Posted by: JohnnyRook | August 16, 2008

Spanish Wind Looks Sexy, But California Efficiency Is Really Hot

You might be surprised to find out that despite being the number three wind producer in the world, Spain is dead last among developed countries in meeting its Kyoto targets. In this post we’ll take a look at how that happened and why Spain (and the rest of the United States) needs a dose of Californication.

According to the 1997 Kyoto Protocol, the European Union is to cut its emissions of greenhouse gases by 8% relative to 1990 levels by the period 2008-2012. Because at the time the agreement was signed, Spain was considered one of the less developed economies (it currently ranks 5th) among the then 15 European Union members (there are currently 27), its emissions target was set at a 15% rise over 1990 levels. (Greece, Ireland and Portugal were also allowed to grow their emissions.)

However, as of 2007, Spain is 52.3% above its Kyoto target and despite optimistic government promises that it can still meet the target it seems extremely unlikely that the Spanish will be able to reduce emissions by 35% relative to 1990 levels in only 4 years.

It is common to hear reference to Spanish wind power in conversations about global warming and energy independence. The Spaniards have grown wind power to nearly 9% of their electrical mix and Spanish companies are busy selling wind technology around the world including in the United States. But wind is only a small part of the Spanish energy story, albeit the most successful.

Part of Spain’s problem is that it has been so successful economically. This has led to increased energy usage. According to a report (PDF in Spanish), Evolution of Greenhouse Gas Emissions in Spain (1990-2007), compiled by the Spanish labor union Comisiones Obreras and the Spanish-language version of World Watch magazine the sectors experiencing the most growth in emissions are electricity generation and transportation. Emissions from electricity generation (up 66% since 1990) account for 24.3% of total Spanish emissions while emissions from transportation (up 97% since 1990)are responsible for 22.9%.

Until very recently the Spanish economy was growing rapidly, largely based on a boom in the construction industry which is very electricity intensive. Around 800,000 new homes were constructed in Spain last year, more than France, Germany and Britain combined and Spain was the second largest market for cement in the world after China. (Cement production is itself a significant source of GHG emissions accounting for 5% of emissions worldwide.) Many of the houses were constructed in coastal or island regions (link in Spanish) which cater to the enormous Spanish tourist industry.

Only this year has the government approved new building codes requiring that new homes be more energy efficient with better insulation and solar panels on every roof. AS Socialist party Environment Secretary Soraya Rodriguez put it “Up to now, we’ve been using 1970s building standards.”

Changing rules regarding housing and transportation can be politically tricky however. Witness the ongoing furor over gas prices and drilling in the United States.

CO2 emissions from households and transport are difficult to stabilise without politically unpopular measures such as restricting cars in city centres or hiking electricity prices.

Javier Tordable, managing director of the Barcelona-based carbon exchange Sendeco2, says the trend is towards obliging makers of household appliances and cars to price in the CO2 their goods will produce.

“As more sectors are included, the national CO2 allocation plan will be easier to manage,” he says. “Liberalising Spain’s electricity industry so that it no longer has to sell power below cost will be another major step.

Surveys show Spanish consumers are gradually becoming more environmentally conscious, but they are still among the most wasteful in Europe and the most prone to take out their cars for short journeys.

But transportation is a problem throughout the European Union:

A surge in transport in the European Union is jeopardizing goals for cutting greenhouse gases blamed for global warming, the European Environment Agency (EEA) said on Monday.

Emissions from transport, led by a near-doubling in aviation traffic, rose on average by 25 percent across Europe from 1990-2004 even as most EU nations managed to cut emissions from other sectors such as industry or agriculture.

“The environmental performance of the transport sector is still unsatisfactory,” the EEA said in a report covering EU nations along with some details of outsiders Turkey, Switzerland, Norway, Iceland and Liechtenstein.

“This tendency threatens both Europe’s and individual EU member states’ progress toward their … targets” under the U.N. Kyoto Protocol, it said in a 44-page report. “Therefore, additional policy initiatives and instruments are needed.”

“Transport — bottom of the Kyoto class again,” it said.

Transport, based mainly on burning oil, accounts for about a fifth of European emissions of heat-trapping gases from human activities. Cars and trucks account for more than 90 percent of transport emissions, ahead of ships, planes and trains.

From 1990-2003, passenger transport volumes in Europe grew by 20 percent, the EEA said. More people own cars and often drive further, for instance to out-of-town shopping malls. Air transport alone surged by 96 percent, aided by cheaper flights.

If Spain fails, as it most surely will, to cut its emissions by 35% relative to 1990 before 2012 it will cost the country around 4 billion Euros, as it will have to purchase carbon credits from nations which have been successful in reducing their emissions.

“They’re looking at a huge bill now,” said Mike Rosenberg, management professor at the University of Navarra’s IESE Business School in Barcelona. “That is because none [referring to Spain, Ireland and Japan-JR] would pay to reconvert factories, power plants and paper mills” to trim gases blamed for the planet-warming “greenhouse effect.”

The cost of a permit to spew a ton of CO2 into the skies surged this year after evidence of global warming mounted and European states reacted by restricting the supply of allowances. The price for a 2008 certified emission-reduction credit rose 14 percent in the three months through Nov. 27 to a record 18.20 euros ($26.85) to release a ton of CO2, according to Nord Pool ASA power exchange prices on Bloomberg.

To summarize, despite the growth of wind power in Spain, the country’s emissions have continued to grow (without the increase in wind power, however, last year Spain would have emitted an additional 26 million tons of CO2). Rapid economic growth has spurred demand for electricity, which has grown 63.4% since 1990, in absolute terms far beyond what the new wind power can offset. As nuclear power and hydroelectric power have stayed the same or dropped (due to drought in the case of the latter) the remaining power has had to come from fossil fuels, which still make up 50% (more if you include cogeneration plants using fuel oil and gas oil) of the Spanish energy mix.

So, what did the Spanish do wrong? Their biggest error was a lack of political will. They ignored non-sexy energy efficiency, focusing instead on alternative energy production and treeplanting as the vehicles for meeting their Kyoto obligations. This lack of energy efficiency in Spain is a focus of the Comisiones Obreras-World Watch report {PDF in Spanish], which calls for the passage of an Energy Efficiency Law applicable not only to new construction but also providing for the retrofitting of older buildings as well as for new, higher standards in lighting, appliances, etc. The reports authors also call for greater fuel efficiency for automobiles and a transition first to hybrids and then to electrical vehicles.

If the Spaniards seriously want to tackle their greenhouse gas emissions they could find the perfect model in one of their former colonies, the US state of California. California is about 80% the size of Spain in both area and population, yet while Spanish economic growth has been produced at a very high price in energy consumption and greenhouse gas emissions, California has has kept per capita energy consumption level for three decades. While the US federal government has shown not merely a lack of political will but a hostility to takng action on Climaticide, California has moved ahead on its own, often having to take on the Bush administration as in the case of automobile fuel efficiency.

Joseph Romm has written about California as a model not for Spain, but for the rest of the United States.

How big is the efficiency potential in this country? The global consulting firm McKinsey & Co. estimates that nearly 40% of the U.S. emissions reduction potential by 2030 is from energy efficiency (see here).

In the past three decades, electricity per capita has stayed flat in Californian while it has risen 60% in the rest of the country. If all Americans had the same per capita electricity demand as Californians, we would cut electricity consumption 40%. And if all of America adopted the same energy efficiency policies that California is now putting in place, the country would never have to build another power plant.

Energy efficiency is THE core climate solution.

Not only has California kept per capita demand flat it has done it more cheaply than it ever could have by building more power plants of any kind.

California has cut annual peak demand by 12 GW — and total demand by about 40,000 GWh — over the past three decades. The cost of efficiency programs has averaged 2-3¢ per kW — which is about one fifth the cost of electricity generated from new nuclear, coal and natural gas-fired plants. And, of course, energy efficiency does not require new power lines and does not generate greenhouse gas emissions or long-lived radioactive waste.

So why isn’t this being done everywhere? In the United States and in Spain? It may not be sexy, but it works.

Many of the strategies are obvious: better insulation, energy-efficient lighting, heating and cooling. But some of the strategies were unexpected. The state found that the average residential air duct leaked 20 to 30 percent of the heated and cooled air it carried. It then required leakage rates below 6 percent, and every seventh new house is inspected. The state found that in outdoor lighting for parking lots and streets, about 15 percent of the light was directed up, illuminating nothing but the sky. The state required new outdoor lighting to cut that to below 6 percent. Flat roofs on commercial buildings must be white, which reflects the sunlight and keeps the buildings cooler, reducing air-conditioning energy demands. The state subsidized high-efficiency LED traffic lights for cities that lacked the money, ultimately converting the entire state.

And energy efficiency doesn’t just work as public policy. It also works as company policy. One of the most inspiring examples that Romm gives of the benefits of energy efficiency comes from an otherwise uninspiring source–Dow Chemical:

You might have predicted that by 1982, after two major energy shocks, if any company in the country had captured the low-hanging fruit of energy savings, it would be one as energy intensive as a world-class chemical manufacturer. Nonetheless, energy manager for the [Dow’s Louisiana] division’s more than 20 plants, Ken Nelson, began a yearly contest in 1982 to identify and fund energy-saving projects. His success was nothing short of astonishing.

The first year had 27 winners requiring a total capital investment of $1.7 million with an average annual return on investment (ROI) of 173%. After those projects, many in Dow felt that there couldn’t be others with such high returns. The skeptics were wrong. The 1983 contest had 32 winners requiring a total capital investment of $2.2 million in a 340% return – a savings of the company’s $7.5 million in the first year and every year after that.

Even as fuel prices declined in the mid-1980s, the savings kept growing. Contest winners increasingly achieved the economic gains through process redesign to improve production yield and capacity. By 1988, these productivity gains exceeded the energy and environmental gains. The average return to the 1989 contest was the highest ever, an astounding 470% in 1989, 64 projects costing $7.5 million saved the company $37 million a year — a payback of 11 weeks.

Finally, Romm offers a plan for energy efficiency that would benefit the United States or Spain if either were to adopt it:

We should establish a federal matching program to co-fund state-based efficiency programs, with a special incentive to encourage states without an efficiency program to start one. This was a key recommendation of the End-Use Efficiency Working Group to the Energy Future Coalition, a bipartisan effort to develop consensus policies, in which I participated. The first year should offer $1 billion in federal matching funds, then $2 billion, $3 billion, $4 billion, and finally stabilizing at $5 billion. This will give every state time to change their regulations and establish a learning curve for energy efficiency.

This program would cost $15 billion in the first five years, but save several times that amount in lower energy bills and reduced pollution. Since the next president will put in place a cap-and-trade system for greenhouse gases, the revenues from auctioning the emissions permits can ultimately be used to pay for the program.

We should restore a federal focus on the energy-intensive industries, such as pulp and paper, steel, aluminum, petroleum refining and chemicals. They account for 80 percent of energy consumed by U.S. manufacturers and 90 percent of the hazardous waste. They represent the best chance for increasing efficiency while cutting pollution. Many are major emitters of greenhouse gases other than carbon dioxide. A 1993 analysis for the DOE found that a 10 to 20 percent reduction in waste by American industry would generate a cumulative increase of $2 trillion in the gross domestic product from 1996 to 2010. By 2010, the improvements would be generating 2 million new jobs.

Focusing on saving energy in the pulp and paper industry etc. may not seem very exciting at first glance, but you never know what a country might do to pick up an easy extra trillion bucks (and cut greenhouse gas emissions at the same time)–“Oh baby…, I love it when you talk efficiency to me.”

Crossposted at Daily Kos


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