Saturday, December 20, 2014

VERY INTERESTING AND WORTH CONSIDERING Three Ways Renewables Could Benefit From Low Oil Prices

I have recently been reading the comments by Mr. Jeff McMahon on renewables and have to say I am impressed. The man seems to really be in touch with the industry and has offered insights that I find compelling. I rode the renewable industry wave when it was not even an industry yet so I am not very alarmed when headlines scream Chicken Little The Sky Is Falling claims. Oil prices have always fluctuated and there are so many factors to take into consideration when they do that I find it only pure speculation when someone claims they know the true reason. OPEC is a cartel controlled by a few. They did egregious damage to the economy during the recession and not one news outlet bothered to point it out but having said that renewables grew during their strangle hold. I would instead rather focus on how we in renewables can benefit and Jeff does a great job in pointing that out.

Jeff McMahonContributor

Low oil prices don’t have to mean a resurgence in the consumption of fossil fuels at the expense of clean alternatives, the leaders of the top U.S. and international energy agencies said today.

International Energy Agency director Maria van der Hoeven and U.S. Energy Secretary Ernest Moniz appeared together Thursday at the Bipartisan Policy Center in Washington DC, where van der Hoeven presented the findings of IEA’s 2014 review of U.S. Energy policy.

The review, last conducted in 2007, was largely positive, though IEA noted deficiencies in U.S. policy toward renewable energy and nuclear power.

“As a career academic, I wasn’t accustomed to getting the grades,” joked Moniz, formerly a physics professor at the Massachusetts Institute of Technology (MIT).

That prompted the moderator, BPC’s executive director for energy Margo Anderson, to ask van der Hoeven for a letter grade.

“I heard the secretary say he was looking for a grade,” Anderson said, “so what did we get? B, B-minus?”

“Well it’s something better than that!” Moniz retorted, and van der Hoeven agreed.

“No no, its something better than that, come on,” she said. “You know, I’ve been in teaching, and if a pupil does a good job, we reward this with a nice grade. And then we tell them, now do something more.

“There has been great progress in the six years since our last review, and I look forward to seeing similar or even greater progress after another six years.”
Emily Meredith of Energy Intelligence asked the duo how governments could “move towards new sources of energy and away from traditional sources at a time when we’ve got $60 oil and quite low gas prices. How does that work, particularly in the U.S.?”

Low oil prices are a boon to oil producing nations like the U.S. (now the world’s third largest oil producer, thanks to fracking), van der Hoeven said, and they also create an opportunity to encourage renewables there.

Even though people drive more when fuel costs go down, it also becomes easier to add costs to their consumption.

1. Eliminate Fossil Fuel Subsidies: “Let’s use this opportunity of a low oil price,” van der Hoeven said. “It’s an opportunity for a number of countries who are now putting a lot of money in fossil fuel subsidies to phase out these fossil-fuel subsidies. We are talking about $550 billion U.S. dollars a year.”

The U.S. spends about $5 billion annually on direct fossil-fuel subsidies, which the Obama Administration has attempted, unsuccessfully, to eliminate in each year’s budget. Mexico, Thailand, and Malaysia are attempting to reduce subsidies while oil costs remain low, van der Hoeven said.

2. Tax Carbon: ”And another thing is, why not use this opportunity to put a price on carbon?” she said. “I know that many people in this country hate the word ’tax’, and I understand that, but you’ve got to make use of this situation. And putting a price on carbon is something that in 2015, at COP-21, should be achieved as well. But now we have an opportunity to do something like that.”

3. Boost Fuel Efficiency: ”And the third thing I would like to mention on this issue. We have done quite a lot in energy efficiency, in fuel efficiency, in renewables. These are assets that are of more importance than just low oil prices at the moment. Let’s not forget about that.”

Moniz’s predecessor at Energy, Steven Chu, was pilloried in Washington for a false report in the press that he had said he wanted gasoline prices to rise, so Moniz began his more defensive response to Meredith’s question by celebrating low gas prices.

“First of all, let me make it clear that the relatively low prices of oil and gas in the United States are a real boon for consumers. And I would say that we already see some of that effect coming in, certainly—I’m not going to attribute it entirely to that, but we certainly saw a big jump up in terms of job creation in the last month to well over 300,000,” Moniz said.

“Having said that, we still are committed to going to a low-carbon future.”

Instead of describing potential actions, as van der Hoeven had, Moniz described three ways the U.S. is already encouraging renewable energy:
1. Reducing Oil Imports: “Even as we frankly celebrate our increased oil production and dramatically reduced oil imports, we can’t forget we are still a major oil importer. And we cannot take our eyes off the ball of continuing to reduce oil dependence in three ways:” efficient vehicles, alternative fuels, and electrification of vehicles.

2. Low-Carbon Policies: ”We do have a large number of states that remain with strong renewable portfolio standards. We do have policies that are not economy-wide, as the solution that Maria advocated for, but in different sectors, like CAFE standards, like the proposed EPA rules on power plants, we have a variety of mechanisms to keep pushing towards a low-carbon future.”

3. Research, Development and Deployment: “I want to emphasize, it’s not about those oil and gas prices being low, it’s about driving down the costs of the alternatives,” Moniz said, and “we’re making tremendous progress on that across the board.”

Moniz reminded viewers of a chart van der Hoeven had displayed praising the U.S. Department of Energy as the world’s largest energy research and development organization. Moniz also defended DOE’s loan program—the object of much derision after loan-recipient Solyndra defaulted in 2011.

“The chatter of a few years ago, we should be forgetting,” Moniz said. ”This is a highly successful portfolio that is getting clean energy out there, big time, and we will continue that over these next years, and this has impact in deployment, in further cost reduction, even in this decade.”

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