The Appalachian Voice

2012 - Issue 6 (Dec/Jan 2013)

A Clean(er) World

Forecasting America’s Role in the Energy Future

By Molly Moore

No country is an energy island.

In the face of a European Union sanction that bans steel imports, Iran is using roundabout trading methods to secure metallurgical coal, used in steel manufacturing, from Ukraine. A state-backed firm in Abu Dhabi plans to invest in Saudi Arabia’s growing renewable energy efforts. And in May, a state-owned Chinese company disclosed plans to buy Triple H Coal Company, which operates in Campbell County, Tenn., marking the first time a Chinese company invested in American coal.

That America and Appalachia’s energy consumption and output are tied to international forces should come as no surprise. Immigrants from the British Isles and Eastern Europe who came to Central Appalachia to work in the coal mines knew that in the 19th and 20th centuries. Today, as nations develop, technology advances and policies shift, the international energy landscape is changing, as is America’s place in it.

Like sea level and human population, the world’s appetite for energy is rising. Without significant changes in policy, such as a worldwide push towards energy savings, global electricity demand will increase over 70 percent from current levels by 2035, the International Energy Agency projects. Renewable sources of power are expected to account for half of new worldwide energy capacity. Coal’s share of overall electrical generation is projected to decline from two-fifths to about one-third, putting it on par with the amount of power expected to come from renewables.

The percentage of U.S. electricity coming from coal is already close to that one-third prediction, a record low, but the country will need to make significant gains in renewable energy in order to fall in line with the projected global average by 2035. In 2011, America derived about 9 percent of its energy from renewables, while Germany used renewable sources to produce 20 percent of its energy.

Looked at another way, however, America doesn’t seem so far behind. At the end of 2011, the United States was second after China in total renewable energy capacity, according to a report by public research and advocacy organization The Pew Charitable Trusts.

Follow the Clean Money
“I don’t think [the United States] gets enough credit for leading in many, many ways in renewable energy,” says Richard Caperton, director of clean energy investment for think tank Center for American Progress. He notes that the field of renewable energy is diverse and encompasses manufacturing, project development, deployment and financing. Compared to other nations, the U.S. is strong on some of those fronts and falls behind in others.

Caperton says America is great at “getting concrete and steel in the ground” by planning and installing wind turbines and solar farms. Compared to China, America also does well at integrating alternative energy sources with utilities. Though it’s difficult to track information on China’s power system, he says, the country continues to build wind farms and solar arrays that aren’t connected to the grid.

“Our banks and venture capital investors and private equity investors are, I think, world leaders in their knowledge of the field and in their willingness to finance renewable energy projects both domestically and abroad,” he says.

The U.S. invested $48.1 billion in clean energy in 2011, more than any other nation. The Pew Charitable Trusts attribute that dramatic increase in clean energy investment to the fact that entrepreneurs and financiers were making the most of government policies that expired at the end of that year.

Following that boom, growth in clean energy investment slowed in both America and around the world. In the third quarter of 2012, those investments were 20 percent lower than they were a year ago, reports research company Bloomberg New Energy Finance. Bloomberg attributed the global drop to uncertain clean energy policies in countries such as the U.S. and United Kingdom.

Caperton says most countries at the forefront of the clean energy field benefit from policy certainty — dependable tax incentives, loan guarantees and state renewable energy goals. “[Those countries] have a general commitment to low-carbon power sources that feeds into every decision they make in the power sector,” he says. “If they know they want to have a zero-carbon fuel mix by 2050, they’re able to plan today for that future and that really helps their investments.”

Making and Trading the Energy Future

One of those areas where the U.S. is doing fairly well but could improve is renewable energy manufacturing — making the photovoltaic cells, wind turbine blades and countless other building blocks of clean energy technology. With the International Energy Agency projecting that the amount of power generated from renewable sources will be three times greater than 2010 levels by 2035, manufacturers see a big opportunity.

China currently leads the world’s solar and wind energy industries. Of the top ten wind manufacturers in 2011, four are Chinese companies and one, GE Wind, is American, reports international organization Renewable Energy Policy Network for the 21st Century.
“Where China does really well is a strong national commitment to providing financial incentives for manufacturing,” Caperton says. “Every country, eventually, will be transitioning to low-carbon power and China wants to manufacture that for the rest of the world. So they’re making strong commitments today to set themselves up to be the future manufacturing leader.”

That support is so strong that the U.S. brought a trade case against China to the World Trade Organization alleging that the Asian country provided unfairly large subsidies to its solar manufacturing industry, allowing Chinese solar companies to sell their product abroad below the cost of production. The U.S. recently imposed tariffs on Chinese-made solar panels to help protect domestic companies.

John Smirnow, vice president of trade and competitiveness for the Solar Energy Industries Association, says the best estimates show a nearly equal trade balance between Chinese and American solar companies. The trade case is beginning to have a negative ripple effect on American manufacturers, he says, since the Chinese government is now more receptive to trade complaints against the U.S. And because the bulk of U.S. exports go to China, Smirnow says anything that harms their economy can hurt U.S. companies that depend on Chinese buyers.

He hopes the two powerful governments can resolve the issue through negotiations instead of further litigation or allowing the situation to escalate into a trade war. “Solar is one of the more global industries that we have; it really is a global supply chain,” Smirnow says. Two U.S. companies manufacture some of the best solar products available on the world market, he says, so customers looking for solar panels with the most efficiency and greatest longevity will seek out American goods.

Much of the solar supply chain also has roots overseas, in the naturally occurring elements known as rare earths. Most photovoltaic solar panels include the element indium, which the U.S. typically sources from China and Canada. That reliance is changing, however, as solar developers find new technologies — such as innovative uses of mirrors and molten salt — to complement conventional solar panels.

Buying Time With Energy Savings

Regardless of where green technology is manufactured, the International Energy Agency forecasts that worldwide growth in clean energy is a certainty. Despite booms in renewable sources of power, however, the agency’s calculations show that under current policies, emissions of heat-trapping greenhouse gases will lead to a long-term temperature increase of 3.6 degrees C (roughly 6.5 degrees F). Climate scientists and international bodies such as the World Bank and United Nations Environment

Programme say even a 2 degree C (3.6 degrees F) increase will lead to dire climate consequences; dry regions will become drier and wet areas will become wetter on a scale that risks food production and water availability while increasing the frequency of intense storms.

Based on the agency’s projections, the amount of greenhouse gas emissions necessary to reach that dangerous 2-degree climate cliff will be “locked in” by 2017 unless nations around the world dramatically change course.

The report finds that if countries around the world invest in measures to decrease energy use, thereby decreasing the amount of pollution ejected into the air, that would give governments five more years to come up with an effective climate plan before temperatures increase to even more dangerous levels. Under this scenario the agency estimates that overall demand between now and 2035 will increase only half as much as it would without policies to promote energy savings. And those gains in efficiency will boost countries’ overall economic situation as well, the report projects.

Averting catastrophic climate change by upgrading energy infrastructure might be a worldwide task, but Caperton believes America’s energy economy can play a significant role. “I’m optimistic about the U.S. being able to deal with every technical challenge that’s out there. I think that my concern would be, ‘Are we taking [climate change] seriously enough and are we going to actually do enough to address it?’”

Posted: December 5, 2012

2 Responses

  1. As a home planner, I wonder why this problem has not been fixed. Our buildings consume more energy than our vehicles. But this is so easy to fix. Most homes can be built to consume less than half the energy without raising costs or changing lifestyle.
    I designed and built a demonstration project and we have lived in it for 2-1/2 years. No expensive solar panels, wind mills, or geothermal heat pumps. Just simple, low cost solutions like orientating the home to absorb winter sunshine, shading the glass in the summer with a well designed roof overhang, covering the north wall with dirt, using better insulation, and more efficient lighting and appliances. The house is also small. But it costs $500 a year for all the energy. $100 of this runs the small heat pump as much as we need all winter.
    I have also designed many homes that are closer to average size, and without raising construction costs, they use less than half the energy of a standard home the same size.
    If everyone built and remodeled this way, and if existing homes were weatherized properly, we would have better results for less cost than all the cool gadgets people are getting rich selling.

  2. molly says:

    I agree, Richard. Our society is smart — we have the technical ability to build more energy-efficient and cost-effective homes. I think its important that people like you are sharing their success stories with others and showing that home improvements and new construction styles don’t have to be expensive to result in energy savings.

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