style="COLOR: #ff4040">Independent Market for Every Utility Customer - Preliminary Business

Case

style="COLOR: #ff4040">Independent Market for Every Utility Customer - Part 2 - Market

Operation

style="COLOR: #ff4040">Independent Market for Every Utility Customer - Part 3 - Alternative Market

Operation

Energy Central Blogs - IMEUC - Independent Market for Every Utility Customer

Independent Market for Every Utility Customer - Preliminary Business Case

Independent Market for Every Utility Customer - Part 2 - Market Operation

Independent Market for Every Utility Customer - Part 3 - Alternative Market Operation

Energy Central Blogs - IMEUC - Independent Market for Every Utility Customer

Commercializing such technology is a necessary evil to implement it because no government tax breaks or handouts could afford the cost of its implementation on a nation-wide scale to vast numbers of consumers. It begs the question how to commercialize it when it intimately must function and communicate with the grid and our utility companies.

The answer just might be in regulatory reform where utility companies could change their business models and start selling the necessary equipment compatible with utility AMI and smart meters to interested consumers willing to pay for them. Just as CATV and telephone companies do with residential consumers, utilities in this scenario could offer the equipment and data communications though their AMI system as an added billable service to any customers who know they could benefit from potentially substantial new savings on their energy bills, and are willing to purchase them.

The technology's commercialization must involve utility companies if it must communicate with their AMI systems, in part because, in the absence of industry-wide standards, it must be designed and developed to work with a particular utility's system. It will never fly commercially left soley to other third-party companies making and selling electronics, as many people think it should in the utility business. Sadly, such reforms to enable our utility industry don't seem to be of any interest to governments or to regulators as it is not even on their radar screens.

With all the other demands being placed on our beleaguered utility industry, like renewable energy and carbon emissions taxes or cap-and-trade schemes, some are predicting a doubling or more of electricity rates. Just ask your local restaurant, or dry cleaning shop, or local auto manufacturing factory, what the impact of doubling or tripling of electricity rates will have on their businesses. More than ever before industries will be / should be looking for ways to intelligently reduce their energy bills, and be able to quantify their savings to justify the cost of pursuing them. Putting more real-time technology in their hands has the potential to help do it, along with judicious strokes of lawmakers’ pens.

Deploy energy efficiently. Efficiency like beauty is in the eye of the beholder, because if voters were efficient Mr Bush would have left the White House in 2004, and the Republicans would have nominated Mr Romney for their presidential candidate. As a democrat what I want from President Obama is for him to leave "efficiency" to the TV audience, and get an energy team that knows about the avantages of nuclear and the futility of cap-and-trade.

The trouble with leaving "efficiency" to the TV audience alone is that it won't happen on the scale that is perceived necessary by environmentalists and by politicians. They believe that government must intervene to make it happen. I am no leading academic economist, but every Joe on the street understands that is costs money to upgrade a house, a factory, or anything else to be more energy efficient. And that Fred is the whole problem - who pays for it, and then how does one measure the energy bill reduction benefits resulting from the upgrades over a given time period.

So society has a dilemma - spend lots of money on efficiency upgrading, or spend lots of money on much more generation like nuclear so that we don't have to care as much in the long run about efficiency. I suspect Obama will do both because the latter cannot happen quickly enough to solve the looming crisis in our electricity system.

Here in Ontario we are about to get new legislation thrown at the public called the Green Energy Act. Among other things like removing regulatory barriers to speed up renewable source generation, it plans to force efficiency standards on all consumer appliance manufacturers. They won't be allowed to sell their products in Ontario in future if they don't strive to meet them. Appliances will therefore cost more to become more efficient, and consumers will have to swallow it when they go shopping, but the Ontario government is now saying what Obama has said when he took office - citizens must “sacrifice” something to build for the future. And in the context here that means it will cost consumers more, one way or another.

Save your pennies Fred, we're going to need them.

Where some sort of upgrading of our house is concerned, apparently we paid for it. Frankly I don't care, nor did my wife, because we had no choice. Both of us understand that it was just another ill thought out directive by a government that is only slightly less stupid than the one it displaced. But let's face it: if consumers in our countries thought more about the futures of themselves and their families, and less about bringing freedom and democracy to stone-age countries on the other side of the world, maybe we could get the governments we deserve.

Agreed. Government decisions and policies, foreign policies included, leave many citizens in both Canada and the US disillusioned about government, to the point they refuse to bother voting in elections.

I sympathize with governments wanting to do something to foster changes regarding energy, because we simply cannot go on with our massive dependence on oil, and the electricity grid is in need of massive investment just to keep it up to where it is now let alone expand it to meet future demand growth. Building more nuclear is definitely going to be part of it because they know it has advantages and long lifetimes. There is also the slow realization of the problems with endless population, economic, and energy demand growth because the earth has real limits. So curtailing energy consumption through efficiency upgrades for just about everything is now showing up on more people’s radar screens everywhere these days.

Even in my world of electronics, all the latest design practices focus on power consumption with greater importance than ever before. I will admit that this is mostly motivated by my industry's appetite to continue to make money by commercializing more technology on top of all the other stuff we already have to play with. For instance they are trying real hard to put everything but the kitchen sink into portable cellphones now, TVs included, and they know it won't sell if you have to carry around a car battery to power it. Advances made in leading-edge cellphone design often gradually migrate to many other generations of new products that are now under pressure to reduce power consumption for efficiency’s sake.

Our provincial premier of Ontario was asked by the Toronto Star newspaper in an interview yesterday what he thought of nuclear. His answer was he "wishes" he could shut down all nuclear and coal plants by replacing them with greener cleaner renewable source generation. But he admits he has live in the real world he said, and to keep the lights on, nuclear must continue to be big part of Ontario's generator fleet for a long time yet, and it will continue to be, as it is now, a big part of future central generator construction plans.

Perhaps today's San Diego Union-Tribune editorial page has it right. The editorial bylines, "Science over politics? Hardly. Defunding of Nevada nuclear waste site undercuts Obama's claim."

Don

By my calculation that would have been about $400 billion spent on processes and facilities that would have started creating jobs immediately and facilitated a greater degree of energy independence before the end of the decade.

A pity the opportunity was wasted.

Paul

[A]ccording to a recent USGS study (Assessment of Coal Geology, Resources and Reserves in the Gillette Coalfield, Powder River Basin, Wyoming, USGS open-file report 2008-1202),

http://pubs.usgs.gov/of/2008/1202/

the coal reserve estimate for the Gillette coal field is 10.1 billion short tons, which is a mere 5% of the original 200 billion ton resource total. In other words, the USGS has just revised the Gillette resource base down by 95%.

http://www.energybulletin.net/node/48240

If any Government intentionally forces up the price of electrical energy to try and make companies more energy efficient here is what will be said in the board rooms of those INTERNATIONAL businesses - how much will it cost to move the plant. Remember this is a Global economy...no one says you MUST make your widgets in North America any more. And many companies don't Increasing energy prices is one of the reasons they moved.

Decisions will be made in board rooms to move production to other places where the energy is less expensive or where it is openly subsidized. Besides it is very difficult for me to believe there are these enormous energy savings to be had in most industrial processes. Aluminium smelters for example are very large electricity consumers and I am quite sure that ALCAN and ALCOA have already done all they can to make them as efficient as possible so as to increase their profits from those operations. Crank up the price of power to those industries and you'll find them moving to Icelend where there is abundant and cheap hydroelectric power... looks like they could do with the jobs.

Businesses operate for the purpose of making profit for their shareholders and no other reason. There is no doubt that most modern Corporations see the value in being good corporate citizens and espousing energy efficiency but when it ends up hitting their bottom lines hard they will simply go somewhere else......and there are lots of somewhere else's to go in this world.

Real time pricing will likely result in the real time exit from North America of every energy intensive business. That will result in the loss of many real time jobs.

The focus of energy professionals ought to be on making energy cheaper and more readily available. Apparently the great Utopian vision espoused here by many is to make it less available and more expensive. Exactly how that attracts businesses to make things in North America is beyond comprehension. Businesses do not build factories because they like the President.

The only way such a policy will work is if it is implemented wordwide and that just ain't going to happen....sorry to burst that Utopian bubble.

Of course one way to conserve energy is to just shutdown the steelworks, paper mills and nickel smelters,....happening in Ontario right now. That way we won't need any windmills or solar panels or nuclear or coal. Tell the people that used to work in these places if THAT is a good idea or not. I am sure David Suzuki thinks it is just wonderful not having any steel mills operating....great for the environment eh. Oh sorry the production went to China where they really care.

Business decisions are not made on whether you like President Obama or not they are made on whether his policies hurt your business profitability or not. Many seem to do just that.. .unless your business is banking of course.

It will be interesting to see what is left of the North American economy in 4 years. I fear the answer is not much. The banking industry is getting Billions (and they produce nothing) while the production industries are being actively discouraged from making things here.

That is just plain stupid.

It remains to be seen whether North Americans are prepared to pay with their jobs and families for the unrealistic dreams of a few.

Malcolm

Wow somebody got their arithmetic wrong big time. That is an error of gigantic proportions.

I always wondered whether these estimates of 300 years of coal reserves were accurate or not. Looks like the answer is no.

But don't be too concerned. Both Uranium and Thorium are very plentiful so when the coal runs out we'll still be able to keep your lights on and your house toasty warm---at least for a few more centuries.

Just hope we figured out fusion by then otherwise we'll really be up the creek.

Malcolm

I agree with your assessments of Swedish politicians. May be they can convert them to run on wood chips?

Malcolm

There's a sign of things to come out of Obama's stimulus plans right here in Ontario. In today's news media the Ontario government has announced sweeping huge incentives to develop large numbers of distributed local generators, both large and small in size. In the on-line Toronto Star newspaper article by energy reporter Tyler Hamilton titled "Fixed Prices Proposed For Green Energy Projects", web link below, Ontario is offering 20-YEAR CONTRACTS of fixed heavily subsidized prices to buy power from them. If you look at the price numbers, they are miles above current consumer retail rates. So that tells me consumer rates are set to rise very substantially over time, something I have been preaching for months on this website. The prices offered are broken out according to generator type, with the highest price a whopping 80.2 cents per kwhr for rooftop solar PV systems under 10kW !

Our energy minister George Smitherman is quoted in it: "We'd have to get to 100,000 rooftop installations to get to just one per cent of overall installed (power) capacity in the province," said Smitherman.

Fixed Prices Proposed For Green Energy Projects by Tyler Hamilton http://www.thestar.com/article/601464

With these lucrative levels of incentives, people will start considering increasing their mortgages on new and existing homes to finance putting a rooftop generator on it.

Let me guess Malcolm. You are lkely seething in disgust over these massively large incentives to promote investment by business people and especially average consumer home owners. I hope you're reading this, and that someday your neighbors put up a rooftop solar PV or other system. Then you can have a drink on the patio with them every other summer day while the sound of money flowing into their bank accounts from Ontario's Power Authority (at 80.2 cents per kwhr) plays music in the background.

Cheers Malcolm.

What this explains is the POWER of the anti-nuclear movement in a modern society. Of course, the Barsebäck reactors were badly located, and from that point of view they should have merely moved the entire operation somewhere else, but no, stupidity ruled and that was that for one of the most efficient nuclear plants in this country.

It also explains the endless stupidity in the pro-nuclear club. If the nuclear industry was clever, and that's a big IF, they would invest much more money in hiring more heroic design engineers, and put them to work to refine nuclear technology with the goals of lowering their obscenely high capital costs. It's known as 'cost reduction' in many other industrial fields of engineering. It needs clever ideas and most importantly, innovation. If they succeeded, maybe then the anti-nuclear movement would shrink considerably for their own good.

We're being led to think by your good self that typically businesses wanting deregulation are the greedy ones. How dare I even suggest the nuclear industry might also be too greedy.

If they proceed with this, it would be the first time regulation in Ontario would have non-uniform rates for all residential consumers, in essence a form of slight deregulation.

Just imagine the growth in defaults on bill payments if rates were to double or triple in the future, which could result in part from building many new large expensive nuclear plants simultaneously.

But I am a realist and I live in the real world where solar and wind are concerned. I know that along with the solar panels there must also be lots of energy storage so that you can run your (presumably gas fired) furnace tonight. If you are unfortunate enough to have electric heating and electric ranges as many do in Ontario then I am afraid solar will not produce enough power to do the job. While 100,000 solar rooftop panels seems alot it really is not. At 1KW each that is only 100 MW during the day and 0MW at night. Even at 10KW (you need a big south facing roof to produce that amount) it is only about 1 modern nuclear plant half the time.Remember the nuclear plant will be producing 1000MW when the Sun has gone down and solar panels are producing nothing.

So Bob, you need to study the rest of the Governments very well balanced and carefully thought out program which includes several large peaking gas plants more baseload nuclear and the phase out of coal. They are wise enough NOT to throw all their eggs in the solar basket and their program is simply NOT designed to replace nuclear power.

Encourage it - sure - rely on it - at your peril. And as for my neighbours being the first to install solar - if the price is right it will be my house that has it first....but I'll not be doing away with my grid connection any time soon...and until you see the midnight Sun I would advise you not to either.

I do have a big south facing rooftop and I could probably get 10KW on it. You seem to consider that advocating nuclear (emissions free) electricity means that I am anti everything else. I am simply questioning - as should you - those who contend this is the replacement for large scale nuclear. It isn't and the Governement is well aware of it. That does not mean that one should not try for the best one can obtain from every source and that is precisely what the Government is doing.

To me they are striking a good and sensible balance in reducing emissions while providing a reliable supply of electricity. It is not promoting one source over another - it is making sensible choices. I do not agree with everything that is being done here in Ontario but on the whole the program is well balanced.

Malcolm

I have indeed studied the Ontario government's plans, and I have never said solar PV or other forms of distributed local generation are going to replace large central generators, nor have I said they are as reliable as nuclear. Large central generators will only be partially replaced by it. For example, instead of building say 3 or more large nuclear plants in Ontario to meet our future demand growth needs, plans are to get away with building just 1.

Practically nothing is as reliable as nuclear. But reliability comes at a premium cost which our politicians are willing to give up some of to live in the real world. I have experience in designing for reliability in electronics, such as military products, and believe me, high reliability ALWAYS costs more to implement.

Storage is the key issue with solar, many know it, and are working on improving it. Even with today's inefficient expensive battery storage, its cost will come down as much more storage proliferates with PHEVs becoming mass marketed, at a dealership near you soon. Storage will become much like the electricity grid we all used to know with lots of excess peak capacity, and as long as we didn't exceed that capacity, no one cared how inefficient it was. That has now obviously changed.

To Bob, you make many good points, but you are overly focused on the high capital cost of nuclear (which I agree is historically high) while ignoring the fact that a well built nuke might last 60 to 80 years under new licensing conditions. Yes, reliability comes at a premium cost, but considering the high capacity factors of nukes over that many years, the capital expense over one’s lifetime would amortize to just pennies per kwh.

In addition to that I am certain that if built as planned and without fierce intervention the historical high costs of nuclear per kw of capacity need not be repeated. Both nuclear and renewables + storage should be built when and where most suited. It is not a contest for dominance. It is a mere matter of doing what is most practical under realistic cost constraints.

Our regulated uniform electricity prices will go much higher in future because of carbon taxes or cap & trade schemes, and to pay for Smart Grid initiatives, not necessarily because of much more distributed local generation. If I don't know what I am talking about, then neither do large numbers of other people in the world, including many policymakers in many governments around the world.

The bottom line is nuclear has had obscenely high up-front capital costs for most to be able to stomach regardless of its inherent advantages, and is the primary reason government policymakers, bankers, and private investors are refusing to line up to finance them in significantly larger numbers to meet our future demand growth. There will be some nuclear builds, but not on the scale the pro-nuclear club would prefer to see. IF ON THE OTHER HAND KEN WRIGHT'S STATEMENT OF NUCLEAR COSTS BEING AMORTIZED OVER MUCH LONGER PERIODS COMES TRUE, THEN THE GAME COULD CHANGE SIGNIFICANTLY IN NUCLEAR'S FAVOR, AND AS LONG TOO AS THERE ARE NO MASSIVE REFURBISHMENT COSTS OVER 60 TO 80 YEARS. Note the record on the latter has been pretty poor, particularly in Ontario.

And as far as regulation is concerned, uniform consumer rates have served us pretty well until now, before peak oil and threatening climate change, and while we had loads of grid capacities. It also worked well as long as consumers in developed countries could enjoy unconstrained growth where most could afford regulated rates participating in prosperous economies. But these conditions have all changed or are changing for the worse, so I predict that while regulation of the electricity industry will remain for a long time yet, uniform consumer electricity rates will gradually morph into deregulation of rates in incremental steps, and not all at once. The reason I predict this is consumers will demand access to the generator of their choice when much more distributed local generation takes hold, akin to Len Gould’s IMEUC reform ideas, mainly because as regulated uniform rates skyrocket for the previously mentioned reasons, there will be a growing number of consumers at lower income levels who simply won’t be able to afford uniform electricity rates for everyone.

Ontario's Green Energy Act legislation is proposing to allow LDCs the option to get back into the generator business but only for local distributed generators under 10MW. The reasoning is that feasibility of any new local distributed generation is very site specific, and implementing it impacts only the LDC's local grid, so therefore an LDC should have the freedom to participate in owning such generators if they choose to.

Now here's the biggest news of Ontario's Green Energy Act: it also proposes to allow LDCs to raise consumer rates to pay for any new consumer conservation projects if they choose to, spelling the potential end of uniform rates for all consumers in Ontario down the road. This in my view reads as a form of deregulation, if only a small step towards deregulation.

I never thought that the kind of crank observations about nuclear that Bob is making would go unchallenged in this forum. I only wish that I would look up some day in a seminar or conference and see his smiling face. I would explain some things to him about nuclear that he wouldn't understand, but might make sense to the rest of the audience. I doubt however whether my presentation would be the kind he expected in a scientific 'congress' however, especially if my wisdom in this issue was questioned

Economics is about optimality. Among other things this means that intelligent persons do not reject valuable information if it is free, and if it is not free - and is truly valuable - then they might be willing to pay for it. A component of the information needed in this discussion is that a nuclear reactor that has an investment cost of $1500/kW - or thereabouts - can produce the most inexpensive power in the world. I won't bother to go into details, but a part of the story is in the second paragraph of Kent Wright's comment. Note that I said "investment cost"! Capital cost is something quite different.

About all sorts of people rushing to put money into solar, wind and so on, I say good for them. Have you ever heard Francis Faye's rendition of the great song ' Fools Rush In'. They have been rushing in since the beginning of time, and some of them have just been appointed to President Obama's energy team - or environmental team, as I call it. But make no mistake. There are some very intelligent people telling the fools to continue to be fools, because it will help these intelligent people to end up with some serious additions to their bank accounts. If I wasn't so honest - and lazy - I could probably be one of them.

One more observation. The basic question in this nuclear thing is HOW MUCH. France has about enough. Despite the bad mouthing of the Finnish nuclear policy, the new reactor and the one they might build should easily give them enough. Sweden would have almost enough if the two plants that the ignoramuses closed had been kept open, though perhaps in a different location. The US should have more nuclear, but I haven't tried to figure out how much. Etc, etc.

And finally. ELECTRICITY IS A NECESSITY, AND SO NUCLEAR SHOULD BE REGARDED AS A PUBLIC GOOD, LIKE ________. I'll let Bob fill in the rest of the argument.

How much nuclear is needed Fred asks. Just enough to keep the lights on is what most want to hear, like maybe baseload generation as they like to call it, but not more than that. Peak demands will continue, as they are now, to be handled primarily by others.

I have more news too for the pro-nuclear club. Concentrated solar power (CSP) has made breakthroughs in engineering design right here in Toronto Canada. Morgansolar.com has dramatically cut capital costs of CSP by using patented light-guide optics, needing more than 1000 times less silicon cell area for a given amount of sun-light area captured. I don't have cost fgures but they claim to be "extremely low cost" and "affordable" on their website.

Look out Malcolm, your neighbors in Ontario might be buying a Morgan Solar Inc. CSP system sooner than you think. Get the coolers and beer ready for your patio parties.

I have witnessed the pace of technological change in many things, accelerating over the years largely because computer-aided design and the internet have empowered designers like myself to create, realize, and test new ideas with lightning speed compared to even 20 years ago. Fred and many others will continue to ignore and belittle attempts to solve technical problems that others failed to solve long ago. Many problems today are being overcome with innovation all the time now.

The people in Georgia however have figured out that by imposing rate increases when construction of a nuclear plant begins, and then adding rate increases gradually each year until the plant goes on line, consumers won’t be hit with a huge step increase in rates at the time it goes on-line as has usually been done in past. If nothing else it helps to mitigate public backlash to rate hikes, but one could argue that incremental rate hikes are all that would be needed to incrementally expand the grid generation capacity with gradually adding more distributed local generation sources over many years too.

Let's see you chew on,or should I say chew UP this economic analysis Fred.

Seems to me that if something is too expensive (whether a nuclear plant or solar power) then maybe it’s not such a good deal for the investor or the consumer. Maybe both technologies should work harder on reducing costs. However, I’m not so sure that either can ever successfully compete with fossil power plants without bailouts of one form or the other. Ditto for wind power.

Anyway, now that you have been shown the error of your ways, as a democrat I feel obligated to turn my attention to the new US president. My advice to him is as follows: get rid of the environmentalist shills on your staff, in the energy department, and anywhere else that you can exert your influence. Yes, we need renewables and lots of them, but what many environmentalists want is not a serious dose of renewables, but to get rid of all the entire nuclear inventory if this is possible, and if it is not possible to get rid of as much of it as they can. That is their supreme goal, and the environmentalists who support nuclear are often classified as traitors.

The government should back up the private nuclear sector, particularly if Wall Street wont, while renewables can be left to the private sector, although a few subsidies might be in order where renewables are concerned. Believe me, I've thought about this a great deal, particularly after seeing a contribution of John Sutherland about the electrifying of the community, or perhaps I should say an increase in the electrification of the community. Yes, renewables are important here, and in the long run perhaps as important as nuclear, but as someone else said, nuclear can provide the EXTRA energy that might be needed.

We now have running commentary on the feasibility of different modes of power generation. Perhaps that should be expected because the Energy Pulse is a platform devoted to (or at least populated by) thought leaders in the field of power generation. Hundreds of readers flock here to be informed and maybe entertained by the debates over nuclear vs. renewables. It is a valuable forum and I thank everyone involved.

Our editor, Mr. Opalka, kindly nudges me for material on a different yet related topic: energy efficiency. And that’s what this thread’s lead article discusses. The American Recovery and Reinvestment Act of 2009 explicitly references “energy efficiency.” Without arguing the need for such policies, questions are begged as to exactly how they will be implemented. We as tax payers should question how incentives are going to be spent, if policy is going to influence investment in energy infrastructure. That infrastructure is a two-sided coin, balancing supply against demand. Energy efficiency plays a role on both sides, especially on the demand side.

This thread’s focus on power supply, while necessary and excellent in its content, is not sufficient by itself to address modern energy challenges. The lead article purposely looks at the “other side of the coin,” that is, management of end-user demand. Regardless of whether power is generated by nuclear, coal, wind, or whatever, end-use consumption patterns determine how MUCH capacity should be brought online. If we need new power generation capacity, then let’s build it. But it seems a shame to inflate that capacity to meet wasteful consumption needs.

The lead article focuses on energy waste in manufacturing, which represents a huge chunk of national energy consumption and a logical place to seek energy efficiency opportunities. Should any readers doubt that industrial (manufacturing) energy waste still exists, simply review the results of energy assessments compiled by the U.S. Department of Energy’s Save Energy Now program at http://apps1.eere.energy.gov/industry/saveenergynow/partners/results.cfm.

Industrial energy efficiency involves human as well as technical dimensions. While engineers and engineering projects play a crucial role in addressing energy waste, their efforts go no where when confronted by conflicting priorities within their organization. It is against this reality that policy leaders are attempting a call-to-action for energy efficiency. That call is needed, but it requires a parallel effort within corporate organizations. I’ll be presenting a paper on this subject at various conferences throughout the year.

Christopher Russell crussell@energypathfinder.com

Well said. The problems with adopting more energy efficiency in industry is little different that adopting more of it with residential consumers. Both require substantial up-front investment to pursue it, and both encounter conflicting priorities for spending new money. Simply adding huge amounts of low-cost excess capacity to the power grid is clearly not going foster more energy efficiency by all end users of electrical energy, because that is what we all have all enjoyed historically, and as a result never had much reason to think much about efficiency.

Now that you have focused on the industrial efficiency "tree", the nuclear "tree", the concentrating solar thermal "tree", the solar PV "tree", the wind "tree", etc. perhaps it is appropriate to take a few steps back and focus on the "forest".

The US is apparently preparing to embark on a carbon emissions reduction of "80% by 2050", in an effort to "save the globe". Of course, we all know that it would not "save the globe", since reducing the US contribution of 20% of global carbon emissions by 80% over 40 years would not halt the increase of atmospheric carbon concentration, or even slow it in absolute terms, though it would arguably reduce the rate of increase to below what it otherwise would have been.

However, an 80% reduction implies massive carbon capture and sequestration and/or a massive shift from fossil fuels to alternatives. Therefore, while energy efficiency is certainly valuable and, in some cases, economically attractive at current energy prices, it must be pursued against the background of: progressive, massive carbon constraints; substantial federal tax or auction revenues; and, massive supplier investments in low carbon or zero carbon facilities and equipment.

Therefore, increasing the efficiency of small to medium scale fossil-fueled processes with long term payback prospects is problematic. In most cases, it would appear wiser to shift, where possible, to electric processes, thus shifting the emissions reduction compliance burden to the electric generators.

One question which must be asked about any industrial process being considered for efficiency investments is whether the process is likely to survive as part of the residual 20% of US carbon emissions remaining in 2050. If so, the investments required to maximize its efficiency should be evaluated against available alternatives. If not, then the available alternatives should be evaluated for implementation.

Large investments in efficiency improvements for processes which are not on the path to an 80% reduction in carbon emissions would appear to be economically inefficient. At the present time, these decisions are complicated by an absence of detail on the emissions allowance auction process and the schedule for reductions in the "cap". Industrial fossil fuel users would be required to purchase allowances for their emissions, apparently at annual auctions. The first auction should provide important information about allowance costs. The "cap" reduction schedule should also provide critical information about the likely rate of increase of allowance prices in future auctions. The cost of current process improvements plus the reduced allowances required could then be compared with the cost of sufficient allowances to continue to operate the existing process and the investment required to switch to a zero carbon emissions process, if available.

Today it is reasonable to make efficiency improvements with rapid paybacks. Improvements with longer paybacks are problematic, because of the uncertainty regarding future regulations and "taxes". However, it appears that much of the uncertainty should be dealt with over the next year. Then the fun can begin in earnest!

They don't have to circulate it to me however because I accept it. Their goal could have been 110% as far as I am concerned, because if I happen to be present in a meeting or conference when this topic is raised, I quietly move toward the toilets or mention that I am expecting an important phone message from George Clooney or Madonna. But even my good self can make mistakes. For instance, I became involved in a controversy with Mr A about topics that he doesn't understand, nor is capable of understanding.

Better watch it Fred. Like the guy who was sitting next to you at a cafe in Stockholm last summer, you'll be calling and talking to talking to yourself on a 'cell' if you think that you can convince Mr Bob of anything.

But Bob is not the only one with a comprehension problem. Mr Obama is one of the most intelligent persons to ever sit in the White House, and as a democrat I wish him well, but he has missed the point where this energy thing is concerned. His energy program is nutty, fruitcake, but there is a chance that he will have to depart the presidency before he finds this out. Of course, it is not as nutty as Bob's discussion of what he calls 'capital costs', but fortunately Bob is not a trusted flunky in the US Energy aristocracy...yet.

If they weren't talking about a program which would require the investment of ~$700 billion per year over the period, it might be merely laughable. A carbon tax or allowance auction merely adds unproductive cost on top of under-productive investment.

If they were talking about a global effort with 100% participation and verification, as well as your 110% reduction target, it might be possible to stabilize atmospheric CO2 concentrations. Once that was accomplished, they might actually be able to remove some of the CO2 from the atmosphere and return the atmospheric CO2 concentration to the pre-industrial, idyllic level.

However, they have apparently made a "unilateral" decision to go to "war" against AGW (truly an "unwinnable" war, as defined), based on "flawed intelligence", without a "broad coalition" and "adequate equipment". Instead of "tilting at windmills", they appear fascinated with the concept of tilting with windmills.

The cast of their "play" is certainly an "all star" company: -Barack H. Obama as Don Quixote de La Mancha; -Albert A. Gore, Jr. as Sancho Panza; -James Hansen as Rocinante; and, -Gaia as Dulcinea. Regrettably, the ticket prices are beyond the means of most of us, though it appears audiences in the developing world will be able to watch this "high comedy" for free and laugh to their hearts content.

Ed

How would you envision construction of 1000-1400 new 1GW nuclear power stations without creating any new jobs?

I am willing to concede that fabricating and installing ~2-3 million windmills and ~25,000 GWh of storage would create new jobs,

Ed

I should have said construction of a large new nuclear plant creates some new construciton jobs but not on a wide national scale, nor does it create or help to grow any new emerging industries. The latter is one of the goals of fostering distributed generation technologies and their widespread deployment, energy efficiency and conservation measures, and Smart Grid.

The carbon tax or cap & trade schemes by themselves will create much hardship without something to redistribute the vast sums of extra money they will suck out of the economy. The money must be put back into the economy somehow for consumers to be able to afford the electricity rate hikes coming and all its consequences in every other industry. Creating widespread new construction jobs and new industries is seen as one way to do it if I read my politicians correctly in the US and Canada.

A "cap" establishes the maximum amount of carbon which can be emitted annually. A "trade" empowers those who can reduce carbon emissions more easily and with less investment to do so and trade any excess allowances they have available to those for whom the reductions are more difficult or more costly. The establishment of a "cap" does not reduce carbon emissions. The combination of a declining cap and economic growth forces carbon emissions reductions. The "trade" then facilitates economic response to the declining "cap". It is critical that the initial "cap", the schedule of progressive reductions to the "cap" and the minimum residual "cap" be identified at the outset, so that emitters may plan their compliance.

Complying with a declining "cap" requires investment in low-carbon or no-carbon technologies to replace the current carbon emitting equipment. This investment, in the US, to comply with a carbon "cap" set at 20 percent of 2005 levels in 2050 would be ~$700 billion per year over the period, based on current commercially available technology.

Government auctioning of the allowances under the cap would add an additional cost to the compliance process, over and above the required compliance investment. Also, an annual government auction of allowances would add an additional element of financial uncertainty to compliance costs.

Electric generators are particularly exposed in this scenario. Residential and commercial fossil fuel users have the ability, over time, to replace their fossil fueled end use equipment with electric end use equipment, shifting their compliance burden to the electric generators. Many industrial fossil fuel users have the same option. However, the industrial customers also have the option to move their manufacturing facilities offshore, to countries which have no intention to limit carbon emissions in the short term. The electric generators, by and large, have nowhere to go; and, they have an obligation to serve. This would make capacity planning a far more challenging activity.

Further, I am sure Fred would tell you that the "widespread new construction jobs and new industries" are, at least in part, a manifestation of the "broken window fallacy", to the extent that facilities with remaining economic useful life cease to operate for non-economic reasons.

I understand your concern about rising costs. However, the added cost of a carbon tax or allocation auction is a small round patch of "yellow snow" in a very large field of the "white stuff".

Ed

There is no easy fix to prevent industries from moving their factories offshore for any economic advantage, it's been going on for decades, just more so in the last.

The "broken window fallacy" is not universal to all new jobs and new industries in my humble opinion. Just look at the prosperity Silicon Valley brought to America over the last 30 years. Yes it's now sad that this industry, which is the one I work in, has now spread worldwide along with much of its manufacturing to the detriment of US factories. People like to say the our future jobs are the ones that will require more knowledge and skilled workers with less manufacturing, but I have a slightly different view on this because new knowledge acquired that gives a domestic industry a competitive edge has a habit of being given away for free over the internet with lightning speed, permitting competition to flourish at will anywhere else in the world.

I wish we didn't have to deal with carbon emissions management schemes because life would be much easier. But I for one am not an environmentalist, climatologist, or economist, just an electrical engineer. The only solutions I can offer to contribute is on using more technology to gain more energy efficiency and conservation, particularly with consumers.

About these carbon 'taxes'. Under no circumstances do I except cap-and-trade or emissions trading or the like. Straight-out carbon taxes are my preference, with tax revenues being returned in one form or another to most - but probably not all - of the persons and firms who pay the tax. Of course, the thing here is that I dont think about this topic unless provoked. I noted that Lord Browne - former CEO of BP - stated that he was wrong in supporting cap-and-trade, but in reality I care as little about what he thinks about this subject as I do the scientific ruminations of Bob.

Where the president is concerned, I'm a democrat and have always been, but I have voted for republicans, and if McCain had chosen another vice-presidential candidate I might have voted for him. Might, but when an American professor of economics and another of physics both said that they would feel safer with Governor Palin than with Obama, that convinced me that Obama would receive my support - for what it was worth.

When carbon taxes or cap & trade programs are implemented, it will affect every sector of the economy like no other government imposed program, with the potential to redistribute vast sums of money. Consumption of alternative products and services that emit less or no carbon will only work if alternatives are available and affordable to industry and consumers, but such is not always the case yet.

We will eventually look back on 2007 and realize we never had it so good for the economy and standard of living in North America because the future promises to be much different. To those readers who feel they won't need to change their energy consumption habits, they are in for a rude awakening after our governments get through with all the changes coming.

I've spent a lot of time studying and thinking about the nuclear situation in Sweden, and that has taught me what I need to know about the nuclear situation elsewhere. Yes, I would like to have a few more numbers, but I am slowly obtaining these. I haven't spent a lot of time with the economic theory I might need to make a fool of anyone getting in my face with nonsense about nuclear, but I know where to find that theory. And the key point for you Mr Bob is that I am NOT fishing for a job anywhere, particularly in Washington, unless a certain young lady is still there - although I suppose that she would be drawing survivors benefits now, if you get what I mean.

Much to professor Bank’s pleasure I will probably take my comments elsewhere since it is a complete waste of time here. I am thankful I am not a member of his cult.

The energy program of the new US government is nutty. Counterproductive. That's the bottom line. As a democrat I want to see them change course, but let's be realistic. At the present time the odds are against that happening. Sure. we - meaning I - want more renewables, but in order to obtain the inexpensive and reliable electric power that we cannot do without, the base of the new energy system must unfortunately contain a larger nuclear component. Note the "unfortunately", because I don't and never have enjoyed the thought of a plutonium community, but there is a good chance that this is what we are going to end up with.

I entered into this discussion late, with a suggestion that we broaden the perspective. On that basis, I would ask whether a NG SOFC is on the path to an 80% reduction in carbon emissions. (I think not.)

One approach which comes to mind, if it is, is that the purchaser would be allocated a capacity-based share of the existing power generators' or power distributor's share of remaining allowances based on the generating capacity displaced. Using this approach, the NG SOFC user would have some excess allowances, because of the lower carbon content of the NG and the higher efficiency of the SOFC, particularly if the system also employs heat recovery. These allowances could be sold in the allowance market, perhaps to the predecessor generator or distributor.

I actually assume that allowance auctions would be conducted annually, based on a reduced number of total allowances each year, to maximize government auction revenue under a declining cap. Under that system, the NG SOFC owner/operator would bid for the number of allowances required based on system capacity and certified emissions. (Note: Emissions are directly related to metered NG consumption, so we're not talking about expensive, complicated instrumentation.) Obviously, the owner/operator of a non-fossil system would not require any allowances for that system.

I believe it is critical that the initial cap, the final cap and the cap reduction schedule be published at the beginning of the program. That way, the owner/operator of the NG SOFC would know in advance in what year the NG SOFC investment would be obsoleted by regulation; or, would require the purchase of additional allowances.

It is strange to recognize that NG SOFC is a short term technology in the "80% by 2050" scenario, since it has been a "long term" research effort for a long time. It is equally strange to recognize that storage is the real long term play, based on the current obsession with intermittent renewables.

It is also important to point out that "80% by 2050" in the US, in the US & Canada, in the developed world, or on the part of every nation on the globe would not halt the accumulation of carbon in the atmosphere, though it would slow it. Therefore, it is highly likely that the 20% of 2005 levels would only be an intermediate technical goal, unless the political goals of the effort had already been achieved. I assume that the "religious" objectives would persist, but would be unpersuasive politically if the political objectives had been achieved.

Ed

You can bet on solar and wind power continuing to be a growing part of the US government's and Ontario's future energy policies for decades to come, along with more incentives to foster greater energy efficiency and conservation measures with industry and consumers. If the emerging government incentives aren't enough to persuade the public, dramatically rising electricity rates in the years ahead will do just as good a job at persuasion.

First, I have no desire for the US government to invest in nuclear generation. I would expect their performance to mirror their performance in providing a legally mandated permanent storage facility for nuclear waste.

Second, while what Georgia is proposing is different, it is hardly "radical" and certainly not "soaking ratepayers". The entire investment in a utility-owned generator of any type would ultimately be included in the utility's rate base and earned on by the utility over its useful life. That investment would include capitalized interest on construction work in progress (CWIP). To the extent that customers contribute capital to the process, that capital would be contributions in aid of construction (CIAC) and the utility would not be permitted to earn a return on that portion of the investment.

Finally, to my mind, there is a significant difference between voluntary conservation and conservation forced by increasing costs beyond the consumers' ability to pay. I grant you that forced conservation is both more effective and more durable than voluntary conservation. I am no more impressed by masochistic consumers than I am by sadistic government.

Electricity rates are going to rise dramatically because of carbon taxes, Smart Grid, plus all the grid refurbishments and expanded generation sources badly needed. Rates are not going to be increased to purposely "force" conservation on us, but rather the effect of rate increases for the previously mentioned reasons will be the same. My point is conservation will become more practiced because electricity will become less affordable to greater numbers of consumers and many businesses.