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Sean Casten's Posts

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Learning from history: Why natural gas prices will rise

Here's the standard story about the U.S. power grid: It gets baseload supply from hydro, nuclear, and coal (in that order), using natural gas (and the occasional oil plant) as a swing producer to meet peak demands. Renewables play on the margin, but are neither big nor reliable enough to matter from a grid planning perspective. On average, that story is true. In recent years, however, a steadily larger portion of total U.S. power supply comes from sources that we historically think of as "intermittent" -- namely, natural gas and renewables. Is that the beginning of a new paradigm (the …

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Growing Midwest and Appalachian efficiency markets

Like boiling frogs, it's the rate of change that matters when it comes to energy efficiency investments. Consumers who have grown accustomed to $4 gasoline are much less likely to buy a hybrid car than ones who just saw their gasoline price double from $1 to $2 between fill-ups. This is the silver lining of the current spike in energy costs -- lots of homes and businesses are finding economic and psychological reasons to invest in efficiency in the current economic environment who might not have before. The flip side is also true: when energy prices are stable or falling …

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How to buy (and price) clean power

You get what you pay for. Clean power mandates in the US mandate that we buy megawatt-hours of clean energy, but they don’t mandate that those sources be reliable. This isn’t to say that clean energy can’t be reliable, but rather that it is mis-priced. Increasingly, this is causing conflicts for utilities, who have purchase obligations that conflict with their obligations to serve their customers. That conflict need not exist – but fixing it will require re-thinking how we structure our clean power mandates. Buying by the MWh For the past 33 years, the US has maintained policies that have …

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DOE shocker: the future will be like the past, but more so

Last October, I had some fun looking at the Department of Energy's historic predictions of natural gas prices and noting their consistent failure to, uh, predict. From 2004 to 2010, natural gas prices were massively volatile, ranging from $4 to $11 per million British thermal units (MMBtu) (on an annual, inflation-adjusted basis). Not only did DOE's predictions fail to anticipate this volatility, but every year they seemed to assume that the best 20-year predictor of future gas prices was ... last year's price. This has created an odd situation: The only thing more volatile than actual natural gas prices has …

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The conflict at the heart of U.S. energy policy: domestic extraction vs. cheap energy

Imagine you're out to dinner with your spouse. When the waiter comes, she says, "I'm trying to decide between the house salad and the deep-fried twinkie. Which would you recommend?" You might think many things, but "she sure knows what she wants" is not one of them. Now shift to Washington D.C., where we are simultaneously discussing how much we should subsidize domestic fuel production and whether or not we can afford to enact (or even maintain) incentives for clean technologies to wean us off fossil fuel dependence. The stakes are higher than the silly dinner example, but the conclusion …

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Man-up, America

U.S. energy policy as a teenage boy

With all the media frenzy around the Japanese nuclear situation, one topic hasn't been covered much : Why don't the Japanese love fossil fuels? Not only have they pushed hard into nuke but they're also world-beaters in photovoltaics, electric vehicles, and energy efficiency. How come? The economic incentives are pretty obvious: Japan doesn't have any domestic fossil fuel reserves, but its industrialization required massive growth in energy supply, so Japanese leaders had to figure out how to avoid spending all their money on fuel imports. As an added bonus, every time there's an energy crisis, they win the future. (The …

Read more: Energy Policy, Politics

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MACT-Daddy

Good news: New EPA boiler regs include output-based standards

Finally the day you've all been waiting for has arrived: EPA has released its new boiler emissions rules for hazardous pollutants! (The cool kids call it "the boiler MACT.") Most review and discussion of these rules so far has been silent on the most significant aspect: they introduce output-based emissions standards. As Grist readers know, I've been preaching the virtues of output-based standards for years now -- this is a wonky subject, but one greens would do well to understand. Output-based standards have been adopted by several states, but somewhat haphazardly, in part because of a lack of consistent EPA …

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Year-end economic musings

Last July, I wrote about trends in U.S. retail electric sales as an indicator of economic activity, and how this recession compares to prior on that metric. We've kept tracking that data, and it gets more interesting with each passing month. Here then, a quick update. First off, a lament. I wish EIA would update their electric sales more frequently. As of December, their databases are current through August. So whatever happened during the fall remains unknowable, at least for now. Good news first. The economy continues its recovery, and the rate of that recovery appears to be accelerating. Retail …

Read more: Climate & Energy

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Boo, Yorker

On David Owen and William Jevons

David Owen's latest article [$ubreq] in The New Yorker has attracted much attention and rekindled interest in William Jevons and his paradox. Much ink has been spilled in support and opposition to Owen's piece -- a testament, if nothing else, to the quality of Owen's prose and The New Yorker more generally. Amidst the discussion, I'm struck that two rather obvious points haven't been made: Jevons' arguments wouldn't pass muster in any discipline other than economics. Owen's arguments fail basic principles of logic. I leave to Amory Lovins and others to delve into the macroeconomic data, but purely as a …

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Lies, damned lies, and natural gas price forecasts

Shale gas doesn't change everything

The new natural gas conventional wisdom says that "shale changes everything." Access to these large volumes of relatively low-cost gas will raise U.S. natural gas supplies and decrease price volatility. That's why prices are low now, and why they'll stay there in the future. This narrative has caused significant shifts in U.S. capital flows. Many industrials are now deferring gas-conservation projects, given reductions in projected future savings. Trouble is, the narrative really doesn't hold water. Maybe gas prices will stay low in the future, maybe they won't. But whichever the case, it won't be because of shale. The narrative fallacy …

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