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No one said that the path to more sustainable energy sources was going to be easy, but it doesn’t have to be this difficult.  Recent articles highlight the challenges we face in meeting our ever-growing energy demands.  Earlier this month, Christopher Martin and Jeff Green wrote for Bloomberg about how renewable-energy companies are struggling to lure top executives as the industry sees declining profits and stock prices.  Additionally, Steven Mufson writes in the Washington Post that “one in every 10 barrels of oil produced worldwide goes into gasoline tanks of American passenger vehicles—not counting fuel-guzzling U.S. trucks.”

As we’ve highlighted on our blog before, the US is taking steps in the right direction to become energy independent.  Mufson writes that “There are, to be sure, many reasons for energy experts to feel more sanguine about the U.S. energy future…Natural gas supplies, thanks to hydraulic fracturing, seem limitless and natural gas prices have plunged to 10-year lows.” But, on the flip side, these low natural gas prices are a major contributor to the problem facing executives in the alternative energy space.

As Martin and Green describe, “The recruiting environment slowed in late 2009 as gas prices fell, curbing demand for expensive renewable power.” Low prices and oversupply aren’t unique to the natural gas industry: “Prices for solar panels fell 51 percent in 2011, and global purchases of wind turbines will fall 14 percent this year from 2010 and won’t surpass 2011 levels for two years, according to Bloomberg New Energy Finance.” Couple this with increased competition from Chinese companies as well as unease over whether or not the Federal government can or will continue to support the sustainable energy industry, it may come as no surprise to see talented executives heading back to traditional companies.

At the end of the day, however, Mufson writes that “for all the euphoria about shale gas, the United States is still a net importer of natural gas…That will change, perhaps by 2016 or so, according to the government and industry estimates. But the fact that it hasn’t yet is testimony to the fact that sometimes impressions run a bit ahead of reality- to say nothing of environmental concerns about hydraulic fracturing techniques used to tap those gas resources.” The problems that result when expectations get ahead of reality also seem to be playing a role in the challenge companies are facing in recruiting top talent.

What these articles really highlight is that despite the excitement in 2009 and 2010 about renewable energy, the sector still fully has the risk associated with a new market: market forces are frequently unkind to new entrants, and success is likely to require support from the public sector for sometime.

But, as we all know, in these days of budget austerity, federal funding is hard to come by, and financing clean energy projects and businesses are often considered the low-hanging fruit that can be sacrificed.

With uncertainty over the future of fracking, and therefore the future of domestic natural gas, we cannot afford to stop making important investments, particularly government investments, in sustainable energy companies until the market matures. In fact, I would argue that policymakers have to recognize that assisting the industry in the near term is critically important to meeting our long-term national security goals, consumer energy needs and environmental responsibility. With government backing through both policy initiatives and other incentives, emerging players can be afforded more stability and security—two components essential in bringing back top talent to the industry.  The government has precedent for supporting emerging but not yet self-sufficient markets. Look at railroads in their infancy; or, more recently, the clear support for competitors in the telecommunications sector in the last decade of the 20^th century.   Leadership is a hallmark for emerging industries, and the clean tech sector still needs some from both policymakers and top business executives as the technology and the market matures.

With rising costs of electricity, consumers are constantly looking for ways to reduce their home energy use. Among other things, appliances are becoming more efficient and people are paying more attention to regulating their thermostats. But what if part of the solution actually lies in the electric socket itself? That’s exactly what Sony Corporation is proposing in Japan. As reported yesterday in the WSJ, Sony thinks it’s “about time those old-school sockets started going through some serious upgrades, the kind of changes that have made consumer electronics smarter and energy efficient.”

In November, I wrote about the revolutionizing of the common thermostat and Nest Labs’ innovative product, commonly referred to as the “Smart Thermostat.” The Nest helps homeowners reduce energy use by tracking home occupants’ behavior, noting daily patterns, and adjusting the settings accordingly. Sony’s product has a similar strategy and goal in mind. Noting that sockets are the one part of Japanese homes that “hasn’t evolved at all for half a century,” the WSJ describes how Sony’s product can “recognize a gadget or appliance that is being plugged in, and automatically monitor energy consumption and possibly control power supply to optimize efficiency.” As reported in PCWorld.com, “Sony hopes to employ technology from its touch-card platform, Felica, which uses RFID (radio-frequency identification) technology and is widely used in Japanese trains, mobile phones and credit cards for electronic money. The new system puts the equivalent of Felica ‘readers’ in outlets and equips plugs with the ‘card’ technology, so that the equivalent of a ‘touch’ occurs when a power cord is plugged in and the two sides meet.”

As with any new technology, there are many hurdles on the path to mass marketing and consumption of the product. As the WSJ notes, “for the new electric socket system to maximize its potential, either electronic devices or their plugs would have to carry Sony’s smart chips, while housing and construction companies would have to agree to use the new sockets instead of conventional ones in new homes.” While Sony is currently focusing on Japan for deployment and adoption of its new technology, I think there is a place in the US market for such a product.  As I noted in November, the residential sector accounted for 23% of America’s energy consumption in 2010. If the price is right on this product, and Sony is able to get the partnerships it needs to make the product viable, I think this could be a critical piece of the puzzle in reducing buildings’ energy consumption. I’m excited to watch Sony’s next steps and will be interested to see if the product starts to gain some US recognition. 

This morning, President Obama traveled to MasterLock Company in Milwaukee, WI to discuss his Blueprint for an America Built to Last and urge companies to bring jobs back to America. In the statement released before his remarks, the White House highlighted Honda’s investment in American jobs:

“Earlier this month, Japanese automaker Honda Motor Company announced it will invest $98 million at its largest auto engine plant, which produce components for its new transmission technology. The company’s engine plant in Anna, Ohio will make high-tech pulley components for Honda’s new continuously variable transmission, which is aimed at improving fuel efficiency. This announcement builds on other recent large-scale investments by the company — since the beginning of 2011, Honda has committed to nearly $800 million in new U.S. investments and more than 1,200 new jobs across manufacturing operations in states such as Ohio, Alabama, and Indiana.”

For the full statement and list of companies highlighted, click here to read the White House release. Read the press coverage from The Detroit News here.

Transportation: The Senate is poised to begin debate on a two-year, $109 billion surface transportation authorization (S 1813) after the measure won a procedural test vote. Yesterday, Senators voted 85-11 to invoke cloture on the question of whether to take up the bill, easily surpassing the 60 votes needed to prevail. The measure includes the $16.5 billion package of spending offsets approved by the Finance Committee on Tuesday. As The Hill reported, “The White House is backing the Senate’s $109 billion surface transportation bill, eschewing a $260 billion measure from the Republican-led House…” Continue Reading.

Energy and Power Subcommittee held a Hearing on Utility MACT on Wednesday. Assistant Administrator Gina McCarthy testified, and the questioning was largely divided along partisan lines with the Republicans questioning EPA’s analysis of the rule’s economic and health impacts and the Democrats lauding the projected health benefits

On January 26th, The Blue Ribbon Commission on America’s Nuclear Future released its final report to the U.S. Energy Secretary. Among other things, the Commission recommended that the job of carrying out the nation’s spent fuel and nuclear waste repository program be transferred from DOE to a new single-purpose, congressionally authorized entity Read the Press Release.

Congressional Outlook:

Budget: Reid announced he will not move a budget on the Floor so the only Senate Budget action will be a Committee mark-up.

Appropriations: The Appropriations process is expected to pick up immediately upon the release of the President’s budget with budget hearings beginning as early as that week. 

House: In Session 2/14-2/17

2/15: Appropriation, Homeland Security Subcommittee Hearing- FY13 Approps

2/15: Budget Full Committee Hearing- FY 2013 Budget

2/16: Appropriations, Subcommittee on Interior Hearing-FY 13 Approps

Senate: In Session 2/13-2/17

2/14: Budget Committee Hearing- Fiscal 2013 Budget

2/16: ENR Hearing- Fiscal 2013 Budget

Anticipated Administrative Action:

2/13: President’s FY 2013 Budget Release

Other Important Dates:

2/29: Payroll Taxcut Package Expires

Lately, we’ve been talking a lot about the prospects of American energy independence and wanted to share this great, in-depth article from Bloomberg. You can also check out our take on the issue in our January 24th Blog Post: “United States on a Path Towards Energy Independence?”

Americans Gaining Energy Independence With U.S. as Top Producer

By Rich Miller, Asjylyn Loder and Jim Polson – Feb 6, 2012

 The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.

The result: The U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011, according to data compiled by Bloomberg from the U.S. Department of Energy. That would be the highest level since 1992.

Continue Reading…

House Floor Action: On Wednesday, the House voted in favor of a bill that would freeze federal employee and congressional pay for an additional year. The Bill, HR 3835, was introduced by Rep. Sean Duffy (R-WI) and passed by a vote of 309-117. The vote was largely symbolic however as the Senate is expected to reject the measure. 

Transportation: House Transportation and Infrastructure Committee advanced its Surface Transportation Bill after an all-day markup Thursday that lasted into the early hours of Friday morning. The measure is expected to go to the House floor the week of February 13^th.

Budget: A group of Republican Senators, led by Senators Jon Kyl and John McCain, introduced legislation that would wipe out automatic defense cuts by reducing the federal workforce by 5 percent and extend the freeze on federal pay through June 2014. Read the full article from The Hill.

Regulatory: EPA announced that its Greenhouse Gas Rule would now be released in February (as opposed to the original schedule of January).

Congressional Outlook:

Budget/Appropriations: The House Appropriations Committees has begun to schedule a series of Budget hearings to begin immediately after the release of the President’s Budget on February 13^th. Click Here for the Schedule.

House: In Session 2/6-2/9

            2/8: Energy and Commerce, Communications and Technology Subcommittee Hearing- “Cybersecurity: Threats to Communications Networks and Private-Sector Responses”

           2/8: Energy and Commerce, Energy and Power Subcommittee Hearing- “The   American Energy Initiative: What EPA’s Utility MACT Will Cost U.S. Consumers”

Senate: In Session 2/6-2/10

            2/7: Budget Full Committee Hearing- “The Outlook for U.S. Monetary and Fiscal Policy”

            2/9: Banking, Housing and Urban Affairs Committee Hearing- “The State of the Housing Market”

State of the Union: On January 24^th, President Obama laid out a blueprint for our economy that emphasized American manufacturing, American energy, and skills for American workers. Among his energy provisions, he included the following goals:

• Promote safe, responsible development of their near 100-year supply of natural gas, supporting more than 600,000 jobs while ensuring public health and safety.

• Incentivize manufacturers to make energy upgrades, saving $100 billion over the next decade.

• Create clean energy jobs in the United States.

Resolution of Disapproval of Debt Limit Increase: On Thursday, the Senate voted against the measure (H.J. Res 98) by a vote of 44-52. The House voted in favor of the Resolution by a vote of 239-176 on January 18^th.

Congressional Outlook:

Budget: The White House announced that the President’s Budget Release would be delayed until February 13^th. Senator Conrad has scheduled a Full Budget Committee hearing entitled “Budget and Economic Outlook” on February 2^nd.

Appropriations: House Appropriations Committees are to begin holding hearings the week of February 13^th, immediately following the release of the President’s Budget.

House: In Session 1/31-2/3

            2/3: Science and Tech, Energy and Environment Subcommittee Hearing- “EPA Science Assessment”

 Senate: In Session 1/30-2/3:

            1/31: ENR Full Committee Hearing- “US and Global Energy Outlook”

            1/31: Finance Full Committee Hearing- “Extenders and Tax Overhaul”

            2/1: Budget Full Committee Hearing- “Budget and Economic Outlook”

Anticipated Administrative Action: EPA expected to release GHG Regulations in January.

As Prepared for Delivery –

Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq.  Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought – and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.  For the first time in nine years, there are no Americans fighting in Iraq.  For the first time in two decades, Osama bin Laden is not a threat to this country.  Most of al Qaeda’s top lieutenants have been defeated.  The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

These achievements are a testament to the courage, selflessness, and teamwork of America’s Armed Forces.  At a time when too many of our institutions have let us down, they exceed all expectations.  They’re not consumed with personal ambition.  They don’t obsess over their differences.  They focus on the mission at hand.  They work together.

Imagine what we could accomplish if we followed their example.  Think about the America within our reach:  A country that leads the world in educating its people.  An America that attracts a new generation of high-tech manufacturing and high-paying jobs.  A future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world.  An economy built to last, where hard work pays off, and responsibility is rewarded.

Read the Full Text Here

Is North Dakota the key to America’s energy independence? It just might be. On Monday, as part of its Annual Energy Outlook 2012 (AEO2012) Early Release, the Energy Information Administrationprojected that US oil production will increase to 6.7 million barrels per day in 2020, an increase of 20% over the next decade and 11% higher than EIA’s earlier prediction  As The Wall Street Journal reported, the forecast includes new production data from “developing oil fields, including the Bakken shale area in North Dakota, which could hold as much as 4.3 billion barrels of recoverable oil.”

Earlier this month Bloomberg reported that North Dakota oil production surged 42% to 510,000 barrels a day in November from a year earlier as energy explorers accelerated drilling the Bakken Shale formation of the Williston Basin which underlies much of North Dakota, eastern Montana, and parts of southern Canada. Although oil was first discovered there over 60 years ago, efforts to produce it have noticeably increased in the past few years, due in large part to technological advancements in production technology.

So what does this mean in terms of US Energy consumption? MSNBC reported in December that, “it’s highly likely that this year will be the first time in more than six decades that the United States will be a net exporter of petroleum products.” EIAprovided some more statistics in its executive summary of AEO2012 Early Release: “Net petroleum imports as a share of total U.S. liquid fuels consumed drop from 49 percent in 2010 to 36 percent in 2035 in AEO2012.” (See EIA Chart).

Edward Morse, a former US energy official who now directs global commodities research at Citigroup says of the shift: “It’s dramatic. It’s transformative,” and Daniel Yergin stated, “What’s occurring is a rebalancing of the world oil supply.”

In addition to the implications for the oil market, the boom is having effects on the life and state economy in North Dakota. We like the following articles that further describe the change of pace to the small towns. This Forbes article provides more insight into the “Bakken Boom,” while NPR describes some of the downsides.