Defense Act Encourages Military Fuel Economy, Renewable Energy Use
A bill to authorize defense spending for fiscal year 2009 includes two provisions that will help create a more fuel-efficient military while encouraging the use of wind and solar energy. President Bush signed S. 3001, the "Duncan Hunter National Defense Authorization Act for Fiscal Year 2009," on October 15.
Section 332 of the bill requires the U.S. Department of Defense (DOD) to include fuel efficiency as a key performance parameter when modifying or developing new machinery that consumes fuel, such as tanks or jets. It also requires that the life-cycle cost analyses for new military capabilities include the fully burdened cost of fuel, which includes the total cost of all personnel and assets required to deliver and protect the fuel.
Section 333 of the bill also requires the DOD to consider the use of wind and solar energy for expeditionary forces to reduce the need to deliver fuel to battle areas, where electricity is typically produced by engine-driven generators. In addition, Section 2402 of the bill authorizes $90 million for energy efficiency projects. See the White House press release and the full text of S. 3001 (PDF 928 KB).
As an example of the fully burdened cost of fuel, a study of military fuel efficiency back in 2001 revealed that delivering jet fuel by air tanker increased its cost by a factor of 17, while the total cost of delivering fuel to Army forces in war zones was estimated at hundreds of dollars per gallon (even though fuel was much cheaper then). A follow-up report in 2007 found that energy needs were hampering DOD operations with regard to aviation forces, individual soldiers, forward land forces, and mobile electric power sources. See the story on the two reports from the May 9, 2007, edition of this newsletter.
Operation Change Out Saves $11 Million at U.S. Military Bases
DOE announced last week the initial results of Energy Star Operation Change Out – The Military Challenge, which focuses on replacing standard incandescent lights at military housing units with energy-efficient compact fluorescent lights (CFLs). The campaign, a joint effort between DOE and the U.S. Department of Defense (DOD), has led 84 military bases to install 359,268 CFLs in 40,951 military housing units since Earth Day (April 22). Over the operating lifetime of the new CFLs, they are expected to reduce electricity use by nearly 100 million kilowatt-hours, saving nearly $11 million while preventing the emissions of more than 150 million pounds of carbon dioxide.
Three military bases stand out for their performance in this campaign: Fort Drum Army base in upstate New York has changed out 106,012 bulbs, which will cut the base’s energy bills by an estimated $2.78 million; Tobyhanna Army Depot, near Scranton, Pennsylvania, has changed out 23,158 bulbs to achieve an estimated energy savings of more than $600,000; and Camp Lejeune Marine Corps base, near Jacksonville, North Carolina, has changed out 19,020 bulbs in nearly 5,000 housing units to cut their energy costs by nearly $500,000. The campaign was originally scheduled to end on October 1, but the success of the program has led DOE and DOD to extend the program through Earth Day 2009. See the DOE press release and the Energy Star Operation Change Out Web site.
Investment Outlook Mixed for Clean Energy Technologies
Divergent trends for clean energy investments suggest that some companies may need to tighten their belts, even as they prepare for significant future growth. Venture capital investments in clean energy were on the upswing in the third quarter, reaching record levels of $2.8 billion, up from only $1.3 billion in the second quarter. But a new report from New Energy Finance also finds that private equity expansion capital is drying up, falling from $4.5 billion in the second quarter to only $1.6 billion in the third quarter.
Also known as growth capital, this type of investment usually finances expansions in relatively mature companies, while venture capital typically supports the development of less mature companies. Meanwhile, investors continue to provide funding for new renewable energy projects, which garnered $18 billion in investments in the third quarter, a modest slip from the second-quarter asset investments of $21.9 billion.
Given the overall losses in the stock markets, it’s not surprising that clean energy companies are also struggling to gain investments from the public markets. Compared to the $5.2 billion raised in the second quarter, only $2.9 billion was raised from public markets in the third quarter, and most of that was from established companies issuing convertible bonds, rather than initial public offerings (IPOs) of stock from private companies that are going public.
In fact, the largest IPO was by Energy Recovery, a California-based energy efficiency firm that raised only $87 million. Clean energy stocks also lost value, as the WilderHill New Energy Global Innovation Index (NEX) fell 30.3% for the quarter, landing 40% lower than its peak in November 2007. In comparison, the S&P 500 index dropped only 9% in the third quarter.
Despite the recent losses, a new survey of companies that offer clean energy investment vehicles finds that they are experiencing strong demand for such offerings and plan to make several new investment vehicles available by the end of 2009. The survey by the Social Investment Forum (SIF) was based on the responses of 14 of its 500 members. See the SIF press release and the New Energy Finance press releases on the third-quarter investments (PDF 22 KB), the performance of the clean energy stocks (PDF 68 KB), and for comparison, the second-quarter investments (PDF 83 KB).
One specific example of the effects of the global credit crunch on clean energy companies is provided by Tesla Motors, the nascent manufacturer of electric cars. The company has established a profitable business selling powertrain components to other companies, while it continues to generate revenue from a growing list of backorders for the Tesla Roadster. But the company is holding off on the work needed to launch the production of its Model S, an all-electric luxury sedan that will be manufactured in California. Tesla will still unveil the vehicle early next year, but production will be delayed about six months, to mid-2011.
Tesla hopes to earn a DOE loan guarantee to cover most of the cost of its Model S program, because such a guarantee would provide the company with capital at a very low cost relative to the cost of equity financing in today’s market. Meanwhile, the company is consolidating its operations at its new headquarters in San Jose, California, and is undergoing a "modest reduction" in its workforce. See the blog entry from Elon Musk, who is Chairman of the Board and who has just assumed the role of Chief Executive Officer, as well as the company’s recent press release on the Model S.
DOE and EPA Release the 2009 Fuel Economy Guide
DOE and the U.S. Environmental Protection Agency (EPA) unveiled the 2009 Fuel Economy Guide last week, providing consumers with detailed information about the fuel economy, carbon footprint, and air pollution score for model year 2009 vehicles, as well as information about hybrids, alternative fuel vehicles, electric vehicles, and fuel cell vehicles.
For mainstream vehicles, the Toyota Prius continues to lead the pack in terms of fuel economy, sharing the top-ten list with six other hybrids, including three Ford hybrids that tied for fourth place. The Smart fortwo convertible and coupe tied for fifth place, joining the Toyota Yaris as the top-ranking small cars. In addition, the manual and automatic versions of the diesel-fueled Volkswagen Jetta and Volkswagen Jetta Sportwagen landed in seventh and eighth place, marking the debut of clean diesel vehicles on the top-ten list. And for the first time, the Fuel Economy Guide also includes a version for mobile users, allowing people to easily check the fuel economy, estimated annual fuel cost, and carbon footprint of cars as they shop. See the EPA press release, the EPA’s list of fuel economy leaders, and the Fuel Economy Web site.
The EPA has also updated its Green Vehicle Guide, which provides information about the fuel economy, air pollution emissions, and greenhouse gas emissions for specific models and configurations of vehicles. Because some versions of vehicles are only available in certain states, the Green Vehicle Guide allows consumers to search by state.
For the first time, clean diesel vehicles such as the Volkswagen Jetta can be found in the listing for California and other states that have adopted California’s tough emissions standards. These "50-state" clean diesels also three 2009 model year vehicles from Mercedes-Benz: the GL 320 BlueTEC, the ML 320 BlueTEC, and the R 320 Bluetec. Because these are the first clean diesel vehicles offered in the United States, meeting the federal requirements for "advanced lean-burn-technology motor vehicles," they qualify for federal tax credits ranging from $900 to $1,800. See the EPA’s Green Vehicle Guide and the list of tax credits for clean diesels on the Fuel Economy Web site.
Hybrid Technologies Gain Ground in Heavy Trucks
When it comes to hybrid electric vehicles, most people may think of the Toyota Prius and its automotive competitors, but a growing stable of heavy trucks are now featuring hybrid technology. At last week’s Hybrid Truck Users Forum in South Bend, Indiana, hybrid trucks from a wide range of manufacturers were on display, including the Kenworth T370 Hybrid, a Class 7 diesel-electric hybrid tractor designed for local-haul applications, including beverage, freight, and grocery distribution.
Introduced in late September, the hybrid tractor has a motor/generator integrated into its transmission, powered by a 340-volt lithium-ion battery pack. Its power management system allows the tractor to operate in three modes: electric-only, diesel-only, and combined electric and diesel power. The Kenworth Truck Company, a division of PACCAR Inc., expects the hybrid tractor to improve fuel economy by up to 25% in local-haul applications. Kenworth also displayed the T270 Hybrid, a Class 6 tractor that it launched in 2007. See the Kenworth press release and brochure (PDF 995 KB) for its hybrid tractors.
Peterbilt Motors Company, another division of PACCAR, arrived in South Bend with three hybrid-electric models: a delivery van, a utility truck, and a municipal dump truck. Using a hybrid drive developed by Eaton Corporation, the van and dump truck can achieve both achieve a 30% improvement in fuel economy, while the utility truck can avoid idling by drawing on its battery pack for power, potentially cutting its fuel consumption in half.
Peterbilt also displayed a refuse truck that uses a hydraulic system to capture energy during braking and to help launch and accelerate the vehicle, for a 25% improvement in fuel economy. In addition, Freightliner Trucks displayed its Business Class M2e Hybrid, which also features an Eaton hybrid system. The company is offering a $5,000 incentive on the vehicle through mid-December. In addition, Dueco, Inc. displayed two plug-in hybrid electric utility trucks, featuring a system developed by Odyne Corporation. Other hybrid vehicles that were on display include a variety of hybrid trucks and buses from Azure Dynamics Inc., refuse trucks from Bosch Rexroth AG, delivery and utility trucks from Eaton, and a variety of trucks from Navistar. See the press releases from Peterbilt and Freightliner, the Dueco and Odyne Web sites, and the full list of "Ride & Drive Vehicles" from the Hybrid Truck Users Forum.
Pennsylvania Requires Utilities to Pursue Energy Efficiency
Pennsylvania Governor Edward Rendell signed a bill last week that will require utilities to save energy, in part by installing smart meters on every home and business in the state. House Bill 2200 requires utilities to prepare plans for energy efficiency programs that would cut electricity use 1% by 2011 and 3% by 2013. In addition, utilities must prepare plans to cut their peak electricity demands by 4.5% by 2013. The plans will be subject to public review and approval by the Pennsylvania Public Utilities Commission (PUC), and once approved, the electric utilities must meet the energy efficiency targets. Electric utilities that fail to meet the law’s requirements will face steep penalties. Additional requirements may be stipulated by the PUC in 2013.
The utilities will be directed to offer customers new pricing plans that reward customers who shift their electricity use to off-peak hours and to equip every home and business in the state with "smart meters" within 15 years. A smart meter gives consumers real-time information, such as the cost of power and whether or not they are in a peak rate period. Armed with this information, consumers can choose to use energy when it is cheapest and cut back at times when it is most expensive. The bill is expected to save the average Pennsylvania household more than 20% on its electricity bill. Those savings are expected to add up to $500 million by 2013. See the governor’s press release and the full text of HB 2200.
Pennsylvania landed in 15th place in a recent ranking of states in terms of their energy efficiency programs, but the new legislation should boost its ranking next year. The American Council for an Energy Efficient Economy (ACEEE) issues its "2008 State Energy Efficiency Scorecard" in early October, placing California in the top spot and Wyoming at the bottom.
Idaho won kudos as the most improved state since 2006 (when the last scorecard was issued), jumping from 25th place to 13th, and other states showing great improvement include Florida, Maryland, Ohio, Illinois, Louisiana, Arkansas, and Virginia. The scorecard ranks states based on their energy efficiency programs and policies; transportation policies; building energy codes; appliance standards; policies to encourage combined heat and power systems; support for energy efficiency research, development, and deployment; and incentive programs. See the ACEEE press release and full report.
Carbon Dioxide Emissions Growing Rapidly, Particularly in Asia
Carbon dioxide emissions from burning fossil fuels and manufacturing cement have increased 38% since 1992, despite international efforts to reduce emissions, according to DOE’s Oak Ridge National Laboratory (ORNL). CO2 emissions grew from 6.1 billion metric tons of carbon in 1992 to 8.5 billion metric tons in 2007, with the greatest growth in rapidly developing Asian countries such as China and India. The United States was the largest emitter of carbon dioxide in 1992, but China is now leads the pack. The major human-caused sources of carbon dioxide are energy use, cement manufacture (which releases carbon dioxide when limestone is converted to lime), and deforestation, so the ORNL study accounts for two of the three major sources. See the ORNL press release.
The ORNL study is part of a larger effort to determine the global carbon budget for 2007. That effort, led by the Global Carbon Project, also looks at carbon emissions from land use changes (such as deforestation) and natural "sinks" for carbon dioxide. The world’s oceans and trees are large carbon sinks, with oceans removing 25% of all carbon dioxide emissions over the past eight years, and terrestrial sinks removing another 29%.
The end result is that the fraction of carbon dioxide in the atmosphere is increasing. In fact, it increased by 2.2 parts per million (ppm) in 2007, which was greater than the 2.0 ppm average growth rate for 2000-2007, and well above the growth rate of 1.5 ppm that held for the previous 20 years. The 2007 increase brought the atmospheric concentration of carbon dioxide to 383 ppm, which is 37% greater than the concentration at the start of the industrial revolution. According to the Global Carbon Project, the present concentration is the highest in at least 650,000 years and is probably the highest for the last 20 million years. See the Carbon Budget 2007 on the Global Carbon Project Web site.
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Kevin Eber is the Editor of EREE Network News, a weekly publication of the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy (EERE).
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