Energy Policy Update Energy and Environmental News February 2005

Janet Napolitano, Governor Gilbert Jimenez , Director, Arizona Department of Commerce Ken Clark, Director, Arizona Department of Commerce Energy Office

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This newsletter is published by the Arizona Department of Commerce Energy Office and is provided free of charge to the public. It contains verbatim excerpts from international and domestic energy and environment -related publ ications reviewed by the Education and Community Outreach personnel. For inquiries, call (602) 771 -1137 or toll free (800) 352 -5499 .

Compiled and edited by Mark Hope, Energy Research Coordinator. ______To send your questions or comments, or to register to rec eive this newsletter electronically, contact : [email protected] .

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Alternative Energy & Efficiency

A Good Year for Alternative Fuels Ahead [Calstart web site, Jan. 4 ] New York - Industry newsletter AltFuels Advisor projects a good year for bio -fuel and hybrids, but also says don't count out natural gas and propane . “In fact,” says editor Layne Holley, “worldwide market growth appears to be steady, and in the U.S., proponents of these fuels are working to expand their niches.” Bio -fuels in the U.S . benefited with the passage of the Corporate Tax Bill in 2004, which also saw the opening of several new E85 stations and bio -diesel supply agreements. Europe and Latin America already have strong bio -fuels mandates and growing industries, and other count ries, particularly in Asia, are looking closely at bio -fuels. Finally, all those flex -fuel passenger vehicles from Ford and General Motors that have been on the road burning gasoline will have more opportunities to fill up with E85, though outlets are stil l extremely limited. For , there is the steadily growing market in the heavy -duty sector, and that school bus and transit market – combined with the stationary heating oil market – may get another boost, with the introduction of four new light -dut y models: the Jeep Liberty CRD, the Mercedes E -320 CDI, and Volkswagen’s Touarreg and Passat. The natural gas market share is growing in Latin America, Europe, and (of all places) the Middle East. In North America, natural gas still has a str ong market, despite backpedaling on vehicle supplies by OEMs [Original Equipment Manufacturers]. The propane industry should focus more on industrial and off -road vehicle applications, particularly in agriculture, but it will have to compete there with bio -fuels producers. The low -speed (neighborhood) electric vehicle (NEV) market will continue to grow. “Keep an eye out,” says Holley, “for full -size electric vehicle projects using advanced batteries such as lithium -ion. Trebling the range could make these v ehicles more viable.” And while hydrogen is years away from commercialization, it should gain more attention as a combination fuel with natural gas, as is the case with Hythane.

Individuals with disabilities who need the information contained in this publication in an alternate format may contact the telephone number above to make their needs known. Requests should be made as soon as possible to allo w sufficient time to arrange for the accommodation. Carbondale Makes Switch to Biodiesel [Valley -Journal, web site, Jan. 13 ] In case you hadn’t noticed, the air around Carbondale just got a little bit cleaner . The town’s public works department recently joined other environmentally conscious organizations locally by switching over to biodiesel for use in its heavy equipment and oth er diesel -engine vehicles. It’s part of a growing trend in the Roaring Fork Valley, as other big -name entities such as the Roaring Fork Transportation Authority, the Aspen Ski Co. and Colorado Rocky Mountain School have begun using biodiesel over the last year. One local gas station, the Catherine Store, also offers biodiesel at the pump for individual consumers, and other filling stations may soon follow suit. For Carbondale, the move to biodiesel is part of a broader environmental push that may also inclu de the purchase of electric hybrid vehicles as part of the town’s automobile fleet, public works director Larry Ballenger said. “All of our parks and streets maintenance vehicles and heavy equipment are now using biodiesel,” Ballenger said. “In the future if we can’t get the appropriate hybrid vehicle as part of our normal replacement, we will look to diesels that can use the biodiesel.” Biodiesel is a non -toxic, non -petroleum, vegetable oil -based, renewable diesel fuel that can be used either in 100 percen t form or blended in various concentrations with regular petroleum diesel. It can be used in any diesel engine with few or no modifications, and has far fewer emissions than petroleum diesel fuel, according to the National Biodiesel Board Web site. Carbond ale is currently using a 20 percent, or B -20, biodiesel blend. The move came at the recommendation of the town’s environmental board, a town council -appointed advisory board on environmental issues….

Hard Work Ahead as Honeymoon Ends for Hybrids [Arizo na Republic web site, Jan. 11 ] Detroit - For hybrid vehicles at this year's North American International Auto Show, the “wow” factor is over . Nine years after Toyota Motor Co. introduced the first gas -electric hybrid, automakers expect to sell 200,000 hybr id vehicles this year in the United States, according to Anthony Pratt, an analyst with J.D. Power and Associates. Since 2000, hybrid sales in the United States have grown at an average annual rate of 88.6 percent, according to Michigan -based R.L. Polk & C o. But to keep posting those kinds of gains, automakers will need to keep improving hybrid engines and keep hybrid prices down. Hybrids currently cost around $3,000 to $4,000 more than regular gas versions. Automakers also have to educate consumers who are still skeptical about the benefits and mechanics of hybrids. Throughout this year's auto show, prominent signs tell consumers that hybrids don't need to be plugged in, which automakers say is one of the biggest misconceptions about the technology. Hybrids draw power from two energy sources, typically a gas or diesel engine combined with an electric motor, and surplus engine power is used to continually recharge the vehicle's battery. Automakers also are trying to convince consumers that hybrids can be just as powerful as traditional vehicles…. Pratt says he thinks demand for hybrids will peak around 2011, at three percent of the market, because there's a limit to the number of customers willing to pay more for a vehicle that will save them a few hundred dol lars a year on gas. “The average consumers aren't willing to pay that premium for a car they won't drive more than six years,” Pratt said….

Lodi, California Winery to Be Solar -Powered [Environmental News Network web site , Dec. 30 ] Lodi , CA - Since vines are solar -powered, The Lucas Winery should be no less, owner David Lucas concluded . As of [the week of Dec. 30th] it will be, with a business investment of $166,000, about half of which he will recoup through rebates over five years. Even though it i s a bottom -line issue for the winery, which like many small operations is fighting to compete and survive over the long haul, it's more than that to Lucas…. Using less power lowers the need for power plants, which means less pollution, which is better for the environment, especially the ocean…. The basic concept here is to install a big enough system to produce enough power on sunny days to cover business needs, plus excess power that feeds back into the Pacific Gas & Electric Co. power grid. In that case, the dials on the power meter are spinning backward. The utility doesn't pay the solar -power system owner for that excess power, though it does keep a tally, giving the owner a credit for later power use, say at night or on cloudy days, when solar -panel sy stems can't run at capacity. Lucas is aiming for a system where the excess power credits will basically cover the power costs for his 3,000 -square -foot winery, tasting room and casks room by year's end. In the case of The Lucas Winery, the aim is to cut th e power bill from $6,000 to $8,000 each year to about $30 to $40…. Several growers have tapped the sun's power, including the head of the Lodi -Woodbridge Winegrape Commission. Mark Chandler, the commission's executive director, last spring installed a sola r system to power the water pump at his 40 -acre Lockeford

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 2 vineyard. As a result, his power bill dropped from $3,000 a year to $40 or $50, and so far, the system has run great, he said. “More people aren't doing it, because it is expensive,” Chandler said . “Mine cost $50,000.” But he's getting about $20,000 in tax credits and figures his power savings will pay for the system in about seven years. That's on a system guaranteed for 20 years, Chandler said, “so it's very worthwhile.” Renewable Technologies In c., a 10 -year -old Sutter Creek startup, is installing the system at The Lucas Winery. Company founder and president Darryl Conklin said the solar -power industry has been growing in leaps. His own business has doubled year to year in the past few years, he said. It's gone from an enterprise operating “outside my bedroom door,” he said, to a multimillion -dollar company with 43 employees, including seven engineers and a 12,500 -square -foot warehouse in Sutter Creek. “It's the gift of the energy crisis,” he said ....

Tennessee Wind Farm Expands to Generate More Clean Power [Environmental News Network web site , Jan. 7 ] Oliver Springs, TN - With a “whoosh, whoosh, whoosh,” the graceful blades of 18 windmills on the South's first commercial wind farm are now produ cing enough clean power to be seen as more than just an eco -experiment . When the farm opened with three turbines in 2001, it generated a mere two megawatts of electricity, enough for just 360 homes. But the December addition of 15 larger turbines – each as tall as a 26 -story building – boosted the capacity to 29 megawatts, enough for 3,000 homes. “Magnificent,” said Rick Carson, the Tennessee Valley Authority's [TVA] renewable operations manager, as he gazed out on the windmills dotting a two - mile forested ridge atop Buffalo Mountain. Still small in comparison to big wind farms in the Great Plains and Pacific Northwest, TVA's expanded operation is huge for the Southeast, where there is less reliable wind. TVA is the nation's largest public utility, serving a bout 8.5 million people in Tennessee and parts of Kentucky, Virginia, North Carolina, Georgia, Alabama and Mississippi. The new turbines rise 262 feet, 49 feet taller than the three originals. Their seven -ton, 135 -foot -long white blades can be seen for mil es. Despite their size, the spinning rotors can barely be heard over the mountain breeze or the coal mining that continues farther down the mountain….

Willie Nelson Marketing Biodiesel [Reuters, Jan. 14 ] Dallas – “ On the Road Again” means something new for these days – a chance for truckers to fill their tanks with clean -burning biodiesel fuel. Nelson and three business partners recently formed a company called Willie Nelson's Biodiesel that is marketing the fuel to truck stops. The produc t – called BioWillie – is made from vegetable oils, mainly , and can be burned without modification to diesel engines. It may be difficult to picture the 71 -year -old hair -braided Texas rebel as an energy company executive, but the singer's new gig is in many ways about social responsibility – and that is classic Nelson. “There is really no need going around starting wars over oil. We have it here at home. We have the necessary product, the farmers can grow it,” said Nelson, who organized tw o decades ago to draw attention to the plight of American agriculture…. “I got on the computer and punched in biodiesel and found out this could be the future,” said Nelson, who now uses the fuel for his cars and tour buses. Peter Bell, a Texas biodiesel s upplier, struck up a friendship with Nelson after filling up one of the tour buses, and the business partnership came together just before Christmas. Bell said Nelson's name will help the largely unknown fuel – typically purchased by government agencies to promote environmental awareness – gain wider national acceptance. The fuel's average U.S. price per gallon is $1.79. “What Willie brings to this is the ability to communicate directly with a truck driver. That kind of community is hard for people to get t o,” Bell said. “When he starts talking, these folks really listen to him. ... It's like having Tiger Woods talk about golf clubs.” Still, a driver can cover many miles without spotting a biodiesel pump. A map on the National Biodiesel Board's Web site show s a heavy concentration of distributors in the Midwest, but very few in other parts of the country. Nelson's group is currently negotiating with Oklahoma City -based Love's Travel Stops & Country Stores to carry the fuel at its 169 locations nationwide. Dan Gilligan, president of the Petroleum Marketers Association of America, expects commercial expansion for biodiesel, but says that supplies are still limited and that making the fuel available in northern states is a challenge….

Wind Power Set to Soar [Arizona Republic web site, Jan. 5 ] Washington, D.C. - Thousands of giant wind turbines will spring up around the country this year to generate more eco -friendly power . Nearly 30 energy companies are rushing to take advantage of a 2005 tax break and plan to install thousands of windmills in at least 21 states, according to the American Wind Energy Association. Wind power produces less than one percent Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 3 of America's electricity today, according to the Energy Information Administration, compared with nearly 22 percent provided by nuclear generators and 55 percent by coal plants. But proponents of this renewable source of power hope the 35 -story turbines can produce six percent of the nation's electricity by 2020. “Because we only have a year, we're working doubl e time and triple time to get these projects done,” said Donna Lotz, project marketing coordinator at enXco Inc., a Palm Springs, Calif., company that builds and operates wind farms. EnXco flipped the switch [on Dec. 29] on a wind farm in Tehachapi, Calif. , that will produce 60 megawatts of electricity – enough to light up nearly 20,000 homes. Among the developments propelling the new wind power projects are: • The federal government is offering wind producers a 1.8 - cents -per -kilowatt -hour tax credit. • Sta tes are requiring utilities to produce some of their electricity from green power, such as solar, wind or geothermal sources. • Technology is increasing energy efficiency. But problems have cropped up as energy companies rush to build wind farms. Just bec ause wind power doesn't pollute the air doesn't mean it has no environmental impact. Also, not everyone wants a windmill within eyesight. … Legislation & Regulation ACC Seeks New Power Route to Nogales [Tucson Citizen web site, Jan. 12 ] Santa Cruz County residents will have to endure outages and other electricity supply problems while a new route is sought for a 345 -kilovolt transmission line from Tucson to Nogales . The Arizona Corporation Commission voted unanimously [on Jan. 11] to seek a better route. The $70 million project reached an impasse in July when Jeanine Derby, forest supervisor for Coronado National Forest, opposed a route the commission had approved through sections of the forest. Derby favors routes closer to Interstate 19. The commission's vote [on Jan. 1 1] also called for a study of reliability and other power issues in Santa Cruz County. In 1999, the commission ordered construction of a 125 -kilovolt line from Tucson to Nogales to stabilize the border county's power supply. Citizens Communications Co., th e utility company in the Nogales area at the time, combined its project with one proposed by Tucson Electric Power Co [TEP]. TEP wanted to build a 345 -kilovolt line to the border area, possibly to sell electricity to Mexico. Citizens later was bought by TE P's parent company, UniSource Energy Corp. Santa Cruz County resident Bill Kurtz said the commission got sidetracked by seeking the best route instead of focusing on shoring up the county's power supply. “When these outage problems in Nogales started,” a 3 45 -kilovolt line was never considered, Kurtz said. “TEP picked this up as a piggy back to get their primary project,” the line to Mexico. Commissioner Kris Mayes expressed frustration, saying the issue has dragged on too long. “The one thing that has becom e crystal clear is that putting in any new line is going to be difficult and controversial,” Mayes said.

Arizona & Western Power

Pipeline Spill Leads to a $500,000 Fine [Arizona Republic web site, Jan. 20 ] The operator of a gasoline pipeline that ruptured in Tucson in 2003 and triggered a Valley -wide gasoline shortage has agreed to pay a $500,000 fine to the state . The settlement with Kinder Morgan Energy Partners is the largest fine ever levied under the state's groundwater protection statutes, said Steve Ow ens, director of the Arizona Department of Environmental Quality [ADEQ]…. The company fought the agency on its right to impose those fines. Under the terms of the consent decree, which still must be approved by a Maricopa County Superior Court judge, Houst on - based Kinder Morgan must also notify the DEQ of any future spills greater than 210 gallons within 24 hours, be financially responsible for the long -term cleanup efforts at the Tucson site, which is expected to cost $5.5 million, and issue quarterly repo rts to the DEQ on the progress of cleanup efforts and minor spills anywhere in the state. Kinder Morgan will monitor the aquifer, which is not currently being used for drinking water, under the Tucson spill site…. The volume of the July 30, 2003, spill con tinues to grow from initial reports. As of Dec. 9, 52,000 gallons of fuel had been recovered from the water table and soil. Kinder Morgan recovered 7,000 gallons from the soil and immediate area during initial cleanup efforts and 45,000 gallons from the gr oundwater table…. The break was caused by stress -corrosion cracking to the pipeline…. The rupture, which spewed fuel 50 feet into the air and doused five nearby residential lots, renewed scrutiny of pipeline safety both locally and nationally….

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 4 Nevada Co mmission Issues Solar Power Rebates [Environmental News Network web site, Dec. 29 ] State regulators on [Dec. 28] approved solar power rebates for 50 residential and small -business electric customers and adopted a program designed to help independent power developers secure financing for wind, solar and geothermal power projects . The Public Utilities Commission voted 3 -0 to approve the recommendation of the 50 rebate applications based on a recommendation from the Nevada Renewable Energy and Conservation Ta sk Force. Nevada Power Co. of Las Vegas and Sierra Pacific Power Co. of Reno accepted applications this summer for residential and small -business customers who wanted to receive a rebate of $5 a watt for solar systems. A typical residential customer instal ling a 2,000 watt solar system will get $10,000 from the utilities to offset part of the $20,000 cost of the installation. The maximum rebate for residential customers is $25,000, but financial incentives for small businesses are capped at $15,000. In addi tion, customers can use the solar systems to reduce quantity of power they buy from the utilities. The rebate program applies to photovoltaic systems that convert sunlight directly into electricity. The Legislature established the program under Assembly Bi ll 431, which was sponsored by Assemblywoman Chris Giunchigliani, D -Las Vegas. The utilities accepted applications from residents and businesses on a first -come, first -serve basis, and all of the available rebate for these customer categories have been all ocated for the current program. The program continues but the rebate authorized next year drops to $4 per watt….

Solo Drivers of Hybrids to Gain from California Bill [Environmental News Network web site , Jan. 6 ] Sen. Dianne Feinstein announced [on Jan. 5] she will introduce legislation allowing solo motorists to drive hybrid cars in California's freeway car -pool lanes . The state Legislature passed a bill [in 2004] to allow drivers of hybrids that get 45 mpg [miles per gallon] or better to travel solo in the high -occupancy vehicle lanes. Before the law can take effect, it requires congressional approval because federal money is used to build car -pool lanes. “Hybrid vehicles are the wave of the future, and we should be doing everything we can to encourage t heir use,” Feinstein, D-Calif., said in a statement. “Changing the law to allow these hybrid vehicles to use diamond lanes certainly makes sense. I hope that the Senate will act on this legislation quickly.” The first day senators can propose legislation i s Jan. 24. Feinstein's proposal would allow California and other states to set their own regulations for allowing hybrid vehicles into the car -pool lanes, which are typically reserved for cars with two or more occupants. Under California's newly passed law , hybrids achieving a 45 mpg fuel efficiency would qualify – at this point, only the Toyota Prius and Honda's Civic and Insight. Automakers have opposed setting minimum fuel efficiency, saying that new hybrids coming onto the market that don't get 45 mpg, such as the Ford Escape sport utility vehicle and the Lexus RX400H, should also enjoy the perk. Energy -Related Environment

Twenty -One EU Nations Ready to Make Kyoto Emissions Cuts [Environmental News Network web site, Jan. 6 ] Brussels, Belgium - The European Union [EU] head office said it approved a further five national emissions trading plans [on Jan. 6], as the EU began participating in the Kyoto climate change pact [during January] . However, a further four – from Greece, Italy, Poland and the Czech Republic – s till needed to be approved, it said. The European Commission said it accepted five further plans [on Jan. 6], from Cyprus, Hungary, Lithuania, Malta and Spain. EU Environment Commissioner Stravros Dimas said his office expected to approve the outstanding plans “as soon as possible,” likely within the next few weeks, he said in a statement. Dimas said the EU head office had to ensure that “these member states can take part fully in the European emission trading scheme, which has now formally started.” The em issions trading plans are at the heart of the EU's policy to cut greenhouse carbon dioxide emissions in a cost -effective way. The plans are a key part in the EU's implementation of the 1997 Kyoto global climate change pact, which commits the 25 -nation EU t o cut its emissions of carbon dioxide by eight percent from 1990 levels by 2012. So far, emissions are down only 2.9 percent. The latest approvals cover pollution quotas for some 1,300 industrial sites, most of which are power plants and factories, the EU said. The EU aims to involve some 12,000 such sites under its scheme. Under the trading system, European companies that emit less carbon dioxide than allowed under set quotas can sell unused allotments to those who overshoot the target. The profit motive i s expected to drive efforts and technology and bring “substantial cuts” in emissions of carbon dioxide, which makes up 80 percent of the EU's greenhouse gases, EU officials have said.

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 5 Device Could Cut Air Pollution at Long Beach, Calif., Port [Environmenta l News Network web site, Jan. 12 ] Long Beach - Harbor Commissioners on [Jan. 10] lauded the potential of new technology that may reduce air pollution from giant ships docked at the Port of Long Beach by 90 percent or more . Representatives of Oxnard -based A dvanced Control Technology Inc. [ACTI] showed the commission details of the company's concept to capture diesel exhaust from ships by deploying a flexible hood over their smokestacks. The hood would be placed on the stack by a robotic arm and the captured exhaust would be diverted via a tube to a tank, where pollutants would be removed in a two -stage process called “wet scrubbing.” The whole system would be mounted aboard a barge, making it mobile. “I think we all find this a very interesting concept,” Harb or Commissioner John Hancock said. Ships arriving at the San Pedro Bay ports of Long Beach and Los Angeles are among the largest polluters in Southern California, with each vessel emitting as much nitrogen oxide (NOx) as several thousand cars…. Board inspe ctors are expected to pass judgment this fall, after Advanced Control Technology conducts tests of the system in the summer. ACTI representative Sal Caro said the system has the potential to reduce NOx emissions by 95 percent, particulate emissions by 90 p ercent and sulfur dioxide emissions by 99 percent. Port administrators said they see the technology as a complement to other pollution -reduction strategies, such as electrically powering docked ships, and encouraging the use of cleaner -burning diesel fuel as ships near ports, said port planning director Robert Kanter….

Palo Verde Probe Nets Four Safety Violations [Arizona Republic web site, Jan. 6 ] Arizona Public Service Co. [APS] faces possible fines and heightened scrutiny from the Nuclear Regulatory Commission [NRC], which said the power company failed to properly maintain a key safety system at the Palo Verde Nuclear Generating Station . The results of a four -month -long investigation, released [on Jan. 5], cited four safety violations related to the e mergency cooling systems for three nuclear reactors at the plant, which is west of Phoenix and operated by APS. The NRC noted that the violations have been corrected and do not represent a current safety concern. APS said its own tests have found the condi tion of the backup cooling system did not pose a significant safety risk. The utility will present its case at a hearing, Jan. 27, at the NRC's regional headquarters in Arlington, Texas. “We have test data in hand and we believe that data will mitigate the NRC's findings,” APS spokesman Jim McDonald said. While two of the violations posed minimal safety risks, two might have compromised the plant's ability to keep its reactors cool during an emergency, the report said. Those two violations could lead to fin es and other penalties. The agency said it would wait until after hearing APS' response to determine the extent of the penalties. NRC spokesman Victor Dricks said the findings don't show that the plant was being operated in an unsafe fashion, only that the safety margins had been diminished. At issue are pipes that deliver emergency cooling water to the plant's reactor vessels in the event of a breakdown of the primary cooling system. Commission inspectors found the pipes dry, instead of filled with water a s prescribed by NRC maintenance procedures. The NRC contends APS made a decision in 1992 not to maintain water in the lines. The agency expressed concerns that the air in the lines could cause pumps to malfunction during an emergency start -up. “Essentially they have been operating for more than 20 years with a degraded emergency cooling system,” Dricks said. McDonald said the utility's tests show that the dry pipes did not affect the operation of the pumps. The reactors are contained in large vats of water that is circulated to maintain a constant temperature. If that system fails, water is pumped into the tank from an outside source to maintain the temperature. The Nuclear Regulatory Commission sent an investigation team to Palo Verde in August to determine if the condition of the pipes presented a significant safety risk. It was the fourth time since the first of the year that the agency had sent a special investigative team to Palo Verde….

Phoenix Loses Bad -Air Label [Arizona Republic web site, Jan. 7 ] It's official: The Valley has shed its bad -air label for carbon monoxide . The U.S. Environmental Protection Agency on [Jan. 3] finalized its decision that Greater Phoenix has met clean -air standards for the invisible pollutant. The announcement is largely procedural, since there has not been a violation of the carbon monoxide standard since 1996 and federal officials signaled their intention to remove the “bad air” label last fall. The designation removes any threat of losing federal funds. Carbon monoxid e has waned as an air pollutant due largely to cleaner vehicle engines and some strides in fuel formulation, state and federal regulators say. The Valley remains classified as “serious” for “particulate matter 10,” a reference to the size of particles of s oot and grime that come from dredging up the desert's crust.

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 6 Power Plants Agree to Slash Coal Emissions [New York Times web site, Jan. 12 ] Albany, N.Y. - The operators of six coal -burning power plants in upstate New York have agreed to significantly redu ce emissions that cause smog and acid rain in what state officials called the state's largest settlement ever for reducing air pollution . The agreements with the plants – which were announced here jointly on [Jan. 11] by Gov. George E. Pataki, a Republican , and Attorney General Eliot Spitzer, the Democrat who would like to replace him in two years – call for them to cut the air pollution they produce to a level that officials said would be the equivalent of removing 2.5 million cars from the state's roads, as well as every diesel truck and bus in the nation. The power plants, including the two biggest coal -fired plants in the state, which are in western New York, and four more in the Finger Lakes and Southern Tier regions, agreed to several measures to make them cleaner, including installing filters, switching to cleaner -burning coal, and shutting some of their oldest and least -efficient units. The actions at these six plants alone will cut by more than half the amount of sulfur dioxide, the main cause of aci d rain, produced each year by all the power plants and factories in New York State, according to data from the attorney general's office. And they will cut by more than a fifth the amount of nitrogen oxide, which causes smog and contributes to acid rain, t hat is produced by the state's power plants and factories…. Environmentalists praised the settlements, saying that the pollution spewed out by coal -fired plants kills and sickens thousands of people each year. An analysis by the American Lung Association o f New York State estimated that the reduced emissions from these six plants alone could result in roughly 63 fewer premature deaths of elderly New Yorkers each year, as well as 460 fewer emergency room visits, 530 fewer cases of bronchitis in children, an d 6,400 fewer asthma attacks. And they said the reductions would help protect the state from the ravages of acid rain….

U.S. Coal -Fired Electricity Plants Among Largest Polluters [Environmental News Network web site , Jan. 13 ] Montreal - Power plants in the U.S. midwest and southeast spew a disproportionately large amount of continental air pollution, according to an environmental commission's study released [on Jan. 11] . The Ohio River valley, parts of Indiana, West Virginia and Illinois in the midwest a nd Tennessee, northern Georgia and Alabama in the southeast are pollution hot spots caused by coal -fired electricity power plants, the study by the Montreal -based Commission for Environmental Cooperation said. It compared emissions from 1,000 fossil -fuel p lants in Canada, Mexico and the United States using 2002 data and found a small percentage of facilities are responsible for most of the pollution. While the United States is easily the largest continental polluter because of the size of its economy, its s hare of electricity -producing emissions is disproportionately large owing to its reliance on coal to produce half its power, the report said. “This report shows that, site by site, coal -fired power plants are the dominant source of harmful air emissions fr om the electricity sector in North America,” says William Kennedy, executive director of the commission. The commission was created by the United States, Canada and Mexico under the North American Free Trade Agreement to ensure that environmental laws are observed under the deal. The commission's 93 -page report measured pollutants such as sulfur dioxide, nitrogen oxides, mercury and carbon dioxide, which can cause acid rain, haze, smog, and climate change, as well as toxic mercury found in fish that people eat. A plant in Monticello, Texas emits the most mercury of the plants listed but the top individual polluters are not all in the United States. A plant in Veracruz, Mexico leads the continental sulfur dioxide list while another in Coahuila, Mexico produce s the most nitrogen oxides. The report dispels notions that Mexico is a large polluter because it is less developed than its continental partners and that Canada is an environmental haven, co - author Paul J. Miller said. Mexico uses coal for just eight perc ent of its electricity and its three coal -fueled plants produce many times less emission per capita than the United States. Canada gets 60 percent of its electricity from hydropower. However, the country is also home to the largest carbon -dioxide generatin g plant on the continent, in Nanticoke, Ontario. It spews 23 million tons of carbon dioxide, a greenhouse gas, every year. Only a few large plants use modern pollution -fighting technology to reduce emissions but that is slowly changing, Kennedy said. “A nu mber of power plants are currently installing new technologies to reduce pollution, and this report helps set a North American benchmark with which we can show their environmental achievements over time,” he said. Energy/General China Emerging as U.S. Rival for Canada's Oil [New York Times web site, Dec. 21 ] Calgary, Alberta - China's thirst for oil has brought it to the doorstep of the United States . Chinese energy companies are on the verge of striking ambitious deals in Canada in efforts to win access to some of the most prized oil reserves in North America. The deals may

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 7 create unease for the first time since the 1970's in the traditionally smooth energy relationship between the United States and Canada. Canada, the largest source of imported oil for the United States, has historically sent almost all its exports of oil south by pipeline to help quench America's th irst for energy. But that arrangement may be about to change as China, which has surpassed Japan as the second -largest market for oil, flexes its muscle in attempts to secure oil, even in places like the cold boreal forests of northern Alberta, where the o il has to be sucked out of the sticky, sandy soil. “The China outlet would change our dynamic,” said Murray Smith, a former Alberta energy minister who was appointed this month to be the province's representative in Washington, a new position. Mr. Smith sa id he estimated that Canada could eventually export as many as one million barrels a day to China out of potential exports of more than three million barrels a day. “Our main link would still be with the U.S. but this would give us multiple markets and com petition for a prized resource,” Mr. Smith said. Delegations of senior executives from China's largest oil companies have been making frequent appearances in recent weeks here in Calgary, Canada's bustling energy capital, for talks on ventures that would s end oil extracted from the oil sands in the northern reaches of the energy -rich province of Alberta to new ports in western Canada and onward by tanker to China…. China's appetite for Canadian oil derives from its own insatiable domestic energy demand, whi ch has sent oil imports soaring 40 percent in the first half of this year over the period a year ago….

Chinese Cars May Be Coming to U.S. Roads [New York Times web site, Jan. 3 ] Detroit - The man who brought the Yugo and Subaru to this country and built a gull -wing sports car bearing his name has a new project: selling low -cost Chinese -made cars in the United States . Chery Automobile Company, owned by the Chinese government, has signed a deal with the privately held Visionary Vehicles of New York to sell Chery's cars in the United States, Malcolm Bricklin, Visionary's chief executive, said [on Jan. 2]. It is the first deal to import Chinese -made vehicles designed for the American market. Mr. Bricklin said Visionary was investing $200 million in the ventur e. The companies aim to sell 250,000 vehicles in five models in 2007: a compact sedan, a midsize sedan, a car -sport -utility crossover sedan, a sport luxury coupe and a sport utility vehicle. They hope to sell one million vehicles [with] eight to 10 models by 2012, said Visionary's chief of staff, Paul Lambert. Mr. Bricklin was behind the selling of the low -cost Yugoslavian -made Yugo cars in the United States in the late 1980's and early 1990's. His company, Yugo America, collapsed in 1992 amid falling sales and production problems in Yugoslavia, which was in the middle of a civil war. Mr. Bricklin started importing Subaru cars from Japan in 1968. In 1974, he founded a short -lived Canadian company to build a gull -winged Bricklin SV -1 sports car. Chery is Chin a's eighth -largest automaker. It was founded in 1997 and sold about 90,000 vehicles in China in 2004.

Fuel Helps Push Consumer Prices Up in 2004 [Reuters, Jan. 19 ] Washington, D.C. - Consumer prices jumped 3.3 percent last year as the biggest surge in f uel bills in 14 years pushed up inflation at the fastest pace since 2000, the government reported [on Jan. 18] . But in a sign that some relief may be on the way, retail prices fell by 0.1 percent in December, driven lower by the largest one -month drop in e nergy costs since July. The Labor Department said the 3.3 percent increase last year in its Consumer Price Index, the most closely watched barometer of inflation, was the biggest annual jump since a 3.4 percent rise in 2000. In 2003, consumer prices had ri sen just 1.9 percent. The acceleration in price pressures last year was led by a 16.6 percent jump in energy costs, the biggest annual gain in 14 years – since an 18.1 percent surge in fuel bills in 1990, when supply disruptions related to Iraq's invasion of Kuwait roiled world oil markets. Last year, sporadic attacks on Iraq's oil pipelines and continued worries about potential supply disruptions in other parts of the Middle East from terrorist attacks pushed oil prices to record levels, hitting $55 per ba rrel in October. Economists hope that 2005 will turn out to be a calmer year on the energy front, but they concede that their forecast of falling prices is contingent on the absence of any serious supply disruptions….

General Motors Touts Big Engine Desp ite Hybrid Clamor [Reuters, Jan. 10 ] Detroit - Never mind the fuel -sipping, gas -electric hybrid vehicles. Detroit wants to send power to the people. Judging from last year's runaway success of the V -8-powered Chrysler 300C sedan and General Motors Corp. [ GM] plans to roll out several high -performance models this year, Detroit's Big Three think Americans still want cars with big engines. While Japanese automakers Toyota Motor Corp. and Honda Motor Co. have won the hearts of environmentalists with their hybr ids, GM believes its V -8s will win over American wallets. “Right now the drive for more and more power in cars is

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 8 way larger than the drive for more and more hybrids,” said GM Vice Chairman Bob Lutz, the top carmaker's long -time design guru. To emphasize t he point, GM on [Jan. 10] will unveil at the Detroit auto show its fastest car ever – the new Corvette Z06 – as well as the Cadillac STS -V, powered by a supercharged V -8 engine that delivers the most horsepower of any Cadillac. The world's largest automake r this year will also offer V -8 versions of its Chevrolet Impala sedan and Chevrolet Monte Carlo coupe, introduced at the Los Angeles Auto Show [on Jan. 7], and the Grand Prix sedan. GM also plans to add a V -8 to a large Buick sedan later this year, analys ts said. Hybrid sales in the United States are growing quickly. But with gasoline prices receding from record highs, roomy cars with big engines remain popular….

High -Tech Homes Offer Ways to Cut Utility Bills [Tucson Citizens web site, Jan. 13 ] Owners of older homes in Tucson can save money on utility bills by adopting strategies used in an award -winning downtown Tucson development . Armory Park Del Sol, built to mimic the historic architecture of the area, taps into high -tech building methods to cut ene rgy consumption, said Ken Shackman, who with his wife, Linda, moved to the development three years ago. The homes, by builder John Wesley Miller, feature thermo -mass construction, lots of fiberglass insulation, solar -electric generation panels, solar -water heating and other energy -saving attributes, he said. “We are very pleased.” Also pleased are officials from the U.S. Department of Energy, the main sponsor of the National Association of Home Builders' 2005 Builder of the Year Award for Energy Value Housi ng, which is being presented to Miller [on Jan. 13] in Orlando, Fla. Miller has been a Tucson builder for more than 50 years and is considered a national leader in energy conservation and “green” building practices. His Armory Park project includes the dev elopment of 97 single -family homes. The builder has already received the 2005 Gold Award for Energy Valued Housing in Hot Climates, the 2003 Builder of the Year Award from the Southern Arizona Home Builders Association [SAHBA] and the 2002 Outstanding Gree n Advocate of the Year Award from the National Association of Home Builders. The proof of the savings is in the bills, said Ken Shackman who paid a total of $52 for utilities in December 2004 to run the heat pump on the 1,344 -square -foot home. The highest monthly utility cost since the couple moved in was $145. In their old home on the Northwest Side, summer utilities typically ran $200 a month and half that in winter, he said. “We have a heat -pump system and solar panels that generated power to offset some of my electric bills.” The cost of the semicustom homes, built on lots that run about 3,200 square feet, run from $192.50 to $222.47 per square foot. That's not out of line for the cost of custom homes, said Roger Yohem, spokesman for SAHBA, whose survey show custom home prices run from $150 to $300 per square foot. A production -style home costs about $100 per square foot, Yohem noted. Miller said building energy - efficient homes has been a lifelong passion…. “My goal is to demonstrate to other builders i n the world that we can make the world better by the things we do.” But Tucsonans can do a lot on their own to save energy, and it doesn't have to add more than about 10 percent to the cost, said Paul Huddy of the Solar Institute in Tucson. Huddy contends energy efficiency can be achieved by building a passive solar home that uses the sun's energy for the heating and cooling by taking advantage of natural energy characteristics in materials and exposure to the sun. In addition, passive systems are simple an d require minimal maintenance, he said. Passive solar is a series of installations that can include windows that can be opened and closed, thermal mass – materials such as masonry and water that can store heat – and proper home orientation.

Long -Life Lig ht Bulb Earns Popular Mechanics’ Kudos [Arizona Republic web site, Dec. 27 ] A Mesa company that develops cooling systems for sophisticated high -end computer equipment has come up with a better light bulb . Enlux Lighting's digital floodlight uses half the electricity of a conventional light bulb and lasts 25 times longer. It has been on the market for two months and the company reports strong demand for its $80 light bulb. “It's been overwhelming,” marketing chief Dan Nelson said. The lights are available o n the company's Web site and through a growing number of dealers. The company believes the bulb is still too expensive to sell in conventional retail stores. “When you add a store's profit, the price becomes prohibitive,” Nelson said. The scientific commun ity has noticed the product. The light earned Enlux a Grand Award in Popular Science magazine's 17th -annual “Best of What’s New” awards and a write -up in the magazine's December issue. Instead of filaments or glowing gases, Enlux's bulb uses light -emittin g diodes, or LEDs. The diodes are semiconductor devices that emit light when an electrical current is applied. They have been around since the 1960s and are used in everything from thermometers to home appliances. But until recently they have been primaril y used in low -wattage digital displays and not for illumination. The challenge has been to

Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 9 concentrate enough diodes to produce a light that is comparable to an incandescent light bulb without overheating….

Record Gas Prices Forecast [Bloomberg News we b site, Jan. 7 ] Demand for gasoline is rising faster than U.S. oil refiners can increase production, boosting expectations for a second year of record prices . By July, the average price at gas stations nationwide will top an all -time high of $2.06 a gallon set in May, according to projections from the U.S. Energy Department. Consumption this year is forecast by analysts to grow three times as fast as output of refiners such as Sunoco Inc. and ConocoPhillips. “We fully expect refining capacity to continue to expand,” said Joanne Shore, petroleum team leader at the department's Energy Information Administration in Washington. That's bad news for Arizonans who are finally seeing a meaningful drop in prices…. Gasoline prices will probably peak in May through Jul y as motorists take to the road for vacations, the Energy Department said in its report. “It's not surprising, it's the same scenario we saw last year,” said Kim Pappas Miller, [American Automobile Association] AAA Arizona spokeswoman. In Phoenix, prices r eached an all -time high of $2.20 per gallon last May and stayed above $2 per gallon until December.

Indus tries & Technologies

Canadian Researcher Invents New Solar Cell [Reuters, Jan. 13 ] Toronto - It may only be a matter of time before we will be using our shirts to ch arge our cellphones . Researchers at the University of Toronto have invented a flexible plastic solar cell that is said to be five times more efficient than current methods in converting energy from the sun into electrical energy. Team leader Ted Sargent, a professor of electrical and computer engineering at the university, said the cell harnesses infrared light from the sun and can form a flexible film on the surface of cloth, paper or other materials. And the film can turn 30 percent of the sun's power int o usable electrical energy – a far better performance than the six percent gleaned from the best plastic solar cells now in use. “The fact that these materials harness the sun's energy using flexible materials potentially could allow you to weave the plast ics into fibers, sort of the way we have synthetic fibers already, and to weave those into clothing and make something that's a wearable solar cell,” Sargent said from Boston, where he is working until the summer. “That's sort of portable electricity.” Sar gent said the coating could be woven into a shirt or sweater and used to charge an item like a cellphone. “We expect that our cellphones or our e -mail can go anywhere with us, but we don't have that expectation of a continuous supply of power. The best tha t we have is batteries, which run out,” he said. “So if we could have a wireless source of power like how the sun would provide, this would be pretty exciting.” …

Honda's Details Initiatives in Hydrogen Fuel -Cell Engines [Environmental News Network web s ite , Jan. 12 ] Detroit - Honda President Takeo Fukui laid out a vision for the company's future [on Jan. 11] that was both clear and compact. Fukui, speaking during the North American International Auto Show, said he expects Honda to lead the industry with its environmental and safety initiatives. “Honda will not only meet the needs of our customers,” he said, “we will achieve our goal of becoming a company that society wants to exist.” Fukui brought the vision to life by announcing Honda has a variety of pl ans that includes unveiling a redesigned Civic in September that will offer more safety features than any other subcompact. Within the next several months, he said, Honda also will become the world's first automaker to put a hydrogen -fuel -cell car into the hands of an American consumer for testing. The 2005 Honda FCX will emit only water vapor. It also will be the first fuel -cell vehicle to operate in subzero temperatures. Allowing a consumer to test -market the car “is just a first step,” Fukui said. “But i t demonstrates that Honda's fuel -cell technology is ready for real -world use.” Fukui said the new Civic will have features that now are on the Accord, including standard anti -lock brakes, side curtain air bags, a bumper designed to prevent injuries to pede strians and a steel frame that disperses the force of a crash….

Iceland's Hydrogen Buses Zip to Oil -Free Economy [Reuters, Jan. 12 ] Reykjavik, Iceland - Hydrogen, tested in buses from Amsterdam to Vancouver and used in the rockets of the U.S. space shu ttle, is a clean power that promises to break dependence Arizona Department of Commerce Energy Office, Energy Policy Update February 2005 10 on oil and gas – at least in Iceland . “Sometimes I have to explain to passengers that it's just water vapor,” the driver said of white clouds trailing after his bus along the streets of the capital, Reykjavik. “When it's very cold there's a lot of white steam.” With almost unlimited geothermal energy sizzling beneath its surface, Iceland has an official goal of making the country oil -free by shifting cars, buses, trucks and ships over to hydrogen by a bout 2050. By then, in theory, the only oil used on the volcanic North Atlantic island will be in planes visiting Reykjavik airport. Other countries, such as the United States, where President Bush is a strong backer of hydrogen, face a far tougher path. A bout 70 percent of Iceland's energy needs, from home heating to electricity for aluminum smelters, are already met by geothermal or hydro -electric power. Only the transport sector is still hooked on polluting oil and gas. “When the Vikings came here they w ere only using renewables, like wind and solar energy,” said Bragi Arnason, a professor of chemistry at the University of Iceland who is known as “Professor Hydrogen.” “Like the rest of the world they were in a solar energy civilization,” he said. “Now we are watching the first steps toward a hydrogen economy. That could be one step back to the way of the Vikings.” Hydrogen's big drawback is that it is very expensive to produce – either by splitting water into its components of hydrogen and oxygen or by sep arating hydrogen from natural gas or methane. With current technology, burning oil to make hydrogen to run a bus produces more pollution than simply running the bus on oil. Iceland sees itself as a testing ground, where almost unlimited heat from hot sprin gs can be tapped for experiments. Car makers from Tokyo to Detroit have visited Iceland's hydrogen projects to discuss fuel cell design, Arnason said. The world's first hydrogen filling station, run by Shell, opened in Reykjavik in April 2003. “People say Iceland is a very small country and can't be copied. But it's a real society, with infrastructure similar to big societies,” Arnason said. “We can start in Iceland on a small scale.” Bush, for instance, wants to break reliance on Middle Eastern oil suppli es as part of a wider quest for national security with a $1.2 billion scheme to promote hydrogen.

Indian Scientists Develop Hydrogen Motorcycle [Hydrogen & Fuel Cell Investor web site, Jan. 5 ] Ahmedabad - As part of India's hydrogen energy program, scie ntists have built a hydrogen motorcycle, which would soon be tested in Delhi, ministry of non -conventional energy sources said on [Jan. 4] . The country had made several achievements in the area of hydrogen energy and had come up with efficient production m ethods in laboratory conditions and successfully demonstrated utilization in motorcycles and three wheelers, Dr. S. K. Chopra, senior advisor at the Central ministry said. Besides, success had also been achieved in biological production of hydrogen from or ganic waste and , Chopra said at the plenary in the 92nd Indian science Congress. The demonstration of the hydrogen motorcycle had been done in Varanasi and it would soon be demonstrated in Delhi, he added. Scientists are working in the area of fuel cells in which hydrogen and oxygen combine to produce electricity and water. Japan and the U.S. were leading in this area, he said. Stating there was an urgent need to move towards cleaner energy resources and technologies, Chopra said this would reduce en vironmental pollution and promote human health. Utilization of solar energy was a good option but its utilization in all its forms has many inherent problems, which prevents its use on large scale as a substitute to the existing fossil fuels, he explained. The world was now moving towards a solar hydrogen system and many countries were now working towards the transition to the hydrogen economy, he said adding India could show the way in this frontier energy technology area as it was already working on a hyd rogen energy road map and program to bring about transition to new solar hydrogen economy.

U.S. Announces Breakthrough in Fuel Cell Production [Hydrogen & Fuel Cell Investor web site, Jan. 4 ] Washington, D.C. - A major milestone in the development of fue l-cell technology was announced [on Jan. 4] by the U.S. Energy Department . The agency said in a release Delphi Corp. had reached a power density level in its fuel -cell program that will greatly reduce the cost of the technology and make fuel cells competit ive in the commercial market. The breakthrough means fuel cells can now conceivably meet the government's energy -production target of $400 per kilowatt hour – about one tenth of the cost of energy produced by current fuel cell models. The auto industry has committed itself to commercially developing fuel cells as an alternative to gasoline engines; however, the carmakers insist quality and cost goals must first be met before fuel cells can gain the large market share needed to have an actual impact on smog levels.

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