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Pickens Plan

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Wind turbines generate electricity behind a pumpjack in Muenster, Texas. This could be a common scene in the Great Plains if Pickens Plan is adopted.

The Pickens Plan is an energy policy proposal announced July 8, 2008 by American businessman T. Boone Pickens. Pickens wants to reduce American dependence on imported oil by investing approximately US$1 trillion in new wind turbine farms for power generation, which he believes would allow the natural gas currently used for power generation to be shifted to fuel CNG trucks and other heavy vehicles. Pickens thinks that his plan could reduce by $300 billion (43%) the amount the country spends annually on foreign oil.[1] The plan has received broad public support,[2] while some have questioned the practicability of the enormous seminal project.

Proposal

The main proposals of the plan are:[3]

  1. Private industry would fund and install thousands of wind turbines in the Great Plains, which Pickens refers to as the potential "wind corridor" of the United States due to favorable wind resources and geographic location. Pickens estimates that these turbines could generate enough power to provide 20 percent or more of the country's electricity supply.
  2. Government would pay for electric power transmission lines to connect the turbine farms to the power grid. They would provide energy to the Midwest, South and Western regions of the country.
  3. With wind energy providing a large portion of the nation's electricity, the natural gas that is currently used to fuel power plants would be used instead as a fuel for thousands of vehicles. To increase efficiency, the plan puts an emphasis on natural gas-burning fleets of trucks and buses.[4] Thus, the demand for petroleum products made from imported oil would be reduced.

Timetable

Pickens thinks his plan that would provide 22% of electricity from wind power and the conversion for vehicles from gasoline to gas could be accomplished in less than 10 years with the right leadership.[5] However, according to Chuck McGowin, senior project manager at the Electric Power Research Institute in Palo Alto, the time table is too tight.[6] Dave Hamilton, director for global warming and energy projects at the Sierra Club agrees "That is extremely aggressive ... But it's in the right direction. It's a good thing we have an oilman saying we can't drill our way out of this problem."[7] At the other extreme, former U.S. vice president and Nobel Prize winner Al Gore said that all electricity generation should be completely fossil-fuel free in the same 10 years.[7]

Wind power status and potential

Wind power had been experiencing exponential growth in the United States for several years when Pickens announced his plan.[8] Wind power in the large state of Texas grew very rapidly, 2400% from 1999 to 2007. In another large state, California, wind generation increased by 48% in the same period.[8] The cost of wind power generation has decreased by about 80% over the last 20 years because of technological advances and is now cost-competitive with other energy sources.[9] Wind-generated electricity can be produced at 5 to 6 cents per kWh.

A yardstick used to determine locations with high potential wind energy production is referred to as Wind Power Density (WPD.) It is a calculation relating to the effective force of the wind at a particular location, frequently expressed in terms of the elevation above ground level over a period of time. It takes into account wind velocity and mass. Color coded maps are frequently prepared for a particular area described, for example, as "Mean Annual Power Density at 50 Meters." The results of the above calculation are entered into an index developed by the National Renewable Energy Lab and referred to as "NREL CLASS." The larger the WPD calculation, the higher it is rated by class. [10]

The Pickens Plan calls for increasing the installed wind power capacity by at least a factor of ten from its 2008 level by 2018. This would tap only a small fraction of total U.S. wind power potential.

Installed U.S. wind power[8]
Year Nameplate Capacity, MW
1999 2,500
2000 2,566
2001 4,261
2002 4,685
2003 6,374
2004 6,740
2005 9,149
2006 11,575
2007 16,596
US installed wind power, 1981-2008
Map of available wind power for the United States at 50m. Color codes indicate wind power density class. Note the shortage of transmission lines through much of the Great Plains wind corridor.

Effects on the environment

Wind turbines south of Dumas, Texas

By shifting a percentage of electricity production from natural gas combustion to carbon neutral wind generation, Pickens' plan would significantly reduce carbon dioxide emissions from electricity production. Although vehicles powered by combusting natural gas instead of gasoline would still produce CO2, they would produce about 25% less for the same amount of energy.[11] Combustion of gasoline also produces much larger amounts of nitrogen oxides (NOx, which cause smog) and other air pollutants than combustion of natural gas.[11]

Technical issues

Power generation and transmission lines

High voltage transmission lines

Pickens says that his plan could generate enough wind power to provide 22 percent of the country's electricity.[5] The Institute for Energy Research (IER), an organization that advocates off-shore drilling[12] and is funded by the oil industry[13] disagrees. The IER claims that Pickens' plan relies on government subsidies and that producing large amounts of wind power is not a viable option. Instead, the IER advocates "less government for more abundant and affordable energy."[14]

Pickens acknowledges that natural gas would still be required for peak electricity demand and additional infrastructure would be needed to distribute the wind energy across the country.[5] New transmission lines, worth $64 billion to $128 billion, would be needed to carry the power from the windmills to the cities.[6] Pickens testified before the Senate Homeland Security and Government Affairs Committee and said the government should begin building transmission lines for wind-generated power in the same way that President Eisenhower did by declaring an emergency to build the interstate highway system in the 1950s and 1960s. As an alternative, Pickens proposed that the government should provide the right of way on private land and extend tax credits so the private sector can build the lines.[15] Kenneth Medlock III, an energy fellow at the James A. Baker III Institute for Public Policy and a critic of Pickens' Plan, said "A lot of what he's trying to do is add value to a stranded asset"[16]

Despite the recession, Denver oil man Philip Anschutz is moving forward with the construction of a wind farm in southern Wyoming and a 900 mile transmission line to Phoenix, Las Vegas and Southern California.[17]

Intermittency

One of the challenges with using wind to replace natural gas is that the wind doesn't blow all the time. But Sierra Club's Dan Becker, director of the Sierra Club's energy program, does not believe it is a major issue. He said that technological advances will allow several wind farms from varying regions of the country to be tied together in the same electricity grid. When some are idle, others could make up the difference.[7] According to a 2007 study by Archer & Jacobson published in the Journal of Applied Meteorology and Climatology, interconnecting ten or more widely-separated wind farms allows 33 to 47% of the total energy produced (15–20% of nominal capacity) to be used as reliable, baseload electric power, as long as minimum criteria are met for wind speed and turbine height.[18][19]

To dispatch power when the wind isn't blowing, backup power plants would be needed, according to Paul Fremont, an electric-utility analyst at the investment bank Jefferies & Co.[7] Natural gas plants can quickly be brought online to supply peaking capacity during periods of low wind or peak demand.[20] According to Art Holland, a director at Pace Global Energy Services, the US will need to replace 140,000 MW of gas plant capacity over the next 10 years due to plant retirements.[21] This translates to twice as much wind capacity due to the difference in capacity factors.

Instead of dispatching additional power generation, energy could be conserved on demand. The Smart power grid, an intelligent power distribution network currently being researched and developed, can reduce power consumption at the client side during peak hours and thereby lessen our dependence on gas for load following.[22]

Storing electricity is currently significantly more expensive than using dispatchable generation, but it can be done. Wind energy can be stored by pumping water uphill when the wind is blowing, and then releasing it through turbine generators when the electricity is needed. TVA's Raccoon Mountain Pumped-Storage Plant near Chattanooga, TN is just one example of many such installations that already exist in the US. Another option is to uprate the peak generating capacity of existing hydroelectric dams by adding more generator units;[23][24] this allows a hydroelectric plant to buffer the variable output of wind farms on the grid, by accumulating river water during periods of strong winds, and releasing extra water when winds are calm and power demand is high. A dam that impounds a large reservoir can store and release large amounts of water by adjusting the reservoir level within a few meters.

Compressed-air energy storage is another energy storage mechanism. When there is excess electrical energy production, air is compressed and stored in a limestone cavern. Then when the energy is needed again, the compressed air generates electricity by blowing through a turbine.[25] Vanadium redox batteries are being used to store energy and level loads from wind generation projects. The excess energy is stored chemically in different ionic forms of vanadium in a dilute sulphuric acid electrolyte. The reaction can be reversed, which allows the battery to be charged, discharged and recharged.

Making the transition

CNG Powered Bus

Pickens' Plan proposes that the natural gas that is currently used to fuel power plants be used instead as a fuel for thousands of vehicles. Ken Medlock, a research fellow at the Baker Institute for Public Policy at Rice University, says that the US will continue to use natural gas for electric power generation. Natural gas burns cleaner than coal, making it an increasingly popular fuel for power plants. Gas plants also produce fewer greenhouse gas emissions.[6]

The technology needed for Compressed Natural Gas (CNG) vehicles such as City buses, fork lifts and passenger cars with CNG drivetrains is available now. Honda sells the Civic GX, with a 170-mile range. In addition, it is possible to convert vehicles to run on CNG in addition to leaving the conventional fuel injection intact, allowing the driver to switch back and forth at will. Kits are available for the do-it-yourselfer. One can buy a CNG compressor called Phill that hooks up to the city natural gas line making it possible to refuel a CNG car at home.[26]

On the other hand, the IER believes that natural gas vehicles are "a niche product."[14] Patricia Monahan, believes "It's going to be a big price tag" to switch to CNG vehicles. Monahan considers CNG an excellent fuel for running small fleets of vehicles which log heavy mileage per vehicle, such as buses and garbage trucks.[6] Vehicles which use large amounts of fuel realize savings more quickly from the lower price of CNG relative to diesel.

In November 2008, Pickens changed his position stating that he wants heavy trucks, not cars running on natural gas.[27] Rich Kolodziej, President of NGVAmerica, says the very limited distribution network for natural gas is currently available in only 1,200 out of 190,000 gas stations would better serve commercial fleets and long-haul trucks. He fears opposition from oil companies.[20]

Policy issues

Renewable Portfolio Standards

Oil and Gas prices are plummeting; however, renewable energy and energy conservation are still needed in the future. National and state policy can demand that utilities develop more renewable energy and provide incentives to continue on that path. Twenty-four states plus the District of Columbia have Renewable Portfolio Standards in place to set targets for renewable energy in those states. Four more states have set non-binding energy targets.[28]

Economic issues

Funding

The Energy Policy Act of 2005 created the Clean Renewable Energy Bond (CREB) program, effectively offering interest-free debt to eligible renewable projects.[29] In October 2008, the CREB program was extended to March 6, 2009.[30]

Since July 2008, Pickens’ Dallas-based investment firm, BP Capital, has lost as much as $2 billion as a result of the falling stock market and credit crunch. Pickens may have lost around $300 million from his personal funds.[31]

Cost of wind vs. natural gas

Jerry Taylor, senior fellow at the Cato Institute, argues that if wind were used to generate most of the nation's electricity it would undoubtedly result in higher retail electric rates because wind power is twice as expensive as natural gas-fired generation "and probably more if you take out the subsidies."[21] The American Wind Energy Association points out that the cost of wind power has dropped over 90% in the last 20 years and expects the cost to continue to decline as the industry matures. Meanwhile cost of natural gas is expected to rise. Also, the cost of "externalities" (effects on the environment and public health) for natural gas are estimated to range from 0.5 to 2 cents per kWh.[32] The externalities from wind are very low.

Peak gas

US gas production 1936-2007

The use of natural gas is a key component to Picken's proposal. There are concerns however that gas production has already reached its maximum production rate, a point in time known as peak gas. US gas production reached a peak in 1973 at about 24.1 trillion cubic feet, declined until 1985, and has been slowly increasing over the last 23 years. (see figure on left).[33] According to peak theory, the rate of production enters a terminal decline after the peak. Peak gas has already been confirmed by Exxon's CEO Lee Raymond. In 2005 he said to Reuters that "Gas production has peaked in North America."[34] The Reuters article continues to say "While the number of U.S. rigs drilling for natural gas has climbed about 20 percent over the last year and prices are at record highs, producers have been struggling to raise output." John DeCicco, a senior fellow with Environmental Defense is critical of the plan because it assumes that gas would remain cheap as it already has a growing demand and is increasingly being imported as evidenced by proposals for LNG terminals.[20]

The Pickens Plan does not require an increase in supply of natural gas to implement, only a maintenance of it because the plan calls for a shifting of the use of natural gas, rather than an increase in its use. Natural gas production has been slightly and consistently increasing in the United States for more than two decades. Proven recoverable U.S. gas reserves have been slightly and consistently rising since 1996 and are about the same as in 1976.[35] Estimates of technically recoverable reserves in the United States vary as they are generated by geological inferences, but the U.S. Energy Information Administration estimated in 1998 that there was 1,190 trillion cubic feet available,[36][37] enough to provide domestic production at 2005 rates[38] for 65.4 years.

Other options

Nuclear power vs. wind power

Pickens' plan will require the construction of large scale wind farms to generate electricity. Critical of the plan, the National Center for Public Policy Research, a self described conservative think tank, is suggesting that nuclear power plants would be a better alternative than the wind farms.[39] They contend that nuclear power is also environmentally sound and creates very little waste, that nuclear power is also far cheaper than wind power, and that to build the wind farms would take many square miles of land.

Nuclear power is not clean when the environmentally harmful, carbon-intensive mining and refinement processes[40][41] and the ever-increasing stockpile of its deadly radioactive waste is considered.[42] Although fully depreciated coal or nuclear power plants may produce electricity at cheaper prices than new wind energy projects, wind energy is already cost-competitive and provides a low-cost electricity source.[43] Nuclear power has seen significant increases in capital costs and fuel costs while windmills have gotten much cheaper to produce. Although wind power requires a large overall land area to allow for space between turbines, only a small fraction is used for the turbines. Wind power can share the surrounding land with other compatible activities, such as growing crops for food, animal grazing or energy production. Also, when comparing land areas, proponents of coal and nuclear power leave out the massive land area needed for mining.[44]

Electricity vs. natural gas for powering vehicles

All-electric Tesla Roadster

To some,[45][46] this plan seems to ignore one of the most fruitful paths to cut into America’s foreign oil addiction: plug-in hybrids and fully electric vehicles. Wind generated electricity could directly fuel America’s ever-more electrified transport sector. Some hybrid owners [47] argue the part that using compressed natural gas as a transportation fuel does not make sense especially when the new wave of electric and hybrid-electric vehicles that are expected to hit the market in the coming years.[47] The US government is already promoting the adoption of PHEVs and EVs. The $700 billion bailout bill signed by President Bush in 2008 includes tax credits up to $7,500 for US buyers of electric vehicles and plug-in hybrids.[48]

Pickens does not believe that all electric vehicles are viable, especially trucks. In his plan natural gas primarily replaces diesel fuel. Pickens frequently makes the statement that "the battery won't move an eighteen wheeler"[49] although batteries, electric drivetrain, and engines for heavy vehicles exist in hybrid buses and a hybrid version of the military's HEMTT heavy lift vehicle.[50] The Port of Los Angeles and South Coast Air Quality Management District have demonstrated a short-range heavy-duty electric truck capable of hauling a fully loaded 40-foot cargo container. The current design is capable of pulling a 60,000-pound cargo container at speeds up to 40 mph and has a range of between 30 and 60 miles.[51] William Tahil of Meridian International Research acknowledges that hybrid or completely electric long-haul semi-trucks are technically possible, but poses the question if there is enough lithium carbonate production currently to support the production of the needed batteries.[52]

Gore's Global Warming vs. Pickens Plan

The plans of T. Boone Pickens and Al Gore have some similarities - each lessens the dependence on fossil fuels - but differ in their eventual goals. Pickens specifically wants to see energy security by increasing the use of domestic energy sources including fossil fuels while Gore wants to eliminate the burning of fossil fuels altogether to stop global warming.[46] Pickens claims to have a plan that could accomplish this with existing technology, while Gore advocates new research to reduce costs.[citation needed] A study by the European Renewable Energy Council states that the burning of fossil fuels for energy could be eliminated globally by 2090 using existing technology, and earlier for western nations.[53][54]

Dependence on foreign fuels

US Natural gas imports 1973-2007

Pickens estimates that his plan would cut oil imports by 38 percent. Patricia Monahan, deputy director of the clean vehicles program at the Union of Concerned Scientists thinks differently. She questions the wisdom of trying to replace large amounts of imported oil with another fossil fuel, especially considering that the United States already has to import 19 percent of the natural gas it uses.[6] The US has been steadily increasing its imports of natural gas since 1985 (see figure to the left)[55], mainly from Canada.[56]

According to Jerry Taylor, senior fellow at the Cato Institute, is that "foreign oil is not bad; it is good." The US is now importing about 70% of its oil needs annually because it is cheaper than other forms of energy. Taylor argues that if compressed natural gas is the best option for transportation fuel then "the markets will see it," and over time CNG could outperform gasoline as a cheaper transportation fuel.[21]

Pickens' motives

T. Boone Pickens would be in an excellent position to benefit financially if the plan is implemented. His hedge fund, BP Capital, is highly invested in wind and natural gas enterprises.[57] He is the majority stockholder of Clean Energy, the largest supplier of natural gas for vehicles in the United States.[58][59] Through these investments, Pickens has shown that he is personally confident that it can both work and generate a profit.

Further, Pickens insists his interest is more in the country's future, than his personal wealth.[60] There are many examples of wealthy individuals becoming altruistic in their later years, for example Andrew Carnegie.

Still, there are some who are uneasy about a man who made millions in the oil business advocating clean energy:

"When it comes to the Pickens Plan, the burr under my saddle is Pickens himself. I mean, isn't an oil guy selling air and gas a little like Donald Trump pitching poverty? It's downright uncomfortable."

— Jay McDonald [61]

There has been an accusation of an ulterior motive. According to an article in Popular Mechanics, if the plan is accepted, Pickens stands to reap a significant profit by building pipelines to pump billions of gallons of water from an aquifer under land in the Texas Panhandle, for which he controls the water rights. The proposed pipeline could follow the same 250-mile corridor as the electric transmission lines from the wind farm, which would be seized for utility use from private owners through eminent domain.[62] Pickens owns more water than anyone else in the U.S.[63] However, Pickens says that he has no need for the money,[64] and that Texas law provides alternative ways for public water supply districts (such as the one formed by Pickens)[65] to obtain pipeline right-of-ways.[62]

Libertarian groups have objected on philosophical grounds. The Cato Institute, a libertarian think tank, says that the Pickens Plan amounts to market rigging in favor of his business interests and would raise energy costs for consumers. The institute believes the best energy plan is to remove all energy subsidies and let market forces decide. [66][67] [68]

Support campaign

Pickens announced that he would spend $58 million on a multi-media effort to promote the Pickens Plan, not only through old media (such as newspapers and television), but also by using new media (including YouTube, Facebook, MySpace, and Twitter),[69] and the creation of a new social network on the Pickens Plan website (powered by Ning).[70] As part of this effort, Pickens has appeared on The NewsHour with Jim Lehrer, ABC's Good Morning America, the CBS Evening News, CNN, The Tonight Show with Jay Leno, Lou Dobbs Tonight, Larry King Live [71], MSNBC's Race for the White House [72], and Fox News.[73] Pickens is aided by his spokesperson Jay Rosser and political ad firm Joe Slade White & Co.[73]

To raise political support, Pickens planned to organize supporters by Congressional districts.[70] He has also met with the main party candidates for the 2008 United States Presidential election to discuss his plan. He met with John McCain on August 15, 2008,[74] and with Barack Obama on August 17, 2008.[75]

On October 13, 2008, Pickens announced that the one millionth person had signed up to support his plan,[76] and that two U.S. Senators, 37 U.S. Congressmen and nine governors had pledged "to enact an energy plan that reduces our foreign oil dependence by at least 30% within ten years."[76][77]

Major endorsements

Carl Pope, executive director of the Sierra Club, has expressed support for the Pickens Plan and stated “To put it plainly, T. Boone Pickens is out to save America”.[64][78] Former Clinton White House Chief of Staff and current President of the Center for American Progress John Podesta supports the plan.[79] Barack Obama has stated he supports many elements of the plan.[80] The American Lung Association endorses the Pickens Plan.[81] Republican Governor of South Carolina, Mark Sanford supports the Pickens Plan.[82]

See also

References

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  2. ^ Jerry Lindsley (2008-08). "National Poll: Americans Say Pickens' Energy Plan Can Work". Sacred Heart University. Retrieved 2008-12-30. {{cite web}}: Check date values in: |date= (help)
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    PICKENS: You can, but don't.
    STEWART: Ok, but then what do you do?
    PICKENS: I want the trucks on it. The trucks are the ones to go to the natural gas.
    {{cite AV media}}: Unknown parameter |date2= ignored (help)
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  46. ^ a b Melcher, Joan (2008-10-17). "Picking on Pickens' Plan The fossil-fueled portions of T. Boone Pickens' energy plan for the U.S. have had a rough ride". Miller-McCune. Retrieved 2009-03-16. In a recent appearance on NBC's Meet the Press, Gore noted, "There are vehicles running today on natural gas. Chattanooga, Tennessee, has natural gas buses. It's a respectable option. But I think that in the long term the better approach is to make this investment in a unified national grid that has low losses in transmission ... and shift over to renewable resources."
  47. ^ a b "Pickens Plan Promotes Compressed Natural Gas Vehicles". Hybrid Cars. 2008-09-17. Retrieved 2008-10-07.
  48. ^ "Congress Throws Cash At Plug-In Hybrids". Hybrid Cars. 2008-10-04. Retrieved 2008-10-07.
  49. ^ T. Boone Pickens Disagrees with Al Gore on Energy.
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  58. ^ Kate Galbraith (2008-08-05). ""Pickens Plan Stirs Debate, and Qualms"". New York Times. Retrieved 2009-01-21. {{cite news}}: Italic or bold markup not allowed in: |publisher= (help)
  59. ^ "Profile". Clean Energy. Retrieved 2009-01-21.
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  61. ^ Pickens Plan Needs Better Pitchman by Jay MacDonald, Bankrate, January 7 2009
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