Category: Hot air

We were promised a grown up government

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Being described as a Pollyanna took me back a peg or two. (Full Definition of POLLYANNA : a person characterized by irrepressible optimism and a tendency to find good in everything — Pollyanna adjective — Pol·ly·an·na …

www.merriam-webster.com/dictionary/pollyanna).

What do you mean? All that was said was I would like to be optimistic of the intention of the new government. That we should expect some transition difficulties but ultimately once the classical change management transition is complete we should have common sense prevail, as you would expect in a democracy.

If there was some unease with the choice of the basic change management strategy it may be because it was thought there was a right to govern. It could explain the expectation that the degree of resistance or indication of lack of resistance by the people, the dependency of the people to expect him to take decisive action was deemed by the Prime Minister as requiring a power-coercive change management strategy.

But something is already showing itself that the key success factors are astray. Whilst it is seen as a problem the identification of the major risk that is apparent may get down to the Culture or organization alignment.

“Tony Abbott promised us a grown up government.

But apparently what he meant was that he would be the only adult in it. His ministers are to be treated as children – worse than children, in fact, because while children should be seen but not heard, Abbott’s team cannot even be seen in public without permission from the top.

And even then they really shouldn’t open their mouths except to paraphrase Abbott’s message. Why, even his favourite choir boy, little Christopher Pyne, got it wrong this week with his talk about killing off university student unions – he was absolutely sure that was what Mr Abbott wanted him to do, but he was sent straight to the naughty corner for suggesting it prematurely. The other kiddies have apparently got the message; the airwaves have been freakishly Liberal-free ever since.

Still more importantly, he will have to pray that the public and the media react to his policies of concealment, silence and obfuscation with the same acquiescence he expects from his ministers. For the moment at least, he is determined to press ahead with the mushroom policy: keep them in the dark and feed them bullshit. ” Source ABC.net.au the Drum by:

Mungo Wentworth MacCallum is a political journalist and commentator. View his full profile here.

Co2Land org now asks: What is going on, are we to procrastinate to not be so sure – to be sure!

Our democracy – the need to educate, to influence better environmental outcomes

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Increasingly you might hear the comment – we don’t have a democracy anymore and all that we get is push marketing and the pedaling of misinformation. We are told what to think, act and what we feel in order to react ‘appropriately’. Scenario the phone rings – hello, its Adrian mate and if you don’t want to let the community down you will adopt our stance, you don’t want to let the sky fall do you?  You react and say hang on I am a good upstanding community member….you are hooked and steered into a psychological twist.

Whatever scenario you want to paint on the issue a properly functioning democracy requires an educated, well-informed and proactive community. Backing this thread up is a quote from the Executive Director at Liana Downey & Associates – Strategic Advisors to Governments and Nonprofits – contributing to the discussion about the morality of government and some leaders on action on climate change – “I think it just strengthens the impetus to keep educating, and keep moving forward, particularly for those of us with a good understanding of the science. I have had plenty conversations with reasonable, educated professionals who admitted they just weren’t sure if “all this climate change stuff” was really an issue. We have to take the time to acknowledge doubts, and respond to concerns in an informed way that doesn’t patronize people but allows for conversation and progress. Who says there isn’t scope to address the concerns of the cynics? 

This would be an easy time to fall into despair – it’s certainly tempting. But it’s also the most important time to step up, be clear about the facts, and help lead. Government are obviously important players, but not the only decision makers or leaders in our society. There is still plenty of scope to help shape thoughtful sustainable investments, shift consumer and corporate behavior, and keep doing what we know to be right to protect future generations”.

Then we have the comment by Michael O’Flynn – Sustainability and Financial Risk Consultant: “The real culprits are the politicians with their lack of accountability, aspects of the media who cherry-pick “evidence” to push their backer’s agenda, large immoral corporations and their executives who simply care about profits, rates of return and $$$bonuses and some of the mega-rich. We are basically facing a fight between the gung-ho capitalist model who call for less regulation and as happens, have the big bucks and consider all resources as simply a means to derive a profit first and foremost, versus the people. 

It wasn’t so long ago that the god-Father of the current Libs, John Howard and supposedly the Libs too, were keen on an ETS. Exhibit A for long-term culpability for any inaction.”

CO2Land org finds this potent stuff, maybe a little emotive, but puts the point across vey well – we are influenced as opposed led. So is the real problem that we have ourselves to blame, that we are followers and not leaders – short answer is not everyone can be the leader. But, we need to stay focused and committed and advocate for what we believe is right. The Adrian example at the beginning of this post was and example of an advocate that recognized that public opinion and political policies are never static and will ebb and flow. Even from within governments positions on issues are not necessarily entrenched within the Party’s or even its voters. It is a case of reacting from the popularity base both within and outside the party and will influence those that make the hard decisions. A documented illustration of this is in Australia where a newly elected Government is already facing rough times over the party’s previous support of climate change policies such as the Emissions Trading Scheme (ETS). With the current Prime Minister saying his party does not support the view that climate change is real, and then others within, such as the popular Malcolm Turnbull, openly being supportive of an ETS. This suggests we will be in for more push polling efforts and misinformation peddling is in the wings. Sadly it will also auger well for those that will react with ‘we will review this matter’ and behind the scenes say – no further action required it will go away! He recipe for ‘seeing to be doing and not doing at all’!

CO2Land org will argue that until the opposition parties start acting professionally we can expect nothing more than talk on what is needed on meaningful climate change policies. But either way, neither the government nor the opposition parties can exempt themselves from being detrimental to the obvious environmental dangers we are facing now, and merely taking the arguments to the next election will just be too late.

Thank you to those that contributed to this thread – it shows the potential that there is still some really positive discussion going on. It also put into focus, what recently happened when the Australian Climate Council was established as a privately funded model after the government of the day chose to abandon public funding for its predecessor. We speculate that the thinking behind the funding denial was that it would put aside the issues the entity has uncovered. It might actually come back to bite the climate change deniers and we might even see better outcomes for the betterment of how society views the working of our democracy.

Illustration – LED technology triggers new value proposition.

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Is behavior management key to Greenhouse Gas (GHG) reduction? Demand management is a great place to understand GHG sources. Reasonable observations are they not?

Then in a discussion with Carbon Professionals was added an illustration of the view that maintaining interest in the effects of product life cycle is essential  – because the product itself can morph so quickly into another business matter.  If you think business then you will understand – “When things are going wrong in a supply chain, the first reaction is all too often ‘if we could forecast demand better, most of our problems would go away.’” CO2Land org speculates it is not the inability to better forecasting demand that is the main cause of what is ailing that company’s operations….it is the changing conditions that it operates under in creating the demand. It is the need to hold and speculate the demand for its inventory.

CO2Land then postulates the opening paragraph in this post and a position on this: Agreed, it is an interesting statement on the connects that occur with behaviour management and demand management. But: reinforcement can be more difficult after the initial effort, a diminishing return for the effort. Why? The initiative came from a policy and policy can be altered, definitions diffused and vested interests will separate DM and GHG as coincidental to each other. If you follow that you will understand that the business will settle on the economic differences – the measurable, and initially DM works to reduce GHG and then technology (like LED Lighting) removes the need to think about it any more – a new policy is then needed. Motivation must then be linked to another driver.

While discussing this issue a story was printed as

http://www.energymanagertoday.com/shift-to-led-lighting-may-trigger-cataclysmic-change-in-building-automation-industry-095407/

“Shift to LED Lighting May Trigger Cataclysmic Change in Building Automation Industry.”

The story overtly portrays “As we go forward, the case for retrofitting buildings with LED lighting will become very compelling and with it will come a much broader application of controls.

The key difference, though, is that these controls applications and projects will be lighting-centric rather than HVAC-centric and that will make all the difference. These lighting-centric projects will be motivated by LEDs but will naturally incorporate wireless and cloud technology. The result will be the emergence of new players, new technologies and new application delivery mechanisms. The existing industry structure and business models could easily come tumbling down.”

If technology shifts, the business model – what is the value?

Lessons learnt, and studied results suggest that industry structure will remain during the commencing and product development process of the evolutionary change, and this provides incremental gain in the existing value proposition of the company. Once that process markets the technology or change the technology enabled so changes the value propositions, and business survival requires changes in the industry structure.

The example for the building automation industry is that Digital controls were an evolutionary technology shift away from pneumatics, and now LEDs are doing more than making an evolutionary change they are enabling whole new value propositions built on the fact that light affects people and behavior. In this case you can predict the LED transition is and will be far more disruptive to the industry than the introduction of digital controls.

The impact of LED lighting is creating demand for coincident adoption of two other technologies, wireless networking and cloud services. Why? The incumbents in the traditional industries are not geared to extract value from the technology! It is very likely a small company will build a value proposition that is the right combination of business model and technology to drive the industry. Why a small company? Large companies need linear projection for outputs and evolution tends to be non-linear. A smaller company is more likely to be agile and able to adapt, and not shackled by conventional wisdom.  That is they attack with vision and gusto, and not defend with placards to impress the public.

Has the pace of change, changed? Business as usual for industry has powerful reasons for resisting change, and techniques are deployed to slow down the introduction of new technologies and systems. It is not unexpected for 10 to 25 years being considered reasonable for a company to adapt to new technology. But LEDs “come from an industry that moves very quickly, as do wireless networking and cloud services technologies. So, to the extent that companies in these adjacent industries choose to involve themselves directly in LED lighting and controls, the historical rate of change in building automation may be a poor indicator of the future.

It is worth noting that in 2005 there was no You-Tube. The cost and complexity of creating and posting video on the web was prohibitive for casual users. Now, only eight years later, almost anyone can create and post videos on the web … and millions of people do every day.”

The above quote does answer the question:  That is how fast things are changing. So, government policy has to get it right too – to survive another election – eh the needs of society!

 

 

 

how to change a capacity market that serves BAU

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In States like Western Australia there is potential for around 1 gigawatt of “avoided power purchase” to insulate against price rises through wide scale adoption by 2020, or in WA’s case 25% of the existing market. This is base load regenerative power capacity. In this discussion, Peter Davies of ID Gasifiers, also said “I was struck by the potential for increasing significant reduction of demand. Small scale efficient biomass energy plants are on the way.

CO2Land org recently posted, 10 September 2013:

the claim a capacity market only serves BAU

The quote in the story was from Dr Jeffery Doyle after posting his précis of a recent conference paper ‘A Cautionary Tale’ and reported through Greentech Media.

CO2Land org included in the story that advances in waste to energy technologies could have sufficient volume available in time for the next bidding cycle – assuming a two year timeframe – they have the potential to create an industry that has multiple product streams with the developing technology. This innovation can be described as ‘batteries’. The key is that reliable and predictable supply can be managed to provide the volume needed.

What might help readers understand the story better is some background facts on how the market operates in WA. The state operates its power supply under the Wholesale Electricity Market (WEM) that was set up so generators can offer electricity for sale to retailers who purchase electricity for their customers. It was part of the Western Australian Government’s reform of the way electricity is generated, distributed and retailed in Western Australia.

The WEM is not state wide in its supply, it in effect ‘islands’ grid connected supply to the more populist corner of the state and calls this bound the South-West Interconnected System or SWIS (an area bound by Kalbarri in the north, Kalgoorlie in the east, and Albany in the south). If you need to know, the ocean forms the boundary to the west. The dominant generation supplier is Verve Energy. Verve provides about 60% of the generating capacity in the SWIS. Verve Energy sells its electricity on the WEM as well as through bilateral contracts with other participants in the market. The majority of Verve electricity is sold to Synergy.

The operator and administrator of the market is called the Independent Market Operator (IMO). The IMO arranges the orderly dispatch of all the electricity traded and the System Operator, which is an independent operating arm of the network business, manages the dispatch.The bulk of electricity is traded as contracts between generators and retailers. In addition, the Short Term Energy Market provides for day-ahead and ‘realtime’ trading.

Reliability of supply is the paramount concern in the SWIS.

More information about the market is available on www.imowa.com.au and www.era.wa.gov.au.

What concerns the discussion, in this instance, is the Reserve Capacity mechanism as is intended to ensure that the South West Interconnected System (SWIS) has adequate installed capacity available from generators and demand-side management options at all times in order to:

  • Cover expected system peak demand including additional capacity to cover the failure of the largest generator on the system and a capability to respond to frequency variations.
  • Remove the need for high and volatile energy prices in the wholesale electricity market (WEM).

The Independent Market Operator (IMO) administers the Reserve Capacity mechanism.

If there is insufficient Certified Reserve Capacity to fully cover the total Reserve Capacity Requirement in a future Capacity Year, the WEM Rules (clause 4.1.16) require a Reserve Capacity Auction to be held to secure additional Certified Reserve Capacity.

A Maximum Reserve Capacity Price (MRCP) is set for each Capacity Year (clause 4.16.1) and determines the expected cost of new entrant peaking plant and other costs required to establish plant capable of supplying electricity to the SWIS (clause 4.16.4). MRCP has the following price setting functions in the WEM:

  • MRCP is the maximum offer price to apply for the Capacity Year for which a Reserve Capacity auction is being held (clause 4.18.2.(b)).
  • MRCP is scaled down by the IMO when there is more Certified Reserve Capacity than required in a particular Capacity Year (clause 4.29.1).

Clause 2.26.1 of the WEM Rules requires the Economic Regulation Authority (ERA) to review a report provided by the IMO that proposes a revised value of MRCP. In approving the value submitted by the IMO, the ERA is only required to consider if the revised value reasonably reflects methodology specified in clause 4.16 of the WEM Rules and whether an adequate public consultation process has been conducted.

Clause 2.26.3 of the WEM Rules requires the ERA to conduct a review of the methodology specified by clause 4.16 of the WEM Rules on each fifth anniversary of the first Reserve Capacity Cycle.

The opportunity to influence the MRCP is also an opportunity to have in place mechanisms to encourage innovations, albeit Co2Land org has in the 10 Sept 2013 story said would require a courageous action. Writing in a preference to supply clause to alternative solutions or innovations to break the bidding ‘status quo’.

The typical Certified Reserve Capacity notices are typically listed Feb 2012 notices for MRC 2014/15, Jan 2013 for MRC 2015/16. Hence this might help you understand that bids are accepted 2 years into the future, but the need to influence should commence 2 years prior to that time of notice.

Can you bank on that?

the claim a capacity market only serves BAU

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An unlikely scenario “Do you think we should run a high voltage line to 
Hawaii?” came from a talk that bidding practices for the Western Australia Electricity Capacity Market having lessons for what might happen in Texas USA. It happens they all have in common that they are isolated grid systems and not part of a national grid. If they were part of a National Grid then they could exchange excess capacity, peak loads and help with a transition to an energy spot market. The quote was from Dr Jeffery Doyle after posting his précis of a recent conference paper ‘A Cautionary Tale’ and reported through Greentech Media.

It is a serious matter that the claim a capacity market does not allow the effective operation of an opportunity to be set for demand response. This assumes demand response can only be reactionary to spot price pressures to be effective. However, at about 2007 it was proven the principles of demand management could be a good fit with the bidding practices of the capacity market, providing an advance intention to provide capacity as a virtual and apparent delivery.

What Dr Doyle exposed was that the problem of ‘business as usual’ is being supported by the bidding system. In practice that is a problem no matter where you provide a market (recently the outgoing CEO of Microsoft was quoted as saying they did not promote their capability to compete against their own Windows Operating System as they would have to destroy their infrastructure advantage in the market). If that is so, then courageous actions are needed to encourage innovation to meet the demand. An example of what could be done is changes to the conditions attached to the bidding requirements.

CO2Land org has noted the advances in waste to energy technologies and they can have sufficient volume available in time for the next bidding cycle – assuming a two year timeframe – they have the potential to create an industry that has multiple product streams with the developing technology. This innovation can be described as ‘batteries’. The key is that reliable and predictable supply can be managed to provide the volume needed. It can also be a multiple of aggregated provider units. 
All that is needed to make these ‘batteries’ available is the authority figures to be a courageous promoter and write into the bidding process that preference would be given to ‘new multi product’ generation. Why because cost of generation is then part of a mix of revenue potential and it encourages business opportunities to price in a way to be competitive with conventional supply for peak demand. Note: I did not claim total energy demand as that would be unrealistic.

That said, Peter Davies then offered after reading through Dr Doyle’s analysis that: “

“I was struck by the potential for increasing significant reduction of demand. Small scale efficient biomass energy plants are on the way.

In States like WA there is potential for around 1 gigawatt of “avoided power purchase” to insulate against price rises through wide scale adoption by 2020, or in WA’s case 25% of the existing market. This is base load regenerative power capacity.

What is most interesting here though is if grid connected they can act as load following systems for wind and industrial solar, negating the argument of the existing coal burners that they need to maintain capacity anyway for when these falter in their dispatch. To add insult to injury the same biomass systems can co-fire coal…so fuel supply limitations are not an issue, and being modular such plants can be expanded as required on quite short lead times. The high quality syngas produced can also be used as feed stock for other processes and products, increasing both plant flexibility and resilience to fluctuations in the electricity market (real or forced by monopoly generators).

Start throwing in advances in lower cost domestic solar energy storage coming out of China shortly and demand for fossil energy generation can only fall even further…anyone want to bet on getting a good return on investment in building a new conventional coal or NG power station?”

As we said: A serious matter – this cautionary tale.
 

 

RET designs – Abbotititis or Rudasinus.

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Do you have Abbotititis or Rudasinus. Bored with the election being in your face yet not meaning a thing.  Then there is ‘real’ again – It just means it will be reviewed and in the mean time your asset is at risk of being stranded because of the ‘Election’. You are told any decisions will need to be taken with a view of caretaker convention and then we will wait until the ‘dust settles’ and the view of the incoming Government is known.  Can you understand the frustration? Promises are being made yet we are told they are real until after the election!

Now lets look at the promised policy positions:

The Coalition talks of ‘real’ abatement in terms of energy efficiency. The flagstone is the Direct Action Plan. This plan will or may impact your business. We say this because the White Paper consultative process that the Coalition will initiate will only be known should they win office. Yes the ‘real’ is it will be a consultative process expressed as the opportunity for your business to provide input into the design of this ‘potential’ new policy framework. In more simple terms it means the details are not yet developed. However, the Renewable Energy Target (RET) has a commitment from the Coalition to retain a 5% to 25% reduction of emissions by 2020 compared with 2000 levels, but will review this commitment in 2015 (then other statements say 2014). That said they intend to wind back many of the provisions of the Clean Energy Future Plan including abolishing the carbon price and disbanding the Clean Energy Finance Corporation, the Climate Change Authority, the Climate Commission and the Energy Security Fund. Then we should note the Coalition intends to expand the existing Emissions Reduction Fund to introduce a buyback, and also plans to expand the Carbon Farming Initiative to achieve emissions reductions in the absence of an explicit carbon price – but the reductions must be ‘real’ against baselines ‘to be advised’.

It is most likely the Coalition’s plans to meet emissions commitments will be more disruptive to electricity supply industries and their downstream industries than labor’s.

Labor (why is it called Labor?) – Reported is among other things, this name makes it easier to distinguish references to the Party from the labour movement in general. Source(s): http://www.alp.org.au/australian-labor/l…

Maybe that is ‘unreal’!

 

Labor has two major policies for abatement changes. Continuing of the Clean Energy Future Plan, and the review of the Renewable Energy Target (RET).  The current RET compels large energy users to invest in renewable energy. This is to the benefit of industries such as wind and, up to an including hydro-electricity. The RET purpose is to introduce more capacity into electricity markets and push down wholesale electricity prices. Therefore the RET is challenging for fossil fuel electricity generators, and the changes will affect them directly and the upstream industries, including oil and gas extraction, brown coal mining and black coal mining, indirectly.

 

That said, Labor is committed to a 5% to 25% reduction of emissions by 2020 compared with 2000 levels, and an 80% reduction on 2000 levels by 2050. Labor has also taken the position and made an announcement of an early transition from the carbon tax to an emissions trading scheme in July 2014, bringing it forward from the previous announcement of 2015. Under the scheme the carbon dioxide equivalent would have a floating price linked to the prices of the EU’s emissions trading scheme. Under this policy, the price per tonne for carbon dioxide is likely to be discounted. The impact uncertainty is what will be the effect on the industry assistance packages included within the Clean Energy Future Plan.

Co2Land org said Labor supports the current 20% RET. This still holds true, as the responsible Department (name too long to mention) and advised work on the review of RET is suspended until further notice, and Labor has made a commitment to not review the target until 2016.

Labor’s changes to the Clean Energy Future Plan will create new winners and losers across energy-intensive industries. Labor’s changes maintain a pricing mechanism as a strategy to reduce carbon dioxide equivalent emissions.

 

Co2Land org has noted IBISWorld’s August 2013 Report has a more detailed outline of the positions taken by the Labor and Coalition parties on major issues impacting Australian industry including workplace reform, energy, resources, broadband network, transport infrastructure, manufacturing and education. They write:

“The 2013 Federal Government election will be dominated by concerns about the economy. The end of the mining investment boom and the continued decline of the manufacturing sector have set a pessimistic tone among Australian businesses.

The Labor Government has taken a ‘glass half full’ approach, pointing out Australia’s strong economic position relative to other advanced economies and successful economic guidance during the global financial crisis.

In contrast, the Coalition points out a widening Federal Budget deficit, a declining economic growth rate, low business confidence and a weak economic performance relative to neighbouring countries.

The winner of the election will have to balance the government’s role to provide fiscal stimulus and counter-cyclical spending with budget responsibility and a plan to reduce government debt.

The Productivity Commission has estimated that there are $12 billion worth of cost-cutting and efficiency savings available to the Federal Government.

The Coalition has backed away from providing a date for a return to surplus, but asserts it will be sooner than a Labor surplus.

Labor forecasts a return to budget surplus in 2016-17, driven by savings made during 2015-16 and 2016-17 when the economy is expected to be in a healthier state than it is presently.”

 

Wait a minute, recently the coalition did say they aim to save $31B – now we are confused – will the ‘real’ number please stand?

Please note: No Green was hurt in this discussion.

Energy Utilities changing Models – A Battery of Choice

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As one would normally do, chat about renewables and impacts on the utilities business model while relaxing with friends. It was a case of too much uncertainty over how the consumer would be treated because of change. Central to the discussion was that a provider to the electrical distribution system could threaten the current regulatory and centralized generation models of ‘essential services’.

What does this mean?  The business as usual model is failing where supply centric economics demanded you build additional load capacity and transport the capacity to the place of need. This model also meant the assets, including the customer, was owned by the utility. If you think of it this way, Governments tend to discourage demand side solutions. Demand Management was tended to be more of a series of incentive programs for utilities to duplicate infrastructure to transport to the demand source.

So, what happened to change the balance? The obvious: Technologies improved, carbon became issues for society and clean energy and renewables were being shown as a better way to address the logistics of meeting demand where it was needed. As a result some of the conventional infrastructure was at risk of being a stranded asset and the need to build conventional infrastructure required incentives from Government to reduce the financial risk. For example, the Demand Side Incentive scheme (DIS) formulated at about 2004 is dramatically underspent but is comforting for utilities in being a facility to reduce the financial risk.

If we note the changes in the needs of society as a driver for change: Governments and their policies encouraged that traditional public ownership be phased out to pass the needs to private investment. Government was happy for this ‘fix’ as they see it as the asset is sold for a value and ongoing regulated charges and fees and taxes are being paid to treasury, and that is a public benefit. The perfect storm in Australia is this action is also one of the drivers for electricity tariff increases in Australia. Recently the state of Queensland announced a 21% increase to its general tariff.  A source, CO2Land identifies as SF said: “Therefore those consumers with solar PV are subsidising those consumers that don’t have solar PV”.

From that last statement we can assume government policy (Federal and State) is very much the catalyst that resulted in the model change. Whether the change was necessary was more of a political move in this instance. It followed that technology and innovation evolved and the model change was inevitable. If you follow the beliefs of the 5th Column existing, this was done by infiltration of the policy areas by a particular group. It follows, in contemporary Australia, Government policy is more reactive than before, and since the 1970’s the rule of law was modeled as to be reactive to the needs of the dominate influence. Below is an explanation of this view as posted by CO@Land.org on 3 April 2013. Where:

Co2Land org now asks: If we consider the four primary schools of thought in general jurisprudence :

  •   Natural law is the idea that there are rational objective limits to the power of legislative rulers.
  •  Legal positivism, by contrast to natural law, holds that there is no necessary connection between law and morality and that the force of law comes from some basic social facts although positivists differ on what those facts are.
  •  Legal realism is a third theory of jurisprudence which argues that the real world practice of law is what determines what law is; the law has the force that it does because of what legislators, judges, and executives do with it. Similar approaches have been developed in many different ways in sociology of law.
  • Critical legal studies is a younger theory of jurisprudence that has developed since the 1970s which is primarily a negative thesis that the law is largely contradictory and can be best analyzed as an expression of the policy goals of the dominant social group.

If you think of the debate of tariff increases. Then you should consider it may have been ‘an expression of the policy goals of the dominant social group’, as critical to that issue. We should then think about the set of claims that the “Renewable Energy Targets” (RET’s) had undesirable consequences, and how governments (Federal and State) now realise that the larger than expected number of early adopters who signed up for the long term contracts are now having a negative impact on state & federal budgets, and this is one of the dominate drivers for electricity tariff increases in Australia. For those needing an introduction to the scheme, the RET’s are a federal government initiative commencing during year 2001, and from those bills and legislation various states and territories introduced those targets as various incentive schemes for customers to invest in solar PV with generous feed in tariffs. This incentive had the effect of distorting the demand supply balance, and the popularity embarrassed and alarmed treasury. If we use SF as the source again; “Queensland Govt initially offered 44cents per kWh this has now been reduced to 8cents. That said the response from the customer was rapid with Australia now having 2500MW of solar PV with and average capacity of 3.5kW.”

CO2Land org chose to give an example of Queensland for convenience, as this states geography and population patterns influence the custom that those consumers with a service, are asked to provide subsidies to those that do not.  In the case of electricity you could argue the subsidy required is determined by the length of the extension cords needed. You might understand why that state found it Initially appealing that solar PV was a localized delivery point. However, managing the asset is a different matter.

We are seeing similar issues being evident from around the world – business as usual is failing as the utility model. The danger is stranded assets and less control being possible. A story titled The Clean, Simple Solar and Storage Solution to US Utility Business Model Woes .

http://www.renewableenergyworld.com/rea/blog/post/2013/07/the-clean-simple-solar-and-storage-solution-to-us-utility-business-model-woes?cmpid=SolarNL-Thursday-July4-2013&goback=%2Egde_67258_member_256399748

Tells of an interview “ with former United States Secretary of Energy Stephen Chu on utility business models.  While the gist of what he said wasn’t new to me, the clean and elegant way he laid out what he sees as the future of utilities and solar power is worth sharing.

Similar to how in the past telephone companies – he specifically named AT&T – used to own the entire telephone system from the overhead telephone lines up to and including the phone in your house, Chu feels that utilities ought to own solar panels and energy storage systems that they put on their customers’ roofs and in their garages. He said if utilities could outfit homeowners with solar panels and a 5-kW battery system, they could continue selling that customer power just as they do now. The utility would own the system, maintain the system and the customer would have no out-of-pocket expenses for it other than continuing to buy power at the same rate or at perhaps an even lower rate.

 In the three-minute interview, Chu didn’t explain another huge reason that utilities should consider this option: distributed generation used in this way counteracts the need to build additional generation as the load capacity needs increase.  And lastly and most important, the utility gets to keep its customer.

Utilities should probably get clear on their approach soon. When it’s just a quarter or a half of one percent of a utility’s customers that have their own PV and are selling their solar power to the grid at the retail rate, the utility doesn’t care. But energy storage and PV panel costs are dropping, and once that percentage of utility customers’  that are zeroing out their bill goes to 5, 10 or 15 percent then “it’s a big deal” said Chu.

Chu said he told utilities that PV and energy storage is going to come and they should “form a new business model” NOW so that what today is a potential revenue loss, could become an area of growth for them in the future.  Plus, he said this model would eventually lead to a more stable grid for us all. “

CO2Land org is finding it difficult to solely blame the RET Scheme as the problem. The evidence is the splitting of the RET’s scheme into a ‘small scale’ offering for predominately solar PV is the problem. It is appropriate to say any change to the utility models would and did have a cause and effect disruption on the industry, and cause and effect type of disruption suggests any intervention will introduce more shocks in the industry, and we can expect that ideologies will continue to influence the Governments policy advisors who are without a full understanding the implications. It also follows that a large dependence on small scale or residential solar PV services implies a need for significant workforce skills shifts to cater for the growth and scope of the model change for utilities to take control of the assets at a domestic level to be to be effective. That is a significant cost driver, and it is reasonable to ask why should the utility be the provider of choice for these services where it would serve to drive up prices?

In defence of RET’s large scale systems, it follows that large systems do not directly affect the utilities mechanism to preserve the current regulatory model, but they shift the balance so that the model needs to be reviewed of the purpose and objectives in the delivery of the product. It follows that centralised generation models are what utilities do very well, and large scale transportation and distribution are well established capabilities of the industry. Expanding that capability to large commercial rooftops and installations might be a good idea. However, it too is not without the need for change. Albeit less dramatic than small scale.

CO2Land org is not proposing we should concentrate on picking winners for the model change.  However, ‘the battery concept’ leads to deeper thinking. The demand initiative needs to be expanded and a battery concept is not just a means of storage of an electron! It can mean tools and equipment that is readily available to balance the total load needs, and not just peak demand requirements. We know solar’s great weakness is peak availability profile and traditional batteries concepts take up rare earth minerals to manufacture. Are they already defunct? A far more sensible battery concept is something that can utilise what we have already consumed and discarded to be returned to there natural elements while producing energy and balancing the supply needs.  If you prefer think of it as a provider it can be an insurance tool for a supply imbalance, So can what they do be a source of energy rationing and balancing that fits neatly into the traditional delivery mechanism.

One such battery concept is the waste to energy gasifiers and their products including pyrolysis retorts. These can easily be written into the current infrastructure and be part of any new regulatory mix – even provide a result for policy without implications – it is not creating anything new – just making something old new again!

For the future, CO2Land org can see a lot more independent renewable sources becoming the norm, and utilities will be using energy exchanges to sell power to customers. This differs from ownership of customers in that bidding could be managed power purchasing agreement with give and take provisions in the price. What regulators will have to deal with is that nationwide and globally installing microgrids for Businesses and Communities will need to fit into economic as well as technical delivery models. A real power of choice if you prefer to think that way.

CFI – a XANADU

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If you follow that Shangdu as the summer capital of Kublai Khan’s empire, then you would be forgiven for thinking the CFI is our XANADU and an enigmatic bright feature on the surface. Thereby, we have a problem because it is being profiled as exactly that and actively marketed by government as a series of experiments to showcase. Practitioners are asking: What about us in the ‘real’ world, can we believe something that looks good on the surface is enough? Some say yes, many no.

This conversation started because projects are to be funded that address recognised program gaps of the Carbon Farming Futures activities. This round: The Extension and Outreach Phase two submissions were due Wednesday June 12 5pm. Information is be found on Extension and Outreach daff.gov.au.

Some disquiet continues and numerous amounts of feedback do focus on the issue of the bankable when needing to finance, and other is the number of reference groups that were set up to work through the matters and the concern some of the critical consultation groups are difficult to contact or not able to be mobilized. A prime example being: The Biochar Reference Group. After some searching key people advocating the approach found part of the problem was people moving on to further their personal interests. The difficulty is that the group has funding to develop the soil carbon methodology necessary to be approved by the DOIC to produce ACCU’s (carbon credit units), and although soil carbon methodologies now has an active ‘reference group’ to attempt to push it along, the two subgroups (Mixed farming, and Rangelands) do not, or have not formally communicated what each are up to in their work levels. Compounding this the CFI is looking less of a ‘farming’ initiative in terms of reward systems, and as of the time of writing the government has not produced an example of a good news story on a true ‘farming’ credit. It is difficult to sell virtues without success stories and Gant chart the project support from the farming community without it.

A closer look at the cost of participating is also most interesting, and it is easy to see another genuine hurdle is related to the methodologies development. There is considerable variation in calculating the cost of participating, and some use this as an excuse that farmers are simply not ready to seek approval of their methods, some say it is simply too expensive to get approval. Some even say there is a genuine disinterest for government to get on with ‘innovation’ attempts.

In terms of cost we need to consider that published 8 April 2013 by Co2Land.org: ” It costs up to $1M to develop a methodology acceptable under CFI. Once accepted the transaction cost to create the ACCU’s is said to be about $70,000. Although it is not a definite cost, it can be less but a reasonable guide and it requires you to look carefully at the potential yield of each project and whether you can smear the transaction cost across the entire project to determine the minimum size for it to be a worthwhile program”.  Then Country Carbon ( www.CountryCarbon.com.au ) said the numbers posted by CO2land of transaction cost of $70k for ACCUs are ridiculous. They made no attempt to say what is a typical transaction cost other than a comment, and the spokesperson (identified as NC) said “I have no idea where they sourced those”. Curiously NC goes on to say: “The Clean Energy Regulator register shows only a few projects from farmers and only 1 I believe has done a transaction. 
I doubt very much that every methodology needs $1 million for development as well. Too many variables to generalize”.

Co2Land org agrees that too many variables are involved, and then notes two other people advocating for the CFI saying: “None of the methodologies applicable to general farming, that we have examined so far, appear to have net positive financial benefits. Some can lead to substantial unknown liabilities in the future or limit land use in overly prescriptive ways. 

If I am wrong in this please correct me, and show me where it does work and I will be happy to spread the good news”. 

And, “I am a farmer (even if less active than I would like) and all the ones I know are not only not ready to adopt but are only following the program with peripheral interest until such times that they are satisfied something of genuine benefit to their own operation has become apparent. Many I have talked to see it as another under handed greenie grab for the land, some of the prescriptions on approved methodologies certainly seem lifted from this camp. 

Methodology development using all our substantial ‘in house’ skills and resources we estimate to still cost in excess of $100,000 with no guarantee of success “(source identified as PK). Then source LK – not related, said “Many unresolved issues remain, however moving ahead is better than waiting for the ‘perfect’ answer in my view. Just wish for political consistency at this end – the fact that State Coalitions have stripped climate change policies bare is of most concern to me.”

In all this there does seem to be agreement that for farmers, environmental planting does not pay a sufficient return to justify the investment on carbon alone. NC also said “It is also considered that the RMT tool (modeling tool) is deliberately using carbon sequestration estimates well below average because no direct sampling is required for audit”. Possibly this is an oversight, maybe not? In this approach they have taken an ultra conservative approach and the indications are these carbon estimates are so low it is not economical to do it – participate in the initiative that is!  So it remains only one of those methodologies remain with few takers. Even the CSIRO was showing how low these estimates are for the RMT. Reported is the government has taken a decision to use the lowest rates possible for landholders carbon sequestration from tree planting. A good source of this view is https://twitter.com/CountryCarbon/status/332655918254792706/photo/1 

They go on to say: ”In simple language the govt will only recognize extremely low carbon sequestration rates regardless of what happens on the land. It is not even the mid-point average. So that farmers would earn very few carbon offsets. Therefore they say, why bother? 

Most of the extension and outreach to date talks about tree planting or piggeries. (Piggeries are a different question). Most projects approved are all about landfill projects and they are town councils.” They also say: “It actually has less to do with government cut backs or Coalition vs Labor politics and more to do with implementation”. More than one providing input say it may be just a simple matter as readjusting the RMT tool.

CO2Land org intends to continue this thread of knowledge and asks: Unless you be fortunate enough to have a government program that is more generous behind you. 
Should we lobby government harder to be more encouraging for innovation in CFI?

Notwithstanding, CO2Land org wish everyone the best with their endeavours in the initiative. Applauded is the intention is well founded, the legislations well intended, and the potential well received – but something is missing! Maybe it is a case of it is too difficult to include farming in CFI and the outreach context for farmers is that the potential liabilities that could be incurred by landholders using some already approved methodologies are not properly explained and/or are dismissed as of a trivial nature. The great harm in this possibility is that the program reputation will be tainted – irrespective of its intention of fairness. Even recent Government decisions on department restructuring (especially the Department of the long name – too long to repeat) and budget constraints required by departments and the continued efficiency dividends to Treasury are not helpful to the pledge. What is hoped for by farming advocates and practitioners is a more direct show of continuous steps to perfection for the farming community and eliminating any direction that might be seen as a series of steps to dismantle or derail such a worthwhile cause from its name sake – the Carbon Farming Initiative.

Falling Short – F.I.T. in renewable power

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A desire to improve the competitiveness of Renewable Energy in Australia’s power mix is problematic and it is not necessarily technical limitations that hamper the project or is it financial limitations despite bank risk concerns. Especially if the later is supported by the Government bringing forward $160 million in Clean Technology Investment Program (CTIP) funding to 2014-15 to increase manufacturing investment and boost productivity and competitiveness – The budgets key message that CTIP program demand is strong and growing, and there is no change to the funding commitment.  It also is possible the coalition could maintain the $1 billion commitment to the investment programs, albeit it may be called something else for branding purposes.

Co2Land org argues it is not sufficient to be experience in, or have an understanding of the challenges in the design or deployment of renewable energy solutions. That is referring to only the infrastructure, energy output, utility area of responsibility, power capability, transmission and distribution capacity, or even storage technology as the solution set.

The more dangerous issue is the means that an uncooperative energy utility can muster a political wedge and creates sufficient doubt of the effectiveness of the program that will lead to a fall-out with the community. Recently in Australia Co2Land org has been given information that a bitter war is engaged between parties over such a Queensland power line duplication proposal and it all seems so unnecessary. As an observation there is room for both sides to move on this one. However, the agenda may be more complex and looking further afield Canada has some lessons we could learn from over the growth of renewables and why utilities might be so sensitive to the growth of such. It could be our problems in Australia are similar to the following as the Pike Research report that says energy is becoming increasingly democratized and the role of utilities is changing, from producing power and supply markets to purchasing it from distributed sources. We also know in Queensland the State Government has a large ownership stake in generation and supply – albeit they are not alone from the other states and it all gets down to variation of the model as opposed to opposition of the models of operation. Regardless each has ample opportunity to hamper success of ‘buy local’ feed-in into the grid system as the rules stand.

Looking further to the problems of Canada and the utopian belief that all would embrace the new world, it is reported by www.energymanagertoday.com, on 21 May 2013:

“Ontario has fallen short of its goal of creating 50,000 jobs and 5 gigawatts of renewable energy power with its ‘buy local’ feed-in tariff program, despite gathering early momentum by generating 31,000 jobs and turning one in 7 farmers into energy producers, says a report by the Institute of Local Self-Reliance.

Hydro One, the province’s largest utility, has been a major roadblock to progress says ILSR report author John Farrell, since it set a limit of sourcing just 7 percent of its energy from distributed renewable sources, compared with 15 percent for most US utilities. In US states where the cost of power is high, like Hawaii and California, utilities have upped the limits even further, at 25 and 50 percent respectively.

Farrell says Hydro One did not prepare to accommodate the boom in distributed power from the FIT program and missed deadlines to link up to new sources of power. As a result, despite overwhelming demand for FIT and contracts being signed for most of the 5 gigawatts, only 10 percent of the projects are producing electricity now.

Because of the demand for FIT, Ontario will actually be able to shut down all its coal-fired plants next year, and meet most of its 2030 renewable energy goals 12 years early – but its notable success has come at a price, since unprepared utilities were not able to bring the contracted energy on line.

The slow development led to political backlash that nearly toppled the ruling Liberal Party in the 2011 elections. It did lose its majority, which Farrell says jeopardized support for FIT. The Great Recession also stymied progress.

Since then, Ontario has reviewed the FIT program and revised its rules last year, doubling its focus on local ownership and participation. Farrell believes the move, which he says should have been adopted two years ago, will reduce political angst and local opposition and increase return on investments.

Farrell suggests that the Ontario Power Authority needs to streamline its process for developing renewable power with existing contracts and push utilities to get better at determining grid capacity. It should also review whether utility-scale mega projects make sense, given the difficulties in getting it to market. With these changes, “the FIT program may still live up to much of its early promise” he says.”

Sometimes you have ask – why do we ignore the obvious in Power Play? I answer is it is the nature of things to only see our side as a team play, and there is no I in team. ‘I’ referring to the society as a collective, and it has no advantage to be a collective outcome.

 

Movements – a Viable CFI methodology

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Under debate for some time has been whether reforestation, and afforestation should be part of the CFI. It was thought only conservation planting was viable as a measure under Natural Resource Management (NRM) rules. In more recent times part of discussion was a concern that political movements would be disruptive.

Two announcements made by the Australian Government on these matters by newsletter on 12 April 2013 may be helpful for the debate. Namely:

  1. First reforestation and afforestation project approved, and
  2. No changes to methodology development following changes to the Cabinet.

Posted on April 8, 2013 by co2land, Makers – a Viable CFI methodology the point was made it is not a simple process to develop CFI Methodology and program rules are a major factor in participating, and the recent Government announcements will address most of those points (but not the coalitions position).

On point 1: The Clean Energy Regulator under the Carbon Farming Initiative has announced the first project using the Carbon Credits (Carbon Farming Initiative) (Reforestation and Afforestation) Determination 2013. There are now 53 projects approved under the Carbon Farming Initiative. All projects declared eligible under the CFI Act are published on the Register of Offsets Projects.

On point 2: Work on the development and assessment of Carbon Farming Initiative methodologies undertaken by the Department of Climate Change and Energy Efficiency (DCCEE) will continue apace under new Ministerial Responsibilities announced recently by the Prime Minister.

DCCEE’s energy efficiency functions will be have been transferred into the Department of Resources, Energy and Tourism (DRET) while the remaining policy functions currently performed by DCCEE, including the CFI, will be have been transferred to the newly-named Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE).

Former DCCEE staff working on the CFI and other land sector measures will move to DIICCSRTE and continue their work accordingly.

Whether participating in CFI or not is still very much a matter of it depends on the location and the carbon sequestration rates that would be possible for it to be viable.

If we start by avoiding the cost of participation discussion, one non-scientific way to help you decide is to ask: Did the area to be used have really large trees present in the past? If yes it could be very viable. It follows that nature will want to regenerate those areas into large carbon rich forests. In gathering your evidence you could include old local history photos of the areas showing the large density of trees on them. In choosing a more scientific way: Gather the Lot & DP numbers and/or GPS points, and the CFI environmental tools should be useful to tell the landholder the likely sequestration rates. However, as we said in the former Co2Land org post the uncontrollable factor in proving if it is viable is the price of carbon. Notice it was not said the ‘carbon price’ as that is an artificial price set for the transition period.

If we focus on the cost of developing a methodology for inclusion into the CFI program register the major factor is cost in terms of the capability to enter into initiative. You may find innovation is required for a “creative” way to recover the cost of developing a methodology. Or is it? It follows that once published on the climate change website it becomes public information. However, it will still take some effort and there will be a need to lobby Government to allow the methodology to be used by another entity. In equity you should anticipate any agreement might require a royalty payment to the original developer.

If you can overcome the matter of cost, it becomes a question of what CFI environmental tools you refer to for the CFI Mapping and Reforestation Modeling tools. Also the methodology costs will depend on the level of verification and any additional research required, in many cases there are sufficient prior studies (such as survival & growth rates in the targeted region) and accepted calculation methods to do this could be found from a literature search, or you could talk to others trying to develop the same thing. It is understood the web page: http://www.greeningaustralia.org.au/our-projects/land/bio4 will promote further research on this matter.

One suggested project to study as a background search is the NSW Blacktown Council and their Regenesis Project. That project has lessons that can be of benefit to be aware of in your deliberations. One example lesson is they had a significant grant to develop their concepts and actually generated the first carbon credits only to have a later policy decision rule projects within urban boundaries to be ineligible. Notwithstanding, the core of their work is valid. You can view the Regenesis projects on the website – www.australiancarbontraders.com and then click on the Regenesis link on the front page.

So frustration will continue and innovation continues to be encouraged – for those eligible – and that suggests you need friends to be recognized as able to be innovative. At cross purposes you might argue!  An anonymous friend, name provided but withheld, said “in an entirely different forum some years ago we flagged this as a problem for the then announced Innovation Strategy. The senior public servant delivering the local launch responded: We can’t have people solving problems in unique ways that we can’t predict, you wouldn’t know where would it all end up!

It would seem the core problem with the current grant model is that it is primarily a funding model for the usual suspects, as practiced the truly (open) competitive component is only a small % of the funding available.

We need a better approach that covers needs of Universities and commonwealth and state research agencies separately.”

Then we hear funding has no longer been provided for strategic innovation!