uk, Thursday 7 January 2010 19.00 GMT
Mountaintop mining should be banned for causing vast and permanent destruction to US environment and exposing its people to serious health consequences such as birth defects, a new study says today.
An article in the journal Science, by a team of 12 ecologists, hydrologists, and engineers, provides the most comprehensive analysis so far of the damage done by the controversial mining practice.
The process involves shaving off up to 1,000 vertical feet of mountain peak – including ancient forests – to expose thin, but highly prized, seams of coal.
Margaret Palmer, an ecologist at the University of Maryland Centre for Environmental Science, who led the study, said the science left no excuse for the Obama administration not to ban the highly destructive practice.
"Scientists are not usually that comfortable coming out with policy recommendations," she said, "but this time the results were overwhelming."
The article described river and forest systems that have been disrupted well downstream from the original dumping spot of mining debris. It also said there was virtually no chance of restoring mountain, forests or streams once the mining companies have moved on to new seams.
"There is a lot of evidence suggesting that there is significant degradation, and there just isn't the evidence at all that they can reverse this," said Emily Bernhardt, an environmental biologist at Duke University, who was another co-author.
She said there were signs that contamination from the mining debris was spilling into drinking water and wells. The debris is already killing off fish. In heavily mined southern countries, 50- 60% of young fish were deformed because of high concentrations of selenium.
"That was quite an eye-opener," said Dennis Lemly, a biologist at Wake Forest University and one of the authors. He warned the fish population could soon be wiped out. "The deformed young fish – that is really the red flag. You can see right away that you are over a serious threshold."
Selenium concentrations in fish caught in some of West Virginia's rivers were twice as high as in other states that had declared them unfit for human consumption. West Virginia authorities issued a health warning – but not a ban.
"To put it quite bluntly, my jaw dropped because right away I saw concentrations that were far above toxic thresholds," added Lemly.
The authors also logged significant dangers to human health, including lung cancer, and chronic heart lung and kidney disease, as well as birth defects.
Today's report – reinforced by the rare demand from scientists for specific government action – deepens the pressure on the Obama administration from environmentalists and liberal supporters to ban mountaintop mining.
Obama administration officials had promised to toughen the lax environmental regulations of the George Bush era. But grassroots activists in West Virginia accuse the Environmental Protection Agency (EPA) of continuing to greenlight new projects – albeit with some additional restrictions on the mining companies.
Earlier this week, the EPA outraged activists by giving the go-ahead to two new mines. EPA officials argued that the new conditions imposed on the mining operator, Patriot Coal, would bury only three miles of mountain stream – instead of the six miles of waterways that would have been filled with debris under the company's original plan.
Until today's article, Mountaintop mining consequences, much of the research on the effects of mountaintop removal had been left to government scientists, and there was little understanding in the broader academic community of the sheer scale of destruction.
As many as 500 mountaintops across West Virginia, Virginia and Kentucky have already been replaced by dry flat plateau, and 1,200 mountain streams have been buried beneath dumped rock and dirt. By 2012, the Environmental Protection Agency estimates that more than 2,200 square miles of Appalachian forest will disappear.
At some sites, the mining companies have tried to rebuild the silhouette of the old mountain, or replant. But mostly they leave the mountain missing its crest.
In any event, there is no undoing the damage, and the scientists said the seriousness of the environmental and public health impacts compelled the EPA to ban mining.
"I think it is very clear. It is very compelling, and it would be a disservice to the people who live there to say we just have to study it more," said Michael Hendryx, a community medicine professor at the University of West Virginia. "The monetary costs of the industry in terms of premature mortality and other impacts far outweighs any benefits."

Beauly Denny power line is vandalism

In trampling over people's love of wild landscapes, a depressing split has been opened in the Scottish environmental lobby

Ed Douglas
guardian.co.uk, Thursday 7 January 2010 12.07 GMT
At first glance, approval for the Beauly Denny power line through the Highlands of Scotland looks like a victory in the battle against climate change. The upgrade was required to plug a series of proposed renewable electricity projects in northern Scotland into the grid. The Highlands may be beautiful, Friends of the Earth Scotland argued yesterday, but in the face of a global crisis, marching huge pylons across mountain landscapes is a price worth paying.
Renewable energy investors may be relieved, but this decision by Scottish ministers is a needless and myopic act of vandalism. Climate change campaigners can mock the 18,000 people who objected as nimbys. But in trampling over ordinary people's love of wild landscapes, a depressing split has been opened in the Scottish environmental lobby.
On one side are groups like Friends of the Earth and WWF. They have acted as bulldogs for the energy lobby, sinking their teeth into conservation groups like the National Trust for Scotland and the John Muir Trust. They will argue this was ugly but necessary, to get a critical piece of infrastructure built. But people like me who love the Highlands won't thank them for it.
The argument was presented in the crudest terms. Either this power line gets built or Scotland's ambitious renewable targets go up in smoke. The truth isn't so simple. Alternative approaches existed but weren't properly considered during the planning process. A less intrusive east coast route was identified. The power cable could have gone under the North Sea and spared the Highlands altogether.
Scottish and Southern Energy, whose subsidiary will operate the new system, will dismiss the undersea route as ruinously expensive. But the costs of undersea power lines have come down fast since the Beauly Denny upgrade was mooted. In fact, an international North Sea grid linking renewable installations across northern Europe and beyond already has the backing of the Westminster government. That will require colossal investment in undersea cabling.
The Electricity Network Strategy Group released a report in March exploring how our electricity supply can be adapted to cope both technically and economically with the complex shift towards a larger proportion of renewable energy. Needless to say, undersea cables form an integral part of their plans. So why not in the Highlands?
The truth is that having set ambitious targets to increase renewable electricity generation, politicians north and south of the border have turned anxiously to energy corporations and asked them what they need to make it happen, even in the face of determined public opposition. Once Scottish and Southern said they needed the Beauly Denny project, it was only a matter of a time.
Imagine if the Scottish executive decided the public should pay for a new motorway through the Highlands. Now imagine the only people they consulted were Tarmac and Eddie Stobart. That is essentially what's happened in the Highlands. Our infrastructure paradigm is currently being rewritten and the people holding the pen are those with the biggest financial interest.
You might think it's overly romantic, even indulgent, to defend wild and beautiful landscapes when climate change and energy security are at stake. The government clearly felt landscape was worth defending when it signed the European landscape convention in 2006. But by allowing this kind of project to go ahead through the heart of a national park, the Scottish executive has shown that everything is up for grabs.

Wind farms could power half of Britain’s homes, but jobs could go overseas

Ben Webster, Environment Editor

Nine giant new wind farms in the seas around Britain will be announced today, but few of the 6,000 turbines needed are likely to be built here.
Ed Miliband, the Energy and Climate Change Secretary, will say that the world’s biggest expansion of offshore wind power, costing £75 billion, will create 70,000 jobs in Britain by 2020. However, the Government has failed to persuade any of the major wind turbine manufacturers to open a factory in Britain. The companies granted licences today to build the farms will not be obliged to source any parts from domestic manufacturers and most are expected to buy turbines made in Denmark or Germany.
A taskforce of officials from Downing Street, the Treasury and the business and energy departments has held talks with suppliers in recent months including Siemens, Vestas, Mitsubishi and General Electric, but none is yet willing to commit to manufacturing in Britain.
The country’s only turbine blade manufacturer — the Vestas factory on the Isle of Wight — closed last summer after the company said that the British market for turbines had been too slow to develop.

Almost all the manufacturing contracts for London Array, the biggest wind farm in British waters approved before today, have been awarded overseas. Less than 10 per cent of the £1.7 billion investment will be spent in Britain. Clipper Windpower is developing one of the world’s biggest turbines at a research centre in Blyth, Northumberland, but it is several years away from starting commercial production.
The nine farms announced will generate enough electricity to power more than half of Britain’s homes, but only when the wind blows.
The turbines will be twice as large as those on land, typically rising 170m (557ft) from sea level to the tip of the blade. They will stand in up to 70m of water, compared with only 10-25m for existing offshore turbines.
They will also be much farther away from the coast, with the biggest, Dogger Bank, starting 130 miles off the North East coast. Residential platforms will be built near the turbines to accommodate hundreds of workers who will carry out servicing and repairs.
The developers, which will include some of Britain’s biggest energy suppliers, will pledge to build enough turbines to create 25,000 megawatts of electricity, the equivalent of 21 Sizewell B nuclear power stations. There are currently 228 offshore turbines with a capacity of 688 megawatts.
The timetable for the construction will depend on how quickly the finance can be raised and what happens to the price of the fossil fuels with which wind energy competes. None of the farms is likely to be generating electricity before 2015.
The British Wind Energy Association said yesterday that the cost of building wind turbines had doubled in recent years, partly because of the fall in the value of sterling and a growing reliance on imports. Each megawatt of wind capacity announced today will cost up to £3.1 million, compared with £1.5 million for the first offshore wind farms approved a decade ago.
John Sauven, director of Greenpeace UK, said: “The Government’s role is clear: train and equip Britain’s workforce to ensure that the thousands of jobs that will be created are filled by British workers, and provide the economic certainty investors need to complete these projects on time and on budget.”

Hundreds of wind turbines to be built in Firth of Forth

Published Date: 08 January 2010
By Jenny Fyall
THE government will today give the green light for up to 1,000 offshore wind turbines to be built in two locations off the Scottish coast.
• A turbine in the Cromarty Firth – similar to those destined for the Firth of Forth and Moray Firth. Rights are expected to be granted for developers to build huge projects in nine locations around the British coast, in a massive expansion of offshore wind generation. Two of the spots earmarked are in the Firth of Forth and the Moray Firth.Rights will be granted by the Crown Estate, which owns the seabeds on behalf of the government, to winning bidders, as part of the Round 3 Offshore Wind programme.In total, this tranche of offshore wind development is expected to generate up to 32 GW of electricity – the equivalent of 18 new coal-fired power stations – by about 2020. This is the equivalent to about a quarter of UK demand.Up to 4.7GW would be generated from Scotland, from as many as 1,000 enormous turbines. They would be far larger than onshore machines – standing more than 150 metres above the seabed and weighing over 300 tonnes.The sites in the Moray Firth and Firth of Forth are both at least 12 miles from the coast, meaning the turbines would just be visible from shore.It will be the biggest expansion of offshore wind ever seen in the UK and the first major development off Scotland.Prime Minister Gordon Brown said: "Our policies in support of offshore wind energy have already put us ahead of every other country in the world."This new round of licences provides a substantial new platform for investing in UK industrial capacity. The offshore wind industry is at the heart of the UK economy's shift to low carbon, potentially worth £75 billion and supporting up to 70,000 clean-energy jobs by 2020." In the Moray Firth site, a consortium made up of EDP Renewables and SeaEnergy Renewables is expected to be granted a licence.And in the Firth of Forth, a consortium called Seagreen Wind Energy, made up of Airtricity and Fluor, is hopeful of a licence.Scottish Secretary Jim Murphy said: "Scotland is the windiest country in Europe, and this shows we're creating the right conditions for the energy industry to invest in harnessing it. This is one of the strongest signals that Scotland is at the heart of the UK's commitment to a low-carbon, energy-secure, prosperous future."Dr Richard Dixon, director of WWF Scotland, said: "I think this is an extremely important development for Scotland."He did not think the turbines would change the view from the coast. "They will be so far out that you would have a reasonable view of them from the top of a hill with some binoculars, but otherwise they will be tiny spots on the horizon," he said. "They won't be a serious intrusion."Developers will have to apply for planning permission before they can build the wind farms. Construction is expected to start from 2014. The offshore projects will help the Scottish Government meet its target, in the Climate Change (Scotland) Act, of generating 50 per cent of electricity from renewables by 2020.Offshore wind has not proved as controversial as onshore wind. However, applications are likely to raise concerns from various sectors. There are fears turbines could disrupt shipping routes, interfere with fishing interests and damage the subsea environment.Major challenges also remain over installing giant turbines in the water. This is expected to be particularly difficult in Scotland, where the ocean becomes deeper closer to shore than around the rest of the UK.And there are concerns over likely shortages of supply-chain equipment, such as the large vessels needed to install the turbines. However, Scotland is thought to have an advantage, with expertise and equipment that can be transferred from the oil industry.Supporters of offshore wind energy claim the sector could transform the economy, creating thousands of green jobs. But critics point to the intermittent supply of power from wind turbines.There are also question marks about how all the electricity generated by the offshore farms would be connected to the grid.Meanwhile, it is anticipated that £1.5 million will be granted today to Burntisland Fabrications Ltd in Fife to set up a manufacturing facility that can build more than 100 turbine "jacket" sub-structures per year by 2011. This will be part of £8m of grants across the UK to support the supply chain for offshore wind farms.Greenpeace executive director John Sauven said the UK must make the most of a "momentous opportunity"."Throughout its history, Britain has shown the determination and ingenuity to tackle the great industrial challenges of each era," he said. "In the 21st century, these qualities are being called on once again, to enable the transition from fossil fuels to clean, renewable sources of energy. "The economic and environmental benefits are huge, but unless we make the most of this opportunity, others will." IN NUMBERS1,000: number of offshore turbines that could be built at the two sites off Scotland.4.7: gigawatts the amount of electricity they would generate.£100bn the amount of money the government is expected to announce for offshore wind today.12: miles minimum distance from the coast of the wind farms.70,000: number of jobs in the offshore wind sector the government believes could be created by 2020