New pipeline policy could solve Keystone XL problems

New pipeline policy could solve Keystone XL problems 06/08/14
by John Brian Shannon John Brian Shannon

Which are the most dangerous pipelines?

It’s an easy answer. Old pipelines.

Oil companies don’t advertise the first 15 years as the safest pipeline years. All bets are off after 30 years. And almost every pipeline spill in North America shows a pipeline well past 30 years of age.

One of the biggest problems contributing to leaks and ruptures is pretty simple: pipelines are getting older. More than half of the nation’s pipelines are at least 50 years old. — How Safe are America’s 2.5 Million Miles of Pipelines? published by propbulica.org

The average age of North America’s petroleum pipelines is getting older all the time (as there are few new pipelines are being built) so the existing pipeline network continues to age. But some pipelines built 30+years ago are so fragile from a maintenance perspective that they shouldn’t be allowed to transport toxic crude oil, dilbit, petroleum distillate, bunker fuel, or coal oil.

Forty-one per cent of U.S. oil pipe was built in the 1950s and 1960s; another 15 per cent of the country’s 281,000-kilometre network was built before then. In Alberta, 40 per cent of pipe was built before 1990. — Globe and Mail

How long does it take to ‘pay off’ a pipeline investment?

Depending upon the terrain a pipeline is traversing, pipelines can cost anywhere from thousands of dollars per mile up to millions of dollars per mile, especially when laying them through populated areas or under or above rivers and lakes. It can cost billions of dollars to build one pipeline.

Of course, if you want to move petroleum through a pipeline to your oil refinery, you are going to pay a significant dollar amount to transport that oil across the continent. Each oil refinery can refine up to one million barrels of oil per week. The oil refinery has only so much storage available to it on-site so it usually ships the refined product out ASAP via another pipeline system to a rail network, or direct to the customer via yet another pipeline.

U.S. petroleum pipeline map
U.S pipeline map. Toxic liquids show in red colour, while natural gas shows in blue. Image by propublica.org

After 15 years of operation, pipeline companies finally ‘break-even’ on their original investment

“Now we can finally make some money!”

Pipelines are quite costly to gain approval for from national and local regulators, to buy or lease the land, to design, build and operate. It also is the case that oil companies pay millions of dollars per year to the pipeline companies to move their liquids around. It is an annual business of billions, not millions.

We all need to make money and pass the ‘break-even’ point in our investments

We all want and need to make a return on investment (ROI) which is the reason we start businesses in the first place. But, just at the point that a pipeline has finally broken-even investment wise for its investor group, it is beginning to seep oil at the gaskets (called ‘weeping’) and also leak oil at the pump stations, and at areas where the pipeline has been disturbed by ground movement due to frost, ground settling, or earthquake movements. Some of this weeping can continue on for many years before anyone visits that remote area, which may not have been visited since the construction of the pipeline. Running toxic liquids across a continent safely, but economically, are mutually exclusive matters.

But without oil pipelines, our economy would grind to a halt within 90 days

Without pipelines, only coastal cities would be able to receive gasoline, diesel, kerosene, or other liquids used for transportation fuels, via international shipping lines. Other users of petroleum, such as chemical, plastics, and pharma companies would need to relocate to coastal areas to receive their petroleum ingredients.

It is a case of need vs. greed

  1. “We need the oil, keep it coming,” say consumers.
  2. “We need to keep our environment clean,” say a rapidly growing number of citizens/consumers.
  3. “We need to recoup our pipeline investment and make a profit in order to stay in business and we do it all for groups #1 and #2,” say the pipeline companies.

If ever there were a situation calling out for compromise, this has got to be it.

But the simple fact is, old pipelines weep plenty of oil and eventually burst, releasing tons of toxic liquids into the environment. New pipe does not burst or leak — unless it was to be hit by a derailed train, a transport truck, or an airplane crash — all of which are very unlikely events.

A mechanism for safe petroleum transport that works for all

Add a mile of new pipeline | Remove a mile of old pipeline

There are many pipeline systems that have been transporting petroleum for 30+ years in North America. These old pipes weep oil everyday. You might not see it, some of them are underground, or in wilderness areas where pipelines often traverse, or are just not accessible for viewing by the pubic or inspectors for that matter.

Some pipelines in North America are 45+ years old and they are big leakers — and just like purchasing carbon credits — one pipeline company could sell their RRR credits to another company that is ready to build a new pipeline.

It may seem odd for you to hear this solution from a renewable energy proponent; We should build more new pipelines!

What? Yes, but only if we completely remove 30+ year old pipelines on a mile-per-mile basis and remediate the soil and replant native species of plants along the historic route of the removed pipeline.

If pipeline company “A” wants to build a new pipeline, (such as Keystone II, for example) then government regulators should require that for every mile that they want to install new pipeline, the pipeline company is required to completely remove and remediate the soil and plant life, from whence an old pipeline has been removed.

This would help us to get rid of thousands of miles of old, leaking, and rusting pipelines that even the oil companies have forgotten about. They are environmental catastrophes just waiting to happen.

You can never completely empty a pipeline so they just sit there decade after decade weeping oil into the groundwater. Some old pipelines, although very leaky, are kept in place just in case of emergency so oil can be quickly diverted to the old pipeline for transport to a different junction in the system — and thereby still arrive at the oil refinery (and likely a day late and a few tens of barrels of oil short).

But that isn’t the best solution for the environment.

The best solution is easier approvals for newer and safer pipelines, contingent upon Retiring, Removing and Reclaiming (RRR) the land on the same total mileage of 30+ year old pipeline in the North American petroleum distribution network.

If Keystone II is 3500 miles of shiny new, high-tech, and state-ot-the-art pipeline, that’s great. It’s orders of magnitude less likely to leak, than 3500 miles of old pipeline.

All pipelines over 30 years old should be allowed to qualify for this removal/remediation programme. And the pipeline companies signing up for the Retire, Remove and Remediate (RRR) pipeline plan should receive tax incentives to assist in this regard. And, bonus, they can sell the land, once it is remediated.

Birth of a new industry

With the high prices of metals these days, oil and pipeline companies could find that passing the actual RRR work to another company could be the way to go. Even if the old pipe and pumps and pumphouses, etc, end up being sold for the scrap metal value, millions of tons of 30+ year old pipeline is sitting on the ground or just underground, waiting to be picked up and recycled.

Add in soil and plant remediation, and you have a whole new business model. A business where the workers could feel proud of the work they do!

“What do yo do for a living?”

Wouldn’t it be nice for an petroleum industry employee to be able to reply;

“I remove old, leaky pipelines, remediate the contaminated soil, replant the areas with native plants, and recycle millions of tons of old, leaky, pipeline metal.”

That has got to be the feelgood moment of the year, for any oil company employee.

Not your typical oil company employee job description

Yet, with some executive-level decisions and with a common-sense regulatory framework, RRR could finally solve the problem of the many thousands of miles of dormant but still weeping pipelines — and spawn a whole new business model — while helping to protect our North American ecosystems that wildlife depend on.

The Solar power / Water Nexus

The Solar power / Water Nexus | 11/07/14
by John Brian Shannon John Brian Shannon

Separate from discussions about airborne coal power plant emissions, are the high levels of water usage caused by obscenely high coal power plant water requirements. Water usage by power plants are directly proportional to the downstream water loss experienced by farmers, citizens, and other water users such as wildlife.

Water used by power plants
At a time of increasing water scarcity, water use by power plants varies widely. In some regions, that different water usage level is becoming an important part of the decision-making process for planners. climaterealityproject.org

In some regions of the world, there exists acute competition for water resources as coal power station operators vie for water with agricultural, urban, and other users of water — while areas with plentiful water find their power plant choices aren’t constrained by water supply issues at all.

But the era of increasing water shortages and frequent drought seem here to stay in many regions, and the huge volumes of water required by some power plants is becoming a factor in the decision-making process as to which type of power plant is most suited for any given location.

Therefore, the conversation is now arcing towards the local availability of water and thence, to the most appropriate type of power station to propose for each location.

So let’s take a look at the water usage of five common types of power plants:

  • Coal: 1100 gallons per MWh
  • Nuclear: 800 gallons per MWh
  • Natural gas: 300 gallons per MWh
  • Solar: 0 gallons per MWh
  • Wind: 0 gallons per MWh.

While 1100 gallons per MWh doesn’t sound like much, America’s 680 coal-fired power plants use plenty of water especially when tallied on an annual basis.

The largest American coal-fired power station is in the state of Texas and it produces 1.6 GW of electricity, yet it is located in one of the driest regions on the North American continent. Go figure.

At one time as much as 55% of America’s electricity was produced via coal-fired generation and almost every home had a coal chute where the deliveryman dropped bags of coal directly into the homeowner’s basement every week or two.

But in the world of 2014, the United States sources 39% of its electricity from coal power plants and this percentage continues to decline even as domestic electricity demand is rising.

Texas Utility Going Coal-Free, Stepping Up Solar

In a recent column by Rosana Francescato, she writes;

“El Paso Electric Company doubles its utility-scale solar portfolio with large projects in Texas and New Mexico. As if that weren’t enough, the utility also plans to be coal-free by 2016.” — Rosana Franceescato

She goes on to tell us that EPE serves 400,000 customers in Texas and New Mexico and gives credit to the foresighted management team. El Paso Electric is already on-track to meet the proposed EPA carbon standard. Their nearby 50 MW Macho Springs solar power plant about to come online is on record as having the cheapest (PPA) electricity rate in the United States.

This solar power plant will displace 40,000 metric tonnes of CO2 while it powers 18,000 homes and save 340,000 metric tonnes of water annually, compared with a coal power plant of the same capacity. That’s quite a water savings in a region that has been drought-stricken in 13 of the last 20 years, only receiving 1 inch of rainfall per year.

In February 2014, EPE signed an agreement for the purchase all of the electricity produced by a nearby 10 MW solar installation that will 3800 homes when construction is completed by the end of 2014. And they are selling their 7% interest in a nearby coal power plant. Now there’s a responsible utility company that makes it look easy!

Solar’s H2O advantage

The manufacture of solar panels uses very little water, although maintenance of solar panels in the field may require small amounts of water that is often recycled for reuse after filtering out the dust and grit, while other types of energy may require huge volumes of water every day of the year.

Wind’s H2O advantage

Wind turbines and their towers also use very little water in their construction and installation, although some amount of water is required for mixing with the concrete base that the tower is mounted on at installation.

In the U.S. which is facing increasing water shortages and evermore drought conditions as global warming truly begins to take hold in North America, switching to a renewable energy grid would have profound ramifications. Estimates of water savings of up to 1 trillion gallons could be possible if utilities switched to 100% renewable wind and solar power with battery backup on tap for night-time loads and during low wind conditions.

Midway through that transition, the present water crisis in the U.S. would effectively be over. Yep, just like that. Over.

China’s Looming Water Crisis

China’s looming water crisis has planners moving to taper their coal and nuclear power generation construction programmes. You can’t operate these plants without the required water, even for a day. Yet, the people who live and grow crops and raise livestock in the surrounding areas need access to undiminished water supplies. What good is a coal power plant if everyone moves away due to a lack of water?

There are very legitimate reasons nowadays to switch to solar and wind generation — and the reduction of airborne emissions used to be the prime consideration and may remain so for some time, however, massive reductions in water consumption might now prove to be the dealmaker in some regions — and the emission reductions may now be viewed as the happy side benefit! Wow, that’s a switch!

Of course, the benefits of solar and wind power will still include no ongoing fuel costs, very low maintenance and the lowest Merit Order ranking (the wholesale kWh price of electricity) of any energy.

Granted, there are locations where renewable energy doesn’t make sense, such as some Arctic or Antarctic regions. In these places solar simply isn’t worthwhile and wind levels may not be sufficient to make the economic case. Biomass may be a partial solution in these areas and there may be the opportunity for geothermal energy — although finding ‘hot rocks’ underground near population centres is much more unlikely than many people may realize.

But in the future, the vast majority of locations will be powered by renewable energy paired with a battery backup or a conventional grid connection — or both. And its a future that’s getting closer every day.

US Electricity Sector Gets Downgrade From Barclays

Originally published on Rocky Mountain Institute by James Mandel

Barclays recently downgraded the U.S. electricity sector. That’s right, the whole sector. It’s now listed as “underweight,” meaning that if you were to hold a full portfolio of bonds for the U.S. economy, you might want to be a bit light on U.S. electric utilities, as they might not keep up with the broader economic growth trends.

Why? One answer is the disruptive threat of solar-plus-battery systems.

From the Barclays report:

Over the next few years… we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo.

Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii.

Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after.

In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power.

We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade.

If that language sounds familiar, it’s because Barclays’ logic is very similar to that of our recent report, The Economics of Grid Defection, in which we forecasted the declining costs of solar plus storage and the time—coming soon—when those systems could reach parity with grid-sourced retail price electricity in a growing number of markets, including Hawaii, California, and New York.

In fact, the Barclays report cites RMI as a key source in several of its analyses that lead to this conclusion.

Barclays recently downgraded the entire U.S. electricity sector.
Barclays recently downgraded the entire U.S. electricity sector.

Barclays believes we’re entering a post-monopoly world in which distributed energy resources will take a place alongside large-scale central generation as a critical energy resource and a widely available and affordable customer option.

In a surprisingly strong prediction for analysts, Barclays views this transition as inevitable:

“Whatever roadblocks utilities try to toss up—and there’s already been plenty of tossing in the states most vulnerable to solar, further evidence of the pressures they’re facing—it’s already too late.”

If you’re a utility, or an investor who’s got money in utilities, that’s some ominous language. Admittedly, a downgrade suggests two possible outcomes in the near future: 1) analysts tend to move in herds, so expect more news on the U.S. electric sector soon, and 2) capital is likely to get a bit more expensive for utilities, as millions of dollars shift out of the sector.

It’s not all bad news. As we discussed recently in “Caveat Investor,” this should ultimately lead to a stronger, more resilient power sector with stronger overall valuations, but the transition is likely to be volatile. The Barclays report suggests we’re about to enter that volatile transition phase.

So, what are the major trends we can learn from this, and what does a utility downgrade mean for the future of distributed renewables?

1) Distributed energy is hitting the mainstream. Historically, it’s renewables’ creditworthiness that has been challenged (while utilities have been considered rock solid), but now this trend appears to be reversing. We’ve seen declining costs of capital in solar (as recent securitizations demonstrate), new financial instruments emerging for related technologies, and lower costs overall. Despite this progress, there is still a large gap between the market acceptance of renewables and the market acceptance of central, fossil-fueled generation. The recent downgrade suggests that people are starting to take distributed renewables seriously, and that utilities and renewables are entering a period of equal (or at least comparable) market strength.

2) Issuing new bonds for thermal fossil generation will become more expensive. While many people focus on the construction costs of new assets (central and distributed generation alike), it’s more often the cost of capital that determines project viability. Traditionally, utilities have almost always been the lowest-cost provider of new energy resources, and part of this advantage has rested on ready access to and favorable terms from the bond market. If that advantage is eroding, then expect new players to be able to compete for providing the nation’s energy, including providers of much smaller, distributed generation.

3) Distributed storage, when combined with already mature trends in generation and energy efficiency, compounds the disruptive threat of consumer-scale investments in energy. Many people have worried that declining demand (through energy efficiency) and distributed generation are putting enormous stress on the traditional business model for investments in central generation. That has not changed at all. So why does the emergence of storage, something that doesn’t reduce consumption or increase generation, suddenly give the markets concern? Simply put, the addition of storage gives customers the option to entirely disengage from their relationship with the utility. While most customers won’t choose to leave, and for good reasons, the threat of grid defection creates consumer leverage that will slow recent upward trends in utility rates out of competitive necessity.

4) These trends are likely to accelerate. As capital shifts from central to distributed generation, this just improves the economics of distributed resources even further, through scale benefits as well as lower cost of capital. Few people would say that we’ve even come close to market saturation for any customer segment for renewables and efficiency. As the traditional electric sector becomes a more challenging place to park capital (or even just a less certain place), more investors will start to notice that investments in distributed resources have similar risk-reward profiles, and this movement of capital will be self-reinforcing.

Barclays took a fairly surprising stance for an industry not traditionally known for looking years into the future. That’s a great sign for the markets, which need to start responding to global, long-term trends. And while the Barclays report isn’t likely to move markets in the next 6 or 12 months, it does signal an important shift under way—distributed generation is likely to be an affordable and accessible choice for more and more customers alongside traditional utility-provided electricity. More options means more competition and increased relevance of the customer. And that’s an upgrade for users of electricity everywhere.

Image Credit: pcruciatti / Shutterstock.com

This article, US Electricity Sector Gets Downgrade From Barclays, US Consumers Get Upgrade, is syndicated from Clean Technica and is posted here with permission.

ACORE’s Outlook for Renewable Energy in America: 2014

Report Forecasts Industry Growth and Highlights Policy Recommendations to Advance an American Renewable Energy Economy

Jointly Authored by U.S. Renewable Energy Trade Associations

The Outlook For Renewable Energy in America (2014) Cover
This publication is available for download. Image courtesy of American Council On Renewable Energy (ACORE).

Washington, D.C. March 31, 2014 – The American Council On Renewable Energy (ACORE) today announced the release of The Outlook for Renewable Energy in America: 2014, jointly authored by U.S. renewable energy trade associations from the power, thermal, and fuel sectors.

The Outlook assesses the renewable energy marketplace and forecasts the future of each renewable energy technology sector, from the perspectives of each of the associations, and provides a list of policy recommendations by the respective associations that would encourage continued industry growth.

“ACORE applauds the unity of the renewable industry community and this united front as reflected in The Outlook for Renewable Energy in America: 2014,” said ACORE President and CEO, Michael Brower.

“The report demonstrates the many public and private sector opportunities that exist at the national, regional and local levels for continued industry advancement and investment; however, they are not one-size-fit-all solutions for every renewable technology.

The articles in the report detail specific market drivers for the biofuel, biomass, geothermal, hydropower, solar, waste, and wind energy sectors.”

“The financial markets have responded to greater American consumer interest in renewable energy with increasing levels of private sector investment,” said Jeffrey Holzschuh, Chairman of Institutional Securities at Morgan Stanley.

“Spurred by growing individual as well as business demand, private sector investment in the U.S. clean energy sector surpassed $100 billion in 2012-2013, stimulating significant economic development while supporting hundreds of thousands of jobs.”

The trade associations who participated in the Outlook are: Advanced Biofuels Association; American Wind Energy Association; Biomass Power Association; Biomass Thermal Energy Council; Energy Recovery Council; Geothermal Energy Association; Growth Energy; National Hydropower Association; Ocean Renewable Energy Coalition; and the Solar Energy Industries Association.

The industry-specific authors of The Outlook forecast renewable energy’s growth to continue, driven by increasing cost-competitiveness with conventional generation, technology advancements, and acceptance by Americans to embrace clean and renewable technologies.

Linda Church Ciocci, Executive Director, National Hydropower Association commented,

“Certainty is integral to hydropower’s continued growth over the next five years. Doubt surrounding the extension of tax incentives and the possibility of a drawn out licensing process are the main deterrent for developers that Washington must address.”

“Wind energy is now among the largest sources of new electric power in the U.S.,” said Tom Kiernan, CEO of the American Wind Energy Association.

“Technology innovation and U.S. manufacturing have reduced its average cost by 43 percent in just four years. The economic benefits are reaching communities and consumers all over America, with an average of $15 billion a year in private investment and savings on electric bills also now in the billions a year. We’re on track to generate 20 percent of the electricity in America from wind by 2030, and already produce over 25 percent in Iowa and South Dakota.”

“The U.S. is a world leader in geothermal power generation,” said Karl Gawell, Executive Director of the Geothermal Energy Association, “but to sustain that role, we need the kind of collaboration shown at ACORE’s recent National Renewable Energy Policy Forum to reach state and federal leaders so they will recognize the value of achieving the full potential and diversity of renewable energy.”

“The world has witnessed a sea change in the drivers of energy production and demand,” commented Michael McAdams, President, Advanced Biofuels Association (ABFA).

“ABFA believes these issues can be an opportunity and driver for advanced and cellulosic biofuels and we welcome the opportunity to participate with ACORE and the renewable energy community to help support the development and deployment of all renewable technologies.”

ACORE advocates that an America powered on renewable energy and renewable fuels is a stronger, more secure, cleaner, and more prosperous America.

The Outlook for Renewable Energy in America: 2014 shows the potential of America’s renewable energy economy to extend beyond one fuel choice or pipeline, to provide the country with an unparalleled opportunity to reinvigorate the U.S. economy while protecting our environment.

The Review can be downloaded here: http://www.acore.org/outlook2014

About ACORE:

ACORE, a 501(c)(3) non-profit membership organization, is dedicated to building a secure and prosperous America with clean, renewable energy. ACORE seeks to advance renewable energy through finance, policy, technology, and market development and is concentrating its member focus in 2014 on National Defense & Security, Power Generation & Infrastructure, and Transportation. Additional information is available at http://www.acore.org .

Top 10 Solar Cities in America

by Jake Richardson

You might expect the #1 solar area in America to be a city like San Francisco or San Diego. According to One Block Off the Grid* it isn’t one of the largest metro areas, it’s Fresno, CA, with a strong lead at 182 watts per capita.

That rate is almost a full 100 watts per capita greater than the city in the number two position, Phoenix.

Top 10 Solar Cities in America per capita. Fresno, CA is number one! Image: Fresno county courthouse
Top 10 Solar Cities in America per capita. Fresno, CA is number one! Image: Fresno county courthouse. Image courtesy of Matt Wright.

The rest of the top 10:

2. Phoenix
3. Las Vegas
4. Sacramento-Yolo
5. San Francisco-Oakland-San Jose
6. San Diego
7. Philadelphia
8. New York City
9. Los Angeles
10.San Antonio

Fresno topped the list because it has a lot of open space for solar projects and a relatively small population. One initially might have assumed it was because their citizens are greener than most, but this isn’t the case.

It is exactly this closeness to open space, but this time desert lands, that make Phoenix and Las Vegas top solar installation sites as well. Considering that they both have abundant sunshine and open desert space around them to accommodate solar power plants, it just might turn out that they eventually eclipse Fresno.

It isn’t surprising that the San Francisco Bay Area is in the top 5, which surely comes in part from their technology and startup presence. This area is also progressive and has a fairly large population of green enthusiasts. The city of San Francisco also benefited when Gavin Newsom was mayor, because he helped build enthusiasm and strong policies for clean energy. The Bay Area might also move up the list eventually.

LA has such a large human population that it might be hard for the entertainment capital of the country to catch up. San Antonio is also fairly large, so if a smaller Texas city that is progressive catches up it, few will be taken off guard.

Texas might do well to improve its policies regarding clean energy, because it has been found that the whole state could easily be powered by solar*. Of course, its history is saturated with oil production and sales, so a culture shift will be required to move entirely toward renewables.

*Full disclosure: we have a financial partnership with 1BOG and Cost of Solar.

This article, Top 10 Solar Metro Areas In The US, is syndicated from Planetsave and is posted here with permission.

About the Author

Jake Richardson Hello, I have been writing online for some time, and enjoy the outdoors. If you like, you can follow me on Google Plus.