Wednesday, January 27, 2010

Good News for Renewables

The U.S. wind power industry continued to grow in 2009 despite a global recession, adding 9,900 megawatts — a capacity increase of about 39 percent.

36 comments:

boehlinga10 said...

Well I am glad to hear that the stimulus package is having a positive impact on the environment as the article credits the stimulus package for the success of these wind energy efforts. Providing tax credits is something that we have discussed in class as an economic incentive, but I am curious what the "other investment incentives for the industry" were....??

The fact that new wind and natural gas projects accounted for about 80 percent of all new generating capacity added in the country is pretty astonishing. It seems like we are on the right path, and the bar chart depicts that as well. However, the article does point out that this growth in alternative energy may slow due to our economic crisis.

Tess Hayden said...

One of the things that really jumped out to me from that article was that Denmark often produces more wind power than they can use. They provide a good model for the US, who will hopefully reach that goal over the next few decades.

I understand that it takes money and time to construct long distance transmission lines, but I feel that at this point in time, these transmission lines will be necessary in the very near future. The longer it is put off, more greenhouse gases will be emitted and the rate of wind power will likely slow.

Stevenson said...

My point and question also reflect the European Commission's "mandate" to generate 20 percent of electrical production through wind power. If the U.S. is providing tax credits and "other investment incentives" to increase production, what type of policy does Europe implement? The word "mandate" strikes me as a more command and control approach. If this is the case, has such policy proven more effective in Europe and how so? If not, what types of incentives are provided to European wind companies to create a country such as Denmark that can potentially outsource wind power? Is this a plausible or reasonable goal for the U.S.?

James said...

I think it is great that the wind-power industry has grown and I recognize the benefits it may bring, however I want to take a the other side on this one for fun.

Wind turbines do not necessarily produce "green" energy. In fact, they have received a lot of criticism lately. By subsidizing the wind industry we might be causing negative externalities toward the environment. Wind farms produce a lot of noise, kill birds, and are eye soars for many people. Furthermore, they require a significant amount of infrastructure (i.e roads) for maintenance and need a lot of concrete in the ground to hold them up (more damage). It would be interesting to do a cost benefit analysis of a wind farm and compare it to its low cost competitor, natural gas. I wonder if wind farms are that much more beneficial given the low emissions of natural gas?

The wind doesn't always blow and moving the power generated by turbines to large cities will be extremely costly and perhaps be even more damaging to the environment.

oldman4president said...

The article left me curious about what types of incentives specifically the US has for wind power. I'd like to know what the qualifications are for the investment and tax incentives (whether they are targeted to some aspect of wind power development or toward low pollution energy in general (and then if targeted toward low greenhouse gas emission, low local air pollutant emission, or low overall environmental damage). I wonder where I could find a comprehensive list of state and federal incentives for wind power. Googling, I found this website: http://www.ucsusa.org/clean_energy/solutions/big_picture_solutions/production-tax-credit-for.html which states that the federal Production Tax Credit (PTC) gives a 2.1¢ tax credit per kWh produced in the first 10 years of a renewable energy facility's operation, but what qualifies as a renewable energy facility? It also says 'renewable energy projects' can receive an Investment Tax Credit or a grant from the treasury (helpful in recession if business has no income and thus tax level already at zero) in lieu of the PTC.

I think James made some good points particularly about what a cost-benefit analysis would reveal about wind power's merit relative to other options. The net benefit of investing in wind power will likely have much to do with location (wind strength/consistency + potential damage to area from turbine).

A tax or permit trading program for greenhouse gas emissions, would presumably have the advantage of favoring the most cost-effective means of reducing the emissions, whether it be moving toward wind power or otherwise. Additionally, tax or permit auction revenues could go to reducing the tax burden elsewhere or rather reducing the need for increasing the tax burden elsewhere. I'd imagine that would give even stronger incentive toward wind power, as high-emitting energy sources, like coal, become relatively more expensive.

Andrew said...

The point about Denmark also struck me as impressive: counting on wind for 1/5 of the country's electrical production. I'm not sure if that kind of dependence is feasible in the U.S., but it would be nice to think so.

I think James makes a solid point, although I'm not so sure we should be concerned about the "eye-sore" aspect of it.

If the transmission lines to coastal areas are that large a problem, perhaps wind energy could be used mainly by the "wind-intensive regions" and surrounding areas, while other regions rely on different alternative energy sources.

Michael said...

No type of energy is perfect, but wind power is one of the better options we have available. One of the biggest drawbacks to wind power is our inability to efficiently store the power if we produce an excess in batteries or something of the like. As of now, storing power in batteries is extremely inefficient and not useful, therefore the only option if a surplus is produced is to sell the power to others. Selling power to Canada or Mexico could be viable options but I am not sure if these nations would want to buy our surplus wind energy when it does not come at a steady and reliable basis. The increase in wind power is a good showing towards the future but research and development should continue for new ways to produce and to store energy for the future.

Michael said...
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Tara said...

I also think that James made an important point when he mentioned the negative externalities of wind energy and that a cost-benefit analysis could give us a clearer picture of wind energy. This article and the countries written about in it do not mention any of these negative externalities. It is obviously a good thing that countries are looking to decrease their dependence on natural gas, but they need to do so in a responsible way by making sure that research proves alternatives are socially optimal. Beyond that, it was impressive to read about the advances in European countries, particularly in Denmark. It will be interesting to see if the United States can follow Europe's lead and reach its goal. This market for wind power has potential to alleviate some of the US's unemployment problems, but as the article mentioned, there needs to be a renewable energy standard to provide a long-term market in order for continued growth.

Roberta said...

As a new clean energy resource, it can help USA to reduce his volume of CO2 or other global warming gases. But, which made me think is what will be the limit for this economic inventive? Will be the government really interested in use this new king of energy and invest a huge amount of money? In my opinion, it can be a good example how we can reduce our pollution by moral suasion, but I don`t believe in a big actual energy substitution.

Robert said...

I'm wondering whether Denmark producing more wind generated power than they can use is efficient or even beneficial to do. I understand that it is a more sustainable alternative than producing extra power from coal, let's say, but in general producing more than you can use is wasteful. Even if some of the excess is sold off, it may not be optimal to continually be overproducing.

Stephanie Beebe said...

What is upsetting to me about the political system in our nation is that proposals to build wind farms in desirable locations are often lobbied against and turned down successfully. My family owns a house in Nantucket and have followed closely the political battle against erecting the windfarm in the Nantucket Sound. Many high profile property owners in the area fought viciously against the farm, and according to the book, Cape Wind, the proposal is no longer in the works, for now. I find it frustrating that something that seems (at least to me) so necessary to combat negative externalities and increasing costs can be determined irrelevant through lobbying by elites and interest groups.

Katie Bean said...

Although the rate of growth of wind power capacity has increased rapidly in the past year, wind power only supplies 2% of the country’s electricity. Much of the wind energy development is being spearheaded by the federal government, as the stimulus package extended a tax credit and provided other investment incentives. Government intervention in Europe has achieved great success in using renewable energy sources. A major problem with wind power in the US is that the underlying infrastructure such as transmission lines are not in place, but will be necessary to transport the energy from wind-intensive regions to highly populous regions. Government subsidized R&D and installment of infrastructure must take place to make wind power a viable option that will have a major impact in supplying energy to the US. Also, a cost-benefit analysis should be performed to see if different regions of the country should use different renewable energy sources, such as wind power in the wind-intensive regions and natural gas in other places.

Katie said...

While this article indicates the US government is making a step towards financing alternative energy projects, I have a sense of false hope after reading this. It briefly mentions a new federally funded report that claims government financing will increase, likely through loan guarantees. Yet on the other hand teh article also mentions the economic "slowdown's" impact on these renewable energy projects...I wonder what end will win out-- will economic uncertainty stifle funding? Or will the government choose to add to the deficit?

Aparajita said...

The article touches upon some of the most important principles of economics that guide the market for environmental resurces. It should be noted that the increase in interest in renewable energy came only from the fact that the price of oil had gone up severly in 2007-08 and government provided tax incentives to wind power generators.

The interest in renewable energy can be ascribed completely to incentives generated in the market. In the past such a market failed to developed because the Marginal cost of producing wing power must have been higher than the marginal benifit. The marginal cost must have been high because there huge fixed costs associated with starting a wind power and also because the technologies for harnessing wind power is probably not as effecient as the ones used for coal.

There is no doubt that there are huge benifits to using renewable sources of energy but it must be realized most of this benifit is social in nature and hence the market for renewable resources often fails. The private benifit in purely monetary terms, to an individual using energy from coal is probably higher than wind because coal is often cheaper. Hence, an individual thinking of marginal benifit solely in terms of money will demand/chose coal power over wind. Although one could argue that a person might get personal satisfaction from using a green source of power and hence might chose wind power but market is determined by all and not one individual.

Hence, as it is clear from this article, inorder to foster the market for nonrenewable sources of energy the government must take steps to reduce marginal cost of both producing and consuming wind power.

Chas said...

Looking further into the political side of this issue, it is not only elite homeowners who do not want wind farms in their back yards who lobby against wind energy. The coal lobby is very powerful and influential and runs on some points that should be considered. Coal lobbies argue that coal provides the cheapest type of energy. Coal energy accounts for almost half of all energy used in the US and it is the most abundant fuel in the United States and there is an effort to use clean coal and reduce emissions. It is important to note that there are large groups and industries out there opposed to the expansion of wind energy.

It is estimated that coal can meet domestic demand for energy for the next 200 years. It is clear that coal is the most economically efficient resource for energy without taking into account the negative externalities. In 200 years, the price for coal will rise if supply starts to dwindle and at that point there will be incentives for firms to develop wind farms even without government subsidies or tax breaks. The question is whether the negative externalities from coal and other nonrenewable resources will outweigh the cost of manipulating the market and encouraging the development of wind farms.

Allie Long said...

I think that while this article is trying to show the positive push towards the increased use of wind power, it mainly points out how much work we still have left in order to get to where we need to be. First of all, 2% is not a very large percentage of all energy, especially when places like Denmark have wind energy make up about 20%. The government has been very involved in getting it to this point this year due to the help from the stimulus package, and I don't think that this help necessarily is going to continue. This makes me unconfident that the wind industry will really take off, especially since the article predicts that the increases that we have seen will come to a slow this year.

I find it also troubling and interesting that we don't even know exactly how beneficial wind energy is. James makes an interesting point about the negative externalities that can come from wind energy production and I think before any more progress can be made there needs to be cost-benefit analysis' done and their needs to be more R&D about renewable energy sources.

Allie Long said...

I think that while this article is trying to show the positive push towards the increased use of wind power, it mainly points out how much work we still have left in order to get to where we need to be. First of all, 2% is not a very large percentage of all energy, especially when places like Denmark have wind energy make up about 20%. The government has been very involved in getting it to this point this year due to the help from the stimulus package, and I don't think that this help necessarily is going to continue. This makes me unconfident that the wind industry will really take off, especially since the article predicts that the increases that we have seen will come to a slow this year.

I find it also troubling and interesting that we don't even know exactly how beneficial wind energy is. James makes an interesting point about the negative externalities that can come from wind energy production and I think before any more progress can be made there needs to be cost-benefit analysis' done and their needs to be more R&D about renewable energy sources.

Rosemary said...

I wonder if it is economically efficient (or fair) for tax dollars paid by American citizens nationwide to be used to encourage the expansion/creation of wind farms that will not be able to provide energy to the coastal regions in the immediate future? I suppose the issue of fairness might illicit a dissension of opinion from person to person. Someone who lives in a region that has no access to wind energy might still be able to derive satisfaction from purchasing products that are produced via wind energy. One example is Silk Soymilk. http://www.silksoymilk.com/content/wind-energy

Additionally, is it environmentally just to support the continuing implementation of a new technology which might prove detrimental to localized ecosystems, even if the intent is to reduce the “Tragedy of the Commons” effect of worldwide pollution caused by the release of green house gases?

Elsa said...

This article I think proves how important actual regulations passed through the government are. Clearly there needs to be more guidance from a national level if only 29 states have implemented policies mandating a certain level of renewable energy sources. I too am curious about what exact mandates countries such as Denmark and China have implemented and curious whether or not they are possible within the US? Like the article implies, hopefully if strong enough standards are mandated by the government, there will be a stronger incentive in the creation of many more "green" and specifically, wind power jobs.

Blair said...

I think it's good that the stimulus package is promoting renewable resources While 2% isn't a lot, it is more than zero and that is a step in the right direction. While the technology is not perfect, for example there are no long-distance transmission lines yet for places with large populations like Texas and California, this is the time to experiment. We still have other sources of electricity, so this is the perfect opportunity for trial and error with renewable resources. If we wait until our current forms of energy run out or become too expensive, we may regret not knowing what types of renewable energy work best or how to make them most efficient. The government should definitely continue to give incentives and encourage research for new sources of energy.

Frank said...

I thought this was an interesting article that gave insight into an industry that a lot of us don't know much about. While i'm sure the recession will cause the growth for the industry in 2010 to slow becuase of fewer orders in 2009, I think it's important to provide incentives for investment to continue. Tax credits and other incentives should allow us to continue to increase the percentage of the parts made domestically, which is important for continued growth in this industry. I believe this action would be more effective than setting an energy policy, requiring us to use a certain percentage of wind power. This could have adverse effects on other areas of our economy requiring great amounts of energy.

Caitie Haigis said...

In response to Stephanie’s post, I am currently working on a project for my environmental studies class which focuses on the Cape Wind issue. I’ve been assigned to the opposition’s side of the debate, so I’ve spent a lot of time looking into the negative externalities associated with the project. It is true that wealthy homeowners make up a considerable portion of the proposal’s opposition and that much of their motivation lies in preserving the aesthetic qualities of Nantucket Sound. However, the opposition’s research reveals that offshore wind farms may have substantial environmental and economic costs. For example, electricity produced through this offshore wind farm would cost 15 to 20 cents per kilowatt hour as opposed to the 5 to 9 cents per kilowatt hour required for land-based wind, natural gas, and coal. Additionally, the area may suffer economic losses in fishing, tourism, and property losses. These losses are in addition to the nonmarket environmental effects, such as the destruction of marine habitats and disruptions to the flight paths of migratory birds. In the end, the issue comes down to a weighing of costs against benefits. However, it appears that numerous alternatives exist that would produce more favorable economic outcomes.

Hillary said...

I am encouraged by the fact that the U.S. wind industry is making an effort, but it is mildly disheartening that we only have 2% of our electricy come from wind turbines. The fact that Europe only has 5 % of its energy from wind is also disheartening. However, it is encouraging that Chine plans to more than double her wind capacity by the end of 2010. But I just have one issue with wind energy. Although wind energy presents one way we can switch to “green energy” I read a NY times article last month detailing the “un-green” aspects of wind energy. Evidently two rare earth elements, dysprosium and terbium, are the “miracle ingredient for many types of modern green energy products. Unfortunately most of these rare earth elements are found in China and are mined in an incredibly un-environmentally friendly way. The price for these two elements has also skyrocketed and I wonder how much of an effect this will have on the recent surge for the desire of wind power- especially in the US (this is the link: http://www.nytimes.com/2009/12/26/business/global/26rare.html?_r=1&scp=5&sq=terbium&st=cse ) Most articles today make wind energy out to appear clean of environmental degradation, but from reading the other article, this is not the case.

mancinia11 said...

The issue the article brings up seems to deal with a lack of a national policy on renewable energy, adopting few plans at all beyond the stimulus money mentioned in the article. While the stimulus package incentivized some growth in renewable energy, it will take some comprehensive plan in order to get others to stop freeriding off of those who are changing their sources of energy. Clearly renewable energy and wind in particular have huge potential, but as mentioned in the article, the renewable energy industry cannot grow without help; the costs seem simply too large for the renewable energy industry to handle at this point. It is good, however, that the large countries (China in particular) are adopting policies aimed at renewable energy, which is a good sign for the future in the reduction of greenhouse gases.

Joe said...

This is a very interesting article that sheds some light on an industry I do not know much about. It appears that the demand for these turbines will not remain as high as they were the past few years; however they are still seen as very important for the future of energy.

As the article said, there must be a long-term market for their to be increased growth beyond the stimulus package. It is important to look at the job creation that this industy has done to help the US. Now, the US manufactures 50 percent of products used in the creation of the wind turbines. If this persists, international demand, especuaially from China and the EU, for these products will continue to increase job creation.

For the industry to continue to grow, the US should provide incentives for this green energy. It is a sustainable resource that will be very important in the future.

Pearson Nibley said...

Along with many others, I am pleased that this renewable energy industry has grown in spite of a recession. I also agree with other bloggers who feel that increases in the wind power industry are not going to solve large-scale U.S. energy problems in the near future. A diversified portfolio of green or renewable energy investments such as solar, wind, geothermal, and others types are necessary for improving U.S. energy consumption. I don't think anyone will disagree with the idea that wind power alone will solve our energy problems, but recent growth in this industry is hopefully a sign of good things to come.

Jeremy Becht said...

It's great that the stimulus package is being put to good use. I thought the recession put more of a hurt on wind power production, so I am glad to hear that it is still moving forward. I have also heard of another possible package known as cash for caulkers which would entice homeowners to weather proof their homes which would provide work for a lot of idle construction workers. Apparently the rough figures said that carbon emissions could be cut by around 20 percent in the next ten years, but I am not sure how solid they are and how well cash for caulkers is doing in congress.

Beth said...

Since health care is such a hot topic, I started thinking about the health benefits of utilizing wind energy as opposed to the economic ones. I read a study about the health risks associated with living in communities near power plants and the results were very disturbing. Just two coal-fired power plants in Massachusetts accounted for 43,000 asthma attacks, almost 300,000 aggravations of upper-respiratory problems, and 159 premature deaths per year. Additionally, using green technology like wind energy will cut these health issues by 78%. (http://www.hsph.harvard.edu/news/press-releases/archives/2000-releases/press05042000.html)

This was interesting to me because normally when I think about how our society needs to pour our resources into developing green technology, I only think about reducing greenhouse gases and conserving limited resources. The added health benefits of wind energy made me glad that the stimulus package is addressing this issue and that there are slow, but positive results.

Ellie Van Sant said...

I agree with Allie, although Mouawad highlights the increased interest and use of wind power by the United States, he simultaneously stresses the challenge that lies ahead of us in order to increase our percentage of electrical production from wind. Like many of my other class members, I am interested in what other type of incentives the United States has introduced other than tax reductions. Considering the extreme success of some countries such as Denmark who have already achieved a goal of around 20%, I think the U.S. should look towards their policies and success as an example and implement a similar mandate. Only 29 states in the U.S. have adopted a new renewable power standard thus far and in order to increase the level of wind energy production it is imperative that almost every state adopts a similar power standard. Lastly, to reinforce the overall challenge I thought Tim Stephure’s statement was incredibly interesting as he points out, “It is not a question of lack of resources, Unlike the federal highway system or the national gas system, there is a huge lack of federal oversight for electricity. This is something that will take time, while the need for the industry is now.”

Victor said...

As believe that the growth of wind energy sounds like a really optimistic horizon for reducing greenhouse gases emission from a economy so dependent of energy, particularly, the dirt energy. However, the question on change the energy matrix of USA would not be so simple after all, when we talk about changes on energy matrix we are not just talking about economic and environmental question but political issues as well.
Another interesting point is that the world demand by energy will increase sharply in the next 20 years. According to Department of Energy from US government the tendency is that the world demand double in 20 years. So, I make a question: with source of energy the world expect to supply it all? Well, sounds me quite plausible that will not be wind power. At least, not yet.

andrewsl11 said...

I think that wind power is a good alternative to the current US electrical generation, with no major externalities such as coal pollution or nuclear waste. As other people have mentioned, the fact that 80% of new energy production facilities are clean natural gas and wind alternatives is astonishing, as the electrical infrastructure in the United States is aging and requiring replacement. The tax credit economic incentive is a good start to providing incentives for cleaner energy, but, like always, I feel that a cap and trade system with transferable quotas would be much more effective to spur the development of alternative energy sources in the United States.

Joseph said...

I think that it is great that the wind energy sector has grown so substantially, especially through the economic recession. I also think that the United States Congress and the Administration are lacking a good idea of where our future energy needs to come from. It is obvious that Europe has made better strides to use alternative energy sources, and I hope that we can follow along similar lines.

But I also think that wind and natural gas alone are not the only avenues we as a nation should pursue in order to curtail emissions. There are plenty of cleaner energy sources out there that should be utilized in conjunction with wind and natural gas. That seems to be best way to ween ourselves off of carbon based energy sources.

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martine10 said...

After reading the article I did a little additional research on wind power and I came across a quick article (http://www.earthportal.org/news/?p=3054) about a major Energy investor T. Boone Pickens, who has recently decided to cut his order of 687 wind turbines by more than half because of the drop in natural gas prices. Another large contributing factor for Pickens decision was the lack of transmission lines. As the article stated, this is a real obstacle that hinders further expansion. The remaining wind turbines are no longer going to be part of what was going to be the worlds largest wind farm in Texas and now will go to Minnesota and Canada.

I understand that hefty prices are associated with transmission lines. However, the benefits that we can gain once we have these transmission lines seems to make up for those costs. However, a formal cost-benefit analysis should be conducted as soon as possible to see if this assumption is indeed correct. As you can see with the case of Pickens, wealthy investors are diverting their investments as we speak away from wind power simply because of the lack of transmission lines. To me, it only seems logical (if the results of the cost benefit analysis prove that wind power is indeed cost effective) for the government to go ahead and subsidize or create further incentives for these lines to be made in a timely fashion.

Caroline said...

Like everyone else, I am very surprised to hear these figures. I would never have thought that last year, "as much new power-generating capacity came from wind as from natural gas." I suppose the real question will be how long can government afford to keep providing incentives? It sounds like progress could be slowing down a bit, and that the wind industry will not be able to stand on it's own in the energy market for awhile.