clean skies bulletin, january 2013

THE CLEAN SKIES BULLETINJanuary 2013

The Road Ahead for Clean EnergyInauguration Forum: What’s Next?p.3

Work In Progress - p.13

Where Can I Fill Up? Survey Updateon Natural Gas Refueling Options

New Report - p.6

Lessons from Ohio: Building a Clean Energy Supply Chain

Infographic - p.10

Three Rocks, Three Technologies, One Timeline of Innovation

2 THE CLEAN SKIES BULLETIN

title

Subhead CONTENTS

ThE ClEaN SkiES BullETiN JANUAry 2013

CONTACT US: 750 1st Street NE, Suite 1100 | Washington, DC 20002 | Phone: 202.682.6294 | cleanskies.org @cleanskiesfdn

CEO: Gregory C. Staple EdITOR: Ilyse [email protected] [email protected]

aBOuT uSThe Clean Skies Bulletin is an occasional report about the activities of the American Clean Skies Foundation (ACSF). This issue focuses on the road ahead for clean energy. Established in 2007, ACSF is a 501 (c)(3) not-for-profit organization seeking to advance America’s energy independence and a cleaner, low-carbon environment through expanded use of natural gas, renewables and efficiency.

03 FEATURE: THE ROAd AHEAd FOR CLEAN ENERgy From the Editor’s Desk

03 Inauguration Forum: What’s Next?

05 EdUCATION Fourth Clean Energy Regulatory Forum

05 Energy 101: Microgrids

06 NEW REPORT Lessons from Ohio:

Building a Clean Energy Supply Chain

08 CLEAN SKIES INFOgRAPHICS Understanding One Mcf: What Does 1,000 Cubic Feet of Natural Gas Get Us?

09 WORK IN PROgRESS Three Rocks. Three Technologies.

One Timeline of Innovation.

10 CLEAN SKIES INFOgRAPHICS Three Technologies Converge

to Spark the Shale Gas Revolution

12 NEWS BRIEF ARPA-E Supports Potential

Game-Changers In Energy Technology

13 WORK IN PROgRESS Where Can I Fill Up? Survey Update

on Natural Gas Refueling Options

16 CLEAN SKIES INFOgRAPHIC Gas Production Onshore Reduces

Gulf Hurricane Price Shocks

17 REgULATORy WATCH Natural Gas Provides EPA Option for

Pollution Control At New Power Plants

18 NOTEWORTHy EvENTS Leveraging Natural Gas Workshops Continue

19 Statesmen Urge White House To Form Cross-Agency Energy Council

19 Winning Innovation: Celebrating the ACSF Energy Visions Prize

20 OPEN LETTER TO THE PRESIdENT Energy Security Starts at the Federal

Government’s Loading Docks

www.CLEANSKIES.org/oILSHIfT

THE CLEAN SKIES BULLETIN 3

Did shale gas tip the presidential sweep-stakes? Depends on whom is doing the analysis, but in a tight race, every hy-drocarbon can make a difference. Before the election, New York Times columnist David Brooks predicted that the natural gas boom in Ohio—resulting in slightly better employment and lower home heating prices—might convince voters to stay the course. (Remember the shale map from the last Bulletin? Ohio’s Stark County and other bellwether precincts did in fact go blue.)

Others point to the energy renais-sance as fundamentally changing our politics and economics. Niall Ferguson, a Harvard professor who backed Mitt Romney, said America may be headed to a golden economic age fostered by energy. Ferguson, a British historian, argued from Hong Kong after the

election, “As the U.S. moves toward energy independence and becoming the biggest producer in the world, the dollar can only benefit. Anybody who thought the financial crisis was going to lead to the demise of the dollar as an international currency is wrong—it’s quite the opposite.”

To understand the changing econo-my behind Ferguson’s optimism, take a look at Lessons from Ohio, the new ACSF report on the cross-industry benefits of building clean energy supply chains. This report complements the Founda-tion’s broader state-by-state survey, Tech Effect, released last October, which reviewed the benefits from innovative oil and gas production technologies.

This issue of the Bulletin also reviews our work in progress. It includes Where Can I Fill Up? an update on the natural

gas fueling infrastructure around the country. Also, in this issue are original infographics featuring: • the University of Texas/ACSF in-

teractive Technology Innovation Timeline tracing shale gas history from World War II to the present and beyond

• the increasing price stability of natural gas even amidst Gulf Coast Hurricanes

• 1,000 cubic feet of natural gas pow-ering and fueling things we need.As always we comment on federal ef-

forts to regulate pollution and provide news from ACSF sponsored events and workshops. Finally, don’t miss our pre-inauguration forum about presidential priorities and what may be achieved on the Road Ahead for Clean Energy.

Let us know what you think.

FEATURE: THE ROAd AHEAd FOR CLEAN ENERgy

From the Editor’s Desk

Inauguration Forum: What’s Next?

As President Obama opens his second term with a call for action, other national leaders are contemplating a clean en-ergy agenda. Tax reform, greenhouse gas regulations, private initiatives and other ideas might boost the environmental and economic landscape.

ACSF invited American Gas Associa-tion President and CEO Dave McCurdy, Advanced Energy Economy CEO Graham Richard, Center for American Progress’s Director of Climate Strategy Daniel J. Weiss, and Clean Edge Managing Direc-tor and Clean Tech Nation Co-Author Ron Pernick, to give us their perspective on The Road Ahead for Clean Energy.

ACSF: A year ago the president told the Congress and everyone worldwide watching his State of the Union: We have

a supply of natural gas that can last Amer-ica nearly one hundred years, and my Administration will take every possible action to safely develop this energy. Ex-perts believe this will support more than 600,000 jobs by the end of the decade. And I’m requiring all companies that drill for gas on public lands to disclose the chemicals they use. America will develop this resource without putting the health and safety of our citizens at risk.

What action should we expect from the administration next year regarding the safe development of natural gas to meet the increasing demand?

AGA’s McCurdy: The White House took several steps in 2012 to increase access to the benefits of natural gas including creat-ing an interagency working group to sup-

port safe and responsible development of unconventional domestic natural gas resources, executive orders on combined-heat-and-power and infrastructure per-mitting and standards for increased fuel economy for cars and light-duty trucks.

I’d like to see more actions in the same vein—greater recognition of the benefits of natural gas in regulation, legislation, building energy codes, appliance standards and energy policy initiatives. Some options include a heavy duty CAFE standard and research and development investments in end-use that would expedite greater and more efficient use of natural gas.

AEE’s Richard: AEE is working at both the state and federal levels to create a bet-ter business climate for all forms of ad-vanced energy, including natural gas. We



Inauguration Forum: What’s Next?-Continued

hope that issues regarding the safe devel-opment of natural gas will be resolved, so that this resource can be fully utilized as a fuel for electricity, heating and transpor-tation. Electricity generation, combined-heat-and-power, and natural gas-powered trucks and buses are all advanced energy uses of this resource that will make energy more secure, clean, and safe when deployed on a wide scale. It is an exciting prospect.

CAP’s Weiss: We anticipate the adminis-tration will take a few actions including finalizing the health and safety standards for fracking on publicly owned lands and releasing the final EPA fracking study in 2014. This should provide impetus for more federal safeguards. With industry cooperation, the Environmental Defense Fund studies on methane releases from fracking could provide additional impe-tus to regulate methane.

Clean Tech Nation’s Pernick: The U.S. is blessed with perhaps the most abun-dant natural gas and renewable sources of any nation on the planet, along with being a global leader in energy efficiency and green building technologies. While the U.S. will continue to use oil and burn coal, the future needs to be built on cleaner, less environmentally destruc-tive, less volatile sources of energy.

Based on its unprecedented natural ad-vantage, we believe the U.S. should focus new generation assets on natural gas (that’s responsibly extracted and used with limit-ed environmental impact), renewables, and energy efficiency-based “negawatts; “Nega-watts,” refers to those watts that you don’t need to use if you’re efficient.

To a great extent that’s already been happening, with the majority of new gen-eration assets in 2011 and 2012 coming from new natural gas and wind power plants. The president should further leverage these resources by supporting policies and build-ing bridges—highlighting how these indus-tries can work together to enable true U.S. energy independence and security.

ACSF: Recent events, including record-breaking warm temperatures, Hurri-cane Sandy and the UN Climate Change Conference have put climate back on the map for 2013. What do you think could be achieved? How can federal agencies lead by example?

Clean Tech Nation’s Pernick: In the af-termath of Superstorm Sandy, it’s very clear that our nation’s electric grid is woefully inadequate to meet the needs and requirements of a digital, energy-hungry, and increasingly climate-chal-lenged society. We need to invest billions of dollars (and create millions of jobs in the process) in updating our grid with smart meters, distributed power resourc-es like solar and fuel cells, and backup energy storage built in. And we need to look at burying the most vulnerable utili-ty cables underground so they aren’t con-stantly subject to high winds and fallen trees. This won’t be inexpensive, but our electric utility infrastructure needs to be upgraded. There isn’t much that the AFL-CIO and chambers of commerce agree on, but they both believe the U.S. must

rebuild its infrastructure. The president should make the pursuit of smart, resil-ient, and secure utilities of the future one of his highest priorities.

AGA’s McCurdy: On the subject of Sandy, I want to mention how extremely proud I am of the response from natural gas utilities. AGA helped coordinate response efforts through its mutual assistance pro-gram, and AGA member participants in the program sent hundreds of crew mem-bers to assist with leak detection, assess-ing meter assembly condition, replacing meters and regulators and relights. We are proud that hundreds of millions of Americans were able to maintain natural gas service through these unprecedented storms, and for those where service had to be shut off, which is always a last resort; we have seen a tremendous effort from utilities throughout the country to restore service as quickly as possible.

I firmly believe that natural gas can work alongside other clean and renew-able energy sources in 2013 and beyond to build a clean energy portfolio without sacrificing economic growth. Natural gas provides clean and efficient energy. We are seeing an increase in natural gas for power generation. The transporta-tion sector has taken some huge steps

What action should we expect from the administration?

Continued on p. 18


Last November, ACSF convened its fourth bi-annual forum for electric utili-ty, natural gas industry and environmen-tal experts. The forum, hosted in part by PJM, the mid-Atlantic regional trans-mission organization (RTO), brought together over 40 professionals from 15 states for a tour of PJM’s Valley Forge, Pennsylvania control center followed by a day-long meeting.

The Foundation created the CERF se-ries as a bi-annual meeting place for in-dustry professionals, regulators and en-vironmental groups to discuss innovative options for expanding the production and distribution of cleaner, lower car-bon electricity. Discussions have focused on rule and procedure reforms at public utility commissions, RTOs and the Fed-eral Energy Regulatory Commission.

To promote open dialogue between participants, the workshops have been organized as by-invitation-only events and operate under Chatham House rules.

The Forums complement ACSF’s on-

going dialogue with state regulators at the National Association of Regulatory Utility Commissioners’ regular meetings.

The first Clean Energy Regulatory Fo-rum was held February 27-March 1, 2011 at the Aspen Institute’s Wye Conference Cen-ter in Queenstown, Maryland, and subse-quent workshops were held in Chicago and Golden, Colorado. Each event has been at-tended by up to 50 high level professionals.

Previous meetings have received sponsorship from the Energy Founda-tion and the William and Flora Hewlett Foundation and have been co-hosted by

the Environmental Law and Policy Cen-ter, and the Joint Institute for Strategic Energy Analysis at the National Renew-able Energy Laboratory.

Selected forum papers are available from the American Clean Skies Founda-tion website: http://www.cleanskies.org/projects/#cerf.

Additional meetings are being planned for 2013. If you would like to attend or want additional information about CERF, please contact Geoff Bro-maghim, ACSF’s Research Associate. [email protected].

EdUCATION

Fourth Clean Energy Regulatory Forum

ENERgy 101 : MICROgRIdS

How can we better prepare the grid for extreme weather?

In the wake of Hurricane Sandy and the extended power outages that ensued, ACSF’s new Energy 101 shows how microgrids powered by photovaltaics, micro-turbines, fuel cells and other technologies can provide local energy security and business opportunity for those promoting cleaner energy. Correspondent Lee Patrick Sullivan also reminds us how the national grid works and, occasionally fails. He says, microgrids can make a neighborhood an island of power in a sea of darkness. wATCH Now AT www.CLEANSKIES.org/ENErgy101 or EmBEd ANd SHArE.


From John D. Rockefeller to Thomas Edi-son, Ohio has long driven America’s en-ergy innovation. Ohio has led the nation in developing the wind turbine supply chain and is emerging as a leader in natu-ral gas production. The technological revolution taking place in Ohio is chang-

ing the economic landscape, spinning off jobs from Ashtabula to Zanesville.

In October we summed up the “Tech Effect,” how innovation in oil and gas ex-ploration, especially for shale gas, is driv-ing economic growth across Ohio and a score of other states. Now we offer “Les-sons from Ohio,” including the latest from Cleveland’s WIRE-Net on the growth of manufacturing for and revenues from the clean energy supply chain. ACSF decided to collaborate with WIRE-Net, a 24-year-old nonprofit economic development or-ganization with its network of 240 mem-ber companies, after the “Making it Here: 2012” conference in Cleveland.

With the promise of the Utica Shale, natural gas is poised to reinvigorate Ohio’s manufacturing base. At the heart of this renaissance is the technological advance-ment—such as hydraulic fracturing and horizontal drilling—that has unlocked previously inaccessible shale reserves.

The sudden supply of natural gas—upward of a 100 years’ worth at current consumption levels—has driven down

the fuel price. This has reduced home-owners’ electric bills and energized the manufacturing base, especially chemicals and steel making. Consider Youngstown, once the backdrop for industrial decline. Vallourec & Mannesmann Holdings Inc. announced it will build a $650 million plant in Youngstown to meet demand for drilling materials such as steel pipe. In November, Houston-based Valerus—a gas processing firm—announced its first facility above the Mason-Dixon line. The company chose Youngstown so it could service development in Pennsylvania and Ohio and because the city has an existing manufacturing workforce.

U.S. Steel and Timken also have an-nounced expansions in Ohio. Halliburton, Baker Hughes, and Select Energy Services —all oil and gas service companies—have announced construction of facilities to meet the needs of drillers in Ohio’s Utica shale. Range Resources and MarkWest will jointly invest $1 billion to build natu-ral gas processing plants in Harrison and Monroe counties.

Overlap Between Natural Gas and Renewable Energy Component Suppliers

NG

Wind Solar

Fuel Cells BioFuels

Hydroelectric

79% of NG Suppliers Overlap into Renewables

“The Ohio experience suggests that there is a powerful national story to be learned about the connection between American clean energy and manufacturing. One sector is reinforcing the other,” said WIRE-Net President John Collum.

NEW REPORT

Lessons from Ohio: Building a Clean Energy Supply Chain


Ohio Clean Energy Manufacturing Map WIRE-Net surveyed 50 Ohio manufacturers and explored their role in producing components for energy markets. Companies in the study operate from locations across the state in eight industries.

Overall, by 2017, our study shows that natural gas will add between 42,900 and 84,000 jobs in Ohio from 2010 levels. For 2012 alone, drilling will add $300 million in state and local taxes.

But Ohio isn’t relying on just one fuel. As the joint ACSF-WIRE-Net report un-derscores, manufacturers have found that diversifying their energy portfolios allows them to supply components for wind, so-lar, biofuels, natural gas and others. These overlapping supply chains for clean ener-gy are keeping employment steady in the face of swings in energy demand.

For example, Norlake Manufactur-ing in Elyria was manufacturing wind turbines parts and has expanded to so-lar and liquefied natural gas. Norlake is awaiting permits that will allow it to expand its manufacturing to electronic products for natural gas and biofuels—and adding 30 workers.

Wodin, in Bedford Heights, made components for the aircraft indus-try, which in turn allowed it to meet standards for well-site equipment when

natural gas companies knocked on its door. Then came opportunities to use its components in wind turbines.

READY FOR SHIPMENTWhat has Ohio’s experience taught us about energy-related manufacturing in America?

First, it’s happening—parts are ready for shipment. More than eight out of ten Ohio manufacturers involved in the WIRE-Net study (84 percent) supply prod-ucts that go into either natural gas or re-newable energy production. These prod-ucts bring new revenue.

Second, companies report a strong overlap between manufacturing require-ments for different energy markets; 79 percent of natural gas component sup-pliers have moved into renewable energy manufacturing. This leverages investment and provides additional balance to facto-ries when market fluctuations occur.

Third, companies want to expand their energy businesses. By meeting the

demand for precision manufactured components, domestic energy manufac-turers are creating jobs, investing in their communities, and strengthening Amer-ica’s clean energy infrastructure. With widespread investments in capital equip-ment, facilities, and new people, success-ful manufacturers are showing their ap-petite to make American industry more self-sufficient—supporting our nation’s growing energy needs with American la-bor and know-how. In short, moving into the business of supplying clean energy is a move toward sustainability.

To extend continued success of these overlapping clean energy supply chains, stable, predictable public policy and a level international playing field is needed.

“A key lesson from Ohio is that the natural gas and renewable energy in-dustries have a common interest in a strong manufacturing sector that can build parts, create jobs and generate ongoing local investment,” said Greg-ory C. Staple, CEO of the American Clean Skies Foundation.

Machine Shop ..........42%

Fabricator .................. 22%

Coatings ......................10%

Electronics .................. 8%

Composites ................. 6%

Forge ............................. 6%

Steal ............................. 4% & Foundry ....................2%


By Geoff Bromaghim, ACSF Energy Policy Research Associate

Natural gas is an incredibly versatile fuel. Many people are famil-iar with gas because they use it directly in their homes with their kitchen stove, water heater or furnace. However, natural gas is also a major fuel used to generate electricity, a cleaner alterna-tive for powering vehicles, and a vitally important feedstock for the chemical and fertilizer industries.

One Mcf (thousand cubic feet) is a relatively small, common volumetric measurement of natural gas. This graphic demon-strates how the energy contained in a standard unit of natural gas could be used for a variety of these different applications. For example, if consumed in a combined cycle power plant, this small quantity of natural gas could produce about 140 kilowatt hours of electricity that could then be used by any number of electric devices, like flat screen televisions.

For a list of the sources used to produce this chart, please visit: www.cleanskies.org/infographics/1mcf/

INFOgRAPHIC

Understanding One Mcf: What Does 1,000 Cubic Feet of Natural Gas Get Us?


The Technology Innovation Timeline—if the events hadn’t happened, no one would believe it.

Three disparate technologies con-verge at the same time natural gas prices are rising, and three very differ-ent rocks—tight sand, coalbeds, and shale—are competing to be the nation’s new source of natural gas. Sustained high prices encourage improvements in equipment and technique. Shale lags far behind its competitors as recently as 2008.

Then, in a dramatic sprint about which detailed Wall Street filings carry barely a word, shale gas producers use these improvements to burst ahead—transforming the U.S. economy and in-ternational geopolitics. But wait, there’s more—these technologies, born and perfected in the U.S., also transform the petroleum industry.

The story—as shown in the Technol-ogy Innovation Timeline on p. 10—is far from over.

Of course, “technological innova-tion” is not straightforward or easy-to-define. It can be different things at different times in history, and differ-ent things to different industries at the same time in history. This Timeline

Joel Swerdlow, Ph.D., formerly a senior advisor to ACSF, is an Adjunct Profes-sor of Government at the University of Texas. He is the principal architect of the interactive Technology Time-line project. Arka Chaudhuri, ACSF’s Director of Technology, designed the timeline and helped develop the web offerings mentioned in the Clean Skies Infographic on p. 10

WORK IN PROgRESS

Three Rocks. Three Technologies. One Timeline of Innovation.

frames the basic unchanging “ecology of innovation” in which all technologies emerge, merge and evolve.

The limited academic literature on technological innovation describes the shale Timeline perfectly. S.C. Gilfil-lan’s seminal The Sociology of Invention (1935) portrays “a perpetual accretion of little details, probably having neither beginning, completion nor definable limits….” Nor are beginnings and ends necessarily related. In “The Impact of Technological Innovation: A Historical View” (OECD, 1986), Nathan Rosen-berg explains:

The steam engine … was invented in the eighteenth century specially as a device to pump water out of flooded [coal] mines… A succes-sion of improvements later ren-dered it a feasible source of power for textile factories, iron mills and an expanding array of industrial establishments.

We developed this Timeline to bet-ter understand what extraction from shale teaches us about technological innovation—including the human, non-technological factors which are the most unpredictable, uninhibited and amazing variables: “A new device merely opens a door; it does not com-pel one to enter,” writes Lynn White in Medieval Technology and Social Change (1962). “The acceptance or rejection of an invention, or the extent to which its implications are realized if it is ac-cepted, depends quite as much upon the condition of a society, and upon the imagination of its leaders, as upon the technological item itself.”

So be forewarned: when it comes to technological innovation, the most powerful force will often be techno-logical inertia. This can be difficult to grasp because change seems to be oc-curring so quickly. In 1995, few people had a cellphone; now virtually every-one has at least one. And as recently as

the mid-1990s, few people had heard of the “Internet.”

CRITICAL TIMINGNonetheless, we must always remain mindful of what Edward Tenner de-scribes as “the shock of the old” and “the intransigence of reality.” (“A Place for Hype,” London Review of Books, May 10, 2007). For example, Tenner notes:

The most significant recent break-through in the technology of power transmission, the discovery of high-temperature superconductivity in 1986, seemed to herald virtually resistance-free electric cables, but is still far from being a large-scale application... The future is running behind schedule. Just as the use of horses persisted well into the 20th century [the German Army during World War II used far more horses than it did mechanized vehicles], so piston-driven internal combustion engines, developed in the 1870s and 1880s by Otto and Benz, continue to dominate passenger transport.... An airline flight from Philadelphia to Los Angeles now takes nearly an hour longer than it did forty years ago.

Recognizing this inertia is essen-tial, Tenner emphasizes, because we live amid “the rhetoric of technologi-cal revolution,” and to let our expecta-tions run too far beyond reality can be dangerous. Inflated expectations about the timetable to renewable power, for example, can impede major efforts to reduce pollutants from fossil fuels.

NOTE THE MILLENNIUMOn the Timeline, please pay particu-lar attention to the past decade. When shale gas production increases expo-nentially from virtually uncountable to world-changing.


INFOgRAPHIC

Three Technologies Converge to Spark the Shale Gas Revolution


KEEP TRACK WITH US

The Timeline on this page highlights what may be the 21st century’s biggest energy story: hydraulic fracturing. The narrative about technological innovation includes post World War II days when industry applied napalm instead of pressured water to crack rock.

ACSF is working with the University of Texas to augment the Timeline. Researchers have already identified critical government and private industry papers detailing the dramatic story behind innovative technological development. To contribute facts, ideas or funds to the Timeline project, contact [email protected].


NEWS BRIEF

ARPA-E Supports Potential Game-Changers in Energy Technology

In December 2012 Uncle Sam injected $130 million worth of angel investment into transformative energy technolo-gies. That latest round of awards from the Energy Department’s Advanced Re-search Projects Agency (ARPA-E) sup-ported about 66 energy technology proj-ects in 24 states.

“ARPA-E seeks out transformational, breakthrough technologies that show fundamental technical promise but are too early for private-sector investment. These projects have the potential to pro-duce game-changing breakthroughs in energy technology, form the foundation or entirely new industries, and have large commercial impacts,” according to the DOE release. “[They] support the Obama Administration’s all-of-the-above ap-proach to solving our nation’s most pressing energy challenges.”

The OPEN 2012 projects will focus on technologies including advanced fu-els derived from natural gas, advanced vehicle design and materials, building efficiency, carbon capture, grid modern-ization, renewable power, and energy storage. Approximately 47 percent of the

chosen projects are led by universities, 29 percent by small businesses, 15 percent by large businesses, 7.5 percent by national labs, and 1.5 percent by nonprofits.

Though final award amounts vary, Pratt & Whitney, proposing a project involving low-cost gasoline, is set to receive nearly $3.8 million to develop a system to improve the conversion of natural gas to liquid fuels. And the University of California Berkeley/California Institute for Energy and Envi-ronment was another big winner, receiving an estimated $4 million from ARPA-E to develop an electric power-monitoring de-vice for electric grid systems.

With $547,000 the Massachusetts Insti-tute of Technology will develop a com-pact reformer that could be used for a small, remote source of gas.

This is the second time ARPA-E has provided such seed funding. Some no-table completed works include a high-powered laser system that can drill through hard rock formations and is more economical than traditional drill-ing methods. And the first-ever 400 Watt hour per kilogram (Wh/kg) lith-ium-ion battery, instrumental in the world of electric vehicles, was also fund-ed through ARPA-E.

NATIONAL RENEWABLE ENERgy LAB FINdS SyNERgy PROSPECTS FOR INdUSTRIES

At times the natural gas and renewable energy industries have viewed themselves as direct competitors, but many in the energy sector are beginning to see the complementary goals and attributes of the two industries.

A recent report from the National Renewable Energy Laboratory (NREL) explored opportunities for natural gas and renewable energy to partner together to increase our energy security and reduce the carbon intensity of the nation’s electricity and transportation sectors.

The report—“Opportunities for Synergy between Natural Gas and Renewable

Energy in the Electric Power and Transportation Sectors”—offers several ways for the gas and renewable industries to work closer together.

Opportunities for increased communication and collaboration include systems integration, joint technology development, enhanced quantitative tools, and a joint myth-busters or FAQ initiative.

The report concluded “In this critical period of industry adaptation to new energy paradigms, active engagement and partnership between the natural gas and renewable energy sectors can lead to efficient well-designed electricity markets better situated to achieving the long-term energy goals of energy security and climate change mitigation.”

For the entire report, go to http://www.nrel.gov/docs/fy13osti/55538.pdf.

The ARPA-E Innovation Summit is coming up Feb. 25-27 in DC, http://www.arpae-summit.com/

By Patrick Bean, ACSF Energy Policy Advisor


WORK IN PROgRESS

Where Can I Fill Up? Survey Update

More than 90 percent of natural gas vehicle (NGV) profession-als surveyed recently point to the price spread between diesel and CNG/LNG as the most important factor in fleet adoption of NGVs. With gas prices remaining low, confidence is high that the NGV market will grow this year.

ACSF’s latest survey, conducted in November by Matthew I. Slavin, Ph.D., President of Sustainability Consulting Group of Washington, DC, asked 304 stakeholders—from gas pro-ducers and gas distribution companies, fuel vendors and sta-tion developers, vehicle and component manufacturers, fleet

owners, Clean Cities and government—about market trends and priorities. Subsequent to our survey the American Tax-payer Relief Act of 2012 restored two tax credits for NGVs. Section 402 renews, retroactive to the beginning of 2012, the tax credit of 30 percent (up to $30,000) for NGV fueling prop-erty. Section 412 renews, also retroactive to the beginning of 2012, the Alternative Fuels Excise Tax Credit of 50 cents per gallon. Both are in effect through December 31, 2013.

This should bolster the high confidence we found about the NGV market.

0%

Light-Duty

Medium-Duty

Heavy-Duty

10%

39%

32%

29%

5%

33%

20%

78%

62%

2%

20% 30% 40% 50% 60% 70% 80%

How confident are you that each of the below NGV market segments will grow in the coming year?

Less Confident Confident Very Confident

HIGH CONFIDENCE: NGV MARKET WILL GROW IN 2013Ninety-eight percent of respondents are very confident or con-fident that the heavy-duty NGV market segment will grow in the coming year: almost 80 percent are very confident. Only 2 percent expressed doubts the heavy-duty market segment will grow. Confidence is also high regarding prospects for growth in the medium-duty NGV market segment: 62 percent being very confident with 33 percent being confident. Opinions are more mixed when it comes to the light-duty market, where a larger number of respondents reported only guarded confidence re-garding growth prospects.

0% 10% 20% 30% 40% 50% 60%

59.3%

56.8%

38.3%

21%

Vehicle Cost Down by 50%

20% Long Distance Truckers

20% Local Fleet Operations

10% Fueling Stations

Which of the following do you expect to be realized by 2020? Respondents were asked to check as many as apply.

BY 2020, COSTS DROP; MORE LOCAL FLEETS USE CNGAlmost 60 percent of respondents expect the incremental cost of purchasing a NGV or converting a vehicle to run on natural gas will decline by half by 2020. About one-fifth expect that 20 percent of long-distance truck fleets will utilize LNG as a fuel by 2020. A higher percentage—57 percent—think that 20 percent of local fleet operators will use compressed natural gas (CNG) as a fuel in the same year. Thirty-eight percent of NGV profession-als expect natural gas to be dispensed as a fuel at 10 percent of all U.S. motor vehicle fueling stations by 2020. The current figure: less than 1 percent.


WORK IN PROgRESS

Where Can I Fill Up? Survey Update-Continued

BARRIERS TO TOPPLE: HIGH COST OF BUILDING STATIONSThe high cost of building a new CNG or LNG fueling station remains a major concern— almost 58 percent of respondents cited high fueling station costs as a barrier to expanding NGV fueling infrastructure. Insufficient demand from fleet opera-tors was cited by half of respondents as a barrier to building new fueling stations. Over 40 percent of respondents pointed to inadequate government incentives as a barrier to building NGV fueling stations. Access to capital, zoning and land use, and pipelines extension issues were also cited as impediments.

Which is a significant impediment to building new fueling stations? Respondents were asked to check as many as apply.

0% 10% 20% 30% 40% 50% 60%

Pipe Extensions

Zoning/Land Use

Cost Fueling Equipment

Lack Government Incentives

Insufficient Demand

Access to Capital

29.4%

25.9%

57.6%

42.4%

50.6%

29.4%

COMINg SOON: WHERE CAN I FILL UP? 2013

ACSF’s latest new assessment of U.S. natural gas fueling infrastructure and strategies to accelerate deployment.

Request your copy here: http://www.cleanskies.org/contact/publications-request/


92.5%

31.3% 32.8%

14.9%

0%

20%

40%

60%

80%

100%

Price Spread Gas SupplyVehicle

Availability Environment

Which of the following are the main drivers of fleet adoption of NGVs? Respondents were asked to check as many as apply.

FUEL COSTS DRIVE FLEET ADOPTION OF NGVSOverwhelmingly, NGV professionals point to the price spread between diesel and CNG/LNG as the most important factor in fleet adoption of NGVs. The environmental benefits of NGVs—reduced pollution and greenhouse gas emissions—are signifi-cant. But environmental benefits are not seen as a key driver of NGV adoption—only 14.9 percent of respondents pointed to environmental benefits as a main driver of NGV adoption. A wider selection of NGV models and a reliable domestic supply of natural gas are seen as key drivers by almost one-third of survey respondents.

8%

5.7%

12.6%

LNG Excise Tax

Govt. Purchasing

Vehicle Incentives

Fueling Incentives

Govt. R&D Funding

26.4%

47.1%

Which of the following do you see as the most important priority for government policy in 2013?

0% 10% 20% 30% 40% 50%

TOP 2013 POLICY PRIORITIES ARE FUELING INFRASTRUCTURE BUILDING AND VEHICLE INCENTIVESThere are some surprises regarding NGV priorities for govern-ment policy. By almost two to one, expanding government in-centives for fueling infrastructure is reported as a higher priority than incentives for vehicle purchase and conversion. Almost 13 percent of respondents view government purchasing mandates for NGVs as the top priority. Only 8 percent of respondents pointed to revising the federal excise tax on LNG to reflect en-ergy content instead of volume sold as the highest priority, al-though this is generally considered a key industry goal.

0% 10% 20% 30% 40% 50%

4.5%

5.6%

What are the most effective incentives to accelerate NGV infrastructure deployment?

40.4%

49.5%

Bonus Depreciation

Loans

Grants

Tax Credits

GOVERNMENT INCENTIVES: TAX CREDITS, GRANTS FAVOREDSurvey respondents view government incentives as a key way to accelerate the pace of NGV adoption and deployment of NGV fueling infrastructure. As to the most effective types of incen-tives for fueling infrastructure, almost half of all respondents point to business tax credits as most effective. Just more than 40 percent of respondents view grants as the most effective incen-tive for accelerating fueling infrastructure deployment. A fed-eral bonus depreciation allowance for properties placed into use for NGV fueling is viewed as the most effective type of incentive by only 5.6 percent of respondents. Even fewer—only 4.5 per-cent of respondents—view government lending programs as the most effective incentive.


The chart above shows that the rise in U.S. onshore natural gas production has tended to diminish the impact of hurri-canes on prices. The percentage of on-shore production is shown on the right axis and gas prices on the left axis. The recent hurricane, Isaac, struck the Loui-siana coast on August 28th as a Category 1 storm. Isaac knocked out electricity to more than 900,000 homes and is esti-mated to have caused about $2 billion in damage in Louisiana alone. However, unlike previous hurricanes, it had a neg-ligible impact on natural gas prices na-tionwide. In the first half of 2012 before Isaac hit, U.S. marketed gas production

averaged 6.2 percent from federal Gulf of Mexico waters. Seven years before, the percentage averaged 19.2 percent.

Two years ago the American Clean Skies Foundation and the Bipartisan Policy Center jointly convened the Task Force on Ensuring Stable Natural Gas Markets to examine historic causes of instability in natural gas markets and to explore potential remedies. One of the Task Force’s findings was that the growth of onshore shale gas was reducing the

susceptibility of gas markets to price in-stability (while also accommodating new demand). The relatively minimal impact of recent Gulf hurricanes on gas prices provides support for this thesis.

To learn more, read the report of the 2010 Task Force on Ensuring Stable Nat-ural Gas Markets: www.cleanskies.org/pricestabilitytaskforce/

For more information about this chart, including sources, please visit: www.cleanskies.org/hurricanes-gas-prices/

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U.S. Natural Gas Wellhead Price (2010 $ per mcf) Percentage of U.S. Marketed Natural Gas Production from the Gulf of Mexico

Lee(Tropical Storm)

KatrinaDennis

Rita Gustav and Ike

Isaac

Lili

Ivan

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INFOgRAPHIC

Gas Production Onshore Reduces Gulf Hurricane Price Shocks

Bottom line: The growth of onshore shale gas has been reducing the susceptibility of gas markets to price instability.

$14.00 100%

$12.0090%

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U.S. Natural Gas Wellhead Price (2010 $ per mcf) Percentage of U.S. Marketed Natural Gas Production from the Gulf of Mexico

Lee(Tropical Storm)

KatrinaDennis

Rita Gustav and Ike

Isaac

Lili

Ivan

2002

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This month ACSF commented on the Environmental Protection Agency’s re-vised standards to control mercury and other hazardous air pollutants (HAPs) from new power plants. These reconsid-ered standards known as MATS—Mercu-ry and Air Toxics Standards, build on the agency’s landmark 2012 rules to tighten the control of HAPs at existing, mostly coal- and oil-fired power plants. See: http://www.epa.gov/mats/actions.html

In its comments, ACSF urged the agency to recognize that the best compli-ance option for new plants is likely to be based on gas-fired technologies because they have a lower emission profile and are more cost-effective.

The EPA’s MATS rulemaking docket is critical for advancing public health because the new standards will significantly reduce toxic air pollutants from the most hazard-ous electric power plants—those fueled by coal and oil. Notably, the MATS standards do not regulate natural-gas fueled power plants, as EPA found the toxic emissions from these power plants to be “negligible.”

In its comments, ACSF noted that EPA must require the consideration of fuel switching from coal and oil to natural gas at new units as a “beyond-the-floor” option—

i.e., an alternative control measure that low-ers emissions beyond the maximum reduc-tion that can be achieved by applying the best pollution controls to existing fuels (e.g., coal and oil). Under the Clean Air Act (CAA), the proposed emission rules for new power plants must be based on “maximum achiev-able control technologies” (MACT). And the standard must achieve the same emissions rate as is achieved by the best-controlled similar source. This is known as the regula-tory “floor.” However, EPA can go “beyond the floor”—and approve alternative com-pliance options, such as fuel-switching—where greater reductions are achievable.

The Foundation said that by overlook-ing fuel switching to natural gas as a be-yond-the-floor option in the MATS Final Rule, EPA failed to achieve critical health environmental benefits as required by the CAA. ACSF said that requiring the consideration of natural gas for new units would probably only impact a small number of newly proposed coal plants and would not effect an outright ban on new coal units, as some have alleged.

ACSF noted that several options exist for setting a gas-based beyond-the-floor emis-sion standard for new units.

First, emission limits consistent with the use of natural gas could set the beyond-the-floor limits for new fossil plants unless a permit applicant can demonstrate that natural gas is unavailable. Such an assess-ment of “availability” would not be new. EPA has stated that a control technique is considered available if it “can be obtained by commercial channels or is otherwise available within the common sense mean-ing of the term.” However, in many or most cases when a new power plant is proposed, natural gas will be commercially available.

Nevertheless, it is possible that a utility may site a new generation unit in a location without existing natural gas availability (or the ability to install relatively short lateral pipeline connections). Here, “availabil-ity” can be informed by the CAA’s require-ment to consider costs based on the ratio of total annual costs to the total amount

of pollution removed (e.g., a $/ton cost-effectiveness assessment). In this case, a natural gas combined-cycle unit would set the standard (i.e., would be the most cost effective) except, perhaps, in cases where (i) the costs of the gas unit plus necessary natural gas infrastructure exceeds the cost of a new coal unit equipped with the oth-erwise necessary control equipment or (ii) an incremental $/ton costs is greater than amounts previously determined by EPA for other sources controlling the same pol-lutants. This approach is analogous to that which EPA undertook in its coal-to-gas analysis for existing units. (See EPA, Coal-to-Gas Conversion (C2G) Technical Sup-port Document (March 4, 2011).

Alternatively, natural gas should be considered on a case-by-case basis as a po-tential beyond-the-floor requirement, for all newly proposed coal and oil-fired pow-er plants. For each new electric generating unit (EGU), the developer would need to provide an analysis of all possible options available and the level of emissions reduc-tion from each. EPA could then determine what the “maximum” emissions reduction should be for that unit.

Importantly, none of these approach-es is a prohibition on new coal plants. If natural gas is “available” and “cost effec-tive” in a particular location, then a new EGU sited in that location must meet the emission standard achieved by a natural gas combined-cycle unit. If natural gas is “unavailable” or “not cost effective” in a particular location, then the standard could be set based on MACT floor units separately established for the particular subcategory of EGU.

ACSF stressed that the fuel switching standard proposed above is similar to the approach that EPA had taken already in its NSPS for regulating greenhouse gas (GHG) emissions from new power plants. Under these proposed rules, which are still pend-ing before the agency, gas sets the emission standard, but a coal plant could still be de-ployed if emission controls can meet the limits commensurate with natural gas.

Gregory C. Staple, CEO of the American Clean Skies Foundation, sums up. The EPA’s MATS rulemaking docket is critical for advancing public health.

REgULATORy WATCH

Natural Gas Provides EPA Option for Pollution Control At New Power Plants


NOTEWORTHy EvENTS

Leveraging Natural Gas Workshops Continue


Inauguration Forum: What’s Next?-Continued

in the use of natural gas. This summer, a U.S. Energy Department report said that C02 emissions were at 1992 levels. All of these changes are making an impact, but ensuring we have accurate data is key to understanding the full impact of all our energy sources.

We are confident that as we continue to embrace new ways to use this clean, domes-tic resource, we will continue to take steps to improve our environment, increase our national security and boost our economy.

AEE’s Richard: Despite inaction in Wash-ington, the U.S. achieved approximately 70 percent of the emissions reductions target-

ed under Kyoto, thanks to increased use of natural gas for electricity generation. In ad-dition, higher fuel efficiency standards and greater penetration of compressed natural gas vehicles will reduce the use of oil. All of this makes for emissions reduction and en-ergy savings for industrial, commercial, and residential consumers at the same time.

We also expect to see extreme weath-er spurring interest in investments that make infrastructure more resilient and resistant to catastrophic failure, such as combined heat and power, and smart grid/microgrid technologies. The U.S. is beginning to face up to its vulnerabilities in the power grid, and the time has come

to employ advanced energy to make our energy system more reliable, more resil-ient, and more able to recover from the impact of extreme weather events.

For more on these forum respondents’ and others top priorities for action in the next term on clean energy for trans-portation and power continue reading at http://www.cleanskies.org/forum-on-energy. To join our discussion, tweet @cleanskiesfdn or contact ACSF’s Com-munications Director Jack Deutsch, [email protected], and Clean Skies Bulletin Editor Ilyse Veron, [email protected].

C2ES—the Center for Climate and En-ergy Solutions —and the University of Texas last fall led their second workshop co-sponsored by ACSF. Stakeholders and subject matter experts from around the country gathered in Boston to continue the discussion of leveraging natural gas to reduce U.S. carbon emissions. This time they focused on distributed generation, expanding infrastructure, and direct use of natural gas in homes and businesses.

Background papers for both work-shops are still available to encourage fur-ther comment from people who did not attend the meetings. C2ES and UT will synthesize the background papers—avail-able at http://www.c2es.org/initiatives/natural-gas—along with information pre-sented at the two workshops, and stake-holder feedback. The synthesis will yield recommendations this spring on how nat-ural gas can best mitigate climate change.

Average U.S. Home Energy Use

Source: C2ES and US EIA 2005

RefrigerationAir Conditioning

Water Heating

20%

Lighting and Other Appliances

26%

Space Heating

41%

8% 5%


Winning Innovation: Celebrating the ACSF Energy Visions Prize

By Keosha Johnson, Social Media/Public Outreach Strategist

We asked and you delivered. The ACSF Energy Visions Prize had a successful in-augural run over the past year. With the help of media hubs such as Slashdot, Snag Films, the New Yorker, YouNoodle, Google and CleanWeb Hackathons, among others, as well as our friends in energy and envi-ronmental circles, our search for the best clean energy films, videos and apps yielded applications from all over the country and

a wide range of content targeted at busi-nesses and consumers. We saw climate consciousness-raising mapping and gam-ing apps, book and film video trailers, doc-umentaries of grassroots action and e-tools to manage energy systems.

Our panel of independent judges is reviewing all the fine entries this month, and we look forward to celebrating the award recipients in style at a February gala in Washington, DC. Guided by longtime anchor Thalia Assuras, dinner attendees will see the clean energy innovations and get to meet the creators in person. It is our hope that the Prize money and attention

will spread the word about clean energy initiatives and advance innovation.

If you are interested in attending the February 28 awards dinner or learn-ing more about the prize winners in the coming months, please let us know ASAP via [email protected].

With the U.S. energy renaissance un-derway, policymakers say it’s time to de-velop a national energy agenda instead of approaching the issue piecemeal. The Bipartisan Policy Center’s Strategic En-ergy Policy Initiative in November of-fered recommendations to strengthen the president’s ability to set a national energy strategy. While the comprehensive report is expected to be released in February or March 2013, the BPC panel gave a preview of the plan that seeks to streamline energy policymaking and connect energy pro-grams among federal agencies.

With so many federal agencies in-volved in U.S. energy policy, it’s “like an or-chestra without a conductor,” former Sen. Byron Dorgan told AOL Energy. Dorgan, a former North Dakota Democrat, is one of the co-chairs of the Initiative.

“The U.S. Department of Energy and the 20 other agencies involved in energy policy each play an important role in the development and implementation of our national energy policy. With that many agencies involved in energy issues, coor-

dination, implementation and oversight are often difficult,” Dorgan said.

In broad terms, the proposal envi-sions an executive branch “nerve center” for energy policy—called the National Energy Strategy Council—that would cut red tape and inefficiencies resulting from making policy across several agen-cies. The council—chaired by the Energy Secretary and comprised of top-level ad-ministrators from several federal depart-ments, such as Defense, Agriculture and Transportation—would develop a na-tional energy strategy, as well as produce a Quadrennial Energy Review to suggest specific actions needed to implement the strategy. This new framework aims to give the president the tools to respond to quick-changing economic, environmen-tal and national security concerns.

The Quadrennial Energy Review would include a multi-year roadmap of U.S. energy objectives, reviews of exist-ing federal agency policies and programs (including federal R&D programs), and assessment of global competition for en-

ergy resources and technology. The coun-cil would also release an annual energy report, which would assess the progress made in meeting short- and long-term goals in national energy strategy.

“We should take action now to build on this good news [about energy], instead of waiting until we’re experiencing a cri-sis,” said former Senate Majority Leader Trent Lott, a Mississippi Republican and another Initiative co-chair.

“I am aware firsthand of some of the struggles of moving energy or climate policies from my time at the U.S. Environ-mental Protection Agency,” said former EPA Administrator William Reilly, anoth-er co-chair. “By structuring policy in terms of both long-term strategy and short-term implementation goals, we establish useful metrics for analyzing progress.”

The Initiative, which receives input from scientists, economists, environ-mental representatives and industry leaders, is co-chaired by Lott, Dorgan, Reilly and former National Security Ad-visor Gen. James L. Jones.

NOTEWORTHy EvENTS

Statesmen Urge White House To Form Cross-Agency Energy Council


title

Subhead

OPEN LETTER TO THE PRESIdENT

Energy Security Starts at the Federal Government’s Loading Docks

Dear President Obama:Early on November 7, you told a cheering Chicago crowd that:

“In the coming weeks and months, I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together—reducing our deficit, reforming our tax code ... freeing ourselves from foreign oil. We’ve got more work to do.”

We agree. And so as you set priorities for 2013, when it comes to “freeing ourselves from foreign oil,” we think the federal government should redouble its own efforts to get off imported fuel.

During your first term, you directed federal agencies to continue reducing the petroleum used by government fleets and, by 2015, to buy only alternative-fuel vehicles.

You also adopted historic nationwide fuel economy standards. They will almost double the gasoline mileage of the average car by 2025 while halving harmful greenhouse gas emissions. As importantly, these new rules provide new incentives for manufacturers to produce many more non-petroleum vehicles, including cars and vans powered by natural gas.

But, we need thousands of vehicles like these to service every federal loading dock. Each year, Uncle Sam pays approximately $150 billion on shipping contracts with truckers and delivery services (over 35 times what the government spends on its own fleets). Much of this huge outlay goes to cover the high cost of the gasoline and diesel these vendors use.

That provides a large opportunity for fuel switching. A recent report by our foundation suggests that the govern-ment could save as much as $7 billion a year by 2025 by shifting just 20% of Uncle Sam’s annual transport spend to vehicles that use alternative fuels — natural gas, electricity and biofuels.

In short, it’s time to rethink how Washington spends its transportation dollars. Buying more alternative fuel ser-vices, sourced in America, will be good for the budget, good for national security and good for the environment.

Sincerely, Gregory C. Staple, CEO American Clean Skies Foundation

For more information about our proposals to reduce the country’s reliance on foreign oil, please read: “Oil Shift: The Case for Switching Transportation Spending to Alternative Fuel Vehicles,” available at: http://www.cleanskies.org/oilshift/

This aCSF advertisement ran

in both Politico and National Journal.

clean skies bulletin, january 2013

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