|The Week That Was
January 29, 2000 NEW ON THE SEPP WEB:
Much media activity about so-called "new" evidence on global warming, with Dan Rather and others dragging out the usual horror scenarios. The real story was missed: Even the severest critics of the global satellite temperature data now agree, reluctantly to be sure, that the atmosphere is NOT warming. Learn how a slanted press release can be used to mislead.
We have all heard about how cheap wind power is becoming - as low as 3 cents per kilowatt-hour over 30 years, such as the price contracted at the Lake Benton project in Minnesota, one of the largest in the world at 107 megawatts.
Well, that 3 cents is really 4.7 cents without the federal Production Tax Credit and 7 cents without accelerated depreciation and other subsidies, with transmission provided by the utility (which was forced to buy the unneeded renewable generation as part of a regulatory settlement on nuclear waste). Compare that with economy power available most of the time at 2 cents per kWh and new natural gas generation available at 3.5 cents per kWh.
In the May 1999 issue of Windpower Monthly, a full-page advertisement on page 9 talks about "another small victory for our planet." The project is described by its sponsor Enron Wind Corp. as "an award winner in every respect." The engineering "complexity" of the project is mentioned as if it was an inherent virtue. But is it?
Buried on page 33 of the same issue is the real story. All wind turbines in the project are being retrofitted due to operational problems. The headline reads, "Faulty Generators: Complete Retrofit at Lake Benton." All this in less than 12 months, not the 30 contractual years.
The Midwest is being hyped as the "Saudi Arabia" of wind by a recent study from the Council of State Governments. But it increasingly looks like wind farms in the Midwest will be the "Saudi Arabia" of stranded costs.
The news gets worse. It appears that the Midwest is also the "Saudi Arabia" of lightning. Reports Windpower Monthly (June, 1999 p.21): "The Midwest, the area of America with the most new wind development, is far more prone to lightning than almost any area where wind projects have been installed."
This snafu brings out a stark fact. New wind projects set for a 30-year life will encounter increasing maintenance problems over time and will likely turn into "stranded costs" as other technologies improve. Debates in five or ten years will be about whether to tear down the noisy, ugly, poorly performing turbines (such as was done by Sydkraft in Sweden). Technological risk should now be added to the economic and social penalties of wind. Few thought the honeymoon would be this short. Rushing unproven technologies into the market to meet regulatory requirements is having its predicted results.
And just think. The enviros are gearing up to tout wind as a Kyoto solution for Earth Day 2000. Maybe decapitated birds in California and flaming wind turbines in the Midwest will make them think that fossil fuels are not so bad after all.
WORLD BANK LAUNCHES PROTOTYPE CARBON FUND (PCF)
Not wishing to be left behind, the World Bank has recognized "the seriousness of the threat of climate change" and wants to do its bit. They figure that developing countries can reduce emissions at a cost of $5 -15 per ton of carbon, versus $50 in industrialized nations. This affords a great social engineering opportunity to transfer resources (i.e., money), and provide a tidy income to the brokers -- without actually reducing emissions into the atmosphere. Figure it out!
So far, four governments and nine companies have committed $85 million; the goal is $150 million and the start date is April 2000. Of course, if Kyoto doesn't pass, the investors will be out of money but they'll have lots of emission permit certificates to use as wallpaper.
In the meantime, the World Bank will continue its traditional support for the construction of fossil-fuel power plants and hydro projects, because that's what the LDCs need and want. But the money from the PCF will go primarily into renewable energy projects, such as wind power, "that would not be profitable without revenue from emissions reductions sold to the PCF." [World Bank news release 2000/176/S]
The German Socialist-Green coalition is under great pressure on account of its "eco-tax" on fuels. The public reaction has been vehement. Industries are filing lawsuits against it. Even the German railway system complains about being "punished" even though it is "eco-friendly." To divert attention, Environment Minister Jurgen Trittin accuses the oil companies of using the tax as an excuse to increase their profits, while the Club of Rome argues for $10 a gallon gasoline.
As expected, motorists are complaining loudly, even though the yearly tax increase amounts only to 10 cents per gallon (superimposed on an existing tax of more than $3 per gallon). But this may be the proverbial straw to break the camel's back.
When the eco-tax went into effect last year, the German government promised to refund it by lowering the social contributions by wage payers and wage earners. But they never did it and are now catching flak. There may be a lesson in all this for the US administration and for the EPA, which have been trying to bring back the carbon tax that failed to pass a few years ago. Stay tuned!