Posts

Is American Renewable Energy Falling Behind?

In last week’s article, we took a look at how Germany’s investing heavily in renewable energy as part of what they call the Energiewende, which translates to energy transition or energy shift in English.

 

renewable energy, image by huffington post

renewable energy, image by huffington post

 

Let’s Take a Look at How American Renewable Energy Production Stacks Up Against the Europeans

Are we falling behind? In some ways renewable energy has pretty much fallen off the radar for most US manufacturers thanks to the revolution in unconventional extraction technologies, like fracking. Fracking has brought us an abundant surplus of natural gas, which in turn has helped American manufacturers by lowering their energy costs. As we discussed last year, these lower energy costs are one reason that American heavy industry manufacturing has stayed relatively competitive. So just where are we with renewable energy production capacity in the U.S.?  In the chart below which we created from data provided by the U.S. Energy Information Administration, we show the percentage breakdown, or mix, of energy production capacity (not usage) during July 2014.

 

Renewable energy sources only made up 16% of US energy production capacity in July 2014. Fossil fuels dominate with 73% of capacity. Data courtesy US Energy Information Administration (eia.gov)

Renewable energy sources only made up 16% of US energy production capacity in July 2014. Fossil fuels dominate with 73% of capacity. Data courtesy US Energy Information Administration (eia.gov)

 

Based on this graph, things don’t look particularly auspicious for renewable energy. Fossil fuels are the 800 pound gorilla in the room at 73% of energy production capacity.

 

Let’s Dig a Little Deeper and See the Effect of Our Domestic Natural Gas Boom

When we look at the detailed break out in the next chart, it’s clear that natural gas at 40% has overtaken both coal at 29% and petroleum liquids (fuel oil) at 4%. Nuclear power and hydroelectric power are running neck and neck at 9% and 8%, respectively. Among the renewable energy production capacity, hydroelectric is the largest 8%, but surprisingly wind is not too far behind at 6%.

 

When broken down further, we see Natural Gas (40%) followed by Coal (29%) dominated US energy production capacity in July 2014. Nuclear (9%) barely edged out Hydroelectric (8%). Data courtesy US Energy Information Administration (eia.gov)

When broken down further, we see Natural Gas (40%) followed by Coal (29%) dominated US energy production capacity in July 2014. Nuclear (9%) barely edged out Hydroelectric (8%). Data courtesy US Energy Information Administration (eia.gov)

 

Current Renewable Energy Capacity is Still a Minor Player Today, but What About Projected Growth?

You may recall that we wrote about a surprising development that took place last week: the wealthy heirs of oil tycoon John D Rockefeller announced they were divesting from fossil fuel energy stocks. We asked if this was an environmental advocacy publicity stunt or if there really was a legitimate business case at play. Well, we crunched some more numbers provided from the U.S. Energy Information Administration, and we came up with our next chart, the horizontal bar graph below.

This graph illustrates the EIA’s latest energy capacity projection, for the period from July 2014 to July 2015. There’s no two ways about it: the projected growth in solar energy capacity — at 56% — is a barn-burner. Even the second-fastest projection for wind at 11% is still in the double digits. If both these renewable energy sources could continue this growth rate it wouldn’t take too many years for wind and solar to become top-tier players in U.S. energy production.

 

The US Energy Information Administration (eia.gov) reports projects capacity changes from July 2014 to July 2015. Only Solar (56%) and Wind (11%) are projected to grow at double digits. Both Coal and Petroleum energy source capacity are projected to decline.

The US Energy Information Administration (eia.gov) reports projects capacity changes from July 2014 to July 2015. Only Solar (56%) and Wind (11%) are projected to grow at double digits. Both Coal and Petroleum energy source capacity are projected to decline.

 

As we continue to look at the horizontal bar graph above, we note that coal capacity which (pardon the pun) has come under fire from the EPA due to air pollution, is projected to decrease by 4%. Petroleum liquids (fuel oil) are also down, by 2%. Nuclear is flat, with a 1% decrease. Given the natural gas bonanza brought about by fracking, one might have expected something higher than the 2% projected growth in natural gas energy production capacity.

 

How Does US Renewable Energy Capacity Compare with Europe and Germany?

Now we are going to shift gears a little bit to see if the Europeans are onto something in the renewable energy production market that we aren’t (or vice versa), by making some head-to-head comparisons. In the next graph, we show the relative mix of US renewable energy production capacity reported for July 2014. Only wind and hydroelectric break the double-digit capacity barrier.

 

Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is for July 2014, courtesy US Energy Information Administration (eia.gov)

Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is for July 2014, courtesy US Energy Information Administration (eia.gov)

 

How Similar or Dissimilar is this to European Renewable Energy Capacity?

To analyze this, we researched publications from the European Union (EU). Fortunately, the EU’s reporting agency, EuroStat, has recently published information we are looking for, but unfortunately, the newest data available is for the year 2012, not 2014. Nonetheless, when we put the renewable energy production from the 28 nations of the European Union into our graph format below we see the overall European renewable energy mix is dramatically different than here in the US.  

 

Here is European Union renewable energy capacity formatted in a similar graph as the one for the US above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012,  courtesy of EuroStat (epp.eurostat.ec.europa.eu)

Here is European Union renewable energy capacity formatted in a similar graph as the one for the US above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012, courtesy of EuroStat (epp.eurostat.ec.europa.eu)

 

In the EU, one dramatic outlier that catches your eye immediately: renewable energy capacity from wood, wood waste and biomass, which weighs in at over 65%! Coming in second at bit above 15% is conventional hydroelectric, which you may recall, is the largest of renewable energy capacity in the US.

 

Given the Great Publicity Around the Energiewende, is Germany’s Renewable Energy Capacity Market Markedly Different?

Having read so much about Germany’s initiatives for wind turbines and solar energy, the next graph is not what we expected to see! Certainly wind and solar are higher renewable energy contributors compared to Europe overall. But what was unexpected — at least for us — was that wood, wood waste and biomass constitute more than 70% of the German renewable energy mix! Of course we wish we had this year’s figures to see what changes have happened over the last two years, but clearly we have a lot to learn about this biomass renewable energy category, which was not on our radar from our admittedly American-centric perspective.

 

Here is German renewable energy capacity formatted in a similar graph as the ones for the US and EU above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012,  courtesy of EuroStat (epp.eurostat.ec.europa.eu)

Here is German renewable energy capacity formatted in a similar graph as the ones for the US and EU above. Blue bars indicate the relative amount of capacity within the renewable energy sector. Red bars compare the capacity of each renewable energy source will ALL energy production capacity, including fossil fuels, etc. Data is 2012, courtesy of EuroStat (epp.eurostat.ec.europa.eu)

 

So please look for a future report from us on biomass, wood and wood waste energy sources as it looks like there is something interesting going on here! We also plan to take a look at some of the nuts and bolts — or some might say blocking and tackling — necessary to make the projected rapid growth in wind and solar energy production capacity a reality. In particular, we will take a look at a key component, construction of new long-distance transmission lines that extend our current electrical grid by hundreds of miles to connect population centers with remote solar and wind turbine farms. Stay tuned.

 

Formaspace Brings New Energy to Your Workplace mobile-lab-island-01

Whether you are an energy producer, manufacturer, researcher, educator or professional, Formaspace technical furniture can bring new life to your existing workplace  — or new facility under construction. Our American-made technical furniture solutions feature clean, efficient and modern designs with flexibility and longevity built-in. We are so confident in what we build for you we back it up with our 12 year, 3 work shift furniture warranty— the best guarantee you’ll find in the industry.

Give us a call today at 800.251.1505 to find out more about the Formaspace line of stock, semi-custom and custom-made computer workstations, industrial workbenches, laboratory furniture, lab benches and dry lab/wet labs — as well as our design / furniture consulting services. Join the roster of satisfied Formaspace technical, manufacturing and laboratory furniture clients — including Apple Computer, Boeing, Dell, Eli Lilly, Exxon Mobile, Ford, General Electric, Intel, Lockheed Martin, Medtronic, NASA, Novartis, Stanford University, Toyota and more.

Related Articles

manufacturing facility
Thanks to a growing economy, 2018 is proving to be a year of great opportunities for American manufacturers as they inve...
Austin energy truck
Sometimes the best location for a new laboratory or tech repair center isn't a new building, it's on the road. We take a...
formaspace team
It’s time to get geared up for the NeoCon contract furniture show in Chicago. This year’s upcoming NeoCon will be an...

Will German Investment in Renewable Energy Make a Carbon Tax Unnecessary?

The news kicked off a little early this week — on Sunday — starting with a huge demonstration march down Broadway in New York City in advance of the climate change discussions taking place this week at the United Nations. We thought it might be useful to try to understand (and predict) what kind of changes that industries like manufacturing will face in the coming 10 years with respect to climate change regulations, cap and trade regulations, potential carbon taxes, renewable energy sources and the electrical grid.

 

German Enercon E82 Wind Turbine stands 450 feet tall. Image Julian Fischer.

German Enercon E82 Wind Turbine stands 450 feet tall. Image Julian Fischer.

 

Yesterday, President Obama addressed the United Nations General Assembly as part of a one-day Climate Leadership Summit meeting under the direction of UN Secretary-General Ban Ki-moon. Obama reiterated the importance of all nations coming together to agree on a global plan by the end of 2015. “The climate is changing faster than our ability to address it,” Obama reasoned. ”The alarm bells keep ringing.” Disappointingly, neither Chinese nor Indian heads of state attended the summit. Yet Obama did call out China by name, saying the most populous nation on earth — with the fastest growing rate of carbon pollution — must join the rest of the world in reducing carbon emissions. Critics may argue that this event is just another one of the many meetings on climate change that have taken place since the Kyoto Protocol was drafted back in 1997 and — like so many other summits and conferences — it won’t result in much of anything in the long run.

The critics may be right on this point. Even the most enthusiastic advocates of placing controls on carbon emissions — be it through cap and trade, carbon tax or emission quotas — would agree that the Kyoto Protocol failed to live up to its promises. It expired in 2012 without ratification by the U.S. Congress. But the same group of environmental advocates could also point to the success of the Montréal agreement which regulates ozone-depleting gases like Freon used in refrigeration equipment. It’s widely accepted that Montréal agreement saved the Earth’s ozone layer – thanks to a comprehensive international agreement.

 

Can Lightning Strike Twice?

Possibly. There really are signs things could be different this time. Case in Point #1: Heirs to John D. Rockefeller’s Standard Oil fortune announced this week they would divest their investment portfolios of any fossil fuel industries. This certainly has a lot of symbolic weight. Even climate change skeptics have to ask themselves if this is a publicity stunt or if there really is a legitimate business case at work for moving away from investments in the coal, oil and gas industries.

Case in Point #2: In advance of yesterday’s UN Climate Leadership Summit, the World Bank made a surprise announcement that they were in favor of establishing a price (e.g. tax) on carbon pollution. Further, the World Bank has already received commitments from 73 countries, 22 states, provinces and cities and over 1,000 businesses and investors in support of a carbon pricing system. Given the historically conservative nature of the World Bank, this is really quite a startling change. If we see additional influential announcements from other nations and high-profile organizations supporting a worldwide agreement on a carbon tax, then next year’s 2015 Paris meeting might be successful in setting a plan in place to address the role of carbon emissions and climate change after all.

 

What are Some of the Reasons Favoring a Carbon Tax Over Cap and Trade Regulations or Carbon Emission Quotas?

In an era when taxes are as unpopular as ever, how could the world’s nations ever agree on imposing a new universal tax? For an explanation, we turn to Morris University Professor Dale

Jorgenson Dale, image by Harvard University

Jorgenson Dale, image by Harvard University

Jorgenson, who has been studying the relative merits of different mechanisms for controlling carbon emissions. Professor Jorgenson recently spoke to Harvard magazine in an extensive interview, where he explained that while all these different approaches— taxes, quotas or Cap and Trade — could reduce carbon emissions effectively, only a carbon tax would also provide something that governments around the world are desperately seeking: a source of revenue.

 

As an Economist, Jorgenson Then Asks: “What Should Governments Do with this New-found Source of Funds?”

In his view, the most efficient use of the income generated by carbon tax would be to reduce costs of capital. Whether you agree with this approach — or not — we think you’ll find reading the entire article quite interesting and informative. By tying a carbon tax to reductions in taxes on capital, we do think that Jorgenson has identified a mechanism which will garner the support of the world’s financial titans. Therefore, it does raise the chances of a worldwide agreement in Paris during 2015. Jorgenson also points out that for a Carbon Tax system to work there would have to be a universally agreed-upon price for taxing carbon emissions — and that every nation must participate to avoid freeloaders trying to game the system.

 

But How Do We Determine the Price of Carbon Emissions? What Would the Cost of a Carbon Tax Be?

For that we turn to Bill Nordhaus, Sterling Professor of Economics at Yale. He proposes a price of about US$30 per ton of carbon emissions. We’ll take Nordhaus at his word; you can dive into his book, The Climate Casino, for more details. If a potential 2015 agreement in Paris supporting a universal carbon tax seems far in the future, you’re right. But wait. There’s a quiet revolution in renewable energy production taking place in Germany. In fact, what’s been happening in Germany recently is so significant it may push any eventual carbon tax off to the sidelines.

 

What’s Germany Doing that is So Significant in the Energy Market?

After jettisoning the last of its nuclear power plants after the Fukushima earthquake nuclear disaster in Japan, Germany is more determined than ever to remake its entire electricity system — essentially from scratch. Their new focus is on renewable wind power and solar energy. The German electrical grid is being redesigned to incorporate the flexibility needed to support widely disparate power sources — ranging from huge offshore wind farms in the North Sea to individual apartment complexes and homes with solar cells on their roofs. Germany has also restructured the entire electricity consumer payment system. They have created a system with long-term contracts for small energy producers, called feed in tariffs, which provide stability in the market and enable financing for investing in renewable energy products — like solar panels and wind turbines.

There’s no question it’s a work in progress, but their progress has been incredibly rapid. Already, Germany is close to producing 30% of its power needs from renewable energy, which is twice as much as the United States. Germany’s strong economy in recent years has helped bankroll their heavy investments in renewable energy. In fact German investments in renewable energy products have been so large that they’ve really driven the market demand curve in ways that many US manufacturers did not anticipate, much to their detriment.

 

Germany's Energy Mix, image by Stromvergleich

Germany’s Energy Mix, image by Stromvergleich

 

By creating rapidly increasing demand for things like solar panels and electrical grid controllers, Germany has become dependent on Chinese manufacturers who were able to stay in business even as intense competition has driven down equipment prices as much as 70% in the last decade. As we’re sure you are aware, most American solar manufacturers have struggled and quite a few have ended their operations in bankruptcy. (You may recall we recently discussed the GT Advanced Technology plant in Mesa AZ making sapphire for Apple. It operates on the site of a former bankrupted solar panel manufacturer.)

 

The Big Question for American Energy Utilities

American utility companies are on the horns of a dilemma. As fracking produced a natural gas bonanza, many electrical utilities were forced to convert their existing coal powered electrical generation plants to natural gas. They now have to consider whether or not a future agreement on a universal carbon tax in Paris in 2015 will further tip the balance toward renewable energy sources like wind and solar.

Yet it may be the Germans who — at the end of the day — become the most influential of all in the world energy market thanks to their relentless buying power that continues to drive down the costs of renewable energy equipment like wind turbines and solar energy cells. And if you think utility companies in the U.S. are concerned, it’s likely that energy companies heavily invested in fossil fuel production are doubly so. It may be easier to block a political consensus around a carbon tax, but once consumers begin to see the potential for generating their own electricity from sunlight, the equation for fossil fuels changes rapidly. After all, it’s quite possible that the offspring of oil giant John D. Rockefeller are onto something.

 

Formaspace Can Help You Stay at the Cutting Edge

No matter how market conditions for energy may change, Formaspace is here to help. Our American-made technical furniture solutions are flexible, reconfigurable and long-lasting. In fact our 12 year, 3 work shift furniture guarantee is the best in the industry. Join the roster of satisfied Formaspace technical, manufacturing and laboratory furniture clients — including Apple Computer, Boeing, Dell, Eli Lilly, Exxon Mobile, Ford, General Electric, Intel, Lockheed Martin, Medtronic, NASA, Novartis, Stanford University, Toyota and more.

 

Lab Sample Processing

Lab Sample Processing

 

Give us a call today at 800.251.1505 to find out more about the Formaspace line of stock, semi-custom and custom-made computer workstations, industrial workbenches, laboratory furniture, lab benches and dry lab/wet labs — as well as our design / furniture consulting services.

Related Articles

Austin energy truck
Sometimes the best location for a new laboratory or tech repair center isn't a new building, it's on the road. We take a...
University Maker Space and Innovation Lab with Double Benchmarx
In a world focused on making sustainable design choices, many laboratories are falling behind: traditional lab designs c...
Science, Research, Technology and Cannabis - The Increasingly Legal, Medical and Recreational Use of Marijuana
As annual sales from the legal cannabis market grow to north of $1 billion dollars in Washington State alone, many exist...