Green Energy War
Pontifical Years: 2008 - 09
By John Geesman
Smashwords Edition
Copyright 2010 John Geesman
License Notes:
This free ebook may be copied, distributed, reposted, reprinted and shared, provided it appears in its entirety without alteration, and the reader is not charged to access it.
Enjoy John Geesman's other free ebook at Smashwords.com:
Contents
Chapter 1: About Green Energy War
Chapter 3: Beware the Ides of March!
Chapter 4: Does CCS Establish a Wartime Cost Frontier?
Chapter 5: IPCC Sets Climate Front Timeline
Chapter 6: Carbon Capture and Sequestration in Europe
Chapter 7: Lightbulbs -- Home Front in the Green Energy War
Chapter 8: DOE Efficiency Standards -- Historic Weak Link
Chapter 9: UK Embraces New Nuclear, Coy About Subsidies
Chapter 10: Entergy's Nuclear Spinoff -- No New Construction
Chapter 11: UK Renewables -- Beating Your Head Against a ROC
Chapter 12: Border Carbon Charges -- A Whiff of Mustard Gas?
Chapter 13: Feed-In Tariffs -- A Redistribution of Power?
Chapter 14: Motivating the Generals
Chapter 15: EVs in Israel -- Energy Security on Wheels?
Chapter 16: NRG -- Candor on What Holds Back Nuclear Energy
Chapter 17: CARB's ZEV Retreat -- Dunkirk or Dien Bien Phu?
Chapter 18: McKinsey -- 17% IRR from Productivity Investments
Chapter 19: McKinsey, Pt. 2 -- Where the Gold Is Hidden
Chapter 20: McKinsey, Pt. 3 -- Seizing the Gold
Chapter 21: 10 Candles for the California ISO
Chapter 22: LBNL -- Reading the Utility Planning Tea Leaves
Chapter 23: EIA Oil Price Forecasts -- the Limits of Intelligence
Chapter 24: Feed-In Tariffs Pull AES Solar Strategy Away from US
Chapter 25: Misunderestimating Bush's Climate Prattle
Chapter 26: Misunderestimating Bush, Pt. 2 -- Clean Coal Katrina
Chapter 27: Misunderestimating Bush, Pt. 3 -- Thumb on the Scale
Chapter 28: Misunderestimating Bush, Pt. 4 -- Contempt of Court
Chapter 29: Biofuels Smackdown – When Words Fail
Chapter 30: Biofuels – Wouldn’t We Miss 500,000 Barrels a Day?
Chapter 31: Biofuels – Confusion, Conflict Among Allies
Chapter 32: Biofuels – Low Carbon Fuel Standard to the Rescue?
Chapter 33: Will Edison’s Solar Play Trigger a Feed-In Tariff?
Chapter 34: New EIA Oil Price Forecast – Oops, We Did It Again
Chapter 35: How Big a Nuclear Renaissance Did We Buy?
Chapter 36: CBO Nuclear Report, Pt. 2 – Construction Cost Peril
Chapter 37: CBO Nuclear Report, Pt. 3 – Mitigating Factors?
Chapter 38: CBO Nuclear Report, Pt. 4 – EPAct’s Limited Role
Chapter 39: Where, Oh Where, Have the CCS Projects Gone?
Chapter 40: General Motors – The Consequences of Strategy
Chapter 41: IEA Climate Report – The Relentless Logic of War
Chapter 42: IEA Report, Pt. 2 – Decarbonizing Generation
Chapter 43: IEA Report, Pt. 3 – Transport Sector Most Difficult
Chapter 44: IEA Report, Pt. 4 – Five Weak Links
Chapter 45: German Cabinet Bolsters Merkel’s Hokkaido Stance
Chapter 46: Stage Set for New Renewables Strategy in UK
Chapter 47: A Policymaker’s Cookbook for Feed-In Tariffs
Chapter 48: EIA Fudges Update to Longterm Oil Price Forecast
Chapter 49: California’s Climate Plan Snowball Starts Its Roll
Chapter 50: UK Renewables Policy – No ‘Rule, Brittania’ Just Yet
Chapter 51: UK Renewables, Pt. 2 – Churchill or Friedman?
Chapter 52: Will the UK Require New Coal Plants to Use CCS?
Chapter 53: Discount Rates – The Divine Right of Economists
Chapter 54: Discount Rates, Pt. 2 – Why They Matter So Much
Chapter 55: So How Expensive is US Gasoline Anyway?
Chapter 56: Enhanced Geothermal – Drill Here, Drill Now?
Chapter 57: Enhanced Geothermal – Drill Here, Drill Now, Pt. 2
Chapter 58: Feed-In May Ease Southern California Squeeze
Chapter 59: Efficiency – California’s Oldtime Energy Religion
Chapter 61: McKinsey Finds $680 Billion Tumor on US Economy
Chapter 62: Who Brainwashed Texas on Renewable Energy?
Chapter 63: The Coming Nuclear Assault on the US Treasury
Chapter 64: Why Moody’s Thinks New Nukes Are for Losers
Chapter 65: A Welcome Maturation in the LEED Rating Process
Chapter 66: Will Areva’s Finnish Fiasco Spook US Taxpayers?
Chapter 67: Upon Being Named a Clean Power Champion
Chapter 68: UK Energy Leaders – Losing Their Religion?
Chapter 69: Free Trade, Global Warming, and Beliefs of Elites
Chapter 70: PG&E’s Sham Ballot Measure Brings the War Home
Kierkegaard probably got it right when he confided to his diary that life must be lived forwards but understood backwards. While Barbara Tuchman waited some five decades before trying to make sense of the run-up to World War I, the DIY instant analysis made ubiquitous by the internet places a higher premium on the time capsule itself than on the reflections it spawns. And so I submit my message-in-a-bottle chronicle from a propitious time.
When I completed my term on the California Energy Commission in early February, 2008, I centered my post-government calendar on a cognoscenti-focused blog (www.greenenergywar.com) and my speaking schedule as the board co-chair of the American Council on Renewable Energy. What follows are the individual blog posts and podcasts, although web vernacular would characterize Chapter 1 and Chapter 2 as free standing “pages” from the greenenergywar site.
Arnold Schwarzenegger’s global celebrity (I was a late-term, holdover appointee of his predecessor) drew considerable attention to California’s climate policies. My perspective was rooted in the earlier, unforgiving financial pragmatism that tilted the state’s energy dialogue so heavily (and controversially) toward efficiency and renewables in the late 1970s.
Advocates bring some shortcomings to the job of punditry, especially if they observe the sports discipline of not kvetching while their team has the ball. Mothers advise children that silence is the correct response when nothing nice can be said. Literary critics often glean more meaning from the white space, what is not written, than from the words on a page.
Still, the primary virtue in the dwindling number of entries after late 2008 may have been the pressure build-up of a capped well. Inevitably, the feedstock for this ebook – white space included -- became a weird and unintended prequel to the exuberantly nonfiction novella, 21 Machetes.
The opinion polls suggest that California voters next week will decisively reject Proposition 23, which would have effectively repealed the state’s Global Warming Solutions Act (aka AB 32). If so, the electorate will affirm a decades-long embrace of a high expectations energy policy. And send a welcome signal to a despairing world.
JG
Orinda, California
October 26, 2010
Chapter 1: About Green Energy War
War as metaphor is a dubious tradition in modern American politics. Presidents use it to effortlessly summon urgency, priority, mobilization and (implied) sacrifice for a crusade against some amorphous foe. In the past several decades, various Commanders in Chief have declared wars on Poverty, Crime, Drugs, Cancer, Inflation, and Terror.
Many will observe that these jihads never succeed, especially when measured by the grandiose objectives and optimistic time frames announced at launch. With no Homosapien adversary from which to extract a formal surrender, how are these wars supposed to ever end? How will we know when we’ve won? Politicians’ use of war as metaphor may rely more on the Cold War “perpetual struggle” trope than the WW II “finite resolution” model. This realization doesn’t undermine the original motivation behind the policy as much as it limits the ongoing conceptual usefulness of the metaphor.
Within 90 days of taking office in 1977, President Carter declared U.S. energy challenges “the moral equivalent of war”, borrowing a phrase from the early 20th Century pacifist philosopher, William James. “With the exception of preventing war,” Carter said, “this is the greatest challenge our country will face during our lifetimes.”
Carter’s take was centered on resource scarcity: “We simply must balance our demand for energy with our rapidly shrinking resources,” he said. “Our energy problems have the same cause as our environmental problems — wasteful use of resources.” He called for a shift “to strict conservation, and to the use of coal and permanent renewable energy sources, like solar power.” The alternative to his proposals, by Carter’s estimation, “may be a national catastrophe.” As he observed, “Our decision about energy will test the character of the American people and the ability of the President and Congress to govern.”
Well …
Without rehashing the Carter Administration’s political effectiveness, technological choices, or allegiance to market mechanisms — all worthy topics better left to a more contemporary context — one conclusion seems beyond dispute: the United States (and the world) is in a worse energy position today than it was when Carter spoke. U.S. oil imports, the most politically salient indicator, tell the story in shorthand: an annual average of 8.6 million barrels per day in 1977; reduced to 4.3 million barrels per day in 1985; and increased to 12.4 million barrels per day in 2006, the most recent data available. Dependence on imports went down from 47% in 1977 to 27% in 1985, but ballooned to 60% by 2006.
Blame it on the policies. Blame it on the commanders. Blame it on the troops. Blame it on the public. Regardless the cause, the Moral Equivalent of War evolved pretty quickly into the Moral Equivalent of Desertion.
Concern about accelerated global warming was not on the policy radar screen during Carter’s era. The momentum with which policy elites around the world have taken up the climate change imperative may reinvigorate the war metaphor. Al Gore, in his Nobel Prize acceptance speech, observed that, “without realizing it, we have begun to wage war on the earth itself. Now, we and the earth’s climate are locked in a relationship familiar to war planners: ‘mutually assured destruction.’ ” (Ironically, the aforementioned William James, opposed to war but impressed by the civic bonding associated with militias, proposed a system of national service that would conduct “warfare against nature”.)
But the stop-the-war meme, which resonates with many drawn to environmental issues, may not have the scalability or economic growth potential of its win-the-war cousin. The American yearning to provide leadership to a world adrift, the prospect of at least putative allies around the globe in common cause, the anticipated ease of enlisting industry in profitable pursuit of unassailable objectives … it is heady stuff. Are we prepared to pay any price, bear any burden, endure any hardship in the long twilight struggle of our time?
On the ground, where the consequences of war are experienced firsthand, outcomes are determined by choices — often by choices made far away. What technologies are deployed? How are they paid for? Do energy security priorities conflict with environmental objectives? What subsidies are deemed essential to the greater good? Should strategic emphasis tilt toward bottom-up pluralism or top-down authority? What mix of price signals and government edicts is best? How does consent compete with coercion? What role does social equity play? When does transparency trump secrecy? Who decides which competing public values should prevail?
Metaphor is of limited utility in public debate, but that’s more than none at all. As we say in California to the motorcyclists: “even if the helmet’s fit leaves something to be desired, put the damn thing on your head — for your benefit and for ours.” This is the Green Energy War.
Ten Time-Weighted Footprints in the Soft Sand of My Public Psyche:
1. 19 years (from 1983 to 2002) as an investment banker in the American bond markets, an unavoidably conservatizing experience regarding financial matters. Rule of law, sanctity of contract, ability and willingness to pay debt service as scheduled — these are the underpinnings of civilization, in my view.
2. 18 years (from 1951 to 1969) growing up in Lakewood, California, one of the original blue collar insta-suburbs built after World War II on the Levittown assembly line model. Civic equality was presumed with every fourth house a carbon copy.
3. 11 years (from 1978 to 1983 and from 2002 to 2008) of government service at the California Energy Commission, most recently as a Commissioner and earlier as Executive Director. Both experiences centered on the efficiency/renewables recipe which has become California’s signature energy policy cuisine.
4. 8 years (from 1990 to 1998) on the Board of Directors, including 6 (from 1992 to 1998) as President, of TURN (The Utility Reform Network), California’s largest and most vociferous ratepayer advocacy organization.
5. 5 years (from 1997 to 2002) on the Board of Governors, including 4 (from 1998 to 2002) as Chairman, of the California Power Exchange, the first domino to fall in the electricity “deregulation” fiasco. Flawed design, institutional inertia, nonexistent police presence, and ham handed political response — the marketplace equivalent of Hurricane Katrina.
6. 5 years (from 1973 to 1978) as a political activist, including work on the campaign staffs of successful candidates for Mayor of Los Angeles and Mayor of San Francisco and unsuccessful candidates for President and State Senate; co-authorship of a book on the sorry performance of the state Consumer Affairs department; lobbying on behalf of the Nader-inspired California Citizen Action Group; and helping to found one of the first solar water heating businesses.
7. 4 years (from 1969 to 1973) at Yale when it was described — by the snarkily envious Harvard Crimson — as “the bell-bottoms in the Ivy League family”, originally planning to be a journalist and finding a degree of encouragement as a Managing Editor of the Yale Daily News and stringer for the New York Times, only to succumb to the virulent disease of applying to law school instead.
8. 3 years (from 1973 to 1976) of alienation at the UC Berkeley Boalt Hall School of Law, immaturely put off by the trade-school-for-shysters aspects (e.g., assigned reading razor-bladed from library books) and prone to the diversions described in #6 above.
9. 3 years (from 1999 to 2002) as Chairman of the California Managed Risk Medical Insurance Board, growing enrollment in the State Children Health Insurance Program from 50,000 to 632,000 and creating real benefit for real people.
10. 2 years (from 2006 to present) as Co-Chair of the Board of Directors of the American Council on Renewable Energy (ACORE), carrying a California torch to light (zero emission) bonfires across the planet.
Chapter 3: Beware the Ides of March!
Coming soon to a parapet near you. Keep your eyes on this space!
Chapter 4: Does CCS Establish a Wartime Cost Frontier?
The presence of abundant deposits of coal in China, India, the United States — and its general lower cost as a feedstock compared to other energy sources — creates a presumption that, one way or another, this resource is likely to be used over time. Soldiers on the climate front of the Green Energy War are insistent that this only be done with full capture and sequestration of the associated carbon emissions, also known as CCS.
Permanently storing large quantities of carbon dioxide underground in geologic reservoirs is a significant scientific and institutional challenge. Demonstration of integrated systems of capture, transportation and storage in a range of different geologic settings is necessary. Resolution of issues regarding property rights, liability, site licensing and monitoring, compensation arrangements, and eventual transfer of custody to government is required. Development of a regulatory framework that inspires public support is a prerequisite for implementation on a large scale.
The significance of CCS to worldwide climate strategy was modeled in the 2007 MIT study on the future of coal. The Business As Usual scenario has annual CO2 emissions from coal climbing from 9 gigatonnes in 2000 to 32 in 2050. With CCS, annual CO2 emissions from coal are reduced to a range of 3 to 5 gigatonnes in 2050. The same MIT study characterized existing efforts to confirm the suitability of CCS as “completely inadequate.”
Notwithstanding significant differences in toxicity, parallels to the still unresolved challenges of nuclear waste disposal are hard to dispel. The pertinent question for military planners in the Green Energy War: what does it cost to capture and sequester a tonne of CO2? According to the California Energy Commission, between $50 and $100 per tonne for capture and compression — believed to be 70 to 80% of the total — with transportation and storage costs varying by site.
Is this the outer cost limit against which other climate change mitigation strategies should be measured?
Chapter 5: IPCC Sets Climate Front Timeline
The most active front in the Green Energy War this past decade has been the international crescendo of alarm about climate change. The “Fourth Assessment Report” published by the IPCC in November, 2007 defines the time frame by which governmental actions should be evaluated. As summarized by DEFRA, the environmental agency of the UK national government, the relevant points are:
• Global emissions must peak in the next decade or two and then decline to well below current levels by the middle of the century if we are to avoid dangerous climate change. This is economically and technically feasible, and can be achieved by technologies available now. Postponing action to cut GHGs will make it more difficult and costly to reduce emissions in the future, as well as create higher risks of severe climate change impacts.
• Our actions in the next decade will have a large impact on opportunities to avoid dangerous changes. Low carbon technologies are available, but without global agreements on emissions and effective policies to put technologies in place, GHGs will increase rapidly. Putting a price on carbon, so that polluters pay the price of their emissions, is critical. Governments must also invest more in energy RD&D to deliver technologies that supply the growing demand without emitting GHGs.
These are bracing insights from a Nobel Prize winning scientific panel. They provide a good benchmark for judging proposed strategies as the EU member states and the US move into the serious stage of political debate. Those determined to win the Green Energy War will demand nothing less.
Chapter 6: Carbon Capture and Sequestration in Europe
Carbon capture and sequestration, the waste disposal technology underpinning the “clean coal” vision, is perceived by many as a strategic weapon in the Green Energy War’s climate front — if for no other reason than to accommodate the seemingly irrevocable commitment China and India have made to coal to fuel their economic development.
Whether vision or mirage, the belief that CCS can make coal an acceptable fuel in a carbon-constrained regulatory environment is a business life raft for the American and European coal industries. Their adversaries, generally motivated by environmental and worker safety concerns with a more localized impact than global climate change, place a low priority on industrial life rafts and don’t feel particularly compelled to find technological solutions to challenges emanating from China and India.
The European Union has staked quite a bit on CCS as a means to achieving its 2020 GHG reduction targets of 20% below 1990 levels. In a January 2008 strategy document, the European Commission said that without successful deployment of CCS, the ambitious targets “will never be met.” It intends to have up to 12 working demonstration projects operating by 2015.
The European Commission acknowledges that investment “in the order of tens of billions of Euros” will be necessary for successful commercialization of CCS, and that there is “no possibility of significant funding from the EU budget.” Where is the money to come from? From the private sector and from EU member states, and possibly from simply requiring that CCS be used “if investment decisions are not made quickly enough.”
Quite a contrast to the US, where the collapse of the public-private FutureGen project was announced one week later.
Chapter 7: Lightbulbs -- Home Front in the Green Energy War
Nothing in the Green Energy War has stirred the hyenas of talk radio more than Big Government’s move to override the marketplace’s judgment about lightbulbs. The energy legislation signed into law by President Bush last December sets efficiency standards for lighting which will begin phasing out the incandescent bulb — a technology largely unchanged since the 1880s — in favor of compact fluorescents, halogens and LEDs.
The new products are three to ten times more expensive, but use 75% less energy and last eight to ten times longer. Translation: they can pay for themselves through utility bill savings within a matter of a few months but last as long as ten years. What’s not to like?
Apparently quite a bit. Market share for compact fluorescents in the US last year was 6%, compared to 80% in Japan, 50% in Germany, and 20% in the UK. Market research confirms American resistance, especially among women, to a perceived inferior quality of light from compact fluorescents.
So, the radio hosts scream, where does the Nanny State get off legislating another eat-your-vegetables mandate? As is often the case during wartime, a “principled” (i.e., ideological) reliance on market mechanisms may not deliver adequate results on the timetable demanded by military planners.
The relative ease with which the future of lighting has been changed by government fiat suggests a technique likely to be revisited. This was a compromise worked out between environmentalists, other do-gooders, the industry trade association, and profit-driven manufacturers like Philips, General Electric and Sylvania. The well-publicized tightening of CAFE standards, a more difficult and more timid compromise, represented a similar override of free market doctrine in deference to wartime necessity.
The pertinent question for the American polity: are we at war or not?
Chapter 8: DOE Efficiency Standards -- Historic Weak Link
By almost universal consensus, improvements in energy efficiency represent a core strategy in the Green Energy War. Because price signals alone have not prompted efficiency improvements to a level policymakers consider economically rational, there also exists a broad consensus that a legitimate role for government is to correct this market failure and establish minimum efficiency standards for key energy-using appliances.
Since 1975, authority has been vested in the federal Department of Energy to adopt such standards and to preempt state and local governments from doing so. Manufacturers, never enthusiastic about being told how to design their products, abhor a “patchwork” market where conflicting requirements are adopted by multiple jurisdictions.
In 2005, after decades of foot dragging by DOE under both Republican and Democratic administrations, 15 states and three public interest groups sued DOE to demand that it meet its statutory obligations. A settlement was reached in 2006 that established a schedule for completion of all of the standards by 2011.
After the settlement, a 2007 report by the General Accounting Office found that DOE had missed every one of 34 statutory deadlines covering 20 categories of appliances. The slippages ranged from one to 15 years, and the rulemaking process had only been completed for three of the 20 categories. Since the report came out, standards for an additional three categories of appliances have been adopted.
But the standards finally put forward by DOE leave a lot to be desired — the one for furnaces can be met by 99% of existing products on the market, the one for boilers rejected a tougher joint proposal by manufacturers and advocacy groups, and the one for distribution transformers spurned a significantly more stringent recommendation from the electric utility industry itself.
This part of the federal government is a long way from combat-readiness.
Chapter 9: UK Embraces New Nuclear, Coy About Subsidies
Perhaps the most controversial question among climate activists worldwide is what role to assign nuclear power in the Green Energy War. The answer from the Labour Party government in the UK, with full support from the Tory opposition in Parliament: a very big one.
Publication in January, 2008 of the long-awaited White Paper and Parliament’s consideration of a new energy bill promise to presage similar debates in the US. But with some significant differences: the UK political culture seems considerably more sheepish about government subsidies for nuclear power than is the US.
Perhaps that’s the legacy of the ₤3.4 billion government bailout in 2003 of British Energy, which operates eight of the 10 existing plants. Perhaps it’s due to public apprehension over the estimated ₤20 billion taxpayer cost of disposing of existing waste, or the projected ₤70 billion taxpayer cost of decommissioning existing plants. Perhaps it’s because foreign companies like Electricite de France and the German utility E.On seem best-positioned to build any new plants. Whatever the reason, the White Paper seems positively squeamish in brushing up against the question of what costs the government will allow to be socialized.
Past assurances that the private sector will pay all of the costs of decommissioning and waste disposal have morphed into paying a “full share” of such costs. It is now conceded that “in extreme circumstances the government may be called upon to meet the costs of ensuring protection of the public and the environment.”
The presumed financial viability of the new plants is based on the anticipated price of carbon in the EU’s emissions trading market being high enough to make nuclear cost-effective. Attempting to avoid the words “price support”, the White Paper commits the Gordon Brown government “to reinforce the operation of the EU ETS in the UK should this be necessary to provide greater certainty for investors.”
Chapter 10: Entergy's Nuclear Spinoff -- No New Construction
The second largest operator of nuclear power plants in the US, the New Orleans based company known as Entergy, is trying to secure regulatory approval to spin off five of its 10 nuclear plants into a separate, publicly traded company initially called SpinCo. This would create the first pure play nuclear company in the U.S. stock markets at a time of growing enthusiasm in some quarters over the role for nuclear on the Green Energy War’s climate front.
The plants proposed for spin-off are fixer-uppers which Entergy bought over the past decade from their utility owners in New York, Massachusetts and Vermont. Entergy was able to achieve significant improvements in the performance of the plants — they now average capacity factors in excess of 90% — and sells their output into the deregulated electricity markets in the northeast for whatever price customers are willing to pay.
The thought is that the stock market will place a higher value on that kind of company than Entergy’s current blend of deregulated and regulated assets. Entergy, a utility holding company, is going to maintain the utility ownership of its other five nuclear plants. The output from those plants is sold to customers at prices determined by cost-based regulation.
But the proposed SpinCo only takes the “merchant generator” paradigm so far. Entergy is comfortable with the spin-off absorbing the financial risk of nuclear plant operation. It draws the line at construction risk. The new company will not be building any new nuclear plants — “if they were going to do a merchant plant,” Entergy’s CEO told the Wall Street Journal, “I’d sell my stock in the company.”
Which gets to the crux of nuclear’s financial challenge: how can private investors be sure how much it will cost and how long it will take to complete construction of a new plant? Absent the extraordinary ratepayer guarantees that politically sank the industry before, or distasteful taxpayer absorption of cost-overruns, will this technology make it to the battlefield?
Chapter 11: UK Renewables -- Beating Your Head Against a ROC
In the Green Energy War, renewable energy is generally considered to be the ultimate weapon against whatever adversary is identified: energy security, climate change, escalating fossil fuel prices, etc. Significant disagreement exists about time frames, scalability, and costs, but a broad consensus exists among policymakers that promoting greater reliance on renewables is a desirable priority for government.
British Prime Minister Gordon Brown has acknowledged it will take a “fourth technological revolution” to develop a low carbon energy sector. He takes pride in the role the UK has played in pushing the EU to adopt a 2020 goal that 20% of total energy come from renewables — although his government has negotiated a lower 15% target for the UK. After many years of mobilizing international concern about climate change, Britain derives just two percent of its energy from renewable sources — third lowest in the EU, behind Malta and Luxembourg.
In the electricity sector, where some estimates suggest a 40% contribution from renewables will be required to achieve the 15% total energy target, the UK seems hindered by its peculiar attachment to Renewable Obligation Certificates, or ROCs. Since 2002, electricity retailers have been obliged to obtain a portion of their electricity from renewables, documented by the ROCs which they buy from renewable generators.
The volatility in the price of ROCs, typical for such a thinly traded market, does not make for a very bankable revenue stream. The “feed-in tariffs” used in Germany and Spain, which rely on the visible hand of government policy rather than the invisible hand of traded certificates, have produced significantly more renewables at lower costs.
London is the center of the world capital markets. Trading instruments are almost cultural icons. Whether market dogma yields to wartime mobilization may well determine the role renewables play in the UK’s future energy mix.
Chapter 12: Border Carbon Charges -- A Whiff of Mustard Gas?
World War I saw an escalating, though not particularly effective, use of poison gas by the combatants. Because of the horrific effect on victims, more often wounded than killed, the Geneva Convention of 1925 banned the use of such weapons. Considerable opprobrium has attached to their deployment ever since.
Free trade advocates have a similar view of retaliatory tariffs, and are particularly fearful of an uncontrolled chain reaction which severely constricts global commerce.
But for countries choosing to cap their greenhouse gas emissions without putting their own industries at a disadvantage, it can seem logical to impose a carbon import fee at the border. That’s the gist of a proposal put forward in the US by the utility holding company AEP and the International Brotherhood of Electrical Workers. What better way to force China, India and other developing countries to match any American effort to fight climate change?
Unfortunately, the French have made the very same argument in an attempt to “force” de facto American compliance with the Kyoto Accord.
Legal experts believe such an approach might be permissible under World Trade Organization rules based on the celebrated “Shrimp-Turtle” case between the United States and several Asian countries. The WTO Appellate Body upheld a US law that restricted import of shrimp caught in nets without turtle excluder devices. The US restriction was allowed to impact foreign process and production methods because it related to conservation of an exhaustible natural resource.
Complexity of administration, encouragement of tit-for-tat escalation by trading partners, thinly veiled protectionism for favored industries, reinforcement of an American unilateralism that antagonizes allies, chilling effect on the world economy — all of the expected downsides will be pointed out as Congress takes up the climate debate.
Wartime often prompts extreme measures. The Green Energy War is no exception.
Chapter 13: Feed-In Tariffs -- A Redistribution of Power?
The zeal of the renewable energy movement is one of the wild cards in the Green Energy War. Opinion surveys show exceptionally broad “do-it-now” support in many countries. The depth and commitment of such support, and its ability to knock down barriers of institutional inertia, will ultimately determine the pace and scope of any transition away from fossil fuels.
Nowhere is this more true than in the electricity sector. The success of the Germans and the Spaniards in adapting an old American idea — mandatory long-term purchases by the utility grid — to renewable generation has triggered a European boom in wind and solar technologies. Giving renewable generators the legal right to “feed-in” their output to the grid at a regulated price, according to independent studies by the European Commission and the UK’s Stern Review, has delivered more renewable electricity at lower costs than other approaches tried by EU member states.
What makes this policy design so successful? It shifts bargaining power away from the incumbent utility to the renewable generator. The legal entitlement to sell its output at a predetermined price provides the stability necessary to allow long-term financing for the renewable generator.
Ample debate will occur over the appropriate price to set. Should it vary by technology? Should it vary by region? Should it vary by time of delivery? To keep the pressure on for cost reductions and technological improvements, how rapidly should prices offered for future projects decline from those offered today? These questions are not very far afield from those addressed for conventional supplies by utility regulators every day.
Policymakers worldwide are gravitating in this direction, intent on accelerating technological change. The Canadian province of Ontario and the Australian state of South Australia have recently moved forward. Legislation has been introduced in a number of American states. Even the UK is reconsidering its dubious ROCs scheme as it applies to micro-generation. Of such stuff are revolutions made.
Chapter 14: Motivating the Generals
The past several years have seen considerable, and wishful, attention paid to the role of so-called “enlightened” corporate leaders in pushing the U.S. federal government into a more activist stance on climate issues. Some of this has been calculated political strategy, a dry-eyed search by environmentalists for middle-of-the-road message carriers. More of it has been naive sentimentality, reinforced by massive advertising expenditures designed to boost company image.
The sentimentalists tend to downplay the role which providing quantifiable benefit to shareholders plays in a CEO’s job description. Shareholder value is an unforgiving metric, and usually measured over a relatively short time horizon.
It’s been a jarring season for sentiment, as three reputed climate warriors veered seriously off-message and revealed a steely pragmatism that PR consultants dread seeing on public display.
First was Bob Lutz, Vice Chairman of General Motors for product development, widely heralded father of the coming Chevy Volt plug-in hybrid wonder car: “Global warming is a total crock of shit.”
Then General Electric CEO Jeffrey Immelt of “Ecomagination” fame, one of the largest vendors of renewable energy technology in the world: “It’s no great thrill for me to do this stuff. I’m not an environmentalist.”
And finally Lee Scott, CEO of Wal-Mart, the world’s largest retailer, whose “pay-less-live-better” mantra has increasingly embraced environmental themes of late: “We are not green.”
Should any of this matter, beyond a small circle of corporate image polishers and gotcha journalists? Unequivocally, yes. Naive beliefs about business can undervalue the need to craft public policy objectives that adroitly exploit private sector motivations. A quest for false idols will divert attention from our most imperative task: harnessing America’s corporate juggernaut to the challenge of the Green Energy War.
Chapter 15: EVs in Israel -- Energy Security on Wheels?
The energy security front in the Green Energy War is broad and deep. Countries all over the world profess a desire to move away from oil — some out of concern for the environment and climate change, many from a desire to sidestep the debilitating economics of petroleum dependence, most with growing apprehension about continued reliance on OPEC exporters.
Nowhere are security concerns more intense than in Israel, where an initiative is underway to shift the automotive sector from gasoline to electricity. It’s the brainchild of California-Israeli software entrepreneur Shai Agassi, who has enlisted the Israeli government, Renault-Nissan and NEC-Nissan in a transformative effort with global ramifications. Armed with $200 million, the largest seed round venture capital financing in history, Agassi’s company, Project Better Place, aims to test its innovative business model as much as vehicular and battery technology.
The Israeli government has committed to maintain its tax incentives for purchasers of electric cars for ten years. Renault and Nissan will provide cars, minus the batteries, at prices comparable to those for gasoline-powered models. NEC-Nissan will provide lithium-ion batteries, which Agassi’s company will own and maintain along with a network of recharging outlets and battery swap stations.
Customers will be charged a monthly fee for expected mileage, like minutes on a cellphone plan. By Agassi’s calculation, there’s enough delta between the cost of powering such a car and its gasoline alternative to subsidize the purchase price of the car — perhaps to the point of giving it away. Again, the cellphone model. The intent is to make a fundamental shift in technology as frictionless for the customer as possible.
Agassi, who rose quickly through the executive ranks at SAP AG, is talking to 30 other countries. He may stumble. His numbers may be off. The batteries may have issues. The cars may cost more. The logistics of building so much infrastructure may be too daunting. But one thing is clear: new business models to deploy new technologies will be necessary attributes of the weapon systems of the Green Energy War.
And if he’s successful, it may rank in significance with Churchill moving the British Navy from coal to oil in the early 20th Century.
Chapter 16: NRG -- Candor on What Holds Back Nuclear Energy
The rhetorical fight over nuclear power continues to rage. It will retain a certain shadowboxing feel, at least in the US and EU, until markets or governments begin making the massive financial commitments necessary to construct new units.
For the past several years, the issue has been framed largely as one of technological open-mindedness. Are you stuck in an outdated, Chernobyl/Three Mile Island mindset or are you willing to think designs have improved? Juxtaposed against Bush/Cheney obstinacy on climate policy, a willingness to pursue nuclear is embraced by some as testament to the depth of their concern about global warming.
Questions about empiricism vs. faith, permanent waste disposal, and proliferation risks are generally deferred to some future Big Discussion.
Along comes David Crane, CEO of NRG, one of two US companies which hopes to use government loan guarantees to build new nuclear plants as a “merchant generator”. A primary characteristic of a “merchant generator” is that it must absorb (or lay off to vendors) all construction and completion risk — it has no captive customers, as regulated utilities do, who can be forced to eat cost overruns.
In announcing a new partnership between NRG and Toshiba, which builds a reactor originally designed by General Electric, Crane was pretty blunt with the New York Times:
This is Toshiba putting their money where their mouth is … The one principal risk you cannot lay off is who’s going to build this thing on time and on budget … On an $8 billion project, even if it is 80 percent debt, that still leaves $1.6 billion of equity, and people aren’t going to risk the $1.6 billion unless you find someone who says, ‘I’ll build that for X million and in Y months.’
Yes, he probably meant “X billion”. And no, it’s not clear that the deal with Toshiba will prove sufficient to raise the rest of the equity. Or that the equity will be sufficient to absorb all of the construction and completion risk. Nor is it certain that Congress really intended the loan guarantees to be used in such a heavily leveraged financial structure.
But Crane deserves credit for calling attention to the threshold issues of financial viability that will determine the role of new nuclear plants in the Green Energy War.
Chapter 17: CARB's ZEV Retreat -- Dunkirk or Dien Bien Phu?
The California Air Resources Board, widely regarded as the most aggressive technology-forcing regulatory agency in the world, has made a shambles of its “zero emissions vehicle” program since first mandating in 1990 that 10 percent of all new cars be pollution free by 2003 (roughly 100 – 150 thousand vehicles per annum). This week, in the fifth revision to the requirement, it reduced that target to 7,500 over the three-year period 2012-2014.
At the same time, it bumped up the number of plug-in hybrids required of the auto manufacturers during the same period to 58,000.
But with CARB’s loose definitions and complex system of credits, carry-backs, and carry-forwards, it’s difficult to have confidence those numbers will actually be achieved.
Pullbacks are never pretty, even when tactically required. This one bordered on spectacle. It brought protests from the elder statesmen of the Green Energy War’s energy security front: Reagan-era Secretary of State George Shultz and Clinton-era CIA Director James Woolsey. Shultz criticized CARB’s continued prioritization of hydrogen vehicles over “alternatives that are viable today” while Woolsey spoke of “a great disservice to our national security … increasing our dependence on oil.”
In surreal California fashion, the director of the 2006 cult film “Who Killed the Electric Car” was rolling cameras in preparation of a sequel.
The same day CARB met, California-Israeli entrepreneur Shai Agassi was in Copenhagen, announcing that Denmark will join Israel as a target market in his Renault-Nissan, NEC-Nissan joint venture to apply a cellular phone service model to electric vehicles. As with Israel, his plan is to have 100,000 vehicles in the Danish market by the end of 2010. Ironically, Nissan was one of the auto manufacturers complaining that the earlier CARB ZEV requirement was too aggressive.
CARB intends to completely revamp its ZEV program, but not until late 2009. In the meantime, market forces will determine the pace of any move toward zero emission vehicles.
Chapter 18: McKinsey -- 17% IRR from Productivity Investments
The private sector routinely outsources its most perplexing analytic challenges to management consultants. In that extremely competitive profession, the global blue chip standard is widely considered to be McKinsey & Company. Policymakers caught up in the debate over what contribution to expect from energy efficiency in the Green Energy War should give careful consideration to a McKinsey report recently presented to 450 institutional investors, Wall Street leaders, and CEOs from around the world.
Annual investments in what McKinsey calls “energy productivity” of $170 billion would cut the projected growth in global energy demand by at least half by 2020. That’s the equivalent of 64 million barrels of oil a day, or almost 1.5 times today’s total U.S. energy consumption. Achieving that reduction would deliver about half of the greenhouse gas abatement needed to hit the 450 – 550 parts per million target zone.
More significant, the investments would average a 17% internal rate of return and generate energy savings which ramp up to $900 billion annually by 2020. And the $170 billion annual investment is actually quite modest — about 1.6% of yearly global fixed-capital investment and 0.4% of yearly global GDP.
How is it that free markets have overlooked such a gaping opportunity? According to McKinsey,
A wide range of energy-market failures currently discourage consumers and businesses from embracing higher energy productivity, and they deter investors from making the capital outlays that would help end users to overcome initial financing barriers. These market failures include fuel subsidies that directly discourage productive energy use, a lack of information available to consumers about the kinds of energy productivity choices that are available to them, and agency issues in high-turnover commercial businesses.
There’s a tired joke about the economist who was disdainful of his non-economist friend for picking up a $20 bill from the sidewalk. “If it were real, somebody would have already picked it up,” is the received wisdom. But very few Green Energy War planners, let alone the economists among them, have ever made investments which compound at 17% over a lengthy period of time.
Chapter 19: McKinsey, Pt. 2 -- Where the Gold Is Hidden
As Americans have been painfully reminded several times over recent decades, the possession of and respect for sound intelligence are prerequisites of successful military campaigns. The Green Energy War is no exception, which makes a clear understanding of the recent McKinsey report on energy productivity all the more important.
The highly regarded management consulting firm concluded that investing .4% of world GDP in energy productivity improvements between now and 2020 would save the equivalent of 64 million barrels of oil a day — nearly 1.5 times current U.S. total energy consumption. Such investment would create about half the abatement necessary to hold GHG emissions to 450 – 550 ppm. And achieve an average 17% internal rate of return as well!
Where will the war planners find these opportunities? The details in the report are fascinating. Breaking global energy demand into four broad sectors, the McKinsey modeling concludes that the industrial sector would absorb 49% of the annual investment capital, the residential sector 23%, the transportation sector 15%, and the commercial sector 13%.
Geographically, developing regions represent two-thirds of the investment opportunity — with China accounting for 16% of the total. US improvements make up 22% of the capital required.
Energy savings, improvement costs, and investment returns in the 17% rate-of-return portfolio vary widely across measures and geography, as one would expect. Imposing a minimum hurdle requirement of a 10% rate-of-return, McKinsey calibrates the measures by the dollars required to displace a quadrillion btus in 2020. While the industrial sector averages a $20 billion per quad cost, the US portion costs $26 billion per quad and the Chinese portion is $17 billion per quad. But even a comparatively high cost US investment, like combined heat and power at $43 billion per quad, generates a breathtaking 36% rate-of-return.
The residential sector has a similar, if smaller, variance. The total portfolio averages $15 billion per quad, the US portion coming in at $17.6 billion (with other developed countries slightly higher) and the Chinese portion at $13.5 billion. Amazingly, residential lighting improvements in either the US or China generate a 500% rate-of-return by McKinsey’s calculation.
Eisenhower said that in preparing for battle he always found plans to be useless, but planning indispensable. Why should the Green Energy War prove otherwise?
Chapter 20: McKinsey, Pt. 3 -- Seizing the Gold
The extraordinary findings on energy productivity published recently by McKinsey & Company is a wartime anomaly. Not so much for its basic conclusion — Green Energy Warriors have long recited an energy efficiency catechism. But the magnitude (roughly half the GHG abatement needed to reach 450 – 550 ppm) and sheer profitability (a 17% rate-of-return) of the portfolio of measures should be a shock-and-awe awakening in a political debate still mired in the rhetoric of economic deprivation.
That it would take the world’s leading management consulting firm to point this out is an even bigger anomaly. Markets are not supposed to allow arbitrages of such magnitude to build up unexploited. Regardless of the “myriad policy and market imperfections” that have brought this state of affairs into being, what does McKinsey recommend be done to capture the opportunity?
It’s a surprisingly mundane list. The McKinsey report identifies “four priority areas for action that we need to get right”:
1. Set energy efficiency standards for appliances and equipment.
2. Finance energy efficiency upgrades in new buildings and remodels.
3. Raise corporate standards for energy efficiency.
4. Invest in energy intermediaries, like energy services companies and finance entities designed to profit by capturing the productivity arbitrage.
These simple themes obviously take on greater complexity when applied across international borders. By design, they rely on a mix of government and business actors as prime movers. They stretch to encompass both regulatory and market initiatives. Are they sufficient to achieve the full portfolio of productivity improvements? Probably not, but the single most striking feature of the McKinsey numbers is that they are based on an assumed oil price of $50 per barrel.
Even those Green Energy War planners most skeptical of market indicators might wonder how high the 17% rate-of-return would jump were today’s $100+ price plugged in.
Chapter 21: 10 Candles for the California ISO
The following open letter to Yakout Mansour, CEO of the California transmission grid manager, was written for the April 7, 2008 edition of California Energy Markets.
Hey, Yakout — As a rule, former public officials should be denied access to the media because of their sworn duty to fade away. But when the editors of California Energy Markets solicited tenth birthday greetings for my second favorite non-profit public benefit corporation (your corporate sibling, the CalPX, dead these seven years, is still first in my heart), how could I refuse?
Having just read your new Five Year Strategic Plan (the first few pages recite accomplishments akin to those attributed to the Glorious Republic of Kazakhstan in the opening scenes of Borat) and knowing your preference to light a candle rather than curse The Darkness, let me identify the following road flares likely to lie in the ISO’s path these next several years:
1. You will be judged by your contribution to California’s electricity infrastructure. Intellectual fashions and market designs evolve more quickly than economists change underwear, but the enduring judgment of your success will be whether the process in which you are implicated provides adequate infrastructure for a growing population, a prosperous economy, and an improving environment.
2. Soon, you will have to embrace priorities beyond the roll-out of MRTU. Yes, MRTU Will Change Everything, but it is unlikely to be the automatic pilot for assuring adequate investment. Some of our best Smart Guys fail to distinguish between highly volatile price indicators and bankable revenue streams. To paraphrase Amory Lovins: markets make an excellent servant, a questionable master, and a dubious religion.
3. Unapologetically embrace your pivotal role in renewables development. It will probably determine your success in #1 above. The European Commission has recommended that interconnecting renewables be the transmission priority for EU member states — from infrastructure development, to priority dispatch, to cost absorption. Under what scenario will that not happen here? You’ll probably have to drop your technology-neutral, policy by Immaculate Conception guise.
4. You have a special cross to bear in commercializing storage projects, which may prove indispensable to wind integration with the grid. As your recent intermittency report made clear, this is not a technology challenge as much as one of creating the appropriate market mechanisms to properly compensate the storage provider.
5. Accept ownership of glitches like the interconnection queuing fiasco and move aggressively to fix them. Blaming the problem and its multi-year persistence on FERC rules has a certain postal system feel to it. Pointing to an even worse mess at the Midwest ISO reinforces this sense of unaccountability. Federal Express was born under similar circumstances.
6. Recognize that the RPS program structure will likely change and that transmission planning will have to change with it. The CEC found that a 33% target for 2020 will be necessary to achieve AB 32 goals, and that a feed-in tariff will be needed to get to 33%. More immediately, without a tariffed approach, how will the ratepayers avoid paying too much for the last several thousand MW of wind for the pre-built Tehachapi transmission system? Won’t similar issues arise with pre-built lines for solar as well?
7. The existing fossil generation fleet is sorely in need of modernization or replacement. How else will we get the faster ramping, less polluting units we need? Divine intervention? Silence in the face of flaccid utility long-term procurement efforts is no solution. Propping up the existing jalopies with multi-year “resource adequacy” contracts is no substitute. Speak up.
8. The South Coast Air Quality Management District is the de facto supply planner in Southern California. They are not particularly impressed with the amount of renewables coming on line to date, and seem prepared to block new gas-fired plants in the air basin as a consequence. Given the centrality of SCE and LADWP to the state’s renewables goals, they’ve got pretty good leverage.
9. Don’t get sucked into the intake structure of a generic argument on once-through cooling vs. grid reliability. The State Water Resources Control Board faces a real legal imperative under the federal Clean Water Act, and a credible threat of sweeping court orders if it doesn’t act. Plant-specific evidence can help, arm-waving rhetoric cannot.
10. Diplomacy skills are likely to be your most effective means to accomplish your objectives. The early years have stripped away whatever manifest destiny many attached to the ISO’s ambition for geographic expansion. You have been forced to accept a fractious pluralism among control areas — both in-state and regionally. California’s interests require a significant improvement in our ability to rally support for joint projects that stretch across the region. You are uniquely equipped to bring that about. Good luck.
Your friend/JG
Chapter 22: LBNL -- Reading the Utility Planning Tea Leaves
The thankless job of the electric utility supply planner is designed to attract the quantitative, the analytic, and the prudent — not those with an ideological bent or propensity for heroics. Yes, politics constrains choices. The industry being what it is, there’s a predictable tendency of planners to search for the “path of least resistance” — an underpinning of the laws of physics which often finds adherents among regulated businesses.
So what’s going on in the bellwether western United States? A recently published report by the Lawrence Berkeley National Laboratory analyzed the 2006-2007 supply plans of 15 large investor-owned and municipally-owned utilities from nine of the 11 western states. (In classic Wild West tradition, Arizona suspended its requirement for integrated resource plan submittals in 1999 and New Mexico has only recently enacted legislation requiring them.)
The headline conclusions from the LBNL evaluation:
• a majority of the 15 utilities intend to meet at least half of their needs for new energy supplies through expansion of existing efficiency programs and new renewable projects;
• only three utilities selected portfolios where expanded efficiency and renewable initiatives will account for less than 10% of all new supplies;
• nine of the 15 utilities intend to size their efficiency plans based on a “maximum achievable” calculation of cost-effective potential — an admittedly slippery rubric which focuses on existing program design as the only hammer in the toolbox;
• the other six imposed more arbitrary, non-economic caps on the quantity of efficiency improvements assumed in their resource plans;
• other low-carbon options, like new nuclear and advanced coal with CCS, “play a relatively minor role in utilities’ preferred portfolios”;
• five of the eight utilities from inland states selected preferred portfolios where pulverized coal without CCS provides anywhere from 20% to more than 90% of new supplies;
• in contrast, none of the seven utilities from coastal states selected any coal-fired generation.
The most remarkable observation of the LBNL report: 11 of the 15 utility base cases used levelized CO2 prices of $4 – $20 a “short ton” in the 2010 – 2030 period and four — including the Los Angeles Department of Water & Power — assumed no carbon cost at all. LBNL’s droll conclusion? “Some, if not most … may be underestimating the ‘most likely’ cost of carbon emissions.”
Chapter 23: EIA Oil Price Forecasts -- the Limits of Intelligence
Like it or not, by the terms of some unwritten protocol governing the Green Energy War, no single piece of intelligence is deemed to hold more value than the expected long-term price of energy. It not only informs strategy, it defines the outer boundaries of what is considered possible given the virtually universal conviction that price signals cannot be defied indefinitely. Even the most willful of policymakers are forced to make their peace with price.
This week, for the first time, the US government’s Energy Information Administration crossed the Rubicon of triple-digit oil price forecasts by acknowledging that, at least for this year, oil will average $101 a barrel. In January the prediction had been $87.
In the accumulated failures of several decades of US energy policy, no single factor has proven more debilitating than the inability to accurately project price. The California Energy Commission recently graphed the 25-year history of EIA natural gas price forecasts, displaying a grotesque pattern of wildly high projections in the early years and distressing underestimates in recent years. Numbers released in 2006 by EIA show a similar divergence for oil.
When Julius Caesar and his army crossed the Rubico River, a boundary which separated the province of Cisalpine Gaul from Italy proper, the Roman Senate appropriately considered it an act of war. EIA downplayed the significance of this week’s $101 announcement, adding a troops-home-by-Christmas forecast of prices averaging $92.50 a barrel in 2009.
It remains to be seen whether EIA will alter its long-term projection, issued just last month, that oil prices will decline to $57 in real terms in 2016 before gradually rising to $70 in real terms in 2030. By these lights, it looks like another American Century.
The day of the EIA announcement, General Petraeus recommended to Congress that US troop withdrawals from Iraq should be halted indefinitely this summer to allow further evaluation. “We haven’t turned any corners, we haven’t seen any lights at the end of the tunnel; the champaign bottle has been pushed to the back of the refrigerator,” he said.
In the words of the Danish physicist, Niels Bohr, “It is difficult to predict, especially the future.”
Chapter 24: Feed-In Tariffs Pull AES Solar Strategy Away from US
Honest military historians have never known what significance to attach to battlefield precedent. Their views range from the dour George Santayana (“those who cannot remember the past are condemned to repeat it”) to the more celebratory Yogi Berra (“it’s deja vu all over again”).
Why should the Green Energy War be different?
The announcement two weeks ago of a $1 billion joint venture between AES and Riverstone Partners to build utility-scale photovoltaic power plants around the world over the next five years certainly stirred the gamut of emotions. Logically enough, the joint venture will focus on those countries with feed-in tariffs — notably, not the US — that make project economics more attractive.
Unmentioned in any of the press accounts was the peculiar history of AES and its umbilical relationship with the original feed-in tariff, the Carter era’s Public Utilities Regulatory Policy Act (aka PURPA). Now one of the largest independent electricity generators in the world, AES was founded in 1981 as Applied Energy Sources by two former federal bureaucrats, Roger Sant and Dennis Bakke. Its business strategy was to capitalize on the new law’s requirement that utilities buy the output of more efficient, less polluting “qualifying facilities” at the utilities’ avoided cost.
Download this book for your ebook reader.
(Pages 1-35 show above.)