The Week That Was
April 5, 2003


2. THE TRUE HIGH COST OF WIND ENERGY: A full accounting by Glenn Schleede


4. NAS PANEL FAULTS BUSH PLAN TO STUDY CLIMATE: But why should we listen to them?




2. The full cost of wind energy.

There are truly astounding tax benefits that go a long way in explaining why some companies are so eager to build "wind farms." Of course, the tax burden escaped by "wind-farm" owners is shifted to remaining taxpayers. Notably, wind energy promotional documents issued by the US Department of Energy do not acknowledge the huge value to "wind farm" owners of the generous depreciation benefits that reduce both federal and state income tax liability

The Federal Production Tax credit is only one of several subsidies available to "wind farm" owners and developers and others in the wind industry. The value of five-year double-declining-balance accelerated depreciation available to "wind farm" owners permits wind farm owners to deduct hundreds of millions of dollars from income before they calculate their potential federal and state corporate income tax liability and before deducting the lucrative Production Tax Credit.

The value of accelerated depreciation alone in 2003 for a wind farm coming on line on January 1, 2003, could be $0.0533 per kilowatt-hour (kWh). When the $0.018 per kWh production tax credit is added, the value of the two federal tax benefits in 2003 would add up to $0.071 per kWh.

In most states, accelerated depreciation available to wind energy can also be used to reduce state corporate income tax liability. For example, in a state that fully conforms its corporate income tax to the federal system, and with a 10% corporate tax rate, the "wind farm" owner could reduce its state income tax liability by the equivalent of an additional $0.015 per kWh - for a total of $0.086 per kWh. If the "wind farm" began operation later in the first tax year, the per kWh value of the depreciation benefits in that tax year would be proportionately greater.

The value of tax benefits and other subsidies available to the wind industry in 2002 exceeded $300 million and are a part of the true cost of wind energy. These costs are being shifted from "wind farm" owners to remaining taxpayers.

In addition, the Renewable Portfolio Standards that have been adopted by several states are another form of subsidy for "wind farm" owners. Such standards are a particularly insidious subsidy since they force higher costs on millions of electric customers without their knowledge. The standards force suppliers of electricity to purchase electricity from "wind farms" or other "renewable" energy facilities, generally without regard to its higher cost. In some cases, a few electric customers who agree voluntarily to pay a premium price for electricity produced from "renewable" sources pay part of the extra cost. However, the remaining cost of the electricity, as well as the cost of administering the voluntary programs is passed on to electric customers in their monthly electric bills.

There are still other elements of the full, true cost of wind energy. These include (a) the cost of providing the back-up generation that must be kept immediately available to compensate for the intermittent, highly variable and largely unpredictable output from wind turbines, (b) the extra costs of providing transmission for that electricity, and (c) other costs incurred in keeping transmission systems in balance.


Notes: For example, a 100 MW (100,000 kW) "wind farm" with capital cost of $1 million per MW (i.e., total capital cost of $100,000,000 million) coming on line in 2003 could take a $40,000,000 depreciation deduction from income. With a 35% marginal tax rate, the "wind farm" owner could reduce his federal income tax liability by $14,000,000 BEFORE taking advantage of the federal Production Tax Credit. If the wind farm began operation on January 1, 2003, and produced at an annual average 35% capacity factor, it would produce 262,800,000 kWh (100,000 kW x 8760 hours x .30 capacity factor). Therefore, the value of the depreciation deduction in 2003 in reduced federal tax liability would be equal to $0.0533 per kWh ($14,000,000 divided by 262,800,000). The initial year depreciation deduction would be only 20% in the first tax year if the "wind farm" did not qualify for the "bonus" accelerated depreciation authorized by the Job Creation and Worker Assistance Act of 2002. However, the owner would still be able to take a depreciation deduction of $20,000,000 for the first tax year and then another deduction of $32,000,000 in the second year - with attendant reductions in tax liability. State income tax liability would be similarly affected.

EIA, in its Annual Energy Outlook 2003, projects that wind will supply 27/100 of 1% of US energy consumption in 2025 while fossil energy sources would supply 87.27% of US energy consumption in 2025 - or more than 320 times the contribution of wind energy


3. Nuclear News From Abroad

**Russia' cabinet decides to stop production of weapons grade plutonium in 2006.

**Iran's president announce discovery of substantial deposits of minable uranium and construction of two factories for nuclear fuel rods, plus an enrichment facility

**The energy ministry of Alberta province is discussing the use of nuclear heat instead of natural gas for the processing of oil sands

**Greenpeace is fined Euro 95,000 for interfering with French nuclear fuel reprocessing plant at La Hague

**SOFIA, March 28 (Reuters) - Bulgaria's supreme court annulled on Friday a government deal with the European Union to close down two Soviet-designed nuclear reactors by 2006 -- a move that may delay Sofia's entry talks with the bloc.

Late last year, the pro-western government agreed to a demand from Brussels to shut number three and four reactors at the Kozloduy nuclear power plant to avoid derailing accession talks with the EU and achieve its entry target of 2007.

Rejecting a government appeal, an expanded panel of the Supreme Administrative Court upheld its January ruling that the agreement ignored a vote in parliament, which decreed the reactors should be kept working until Sofia's entry into the EU.

Brussels wants the reactors shut in 2006 for safety reasons. The plant produces nearly half of Bulgaria's electricity and their closure would raise power prices that are already a big burden for impoverished Bulgarians.

The opposition Socialists, who had asked the court to annul Sofia's agreement with the EU, have branded the government's position on the reactor's closure a national betrayal.

Sofia shut Kozloduy's first two oldest reactors at the end of December last year to please Brussels. The plant's more modern reactors five and six will stay open.


4. Experts Fault Bush Plan to Study Climate
By ANDREW C. REVKIN (NYT 2/26/03) (edited by SEPP)

A panel of experts has strongly criticized the Bush administration's proposed research plan on the risks of global warming, saying that it "lacks most of the elements of a strategic plan" and that its goals cannot be achieved without far more money than the White House has sought for climate research.

The expert panel, convened by the National Academy of Sciences at the administration's request, said some of the plan's proposals for new research seemed to rehash questions that had already been largely settled.

The plan, the experts concluded, lacks "a guiding vision, executable goals, clear timetables and criteria for measuring progress, an assessment of whether existing programs are capable of meeting these goals, explicit prioritization and a management plan."

Senior administration officials said they welcomed the panel's critique of the draft plan, and added that the final plan, scheduled for release in April, would most likely reflect some of the suggestions. "It may sound like `Oh, yes, please hit me again,' " said Dr. James R. Mahoney, an assistant secretary of commerce who is director of the federal Climate Change Science Program. But, he added, "I absolutely welcome their comments, even though it may sound like they're fairly harsh."

A particular concern among some on the panel was the plan's proposed focus on scientific questions that many experts say have been resolved.

For example, the report said, far more is already known about human activity's contribution to global warming than is suggested by the administration's plan, which, the panel said, expresses too much uncertainty about the question.

SEPP Comments:

1. The 17-member NAS panel has no more than about 6 "experts" who can properly claim some competence in climate science. Four of these are known active promoters of global warming. The panel has no GW skeptics; its chairman's specialty is industrial ecology,

(The names of its members, along with the text of the report, are online at

2. Proper concern of the panel should be with science-and science only:

i] Is the CCSP adequately designed to settle the question of whether the climate is currently warming (as expected from the known increasing trend of GH gases)? Can one determine why both satellite and radiosondes show no appreciable atmospheric warming?

ii] And if it is determined that a warming trend does exist, can the CCSP determine unambiguously that the cause is the anthropogenic increase in GH gases?

Unless the CCSP supplies an answer to these two questions, it is "unlikely to accomplish the aim laid out by President Bush in several speeches: to help decision makers and the public determine how serious the problem is so that they can make clear choices about how to deal with it." (using the words in the NYT story)

3. It is curious to see the opinion by Wm Schlesinger, suggesting that we already have answers for these fundamental questions. This will come as a big surprise to many of us. Perhaps we should note that, judging from his publications, his expertise is in forest biology rather than atmospheric physics. It echoes in some ways the claim by Science editor Don Kennedy in a recent editorial (1/17/03) that we already know enough to take action and that the whole CCSP is merely a stalling technique by the White House. If the NAS panel really believes this, we could save $1.7 billion a year and spend it on more deserving causes.

4. But no -- the panel thinks we should spend even more money -- on climate modeling. I have three comments here:

i] It is evident from the disagreement with atmospheric data that the models need to use better atmospheric physics based on observations. There is likely to be little gained by faster computers that simply decrease the spatial resolution.

ii] The latest IPCC report (2001) makes it quite clear that the uncertainty for a calculated future warming stems from uncertainties in the emission scenarios as well as from uncertainties in the climate sensitivity derived from climate models. Developing realistic emission scenarios is NOT climate science.

iii] Finally, isn't it a bit chauvinistic to insist that US climate models not be allowed "to fall behind" those of other nations? Isn't international cooperation and exchange of information working effectively? And did not the Clinton Administration happily use published results from British and Canadian models in its National Assessment of Climate Change report?


5. Modern Humans Not the First to Generate Large Quantities of Dioxins:

Scientists working in Scotland have shown that burning coastal peat for domestic fuel over several millennia was a significant source of dioxins in the British Isles long before the Industrial Revolution. In a brief communication to Nature (Vol. 421, 27 February 2003), the researchers report dioxin concentrations rise from approximately 114 ng/kg (parts per trillion) in unburned coastal peat to approximately 643 ng/kg in smoke and burned peat. Based on 18th and 19th century population estimates, it is thought that domestic peat burning in the Scottish highlands and islands alone could have generated a total of 1 kg (total mass) of dioxin annually. In comparison, modern domestic coal combustion in the entire United Kingdom emits 5.1 kg of dioxin per year. Since historically peat ash was added to soils to increase soil fertility, the ash has left a reminder in the study area, in the form of a distinct soil dioxin pattern, that modern humans were not the first to generate large quantities of dioxins.


6. A New Take on Deglaciation

About 14,700 years ago, a large pulse of fresh water caused global sea level to rise nearly 20 meters in less than 500 years. The standard explanation of that event is that it marked the melting of the huge North American ice sheet as a result of an interval of warmer climate in the North Atlantic -- the so-called Bolling-Allerod warming -- that marked the end of the last Ice Age.

Now, a new report by Weaver et al ( ) in the 14 Mar 2003 *Science* suggests that events half a world away from the North Atlantic may actually have played a pivotal role -- and that, rather than coming as a result of Bolling-Allerod climate change, the melting ice may actually have helped *trigger* the warming. According to the Weaver et al. ocean circulation model, the collapse of the Antarctic ice sheet that began some 19,000 years ago could have caused meltwater to surge into surrounding Southern Ocean. That, in turn, may have indirectly boosted the North Atlantic thermohaline circulation, which transports warm and salty water to the North, and thus caused widespread warming of the Northern Hemisphere.

As noted in an accompanying news story by R. A. Kerr ( ),the new version of the deglaciation story has so far received a mixed reception.




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