What were the key energy commodity price trends in 2012?

Last Updated: January 18, 2013

Energy commodity price trends varied widely during 2012. This article provides an overview of key energy commodity price trends in 2012.

Source: U.S. Energy Information Administration based on Bloomberg, L.P.
Note: Price changes are derived by taking the difference in prompt contract price for each commodity between January 1 and December 31, 2012. This method allows for comparisons of different commodity classes on a consistent basis. PRB Coal is Powder River Basin Coal. CAPP Coal is Central Appalachia Coal. WTI is West Texas Intermediate, a benchmark for both physical and financial crude oil pricing located in Cushing, Oklahoma. RBOB Gasoline is a kind of gasoline based on a reformulated blendstock for oxygenate blending (RBOB).

Coal and mid-continent crude oil (WTI) led energy commodity price declines in 2012. Natural gas was the only key energy commodity with a significant price increase when comparing January 1 to December 31. Heating oil, Brent crude oil, and wholesale gasoline (RBOB) ended 2012 close to the level at which they started the year(see graphs, right side).

In 2012, average prices for crude oil and petroleum products were largely close to the 2011 averages, with some fluctuations throughout the year. Natural gas prices declined through the early portion of 2012 but then increased in the early fall and winter. Prices for Central Appalachian (CAPP) and Powder River Basin (PRB) coal declined at the beginning of 2012 and remained significantly below the average levels of 2011.

This article provides an overview of a series of related articles (see Today in Energy, 2012 Briefs) on energy market trends in 2012. To ensure comparability among commodities, the prices shown here reflect near-month contracts of futures prices. Most other articles in this series focused on spot market trends. Some key findings from these articles include:

Crude oil and petroleum products

Brent crude oil averaged $111.67 per barrel in 2012, edging past last year's average price of $111.26 per barrel and marking the second year in a row that the global oil benchmark averaged more than $100 per barrel.West Texas Intermediate crude oil averaged $94.05 per barrel in 2012, down slightly from $94.88 in 2011. The annual average price gap between Brent and WTI reached $17.61 per barrel, up from the 2011 level of $16.38.The national weekly average pump prices for gasoline and diesel fuel during 2012 set record highs of $3.62 and $3.97 per gallon, respectively, and marked the second year in a row that the average price for either transportation fuel failed to drop below $3 per gallon during any week.

See related article – Today in Energy, January 10, 2013 and January 11, 2013

Natural Gas

Average, spot natural gas prices were lower compared to 2011, however both futures and spot prices increased in the latter half of the year.Natural gas prices were generally uniform across the country, except when residential and commercial demand peaked during the colder winter months. During these periods, pipeline constraints into the Northeastern United States led to increased separation of the average natural gas wholesale (spot) prices at major hubs in New England and New York above the average spot price at Henry Hub.

See related article – Today in Energy, January 8, 2013

Electricity

Average, spot, on-peak wholesale electricity prices were lower across the United States and largely followed the trend in natural gas prices. Several short-term price spikes occurred during the summer months in several U.S. regions as electric demand increased to meet summer air-conditioning load.

See related article – Today in Energy, January 9, 2013

Coal

Wholesale (spot) coal prices across all basins fell during the first half of 2012, with steep declines in Powder River Basin (PRB) and Eastern basins, before stabilizing in the latter half of the year.Record exports of both thermal and metallurgical coal helped offset declines in consumption in the power sector.

See related article – Today in Energy, January 14, 2013

Natural Gas Liquids

Daily spot prices for natural gas liquids (NGL)–ethane, propane, normal butane, isobutane, and natural gasoline–were generally down in 2012. Ethane and propane, the lower-priced NGL, experienced the largest percentage declines relative to 2011 average prices. Prices for natural gasoline, isobutane, and normal butane more closely track oil prices.

See related article – Today in Energy, January 15, 2013

A futures market is a trade center for quoting prices on contracts for the delivery of a specified quantity of a commodity at a specified time and place in the future. Futures markets reflect price expectations rather than current prices. The 'near-month contract' reflects the most immediate price expectation.

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How can we compare or add up our energy consumption?

Last Updated: March 15, 2013

To compare or aggregate energy consumption across different energy sources like oil, natural gas, and electricity, we must use a common unit of measure. This is similar to calculating your food energy intake by adding up the calories in whatever you eat.

In American households we use several kinds of energy. It's difficult to add up or compare the total energy we use because each energy source is typically measured in a different unit: gasoline is usually measured in gallons, electricity in kilowatthours, and natural gas in cubic feet. One way to add and compare different energy sources is to convert them all to a common unit of measure based on their energy content.

One Btu is the amount of heat needed to raise the temperature of one pound of water by one degree Fahrenheit. It is approximately equal to the amount of energy that comes from burning one wooden kitchen match. A Btu isn't an everyday term to most people, but you might see it on your energy bill or in a news article.

Because a Btu is such a small unit of energy, there are tens of thousands of Btus in even one gallon of gasoline. The table to the right shows how to convert different energy sources into Btus.

You probably already have experienced converting physical units to energy units. When calculating the total amount of food you eat, you might look up how many calories are in each item and then add up the calories. You can't add a hamburger and a soft drink without the conversion. So you can see that calories are a common unit for measuring the energy content of food.

Let's say you consume a typical fast-food meal of:

If you ate the items listed above, you would have consumed 900 calories. Just as calories are a useful measure to help you compare different food items, Btus are useful for making energy comparisons.

If you want to calculate the total amount of energy you use, the process is similar. You can take the gallons of gasoline consumed by your car, the amount of natural gas and other fuels that heat your home, and the kilowatthours of electricity to run your lights and appliances, and convert them all to Btu equivalents using the conversion rates in the table. Then you can add up the different pieces to get a total amount in common units.

One wrinkle is that electricity is an energy carrier, or secondary fuel source, rather than a primary fuel source. There are significant losses in the conversion of primary fuels to electricity and in the transmission and distribution of electricity to the consumer.

For example, in 2011 the average coal-fired plant used 10,400 Btu of coal to generate one kilowatt hour (=3,412 Btu) of electricity. (Of course, there are regional differences in the primary energy used to generate electricity, and not all generation comes from thermal sources with the associated thermal energy losses.) In addition, another 7-8% of the electricity is used up when it is transmitted and distributed from the power plant to your house. If your focus is on primary energy use (such as coal, natural gas, or oil), you should start your calculation with the energy used to make and deliver electricity instead of the energy in the electricity itself.

Most people are interested in saving energy these days, and you can use Btu equivalents to help compare the different levels of savings resulting from taking different actions or making various lifestyle changes. Which do you think uses more energy in a year: gasoline in the average car or electricity in the average home? It's easy to find the answer if you make some assumptions about average usage and then convert the numbers to Btu. See the answers below.

It's interesting to see in these comparisons that residential use of energy for electricity appears to be lower than that for an average vehicle when you use the consumption Btu value of 3,412 Btu per kWh for electricity. But if you count all the primary energy used to generate and deliver the electricity, average residential use of energy for electricity is actually much higher than it is for a single vehicle. However, nearly 60% of households have two or more vehicles, making the average household use of energy for electricity about the same as it is for two passenger vehicles.

Here's another way to compare energy use. Suppose you hear about a new energy efficiency proposal that will save 1,000 trillion Btu per year, which is about 1% of total U.S. annual energy use. A trillion is a big number to visualize. However, sometimes it's easier to appreciate how much energy is represented by thinking in terms of cars or houses, just like it's easier to think of calories as hamburgers and fries, not the calories themselves.

You could divide the energy used by one car/vehicle (66 million Btu) into 1,000 trillion Btu to find that the energy savings in the same proposal described above is equal to taking approximately 15.2 million vehicles off the roads. These averages provide a way to visualize and understand the magnitude of the energy issues and solutions being considered.

The average passenger car/vehicle (including light trucks, vans, and sport utility vehicles) in the United States uses about 66 million Btu per year, which sounds like a big number for just one vehicle. But total energy use for cars, light trucks, vans, and sport utility vehicles in 2010 was about 15 quadrillion Btu, which is 15 with 15 zeros added on to it. That was equivalent to about 16% of total U.S. energy consumption in 2010.

Energy sources are expressed in different units, but their energy content can be compared using the British thermal unit (Btu)

Conversion Table of Common Energy Sources to Btu Energy SourcePhysical Units and Btu Equivalents1 kilowatthour (kWh) = 3,412 Btu (but on average, it takes about 3 times the Btu of primary energy to generate the electricity)1 cubic foot (ft3) = 1,022 Btu
1 cubic foot = 0.01 therms
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NEW 'COMPLETE' RENEWABLE ENERGY OFFERING REVEALED - wholesale supply and installation

Evergreen Energy Solutions, a one-stop shop for the wholesale supply and installation of the most innovative and efficient renewable energy products currently on the market, has opened for business.

With the Government?s flagship energy efficiency ?Green Deal? programme, and the Renewable Heat Incentive (RHI) scheme (due next year), Evergreen Energy Solutions are looking to supply customers with the very best products/services available, so that they get the very best renewable energy deals possible.

James Woollard, managing director at Evergreen Energy Solutions explains: ?There?s been a lot of talk about the Green Deal, and the other schemes that are available or will soon become available, such as the RHI, The Warm Front Scheme, and of course the Feed-in Tariff. However when it comes to choosing the appropriate products/services, and getting the best prices, this can become a real minefield. So that?s why we?re here, to provide a ?complete renewable energy solution.?

Indeed, Evergreen Energy Solutions are already the UK?s largest independent supplier and installer of renewable energy products. Through it?s sister company, Evergreen PV, Evergreen Energy Solutions has built up vast experience in the sector, along with a fantastic network of quality suppliers.

James comments: ?We?ve partnered with some of the UK?s best manufacturers, ensuring that every product in our comprehensive range is the best in its class and backed by extensive warranties. Our solutions span both domestic and commercial applications, fully complement each other and meet the requirements for more energy-efficient ways to heat our buildings.

Evergreen Energy Solutions offer an array of renewable energy products/services. These include:

-Internal Wall Insulation
-External Wall Insulation
-Air Source Heat Pumps
-Air to Water Heat Pumps
-Thermovec Radiators
-Thermal Underfloor Heating
-LED Energy Efficient Lighting
-Double-glazing
-Bio-mass Boilers
-Wind Turbines
-Thermodynamic Hot Water Systems
-Solar PV

As well as providing a complete range of products/services, Evergreen Energy Solutions have also put together a highly experienced professional team who can advise customers on how best to practically and efficiently apply their renewable range of products ? especially where multiple technologies need to be employed to meet the Government?s increasingly demanding energy targets.

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Let Gravity Store the Energy

Gravity Power LLC—a startup based in Santa Barbara, California—has developed a low-cost, quick-start, and fast dynamic response energy storage technology that competes with classical pumped storage hydro and gas turbines for peaking and intermediate duty power generation. The system is simple, yet its potential is profound.

Much of the power generation equipment now being installed is either for renewable energy (predominately wind and solar) or gas-fired combined cycles that leverage the historic low prices of natural gas. However, many of those gas-fired plants were built with an additional purpose: to serve as a fast-reacting source of electricity that can replace renewable generation when the wind stops blowing or the sun doesn’t shine. A better technology choice for “chasing” wind and solar is bulk electricity storage.

The system planning and grid operation complications posed by renewables were thoroughly discussed in an earlier article (“Energy Storage Enables Just-in-Time Generation,” April 2011, available at powermag.com). The key theme of that article was that utility-scale energy storage must be commercialized before renewable electricity can reach its full potential.

Today, most large energy storage projects appear to be little more than a shipping container filled with tens of thousands of small batteries. The value of energy storage is truly realized with utility-scale systems capable of “moving” bulk wind power produced chiefly during off-peak hours to on-peak hours when the value of the energy is significantly greater. The value is equally important to solar photovoltaic systems that wildly cycle when clouds pass overhead.

Several large-scale energy storage technologies in their early stage of development were discussed in the earlier article. Gravity Power LLC was identified as a company that stood out from the others, principally because its technology fully embraces the KISS principal (Google it) and should be deployable in the near term. In fact, the U.S. Department of Energy took a look at the technology and was unable to fund development work because no research and development was needed.

In the time it takes to read this article, even nontechnologists will intuitively understand how the system works and appreciate its simplicity.

According to Gravity Power CEO Tom Mason, the final design concept took shape in 2008, which was immediately followed by the company’s first round of funding in early 2009 from The Quercus Trust, followed by a series of other small investments. The company is currently raising a Series B round to fund final design and testing of the system. The first Gravity Power patent covering its technology was issued by the U.S. Patent Office in May 2012, and other global patents are pending.

The Gravity Power Module (GPM) is a simple machine (Figure 1). At the heart of the system is a reversible pump-turbine and motor-generator, much like those used in conventional pumped storage hydro (PSH) systems for 70 or more years. Sitting 40 meters (m) below ground is the top of an underground “water circuit” where the pump-turbine is located. The circuit consists of two sealed water-filled vertical shafts. The first is a large-diameter vertically bored shaft called the “power shaft.” The smaller is the “penstock” shaft. Within the power shaft rests a large piston that stores or returns energy when hydraulically moved up or down by water. The water is simply a hydraulic fluid. The water flows in a circuit in both directions: Either water flows within the system loop, pushing the piston up, or the water is being pushed in the other direction by the piston as it drops.

1. Gravity works. The piston (shown in red) moves up and down in the power shaft, depending on its operating mode. Power from the grid is used to pump water (the pump is shown in green) into the power shaft and raise the piston. When electricity is required, the piston drops, forcing water through the pump that now functions as
a turbine, producing electricity from the motor that now functions as a generator. The penstock shaft is used to capture and return water to the system. Courtesy: Gravity Power LLC
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Contact Energy Ltd.’s Te Mihi Power Station Harnesses Sustainable Geothermal Energy

Te Mihi Power Station is a two-unit 166-MW geothermal plant currently undergoing commissioning on New Zealand’s North Island. It replaces the Wairakei Power Station constructed in 1958—but with a much smaller environmental footprint. The double flash technology selected produces ~25% more power from the same amount of geothermal fluid that is currently used at Wairakei. For its continuing commitment to renewable geothermal energy, Contact Energy Ltd.’s Te Mihi Power Station is the winner of POWER’s 2013 Marmaduke Award for excellence in power plant problem-solving. The award is named for Marmaduke Surfaceblow, the fictional marine engineer and plant troubleshooter par excellence.

Contact Energy Ltd. (Contact) is one of New Zealand’s leading developers of sustainable power generation systems, with a diverse portfolio of geothermal, natural gas, wind, and hydroelectric assets. In terms of revenue, Contact is one of five large New Zealand power companies. Contact owns and operates 10 plants located throughout the country, producing ~25% of New Zealand’s electricity demand. Four of its facilities are geothermal plants located in the Central North Island.

In early 2007, Contact announced plans to invest up to $1 billion in the construction of new geothermal plants in the Taupo region, located near the center of the North Island. (All amounts in US$; US$1 = NZ$1.28 at press time.) The latest addition to Contact’s renewable portfolio is the two-unit 166-MW (159-MW net) Te Mihi Power Station (Te Mihi).

Contact CEO Dennis Barnes says its investment in Te Mihi reflects the company’s view that geothermal is New Zealand’s most cost-effective new baseload generation. Barnes identified the importance of Te Mihi to ratepayers when he said, “The additional 114 megawatts is expected to be required by the market by 2013 as economic growth resumes and will also contribute to lowering Contact’s average cost of generation.” The total cost of Te Mihi is estimated to be close to $623 million. A second project at Tauhara is in the development pipeline, with other projects seeking permits or in the reservoir exploration phase.

To develop Te Mihi, Contact engaged the McConnell Dowell Constructors Ltd., SNC-Lavalin, and Parsons Brinckerhoff New Zealand joint venture (MSP JV) to build Te Mihi. The engineering, procurement, and construction (EPC) contract was signed with MSP JV in February 2011 for two 83-MW geothermal power units to be constructed 5 kilometers (km) from the existing Wairakei geothermal power station.

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Indonesia: Energy Rich and Electricity Poor

Even though it enjoys sizeable coal and natural gas reserves, Indonesia struggles to provide electricity to its growing economy. Geography is its most obvious challenge. Others include evolving international markets and an energy sector that remains highly politicized.

A vast Southeast Asian archipelago of more than 17,500 islands that straddles the equator, Indonesia has become an established and crucial player in the world’s energy markets. It is endowed with some of the world’s largest reserves of fossil fuels, and in 2011, it was the world’s largest steam coal exporter and the eighth-largest natural gas exporter. Yet, today, energy security has become Indonesia’s paramount challenge. And it appears it will be the country’s preoccupation until at least 2020.

At the heart of the issue is that the economy of world’s fourth-most-populous country (after China, India, and the U.S.), with 243 million people, has been booming at an enviable annual rate of 6% since 2010. But so has its domestic energy consumption, which surged by more than 50% over the past decade on the back of an emerging consumer class. This consumption growth has forced the country to halt exports of oil, temper its natural gas exports, and redirect nearly a quarter of produced coal for domestic production of electricity.

On the other hand, compounded by its geographic complexity, without available electricity imports, and reluctant to rely on diminishing domestic oil supplies that fuel off-grid diesel generators on the nation’s 6,000 inhabited islands, the country has been stricken by a critical undersupply of power. Though it is one of Southeast Asia’s biggest economies, it has one of the lowest electrification rates in the region. This dilemma is underscored by forecasts suggesting that between 2009 and 2019, national electricity demand will increase by an average 9% per year and reach 328.3 TWh in 2020—more than double last year’s figure of 162.4 TWh.

The government’s solution is to seek massive power capacity increases, and it recently embarked on an ambitious plan to add at least 55.3 GW of new capacity and at least 49,299 kilometers of new transmission lines within the next decade. Can Indonesia bypass a number of hurdles and resolve its energy dilemma?

It is important to note that the country has been long-steeped in a festering electricity crisis characterized by rolling blackouts lasting, on a national average, about 3.8 hours per day, according to 2009 figures. As Dr. Mika M. Purra of the Center on Asia and Globalization at the National University of Singapore points out, power shortages have been routine since Indonesia’s independence from the Netherlands in 1949. Moreover, Purra asserts that while modernization of the power sector has been a specific goal of the government since 1998, a “historical narrative reveals repetitive attributes that have continuously stalled any serious efforts to reform the sector, thus causing significant harm to the state, its economy and the general public.” ±±One pervading issue is that the governance structure is based on the dominance of state-owned enterprises, and until recently the government functioned on a constitutional mandate as the sole provider of electricity for the nation. Under the authoritarian regimes of former Presidents Sukarno (1945–1967) and Suharto (1967–1998), the principles of bureaucratization were reinforced and did little to change the structure of state-owned power entity Persero-Perusahaan Listrik Negara (PLN), which held an iron-grip monopoly on the country’s generation, transmission, and distribution.

Only after the Asian financial crisis of 1997–98 and the fall of Suharto’s regime did fundamental changes in the power sector come, Purra says. The new era of democratization of political process achieved, among its most notable changes, passage of Energy Law No. 30 in 2009 (Figure 1). The landmark law allows independent power producers (IPPs) to generate and sell electricity to end users in the Indonesian market, ending PLN’s 60-year-long monopoly as the single electricity supplier in Indonesia.

1. Major players. In a power market regulatory upheaval, Indonesia’s Energy Law No. 30, passed in 2009, allowed independent power producers (IPPs) to begin generating and selling electricity. But state-owned power company Perusahaan Listrik Negara (PLN) generated about 75% of all power in 2012, remains heavily subsidized, holds a monopoly on transmission and distribution grids, and functions as the system operator. This chart shows the major players in Indonesia’s electricity system and how PLN generates revenues and receives subsidies. Source: Differ Group, “The Indonesian Electricity System—A Brief Overview,” differgroup.com/analysis, 2012

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Fewer Rain Forests Mean Less Energy for Developing Nations, Study Finds

That is the conclusion of a group of experts whose findings, released Monday, run counter to the conventional understanding of deforestation’s impact on watersheds.

For years, scientists and engineers have noted an increase in river flows when the trees along streams are removed. The water in the soil, which would otherwise have been taken up by the tree roots and sent into the atmosphere, instead moves directly into streams and rivers.

At the same time, large areas of tropical forest actually create rain clouds as moisture from their leaves evaporates. So the elimination of swaths of these forests decreases rainfall. Cut down enough trees, the scientists argue, and the indirect impact of lost rainfall outweighs the direct impact of removing trees.

The study, published by The Proceedings of the National Academy of Sciences, predicts that extensive deforestation will leave less water in the rivers to generate hydropower from projects like Belo Monte, which is under construction on the Xingu River in Brazil and will be the world’s third largest hydropower complex.

The Belo Monte project, whose massive scope and impact on the landscape have led to opposition, is expected to generate at least 4,400 megawatts of electricity, the study said. The project’s overall capacity would be more than 11,000 megawatts; because of wide variations in seasonal flows of the Xingu River, the lower output is what developers guarantee.

But the study warns that by 2050 as much as 40 percent of this power could be lost because of the reduced rainfall caused by regional deforestation.

Loss of tropical rain forests in the Amazon basin, Central Africa, Indonesia and other parts of the world has been a pressing environmental issue for two decades, but the debate has been framed largely in two ways. First, that the loss of the forests accelerates worldwide climate change be removing a large carbon sink that absorbs carbon dioxide from the atmosphere. Second, that the deforestation destroys the livelihoods of indigenous communities.

The idea that deforestation could reduce rainfall and thus economically harm a country like Brazil, which gets more than 80 percent of its energy from hydropower, is less familiar news.

Noting the established connection between the loss of trees and an increase in river flow, Claudia M. Stickler, the paper’s lead author, said researchers in the Amazon basin “saw effects where the conventional wisdom did not hold true.”

“They removed so much forest that it reduced rainfall and reduced the stream flow,” she added.

A co-author, Daniel C. Nepstad, who like Dr. Stickler works at the Amazon Institute for Environmental Research in Brasília, said rain forests create rain because they “are in the equatorial sun, evaporating a huge amount of water that goes up through the stems and into the leaves and out into the atmosphere.” That moisture feeds rain clouds.

In some eastern and southern tributaries of the Amazon, he added, “the cycle has changed.” The Xingu River, he said, is already near a tipping point where the increased flows caused by the loss of tree roots will be nullified by the overall loss of rainfall.

The authors concluded that “as tropical rain forest nations turn increasingly to hydropower to meet growing demands for ‘green’ electricity, it is important” that planners take into account the links between forest cover and stream flows.

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Climate Change Will Cause More Energy Breakdowns, U.S. Warns

The blackouts and other energy disruptions of Hurricane Sandy were just a foretaste, the report says. Every corner of the country’s energy infrastructure — oil wells, hydroelectric dams, nuclear power plants — will be stressed in coming years by more intense storms, rising seas, higher temperatures and more frequent droughts.

The effects are already being felt, the report says. Power plants are shutting down or reducing output because of a shortage of cooling water. Barges carrying coal and oil are being delayed by low water levels in major waterways. Floods and storm surges are inundating ports, refineries, pipelines and rail yards. Powerful windstorms and raging wildfires are felling transformers and transmission lines.

“We don’t have a robust energy system, and the costs are significant,” said Jonathan Pershing, the deputy assistant secretary of energy for climate change policy and technology, who oversaw production of the report. “The cost today is measured in the billions. Over the coming decades, it will be in the trillions. You can’t just put your head in the sand anymore.”

The study notes that 2012 was the hottest year on record in the contiguous United States, and last July was the hottest month in the United States since record keeping began in 1895.

The high temperatures were accompanied by record-setting drought, which parched much of the Southwest and greatly reduced water available for cooling fossil fuel plants and producing hydroelectric power. A study found that roughly 60 percent of operating coal plants are in areas with potential water shortages driven by climate change.

Rising heat in the West will drive a steep increase in demand for air conditioning, which has already forced blackouts and brownouts in some places. The Energy Department’s Argonne National Laboratory found that air conditioning demand in the West will require 34 gigawatts of new electricity generating capacity by 2050, equivalent to the construction of 100 power plants. The cost to consumers will exceed $40 billion, the lab said.

Mr. Pershing, who joined the Department of Energy this year after serving for several years as the State Department’s deputy special envoy for climate change, said much of the climate disruption was already baked into the system from 150 years of rising levels of carbon dioxide in the atmosphere. He said that the nation must continue efforts to reduce climate-altering emissions, but that the impact of those efforts would not be felt for years. In the meantime, Mr. Pershing said, cities, states and the federal government must take steps to adapt and improve their resiliency in the face of more wicked weather.

President Obama referred to these vulnerabilities in his speech on climate change at Georgetown University on June 25. He said Hurricane Sandy, which devastated the Northeast in October, had provided a wake-up call, if one was needed after the run of climate-related disasters in recent years.

“New York City is fortifying its 520 miles of coastline as an insurance policy against more frequent and costly storms,” Mr. Obama said. “And what we’ve learned from Hurricane Sandy and other disasters is that we’ve got to build smarter, more resilient infrastructure that can protect our homes and businesses, and withstand more powerful storms. That means stronger sea walls, natural barriers, hardened power grids, hardened water systems, hardened fuel supplies.”

After Sandy, Mayor Michael R. Bloomberg of New York commissioned a study of how to protect the city against storms. The report called for nearly $20 billion in investments to enhance resilience, roughly equivalent to the costs of responding to the hurricane. The study said that unless the city took precautions, the next storm of similar magnitude could cost the city $90 billion.

The new Department of Energy report does not provide any firm estimates of expected costs and provides no specific recommendations for immediate action, much of which would be the responsibility of the companies that produce and transport all forms of energy.

But the authors do suggest a series of steps to reduce vulnerability. Power plants and oil drillers should use less water and recycle what they use. Electricity providers should harden their transmission grids and build emergency backup systems. Operators of hydroelectric dams should improve turbine efficiency. And residential and commercial energy users should find ways to reduce demand.

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Historic US Vote Makes Buildings 30% More Energy Efficient

 

In a historic agreement on Monday, US building officials nationwide have voted to support the first building codes that require 30% more efficient buildings for every state under the 2012 International Energy Conservation Code, the IMT is reporting today.

The IMT (Institute for Market Transformation) has long been working on the market failures that inhibit building sector investment in energy efficiency. Delegates also voted to eliminate the weaker Energy Chapter of the International Residential Code, supplanting it with a single nationwide uniform energy code for residential and commercial buildings.

Although some states, like California, have long had energy efficiency requirements in building codes, with a resulting flat-lining in home energy use in the state since the 1970s (to about half the average US use) most states have little or no requirements for reducing energy use. The International code has been the lowest common denominator; compelling safety, but little else in building codes. The minimum standards allowed energy to be wasted in heating and cooling homes in non compliant states by not requiring weather tight walls, roofs, windows or doors.

Why this affects Cancun:

Buildings are responsible for 38% of US emissions, the IMT notes. As one of the wedges for reducing greenhouse gases, requiring energy efficiency in building codes has long been pushed for by the Obama administration and the Department of Energy climate hawks under Steven Chu – as well as the US Conference of Mayors, the National Association of State Energy Officials, and the broad-based Energy Efficient Codes Coalition.

After Copenhagen, the US had to demonstrate both a willingness and an ability to do its part in reducing greenhouse gases. But the Senate was not able to overcome Republican clean energy filibuster to pass the House climate bill.

However, if enough other legislation has the same effect overall, the promised 17% reduction in greenhouse gases can be achieved, anyway.

“It is notable that the votes that will have the most profound impact on national energy and environmental policy this year weren’t held in Washington or a state capital, but by governmental officials assembled by the International Code Council (ICC) in Charlotte, NC,” said William Fay, Executive Director of the Energy Efficient Codes Coalition.

Meets Copenhagen promise:

With today’s nationwide agreement, the US could now even meet its Copenhagen promise to reduce greenhouse gases 17% by 2020, regardless of the stalemate in the Senate.

That is because today’s agreement can be added together with an assortment of other actions (EPA actions, local pollution reduction programs, Obama fuel efficiency rules, the Executive Order on greenhouse gases, the 28% reduction in Federal GHGs, the nationwide appliance efficiency agreement, renewable energy requirements in 30 states) to achieve the same goal.

“This is a big deal!” said Cliff Majersik, Executive Director of IMT. “Most new buildings are built to the code – no better and no worse. These changes to the model energy code will slash pollution from power plants and furnaces while saving Americans billions of dollars in energy bills.”

How likely is it that all of the states will implement this?

Under the terms of the Recovery Act (ARRA), every state that accepted State Energy Program funding had to commit to 90% energy code compliance by 2017.  Virtually every state did accept this assistance, even Wyoming with virtually no building code on the books for energy efficiency (in fact its funding ran out in record time, Wyoming homeowners were so eager to cut their energy costs). That means almost every state will now require efficient buildings.

The new rule affects both commercial and residential buildings. Allowing for regional climate differences, architects and builders will be able to choose which ways to make their buildings use less energy, for example,  by adding renewable energy like solar on rooftops, using more efficient lighting, or increasing weather proofing. But the 30% gain must be reached.

What will be the benefit to you?

“The average homeowner spends more than $2,000 a year on energy bills, more than what they pay for home
insurance or property taxes,” said Caroline Keicher, Program Associate at IMT. “These are not theoretical savings.
This is real money in the pockets of homeowners and a critical step toward making home ownership more
affordable.”

The rules ensure:

• Better sealing and ventilation to reduce heating and cooling losses,
• Higher efficiency in windows and skylights,
• More effective insulation in ceilings, walls, and foundations,
• Reduction in wasted energy from leaky heating and cooling ducts,
• Improved hot-water distribution systems,
• Increased lighting efficiency.

Every dollar spent on code compliance yields a six-fold payoff in energy savings, saving American consumers an eventual $10.2 billion annually.

Image: Online Code Enforcement and Advocacy Network
Susan Kraemer@Twitter
Tags: 30% more efficient, 38%, Cancun, climate hawks, Copenhagen, energy codes

Susan Kraemer Susan Kraemer writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate and GreenProphet and has been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow and Scientific American.   As a former serial entrepreneur in product design she brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention: solving climate change is the mother of all necessities! As a lover of history and sci fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan @dotcommodity on twitter.

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