Tag Archives: Solar Power

Moore's Law Applied to Solar Power

Gordon MooreDoes “Moore’s Law” hold for Solar Power?

In New Jersey, between 2001 and 2010, we went from a total of six systems with a combined capacity of 9.0 KW to about 7000 systems with a combined capacity of 211,000 KW or 211 MW. This is illustrated below.

Solar Capacity, NJ, 2001 to 2010. Increase from 9 KW in 6 systems to 211 MW, or 211,000 KW in 7000 systems

Increase from 9 KW in 6 systems to 211,000 KW in 7,000 systems. Copyright, 2010, L. J. Furman. All Rights Reseved.

This is the “hockey stick” curve of exponential growth typical of positive feedback mechanisms. I expect this kind of growth to continue for the next few years as prices drop, until solar meets 25% to 35% of New Jersey’s needs. This would be another 2500 to 3500 systems and about 200 additional MW in 2011 and 4000 to 5000 systems of 300 to 500 MW in 2012 , and brings me back to “Does ‘Moore’s Law,’ or a corollary, apply to PV Solar?” or “Is this a bubble?” Continue reading →

In Jersey Three Strikes Equals a Home Run

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Strike 1 – Solar Power

When the NJ Clean Energy Program started in 2001, there were six (6) solar energy systems and a nameplate capacity of nine (9) kilowatts. By December 31, 2010 there were over 7000 systems with a combined capacity close to 300 megawatts, MW, of solar electric generating capacity.  In the first six months of 2011, another 100 MW was added, bringing the total to 400 MW by June 30, 2011. By these metrics, the NJ Clean Energy Program has been successful.

Continue reading →

Virginia Nuclear Reactors Shut Down Due To Earthquake

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North Anna nuclear plantAndrew Restuccia and Ben German reported (here) on E2 Wire, “the Hill’s Energy & Environment Blog” that:

Two nuclear reactors at the North Anna Power Station in Louisa County, Va., automatically shut down Tuesday shortly after a magnitude-5.9 earthquake shook the state and surrounding area.

The plant lost offsite power and is now running its cooling systems on diesel generators….

A dozen nuclear plants in the eastern part of the United States have declared “unusual events” because of the earthquake.

It’s good to know that the diesel powered emergency cooling systems are operational, and the operators (presumably) have sufficient fuel to keep the cooling systems running during the emergency.

But …

  1. How long will the plants be offline?
  2. Don’t we need the power those plants would generate during and in the immediate aftermath of an earthquake?

Offshore Wind Farm, DenmarkThis illustrates a major problem with nuclear power:

Rather than enhance the security of the grid and infrastructure nuclear power must be shut down during certain classes of emergency.

A 1.0 gigawatt nuclear power plant is made up of one or two reactors. Both must be shut down during an earthquake, however, as we saw from the melt-downs in Japan, the emergency cooling system must stay up.  A 1.0 gigawatt wind farm is made up of 286 separate and discrete turbines of 3.5 mw each.  A 1.0 gigawatt solar farm is made up of 5 million 200 watt modules and thousands of inverters. These are made up of hundreds or thousands of identical modules.  Like nuclear power plants, they can be engineered to withstand earthquakes. But  unlike nuclear power plants THEY DON’T NEED EMERGENCY POWER DURING THE EMERGENCY! And even if a few solar modules or wind turbines fail due to an earthquake and aftershocks, most will come on after the storm!  And there is no fossil fuel based emergency cooling system needed for solar power or wind power systems!

Why the TVA Wants Nuclear Power

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Fort Calhoun plant in the Missouri RiverIn “Why We Still Need Nuclear,” the “op-ed” piece written in the New York Times, July 30, 2011, Tom Kilgore, the President and CEO of the Tennessee Valley Authority, seems to have made up his mind to attempt to complete the Bellefonte 1 nuclear power plant, in Hollywood, Alabama. Mr. Kilgore is in good company: the President of Iran, Mahmoud Achmadinejad, also wants to build nuclear power plants.

The TVA began work on the Bellefonte nuclear plants in 1974. Construction was suspended in 1988, after the TVA spent about $4.1 Billion on the plant. The TVA wants to spend another $5 Billion over the next six to eight years to complete the plant. It would therefore cost a total of $9.1 Billion to construct a 1.26 gigawatt plant. That’s $7.22 Billion per gigawatt, plus interest, over a period that spans 34 years, with construction in three phases: 14 years of work from ’74 to ’88, 22 years of non-work, from ’88 to 2012, and another six to eight years of work. (Times Free Press, TVA News, TVA Environment).

This suggests the real reason why the TVA wants to complete the plant. Currently Bellefonte 1 a $4.1 billion liability on the TVA’s books. If the TVA adds another $5 Billion, this $4.1 hot white elephant will be magically transformed into a cool (but heat producing) 9.1 billion asset. Continue reading →

NegaWatts Save MegaBucks

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The Newark Star Ledger reported (here and here) that Public Service Electric and Gas, PSE&G, a subsidiary of Public Service Enterprise Group, PSEG, is installing a  2,700-ton chiller the University of Medicine and Dentristy of New Jersey, UMDNJ. This an $11.4 million investment in negawatts. The Star Ledger reported that UMDNJ will save $1.3 million per year on energy costs.What’s the payback? An $11.4 million investment will save $1.3 million per year. That means the system will pay for itself within 9 years, assuming the price of energy remains constant.  I think it’s a much more reasonable to assume that the price of energy will go up, so the payback will be higher and the system will pay for itself sooner.

The system will work long after it is paid for. It will save $13 Million over the next 10 years and $26 Million over the next 20 years – assuming electricity costs are constant.  Assuming electricity costs increase an average of 5% per year, this will save $16.35 Million over the next 10 years, and $42.99 over the next 20 years.

  • Projected Savings of $11.4 Million investment.
  • After 1 Year: $1.3 Million, a return on investment of 11.4% in one year.
  • After 5 Years: Save $7.18 Million, for a total ROI of 63%, assuming a 5% annual increases in cost of energy.
  • After 10 Years:  Save $16.35 M; total ROI of 143.4%).
  • After 15 Years: Save $28.05 M; total ROI of (246%)
  • After 20 Years: Save $42.99 M; total ROI of 377%).

We have Governor Corzine to thank. as well as Governors Whitman, McGreevey, Codey, and Christie.

Continue reading →

Nuclear Power and Cocaine

Asking a nuclear engineering professor “Is radiation bad?” is like asking Charlie Sheen “Is cocaine bad?”

On “Morning Edition” today, 3/30/11, Renee Montagne did just that when she interviewed Professor Peter Caracappa, a member of the faculty of the nuclear engineering department of RPI (Interview / nuclear engineering at RPI). As is typically the case, what was left out of the conversation could have been more interesting than what was in the conversation. My questions for Professor Caracappa are below: Continue reading →

Nuclear Power: What Future?

Smoke from Fukushima Dai-ichi

Smoke from nuclear plant. (C) Reuters

The men and women who design, build, and work at nuclear power plants are bright, dedicated people who work hard so that when we flip a switch the power flows, so we can use our computers, watch our tvs, refrigerate our food, microwave our dinners and our popcorn, heat, cool, and vacuum our homes, and jam on our electric pianos and electric guitars when we want to. The drive, dedication and service of the engineers at Fukushima is heroic.

Under normal conditions, nuclear power emits less pollutants than coal, and the waste from nuclear power is regulated. The wastes from coal are not.

Yet, radioactive materials are an intrinsic property of nuclear power; consequently meltdown and disaster are inherent dangers. The disasters at Fukushima Dai-ichi, Fukushima Diaini, and Onagawa, while not predictable, were not unexpected. We’ve seen Chernobyl in ’86, Three Mile Island in ’79. We’ve had fires at Brown’s Ferry. We have had, and continue to have leaks of radioactive material at Oyster Creek, Indian Point, Vermont Yankee, the Hanford Nuclear Reservation and every other nuclear facility in the United States, Japan, France, and I am sure, the rest of the world.

And we learned what? To ‘harden’ the plants? To spare no expense in a fanatical devotion to safety and maintenance?

No. To cut corners and to defer maintenance. To extend to 60 years the life of plants designed to last 40 years.

Continue reading →

After Fukushima, Wall Street Bearish on Nuclear Power

Fukushima 1 - before the catastrophe

before the catastrophe

(Second in a series on the ecological economics, financial ramifications, logistics, and systems dynamics of nuclear power in the light of the ongoing catastrophe at Fukushima.)

Cary Krosinsky, VP at Trucost, is once again teaching a course on Sustainable Investing at the Center for Environmental Research and Conservation, CERC, at Columbia University. At the March 10 seminar a student spoke about her recent 400% “home run” in a uranium mining operation.  She bought in because the earnings were high, debt was low, yet the price was low. It was a classic “value” play of a well-run company undervalued by the market.

But would a “Sustainable Investor” buy a uranium stock? My goal, as a “Sustainable Investor” is “To outperform the S&P 500 index by investing in the top companies, from the perspective of environmental impact, sustainability, management and governance, in the sectors I hope will thrive over the next 25 to 50 years.”

After Tsunami, STR/AFP/Getty Images

Cary didn’t exactly write the book on sustainable investing. He edited it. In Sustainable Investing, the Art of Long Term Performance, copyright, (C) Cary Krosinsky and Nick Robins, 2008 (Earth Scan) he defines “Sustainable Investing” as “an approach to investing driven by the long-term economic, environmental, and social risks and opportunities facing the global economy.”

Jane and Michael Hoffman, in Green, Your Place in the New Energy Revolution,  wrote that  the nuclear industry was killed not by the protesters at Seabrook, and the environmentalists at Environmental Defense (EDF), Union of Concerned Scientists (UCS), or local groups like NY Public Interest Research Group (NYPIRG) who hired lawyers and scientists to force the utilities to build plants more safely.  But it was bankers on Wall Street who, in the aftermath of Three Mile Island and Chernobyl, realized that their Million-dollar investments could turn into Billion-Dollar liabilities in seconds, and stopped investing in new nuclear power plants. Even though their liability was limited by the Price Anderson Act in the US and by corresponding legislation in other governments, they might never see a return on their investment. Despite promises by Presidents George W. Bush and Barack Obama of loan guarantees – government subsidies – to build plants, Wall Street is reacting to Fukushima with a mix of caution and skepticism. According to the Wall Street Journal, “The Street” is now, once again, bearish on nuclear power but it is looking again at solar and wind.  (click here).

“The nuclear industry is on edge after last week’s quake caused serious damage to several reactors. Bank of America Merrill Lynch cut its stock-investment rating of Entergy ($69.76, -$3.93, -5.33%) and Scana Corp. (SCG, $38.54, -$1.51, -3.77%) to underperform from neutral, citing risks including delays and higher approval costs for relicencing of existing plants. Dahlman Rose says as many as 10 reactors could be affected, which consume the equivalent of 340,000 pounds of uranium each month. The firm cut its price targets for Cameco Corp. (CCJ, $30.90, -$6.48, -17.34%) and Uranerz Energy Corp. (URZ, $3.08, -$0.87, -22.03%).

“Renewable-energy stocks rose in the U.S. in the wake of the nuclear-plant concerns in Japan putting a fresh pall over that industry and some investors believing non-nuclear energy sources away from fossil fuels will get a boost. Solar companies are leading the way, including First Solar Inc.

“CreditSights and other analysts form a chorus that the “nuclear renaissance” of new plants in emerging markets and developed nations will slow, while the potential for new design and safety measures could challenge sector economics .

“Japan’s nuclear crisis is hammering shares in the U.S. nuclear sector, but investors should keep an eye on engineering-and-construction stocks that work in the sector as well, JP Morgan says, citing Shaw Group Inc. Babcock & Wilcox Co. , URS Corp.  and EnergySolutions Inc.  “We believe the safety features of newer generation reactors will be considerably more advanced” than the older Fukushima units causing havoc over the weekend, the firm writes, but still sees likelihood that renewed nuclear worries are a headwind for these stocks.”

Here are the data:

Company Symbol Quote Change Percent
Entergy ETR $69.76 ($3.93) -5.33%
Uranium Energy UEC $4.03 ($0.82) -16.91%
Shaw SHAW $30.92 ($7.49) -19.50%
Babcox BWC $31.58 ($2.79) -8.12%
URS URS $43.88 ($1.58) -3.48%
First Solar FSLR $145.13 $5.39 3.86%
(data from March 14, 2011.)

My analysis –

Peter Crowell, professor of Finance and Logistics in the Marlboro College MBA in Managing for Sustainability asked “What happens if you – we – take away all the subsidies?”

If we take away the subsidies from nuclear power, the industry would collapse. The same holds for the fossil fuel industry – if you factor in the hidden “externalized” costs of environmental cleanup.  It makes no sense to build nuclear plants, or coal plants, drill for oil or use fracking for natural gas. These are more expensive to build, run, and maintain than solar and wind. Rather than keeping nuclear and fossil fuels on life support while fuel gets harder and more expensive to extract we need to put our best engineering minds to work on clean, sustainable power.

And I expect the vultures on Wall Street to buy Japanese stocks as soon as they sense the market has hit bottom, but only if they see investment in infrastructure.

Index to the series

  1. Earthquake, Tsunami and Energy Policy, March 11-13, 2011. Here.
  2. After Fukushima, Wall Street Bearish on Nuclear Power. March 14, 2011. Here.
  3. Fukushima: Worse than Chernobyl? Here.

Earthquake, Tsunami, and Energy Policy

Tokyo Electric Power Co.

First in a series on the systems dynamics of nuclear power in the light of the ongoing catastrophe at Fukushima.

Radioactive waste and melt downs are intrinsic properties of nuclear power. Before / After Gallery.

Current Assessment: 3/27/11 3:00 PM. 10,668 dead, 16,574 missing. Radiation levels spike, drop. (Gather). Silver lining in the cloud – radioactive substances will wind up in the Great Pacific Garbage Patch and trigger mutations in bacteria and plankton, creating “Plasticovores” – critters that chow down on plastic.

Eighth Assessment: 3/24/11 11:30 PM. 10,035 dead. 17,443 missing. Market Watch. Earlier in the day AP, Courtesy of the Star, Bloomberg. reported slightly lower numbers.  We have seen a natural disaster of earthquake, tsunami, and aftershocks. While the the damage is tremendous, it could have been much worse. There are 10,035 tragedies, and 17,443 people are missing. It seems likely that many of them will never be found.  Yet The nuclear plants have not yet undergone a full meltdown. This speaks volumes about American and Japanese engineering. The nuclear plants were built pretty well. Yet it also suggests that it is not prudent to build nuclear power plants in earthquake zones. Radioactive waste and meltdown are not intrinsic properties of solar, wind, geothermal, and conservation.

Continue reading →

Wind Power and Noise

How Loud Is A Wind Turbine? Our friends at Treehugger re-published this graphic from GE, which builds wind turbines.

Graphic showing wind turbine noise

If a wind turbine spins in a forest do you hear it?

If you’re standing next to a utility scale wind turbine, then you’ll hear it. At 300 meters, which is as close to residences as we can build them, they are about as loud as a refrigerator. People report that a set of wind turbines – they tend to be built in sets – produce noise and subsonic vibrations, which can be irritating. But what should we do? PV solar modules are silent. However, they don’t produce power at night.  Coal produces tons of toxic waste, from arsenic to zinc, including cadmium, mercury, lead, uranium, thorium – actually producing more radioactive waste than nuclear power.  And coal produces carbon dioxide. Mining coal and uranium is dirty. We are converting mountains of natural beauty into mountains of toxic waste. (see Coal Tattoo, or I Love Mountains)

So how loud is a wind turbine? And if wind power is too loud, how should we turn on the lights?

The Deepwater Horizon After the Macondo Well Explosion

An Iceberg

First conclusion of a series that began after Earth Day and includes Fossil Fuels and a Walk on the Moon, Drill Baby Drill or Drill Baby Oops, Magnitude, Part 1, One Month After, The Chernobyl of Fossil Fuel?, and Magnitude, Part 2. )

As I wrote on Earth Day, “In 100 years our descendants will not be burning coal, oil, natural gas or using nuclear fission.  They might be using terrestrial nuclear fusion.  They will be using solar, wind, geothermal, marine current hydro, tidal energy systems – clean, renewable, sustainable energy systems. No fuel: No Waste. No mines, mills, wells, spills. No arsenic, lead, mercury, selenium, thorium – no carbon or fly ash to be contained, sequestered, or to leak.

“We have started.  California and New Jersey lead the U. S. Germany and Spain lead Europe. Boeing and Richard Branson’s Virgin Atlantic want to build aircraft that run on biodiesel.  We need to move forward in a big way – to 100% clean energy in 10 years, to retrain coal miners and oil rig operators to build and run solar arrays and wind turbines, and dig deep geothermal systems.”

Otherwise the Deepwater Horizon Explosion at the Macondo oil field, the oil spills in Ecuador and Nigeria, the coal ash floods like the TVA Kingston Steam Plant, coal mine disasters like at Upper Big Branch, spills like the Exxon Valdez, and events like Three Mile Island and Chernobyl will be ‘”Business as Usual.”

A friend of mine who works for BP, and who would like to work for BP Solar, tells me that most BP staff don’t go to work thinking “How can I destroy the earth today.“ They are, she says “focused on obtaining and selling oil.”  Few consider themselves environmentalists. Many see this as business as usual. “Oil spills happen,” they say. They are “focused on getting petrochemicals to market.”

The Macondo oil field that was tapped by the Deepwater Horizon could have contained 1 Billion Barrels of crude. It could have been one of the largest oil discoveries in the world .” (Click here for CBS and here for Times of London). The well could gush oil for YEARS and could have met US needs in 2007 – 21 Million Barrels per Day – for 47 days (here).

This volume of crude oil – 1 Billion Barrels – could explain the explosion. The equipment was built to operate at 20,000 PSI and withstand 60,000 PSI. It the pressures exceeded the limits, then the equipment could have failed. Simple. And Catastrophic. When you consider the pressures under 5000 feet of ocean, and the pressure of 1 Billion Barrels of oil, when you have engineers scratching their head saying “I don’t know, I never saw anything like this. What do You think we should do?”  One the thing to do is run like hell.

An Orca

An Orca

As was noted earlier in the series, like the iceberg pictured above and the Orca pictured at left, this is a singularity.  But it has precedents.

  • TVA Kingston: 1.2 Billion Gallons of toxic coal ash sludge, upstream of Kingston, Tennessee, 12/22/08.
  • Chevron Texaco: (alleged) 18 Billion Gallons (428.6 million barrels) of Oil Process Waste, Rainforests of Ecuador, 1964 to 1990.
  • Oil Fires of Kuwait: 6 Million Barrels per Day, up to 6 Months, 1991.
  • Exxon Valdez: 250,000 Barrels, Prince William Sound, 1989.
  • The Niger Delta, in Nigeria, 250,000 Barrels per year for the last 50 years (click here), “Big oil spills are no longer news in this vast, tropical land….has endured the equivalent of the Exxon Valdez spill every year for 50 years by some estimates…. Perhaps no place on earth has been as battered by oil, “
Flares in the Jungle

Flares in the Jungle

The TVA coal ash flood (here, here, here), the Upper Big Branch Mine accident (here, here), and the Deepwater Horizon at Macondo may be the “Trifecta” of American Fossil Fuel Disasters.  But, like the problems in Ecuador (here) and Nigeria (here), these are “Systems Problems” – built into the system. The only way to eliminate them is to change the system.

This is what precisely what some people are trying to do. Students and faculty in the Marlboro MBA in Managing for Sustainability at the Marlboro College Graduate Center in Brattleboro, Vermont. They think about “Changing the Climate of Business.” And they may be are on to something, as are like minded people at the Presidio, the Fowler Center for Sustainable Value, at Case Western, and Columbia University’s Earth Institute.

Here’s an idea that will enable BP to make things right, change their image, and even make money. Suppose BP Solar built new factories in Florida and Louisiana, and hire former petrochemical and seafood workers – and churned out 25,000 to 50,000 PhotoVoltaic solar modules and 1,250 to 2,500 inverters per day. This would be 5 to 10 megawatts per day, 160 to 300 mw per month, 600 mw to 1.2 gigawatts per year.

According to my back of the envelope calculations, we need about 50 gw of solar in this country, along with 200 gw of wind, and 50 to 100 gw of other CRS (Clean, Renewable, Sustainable) generating capacity, so this is a drop in the bucket. But this is real change. It’s defining moment, substantive, shake the cobwebs out of the attic, hurricane force, Dorothy we’re not in Kansas anymore, paradigm shifting change.

BP Solar, or Massey Energy, or Akeena, Evergreen, First Solar, Sunpower, could do the same thing in West Virginia – build factories to manufacture PV Solar Modules and Solar Hot Water Panels, and hire local people to work in the factories.

It is change we can wrap our arms around, change we can celebrate. As President Obama might say, “change we can believe in. ”

—

This was planned as the Final Post in this series on the Deepwater Horizon / Macondo oil well disaster which began after Earth Day. Other posts include:

  1. Fossil Fuels and a Walk on the Moon,
  2. Drill Baby Drill or Drill Baby Oops,
  3. The Magnitude of the Spill,
  4. One Month After,
  5. The Chernobyl of Fossil Fuels?, and
  6. Magnitude, Part 2.

However, I will continue to offer my thoughts and analysis once or twice per month as the oil continues to gush forth into the Gulf of Mexico.

Deepwater Horizon: 40,000 Barrels Per Day or 70,000?

Deepwater Horizon oil spill in the Gulf of Mexico Sunday, June 13, 2010. Oil continues to flow from the wellhead some 5,000 feet below the surface. (AP Photo/Dave Martin)

The Deepwater Horizon spill. Sunday, June 13, 2010, AP Photo/Dave Martin

Part 6 in a Series that began after Earth Day (1 Fossil Fuels and a Walk on the Moon, 2 Drill Baby Drill or Drill Baby Oops, 3 The Magnitude, 4 One Month After, 5 Like Chernobyl?)

Last month I wrote on Popoular Logistics “BP and the government say … 5,000 barrels per day is reaching the surface and most of the oil – 80%  to 90% – is below the surface. So I think it’s on the order of 25,000 to 50,000 barrels per day.” (click here)

This was a “back of the envelope” reflection of NPR’s analysis, reported May 14 (click here) that the spill was 70,000 barrels per day, with a margin of error of 14,000 barrels – so maybe as low as 56,000 Barrels per Day and maybe as much as 84,000 Barrels per Day.

In their article “Deepwater Horizon round up: it’s worse than you think (again) – June 11, 2010,” Nature.com noted “At the end of May the official estimate was raised again to between 12,000 and 19,000 barrels day. Now the Flow Rate Technical Group has produced a bevy of new estimates ranging from 25,000 to 40,000. Crucially, legal liability established for a spill can be linked to its size.” (click here) and here for the Flow Rate Technical Group.

It looks like I’m in good company. But I’d prefer to be wrong.

I also note that this is “business as usual” for BP and other fossil fuel companies, and compared it to the accident at the Kingston Steam Plant, 12/22/08, the Upper Big Branch Mine, 4/5/10, the Exxon Valdez, and Chevron-Texaco’s alleged dumping of 18 BILLION Gallons

of oil process waste in Ecuador between 1964 and 1990  (click here).

It is obvious to me that we MUST move to a post-carbon economy.

  • 100 gigawatts – offshore wind, $300 Billion
  • 100 gigawatts – land based wind $200 Billion
  • 50 gigawatts – solar $200 Billion (price is going down)
  • 50 gigawatts – marine current – $200 Billion.
  • Clean Energy Infrastructure: $900 Billion.
  • Save the World: Priceless.

Emergency phone numbers.

* Report oiled shoreline or request volunteer information: (866) 448-5816
* Submit alternative response technology, services or products: (281) 366-5511
* Submit your vessel for the Vessel of Opportunity Program: (281) 366-5511
* Submit a claim for damages: (800) 440-0858
* Report oiled wildlife: (866) 557-1401
* Medical support hotline:  (888) 623-0287

The Series, following “Earth Day for the Future”

(Here)

  1. Fossil Fuels and a Walk on the Moon (Here)
  2. Drill Baby, Drill – or Drill Baby, Oops (Here)
  3. The Magnitude of the Deepwater Horizon Spill (Here)
  4. One Month After The Spill BP Siphoning 3,000 Barrels Per Day (Here)
  5. Deepwater Horizon – the Chernobyl of Deep Water Drilling? (Here)
  6. Deepwater Horizon: 40,000 Barrels Per Day or 70,000? (Here)

Drill Baby, Drill – or Drill Baby, Oops

Second in a series  (1, 2) that began on “Earth Day” (0).

“In order to make Policy, you have to be good at Politics.”

– Deborah Stone, “Policy Paradox”

President Obama

President Obama, Official Photo

I like and respect President Obama. I think he’s a well educated lawyer and law school professor, with a good grasp of the Constitution, and the realities of Chicago machine politics and Inside-The-Beltway politics. He understands Stone. He’s also a moderate liberal. However, his economic advisors – Tim Geithner and Larry Sommers – only know what’s good for Wall Street, so every answer is “what’s good for Wall Street.” They don’t appear to know anything about ecological economics.  Obama needs to listen to Herman Daly, Robert Costanza, Paul Krugman, Robin Krugman, Joseph Stiglitz, and others with a long term view and a better understanding of what neoclassical economists call “externalities.”

Perhaps worse, his energy secretary, Steven Chu, is focused on carbon sequestration, nuclear power, and what we might as well call “Drill Baby, Opps.” Continue reading →

Fossil Fuels and a Walk on the Moon

Ships trying to Extinguish the Flames

Ships trying to Extinguish the Flames at the Deepwater Horizon Rig

The unfolding disaster at the Deepwater Horizon rig in the Gulf of Mexico, which promises to be an environmental catastrophe, (click here) the recent disasters at the Upper Big Branch coal mine in West Virginia, and the Kingston, Tennessee fly ash retention pond demonstrate that fossil fuels are dirty and dangerous.  Safety and environmental protection are expensive and cannot be guaranteed. The oil will adversely effect fisheries in the Gulf for years. If the oil gets into the Gulf Stream, it will curl around Florida and flow up the coast hitting Georgia, South Carolina, North Carolina, Virgina, Maryland, Delaware, Pennsylvania, New Jersey, New York, Rhode Island, Massachusetts, New Hampshire, and if it flows around the Long Island Sound, Connecticut – all the original 13 states, then Maine and the Atlantic Provinces of Canada.

Rather than harnessing the Gulf Stream to push pollution from the Gulf of Mexico up the Atlantic coast of the United States, we should harness the Gulf Stream for clean renewable energy. (Here’s how.)

Solar and wind, which harness natural processes rather than consume natural resources, provide power without fuels, and without waste: with no arsenic, carbon dioxide, lead, mercury, methane, and other toxins, greenhouse gases or radioactive waste. These systems enable us to meet our needs and allow future generations to meet their needs – and flourish.

Rather than clinging to the dirty and hazardous infrastructure of the past, we must build the clean, renewable, and sustainable infrastructure of the future.

Cape Wind and the Staten Island Ferry solar array and the thousands of other solar and wind projects here in the U. S. and elsewhere on the globe are, to paraphrase Buzz Aldrin and Neil Armstrong, “small steps … yet giant leaps for mankind.”

This post is the First Installment of a series that will follow the unfolding catastrophe in the Gulf of Mexico.

—

The index is below:

  1. Fossil Fuels and a Walk on the Moon, May 3, 2010.
  2. Drill Baby Drill or Drill Baby Oops, May 7, 2010.
  3. The Magnitude of the Spill, May 15, 2010.
  4. One Month After The Spill BP Siphoning 3,000 Barrels Per Day, May 20, 2010.
  5. Deep Water Horizon – The Chernobyl of Deepwater Drilling?, June 2, 2010.
  6. The Deepwater Horizon: 40,000 Barrels Per Day or 70,000, June 13, 2010.
  7. The Deepwater Horizon After the Macondo Well Explosion, June 19, 2010.
  8. Deepwater Horizon – Bombs and Hurricanes, July 1, 2010.
  9. Like a Bad High School Math Problem, July 14, 2010.
  10. Crisis Management and the Gulf Oil Spill, July 16, 2010.
  11. The Deepwater Horizon: The Good, The Bad, and The Ugly, October 7, 2010.

Tiger Woods & Subprime Mortgages

Tiger Woods may be a great golfer. But I wouldn’t buy a mortgage from him. Here’s why.

(click to stream audio)

Economics II: Macroeconomics and Political Economy

The way for the government to stimulate the economy and to avoid or climb out of a Depression, as John Maynard Keynes wrote, and as President Franklin Delano Roosevelt proved with the New Deal, is to invest money and resources in infrastructure, not to lower taxes or put money in the hands of private businesses. This latter tactic, which New Jersey’s new Governor, Chris Christie1 is trying, was not proven to work by President Herbert Hoover and proven not to work by President George W. Bush.

Keynes’ basic analysis rests on two evident economic phenomena. One is the different effects on the Keynsian Multiplier of government revenues collected as taxes and government revenues not collected as tax-cuts. The other is the basic response of people to a “Deep Recession” or a Depression.2

If a Recession is a series of calendar quarters in which there is a decline in GDP, a “Deep Recession3” or a Depression is characterized by a recession in which there is a general reluctance to invest in new staff or new projects on the part of businesses and individuals. A portion of any income, tax refund, or tax cut is saved. Money is hoarded. Money spent by the government is obviously, spent. The Keynsian Multiplier of money spent directly by the government is greater than money provided to businesses by tax credits because the government spends money directly, while individuals and businesses spend what they must and hoard what they can. For example, for every $1 Million the government spends purchasing goods and services, $1 Million is added to the GDP. However, for every $1 Million of taxes the government cuts, there is $1 Million the government doesn’t spend, a chunk of that $1 Million is spent, and a chunk that $1 Million is hoarded.4 When the government spends directly, particularly on domestic infrastructure, the Multiplier is, in a word, multiplied.

Obama’s tax incentive to hire people, is partially neo-classical, supply-side economics of the type favored and proven ineffective by Hoover and Bush. However, to the extent that it generates jobs, it will help the people whos jobs are created, their families, and the economy.

Robert Reich, a Keynesian economist, said5,:

“The best and fastest way for government to prime the pump is to help states and locales, which are now doing the opposite. They’re laying off teachers, police officers, social workers, health care workers, and many more who provide vital public services. And they’re increasing taxes and fees. … We need a second stimulus directed at states and locales. “

Paul Krugman6 seems to agree. The only way to avoid a Depression is for the government to spend money. Lowering taxes doesn’t work when people are reluctant to spend. However, the government must create jobs that will reduce the deficit in the future.

Wars don’t do this. As President Bush demonstrated, wars create jobs that increase the deficit and deplete the economy by destroying capital, both human and physical. Investing in local clean, sustainable energy and rearchitecting the health care system in the United States, however, are ways to use government spending today to reduce future deficits.

Local Clean Sustainable Energy

Suppose we were to install a 50 kw photovoltaic solar array and a 2,500 liter (660.4 gallon) solar hot water heater system on every school in the United States. That’s approximately 100,000 of each.7 Suppose each solar electric system costs $7.50 per watt, or $375,000, and each solar hot water heater would cost $50,000. That’s $425,000 per school, at 100,000 schools that’s $42.5 Billion. .

Because these are powered by a natural process – sunlight – rather than non-renewable fuels, and because of relatively low maintenance costs and operating costs, these systems will pay for themselves quickly and last a very long time, they will pay for themselves over and over. The return on investment is between 10% and 16% for PV Solar and 20% to 33% for Solar Hot Water. This is outlined in Table 1, below.

Solar Electric and Solar Hot Water Heaters

Solar Electric

Solar Hot Water

Cost of each

$375,000

$50,000

Total Cost

$37.5 Billion

$5.0 Billion

Years to pay for itself

6 to 10 years

3 to 5 years

Useful Life

40 years

25 years

Annual ROI

10% to 16%

20% to 33.3%

Table 1.

The ROI is higher when you factor in the external benefits of clean, renewable energy – there is no pollution, and therefore are no health effects from pollution.

One way to use the deficit to stimulate the economy in a manner that is consistent with reduced long term deficits is thru the development of clean energy resources, such as solar electric and hot water systems on the nation’s public schools.

Health Care

In July, 2007, President George W. Bush said “People have access to health care in America. After all, you just go to an emergency room.8” While Emergency Rooms are well suited for acute conditions – emergencies – such as the traumas of car accidents, gunshot wounds, and broken arms, they are ill-equipped for chronic conditions such as hypertension, diabetes, cancer. If a person with diabetes was to go to the emergency room, the emergency room staff would say “We can’t help you. Come back when you’re in a coma, or you need your leg amputated.” Similarly, while the Emergency Room can’t manage hypertension, it can treat the heart attack or stroke suffered by a person with hypertension.

Assuming Pres. Bush’s statement is accurate, then the approximately 47 million, or one out of six, or 15.46% of Americans who don’t have health insurance only have access to health care in an emergency. This means that the Health Care System can handle non-emergency health care for five out of six Americans, but is not capable of meeting the non-emergency needs of one out of six, or 15.46% of Americans. This means we need about 15.46% more doctors, nurses, medical office staff, hospital staff, medical offices, and hospitals. For every 100 medical doctors practicing today, we need 115.46. For every 100 nurses, we need 115.46.

According to the Bureau of Labor Statistics, there were about 661,000 physicians and surgeons in the US in 2008 and are about 2.6 million Registered Nurses, RN’s, today.9 If this is sufficient for the 357 Million Americans who have health insurance, then we need an addtional 102,191 physicians and surgeons, and an additonal 401,960 nurses, and they need offices, examining rooms and other infrastructure. However, we can’t just push a button and create 102,191 physicians and surgeons and 401,960 nurses out of thin air. It takes nine years to train a physician and three years to train a nurse.10

Selected Demographic Information

Americans

With Insurance

Without Insurance

Total

Americans

257 M

47 M

304 M

Medical Professionals

Have

Need

Total

Physicians & Surgeons

661,000

102,191

763,191

Nurses

2.6M

401,460

3.0 M

Table 2

Another way to use deficit spending today to stimulate the economy and invest for the future is to build the medical infrastructure for the 47 million Americans who can’t afford or are without health insurance.

Paul Krugman on Banking, Securitization, and The Canadian Model

In his recent columns in the New York Times, Paul Krugman11 has discussed the banking industry, the banking debacle, banking reform, and the Canadian model for banking regulation and banking risk management. He quotes testimony by Jamie Dimon of JP Morgan Chase and Lloyd Blankfein of Goldman Sachs. In hearings of the Financial Crisis Inquiry Commission, Dimon basically said “this was business as usual.” Blankfein, however, said “it was an act of God.” While they disagreed about the cause of what happened, they agree with the solution: “Let bankers be bankers. If the government regulates banking, the economy will crumble.” It appears that we tried this deregulatory approach, and the economy crumbled.

“Securitization” of loans, in which bad loans are bundled with good loans and sold, doesn’t limit risk, it rewards risk. In terms Tiger Woods or a Wall Street banker should be able to understand, Securitization is like sexual activity and HIV AIDS. Suppose one person has 100 relations with 10 partners, 10 with each, one of whom is infected with the HIV AIDS virus. Suppose another person has one relation with each of 100 partners, one of whom is infected with the virus that causes HIV AIDS. Clearly the first person has a higher risk of infection. However, the second person is also at risk. In the case of securitization of “toxic assets” the bankers were rewarded to have relations with as many people as possible. They didn’t minimize risk. They spread it around.

The Canadian banking model limits risky loans, limits bank leverage, and limits securitization. This is what Obama must do. He must demand and enforce regulations that require transparency in banking, regulate derivatives, eliminate incentives for bankers to make bad loans, create incentives for bankers to make good loans; to practice what might be called safe banking

. Regulations, for example, like those mandated by Glass Steagal.

Patrick Henry once said. “Give me liberty or give me death,”

Today he might add, “Entrust my money with cautious bankers.”

———— Notes ————-

1Faced with high unemployment and a lack of unemployment compensation funds, NJ Gov. Christie is proposing to cut unemployment benefits, and cut the unemployment tax used to fund unemployment benefits. Beth DeFalco, “Christie proposes to cut jobless benefits,” NJ Herald, 2/25/10, http://www.njherald.com/story/news/nj-jobless-benefits, and Athena D. Merritt, “Christie proposes fix for N.J.’s insolvent unemployment fund,” Philadelphia Business Journal, 2/25/10, http://www.bizjournals.com

2Discussed at length by Riddell, Shackelford, Stamos, and Schneider, Economics, Pearson – Addison Wesley, 2008, pg 365-368.

3I’m using the term “Deep Recession” in conjunction with “Depression” because there appears to be a general reluctance on the part of bankers, journalists, pundits, and others to use the term “Depression” in discussions of the state of the economy today.

4Acharya, Viral and Ouarda Merrouche, “Precautionary Hoarding of Liquidity and Inter-Bank Markets: Evidence from the Sub-prime Crisis,” July 3, 2009, at Stern.NYU.edu, http://pages.stern.nyu.edu/~sternfin/vacharya/public_html/acharya_merrouche.pdf.

5Reich, Robert, “Obama Needs to Teach The Public How To Get Out Of The Mess We’re In, But He’s Not”, 1/29/10, http://www.huffingtonpost.com

6Paul Krugman, the Princeton University Economist, and Nobel Laureate, writes a column for the New York Times.

7According to Statemaster.com there are about 94,260 elementary and secondary schools in the US. I rounded this up to 100,000 to simplify the math. http://www.statemaster.com/graph/edu_ele_sec_tot_num_of_sch-elementary-secondary-total-number-schools.

8On July 10, 2007, “Pennsylvania Progressive” reported then President Bush said: “People have access to health care in America. After all, you just go to an emergency room.” http://pennsylvaniaprogressive.typepad.com/my_weblog/2007/07/bush-on-healthc.html

Also reported on July 11, 2007 by Dan Froomkin in the “Washington Post,” in his column “Mock The Press”. http://www.washingtonpost.com/wp-dyn/content/blog/2007/07/11/BL2007071101146_5.html

9Bureau of Labor Statistics, Occupational Outlook Handbook, 2010-11 Edition,

Physicians and Surgeons. http://www.bls.gov/oco/ocos074.htm#outlook,

Registered Nurses, http://www.bls.gov/oco/ocos083.htm

10I’m assuming a 6-year Biomedical program and a 3 year Medical Residency for physicians and surgeons and a 2 year practical nursing program with a 1 year Residency for nurses.

11Krugman’s Recent columns in the NY Times include, “Bubbles and the Banks”, 1/8/10, “Bankers Without A Clue”, 1/15/10, “March of the Peacocks”, 1/29/10, and “Good and Boring,” 2/1/10. These can be found on the Internet at http://www.nytimes.com.