Sorry, WaPo, but the CES may be third best, but that doesn’t make it a good idea.  Senator Lisa Murkowski (R-AK), expressed it well during a hearing on the proposal last week:

 “First and foremost, we have been reminded of the importance of affordable energy.  Most of the focus is on gasoline, but electricity costs are also going up. Bringing energy prices down should be our objective – not driving them up today, or in the future, as some analyses have projected a CES would do.

“I recognize that affordability is not the only goal, and that most folks support cleaner energy. Federal mandates are just one of many tools at our disposal and, as it turns out, they can be fairly blunt instruments.  In the energy space in particular, federal mandates make it difficult to account for regional differences, consumer preferences, and international competitiveness. Hanging over all of this is our more recent experience in healthcare, which shows just how unpopular mandates are right now.

“What we should remember is that we’re not limited to one policy, or one option, for addressing our energy challenges. My preference would be to increase funding for energy innovation with the revenues we generate from increased domestic production of oil, gas, coal and other resources. If we plan ahead, we could develop a long-term policy that allows those resources to work themselves out of a job by paying for the commercialization of newer, cleaner alternatives – and we would protect families and businesses from added costs and burdens in the meantime.”

That’s exactly right.  And unfortunately during the hearing there was some serious misinformation peddled, in the category of true but misleading, that was then dutifully reported by E&E as “electricity bills will fall under a CES.”

It’s true that bills will go down under the CES — but only because consumers will choose to purchase less of now more expensive electricity.  As the EIA testified:

“Projected national average electricity prices start to rise after 2020 . . .by 2035 they are 18 percent above the Reference case level.  Increasing the dispatch of existing natural gas plants provides a quick, low-cost route for early compliance efforts, but the value of natural gas as a compliance option is significantly reduced as the clean energy target share starts to exceed the credit value for this resource.”

With abundant natural gas finally making the US a competitive manufacturing location again, now is not the time to artificially raise electricity prices with a misguided “clean energy” mandate.

Ever since wind energy came on the scene, questions have been raised about their impacts on local weather.  It stands to reason that diverting wind from its old pattern of whistling down the plain to make electricity would have SOME type of impact on weather patterns.  Now comes this study, that ”showed for the first time that wind farms of a certain scale, while producing clean, renewable energy, do have some long-term effect on the immediate environment.”

This is a first, at least for your writer.  And the methodology seems sound:

“Using sensors aboard a NASA satellite, researchers at the University at Albany-State University of New York, and the University of Illinois systematically tracked a cluster of wind farms in central Texas as the installations grew from a few dozen turbines in 2003 to more than 2,350 by 2011.

On average, the nighttime air around the wind farms became about 0.72 degree Celsius warmer over that time, compared with the surrounding area, the scientists reported Sunday in the peer-reviewed journal Nature Climate Change.”

Far from earth-shattering — and clearly offering no reason to shy away from wind energy — today’s report once again demonstrates two things:  1) The law of unintended consequences is real; and, 2) there is no impact-free technology we can use to harness energy.  The net effect of wind farms is of course still overwhelmingly positive, but let’s not pretend that it is uniformly so.

Gold writes:  A couple of years ago, natural gas was touted as a bridge fuel to a renewable-energy future. But the bridge is looking longer and longer, spanning decades into the future. Is gas still a bridge, or a detour? Will it keep renewables from reaching viability that much longer?

Gold quotes venture capitalist Vinod Khosla, who has bet heavy on alternative energy sources and spent years lobbying for supportive state and federal policies, as calling shale gas “a black swan.”  Now, black swans can be good, but high-impact surprises usually aren’t.  In this case, if you are long on renewables, you are feeling pain with low natural gas prices.

If you are a consumer, or somebody who is elected by them however, you’re liking low energy bills:

California Gov. Jerry Brown said gas could help his state meet aggressive goals for generating a third of its power from renewables. The low cost of natural gas is helping offset the higher cost of wind and solar. It’s helping prevent “sticker shock,” he said.

That is close to a traditional role for natural gas in the electricity system — providing load-smoothing electrons that fill the gap when its cloudy and the wind isn’t blowing.  But what about abundant natural gas as baseload power?  What if it crowds out renewables altogether, rather than supplementing them?  Here’s Bill Gates on that prospect:

Having so much natural gas is “phenomenal,” he said, “if you put aside climate change.”

The idea that natural gas use is bad for the climate has been a recent, ahem, discovery.  Back when natural gas was thought of as a substitute for coal — and that being only the coal needed after aggressive efficiency and conservation measures were adopted — we always heard that burning natural gas for power emitted half the greenhouse gases that burning coal releases.  Which is true.

But now that natural gas production and usage is far more robust, enviros are concerned about two things:  1) displacing truly clean fuels like renewables — who emit negligible GHGs on a life-cycle basis (counting wind turbine or solar cell production activities) — and, in a more recently expressed worry, 2) how much methane “leaks” during the production and transport of the gas to the combustion facility.  Since methane is such a powerful GHG — 25 times more potent than CO2 — even a small leakage rate will have a big climate impact.

So, is focusing our electricity generation on natural gas a good thing?  Depends on your metric.

It’s not necessarily easy to get support to the right level. . . . .Governments aren’t always good at knowing how to profile their subsidies against market conditions.

Too true.  Indeed, as Birnbaum and Faiola report it, the levels set in Europe were clearly not in — or even near — the sweet spot.  What’s the sweet spot for clean energy subsidies?  Something that internalizes the externalities that fossil fuel consumption imposes on the market, whether they be environmental, public health, or national defense.  That should, but may not always, bring renewable costs closer to fossil fuel rates without turning the market upside down.  Europe’s levels weren’t anywhere near that, judging by these statements:

In December alone, Germany installed nearly as much solar capacity as the United States has in total, fueled by the subsidies that solar companies admit sometimes made it possible not to worry whether there was sufficient demand in a given area for the power they would produce. (Emphasis added)

 Though solar energy supplied 3.1 percent of Germany’s electricity needs in 2011 — hampered in part by the country’s famously dreary weather — the industry consumed closer to half of the overall renewable subsidies, which also support other energy sources such as wind and biomass.

The company had entered a lucrative niche in which it installed solar panels on British homes free, and simply collected the government subsidies in return.

It would seem that those levels of subsidy simply caused overinvestment in otherwise unwise solar power.  Now, it may be difficult to determine the precise level of a subsidy – the first step would be a rigorous analysis of what externalities the market-distorting subsidy is designed to address.   And economists would argue that valuing externalities is not rocket-science.

What is clear, with the benefit of 20/20 hindisight, is that a subsidy regime that completely removed market forces from the equation — no worries about demand, no customer payment required to make a project profitable — is and should be unsustainable.

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.

“The world is headed for a “dire future” where high energy prices drag on economic growth and global temperatures rise dangerously, unless significant innovations are made to lower the cost of clean energy and carbon-capture technology, the International Energy Agency said.

Senior officials from the agency painted the gloomy picture of the world’s current trajectory at a two-day meeting with international energy ministers and business leaders in Paris.

Participants concluded that growth in energy demand will be met largely by coal—and that the only hope of keeping global temperatures at safe levels would be in the creation of cheaper technologies to caputre carbon dioxide.”

Just a few inches later, we read “Tokyo Reconsiders Plans to Reduce Emissions”:

“Japan is reconsidering plans to cut carbon-dioxide emissions by 25% by 2020 due to a rethinking of its energy future, and the country is worried that it is spending too much on carbon-credit programs,a  senior government official said.

Japan’s doubts, prompted in part by its nuclear disaster in March, come at a time the European Union is questioning whether it should press ahead with plans to cut greenhouse-gas emissions if others don’t follow suit.”

So on the one hand, future costly calamity awaits, but on the other, current economic maladies reduce interest in spending money to prevent that future.

If only there was a way to make sound economic decisions today that held promise of reducing future high prices and dangerous global temperature rises.  Fortunately, there is.  Our dependence on oil in the transportation sector is both a current drag on the economy and a major contributor to future costly climate change.  Moving from dependence on mostly imported oil to completely homegrown advanced biofuels and domestically-powered electrified vehicles will reduce our balance of payments deficit, insulate us from oil-related economic shocks, lower the cost of clean technology, and help prevent dangerous global climate change.  It’s not a win-win, it’s a win-cubed.

In other Congressional news, E&E reported this morning that the Senate Energy and Natural Resources Committee may not mark up any legislation for the remainder of this month, and the prospects until the end of the year remain cloudy.  The panel’s last markup was in July on oil spill response legislation, with Senators Mary Landrieu and Lisa Murkowski of oil producing states Louisiana and Alaska respectively fighting for a controversial provision directing federal revenues towards offshore production in coastal states.  The markup ended without a vote on the amendment.

Furthering the case for increasing domestic oil production, the Wall Street Journal reports that slipping prices have prompted the Organization of Petroleum Exporting Countries (OPEC) to consider an emergency meeting regarding the price of oil.  Brent crude closed at just under $100 a barrel this week due to poor market performance and partially-restored Libyan output.  Although the current price would have been borderline unthinkable less than a decade ago, some OPEC producers are concerned it will drop further to $85 or $90 a barrel.

Member states are divided in their levels of concern over the matter.  Iran and certain African countries are pushing for an emergency meeting if the price drops below $90, while Kuwait and Saudi Arabia are less concerned.  A Kuwaiti OPEC official argued the prices were too high recently, and while they remain high, negate the need for action.  Saudi Arabia—which increased output from 8.5 million barrels per day before the Libyan crisis to the current 9.8 million barrels per day—will decrease production if they determine necessary.

It bears repeating that there is no free market for oil.  While Congress drags its feet, other countries are utilizing their energy resources and investing heavily in alternative technologies.  Bloomberg released an analysis this week reporting that despite three decades of research and subsidies, ethanol has not emerged as the solution to our energy challenges, and furthermore, as biofuels and petroleum are direct substitutes, ethanol is subject to the oil market’s price fluctuations, as well as shifts in the price of corn.

So what’s a country with growing energy needs to do?  Increased domestic oil production is key, but there’s more which can be done.  As Senator Bingaman said earlier this week, regarding the argument that DOE loan programs shouldn’t be expanded on free market principles, “The problem is the Chinese government doesn’t feel that way. The German government doesn’t feel that way. The Japanese government doesn’t feel that way. And if we’re going to be involved in any of this new technology deployment … as a government we’re going to have to participate with industry and help them do it.”  The same principle applies to electric vehicles, which can meet American mobility needs while drawing on the safety and reliability of electricity.