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60 Minutes of Epic Fail and the Real Energy Policy Debates CBS Missed

60 Minutes and Missing the Point

Part of me doesn’t want to waste anymore digital ink on the CBS 60 Minutes CleanTech Crash segment. Like any national media story on clean energy, it’s effectively stirring the pot of energy and climate commentators and causing a mini firestorm. It’s clear why: it sidesteps policy debates that are too important to ignore and paints a very one-sided picture. Of course, the segment gets a couple things right, but it spends most of its runtime revisiting past problems rather than focusing on real policy issues and innovation success stories in clean tech.

ImageCBS 60 Minutes CleanTech Crash segment journalist Lesley Stahl. Courtesy of Wikimedia Commons.

The 60 Minutes piece tells the story of clean energy’s rapid fall from grace due to wasteful government failures and confused venture capitalists dragging themselves out of the clean tech industry with little to show but the clothes on their backs. It conveniently fulfills many ideological oracles, such as the government always being a failure or clean energy being a far-fetched dream of tree huggers.

To a degree, 60 Minutes’ critique of clean tech investment has some merit. As Katie Fehrenbacher wrote in GigaOm, it’s true that venture capital made a lot of investment mistakes in clean energy and has dramatically pulled back. Some VC’s are still in the energy game, but most have gone back to supporting mobile apps and social media. The anatomy of what went wrong with VC investments in energy is important to dissect, particularly from a technology readiness and innovation perspective. And I think Vinod Khosla’s thoughts on taking risks and being okay with investment failures is a spot-on message that needs to be heard (and listened to) more in Washington.

Instead, CBS uses these issues to paint a broad brush of clean tech’s doom-and-gloom. As many have already rightfully pointed out, the resulting piece can best be described as an epic failure. There is a growing list of what was wrong with the story. Dana Hull of the San Jose Mercury News points out the story fails to even mention climate change, which puts into context the reason why the United States is supporting clean tech in the first place.

Katie Fehrenbacher adds that the story confounds the failures of VC energy investments with government clean energy innovation policy. While there were also government-supported clean energy technologies that flopped in the market, they are actually few and far between compared to the larger portfolio of innovations the Department of Energy is advancing. Not mentioning clean tech success stories outside of a quick pass at Tesla ignores the key investments in research, pilot projects, demonstration projects, and manufacturing that are advancing breakthroughs in technology or growing clean tech markets.

Making this issue more damning is the revelation that it was deliberate, at least according to one of the segments’ interviewees. Even under modest oversight, this looks more and more like a “hit-job.”

But what really burns me is that, in addition to the flaws pointed out above, the segment ignores serious clean tech policy debates that are worth taking a deeper dive into. For starters, the United States is truly in the middle of a clean tech crash, just not the kind CBS tries to advance. The U.S. clean energy innovation budget — the public investments in RD&D and smart deployment — has fallen 28 percent since the 2009-10 Stimulus Act. Federal clean energy research has dropped from $7.9 billion in 2010 to $5.6 billion today. Investments pegged for demonstration projects have dropped by an incredible 97 percent since the Stimulus. And many in Congress want to continue this trend with even deeper cuts.

Making matters worse, Congress also allowed the Production Tax Credit (PTC), which supports wind technologies, to expire at the end of 2013. While I’ve been very critical of the United States use of “blunt” deployment subsidies that no longer support clean energy innovation, it’s important that there be early-stage deployment support for emerging energy technologies regardless. Rather than allowing the subsidy to simply expire, Congress should replace the PTC with a more innovation-driven tax incentive that reflects the maturation of some clean technologies, like wind and solar, but allows for future support for new tech. Of course, this is all while other energy technologies, like oil and natural gas, continue to benefit from public largesse on a permanent basis.

The 60 Minutes segment was certainly a missed opportunity. There are very real policy debates in the United States that are directly impacting the future success and failure of clean energy. The story about the nation’s deteriorating energy innovation ecosystem is one that needs to be told to a wider audience if the right reforms and investments are to be made to address climate change.

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Clayton Handleman's picture
Clayton Handleman on Jan 9, 2014 11:13 pm GMT

I think that this quote gets to the heart of how the renewable energy industry’s goals and intentions are being systematically reframed and distorted.

“Dana Hull of the San Jose Mercury News points out the story fails to even mention climate change, which puts into context the reason why the United States is supporting clean tech in the first place.”

Typically, fossil fuel interests try to discredit sources and avoid any discussion of the market’s failure to monetize externalities.  I had thought that this was just the way things played out.  But in reading the memo below, I have to wonder if it is a more systematic effort.

http://www.theguardian.com/environment/interactive/2012/may/09/wind-power-memo

I think that the renewables community would be well served to keep our eyes on the ball and make sure that the discussion is framed around the fundamental context in which so many of us operate.  That being that the market is blind to some feedbacks and does not, for example, include the net present value (cost) of climate change and a variety of other external costs. 

The other group will steer it back to a pure market discussion and, without saying it, try to create the illusion that because the current system does not monetize it, it just doesn’t matter or count or have relevance.  The purpose of subsidies and other methods of supporting renewables development and cost reduction, is, of course, to create room for this family of innovative technologies to grow and advance to maturity.  It is worth pointing out that government has had a hand in shaping how all infrastructure industries develop in the USA. 

With groups such as the American Tradition Institute seeking to master sophistry in defense of the status quo, it is important that those advocating clean energy make sure to insist that the conversation include the failure of the markets to monetize a variety of large, external costs.  There are a variety of government interventions such as subsidies, and renewable portfolio standards that can help fill the gap.  The best, of course, are market based mechanisms such as cap and trade.  Ironically, the supposed free market capitalists are adamently opposed to this efficient, technology blind, approach to capping carbon production.

I think that 60 minutes could go a long way to making up for their poor performance by doing an expose on soft money and the systematic manipulation of perception and emotion at work and funded by non-disclosing donors.  These groups pursue short term interests at great expense and manipulate sizable blocks of the population to believe and go along with logically inconsistent contentions such as climate change being a myth and use the market except when making it more efficient will favor cleaner energy sources.

Paul O's picture
Paul O on Jan 10, 2014 12:42 am GMT

I don’t particularly like 60 mins, and haven’t liked them since the 70’s, but If keeping one’s eyes on the ball is what counts, then the failure of renewables to significantly impact climate change in spite of gov’t sponsorship, and their unlikeliness of averting the  Climate Tipping Point should have been highlighted by 60 Mins.

To be Blunt, 60 Mins like Renewables are both fails here.

Rick Engebretson's picture
Rick Engebretson on Jan 10, 2014 3:03 pm GMT

I share some of your perspectives Matthew. May I offer some different next policy steps.

I’ve been in this renewable energy game since hippie times. The difference was I actually got some skills first. The head of the Biophysics Dept. came up and wondered what the hell I was doing out here. The answer was “I was learning.” And learn I did, and still am learning, and will until the day I die.

This era is almost completely disconnected from the only Earth they have. Few provide food, water, energy, sanitation, shelter, transportation or engage the environment. Too many people shouting, too few listening. And your generation will pay the price, big time.

As many tyrants have done, moving angry urban mobs to the country accomplishes several things. My small farm closely resembles a Siberian labor camp with no fences or fellow inmates. Right now we face a propane heating shortage because the corn growers used it to dry grain, yet the best carbon sink we know (forests) are choking from neglect and present a real danger. There isn’t enough labor, yet politicians want more unemployment benefits.

I really think something like Roosevelt’s WPA needs to be considered a first step. We need new ideas, new skills. More money to the same people will often get us the same result.

Clifford Goudey's picture
Clifford Goudey on Jan 10, 2014 11:35 pm GMT

Paul, it’s hardly the fault of renewables.  They are doing everything asked of them and can be expected of them.  The problem is a national energy policy that continues to favor conventional energy over carbon-free technologies.  The failure is the government and the private sector level of investment in their roll out. 

Paul O's picture
Paul O on Jan 11, 2014 3:37 am GMT

Clifford,

I don’t know a single renewables scheme private or government, and I include Germany, California, and Texas Wind, that is able to function without Fossil Fuels, namely Natural Gas.

Let’s not blame the (stupid) government policies alone, while excusing the Renewables Who Lock-In Carbon Fuels forever.

Clayton Handleman's picture
Clayton Handleman on Jan 11, 2014 3:59 am GMT

I guess I am missing your point.  Loads are intermittent also.  There needs to be some reserve even if we were to switch to all nuclear baseload.  So there will need to be a mix for the forseable future.  Reasonable people have differing opinions as to what that optimal mix is and it is dependent upon how serious you think the issue of externalities such as climate change is.

I would also point out that the anti-renewables faction on this blog tend to assume a 20 year lifetime for renewables, hardly “forever”.  I think that newer wind turbines are going to last longer than 20 years and am certain that the lifetime of solar PV is in the 30 – 50 year timeframe but that is still not anywhere near “forever”.

Paul O's picture
Paul O on Jan 11, 2014 5:44 am GMT

Clayton, first off, thanks to information from you and others, everyone will eventually become more in touch with the increased durability of windmills and solar panels.

The point that you are missing is that Renewables advocates are never up-front on the need fo FF back up their product  Forevermore.

You may consider my comments a mild reaction to the past and continued missrepresentation of Renewables as the only way to avert GW., and the Bandwagon Jumping by various Governmental entities and “Judges” who determine that Somehow Cold PolarVotex inflicted Minnesota would benefit with lower energy costs from Solar Power, than from Natural Gas.

I weary of incessant embarrassing anouncements from renewbles fans, of oh so and so many GW of solar in Germany..enough to replace say 8 Nuclear plants. Forgetting to mention that it was peaking powere on one single day. To me it is all subtle deception.

Clayton Handleman's picture
Clayton Handleman on Jan 11, 2014 10:28 pm GMT

I do not agree with your comment quoted below:

“The point that you are missing is that Renewables advocates are never up-front on the need fo FF back up their product  Forevermore.”

Where it is available, hydroelectricity is dispatchable.  In Europe Norway is providing a significant demonstration of this.  In the Northeast US, we could use that model and build cooperative agreements with hydro-quebec to get a significant amount of hydro backup.

But hydro is not sufficient to provide all backup.  And while many disagree, I am optimistic about battery storage.  Using this graph, assuming 30% growth for EVs and shifting the curve to today’s battery price of ~$550 / kwhr it appears we will be hitting $100 / kwhr by 2029 and $50 / kwhr by $2035.  And that assumes we don’t find anything better than Li-ion.  It also assumes that the primary battery purchase is for grid storage. 

With V2G much of the grid storage capital cost is paid by the car owner for transportation.  Only the asset depreciation cost is paid by the utility and that, on an as needed basis.  Additionally, as the EVs retire their batteries they can lease them to bulk storage providers.  This has the effect of prolonging their useful life and further reducing the per kwhr storage cost. 

Maybe my numbers are off by a decade, but certainly no more than that so we end up with affordable non-fossil fuel backup by 2035 and worst case by 2045.

In the near term I agree that renewables need to be offset by fossil fuels but it is by no means a “forever” proposition.

Nathan Wilson's picture
Nathan Wilson on Jan 12, 2014 1:16 am GMT

Clayton, your battery experience curve shows the battery costs dropping forever.  The real world doesn’t work that way (outside of the electronics industry).  For example, the huge surge in car purchases due to China is doing nothing to lower the cost of lead-acid batteries; technology always asymptotically reaches a point of maturity, where costs bottom out.

Nathan Wilson's picture
Nathan Wilson on Jan 12, 2014 1:30 am GMT

In the distance future, after the fossil fuel age is over, I think it is likely that we will run all power plants at maximum output, and balance grid loads using dispatchable fuel synthesis (one example is “power to gas” for methane but NH3 is cheaper).

Fuel made this way generally costs more than fossil fuel, so I don’t think this will be popular in the US for a while.  However, it is likely that nations like China and India with their low cost labor and therefore low cost nuclear power could make syn-fuel today that would be cost competitive with imported oil.  Furthermore, it is likely that thermo-chemical syn-fuel plants, powered by high temperature Gen IV nuclear plants could be built in the US which would have a fleet average fuel cost (averaging old and new plants) which is competitive with imported oil.

So, no.  We do not need a mix of fossil fuel in our energy system.

Clayton Handleman's picture
Clayton Handleman on Jan 12, 2014 3:07 am GMT

Nathan,

it is a log plot.  Plot it linear and it will appear asymptotic. 

From 1997 – 2012 the world produced over 1 billion autos.  I could not easily put my hands on figures prior to that but I think it is very safe to say that the world has produced well in excess of 3 billion autos.  China’s 20 million last year is insufficient to cause a cumulative doubling of batteries.  Nor would the world production of over 80 million autos nor would the prior decade and a half of 1 billion autos. 

PV modules only drop 17% per CUMULATIVE doubling.  If auto batteries have a similar constant then it would take well over two decades to see any impact on car battery retail prices let alone wholesale.  Now throw in inflation and other complicating factors that mask it and I am unclear as to where you came up with your number.  If you have a reference please post, I would be interested to see it.

In defense of my numbers I would point out that there is a growing chorus of analysts that are putting Li-ion at less than $200 / kwhr by 2020 and McKinsey projects $160 / kwhr by 2025.  So my number of $100 / kwhr by 2029 is not unreasonable.  

Going with that and consider that battery packs will be retired from use in the auto when they only provide about 70% of the range.  So if rather than immediately recycling them, they are first leased to, or sold to a utility scale storage facility to get the many remaining cycles out of them that otherwise would not have been used, this portion of their life is a freebie.  Seems pretty safe to say that that portion of their lives would be had at a price of $50 / kwhr.   And if we actually do hit my 2035 prediction of $50 / kwhr new then the price of storage starts to look almost negligible.

Remember, I don’t think any credible person is looking at a transition to renewables in 10 years.  Personally I am looking for complete transition by 2050.  Even if we could do it in 10 years I would not favor it because of the economic disruption of collapsing the FF industry at that rate.

 

Nathan Wilson's picture
Nathan Wilson on Jan 14, 2014 1:37 am GMT

Ok, I see what you are saying about the learning effect appearing to be asymptotic when volumes get really huge.  But I also think that the cost of thing can be broken down into to costs which are unique to that item (so they have a learning effect which is unique) and generic components like energy or steel.  These generic components are used in such huge volumes already that no amount of doublings in the production volume of batteries will effect their cost; hence they put a cost floor on the battery cost curve.  Note the Faraday effect will impose a lower limit on the amount of energy that goes into manufacturing a battery.

I have not seen cost projections for advanced batteries which are actually based on material and energy inputs, so I will not dispute your numbers.  However, I will note that a battery that costs $50/kWh, when amortized over 1000 cycles (more than a brand-new NiMHyd battery can deliver), must markup the cost of energy by $50/kWh/1000= $0.05/kWh, even before labor costs, balance of system costs, and round trip losses are included.  So I would not call this cost “negligible” for grid storage (it’s great for cars though).

Clayton Handleman's picture
Clayton Handleman on Jan 14, 2014 3:39 pm GMT

I replied at the top because the thread is making these too skinny.

Clayton Handleman's picture
Clayton Handleman on Jan 14, 2014 6:25 pm GMT

Nathan,

Point well taken.  The number of useful cycles is important and, experience curves do die out when the product costs become dominated by a commodity or raw material.  My position is not that everyone should agree that Li-ion is the answer.  But rather that it is unreasonable to dismiss it as a possibility and not just as a hail Mary possibility but one with significant potential.  I think it is fair to say, at this point, far more demonstrated potential than, for example, CCS which is still in the R&D phase to the best of my knowledge. 

It would be great if someone in the battery industry, or who has studied it, could publish a post that discusses the battery development paths and, for example, what the hard stops for costs are and whether there are likely work-arounds.  

Here are a couple of thoughts regarding the numbers that have been guiding my thinking:

McKinsey puts it as reasonable to expect $160 / kwhr by 2025.

These guys published some curves on page A530 of their report that suggest that the useful life of Li-ion batteries can be in excess of 5000 cycles before being retired from transportation applications with still more to go for, say, grid backup.  So that puts it at $0.032 / kwhr.  If I have my new EV and start seeing $0.32 / kwhr at peak demand or when renewables cut out, I likely will set my car to sell to the grid (10x is a pretty good return). 

If they can get another 2500 cycles as aftermarket bulk storage and they pay $50 / kwhr for the battery (after it has been used in the car at $160), then that has the dual benefit of effectively reducing the LCOE of the EV and providing grid stabilization for under $0.03 / kwhr.  And it is hard for me to imagine that $160 / kwhr is a hard stop over a 25 year planning horizon.

While McKinsey is not the be all and end all, the fact that both they and Navigant are making comparable projections and each has significant resources to apply in researching it, I take it as a very credible number. 

 

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