'Energy & Utilities' Archive
Passions were running high in Congress last week as the Obama Administration’s “cap-and-trade” Energy Bill squeaked through the House of Representatives on a vote of 219 – 212. A visibly irate House Minority Leader, John Boehner, spent nearly an hour castigating the House leadership for both what was in the Bill, and for the limited amount of time that Congressmen were allowed to read it.
At the heart of the Waxman-Markey Climate Bill is the push for the US to reduce carbon dioxide and other greenhouse gas emissions by 17% from 2005 levels by 2020 and by 83% by 2050.
For the White House and Congressional Democrats the thrust of the Bill is for the US to lead global energy policy in a new direction by reducing carbon emissions, the main cause of the man-made contributions to global warming. In return, the Bill’s advocates argue, millions of green jobs will be created as the country inventively shifts to greater reliance on renewable energy sources such as wind and solar and develops more fuel-efficient automobiles.
The cap-and-trade mechanism allows for companies to honor government limits on emissions, by either meeting the goals by reducing output, or by buying emission credits from companies that produce less. The mechanism is designed to provide a market incentive to reduce pollution.
However, the Bill means one thing for certain — less use of fossil fuels such as oil, gas, and coal. And for Democrats representing coal-, gas-, and oil-producing states — as well as for global warming skeptics and “drill here, drill now” advocates on the Republican side of the aisle — the size, scope, and direction of the Bill was too much to take.
The Bill is “a pile of s**t,” Boehner told The Hill magazine, presumably not advocating the use of biomass (in the Bill) with his comment.
While the fate of this Energy Bill in the Senate is highly questionable, a little cool reflection is required.
The push for utilities to use renewables is not a brand new idea. A quiet revolution of renewable energy initiatives has been sweeping through the power sector of the US economy over the past five years. The country’s regulated utilities and the companies that own them have been steadily pushing energy conservation programs with their customers and turning over a small but increasing percentage of their energy plants to renewable energy sources — wind, solar, and biomass. All this in order to meet environmental regulations from previous administrations.
According to Carol Browner, the president’s Assistant for Energy and Climate Change, in 2009 renewable energy already accounts for 3% electricity production in the US, and is likely to double by 2012 or 2013 with or without this Bill. Utilities are already heavily engaged in the process. Pick up any Annual Report for any utility/power company — FLP Group, NRG Energy, Duke Energy, PacifiCorp, NV Energy, etc, — and you will find many paragraphs on renewable energy, and on conservation initiatives.
And the cap-and-trade mechanism is not a new concept. It has already worked well in the US, according to Paul Krugman. In the 1970s and 1908s, acid rain caused by the emission of sulfur and nitrogen compounds into the atmosphere, was a big problem. In 1990 the EPA introduced a cap-and-trade program to address it, and by the end of the decade utilities met compliance, greatly reducing SO2 emissions.
Big Oil, and Big Coal, and Chinese and Indian coal plant expansion notwithstanding — the future lies with clean energy, if the US has the will to make it happen.
BP handed all of us oil and gas analysts and statistical geeks a belated Christmas present last week when it published its Statistical Review of World Energy 2009. This year’s review, the 58th consecutive edition that BP has published, gives a great overview of the world’s energy resources and their utilization by country and region, and covers oil, natural gas, coal, nuclear energy, hydroelectricity, and others.
There are lots of facts to be digested. For instance, according to the report, the US no longer consumes 25% of the world’s energy sources (a number often quoted by politicians and media outlets). In 2008 it only consumed 20.4%, a full 2% lower than in 2007. By contrast, China accounted for 17.7% of the world’s energy, up a dramatic 7.2% from 2007.
Let me stick with China for the purpose of this post, for behind the statistics of the country’s industrial expansion and increased energy consumption lurks a dark and troubling trend. According to the report, coal — the dirtiest, most polluting modern energy source — has been the world’s fastest growing energy source for six consecutive years, and China has accounted for 85% of global growth. The third largest economy in the world, China is also the largest polluter of greenhouse gases — with carbon dioxide, a byproduct of coal burning power plants, being the largest culprit.
Now, here is the really bad news. According to an Investor’s Business Daily report, China has plans to build 2,200 additional coal-fired plants between 2006 and 2020. And so while much of the developed world, under the Kyoto Protocol, is pushing its utilities to cut carbon emissions by switching to greener fuels, or introducing carbon-capture technologies, China is looking to add 12 coal burning plants a month for more than another decade. Sobering stuff.
But wait, it is worse than that. According to an environmental group report from a few years ago, coal mine fires in China burn about 200 million tons of coal each year. These include small illegal fires in the northern region of Xinjiang where local miners set fires in abandoned mines for heat in the cold climate. This translates to 360 million metric tons of carbon dioxide emissions per year, not included in reported emissions statistics.
The silver lining in the growing cloud of carbon emissions? China is also the world’s leader in terms of building clean coal plants that use emission control equipment to remove the sulfur and nitrogen compounds that cause acid rain.
It is also building new plants that use extremely hot steam to power turbines and require less coal per plant. In addition, China is investing heavily in wind power resources and other renewables. But can the new technologies mitigate the pollution caused by the insatiable demand for power that its burgeoning population and economic engine demands? Unlikely.
Just behind China, that other Asian giant, India, is building a large number of coal plants as well.
Speaking for myself (as an energy analyst, stats geek, and greenie living Stateside), the global challenge of controlling carbon emissions and mitigating global warming trends is getting more difficult, not easier.
And that is an inconvenient truth.
Many momentous events took place in 1959. Fidel Castro, Che Guevara, and their communist guerrilla forces took over Cuba. A Raisin in the Sun opened on Broadway. The Dalai Lama fled Tibet and went into exile in India. Khrushchev and Nixon had their “kitchen debate” in Moscow. The St. Lawrence Seaway was opened. Miles Davis released Kind of Blue.
In the world of business, Honda Motor opened its first overseas subsidiary, American Honda Motor, in a Los Angeles storefront. Hitachi established Hitachi America. And National Semiconductor was born.
National Semiconductor makes its headquarters in Silicon Valley, of course, but the company was started in Danbury, Connecticut, on May 27, 1959, and incorporated in Delaware. It was less than a year after the integrated circuit (IC) was invented by Jack Kilby at Texas Instruments, and not long after Fairchild Semiconductor’s Robert Noyce came up with an IC design that was easier to manufacture than Kilby’s design.
National Semi moved its headquarters from Connecticut to Santa Clara, California, in 1967, before Intel or Advanced Micro Devices were established, and about the time people started talking about the Santa Clara Valley, “the Valley of Heart’s Delight” that was covered with fruit orchards (Orchard Supply Hardware got its start there in 1931, and still makes its headquarters in San Jose), as this “Silicon Valley,” filled with companies making semiconductors on silicon wafers.
National’s been around for 50 years, but it’s not half as well known as AMD, Fairchild, or Intel. In fact, it bought Fairchild from Schlumberger in 1987, and then spun off the venerable chip company a decade later. National became famous in the industry for churning out low-cost logic devices, analog chips, and transistors. The company became infamous for a long-standing practice of reverse-engineering its competitors’ devices (an entirely legal yet costly and time-consuming way of designing ICs).
National pioneered many industry firsts in semiconductor products, yet it never really launched a home-run chip, like Intel did with the microprocessor, TI did with the digital signal processor, and ZiLOG did with the microcontroller. It was content to make huge volumes of microchips for its customers and never saw the need for a “National Inside” marketing campaign. National now is pinning hopes on its SolarMagic line of power management devices.
The company is noted for some long tenures among its CEOs. Charles (Charlie) Sporck led National for 25 years, from 1966 to 1991; he helped establish the SEMATECH research consortium. The incumbent CEO, Brian Halla, has held the job for 13 years, which is close to a lifetime appointment in hard-charging Silicon Valley.
Happy 50th, National Semiconductor Corporation! Here’s to 50 more.
There are 3,000 new jobs available in Wisconsin and Minnesota!
Don’t look now, but the economy is beginning to stir after the enforced hibernation of the general economic collapse that was prompted by the failure of the financial and real estate markets. Even the oil and gas sector is coming back after the whiplash ride of experiencing crude oil prices soar to about $150 a barrel before slumping to around $30 a barrel in the course of a few months in 2008. (Crude oil futures are now trading in the mid-to-upper $60s).
One sign of the improving economy in the oil sector is that energy pipeline companies are hiring again. To be specific, oil and gas pipeline giant Enbridge plans to begin hiring 3,000 workers in July in Wisconsin and Minnesota to help build two big pipeline projects (Alberta Clipper and Southern Lights). The Alberta Clipper line, which when completed will stretch 1,000 miles from Superior to the Alberta oil sands in Canada, is already underway. The crude oil pipeline will provide service between Hardisty, Alberta, and Superior, Wisconsin and is expected to be in service by mid-2010. Initial capacity will be 450,000 barrels per day, eventually reaching up to 800,000 barrels per day.
With supply from Western Canada oil sands developments expected to grow by as much as 1.8 million barrels per day by 2015, the industry is looking for more capacity to deliver heavy crude product from the oil sands area to the Midwest markets. Given the long development timelines for oil sands producers and refiners to ramp up to meet demand, an efficient pipeline infrastructure serving their projects is critical. The Alberta Clipper is a direct response to this need.
The Southern Lights pipeline will run 700 miles from Chicago to northwestern Minnesota. This “reverse flow” pipeline makes the pipeline shipment of crude oil from Canada’s Oil Sands area possible. Enbridge’s Southern Lights Project will supply light hydrocarbons (diluents) from US refineries and supply centers to petroleum producers in the oil sands and heavy crude oil production regions in Western Canada. Diluents are light hydrocarbons that are used to dilute heavy crude oil and bitumen (the thick form of oil found in the oil sands) to a consistency that is thin enough to be transported by pipeline. A separate diluent pipeline is proposed to be built from Edmonton, Alberta, to the heavy oil sands region in northern Alberta.
The Federal Government’s stimulus package might well give a good short term boost to employment. However, the natural market forces of increased demand (for oil) matching available supply (oil sands crude) and which requires the building of a delivery infrastructure (oil pipelines) results in the kind of long term employment opportunities by the private sector that the Obama administration would love to see replicated over and over.
Maybe there are more jobs in the pipeline?
Applied Materials was and is the world’s biggest producer of semiconductor manufacturing equipment. That industry is in a severe downturn, going back more than a year, due to the travails of its primary customers in the semiconductor industry. The chip makers are suffering because people aren’t buying as many gadgets and other electronics as they were in 2007, so fewer chips are sold, and fewer machines for making chips are ordered and installed.
Applied’s 2Q09 results are a revelation. Sales in the company’s Silicon segment were $260 million for the quarter. Not bad, eh? Well, no, not when you see that sales in that segment a year ago were nearly five times that amount — $1.27 billion.
Here’s the real kicker — sales in Applied’s Energy and Environmental Solutions segment were $357 million for the quarter, more than the Silicon segment, traditionally the company’s bread and butter. Energy and Environmental Solutions includes Applied’s SunFab line of equipment for making solar energy modules. Sales in that segment quadrupled year over year, although the product line is unfortunately unprofitable.
Solar energy still has a long way to go to become a mainstream source of electrical power generation, but many companies are still heavily investing in it. Suntech Power Holdings, a Chinese producer of photovoltaic solar cells and modules, this week reported it will build its next plant in the US. Renewable energy technology may be the economic salvation so many leaders are looking toward.