Articles in Category: Environment

Forbes ran quite a provocative piece yesterday about some new subsidies given to Chinese solar panel manufacturers in the form of billions of dollars of loans (I don’t know if they are cheap loans but based on how China is doling out money, I’d venture to say the answer is yes).   According to the article, the loans are designed to help the companies make the transition from primarily low cost manufacturers to more integrated project managers via, “more strategic long term, project planning, financing and building large-scale projects for utilities and commercial customers. Companies such as Suntech and Trina Solar will receive $7.3 and $4.4b respectively.

The author goes on to make the point that, “subsidies in the West can lure some manufacturing back. Sure that could happen and Mike Miskovsky, general manager for Canadian Solar’s U.S. division says, “low price alone doesn’t guarantee market share. “More important is the best value per dollar spent on a watt,” he says. If cheap panels don’t generate as much electricity as slightly higher-priced panels, they are not as attractive. So we have two arguments here. The first argument goes like this create subsidies to lure manufacturers back to the West. But what happens when those subsidies run out? How do those manufacturers compete? We dismiss those calls outright because they lack sustainability. The second argument as Mike Miskovsky explains relies upon total cost of ownership. We can’t find fault in that!

But maybe a third argument exists one in which the solar panel producers can take a page from – the US mini-mills who didn’t ask for subsidies (well, they may have but they didn’t get too many according to MetalMiner research) but identified a new way of operating moving away from the old blast furnace methods of production and developing lower cost production methods. Consider the following from Nucor’s website, in its steelmaking operation it has, “over 8000 people who are among the best paid in the industry, yet Nucor has the lowest labor cost per ton of steel produced safely. This link explains many other elements of the firm’s “unconventional thinking.

Apple has disrupted the PC/laptop industry with its low cost iPad. It can compete on innovation. Let’s stop sounding the calls for subsidy and instead create incentives for innovation. Why can’t one of the US solar panel manufacturers become the next Nucor?

–Lisa Reisman

Britain Out to Rule the Waves…Again

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Environment, Green

When you boldly go where no man has gone before there may be a good reason why you are on your own. We hope that’s not the case for the UK marine renewable energy sector but the level of government (or should we say taxpayer) funding required is so immense one has to ask maybe there is a good reason why the UK is a world leader in these technologies. The Crown Estates that owns mineral rights, including the seabed, in the UK has announced ten schemes expected to be capable of generating 1.2GW of electricity around the Orkney Islands and on the Pentland Firth off the northern coast of Scotland. According to a Telegraph article, the combined cost is expected to be some £4bn to install and will require a further £1bn more of taxpayers money to build new grid connections, harbors and other facilities in Orkney and Caithness we suspect this is a conservative number, the distances involved will probably require DC transmission which is hugely expensive to set up as we recently wrote about.

The projects comprise six wave energy developments potentially generating 600 MW and four tidal projects potentially generating a further 600 MW. You will notice a lot of “expected and “potential. The problem is this technology is still being developed and is as yet largely unproven beyond the trials or experimental stage. Britain however will not be the first to install a wave machine. Portugal took that award back in 2008 admittedly using British technology from a firm called Pelamis when they announced the installation of three 140 meter long cylindrical steel wave machines off the coast of Agucadoura in Northern Portugal. The three machines generate 2.25 MW and have been sufficiently successful that the Portuguese are proceeding with a further 20MW.

The wave power generators vary depending on the manufacturer but this design by Pelamis could be said to be the front runner as they have had projects in commercial operation for some years now and have been actively developing the technology via sea trials since 2004.

A different design anchored to the seabed and sited closer to the sea shore looks like this and is predictably called the Oyster, made by a firm called Aquamarine.

The Oyster is a simple mechanical hinged flap connected to the seabed at around 10m depth. Each passing wave moves the flap, driving hydraulic pistons to deliver high pressure water via a pipeline to an onshore electrical turbine. Multiple Oyster devices are designed to be deployed in utility-scale wave farms, in this case scheduled to be 200MW in total.

Possibly of greater potential are the tidal power generators of which Open Hydro were one of the successful firms bidding for the Pentland Firth sites with their seabed mounted machines like these:

The first 6m test unit produces enough energy to supply 150 average European homes and production turbine diameters will be on the scale of hydro-electric power plants. As with Pelamis, Open Hydro’s website has video of their equipment in trials.

Environmentally wave and tidal power has to be preferable to wind power if for no other reason than they are either invisible or barely visible arguably Aquamarine’s Oyster would be pretty visible from the shoreline, and as overcome a major objection to wind power towers, namely the unsightly spoiling of open countryside and the noise from whirling turbine blades. But in one other sense they suffer from the same drawback, namely they are not economically viable (or not without subsidy which amounts to the same thing). Whether scaling up to mass production will achieve lower costs per KWh remains to be seen. Let’s hope that proves to be the case for British consumers and tax payers.

–Stuart Burns

Listening to the hype coming out of the Geneva Motor Show one has to wonder where the global auto industry is headed. Every one of the major car makers released details of new hybrid and new all electric vehicles, admittedly some in concept form like VW and Porsche but still accompanied with some grandiose projections on sales figures down the road. None more so that Renault-Nissan the struggling French-Japanese group who’s chief executive, Carlos Ghosn is reported to have claimed they will be producing half a million electric cars by 2013-14. We hope they have a big enough field to park them all in. After being available for 13 years, hybrid cars made up just 2.8% of the US car market in 2009 according to Hybrid, equivalent to about 300,000 vehicles. Renault-Nissan are starting from scratch with electric cars and yet they are projecting 500,000 in three years time. Of course it is possible Renault know something we don’t. Maybe the French government is about to launch a massive electric car subsidy scheme as a catalyst to encourage buyers to switch. Certainly Renault have identified some of the markets concerns. They propose leasing the battery packs to car buyers, not selling them as part of the vehicle. At the end of practical life they intend to recycle them as power storage units.

Even the normally prudent and sensible VW group has caught the electric fever after staying out of the hybrid/electric market as others rushed to develop products. VW has finally said they plan an “unprecedented drive into electric vehicles, by which they mean 3% of total sales by 2018. VW produced 4.4m cars in the first 9 months of 2009 according to Car Blog, equivalent to 5.87m vehicles a year but numbers were flattered by the scrappage scheme in Germany during that period. However, VW’s sales in China are rising rapidly so 5.87m for 2010 may not be unreasonable. 3% would be 160,000 electric vehicles per annum in 8 years time. It’s not exciting and probably not profitable, but certainly realistic compared to Renault’s 500,000 in three.

Even Porsche got in on the act with a 918 Spyder hybrid petrol-electric concept car at Geneva, an electric Porsche – is it just me?

Back to Renault’s CEO Mr Ghosn took the opportunity to raise the hype by voicing fears that the biggest constraint will be the availability of lithium ion batteries within two years. Japan, South Korea and China currently control 98% of the supply market but considerable investment is going into production facilities in North America and Europe so that situation is unlikely to continue for long. Meanwhile battery makers are scrambling for raw material supplies. Although experts say there is no shortage of lithium around the world, even at current prices, battery makers and trading companies are busy buying into extraction facilities in developing markets like Argentina, Chile and Bolivia ahead of the perceived demand.

Meanwhile research specialists Lux Research say Hybrid Electric Vehicles – HEV sales will reach roughly 3 million units annually by 2020 regardless of the price of oil. Plug in Hybrid Electrics – PHEVs need oil prices of around $200/bbl to reach that level of success, and pure Electric Vehicles -EV sales will be a factor of ten smaller even in this oil price scenario. While PHEVs and EVs may not live up to the hype, they still present a big market for batteries. Even in the low oil price scenario of $70/bbl Li-ion batteries for these vehicles will present a $510 million market, and the opportunity could reach $9 billion in the high $200/bbl scenario.

Of course much will depend on government incentives and subsidies. Left to the market and as a straight comparison with conventional internal combustion cars, electrification of cars in whatever form will remain a sideline. But if governments pour enough money into buyer subsidies and funding charging facilities numbers could be significantly different. Crystal ball anyone?

–Stuart Burns

We have written before about fuel cells. Few would argue that the gas-to-electricity power generators failure to make the breakthrough into widespread commercial use has been a source of considerable disappointment to inventors and consumers alike. Theoretically the process of taking natural gas and converting the oxygen and hydrogen into water (and depending on the feedstock carbon dioxide) while releasing electricity is well proven and has been for 100 years. The problem is in making it commercially viable. For space stations and isolated communities fuel cells work because the alternatives require transportation of large quantities of fuel products over uneconomical distances but the sticking point has in large part been the high capital and maintenance costs of the Platinum Group Metals (PGM’s) used in the catalysts needed to make the reaction work. Well a product called the Bloom Box could be about to change that. Eight years and $400m after Kleiner Perkins, the legendary firm that backed Google, Amazon and other dotcom success stories, first backed the idea they finally made a public launch of the secretive Bloomenergy’s product, the Bloom Box.

According to the Financial Times with a feed of natural or bio gas, a Bloom Box the size of a large refrigerator can power a commercial building. Backers claim the cost per kilowatt hour is about 8 to 10 cents, lower than some electricity rates but as each box costs about $800,000 we wonder if capital cost is taken into that calculation. Bloom says customers will see a return on their investment in three to five years. Several major companies have quietly been testing Bloom Boxes for the past few months. Ebay said it saved $100,000 in energy costs over nine months, and Staples, Google and others all claim similar results.

So in what way is a Bloom Box different from a conventional fuel cell you ask? Well Bloom claims to have made a breakthrough that allows its solid oxide fuel cells to be more powerful, and by using sand instead of platinum as the base material for the cells, Bloom has kept costs down. According to Island Crisis a series of ceramic discs coated with still secretive substances are at the center of the Bloom Box. The discs act as electrodes and after being heated they allow oxygen ions to pass from one cell to the other. As the ions pass through the discs an electrochemical reaction creates electricity. Bloom Energy is working on a domestic unit which might bring the price down to under $5,000. (Prototypes run by Google and E-Bay cost $800,000) The size of a domestic box able to power a whole home could be small enough to fit into a shoe box.

The much hyped launch was carefully orchestrated at eBay’s headquarters in California last week, and attracted figures from the former secretary of state, Colin Powell, who is on the company’s board, to the state’s governor, Arnold Schwarzenegger according to the Guardian newspaper. But they will need more than hype to make it a commercial success. They will need power rates competitive with at least wind or solar, i.e. subsidized but affordably so, even then it won’t be a game changer. To do that it will have to compete with nuclear and gas (coal may have its own problems when legislators finally decide how they will treat carbon). Bloom claim economies of scale in mass production would bring down costs, which of course they will, but whether they will come down enough to have one in every house is another matter. We reserve judgment on the long-term probability of success until hard numbers are available.

–Stuart Burns

Florida to Launch New Hybrid

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Environment, Green

A new kind of hybrid is being launched in Florida across 500 acres near West Palm Beach, later this year. The utility, Florida Light and Power (FPL Group) is assembling 190,000 shimmering mirrors and thousands of steel pylons that stretch as far as the eye can see. When it is completed by the end of the year, this vast project will be the world’s second-largest solar plant according to a NY Times article.

Yes this is a power station hybrid, not a car, and yet the intent is largely the same, to reduce fuel consumption and carbon dioxide emissions by marrying a conventional power source to a “green supply source. In this case, the solar panels will concentrate the sun’s rays onto a vacuum-sealed tube that contains a synthetic oil. The oil then heats up to 748 degrees F and is used to produce steam that is fed into an existing turbine to produce electricity. Using small sensors, the mirrors will be able to rotate during the day to track the sun’s movement. The difference here is that the turbines, electrical generating equipment and transmission system are already in place for the 3800 MW gas fired power station alongside which the solar farm is being built. By piggy-backing on the existing plant, FPL expects to be able to run the solar plant when the sun shines with the gas plant on reduced output and crank up the gas plant to full power during low light or during the night. Such a combination saves some 20% of the costs for a conventional standalone solar farm says the company and is the future for achieving a proportion of all power being produced from renewable sources such as Congress intended with its now stalled legislation to mandate a 25% target by 2025. Although 75MW for the solar contribution will allow the utility to achieve only 19% of total output from solar when the sun shines, it will on average of course achieve much less. The question is will the reduction in capital costs make solar power economical without subsidy or will tax payers and consumers be expected to pay higher charges for the pleasure of knowing they are creating less greenhouse gasses? FPL estimates the $475m project will allow the company to cut its natural gas consumption by 1.3 billion cu ft a year and cut carbon emissions by 2.75m tons over the 30 year life, on the European carbon trading market that would be worth some $50m at current prices and could feasibly be sold forward to help meet the capital cost, if a similar system existed in the US.

The reality is neither solar nor wind appear likely to be economically viable under current conditions (i.e. no carbon penalty) and without subsidies or increased consumer tariffs, but that won’t stop utilities developing projects like this to try and position themselves for the future. A hybrid system has a lot of logic especially in reducing capital costs and in synchronizing the balance of contributions from the conventional power source with the more variable renewable source.   We say anything that reduces the subsidy burden to the consumer has got to be a good idea.

–Stuart Burns

Hummer Deal on the Ropes

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Environment, Green, M&A Activity

Sichuan Tengzhong, the provincial Chinese maker of machinery is struggling to gain regulatory approval from Beijing to close their purchase of GM’s Hummer. The company appears to have run up against a policy issue that has nothing to do with east-west relations and everything to do with the direction the Chinese authorities want to take the country in the years ahead. The $160m deal would see Sichuan Tengzhing acquire the Shreveport manufacturing facilities and rights to the Hummer brand allowing them to sell the model again in the US through the approx 160 dealers some have gone bust since last year – but more importantly sell globally through the 232 overseas outlets that made up 75% of Hummer sales. Not least of which would be sales into China of course, and therein lies the problem.

As Businessweek rightly points out, China is also encouraging automakers to build more fuel-efficient cars, including hybrids, to help win sales overseas and to reduce oil imports and pollution at home. The 3.7-liter Hummer H3T gets 14 miles to the gallon in city driving, according to the U.S. Environmental Protection Agency.  Incentives for smaller cars combined with rural subsidies boosted nationwide sales in China last year to 13.6 million, helping it supplant the U.S. as the world’s largest auto market. However, after so much support both financial and legislatively for fuel efficient cars, acceptance of the Hummer would be a complete about-face something the Chinese are not noted for. Sichuan Tengzhong have said they want to make more fuel efficient versions but there is a limit to how fuel efficient you can make a 4700lb car, the weight of the current H3. A new smaller version could be designed but that becomes incredibly expensive and without GM’s design expertise it would be a major challenge to design and bring to production a new car that would be acceptable to buyers used to the H3. The brand would risk serious damage if it was deemed to be a failure.

Dealers were keen for a deal according to an FT article, just so long as production at Shreveport continued. Although sales dropped dramatically in 2009, Hummer still outsold Porsche, Land-Rover or Jaguar in the US. May be this really will be the end of Hummer and it will be consigned to the history books as the kind of behemoth that buyers could indulge in during the days of cheap gas. In the new green world Hummers do seem out of place, shame though as a lover of big boys toys I for one would regret their passing.

–Stuart Burns

Anyone familiar with life in China’s big cities will not be surprised by the report’s findings – atmospheric pollution has been a problem for years but the report highlights that water pollution is also a major problem.   More than 209bn tons of waste-water were discharged into rivers and lakes in 2007 twice the government’s earlier estimates. Fearing social unrest if environmental problems are not tackled, the authorities are discussing taxes and other forms of control to get to grips with the situation.

Zhang Lijun, vice-minister of environmental protection said in a China Mining report to be wary of industrial projects that involve heavy metals, such as lead, mercury, cadmium, chromium and arsenic, suggesting new projects may not be approved or require expensive control procedures. The census revealed six industries including power generation, heating, minerals and non-ferrous metal smelting account for 88.5% of total sulfur dioxide emissions. China discharged 23.2m tons of sulfur dioxide in 2007 compared to less than 9m tons in the US, and 19.21 m tons of nitrogen oxides, respectively causes of acid rain and global warming. The US halved sulfur dioxide emissions by instigating an extremely effective cap and trade program back in 1990 following the Clean Air Act and Acid Rain Program. It will be interesting to see if China relies on the markets by doing the same or whether they go for centralized control and issue targets and deadlines.

A China Daily report on the census further revealed industry discharged 49.15 m tons of industrial waste and 39,400 tons of hazardous industrial waste in 2007 along with 900 tons of heavy metals. The shock to the authorities has been the level of agricultural pollution caused by over and indiscriminate use of fertilizers and pesticides but the issue for the metals industries will come more as a result of air and water pollution curtailing production as it did last year with lead producers or in declining planning applications for new facilities. Non-ferrous metal smelting has already been identified as a major source of sulfur dioxide either directly from the smelting process or indirectly from the massive amounts of power needed for processes such as aluminum and zinc production. Most of that power is generated from coal-fired power stations and on the whole is dreadfully inefficient from an environmental standpoint. Taking data from the US Energy Information Administration as a framework where Co2 levels are measured for the US and China we can see that while the Co2 emissions per capita are high for the USA at 19.2 mt/person compared to 4.9 in China that is due to the majority of the population in China living at a subsistence level. But the Co2 intensity, measured as emissions per unit of GDP, are 880 mt Co2 per million dollars of GDP in China compared to 443 in the USA, illustrating how incredibly polluting Chinese industry is per unit of GDP produced. As the standard of living rises in China the emissions per capita will rise unless the authorities take action and they know that. This more than tightening of capital and bank loans could provide the brake to relentless Chinese investment in primary industries. With a new five-year plan (now termed guideline) about to start from 2011, expect pollution and the metals industry to appear much higher up the list of priorities than it has in the past.

–Stuart Burns

Every now and then the idea of airships comes around again. Someone comes up with a new development that seems to open the door to a return of the idea only for it to be dashed by the cold hard economics of competing with relatively low cost established air transport. The very idea of airships has an old world glamor about it that should, one feels, find a place in the modern world alongside the cruise ship industry where the journey is the experience not just a means to arrive at a destination.

So it is no surprise that the latest project has all the usual magic ingredients: elegance, space, serenity mixed with a few new ones excellent environmental credentials and speed. The Seymour Powell AirCruise “Clipper in the Skies is showcased in conceptual form on a YouTube clip and although the music is a little irritating and at 5mins the clip is rather long it certainly captures the potential of such a craft. Samsung has picked up the original concept and they have commissioned Seymour Powell to produce a detailed design. We think of Samsung as makers of TV’s and domestic electronics but they also have a heavy industries division and are one of the world’s major shipbuilders so they know a thing or two about bringing such projects to reality. The design allows for up to 100 passengers and 20 support staff and crew to be carried at up to 12,000 ft (it’s unpressurized) and at a cruise speed of 90mph. That allows for London to New York in 37 hours or Los Angeles to Shanghai in 90 hours. The craft would be 270 ft high and weigh about the same as an Airbus A380 super jumbo. Like an aircraft, it would be constructed of lightweight materials such as composites and lithium-aluminum and titanium alloys. Hydrogen would be used to create the lift held in four individual containers even though it has been passed over in favor of the not quite so efficient gas helium in airships ever since the loss of the Hindenburg in 1937. Power would be provided by fuel cells drawing hydrogen from a compressed reserve also used to replenish the main lifting chambers if required. The outside of the airship would be covered by photovoltaic cells to provide power and combined with the emissions from the fuel cell essentially just water vapor would create near zero emissions. For those that can afford what would probably be high-end luxury prices, the AirCruise would provide guilt free travel like no other.

Will it become a commercial reality? Sadly it is unlikely, but if it does it will certainly be on my top 20 list of must do’s.

–Stuart Burns

President Obama said many things this past Wednesday evening during his first State of the Union Address. Admittedly, I had fallen asleep during part of it, though I perked up at the small business initiatives he mentioned. But I missed something rather big pertaining to the nuclear industry. Specifically, President Obama reiterated his commitment to growing this country’s nuclear energy capability by increasing loan guarantees. According to this article, the loan guarantees, included in the Federal Budget scheduled for release on February 1 will include $54b to stimulate the investment in several new reactors. Four companies appear on the short list for the guarantees according to the story. Unfortunately, increasing America’s nuclear base will take more than $54b worth of loan guarantees. We discussed some of the obstacles to increasing the number of nuclear power plants in the United States in this controversial post last May.

First, we have the opposition to the use of nuclear power based on a taxpayer argument. But that argument, put forward by Michele Boyd of the Washington-based Physicians for Social Responsibility in this way, “Why are US taxpayers expected to promise to bail out the nuclear industry, wreaks of hypocrisy. After all, the entire wind industry rests on government mandates paid for by taxpayers (mandates such as the State of Illinois require power companies to source 20% of its energy from renewables paid for by yours truly, I can assure you) And shall we assume that wind and solar energy initiatives do not receive any tax-payer assistance?   The argument seems silly.

The real issue involves what to do with nuclear waste. According to this recent blog post, President Obama under an executive order, established a 15-person commission that will, “conduct a comprehensive review of policies for managing the back end of the nuclear fuel cycle. And according to Earth2Tech, “That report is meant to include advice on how to store, process and dispose of nuclear fuel and waste from both nuclear and civilian use. The preliminary report could come in June 2011 with the final report by the end of 2011.

With a single reactor costing $9b according to the Nuclear Energy Institute quoted in the Bloomberg article, metals make up a substantial portion of the total. Consider these figures for one nuclear power plant according to a Boston Globe article from last September, “¦.66,000 tons of steel, 44 miles of piping, 300 miles of electric wiring and 130,000 electrical components. We know the metals industry remains gaga for wind energy and the metals demand it supports. Unlike wind, however, nuclear has proven itself a viable, long term, low-cost and most important “always-on energy source burdened with the twin issues of spent nuclear waste and high capital costs (but the cheapest of all energy sources on an on-going basis) but without the massive storage, transport and Ëœwhat-happens-when-the-wind-doesn’t-blow’ issues befuddling the wind portion of the energy industry. We extend our kudos to the President for having set up a commission to investigate nuclear waste options.

And before you environmentalists start telling me about NIMBY (Not-In-My-Backyard) politics, I would like to point out I live 60 miles from this nuclear power plant.

–Lisa Reisman


Trying to read the Rune’s on the future oil market must be a tough proposition for North American oil refiners. They not only have to predict the direction of oil prices and of likely demand but also second guess the pace and direction of environmental legislation impacting their industry. That may seem like a no-brainer. It will get tougher you would say, but at the same time that President Obama is making pro environmental noises ultimately ineffective, at the failed Copenhagen summit his administration had already approved a 1000 mile pipeline to carry up to 800,000 barrels a day of oil from Canada’s oil sands deposits to American refineries. The project, likely to cost some USD 2bn, has faced tough opposition from environmental groups keen to keep Athabasca oil sands crude out of the US.

Meanwhile the refineries are making massive investments to accommodate the heavy high bitumen and sulfur containing crude from the oil sands in the belief this will be a long term feature of the refining mix in North America in the future. At least two proposals for new refineries and about a dozen expansions to process tar sands have been made in 2009 according to an article in the Financial Times. The article says many refinery expansions are already underway including those by BP, ConocoPhillips, Valero and Marathon. Analysts are quoted as estimating pipeline companies and refiners plans to invest more than USD 31bn by 2015 to export, process and distribute oil sands products creating a huge opportunity for stainless and steel suppliers to the industry. You can understand the refiners’ enthusiasm. The tar sands reserves are estimated at 175bn barrels of oil and they could see oil companies making plans to pour money into oil sands production as the oil price rose in 2007/8. But some of the steam has gone out of that market as environmental pressures have mounted. Shell is raising its tar sands production with the $14bn expansion of its 60% owned Athabasca Oil Sands Project to a capacity of 255,000 barrels a day due to be completed next year but have shelved earlier plans to raise production to 700,000 barrels a day. It’s not just the oil price either. Operators are reducing project cost estimates as post recession costs feed through and a switch to more conventional technologies is adopted. Husky Energy and BP have reduced their cost estimates at their Sunrise project to USD 2.5bn from an earlier USD 3.8bn. The scaling back of project plans has more to do with concerns over the medium to long term viability of tar sands extraction that emits high levels of green house gasses. In an increasingly carbon centric investment environment, oil companies worry that they should not over invest in a resource where producing a barrel of synthetic crude from oil sands results in greenhouse gas emissions three to five times greater than a barrel of conventional crude.

So although the Canadian tar sands are known to contain the second largest probable reserves after Saudi Arabia, unless a wholly new and much less polluting way of extracting them is developed they are likely to remain very much a marginal source for US oil supplies. The refining capacity may be in place and a new pipeline can move the raw material from source to market but if producers are not willing to pour the billions into developing the extraction facilities the Athabasca oil sands reserves will remain a sideshow.

–Stuart Burns

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