Weekly Clean Energy Roundup:February 9, 2005

News and Events

• White House Budget Boosts Funding for Hydrogen
• 2005 Budget Includes Tax Incentives for Renewables and Clean Vehicles
• DOE Proposes $1.2 Billion for Efficiency and Renewables in 2006
• Bush Administration Pushes Renewable Energy on Public Lands
• Lexus Hybrid SUV Aims for 30 mpg in City Driving
• U.K. and China Plan to Build Wave and Tidal Energy Plants

Energy Connections

News and Events

White House Budget Boosts Funding for Hydrogen

President Bush released his proposed federal budget for fiscal year 2006 on Monday, and despite tight constraints on discretionary spending, the budget includes $260 million for the President’s Hydrogen Fuel Initiative, an increase of $35 million over 2005 funding levels. The Hydrogen Fuel Initiative is a $1.2-billion, five-year commitment to develop the fundamental science and technologies to produce, store, and distribute hydrogen for use in fuel-cell vehicles, electricity generation, and other applications. The 2005 budget continues strong support for high-risk, high-payoff basic research that is closely coupled and coordinated with the initiative’s applied research and development programs.

Research funded through the initiative has already led to reduced costs for fuel cells, and progress continues on other technological challenges in hydrogen production and storage. According to DOE, technological advances have reduced the estimated cost to produce automotive fuel cells at high volumes from $275 per kilowatt, based on the state of technology in 2002, to $200 per kilowatt, based on the state of technology in 2004. Additional research is needed for fuel cells to achieve the cost target of less than $50 per kilowatt, which roughly equates to the cost of today’s internal combustion engines. With complementary work ongoing under the FreedomCAR partnership, these efforts keep the Hydrogen Fuel Initiative on track for the industry to make a decision on commercialization by 2015. See the White House summary of the DOE budget.

2005 Budget Includes Tax Incentives for Renewables and Clean Vehicles

President Bush’s proposed federal budget for fiscal year 2006 includes tax incentives totaling $3.6 billion through 2010 to spur the use of renewable energy and energy-efficient technologies. The Bush Administration proposes extending the tax credit for producing electricity from wind, biomass, and landfill gas through January 1, 2008, while excluding electricity produced from agricultural livestock wastes. The Administration proposes a partial credit?running from 2006 through the end of 2008?for the use of biomass sources that are not specifically grown as a power source (so-called “open-loop” biomass) when co-fired with coal in a coal plant. The Administration also proposes a 10-percent investment credit for businesses that install a combined heat and power system that produces more than 50 kilowatts of power or more than 67 horsepower, if placed in service between December 31, 2004, and January 1, 2010.

For individuals, the Administration proposes a tax credit for the purchase of residential solar energy systems, equal to 15 percent of the cost of the equipment and its installation, up to a maximum of $2,000. The credit would apply to photovoltaic equipment placed in service after December 31, 2004, and before January 1, 2010, and to solar water heating equipment placed in service after December 31, 2004, and before January 1, 2008.

Buyers of hybrid electric vehicles would benefit under a proposal to extend the current $4,000 federal tax credit through January 1, 2009. However, the Administration proposes adjusting the credit based on the percentage of the vehicle’s power provided by the energy storage system and based on the amount that the vehicle’s fuel economy exceeds the 2000 model year fuel economy in city driving. The Administration also proposes a credit of up to $8,000 for fuel cell vehicles purchased before January 1, 2013, with adjustments again based on the vehicle’s fuel economy. See pages 288 and 289 (PDF pages 300 and 301) of “Analytical Perspectives” (PDF 2.6 MB), a detailed budget document.

DOE Proposes $1.2 Billion for Efficiency and Renewables in 2006

President Bush’s proposed federal budget for fiscal year 2006 includes roughly $1.2 billion for the DOE Office of Energy Efficiency and Renewable Energy (EERE). The proposed EERE budget emphasizes hydrogen technologies; offshore wind power; renewable and synthetic fuels; biorefineries; and a new collaborative initiative on crystalline silicon solar cells. In addition, the proposed budget increases funding for DOE’s Weatherization Assistance Program. DOE plans to shift the emphasis of its Industrial Technologies Program from industry-specific research to multi-industry, high-risk research that could achieve significant energy savings. DOE also plans to transfer EERE’s successful research and development of hydropower turbines and water management techniques to industry, thereby closing out EERE’s involvement in hydropower technologies. See the fiscal year 2006 budget documents on the EERE Web site.

Bush Administration Pushes Renewable Energy on Public Lands

The U.S. Department of Interior announced last week the availability of a new report that highlights the Bush administration’s efforts to increase interest in the development and use of renewable energy resources on U.S. public lands. The 26-page report, “Renewable Resources for America’s Future,” shows that lands managed by the Interior Department provide 48 percent of the nation’s geothermal energy, 17 percent of hydropower, and nearly 10 percent of wind energy production in the United States.

Since 2001, the Interior Department’s Bureau of Land Management (BLM) has processed 200 geothermal lease applications, compared to 20 in the preceding four years. In 2003, the Interior Department licensed two new 49-megawatt geothermal power plants in California, the first such approvals i
n over 10 years. The department also approved two geothermal power plant expansions and one new 30-megawatt power plant in Nevada. In the same timeframe, the BLM issued more than 60 rights-of-way for wind energy testing and development, quadrupling the number of permits nationwide. And as a result of increased interest in the development of wind on public lands, the agency is also preparing a comprehensive Environmental Impact Statement to address wind development, which is scheduled for completion this summer. See the Interior Department press release, or go directly to the report (PDF 1.6 MB).

Lexus Hybrid SUV Aims for 30 mpg in City Driving

Lexus is gearing up for the launch of its hybrid electric sports utility vehicle (SUV), the RX 400h, in April, and announced last week that the vehicle should achieve 30 miles per gallon (mpg) in city driving, a 67 percent improvement over the comparable RX 330. Lexus estimates that the RX 400h will achieve 26 mpg on the highway, for a combined mileage of 28 mpg. The RX 400h will draw on a maximum 268 horsepower and 3,500 foot-pounds of torque from a standstill to accelerate faster than the RX 330, reaching 60 miles per hour in only 7.3 seconds. Lexus has not yet announced its suggested retail price for the vehicle.

The RX 400h employs three motor-generators in its powertrain. The engine-driven generator can charge the battery pack or power other electric motors as needed, and serves as a starter motor for the engine. By regulating the amount of electrical power it produces, the generator also controls the output speed of the transaxle, eliminating any need for a clutch or viscous coupling in the transmission. Power from the engine and a 123-kilowatt front drive motor is distributed to the drive wheels via a continuously variable transmission, while a 50-kilowatt motor drives the rear axle. The RX 400h combines all that with Electronic Power Steering and a new Electronically Controlled Brake system to yield a new integrated control system for stability and traction, called the Vehicle Dynamics Integrated Management System. And if that’s not enough technology for you, the RX 400h includes enough high-tech features to make a gearhead dizzy. See the Lexus press release and preliminary product sheet (PDF 128 KB).

A new report from J.D. Power and Associates says that the growing number of hybrid vehicles available in the United States will not translate into significant market share. Although the report anticipates that 38 hybrid vehicle models will be available by 2011, it also expects the hybrid share of the U.S. automotive market to peak at 3 percent around that time. See the J.D. Power press release.

U.K. and China Plan to Build Wave and Tidal Energy Plants

Both the United Kingdom and China are working to build wave energy demonstration plants within the next few years. U.K. Energy Minister Mike O’Brien announced last week that the United Kingdom will commit about $79 million (42 million pounds) to a new scheme that aims to result in large-scale wave and tidal energy plants contributing to the nation’s power grid within three years. The funds will support the construction of demonstration plants around the United Kingdom. Meanwhile, China’s Guangzhou Institute of Energy Conversion, part of the Chinese Academy of Sciences, is working to develop a 100-kilowatt on-shore wave power station on the east bank of Nan-Ao Island. See the U.K. press release and the Guangzhou Institute Web site.

A detailed study of wave energy technology by the Electric Power Research Institute (EPRI) suggests that wave power may become economically feasible in the near future. The study examined five potential wave energy sites in the United States and determined that facilities at three of the five sites would be economically feasible once a total of 20,000 megawatts of wave power capacity has been built. That forecast is based on technology learning curves that would be expected to result in cost savings. As a result, EPRI concluded that the technology warrants additional research and development. See the EPRI press release or go directly to EPRI’s wave energy reports.

The recent wave energy announcements come as a number of related conferences are approaching. In late April, Energy Ocean 2005 comes to Washington, D.C., presented by the newly revived Ocean Energy Council. That conference is bookended by the Marine Renewable Energy Conference?sponsored by the British Wind Energy Association (BWEA) and held in London in early March?and by the Renewable Power Association’s Wave and Tidal Technology Symposium, better known as WATTS 2005, which takes place in Aberdeen, Scotland, in late May. See the Energy Ocean, BWEA, and WATTS Web sites.

Energy Connections

EIA: Oil Prices to Stay Above $40 per Barrel Through 2006

Oil prices for the first quarter of 2005 are expected to average $46.70 per barrel, according to DOE’s Energy Information Administration (EIA). The EIA’s latest “Short Term Energy Outlook,” released yesterday, expects oil prices to remain above $40 per barrel throughout this year and next, despite increased oil inventories in industrialized countries and slower growth in oil demand. See the EIA’s “Short Term Energy Outlook.”

While oil supplies appear to have stabilized, at least for the short term, the Royal Dutch/Shell Group of Companies continues to adjust its estimates of available oil and gas supplies. Shell announced last week that it is again cutting its estimate of proved oil and gas reserves by 10 percent?the equivalent to 1.4 billion barrels of oil?to the equivalent of 12.95 billion barrels of oil. A year ago, the company cut its oil and gas reserves by 20 percent, the equivalent of 3.9 billion barrels of oil. The petroleum company also continues to struggle with replacing its oil and gas production with new oil and gas reserves. Most companies aim to replace 100 percent of their production with new reserves, a percentage known as the reserves replacement ratio (RRR). Not counting divestments, Shell’s RRR for 2004 is in the range of 31 to 41 percent. However, the company claims that it is still targeting a 100 percent RRR for the 2004 to 2008 period, with much of its new proved reserves added in the latter part of the five-year period. See Shell’s “Fourth Quarter and Full Year Results 2004.”

++++