Most of us have heard about the “Hydrogen Highway,” that mythical roadway which, along with bullet trains and bridges to nowhere, may actually get built someday at a staggering expense to the taxpayer (to be fair - we’re as hopeful as anyone the formidable technological barriers to using hydrogen as a transportation fuel are eventually overcome).  But meanwhile, as of last week, the first ethanol highway in the United States is open for business - I65, stretching from the Great Lakes to the Gulf of Mexico.  Corn ethanol is a viable transportation fuel today, not someday, and implementation of this ethanol highway, the first of many, is an exercise in practicality, not pipe dreams.

For 886 miles, from Gary, Indiana, all the way to Mobile, Alabama, drivers of flexfuel vehicles who wish to purchase E85 fuel (85% ethanol, 15% gasoline) are now no more than one quarter-tank away from a filling station offering the blend.  To make this a reality, a consortium of partners including General Motors, the States of Indiana, Kentucky, Tennessee and Alabama, as well as the DOE, Clean Cities, and many others, worked to convert and certify hundreds of retail fuel stations along the entire length of I65.  Overall, there are now over 1,800 retail filling stations offering E85 in the USA, just over 1% of the total stations.

The future of ethanol depends on a few key factors:  The availability of flexfuel vehicles, the availability of retail outlets that offer E85, and the quantity of E85 available to the consumer. There are about 7.0 million flexfuel vehicles already on the road in the USA, and in many parts of the country - the Midwest in particular - E85 is readily available.  Gaining UL certification for ethanol refueling equipment, which should occur early next year, will greatly accelerate the adoption of ethanol pumps at major chains of gasoline retailers.  The real wild card is the availability of ethanol.

As specified in the Energy Independence & Security Act of 2007, the United States has committed to blending up to 36 billion gallons of ethanol by 2030.  Currently the United States consumes about 130 billion gallons per year of gasoline, meaning - taking into account a somewhat lower energy content per gallon in ethanol vs. gasoline - by 2030 ethanol can replace over 20% of today’s gasoline consumption.  Given the potential of electricity and natural gas powered vehicles to also offset gasoline demand, combined with the increasing average fuel economy of the US light vehicle fleet, it is possible these 36 billion gallons of ethanol will actually provide more than 20% of liquid transportation fuels being consumed by 2030.
post resumes below image

EISA 2007 - RENEWABLE FUEL STANDARD

Cellulosic ethanol is mandated via EISA to provide nearly 50% of total ethanol production by 2022. In reality, cellulosic ethanol can provide up to about 100 million gallons per year, far more than EISA’s goals. (Source: General Motors)

With 2008 production of corn ethanol projected to reach nearly 10 billion gallons, and with additional refineries already under construction to produce another 2 billion gallons, it is evident the potential for corn crops to supply ethanol is reaching its limit.  Whether or not corn ethanol production reaches 15 billion gallons, or is throttled down to somewhat less than that, the future of ethanol lies in the ability to produce it from cellulosic material. Dozens of companies are hot on the trail of commercializing cellulosic ethanol production - via two primary technologies, biochemical conversion or thermochemical conversion.  Two companies at the forefront of this process are Coskata, who have a hybrid process that relies initially on thermochemical conversion of cellulosic feedstock, and Mascoma, who are pioneering a 100% biochemical conversion process. 

For more information on cellulosic ethanol, read our in-depth report “Cellulosic Ethanol.”  We will be covering this extensively in future posts, given the potential of cellulosic ethanol is to deliver quantities of fuel well beyond the 16 billion gallons per year targeted by the U.S. Congress for delivery by 2022. Cellulosic ethanol production, if successfully commercialized, based on known feedstocks, could conceivably reach 100 billion gallons per year - which when considered along with the other ways gasoline is destined to be either replaced or used far more efficiently, is another reason we are on the verge of an age of plenty, not an age of scarcity.

We have been warning readers about the pension crisis for a few years now.  In a nutshell, the problem is the following:  California public employee unions - which are virtually unregulated despite the fact they operate in the uncompetitive public sector - have pretty much taken over California’s state and local governments. In recent years they have negotiated pay and benefit increases so dramatic that the average government worker in California often earns 2-4x what globalized private sector workers earn to do jobs of comparable worth.  This dramatic disparity is largely due to the value of their retirement pensions.  The present value of what someone collects in retirement must be applied to the years they work, in order to correctly value their annual compensation.  And by that measure, pretty much every employee working for the state of California is a millionaire.

Please note there is a huge difference between unions that operate in the competitive private sector, and unions that now arguably control our public sector.  Also please note this commentary is in no way meant to disparage the good men and women who work in the public sector to perform vital services for us.  Moreover, this commentary is not suggesting we eliminate government services - on the contrary, this commentary simply advocates making taxpayer funded government services and benefits apply to all workers equally.  Currently the public sector serves itself first, leaving the scraps for the taxpayers.  This must be challenged.

During the internet bubble, then the housing bubble, most financial analysts understood we were experiencing unsustainable economic growth.  But this didn’t stop the public employee unions from using these temporary surpluses as an excuse to serve their members at the expense of the taxpaying private sector workers.  Crowing about excessive ”executive compensation” collected by an insignficant handful of corporate executives, they demanded endless hikes in pay and benefits.  The fact that they should have been comparing their compensation to their ordinary counterparts who work in the private sector was a fact they conveniently ignored.  If politicians opposed them, they could be crushed in the next election.  The fact their pension funds invested in the same evil corporations they routinely demonized was also conveniently ignored.

Schwarzenegger’s disastrous attempt to reform the public sector in 2005 was, ironically, perhaps California’s last chance to financially guarantee their state worker pensions.

Back in July 2004 I recall reading an ad in a local newspaper placed by someone who held regular classes to teach people how to get jobs with the State of California.  The ad said “Land a State Job and Become an Instant Millionaire.”  I read the ad closely, and kept a copy. 

Space and copyright laws prevent publishing the entire text of this ad, but it was factual, and filled with comments like the following:  “The California state government provides a “defined benefit” pension plan to each of its employees. Such “defined benefit” pension plans are far more generous than any 401K or defined contribution pension plan available from any other employer in the state! In fact, the plan is so generous that it makes the average state employee a millionaire after only 22 years of work!”

In this ad and others, written with an astonishingly complete lack of irony, the writer explained in detail how much an employee would have to save every year in order to acquire sufficient wealth to retire with an annuity this generous.  In other ads, the writer explained how many days off California’s state workers receive - holidays, personal days, vacation, comp. time, and the “9/80″ program where they get yet another day off every two weeks by working nine hour days for nine working days in a row.  Show me an example of a conscientious salaried worker in the private sector who doesn’t work nine hours a day!  In all, most state workers get between 50 and 75 paid days off per year.  There is a staggering cost for all this.

Now the chickens are coming home to roost.  For years, California’s public employee retirement funds - and others in other states - have overestimated the rates of return they could earn, at the same time as they underestimated how long their beneficiaries would live.  Despite being the biggest collection agencies the average local government has ever seen, and despite being able to heavily influence our elections, and despite salivating over the prospect of collecting carbon auction proceeds (the real reason “the war on global warming has only just begun”), the unavoidable truth is this:  California’s public employee pension funds are no longer anywhere close to fully funded.  Huge reforms are finally going to come - initiated not by political reform, but by fiscal reality.

The good news is by liquidating public employee retirement funds, and instead giving government workers social security like the rest of us, several benefits will accrue to society: 

(1) What’s left in these public employee retirement funds can be transferred to the social security administration, bolstering the solvency of that fund.

(2)  All workers will receive social security, instead of public sector workers receiving far more generous pensions.  Having the same retirement formulas apply to all workers will create the critical mass of voters, at last, to demand genuine upgrades to the social security benefit. 

(3)  Public employees will no longer be slaves to their pensions - they can try out work in the private sector.  Of course in the private sector they will no longer get 50-75 days off every year, but at least they won’t be slaves to their pensions.

(4)  The biggest liabilities on state and local government balance sheets, their payables to the state employee retirement funds, will be wiped away.  Nationally, eliminating these unpayable trillions in debt may very likely prevent the great depression of 2010 from happening. 

(5)  Government operating deficits will disappear.  State and local governments will be able to fund investment instead of issuing bonds (translation, raising taxes - debt service on a bond is an expenditure, too, requiring tax revenue to service).  With payments to public employee pension funds abolished, more cash will be able to go into public works and better public sector services.

For more on the pension crisis and how public sector unions and environmentalists have both helped create this crisis and are attempting to stop reform, read:  Unionizing Silicon Valley, Unlocking California Gridlock, California’s Global Warming Act, Public Sector Reform, Unions, Ideals vs. Reality, Unions Aren’t Green, CEQA Hijacked, and California’s Deficit.

The opponents of California’s ballot Proposition 7 (read full text of Prop 7) claim it will “cost consumers and taxpayers hundreds of millions per year in higher electric rates - a $300 increase per household per year.”  It is hard to get access to the calculations behind these estimates, so we have attempted to come up with estimates of our own.

In our recent post “California Proposition 7” we put forward some fundamental assumptions and come up with a total projected cost to install the generating facilities.  We assume that by 2025 Californians will draw 1,000 gigawatt-hours per day, meaning at 50% renewables we’ll need 500 gigawatt-hours per day to come from renewable sources.  We therefore project, based on $2.5 billion per gigawatt of wind generated output, and a 17.5% yield, installing this amount of wind capacity will cost $297 billion.  In our post “Megawatt Storage Farms” we estimate California will need 100 gigawatt-hours of peak storage capacity to implement a 50% renewable portfolio standard, and at $350 million per gigawatt-hour of storage, this will cost California another $35 billion.  Total costs, about $335 billion.

This amount, $335 billion, is an absolute lowest case.  It assumes wind generators can be installed at a rate of $2.5 billion per gigawatt, which is a bargain basement price.  It will not get cheaper than this.  It assumes solar energy solutions will achieve cost parity with wind energy solutions - something that is possible but certainly not likely to be exceeded.  It assumes these storage solutions are the only other investments necessary - when in reality there are substantial transmission upgrades also required, as well as huge “smart grid” upgrades.  It assumes all of this will occur without unions taking over the workforce and raising the cost of labor in this government subsidized, government supervised endeavor - is that likely?  It assumes environmentalists will get out of the way, and allow thousands of square miles of land to be developed for solar and wind farms as well as transmission corridors and storage infrastructure, without launching costly lawsuits - is that likely?

Nonetheless let’s go with the $335 billion price tag to implement Proposition 7.  Let’s assume this capital investment is spread over 16 years, since that is how long we’ll have to get this done.  Let’s assume California will have, on average, 40 million residents, and, on average, 10 million households.  How much would this capital investment cost per household?  Please bear in mind that while households do not consume anywhere near 100% of California’s electricity, the higher costs for electricity that businesses will pay will be passed on to consumers, so one way or another, households will pay for this investment.

The math is not encouraging:  $335 billion over 16 years is $21 billion per year, which divided by 10 million households comes up to $2,094 per year per household.  This is the capital investment required.  It is likely this investment can be financed over a longer period than 16 years, of course, but we are assuming in this example zero interest and an extremely low installation cost.  In reality $335 billion projection will never happen - tweak the assumptions just a bit and the costs will probably be about a trillion - easily offsetting the benefits of longer term financing.

The crucial question is this:  Will this $2,000 per year cost of capital, which will be paid by each consumer household, be offset by $1,700 per year in the form of cheaper renewable electricity, or more?  Renewable electricity is not demonstrably cheaper than conventional electricity to-date, to put it mildly, but we have made some generous assumptions, so let’s continue:

If you take $335 billion of capital investment to create 500 gigawatt-hours of renewable generating capacity and storage, etc., and spread this cost over 20 years (remember, the batteries don’t last more than 5-10 years each, and upgrades and periodic replacement of solar and wind assets are not being counted here, nor are interest payments), you will come up with a capital cost of .09 cents per kilowatt-hour.  If you add a $.02 per kilowatt-hour for operations and maintenance you get $.11 per kilowatt-hour.

This is the absolute best case - it assumes no return to the utility, a rock-bottom installed cost for the generating and storage capacity, no costs for transmission lines or smart-grid upgrades, no environmentalist lawsuits, reasonable labor costs, and no financing cost for this money.  Try to float a bond with zero return to see what that means.  In reality a very optimistic price projection would probably still be around $.20 per kilowatt-hour, or an amount roughly equivalent to what we currently pay for conventional electricity.  So it is likely that purchasing this renewable energy will yield no savings to offset the $2,000+ per household capital cost whatsoever.  Declaring the utilities will not be allowed to pass these costs on to the consumer is absurd - either they pass through these costs or they go bankrupt.  That provision is only one problem with this deeply flawed initiative; read the Sept. 18th memo prepared for the California PUC on Prop. 7 for more.

Does moving to a progressively higher percentage of renewables hedge Californians against possible future spikes in the cost of natural gas and other conventional fuels?  Of course.  But California is already moving aggressively towards a higher renewable portfolio standard, and moving too fast in this direction undermines the ability to wait for better and cheaper energy technologies to mature. 

It is inspiring to hope California can eventually reach a 50% renewables standard, or more.  But to properly realize the economic benefits that will accrue to 50%+ renewable electricity in California, more time, more flexibility, and far, far more thoughtful lawmaking than Proposition 7 will be necessary.  Vote no.

UNITED STATES ANNUAL AVERAGE WIND POWER

Wind power resources in the United States. The USA now has the largest installed base of wind turbines in the world. (Source: Wikipedia, click for larger image)

America’s credit crisis should come as no surprise to anyone whose been paying attention.  We discussed this about a year ago in our post “Inflation vs. Deflation,” and if you read that post, you will see links to discussions we’ve had on this topic that go back as far as 1998.  Because this has been brewing for a long, long time.  And the question still remains - inflation or deflation - pick your poison.  Our belief is inflation is a far more palatable option.

Back around 2003 I remember debating economic policy with a business reporter for the Wall Street Journal.  I still recall the shock this person displayed when I downplayed the mitigating value of the “current account” when discussing America’s trade deficit.  Apparently the conventional wisdom held that since foreign investment makes up the difference between how much America pays for imports vs. how much America collects from exports, the trade deficit of some $60 billion per month that America has racked up now for years on end is of no consequence.  The problem with that sanguine assessment of our trade deficit is the fact that Americans borrowed all this money to make all these purchases, and eventually there is no financial instrument left to facilitate more borrowing.  Quite simply, we can no longer borrow at a faster rate than we can afford to make repayments.

America’s debt binge really began about 30 years ago, in the mid 1970’s, which is the last time Americans exported more than they imported - also about the time credit cards started to really get popular.  For a long time, America’s trade deficit was relatively insignificant, and foreign investment indeed more than made up for the shortfall.  And if the monthly trade deficits hadn’t widened precipitously over the last ten years or so, they might have been sustained indefinitely.  After all, America provides an enduring safe haven for investors, and exports security to the world.  We keep the sea lanes open, we have a democracy that works, we are stable, we are innovators.  And our perennial trade deficits mean our dollars finance the industrialization of emerging nations.  Almost everybody was happy.

Alan Greenspan, Chairman Federal Reserve Bank, 1987-2006

It isn’t possible to quickly summarize where things started to slip out of control, but in ticking through the factors, it is very, very important to recognize there was no single party, nor a single ideology, that ought to be held solely accountable. 

The repeal of the Glass Steagall Act in 1999, which lifted crucial restrictions on the degree to which banks were permitted to make speculative investments, combined with the refusal of then Federal Reserve Bank Chairman Alan Greenspan to raise interest rates so as to contain “irrational exhuberance” (his words) in the stock market, probably started to accelerate the slide that has resulted in the current predicament.

When the internet bubble burst, which any financially literate curmudgeon would have seen coming for years, the damage to the economy was severe - but rather than endure a downturn, mortgage lending entered a dangerously aggressive phase to pick up the slack.  Replacing the collateral of inflated internet stocks, without skipping a beat, came the collateral of inflated home equity.  Some would call these loans predatory, and they would be right to say so, but these “no doc,” “introductory rate,” “negative amortization,” “fixed but resetting in 2-3 years,” loans were also permitted thanks to intense pressure from both sides of the aisle to make housing “affordable.”  Since it was impossible to make home prices fall, the only solution was to make home mortgages cheap.  And since there is no such thing as a cheap home mortgage, “introductory rates” were the only way left to “get people into a home.”

So who enjoyed this mess that it is so easy to blame on Wall Street?  People who suddenly thought they needed a 3,500 square foot McMansion and didn’t care if they were borrowing 10x their annual income?  People who thought they would borrow against their inflated home equity at a floating rate so they could drive around in a 6,000 lb. SUV?  Economic planners in Washington who didn’t dare tell the American people that an economy can’t live forever on credit - that it doesn’t work that way in the real world?  What about all the public employee unions who used the ersatz prosperity of the internet bubble followed by the housing bubble to negotiate pensions that have created another crippling liability for the American people - and who used their financial might to take control of our elections and politicians at the state and local level?  Or who didn’t want to lobby for mortgage lending reform because that might lower home prices, which in turn would lower property tax revenues?  There were a lot of pigs at the trough, and none of them apparently cared about what would happen when it was time to pay the piper.  And plenty of them knew better.

For these reasons, blaming the “free market” is a futile, shallow, potentially dangerous exercise.  Power corrupts equally, and if popular sentiment leads our politicians to thoughtlessly eviscerate the prerogatives of our free market while leaving big government and big labor more powerful than ever, it will be a mistake of historic proportions.

The solution is to regulate mortgage lending and derivative trading in measured, not draconian steps.  And any “solution” to Wall Street “greed” is empty if done without also recognizing and attempting to regulate the greed that is endemic in all sectors.  To nationalize the banking industry without merging every public employee pension fund with the social security fund - newsflash, at this point only social security is even slightly solvent - is almost as absurd as the proposed nationalization of our energy industry to supposedly fight an alleged climate crisis.  In both cases the villian is the market, and the good guys - translation, beneficiaries - are the government and public sector labor.  Such blind scapegoating ignores the nature of man.  To embrace such simplicity would be tragic for the United States and the world. 

We need free markets, and good regulations, and good deregulation.  We need to recognize that inflation is our only way out of this, because only through inflation can we systematically and somewhat equitably erode the real value of these mountains of debt we’ve collectively incurred.  Failure to avoid this calamity should not be another excuse to bash free markets because responsibility for this failure is shared by everyone in this imperfect world.  To paraphrase Winston Churchill, free markets are the worst economic system known to man, except for all the other ones.

There is an interesting recent report on IndianAutoBlog entitled “Introducing The Blade Runner.”  It describes (with ample concept drawings) an intriguing idea - a bus that operates with two sets of wheels, one for roads and one for rails.  If the bus is operating on roads, the railway wheels retract into the underbody of the vehicle, and vice versa.  The Blade Runner concept is being pioneered by Silvertip Design in the United Kingdom.  It is great to see new ideas, but some commentary is in order. 

First of all, anything that helps to move mass transit off of urban rails and back onto roads is a good idea.  Despite persuasive light rail scams that have helped - along with public employee pensions - to pretty much bankrupt scores of major American cities, there is rarely a sound justification to build light rail. A combination of roads and busses can offer cost-effective, relatively low maintenance solutions to mass transit, using one conveyance - the road - that accepts a variety of vehicles from individual automobiles to busses to trucks.  No rail corridor can ever hope to match the versatility of roads, which is why rail passenger transit should be emphasized, perhaps, in fast intercity modes and within extremely high density cities, but cannot be easily justified in other circumstances.

post resumes below image

The “BladeRunner” road/rail vehicle concept. (Photo: Silvertip Design)

A large independently powered passenger railcar that can whiz along from city to city on rail - presumably at higher speeds than on the freeway - and can then transform itself into a bus to negotiate city streets and arrive at a variety of dispersed destinations - is a very interesting concept.  It reduces the need for comprehensive rail at the same time as it helps justify the construction of new roads.  Could this solution work on the same rails as freight?  Another source of waste in our transportation infrastructure is that we now have three or more modes of rail corridor - high-speed, light rail, regular all-purpose including freight and passenger (this should ideally be the ONLY mode or rail), and intercity such as the BART system in the San Francisco Bay Area.  If smart cars can allow us to move more cars, faster, on exisiting roads, can technology allow us to move more modes of cars and trains on fewer modes of rail?  Again, versatility - you aren’t trapped on the rail - make multi-modes of transportation including mass transit and personal transportation much easier to evolve on next generation roads and freeways.

There are other concepts that could also be interesting - what about trains that have an efficient way to allow commuters to get their cars onboard?  This has never been tried, other than for certain charter tourist applications where, for example, an entire trainload of cars is delivered - along with their owners - from Frankfurt to Barcelona, and two weeks later returns to transport cars and humans back to Frankfurt.  But this process consumes an entire afternoon, as the cars are driven onto the train one by one.  Is there a faster way to do this?  Probably not.

All in all, practicality is what makes roads a wiser choice than rail in most cases.  This practicality is based on additional assumptions, however, that not everyone may agree with.  (Reader please note - we welcome and respect divergent points of view.)  Here they are:

WHY ROADS AND BUSSES ARE A BETTER SOLUTION THAN LIGHT RAIL

(1) The war on the car is extremely short sighted - the car is becoming relentlessly cleaner, smarter, safer and greener, and soon any objections to the car based on these criteria will no longer be credible.

(2) Cars will drive themselves within a few decades at the most, allowing seniors to maintain independent transportation even after they can no longer drive.  Also, once cars drive themselves, drivers will be able to multi-task while driving, taking away one of the benefits of riding a train.

(3) Cars provide security and privacy that cannot be found on a train.

(4) Most areas, California in particular, have room for more roads, and the solution to traffic congestion is to have wider roads and lower density suburbs - precisely the opposite of the conventional wisdom.

(5) The notion that “vehicle transportation miles” needs to be reduced by making taxing cars and taxing large suburban yards - effectively denying that lifestyle to anyone who isn’t wealthy - has more to do with a misanthropic socialist agenda than any alleged “science” relating to greenhouse gas.

(6) Technology is delivering new sources of energy and materials far faster than they are being depleted, and in any case, cars, busses and freeways consume less resources than a combination of light rail and freeways. 

When you try to develop rail transit and roadways, neither are done well.  In California, we haven’t relieved traffic congestion because we haven’t tried. California has nearly 40 million people driving on freeways designed to accomodate 20 million people.  In California, money that could have been used to build more roads and freeways has disappeared instead into public employee pension funds, into the pockets of environmentalist nonprofits and their attorneys, and, of course, to construct light rail that hardly anyone uses.

In 2004 author Michael Crichton published “State of Fear,” a novel that he uses as a platform to attempt to debunk global warming alarm.  Whether or not one finds Crichton’s arguments compelling generally governs how someone might characterize his views on environmentalists and environmentalism.  But Crichton, in his own way, is himself an environmentalist. Having obtained a transcript of a recent speech by Crichton on environmentalism, what follows is our synopsis of some of the key points he makes:

“DDT is not a carcinogen…the DDT ban has caused the deaths of tens of millions of poor people…”

“Second hand smoke is not a health hazard and never was.” 

“The evidence for global warming is far weaker than its proponents would ever admit.”

“There is no known technology that will enable us to halt the rise of CO2 in the atmosphere in the 21st century.”

“The percentage of U.S. land that is taken for urbanization, including cities and roads, is 5%.”

“>

State of Fear) by Michael Crichton

This is a lot of fairly contrarian stuff, but Crichton is correct about DDT, and assessing DDT - along with second hand smoke - rests on basic toxicology.  Properly applied, DDT is a fantastic solution to malaria, and banning it instead of properly regulating its use has been a tragic mistake.  Obviously second hand smoke with extreme exposure is harmful, but Crichton is saying the criteria being used to justify smoking regulations are far below genuinely harmful levels. 

Our commitment to publishing skeptical analyses relating to global warming and global warming policies is well documented, but Crichton’s statement regarding low levels of urbanization is another area where we add conviction to principle.  There is plenty of land in the United States, definitely including California.  Declaring “open space” to be endangered is ridiculous.  This fatally flawed argument - now buttressed if not guaranteed by the trump card argument of supposedly stopping global warming - is the justification to force people into ultra-dense, punishingly regulated and taxed urban bantustans inside the “green line,” or the “urban service boundary.”  It is dangerous nonsense.  Here’s one more of Crichton’s contrarian zingers:

“The Sahara desert is shrinking, and the total ice of Antarctica is increasing.”

We are constantly trying to get good information on this and it is astonishingly difficult, given how fundamental these two observations are towards assessing global climate change.  But there is strong evidence supporting Crichton’s claim that the total ice mass of Antarctica is increasing.  There is data indicating increasing or at least stable rates of snowfall in the interior, as well as data that the total surface area of the icecap is increasing.  Furthermore, other than in limited areas where there is rising geothermal heat, or the waters around the relatively insignificant Antarctic Peninsula, most of the ocean around Antarctica is getting colder.  In all cases this information is hard to find and often conflicting.  Read our Climate page for much more.

Yet through all this, Crichton is an environmentalist - a Crichtonian environmentalist - but nonetheless someone with environmentalist sentiments.  Consider this: 

“It is incumbant on us to conduct our lives in a way that takes into account all the consequences of our actions, including the consequences to other people, and the consequences to the environment.  I believe it is important to act in ways that are sympathetic to the environment, and I believe this will always be a need, carrrying into the future.  I believe the world has genuine problems and I believe it can and should be improved.”

Environmentalism, according to Crichton, has gone well beyond this invocation, and has become a movement that cannot admit to past or present mistakes or excesses.  He believes environmentalism has fulfilled an innate urge that urban atheists find fulfilling as an alternative to religion.  This may be a bit much at least insofar as environmentalists, including Crichton himself, come from an infinite diversity of faiths and personal perspectives.  But Crichton is on to something when he questions the reactions he elicits from many environmentalists to, for example, his observations regarding DDT, second hand smoke, global warming, urbanization, the Sahara or the Antarctic.  Why is debate closed on these issues when they can be challenged on a factual basis?  Why can’t the facts speak for themselves?  The intense reactions environmentalists have displayed towards Crichton are unfounded unless something more powerful than reason is involved - belief, ideology, passion, a primal inner need for meaning and mission.

Crichton’s opening remarks included compelling reminders that humanity has always adapted and humanity has relentlessly improved the collective well being, and this is continuing.  In his closing remarks he warns how politicized and entrenched environmental organizations have become, stating “what more and more groups are doing is putting out lies, pure and simple, Falsehoods that they know to be false.”

Of course everything Crichton says is not true, just as everything the current environmentalist establishment maintains is not false, or unhelpful, but in his final remarks, here, he also described his state of fear, and mine - and to paraphrase Czech President Vaclav Klaus - what is at stake, our global climate or our freedom?  Or according to Crichton,

“In the end, science offers us a way out of politics.  And if we allow science to become politicized, then we are lost.  We will enter the Internet version of the dark ages, an era of shifting fears and wild prejudices, transmitted to people who don’t know any better.  That’s not a good future for the human race.”

In our interactive spreadsheet “How Much Electricity for all Commuters? ” you can calculate what it would take to replace our combustion-driven automotive fleet with electric vehicles.  The assumptions that the spreadsheet default to (which you can change to anything you wish) indicate that based on 4.0 kilowatt-hours per mile, and 40 miles per day of average driving per vehicle, it would take 10 gigawatt-hours to power 1.0 million electric vehicles.  At ten hours of off-peak charging per night, that would be an additional 1.0 gigawatt of off-peak energy going into the grid per each additional 1.0 million electric vehicles.  But if the winds come and go, and the solar peak is in the middle of the day, where will this energy come from?  Intermittant renewable sources of electricity require unprecedented ability by the grid to store energy in order to flatten the transmission loads, to harvest electricity and store surplus electricity when the sun is shining and the wind is blowing, and to deliver this electricity during the demand peak as well as during the night when electric vehicles are recharging.

There are two ways to solve this challenge; both well underway.  At the large utility scale there are plans to develop megawatt-hour storage farms, as we report in “Megawatt Storage Farms.”  But at the residential and commercial scale, there are kilowatt-hour solutions that combine electricity storage with smart systems to make each storage node aware of the activity on the grid; the availability of electricity, the price of electricity, the stress on the grid.  These systems therefore are not only storage solutions, but act in concert with each other to discharge stored electricity when prices are high on the grid, and to collect and store electricity when prices are low.  The combination of megawatt-hour utility scale solutions and millions of smart, virtually integrated kilowatt-hour solutions play a critical role in the development of renewable electricity as well as the mass proliferation of electric vehicles.

GridPoint’s Energy Manager (Photo: GridPoint)

One of the early leaders in kilowatt-hour scale storage solutions is GridPoint, reported on last year in our post “Gridpoint’s Storage+ .”  At that time Gridpoint already had hundreds of their “Connect Series” units, storing up to 12 kilowatt-hours each, being tested all over the United States. 

The market seems to be taking GridPoint seriously, since on Sept. 23rd they announced a $120 million new equity financing, bringing the total raised in that company up to $220 million.  An interesting question as Gridpoint and other decentralized energy management systems emerge is to what extent they will focus on enabling centralized utilities to remotely monitor and manipulate large electrical appliances in private homes, and to what extent they will focus on facilitating abundant electricity through harvesting and storing privately owned renewable electricity.  Both directions are viable, the question is which will be emphasized.

GridPoint has also just announced the acquisition of V2Green, a Seattle-based company that has developed the ”V2Green System, an integrated client-server solution, [that] establishes intelligent, two-way communication between plug-in hybrid electric vehicles (PHEVS) and the power grid. The flow of electricity to and from these grid-aware vehicles can then be managed by utilities, within parameters set by vehicle owners.”  If GridPoint can integrate their grid-aware onsite storage systems with grid-aware onboard electric vehicle storage systems, they will definitely maintain their lead in the race to bring to market decentralized, smart electricity storage solutions.

GridPoint is not alone in the race to deliver products to integrate decentralized renewable electricity sources with storage and management solutions.  Another pioneering company in this race is Solar City, fast becoming the market leader in residential photovoltaic installations, as well as the much vaunted Tesla Motors, who are now in production with their Tesla Roadster and who have announced a more affordable “Model S” as their next product.  Between Gridpoint, Solar City, and Tesla, you have an example of a company delivering a decentralized solution in all three areas of the new electric age; storage, generation, and mobility.  Expect each of these three companies, as well as the countless others who are emerging, to roll-out companion products that will overlap into the other areas, blurring the lines between which solution provider is fulfilling which niche.

Most encouraging of all is the area in common between these three sectors of decentralized electricity is the smart, grid-aware integration software they are developing.  This is also the area where the most unique intellectual property and cutting edge innovation is taking place.  Because ultimately, Gridpoint, Solar City, and Tesla are systems integrators; like their counterparts in the PC industry, they are dependent on component manufacturers to deliver the enabling breakthroughs such as batteries and photovoltaic panels.  A complex and robust business and technology ecosystem is developing as the electricity economy emerges.