Volvo has set itself apart from other mainstream automakers this month by announcing that all of its new models from 2019 onwards will be electric or hybrid. Five fully electric models and a range of hybrids will become available between 2019 and 2021. In a year in which Tesla has surpassed Ford Motors and GM in market value, the shift toward electric can only be seen as a smart move for Volvo. But, interestingly enough, it was not actually a choice made to corner the American market.

Volvo is owned by Geely Motors, a little known Chinese company that purchased the Swedish brand from Ford in 2010 for a fraction of the cost that Ford had originally paid. The purchase could have driven Volvo into the ground but instead has given it new life in the Chinese market, where government regulations favor electric and hybrid vehicles in large cities. Geely has built a name for itself with its reinvigoration of Volvo and has now moved on to purchasing the makers of London’s ubiquitous black cabs, the racing brand Lotus, and the flying car start-up Terrafugia. Volvo is not the only brand under the Geely umbrella to go green–Geely opened a solar powered factory near Coventry, England this year which has created all-electric cabs for London Taxi Co. The UK government has been preparing plans to give taxi drivers grants for switching to these low emission cabs.

Geely stock price has been climbing ever upward over the past several years, tripling over the course of 2016-2017. The Chinese juggernaut may not be a household name in the U.S. at the moment, but it is expanding across Europe and into the Southeast Asian market, where American automakers have historically struggled to gain a foothold. If the company continues to commit to low emissions vehicles and transforming iconic brands into electric powerhouses its success may spread to the American market. Although the company will probably never have the immense production facilities of its direct competitors, with Ford and GM sales taking a downward turn, Geely may have found its moment to begin edging into the North American market.

The shift to electric has been underway for several years and Volvo is truly just a high profile manifestation of a larger trend–however every effort to drive consumers toward electric energy should be applauded. From the Nissan Leaf to Tesla’s more affordable Model S to the ever popular Prius, electric and hybrid vehicles are now settling into a price range that first time buyers are more comfortable with–but what about drivers with loyalty to a certain brand? In those instances, a massive transformation like the one Volvo is undergoing captures a section of consumers that may never have planned to buy electric–but could change their minds when the vehicle comes from a name they trust. Whether or not the Volvo transition is just a drop in the bucket on the path to a fully electric future, Geely clearly has a vision and commitment to electric energy that makes it unique in the conventional automotive market.

Jillian Sequeira

Jillian Sequeira was a member of the College of William and Mary Class of 2016, with a double major in Government and Italian. When she’s not blogging, she’s photographing graffiti around the world and worshiping at the altar of Elon Musk and all things Tesla. Contact Jillian at Staff@LawStreetMedia.com

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The precipitous decline in the price of crude oil and its effect on the stock market have caught the interest of the energy community, Wall Street, and the American public. What may be lost in all this is that even while oil prices plummet, renewable energy sources are closing the gap and becoming increasingly affordable thanks to a combination of things such as improved infrastructure and beneficial policies, just to name a few. In fact, renewable energy’s recent success even got a mention in President Obama’s final State of the Union address. This article will look at how renewable energy turned the corner and has become a beacon of light for the future of American power.

Sources of Renewable Energy

The outlook for renewable energy has improved significantly in the United States. President Obama noted in his State of the Union Address, “in fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power.” While the validity of this quote only applies to select places and not the entire nation, the fact that it has any truth behind it at all is a sign of major change.

Wind

Wind power, in particular, has seen massive growth in the past few years. Last December, wind energy production passed the 70 gigawatts threshold. To put this in perspective, this means that the power generated from wind can supply 19 million homes. The leap forward in production is the result of a combination of events, including the expansion of wind infrastructure. Wind power now has 50,000 working turbines in 40 different states and Puerto Rico. It is also thanks to tax credits, namely the Renewable Energy Production Tax Credit, which was extended after a brief lapse as part of the latest budget. This increase had led to a drastic decrease in the price of wind power, dropping 66 percent from 2009 levels. It has also meant a large jump in its share of the energy market going from less than 1 percent in 2007 to between 4.5 and 5 percent this year. The U.S. Department of Energy predicts that wind’s production and share of the energy market will increase dramatically in future.

Solar

Like wind power, solar power has grown rapidly over the past few years. According to the Solar Energy Industries Association, solar energy provided 40 percent of all new electrical generating capacity in 2015. This growth has translated into 22,700 megawatts of capacity, or enough to power 4.6 million American homes. As a result, the price of solar installations have dropped 73 percent since 2006 and 45 percent for residences since 2010. Much of that decrease in cost has been fueled by the Investment Tax Credit, which took effect in 2006 to help promote growth in the renewable energy industry.

Hydroelectric Power

Another major source of renewable energy is hydroelectric power. Currently, the total capacity for hydroelectric power is 79,000 megawatts. This production is spread across 2,400 facilities throughout the United States, although the majority are located along the West coast. From 2000 to 2010, hydroelectric power accounted for somewhere between 5.8 and 7.2 of the total energy produced in the U.S., and about 17 percent globally. Initially, hydroelectric power accounted for the vast majority of all renewable energy sources, though that number is falling as additional renewable sources produce more power. Hydroelectricity is incredibly cheap and flexible, especially in comparison to solar and wind units, though their prices have been decreasing in recent years.

Biomass

Wind, solar, and to a lesser extent hydroelectric, get most of the attention, but when it comes to production, biomass is the leader in terms of energy output. This may come as a surprise because exactly what biomass is can be somewhat confusing. The way that it has garnered such a share of the market is largely through ethanol fuel, which in 2013 made up 43 percent of all fuel used in the United States. In fact, that the same year, biomass made up nearly half of all non-renewable energy used–twice as much as the second highest, hydroelectric power. This notion that biomass is the leader in renewables should not be particularly surprising because for most of human history, biomass, namely wood, was used primarily for energy, with the conversion to coal only coming fairly recently. But it is important to note that while most renewable energy sources are touted as environmentally friendly, biomass energy sources are not completely carbon neutral.

Geothermal

Another growing renewable power source is geothermal energy. The United States has approximately 3,000 megawatts of geothermal generating capacity, but it accounts for less than 1 percent of the total U.S. energy output. Growth in geothermal has been relatively slow in recent years, although scientists argue it could be a major source of electricity in the future.

The video below explains how the different types of renewable energy work:

Regulations

On the Federal Level

Starting at the federal level, there are a number of programs and regulations in place to monitor and encourage the growth of renewable energy. One example is the Federal Energy Management Program, which aims to reduce emissions by government vehicles and in government buildings. The Environmental Protection Agency also has a number of programs in place to reduce emissions, conserve the environment, and encourage the use of renewable energy. One is the Green Power Partnership, which provides free advice, training, and support to companies who want to better utilize renewable energy. Another is the Landfill Methane Outreach Program, which seeks to protect the environment, helping landfills reduce emissions and capture methane for use as a renewable energy source. The EPA’s AgStar program also promotes the recovery of methane, this time from animal feeding areas. Lastly is RE-Powering America’s Land, which encourages developing renewable energy projects on the sites of previously contaminated areas.

State and Local

There are also a number of beneficial policies at the state level. Some of the most significant state-level policies are Renewable Portfolio Standards, which require utility providers to provide a certain percentage of renewable energy to their customers. These standards help encourage the growth of renewable energy and allow for a more localized approach to setting requirements.

Public Benefits Funds for Renewable Energy create a pool of money to invest in renewables. The funds are supported by a special charge on customers’ energy bills and can help encourage local renewable production. Output-Based Environmental Regulations define limits on how much energy can come from any one source. In doing so, states can encourage utilities to expand their energy portfolios to provide electricity from new sources. Many states also have Interconnection Standards to help ensure that new energy sources have easy access to the electrical grid. Another policy that is particularly rewarding is Net Metering, which allows customers who have a renewable system in place, like rooftop solar panels, to be paid for any energy they provide back to the power grid. The combination of interconnection standards and Net Metering helps make it cost-effective for homeowners to adopt sources of renewable energy. Along similar lines are Feed-in-Tariffs, which force electrical companies to pay a premium to individuals that provide renewable energy to the grid.

The Future of Renewables

With all the growth in renewables, it is not surprising that the future looks very green. The U.S. Energy Information Administration projected that renewable energy will be the fastest-growing energy source through 2040. Additionally, while the industry still relies on tax credits, it seems on the verge of weaning itself off of them, as growth in renewable energy has caused some renewables to be competitive, if not cheaper, than fossil fuel sources in some parts of the United States. Companies are also on the verge of improving storage solutions, which is one of the major problems with solar and wind energy currently. The accompanying video looks at the future of renewable energy:

It is no surprise then, that according to a Renewable Electricity Futures Study, renewable energy could provide as much as 80 percent of all U.S. electricity by 2050. In the process, this transformation will have significant benefits for the climate, economy, and public health. By switching to these forms of energy production, the United States will also see a drastic reduction in its water consumption because large quantities of water are currently needed to cool traditional power plants.

The efforts supporting renewable energy will likely benefit from last year’s Paris Climate Conference. During the conference, nations across the world vowed to reduce emissions and invest more in renewable technology in an effort to prevent the planet’s temperature from rising 2 degrees Celsius. The following video looks at the specifics of the Paris Climate Conference and its impact on the future of renewables:

Criticisms/Setbacks

While renewable energy sources are growing and expanding, it is still not full steam ahead–even renewables come with caveats. The main issue currently is cost and investment. While wind and solar are thriving, they are doing so with the help of generous tax breaks. While many applaud the growth of solar power, supporters also warned that growth could start to decline if tax breaks do not continue. There are many examples of failed renewable energy companies. Perhaps the most notorious example is Solyndra, a solar panel installation company, which was given a $535 million loan by the Department of Energy, but ended up defaulting. There other examples too, including Abound, a solar company, and Fisker, an electric car company.

The many forms of renewable energy production have their own challenges. Hydroelectric power, for example, is very useful but few, if any, new projects have been planned for the future. Biomass also has accompanying issues, namely that production requires valuable land and resources to grow the corn used in ethanol, which could potentially be better used to grow crops for food. Plants burning biomass may also produce more pollution than traditional energy plants that burn coal or natural gas. Even solar and wind, while not nearly as hazardous to the local environment, are have trouble storing any energy produced in excess of existing demand.

Conclusion

Production from renewable energy sources has seen dramatic growth in recent years and estimates suggest that growth will only continue, if not speed up. But despite the recent success of the renewable energy industry, as oil prices remain low money could easily move back toward traditional sources power. Yet doing so would almost certainly be bad for business–the decline in oil’s price is not the sign of a prosperous future, but a perilous one. Renewable energy sources are growing quickly and are already becoming competitive with traditional, dirty sources of electricity. Even much-publicized failures are showing signs of improvement–the Department of Energy’s loan program, which gave the infamous Solyndra loan, is now turning a profit from interest.

Renewable energy certainly has many hurdles to jump through as far as environmental impact, scale of production, and effective storage. The industry will also need to become less dependent on tax breaks, though signs of that are already emerging. If state and federal programs continue to support the growth of new energy sources, the United States may be able to meet its goals for renewable energy production in the coming decades.

Resources

FactCheck.org: Obama’s Wind Energy Claim

NPR: Wind Power Continues Steady Growth Across The U.S

Solar Energy Industries Association: Solar Industry Data

Center for Climate and Energy Solutions: Hydropower

The Break Through: Growth of Biomass far outstrips Growth of Solar and Wind

Geothermal Energy Association: 2015 Annual U.S. & Global Power Production Report

Energy.gov: About the Federal Energy Management Program

EPA: State and Local Climate and Energy Program

Scientific America: Strong Future Forecast for Renewable Energy

Union of Concerned Scientists: Renewable Energy Can Provide 80 Percent of U.S. Electricity by 2050

The Huffington Post: The Paris Climate Conference is Over, but the Renewable Energy Transformation Has Kicked Into High Gear

NPR: After Solyndra Loss, U.S. Energy Loan Program Turning a Profit

Michael Sliwinski

Michael Sliwinski (@MoneyMike4289) is a 2011 graduate of Ohio University in Athens with a Bachelor’s in History, as well as a 2014 graduate of the University of Georgia with a Master’s in International Policy. In his free time he enjoys writing, reading, and outdoor activites, particularly basketball. Contact Michael at staff@LawStreetMedia.com.

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The Grid is the great bane of renewable energy aspirations in the United States. An all pervasive electrical infrastructure links together power plants, homes, and anything else that contains a switch or button. Regardless of the company with whom one is registered, everybody gets a share of everybody else’s energy. That is to say, all power companies inject their energy into the grid; a customer simply pays premiums to a particular producer.

The same principle applies with green energy. Supposing a customer gets his bills from Company Green, this does not mean that his home has a minimal carbon footprint; the building is getting energy from the grid, which also includes energy produced by Company Brown. There is still merit in this, though, as the more money a green energy company accrues, the more effective it will be at diluting the grid with green energy. Hopefully in time, the entire grid will be green. In the meantime, the grid poses additional challenges.

Solar power has been gaining ground as of late, but it continues to meet opposition from the large utility companies it threatens. The genius of solar power, aside from the fact that it is clean energy with massive potential (the Sun produces so much energy that an hour’s worth could power the entire Earth for a year), is that it decentralizes the grid.

Solar used to be an unreliable and erratic form of energy to inject into the grid and share among customers. Now, however, private homes can draw nearer to energy self sufficiency. Furthermore, solar-powered homes are able to contribute energy to the grid themselves. Utility companies balk at this, declaring that the grid is designed for one-way flow. They go further, writer Edward Humes explains, in attempting to label solar customers “as mooching ‘free riders’ who avoid paying their fair share for the grid.” This is a misrepresentation of the dynamic; utility companies are simply losing customers. If a more favorable alternative provides one with a chance to opt out of complete dependence on the previously established grid, why not do so?

The crowning cause of opposition by utility companies to solar power is the concept of net metering. This policy enables solar homeowners, upon producing surplus energy, to receive credits from power companies as they distribute it back into the grid. In this sense, customers can easily overcome the initial costs of retrofitting their homes with solar panels, as they will not only save money on their energy, but can actually make money selling it back. In what Al Gore calls the Utility Death Spiral, their losses exponentially increase as they lose customers to this process, then consequently must raise prices on those who remain, who subsequently leave the grid as well.

Another factor influencing the appeal of solar power and its grid decentralization is that the barriers posed by storage are less and less significant. Aside from playing a substantial role in the possibility of net metering and generating surplus energy to sell back, increased and more efficient storage capacity enables solar users to fill in the gaps in cloudy stretches or during the night and provides for a more fluid energy-consuming experience.Furthermore, it decentralizes the grid; the individual and the community are more able to place their energy and their fates in their own hands. As Humes points out, it can “allow homeowners to form small, super-efficient neighborhood micro grids that huge, costly utilities could never outcompete.” It would be efficient because the generation and use of energy would be based on the specific neighborhood’s needs, as opposed to a more generalized, business- and profi- motivated number.

A Solar Neighborhood, courtesy of Lauren Wellicome via Flickr

Micro grids are flexible, adaptable, and have geographic advantages. An insightful article from David J. Hayes at The New York Times showcases the merits of renewable energy in remote places where the grid thins out or is non existent. In small Alaskan villages, residents are compelled to utilize dirty and expensive diesel generators to meet their energy needs. Setting up a renewable energy system there on a micro grid would alleviate such a burden, while providing eco-friendly and more affordable power to the people. For residents in northern climes, Hayes details, wind power will probably be more common, while solar systems are likely to appear in more tropical settings. This furthers the argument, demonstrating that other forms of renewable energy can also operate on micro grids and provide all the advantages therein.

Solar power has also met opposition from the political and governmental arenas. Perhaps because the centralized nature of the current electrical system is conducive to the control and oversight preferred by ruling bodies, or perhaps because of initial economic barriers or higher perceived priority of other objectives, the necessary funding for solar installations is difficult to come by. While Arizona maintains the top spot in the country for its solar program, New Jersey often surprised people with the number two position. Now it has dropped to number five. Governor Christie and his cabinet have removed the rebate incentives for solar installations, and, in addition to diverting funding for solar and offshore wind projects to balancing their budget, have been providing subsidies for natural gas power plants.

While solar power and energy democratization may be slowly winning the battle against utility companies, there clearly are additional barriers to solidifying its foothold and future. Solar power is unique among current renewable energy options, though, as the economic incentives for it are in place; the transitions that must be made in order to come on board are very doable. That being the case, convincing the nay sayers of its viability will hopefully be more and more common. The future of solar power seems sunny indeed.

Franklin R. Halprin

Franklin R. Halprin holds an MA in History & Environmental Politics from Rutgers University where he studied human-environmental relationships and settlement patterns in the nineteenth century Southwest. His research focuses on the influences of social and cultural factors on the development of environmental policy. Contact Frank at staff@LawStreetMedia.com.

The post Solar Power Could Change Everything You Know About Energy appeared first on Law Street.

On December 18, 2013, Senate Finance Committee Chairman Max Baucus unveiled a discussion draft for an energy tax reform plan intended to make progress in the federal government’s current system of corporate tax incentives for the production of clean energy. The old system was criticized as being too complicated and too decentralized. Read on to learn about Baucus’ energy plan, the arguments in favor of it, and the arguments against it.

What was Baucus’ plan?

There are forty separate tax incentives offered to corporations for a variety of forms of energy including fossil fuels, wind, solar, and nuclear power; however, many of these are short-term incentives set to expire every two years or so until they are re-authorized by Congress, often leaving companies unsure of which tax incentives would still be in effect in the future. These incentives are also often specific in a way that does not provide for new and emerging technologies that may contribute to reducing emissions.

Senator Baucus’ plan aims to make energy tax incentives “more predictable, rational, and tech-neutral” by consolidating some of these incentives and eliminating others to form two broader and simpler tax incentives, one focused on clean production of electricity and one focused on clean production of transportation fuel. These incentives are granted after a particular plant is using a method that produces emissions intensity 25 percent cleaner than average energy production methods (“emissions intensity” is measured as the amount of emissions released per amount of energy produced, and is used to compare the environmental effect of different methods of energy production).

Baucus’ plan also calls for using the federal money saved through this tax reform to lower the corporate tax rate, which currently stands at 35 percent. Baucus, however, was confirmed in January as the next US Ambassador to China, and though leadership of the Senate Finance Commission will transfer to Senator Ron Wyden, who has worked closely with Baucus on this reform plan, many expect the plan to become stalled as its leader moves overseas. Despite this uncertain future, Baucus’ reform plan is seen as an indicator of impending reform to the current energy tax system in the United States.

What is the argument for Baucus’ plan?

Supporters of the reform say Baucus’ plan is an effective way to simplify the tax incentive structure while supporting clean energy. Companies would not have to waiting on their toes to see whether the particular incentives that apply to them would be renewed, and knowing that these incentives will have more longevity would promote more investment into clean energy production technology projects in the future. Most importantly, this reform plan is tech-neutral, meaning that it does not favor certain technologies over others and in fact does not specify any technologies in its incentives.

Supporters argue that this aspect of the plan will benefit newer and cleaner technologies that may not necessarily fit into the rigid outlines of our current tax incentives, thus paving the way for further innovation and investment into energy-producing technology. Additionally, many of the incentives that are to be eliminated and not included in the broader transportation fuel incentive are tax breaks that benefit Big Oil, a move hailed by many supporters who do not see the point of offering tax breaks to companies in an industry that has shown record profits year after year [cite]. Lastly, with the federal revenue gained from simplifying the tax incentive structure and removing breaks for big oil companies, Senator Baucus’ plan intends to lower corporate tax rates, which supporters hope will provide impetus for further economic growth.

What is the argument against Baucus’ plan?

Others are strongly opposed to this reform plan due to its emphasis only on energy producers (companies that use coal, fossil fuels, wind, solar and other methods to produce energy) and not energy users (all other private citizens and companies that use electricity, gasoline, etc.), and because the emissions reduction quotas of the incentives are, as one critic put it, “unambitious”, and would have little effect on improving the environment.

The two main tax incentives of Baucus’ plan target producers of electricity and transportation fuel, with no mention of companies that use energy in a cleaner way. This means that companies that make their buildings more energy efficient, companies that manufacture environmentally-friendly appliances and cars, and the individuals who use these greener manufactured goods would no longer receive the tax incentives they currently receive. Many opponents see this as being counter-productive in the struggle to promote cleaner energy technologies.

And while this plan does target energy production, many opponents point out that this plan would actually reduce incentives provided to areas such as solar and wind power. Whereas currently producers of solar power receive an investment tax credit of 30 percent, under this new plan they would only be entitled to either a production tax credit of $0.023 per kilowatt or an investment tax credit of 20 percent. Therefore, despite favoring carbon-free methods of energy production, many opponents feel this plan will do little to help area such as solar, wind, and other green energy production.

There has also been a backlash from the oil and natural gas industry, as well as from areas such as Montana and North Dakota who have a fledgling oil industry, arguing that by favoring carbon-free technologies the plan would be stifling job opportunities and economic growth brought about by the oil industry. Lastly, some opponents of the plan argue that the reduction quotas are too low. One critic points out that a 25% reduction in emissions “intensity”, which is the wording used in the discussion draft, is vastly different from a concrete measurement of emissions, and depending upon economic growth and the relative amount of energy these companies are producing, companies could meet this quota without any serious reduction in emissions. On a broader scale, some oppose tax incentives for alternative energy production altogether, arguing that global warming is, as indicated by its name, a global phenomenon, and that any reduction in emissions in the US is offset by emissions due to economic growth in developing countries, where environmental legislation is often more lax.

Conclusion

It’s clear that something needs to be done to fix the very confusing and red-tape-littered energy tax process. While there are certainly tangible benefits to Baucus’ plan, opponents worry that it would do more harm than good.

Resources

Primary

U.S. Senate Committee on Finance: Baucus Unveils Proposal For Energy Tax Reform

U.S. Senate Committee on Finance: Energy Tax Reform Discussion Draft

Additional

American Progress: Baucus Tax Reform Cuts $46 Billion in Oil Breaks

Domestic Fuel: Senator Max Baucus Unveils Energy Tax Reform

EE News: Baucus Proposal Replaces Dozens of Energy Breaks with Credits for ‘Clean’ Fuel, Electricity

BioMass Magazine: Sen. Baucus Releases Proposal To Overhaul Energy Tax Incentives

BillingsGazette: Baucus’ Tax Reform Must Be Fair To Energy Industry

ThinkProgress: Max Baucus’ Renewable Energy Tax Break Reform: The Good, The Bad, and The Ugly

Daily Caller: Analysis: Baucus Energy Tax Plan Comes With Dubious Benefits

Breaking Energy: Are Subsidies the Answer to Energy Sector Tax Reform?

Solar Industry: Baucus Energy Tax Reform Plan Reduces Solar Investment Credit

Washington Post: The Way Congress Funds Clean Energy Is A Mess. Max Baucus Thinks There’s A Better Idea

Politico: Baucus Proposes To Overhaul for Clean-Energy Tax Breaks

Lexology: US Teax Reform Update: Senate Finance Chairman Baucus Issues Energy Tax Reform Proposal

Hill: Baucus Proposes Dumping Energy Breaks

Tax Reform Law: Baucus Proposes Major Overhaul To Energy Incentives

Joseph Palmisano

Joseph Palmisano is a graduate of The College of New Jersey with a degree in History and Education. He has a background in historical preservation, public education, freelance writing, and business. While currently employed as an insurance underwriter, he maintains an interest in environmental and educational reform. Contact Joseph at staff@LawStreetMedia.com.

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