Monday, 27 April 2009

The Energy Ecosystem And The Energy Risk

The Energy Ecosystem

A vision of the Smart Grid that focuses on the importance of energy efficiency, demand response and distributed generation, including viewpoints from: Acterra, Ausra Inc., Hydro One Networks, National Resource Defense Council, Pacific Gas & Electric, San Diego Gas & Electric, Stanford University and The Brattle Group.

Energy Risk - Marked Shift in Policy

Carbon constraints are coming to the United States. But the key question is whether Congress or the Environmental Protection Agency compels them. EPA now officially considers carbon dioxide and other greenhouse gases to be harmful to human health, which is the legal prerequisite to regulate those releases under the Clean Air Act. That designation is a marked shift in U.S. environmental policy and signifies a clear move toward regulating the heat-trapping emissions from all sources. But while EPA says that it is prepared to draft the official rules, it would rather defer to Congress.
"This finding confirms that greenhouse gas pollution is a serious problem now and for future generations. This pollution problem has a solution, one that will create millions of green jobs and end our country's dependence on foreign oil. In both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act."
The pronouncement in mid-April begins a 60-day comment period in which all sides have a right to weigh in. At the end of that time period, the agency will release its regulations that all parties, once again, will be given time to respond. The pending regulations will pressure Congress to come up with its own laws by year-end. Limiting the level of greenhouse gases will assuredly affect the U.S. economy, touching everything that consumes fossil fuels from automobiles to power plants to manufacturing facilities. And while environmental organizations applaud the announcement, business groups remain cautious but say that they are willing to work with policymakers to arrive at an optimal solution. EPA's action comes amidst a U.S. Supreme Court decision rendered two years ago. That ruling said that the agency had the authority to regulate all greenhouse gases under the Clean Air Act if they were deemed to be harmful to human health or the public welfare. EPA now concludes man-made greenhouse gas emissions lead to global warming, which causes increased droughts and flooding as well as to poorer water quality. Even though the state of Massachusetts initiated the case and it pertains strictly to automobile emissions, EPA's position will apply to power plants as well. The move runs counter to that of the Bush administration, which had vigorously opposed regulating greenhouse gases. As such, the Bush White House never moved to make any formal declarations on the issue, although its own EPA scientists had determined that greenhouse gases were detrimental to human health.
"This proposal will cost jobs. It is the worst possible time to be proposing rules that will drive up the cost of energy to no valid purpose."

Official Recognition

EPA's decision will clearly put the focus on congressional efforts, where utilities and other industrials might have more sway. Those groups, in fact, have said that they would rather work with lawmakers so as to ensure any future bill makes gradual advances in an effort contain costs. That is unlikely to satisfy green groups, but they will nonetheless agree to such compromises. The practical effect of carbon limitations would be the setting of performance standards for all coal-fired power plants that are estimated to contribute about a third of all such releases. They would have to use the modern equipment that presumably would include both advanced coal generation and carbon sequestration tools. The ultimate goal is to capture all pollutants and then bury the carbon before it would leave the smokestack. Emitting carbon, meanwhile, will come at a cost. That is, industrials will either have to eventually buy allowances or pay taxes on such releases. That would force those businesses to shift to cleaner burning alternatives so as to bring down the level of carbon emissions -- a move that pits business and green groups against one another. The former is saying such policies will add to energy costs and thereby eliminate jobs while the latter is maintaining it will lead to a new era of innovation and job creation. Specifically, the notable draft now floating on the Hill has been authored by House Energy and Commerce Committee Chairman Henry Waxman of California and his environmental subcommittee chair, Edward Markey of Massachusetts. Their joint measure would cut greenhouse gas emissions by 20 percent from 2005 levels by 2020 and by 83 percent by 2050. The Waxman-Markey bill endorses cap-and-trade but is silent on the issue of whether the credits should be auctioned or initially given away. The measure furthermore requires each utility to meet a renewable portfolio standard of 25 percent by 2025. Such a mandate is necessary if the country is to reverse warming trends, the bill's sponsors say. In an effort to placate lawmakers from coal states, the measure would also give $10 billion in financing to commercialize carbon capture and sequestration technologies. The two sponsors say that EPA's actions give its legislative initiative new momentum. The Pew Center on Global Climate Change agrees, noting that any future delays would only prove more costly for the environment and the economy.
"I applaud the EPA for officially recognizing that greenhouse gas emissions are a danger to our public health and welfare that, if unchecked, could have potentially serious impacts to our environment and well-being."
EPA's position now forces the industrial sector to get on board. And it will, recognizing that the agency would then go forward with its own carbon rules. By participating in the process, skeptics can influence an eventual bill -- one that they hope would slow down timetables and add financial assurances. That's the kind of measure that utilities will back and the type that can pass the full Congress.

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