The government is considering offering incentives to get people to trade in vehicles before model year 2001. Drivers could get up to $5000 toward a new car if they give up their older car and purchase new US-made cars that meet fuel efficiency standards.

Interesting way to boost GM and low-energy vehicles at the same time. A few problems: 1) messing with demand for durables can be expensive later; 2) I wonder how much energy savings this will actually promote, since some older cars are pretty gas efficient.

Any more that you can come up with?

End material for second midterm

Articles posted after this marker may appear only in questions on the final exam, not on a midterm.

Certification: a response to low resource prices

Vendors can raise prices if they can put special "sustainable" labels on their products, as niche markets are willing to may for them. An article in the New York Times highlights this for forestry, and a recent article in a publication by the Nature Conservancy describes how that organization is using a "local" label to raise selling prices enough to justify the higher costs of using sustainable methods. This is internalizing externalities in action, but it's tough when only parts of the market are internalizing a large share of the costs.

Renewables are expensive!

According to the New York Times today, wind and solar are still a long way from being cost competitive. Since wind power goes offline when there's no wind, a plan centered around wind requires backup, and adding backup really makes things expensive. Still, even figuring in the backup, solar checks in at twice the cost of wind. The low price of natural gas (see the next post) is making this all the more difficult. Ouch!

Natural Gas Glut in US

Recently, a globalized gas glut has led to lowered prices for gas that heats our food and homes and runs industrial factories throughout the world. This amazing trend comes after a shortage for natural gas in recent years. Darcel L. Hulse attributes this new imbalance among supply and demand to the global recession stating, “We had many years of ever increasing demand so the world geared up for that, but what the world did not prepare for was an economic recession that is global in scope and in impact.” There are six new production plants for natural gas coming on line. However, Asian and European markets, which use the most natural gas, are slowing.
The global capacity for gas exports will increase 25% from 200 million tons. The natural gas exports from Qatar, Egypt, Nigeria and Algeria which were suppose to enter European and Asian markets are now arriving on supertankers in the United States where there is a glut too. Natural gas prices have lowered in the United States as its use has fallen by two-thirds. The new imports will not lower the prices any further but will sustain the prices in the market until it comes out of the recession.
The new influx of natural gas into the United States has caused mixed reactions. Consumers will most definitely benefit from the lower prices. Many industrial products utilize natural gas in the production process to run machines and operate factories. Natural gas also provides one-fifth of the power generated by electric utilities. Proponents for energy independence, are on the other side of the issue, and are in fear that the new imports will ruin domestic production markets for natural gas. The domestic rig count will be cut by fifty percent as the imports increase. Prices for natural gas are down to $4 per thousand cubic feet from $13 only a year ago.
“The United States used to have gas bubbles all by itself; now the world can have a gas bubble,” said Donald Hertzmark. The once highly priced necessity for countries with little alternative energy sources has become abundant and will aide a global movement out of the recession.
Having a natural resource in such abundance is great for consumers and the producers who utilize it production processes. With such a high abundance and a lowered price, investments in renewable energy sources can be more heavily researched and tested. These practices will hopefully lead to greater energy independence and lead to developments of cleaner energy technologies.
-- Michael Fisher

Costs of Solar Power Falling

The cost of purchasing and installing solar panel systems in homes and businesses has been decreasing rapidly since a decade ago. That cost has dropped 27.6% from 1998 through 2007. In a study done by Lawrence Berkeley National Laboratory, the costs of 37,000 photovoltaic systems across the country were examined and it was found that the average price fell from $10.50 per watt in 1998 to $7.60 per watt in 2007. The study also revealed that the state in which the system is installed has an affect on the price of installation. Systems smaller than 10 kilowatts cost an average of $8.10 per watt in California, the second lowest average in the country next to Arizona. Maryland was found to have the highest average price at $10.60 per watt.

The solar panel industry is continuing to find new ways to drive costs of panels down by using new materials, new production processes, and streamlining installation techniques. The demand for solar energy is increasing as homeowners and businesses are looking to lower energy bills and leave a smaller carbon footprint. Economics is playing a major roll in the issue as photovoltaic solar energy still isn’t economical. It is said that this type of renewable energy needs to fall below $5 per watt in order to truly be competitive with other forms of energy production.

I believe that it is obvious economics will be the deciding factor with solar energy’s success or failure. Right now a small system for homeowners costs approximately $25,000. This price, roughly that of buying a new car, is not economical if a homeowner wants to recover their investment in a reasonable amount of time. The time it takes to recover expenses would also depend on the location of the home; closer to the equator would increase efficiency and shorten the time it takes to “break even”. I am totally interested in having a solar energy system on the house that I purchase in the future, if the cost declines or I stumble upon a large pile of money. Having household appliances connected to a solar power system would reduce energy bills significantly, however, a monthly payment for the solar power system would wipe out that affect and possibly cost more to the homeowner.
--Kevin Kelly

Funding for Solar

For a change, Berkeley's crazy left wingers seem to have done something right. Solar panels have always been hard to sell because you basically have to front the cost of almost all of your power for the next 30 years before you get anything back. Under Berkeley's new model, the cost of solar panels is paid for by a loan taken out by the city, and residents pay it back as part of their property taxes. This article is about some people in southern California who are saving money from the new plan implemented by their city. Says one lady, "You know, I am happy it is also good for the environment."

Severin Borenstein (who works in Berkeley) says that we shouldn't fund solar because the technology is inefficient (i.e. it doesn't generate enough power to pay for itself even accounting for the externalities associated with traditional power generation) and it's hard to argue with him given his thorough study. He calls for increased resources to be invested in research, so that better solar panels can be produced.

There may be other ways that cities can use this mechanism to invest in increased energy efficiency, which would be good too. On top of that, though, I have to think that this new means of securing funding for solar might provide the impetus to get the research done that Borenstein calls for. Hopefully most everyone can agree on that!