Posted: November 02, 2012
Quarterly energy report:
What's become of the New Energy Economy?By Allen Best
"Unemployment would have been three-tenths of a percent higher had it not been for (Ritter’s) appearance on the political stage at the crucial period in time. It was truly extraordinary," Clark says.
From 2007 through 2011, clean tech job totals grew 6.4 percent annually, fossil fuels grew 4.5 percent, and health and wellness 4.2 percent in the nine-county region from Castle Rock to Fort Collins and Greeley. Financial sector jobs fell.
"If you can grow at a rate of 3.5 percent to 4 percent annually, you are rocking and rolling in the world of innovation clusters," says Clark. Too, these were not service-sector jobs with just-scraping-by wages. "Those are the jobs that keep you moving forward in the forefront of innovation," Clark says.
Fossil fuels continue to pull more weight. According to the November 2011 issue of Resource Rich Colorado, a report issued by Clark’s group for 2010, fossil fuels were responsible for 20,080 jobs on the Front Range from metro Denver northward, with an average wage of $95,750, or a total payroll of $2 billion.
In recent years, according to a statewide survey by the Colorado Energy Office, oil and gas provided 50,000 jobs, solar 6,186, wind 5,000, and coal 2,199.
Coal as a fuel for electrical production has been declining rapidly in the United States. Just four years ago it was responsible for 48 percent of generation, but the U.S. Energy Information Administration cautiously projects coal will fall to 38 percent in the next 25 years.
Testimony of Dick Kelly upon his retirement as chief executive of Xcel last year after a career spanning decades in a coal-dominated utility suggests need for an even more rapid retreat. "We’ve got to get off fossil fuels. The quicker the better," he told a Minnesota publication called Minn Post. "I’d be OK if there were never any more coal," he added. Earlier this year, he became board chairman of BrightSource Energy, a solar thermal company based in California.
With the coming switch of Xcel power plants in Denver and Boulder from coal to natural gas, Colorado is part of that broad national shift. Carbon intensity of the Colorado economy has fallen 20 percent since 1995.
Natural gas is also a fossil fuel, but with half the greenhouse emissions of coal. Prices have been a roller coaster. They tumbled from $13 per million Btu in 2008 and have fluctuated between $2 to $4 in the last year as improved production techniques have delivered a flood of product to a market whose growth has been slowed by recession. The recession has also slowed the demand for new generating capacity. Growth in demand has flattened. After averaging 4.5 percent to 5 percent growth a decade ago, Tri-State Generation and Transmission’s growth slowed to 3.3 percent last year and is projected to be 2.25 percent next year.
Jobs in the natural-gas sector in Colorado similarly vanished. They generally parallel the rig count, which has been growing slowly but steadily and is now about 60 percent of the peak levels achieved in 2008, according to the Colorado Oil and Gas Association (COGA).
As the price of natural gas has declined, making it a viable alternative for electrical production, coal has become more expensive. Coal cost 70 cents per million Btu of heat when the Comanche 3 power plant at Pueblo was authorized in 2004. By last year the cost had grown to $1.60 or $1.70, points out Leslie Glustrom, a Boulder-based advocate of renewables. "If burning fossil fuels had no single environmental impact, if there was not a single external cost, it’s still imperative to make this transition," she says.
If coal is to continue to be a powerhouse of electrical production, producers in Wyoming’s giant Powder River Basin must figure out a way to efficiently extract the giant seams as they dip farther underground, making strip-mining too costly, while also figuring out how to capture and sequester carbon more effectively.
When Ritter ran for governor in 2006, the common visual metaphor for his campaign was a wind turbine. Each wind turbine can earn farmers and ranchers between $2,000 and $8,000 per year, depending upon size, wattage and location. It’s a strong shot in the arm to some local economies.
While construction of a new wind farm near Limon continues even now, the industry pace has flattened. The chief problem is the uncertainty about whether Congress will renew the production tax credit. Since 1999, Congress has repeatedly let the tax expire or renewed it only at the last minute. It’s a lousy way to plan wind farms, given how important the tax has been to wind economics. But that uncertainty comes with the turf.
"You can’t claim to be surprised, really. It just rings hollow," says Ron Lehr, Western representative for the American Wind Industry Association and a former chairman of the Colorado Public Utilities Commission. "I think the dynamics are there. We just have to survive some of these bumps in the road and keep going."
Natural gas and wind are natural allies. Xcel figures it needs one megawatt of natural gas generating power for every megawatt of installed generation for intermittent renewable sources.
If drilling rigs were never a central image in his campaign, Ritter insists that natural gas always had a place behind his New Energy banner. It was a matter of tightening regulations governing drilling and other operations to reduce impacts. He says those regulations, along with the disclosure rules governing chemicals used in hydrofracturing adopted by the Colorado Legislature last winter, make Colorado the gold standard for natural gas governance. His proof is that other states have now adopted Colorado’s templates as their own.
But natural gas remains controversial. Most prominent have been perceived threats from chemicals used in hydrofracturing to high-quality water supplies. A growing issue is the incidental release during drilling of methane, the primary constituent of natural gas and a greenhouse gas far more powerful than carbon dioxide. Many Colorado communities have also raised questions about the proximity of drilling to residential and other land uses.
"What needs to be addressed, and wasn’t part of the Colorado experience, is when drilling runs right up against urban and suburban living," says Ritter, who now heads up the Center for the New Energy Economy at Colorado State University. "This has everything to do with community concerns about whether the appropriate protections are in place. We think there is a way to address that."
Tisha Conoly Schuller, chief executive of COGA, concedes some unanswered questions about the impacts of drilling, but argues the case for a broader, collective conversation.
"We really need to take the long view in energy," she says. If wind and solar were delivering as much energy as oil and gas, she says, "I think we would see the same sort of vibrant issues around – well, you name it, birds with wind farms being one example." In her view, the concerns and objections to fracking and methane emissions are "place holders" for a broader discussion about how do we do natural gas well. This is a broad community conversation that must continue, she says. But any sober assessment of our energy future includes a broad role for natural gas.
Some environmental advocates have talked informally about pushing for a 40 percent renewable portfolio standard. It’s now at 30 percent for Xcel, which delivers about two-thirds of Colorado’s electricity, and Black Hills Energy. Xcel expects to meet the mandate in 2017 or 2018, two or three years ahead of its deadline. Municipalities, including Fort Collins and Colorado Springs, have a 10 percent mandate. Electrical cooperatives, most of which are supplied by Tri-State Generation and Transmission, also have a 10 percent mandate. Tri-State reports it is well on pace to achieve its requirement. Holy Cross Electric, based in Glenwood Springs, has already pushed past 10 percent and is marching toward 20 percent.
If this higher mandate is to occur, many think it must offer a broader tent to embrace a greater variety of emission-reducing technologies. Bill Midcap, director of renewable energy development for the Rocky Mountain Farmers Union, sees anaerobic digesters in the dairies burgeoning on the Eastern plains being one possibility. Morgan County alone has 40,000 to 50,000 cows to supply Leprino cheese factories built in Fort Morgan and Greeley.
"In rural Colorado, (the higher standard) might be more acceptable — and it is a big maybe — if they have more of an all-of-the-above approach, including landfill methane, coal-based methane, if you really want to talk about what’s good for the environment, and not just what’s good for big wind and solar," he says.
In a survey to which 60 of the state’s 100 legislators responded, one only person gave unqualified support for an expanded portfolio standard for renewables at this time. "They have taken (Gov. John) Hickenlooper’s stance that we have done enough for awhile," Midcap says.
Energy efficiency is seen by some, including Ritter and Clark, as a place for growth in this clean-tech sector absent major policy initiatives. It is, says Clark, becoming a more dominant part of corporate culture, part of a broader sustainability package. "The tipping on this has begun, and we’re living it," Clark says.
The solar industry has turned its attention to solar thermal, seeing great opportunities in the normal temperature swings of day and night in Colorado to make hot water for heating a prime opportunity for rapid payback in residential applications.
Can the federal government stalemate be broken? Ritter sees the renewable sectors being willing to forego tax incentives for production if carbon emissions are taxed, basically creating a level playing field. "We privatize the benefits of energy production, but socialize the detriments, and that’s because we don’t put a price on carbon emissions," he says.
Given how much cap-and-trade was trounced, an emissions tax would seem as dead as a bark beetle-killed lodgepole pine. But Ritter sees something for both sides of the aisle, if the carbon revenues are specifically allocated to deficit reduction. "That might be something that gives everybody a little," he says.
Are the renewables in Bill Ritter’s New Energy Economy on the ropes? Some companies, yes, but Glustrom sees certain triumph in time. She points to the history of auto manufacturing.
"Any time you try to start a new industry, there are ups and downs," she says, pointing to a paper by Carnegie Mellon University’s Steven Klepper. He found that more than 200 auto manufacturers were scattered across the country in 1909. Most disappeared in the next decade, leaving an oligopoly dominated by three giants based in Detroit.
"There were a lot of them, and then there was a big crash of car manufacturers. A lot of people went bankrupt," says Glustrom. "But that didn’t mean we wouldn’t have cars."