Mixed Greens: Energy efficiency and one-world governments

Could energy efficiency measures really lead to “one world governments?” Well, if you are a member of the Tea Party in the US, anything is possible. A year after railing against energy efficient light bulbs (American citizens should have the right to choose any light bulb they want), the Tea Party is now attacking all energy efficiency programs as “social engineering … including where we live, what we eat.”

Arizona State Senator Judy Burges has introduced a bill into the legislature that she says is designed to wipe out any environmental program administered or funded by the government. She believes that clean energy programs in Arizona are a plot by the United Nations to create a single world government in order to control people’s lives. Under the provisions of Burges’ bill, the state, counties and cities could not accept funds from, spend funds from, or give funds to “certain non-governmental organizations,” including non-profit groups and contractors, for any of the declaration’s initiatives,” Climate Progress reports.

Climate Progress says the Arizona “conspiracy bill” has already moved through the Senate, through a House committee, and is now set for discussion on the House floor. If passed by the House, the bill could block state and municipal programs that help home and business owners invest in energy efficiency improvements. CP quoted Chad Campbell, the Democratic House Minority Leader describing the legislation as “the most ludicrous … I’ve seen in six years…. You could pretty much shut down any form of government sustainability” program.

Carbon slumps again  

On a more serious note, European carbon prices tumbled to new record lows below €5/t overnight as analysts digested the implications of greater than expected emissions abatement in the past year, the poor economic outlook, and a growing surplus of carbon credits out to 2020. Deutsche Bank analysts said the price could fall below €5/t unless policies such as a “set aside” for the surplus is agreed. Analysts said the carbon market was being impacted by the inability of the market authorities to implement policy adjustments, unlike the central banks that can influence monetary policy.

“The short-term success of the equity markets, much like the carbon markets, is dependent on policy,” noted Matthew Gray, an analyst with Jeffries. “The difference between the respective institutions managing these markets lies in their regulatory flexibility: Central banks can act independently and therefore decisively, whereas the Commission is hamstrung by European politics.” Could be a good thing that Australia will have an independent authority headed by former RBA chief Bernie Fraser.

End of GGAS

Meanwhile, the New South Wales government has announced the closure of its Greenhouse Gas Abatement Scheme. The announcement was expected given the introduction of a federal carbon price, but the closure of one of the world’s first emissions reduction scheme could be lamented by nostalgiacs, even if it proved to be less effective than hoped. A report by the Federal Department of Climate Change in 2010 found that the reductions achieved were minimal (4.7 million tonnes a year) and at relatively igh cost ($40/t), and it was not entirely clear if the reductions were “additional” – i.e. would not have occurred anyway. NSW is seeking compensation for the outstanding certificates in the scheme, which the state government says will be rendered worthless by the federal carbon price.

Cape Wind’s big merit order effect

The controversial Cape Wind project, a 460MW offshore wind farm to be built close to some of the richest NIMBY’s of them all, near Cape Cop on Nantucket Sound, could deliver massive savings in wholesale energy costs in New England and Connecticut through the merit order effect, according to a study commissioned by the developers. Charles River Associates said the impact of the wind farm – and its $0 fuel cost and the merit order effect – could reduce wholesale electricity costs by $268 million a year, or a total of $7.2 billion over 25 years. This compares to the $2.6 billion cost of building the project, and the higher retail tariffs (amounting to $1.58 a month, or nearely $1 billion over 15 years), being paid by the customers in the power purchase agreement to get the farm built in the first place. The Charles River report suggested that retail tariff could be lowered in light of the reduction in wholesale electricity costs.

Such arguments have of course been used by wind energy proponents in Australia, notably in South Australia where it has had a demonstrable impact, and by the promoters of the Kennedy Wind Farm in Queensland. However, utilities are now less enthusiastic about the merit order effect now that they have seen the potential impact of the MOE caused by large penetrations of solar energy, which reduces wholesale costs during the day, causing a larger erosion of margins for generators.

Wind up and down

In other wind energy news, US billionaire T. Boone Pickens is revisiting his Texas wind farm proposals, though at a much more modest scale, substituting a planned 4 gigawatt wind farm – which would have been by far the biggest in the world – with a 377MW wind farm. The new wind farm is being built by Mesa Power Group, owned by Pickens created, and Wind Tex Energy. Texas already has around 10,000MW of wind capacity, the most in the US.

Meanwhile, in New Zealand’s Contact Energy – majority owned by Origin Energy – has placed an investment decision on a 504MW wind farm on hold as it waits for electricity demand to improve. The wind farm at the Hauauru ma Raki site near Raglan on the north island, as delayed an investment decision on the 168 turbine project because electricity demand in the country is slowing, and the project won’t be economic until demand improves.