First things first.  In a fairly stunning piece, even to jaded DC insiders, former Congressman William Delahunt (D-MA) is reported to be working for the small coastal town of Hull, on Massachusetts Bay “for help in developing a wind energy project.”

The catch?  “While in Congress, he personally earmarked $1.7 million for the same energy project.”  And it gets worse, as “80 percent” of the funds his firm will receive will be “from the pot of money he created through a pair of Energy Department grants in his final term of office, records and interviews show.”

Now most former members of Congress who end up in law and lobbying firms claim they aren’t actually lobbyists but instead are “strategists.”  And the former Congressman released a statement quoted by the NYT saying:  “I have no federal lobbying relationship with any past or current client.”  That may be news to the town of Hull, who’s town manager is quoted a few paragraphs later using a textbook definition of access-lobbying:

“Obviously he’s got connections into the federal government that we don’t have . . . . We’re hoping he can open doors at the federal level that we could never open.”

So the Hull wind energy project will soon join Solyndra as grist for the argument that the federal government should not be providing incentives for clean energy technology deployment because those incentives are inevitably transformed into “crony capitalism.”  But just as Solyndra was evidence of the misuse of an innovative technology loan guarantee program for economic stimulus rather than evidence of a problem with government incentives; so too is the Hull project actually a fair indictment of earmarking rather than a fatal flaw in the concept of deployment incentives.  The solution?  Programs that provide funding only where the merits of various projects can be clearly compared using  objective metrics rather than “awarded” through either the legislative process or via an opaque administrative ”negotiation.”  Reverse auctions — where bidders commit to delivering X units of energy at Y cost to the taxpayer and only the best deals are then funded — are particularly suitable for such an objective process.

The second piece begins with the type of human interest angle that can obscure rather than teach, as (again, Massachusetts) a hilltop homeowner laments that the local utility wouldn’t run a natural gas line out to his place and he must instead rely on expensive home heating oil.  The real story, as we soon learn, is that home heating oil users are spending between double and triple what their natural gas-using counteparts do.  Some are out of luck due to location; others because they can’t afford the cost of conversion — even though savings due to lower monthly bills may pay for the investment in just a few years.

What’s the current federal policy response to this problem?  It is a well-intentioned effort to help low-income homeowners stay warm in the winter through the much-maligned Low Income Heating Assistance Program, or LIHEAP, whereby taxpayers subsidize the heating bills of qualified consumers.  Unfortunately, that neither fixes the problem nor encourages conservation, but instead simply transfers wealth to homeowners (and ultimately heating oil providers) “trapped in a cycle of spending more and more for heat . . . .”

Is there a better way?  For some, it could be the hugely popular state and local program called PACE — Property Assessed Clean Energy Bonds (see www.pacenow.org).  Designed to let homeowners invest in energy efficiency retrofits in an affordable way, at no cost to taxpayers, this program has been literally sweeping the nation during the last few years.  And if it doesn’t include switching from heating oil to natural gas as an eligible activity, it should.  That would be an obvious energy market intervention worth making.  No earmarks required.

But that’s history, and the annual two-week negotiations over addressing global climate change did end on Sunday with what the WaPo called “a last-minute deal.”  The deal?  An agreement to potentially reach an agreement that would apply something called “an agreed outcome with legal force” to developing nations.  This is arguably an advance on the Kyoto Protocol, which did not require developing nations to commit to reduce their greenhouse gas emissions.   And that’s important because some “developing nations” — namely China and India — are leading the globe in aggregate emissions.  To be fair, their per capita emissions are far lower than developed nations, but that shouldn’t give them a free pass.  The key negotiating issue since the US pointed out the fundamental unworkability of the Kyoto Protocol has been  how to account for developing nations’ exploding emissions without unfairly impeding their economic growth — after all, the developed nations built their economies on cheap fossil fuels and only subsequently has the world (well, most of it) realized that there will be highly negative consequences because of it.

It remains to be seen whether this year’s climate confab really moved the ball on this point.  Host South African foreign Minister Maite Nkoana-Mashabane certainly thinks so, as the WaPo quotes him saying, “We have indeed saved tomorrow today.“  Veteran climate watcher Alden Meyer, of the Union of Concerned Scientists, had a different view, noting failure to achieve agreement on reducing the gap between expected emissions and those most scientists believe are the maximum that the climate can endure without expensive and life-threatening damage:  “There’s nothing [in the agreement] that’s going to get the world to lift its game and close that gap.”

Maybe more important news this weekend came from the Nuclear Regulatory Commission, where dysfunction apparently reigns.  Both the WaPo and the WSJ reported Saturday on four NRC Commissioners, two Democrats and two Republicans, writing to the White House accusing Chairman Greg Jaczko of  ”actions and behaviors [that] are causing serious damage to this institution.”  That quote is from the WSJ, which runs an unfortunate lead sentence (“Four of the five members . . .”) — if you didn’t already know that there are only four commissioners and a chairman, you don’t find that out until the end of the piece, so casual readers may have thought there was a hold-out.  The fact is that all four of these highly respected professionals, Democrat and Republican alike, took the trouble of airing their concerns about the NRC’s leadership to the White House.  House Oversight and Government Reform Committee Chairman Darrell Issa, not the fuming four, released the letter to the media.

The bipartisan nature of the criticism made Senator Harry Reid’s (D-NV) otherwise laudable defense of his former staffer ring a bit hollow.  As reported in the WaPo on Sunday, he called the complaints “a politically motivated witch hunt.”  We’re guessing Senator Reid meant that Chairman Issa was hunting witches, not labelling the letter such.  But since loyalty in Washington is often in short supply, we’ll give him a pass either way.  Not so the NRC as a whole, an organization too critical to our energy future to have it’s oversight confined to the weekend papers.  Oversight hearings, anyone?

power plants are already ratcheting back purchases of thermal coal, which produces smog and soot-causing emissions as it is burned to produce electricity, in favor of cleaner fuels.

Globally, however, Day notes that there will be steady or higher coal prices in the form of demand from Asia; China and India are building coal-fired power plants at a furious pace.

This is an important point.   Many clean energy advocates repeatedly claim that China is investing multiples more in clean energy than is the US.  That’s true, but it’s also true that China is investing multiples more in all energy than is the US.   Why?  Because they have to.  The US and the rest of the West are nearly 100% electrified — China, India and the developing world have a ways to go before they hit that.  Indeed, lack of comprehensive electricity is a key determinant of a nation’s status as developed or developing.

So, while US generators are turning from coal, US miners have been exporting coal, including thermal coal, at a near-record pace this year.

And coal’s disadvantage against natural gas — investment in pollution-control technology doesn’t make sense in the face of cheap natural gas — will eventually go away, as natural gas prices eventually will climb.

Day quotes analyst Chris Kostas on the prospect of new emissions rules having an impact on natural gas prices:  “I don’t think that the natural gas market has priced (them) in.”  That may be a minority view, given the long lead time these rules have had, but it is a fact that natural gas settled Friday at $3.58 per million  Btus, and has been stuck down there for months.

 Devon Maylie had a piece in the WSJ reporting from South Africa, where the annual Kyoto Protocol climate change negotiations are making hardly any news.  Maylie notes that South Africa is poised to invest $12 billion in solar, wind and biomass projects to reduce their 90% reliance on coal.  Watch for China’s heavily subsidized renewable industry to soak up much of that new work.

And finally, Guy Chazan reported, also in the WSJ, that EU sanctions against Syria are causing Shell to pull out of the country.  We’ll end on that piece of good news.

Saturday’s WSJ also noted that forecasts of colder temperatures caused natural gas futures to jump 4.2% to $3.923 per million Btus.  ”Frosty Air Heating Up Gas Futures” quoted Matt Smith at Summit Energy:  ”It’s all about the weather.”    The same article reported that US EIA found underground gas inventory up 92 billion cubic feet, “much higher than the five-year average build for the current period.”  If futures can “jump” to only $3.92 per MBtu, the news is really how astoundingly low natural gas prices will probably stay. . . .

Front page in multiple papers Saturday on White House review of all loan guarantees made by DOE under the stimulus bill.  WaPo headline:  ”White House orders audit of Energy Dept. loans: Move comes amid GOP subpoena threat in Solyndra case.”  The story that won’t die, the “review is a tacit acknowledgment that the loan program, defended by President Obama and his senior advisers for weeks, has raised enough internal concern that an outside assessment is necessary to clear the air and determine its future.”  Good luck clearing the air.  Loan guarantee program future is bleak . . . .

Front page Sunday NYT:   “A New York Village’s Debate Over Drilling Turns Personal”:  ”The debate over horizontal hydraulic fracturing . . . has become increasingly contentious across the Eastern United States, with dozens of communities passing or considering bans.”  No real news here, including the allegation that fracking opponents are also generally “antigrowth fanatics, opposing a once-a-year music festival . . . wind turbines . . .even additional Little League fields. . . . .”

And the most important piece of the weekend, Dan Yergin in Sunday’s WaPo, Outlook section.  In “Oil’s new world order,” Yergin makes the point that the global geopolitical balance of power in the oil economy is shifting.  He finds that a “new world oil map is emerging” . . .”centered not on the Middle East but on the Western Hemisphere.”  But don’t breathe a sigh of relief yet, for since “there is only one world oil market” the U.S. “will still be vulnerable to disruptions . . . .”  Darn.

As a reputable source of energy policy information, SAFE is releasing a two-part Intelligence Report to provide unbiased insight into the situation.  Part one, which was released today, is a history of DOE loan guarantees, detailing what the program is designed to accomplish, legitimate criticisms of its implementation, and a historical case of a program “failure.”  You can find the full Intelligence Report here.

Although Solyndra has generally been touted as a failure of the Obama administration—which did, of course, authorize the loan—the program itself was established during the Bush administration in the Energy Policy Act of 2005.  Loan guarantees are designed to support technologies which have been developed (usually through research and development funding) in laboratory settings, but have not yet been deployed on a commercial scale due to uncertainties about their viability.  Without a mechanism to bridge this gap, countless possible yet unproven energy technologies will disappear into the “valley of death”—the chasm between research funding and commercial venture capital.

The lesson, which will be explored in greater detail in SAFE’s next Intelligence Report, is that while the current manifestation of the DOE loan guarantee program may be imperfect, the goal is to give risky technologies a fighting chance. Clearly though, improvements can be made. Stay tuned for part two.

“As federal stimulus dollars for investment in renewable energy begin to dry up, will the private sector rush in to fill the void?  Maybe not.”

Eilperin and Mufson (let’s call them “E&M”) build an effective case for why it is unlikely — and in doing so provide a strong rationale for questioning the original stimulus spending rationale.  Yet the piece also implies a path forward for policy-makers that makes sense for our global economic competitiveness, our domestic economy, and our energy security.

E&M provide some very useful facts:  “Venture capital investments in what the industry calls “clean tech” companies” were down some 44 percent compared to the same time last year, outpacing the overall 26 percent decline in overall US venture capital investment.

E&M are on target when they write that the future is unlikely to be rosy for VC in electricity-related clean-tech:

“Now, an abundance of cheap natural gas extracted from shale, the death of climate change legislation and fierce competition between existing renewable energy companies have combined to make venture capital investors hesitate even more.”

Fair enough.  These market forces (and lack of federal policy that internalizes some environmental costs for fossil fuels) are the same ones that make new nuclear build such a long shot.  Yet we should be celebrating the fact that we have cheap, clean natural gas available for electricity generation — while focusing our efforts on the area of need.

And what’s that?  Our continued dependence on increasingly expensive oil.  Let’s gear federal policy and private capital toward dealing with that present danger to our economy, rather than trying to make markets for expensive clean tech where good alternatives already exist.

Today’s installment in the Solyndra saga is courtesy of the National Journal’s Amy Harder.  Headline:  Solyndra Was Banking on Energy Bill, E-mails Show.

Oops. 

As Ms. Harder writes: 

Solyndra could still be in business had Congress passed a comprehensive energy bill last year, recently released e-mails indicate.

A May 2010 e-mail exchange between senior Energy Department advisers . . . show Solyndra’s executives were “counting on” Congress passing an energy bill that would have included major policies promoting renewable energy nationwide.

In September 2009, when the Energy Department awarded a $535 million loan guarantee to the solar-power start-up, the administration and Democratic leaders in Congress were confident they could deliver on President Obama’s campaign promise to put a price on greenhouse gas emissions that causes climate change.

Now maybe folks are spinning this story to reporters, but this is revisionist history and has an additional problem beyond that.  First, if anybody anywhere was “counting on” Congress passing comprehensive energy legislation in either September 2009 or, worse yet, May 2010, they were in total denial about what was — or better put wasn’t — happening in Congress at the time.  The Waxman-Markey bill passed the House on a partisan vote and landed with a thud in the Senate during the summer of 2009.  A similarly uni-partisan Boxer bill was to squeek out of the Senate Enviroment and Public Works Committee in the fall — only to be quickly sunk by Senator Kerry’s announcement that he, South Carolina Republican Lindsey Graham, and Connecticut Independent Joe Lieberman were going to negotiate a new bill.  Those talks sputtered along until Senator Graham publicly walked out in February, dooming all chances for even a long-shot moderate Senate bill.

No member of the Democratic leadership was truly “confident” that they were going to pass energy and climate legislation in fall 2009.  In fact, thanks to the backlash against both the partisan health care bill and the House energy and climate bill, the main speculation was whether Democrats would lose both the House and the Senate in the 2010 elections, or just the House.  Making coal state Senate Democrats vote on a climate bill wasn’t part of the strategy for avoiding that outcome.

But let’s pretend that there was optimism about the prospects for climate legislation.  Even the most aggressive possible outcome — Senate approval of a Waxman-Markey like bill — would not have provided a new market for solar for years.  All of the modeling showed that, after a several year implementation period, some wind would have benefited from the renewable portfolio standard in the bill — but not solar.

So there’s just no way that the DOE and OMB reviewers who signed off on the Solyndra guarantee would have accepted a business plan where success was contingent on passage of some imaginary legislative solar power driver.  Maybe the email leakers think that the public image of Congress is so bad that blaming congressional inaction for the Loan Guarantee Program’s bad bet is a winner.  They should think again.

New York’s charged debate over the natural gas extraction process known as hydrofracking will soon move to the face-to-face stage. At hearings set for November, pro- and anti-drilling forces will get a chance to address state regulators directly.

New York’s Department of Environmental Conservation, which is tasked with regulating the drilling, has announced that it will hold public hearings in four places — New York City, Dansville, Binghamton and Loch Sheldrake — on its draft environmental impact statement and proposed regulations for high-volume hydraulic fracturing. Each public hearing will include an afternoon and an evening session, the department said.

The hearings are part of an extended public comment period that ends Dec. 12 and is intended to ensure that the rules are tough enough to guarantee that drilling is conducted safely.

One hopes that’s not actually the goal.  No regulations are going to “guarantee” that any human activity will be conducted with 100% safety.  Humans are involved, so not matter how good the systems are, the potential for human error exists. 

The point of regulation is in this area, as in so many others, is three-fold:  ensure that best practices are followed by all participants; ensure that conditions are monitored so that failures or lapses can be detected; ensure that those engaged in the activity have the financial resources to make affected humans and ecosystems whole in the event of an incident. 

Nothing we do is risk-free, and energy production in particular has the potential for damage.  We live with that risk because energy production is so important to our way of life.  We seek to mitigate the risks through the application of regulations and the threat of civil litigation.  To pretend that the goal is guaranteed safety is a disservice to the public.

Meanwhile, this week has seen a pleasant level of press attention to the continued development of electric vehicle popularity and infrastructure, with substantive articles appearing in the Financial Times, Wall Street Journal, New York Times, CNN, Reuters and the Economist.  Pieces were mixed in expectations of growth in the EV sector, but it’s encouraging to see the news media giving this important issue the attention it truly merits.

The Wall Street Journal drew attention to the huge strides which have been made by the EV industry, beginning one article with this positive assessment:

“The plug-in automotive future we’ve long been promised is, after a fashion, here. Industry pundits have been prophesying these strange days for decades, with internal combustion falling from grace, usurped by a cleaner, quieter and more sustainable technologies. And now you really can pop round to your local dealer and drive away in an all-electric family car. Not so many years ago this was unthinkable—now it’s a daily reality, one that has leapt from the designer’s easel, by way of the exotic prototype, to our own driveways with remarkably little fanfare.”

Further commenting on the stealth emergence of the EV in everyday life, the Financial Times remarks that German automakers like VW were once skeptical about EVs and hybrids have come to actively embrace the technologies.  There is plenty to be optimistic about.  Indeed, because electric vehicles are such a dramatic technological shift, there are lower barriers to entry for manufacturers of automobiles, batteries, chargers, and other electronic equipment.  In addition to creating opportunities for established car companies to reinvent themselves or their brand by launching an EV, the industry is being opened to new players in a way that could result in positive developments in the long term.

Some businesses, like Nissan, are excited about the business challenges associated with launching a new kind of vehicle which requires a new kind of infrastructure.  Others are experimenting with how to make EVs safer by adding sounds to the silent engines, which some consumers find disquieting, and may pose a safety hazard for the visually impaired.

One area in which EVs are particularly useful are through fleet deployments.  Companies utilizing large vehicle fleets may be more adapted to switching to an EV infrastructure, and are drawn to the lifetime cost effectiveness of EVs as gas prices remain volatile and high.  One article profiled the Electrification Coalition’s position that EVs are perfectly suited to the roles of many fleet vehicles, and can help bridge the gap between this developing technology and broad based public acceptance.

With Congress reconvening, and lots of press coverage on EVs, here’s hoping to a busy and active fall!

The WSJ editorial page makes its usual point about political investing — that it’s a bad idea.  What the editorial omits is that Solyndra wasn’t some fly-by-night, crony capitalist facade.  Rather, as the Chernova piece points out:

In 2010, it was ranked atop The Wall Street Journal’s survey of venture-backed cleantech companies.

Now, we don’t pretend to know what goes into the annual WSJ survey of vc-backed cleantechs, but presumably being a shaky recipient of politically-directed funds doesn’t get you to the top.

Unfortunately, Chernova’s piece contains a significant error, if you read all the way to the end.  In an attempt to balance the political scales perhaps, the piece concludes:

Solyndra’s loan was the first under a guarantee program created in 2005 under the administration of President George W. Bush.   Much of the program’s funding has come from the 2009 economic-stimulus package.

Not exactly.  The original loan guarantee program, authorized by a Republican Congress as Title XVII of the Energy Policy Act of 2005 and signed into law by President Bush, was an innovative technology deployment incentives program, designed to both get the nuclear industry moving again and spur the commercialization of new clean energy technologies.  For that program, failure was expected, as the intent was to assist projects that were too risky for private financing.  Such projects are generally proved out at the lab and pilot demonstration scale, but have never been scaled up (in our country) for commercial application.  Those projects face a so-called “valley of death” that DOE’s loan guarantee was intended to help them walk through.

An administration spokesmen rightly made the point in Chernova’s piece that:

“(N)ot every one of these innovative companies would succeed” and that the DOE’s overall portfolio “continues to perform well.”

Fair enough if you are talking about spurring innovative technologies.  Those projects should be expected to fail as it is their technology risk that prevents them from getting private financing.  If the entire portfolio is slightly net positive, that’s probably enough, but if every project succeeds then all the program is about is providing low-cost capital to technologies that really should get private financing.  And that is rightly viewed by many as “corporate welfare.”

 But Solyndra received a loan guarantee under a new section of the law (1705) added by the American Recovery and Reinvestment Act (ARRA, or “stimulus”).  That section did two things:  first, it put the taxpayer on the hook for more funding for projects  (by appropriating funds for the credit subsidy) and stipulated that the projects had to be already commercial and prepared to go to construction within two years — so-called “shovel-ready.”  At the time, Solyndra met those tests.  What happened?  Continued US economic malaise, Chinese competition and low natural gas prices.  In other words, market dynamics.  Does that call into question the entire premise of Title XVII?  We think not.

Does it mean that perhaps Title XVII ought to be focused on the transportation energy sector, where high energy prices and national security concerns demand innovation?  Probably so.