Posts Tagged ‘Sustainability’

Chinese Wind Energy

Tuesday, January 4th, 2011

The New York Times recently reported on China’s entry into the U.S. wind energy market. “While proponents say the Chinese manufacturers should be welcomed as an engine for creating more green jobs and speeding the adoption of renewable energy in this country, others see a threat to workers and profits in the still-embryonic American wind industry,” The Times reports.

Smeal’s Gerald Susman, chair of the college’s Sustainability Council, believes that China’s entry into the U.S. wind power market presents a mixed bag of new challenges and opportunities:

There may be some benefits and drawbacks from the Chinese entry into the U.S. wind market.  The Chinese heavily subsidize their domestic solar and wind industries via low-interest loans and make it difficult for foreign competitors to enter China.  That allows them considerable scale to lower costs.  They already have gained significant share in the U.S. solar market, and this may happen for wind too.  The U.S. government has subsidized wind mainly through the Production Tax Credit, but low or zero profits have reduced its attractiveness.  Wind demand in the United States is driven mainly by Renewable Energy Standards in the 30+ states that mandate renewable energy.  Chinese entry won’t increase demand much via lower prices because coal is cheap and natural gas is especially cheap now. 

The Times article points out that foreign firms already make up most of the wind market.  GE and Clipper have relatively small shares compared to Siemens, Vestas, Suzlon, and Mitsubishi.  These latter companies import most of their high-value-added, high intellectual property components because there is a limited skill-base in the United States to make these components.  U.S. manufacturing focuses on towers, nacelle covers, engine mounts, and blades, which are either low-value-added components or too big and too heavy to import. 

The best that we can hope for in the near term is increased jobs for people who manufacture the low-value-added components, assemble turbines from imported components, and construct towers and maintain them.  That’s not insignificant growth, however.

Tags: China, Energy, Globalization, Susman, Sustainability
Posted in News | 14 Comments

Climate Responsibility

Monday, December 14th, 2009

“Ongoing climate negotiations were temporarily upended on Monday when dozens of developing countries, including China and India, threatened to walk out in protest, saying that the world’s richer countries were not doing enough to cut their greenhouse gas emissions,” The New York Times reports. 

In an op-ed in yesterday’s Pittsburgh Post-Gazette, Smeal’s Terrence Guay argues that the world’s industrialized nations are ethically bound to do more to combat climate change because they have caused most of the damage:

Tags: Guay, International Relations, Politics, Sustainability
Posted in News | 1 Comment

Smart Grid: Smart

Friday, November 13th, 2009

President Obama recently announced that Washington will spend $3.4 billion dollars of federal stimulus funds to modernize the nation’s power grid, indentifying 100 projects to make the grid smarter and more efficient. “The aim of the projects, officials said, includes placing ‘smart’ electric meters in homes, automating utility substations, and installing thousands of digital transformers and grid sensors,” The New York Times reports.

According to Smeal’s Gerald Susman, executive director of the college’s Sustainability Council, the nation’s power grid is in need of a major upgrade so that consumers can fully utilize alternative sources of electricity and do so more efficiently:

A new, smarter U.S. power grid is necessary if the country is serious about moving toward reliance on alternative, renewable energy sources like solar and wind.

Intermittency is one of the biggest obstacles facing solar and wind energy. If there is no wind, then there is no electricity. Likewise, it’s impossible to create solar energy at night and it’s less efficient on cloudy days. To bring more solar and wind power into the fold, better technologies must be developed to enable the grid to store this green electricity for later use. In the meantime, a smart grid will be able to anticipate disruptions in wind and solar energy and automatically bring other sources of energy online.

Another important component of this plan is that it gives consumers the information to make smarter energy choices at home. The expansion of time-of-use meters and variable rates will allow consumers to use electricity in ways that make economic and environmental sense. If it costs 15 cents per kilowatt-hour to run a clothes dryer during peak times when energy use is at its highest, but costs half of that to run it at night, consumers will inevitably start making better consumption decisions.

Ultimately, the current grid must be improved to eliminate the disruptions between where and how energy is created and used. Given the scope and complexities of the national grid, it would be nearly impossible to rely solely on individual companies and grid owners to undertake such a modernization on their own. When you consider these complexities along with the economic and environmental boons of a smart grid, it makes sense for the government to subsidize this truly public project.

Tags: Energy, Politics, Susman, Sustainability, Utilities
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Regulating Energy Inefficient TVs

Thursday, November 5th, 2009

BusinessWeek’s Cliff Edwards reports on California’s plan to regulate the sale of televisions that are not energy-efficient, leaving consumer electronic companies and retailers up in arms. “As early as Nov. 4, the state is expected to set new guidelines that would require retailers by 2011 to sell only sets that consume about a third less power than they do today,” writes Edwards. “Manufacturers and retailers say the new rules could force them to pull large-screen plasma TVs and many other models off store shelves.”

Smeal’s Dan Guide weighs in on the issue and how this impacts consumers:

California’s proposed rules mandating power consumption from TVs are an excellent example of good legislative intentions with bad outcomes for consumers. The bad outcomes are most likely to be increased prices for TVs and reduced choices for consumers in California. Is the real problem that energy prices are too low? If consumers are indifferent to an increase in their energy consumption then there is a strong possibility that sufficiently raising electricity rates will decrease consumption, but at a high societal cost (e.g., older people on fixed incomes unable to afford air conditioning and dying from heat stroke). Consider the impact of $4 or $5 a gallon gasoline prices on fuel-inefficient SUV sales as a recent case in point. Should refrigerators that consume ‘too much’ energy be banned? It seems a no-brainer for those of us with plenty of money, but energy efficiency comes at a price (a more expensive price tag) and we (hopefully) recover our investment in a reasonable period of time. However, if you are worried about paying for the food every week, then buying a more expensive, but energy efficient, refrigerator may be out the question.

The U.S. EPA’s Energy Star Program already rates TVs on power consumption and makes this information easily available via their website. This option allows consumers to vote with their wallets and if consumers don’t buy energy inefficient TVs, then manufacturers will stop selling them. The California commission claims that 38 million Californians would ‘double TV energy consumption’ by 2020. This claim assumes that manufacturers will do nothing to reduce the energy consumption of their future offerings. This isn’t likely since manufacturers have already made marked improvements in plasma TV energy consumption. It seems odd to single out a single luxury item for this type of legislation. What about flat panel monitors for computers?

A related question (that hasn’t been asked) is where the most energy is consumed during the product life cycle. For example, mobile phones and laptop computers sip energy during the use phase, but require enormous amounts of energy during the production phase. To make the problem worse, both of these products have very short life cycles before they are discarded in favor of the newest model (80 percent of Americans replace their mobile phone within a 12 month period). Recycling of both these products is problematic since there are so many mixed materials present. This is a much more difficult problem to address, but with a higher potential payout.

Tags: Energy-Efficient Products, Guide, Supply Chain, Sustainability
Posted in News | 4 Comments

Electronics Recycling: Cure or Band-Aid?

Monday, July 6th, 2009

The New York Times recently reported on the growing trend of electronics recycling. “Since 2004, 18 states and New York City have approved laws that make manufacturers responsible for recycling electronics, and similar statutes were introduced in 13 other states this year,” The Times reports. However, electronics recycling is likely little more than a Band-Aid that “simply covers up the problem of e-waste for a short period,” according to Smeal’s Daniel Guide, whose research focuses on the creation of industrial systems that are both environmentally and economically sustainable.

More from Guide:

As a result of the recent interest in the recycling of consumer electronics, many states are passing producer responsibility legislation aimed at keeping e-waste out of landfills.  Keeping e-waste out of landfills is an excellent idea—especially older waste that contains lead-based solders and dangerous heavy metal such as cadmium.  However, the United States would be well-advised to learn from the European Union’s recent experiences with the Waste Electronics and Electrical Equipment (WEEE) directive.  The WEEE is widely regarded as a disaster and adds a layer of bureaucracy and associated costs to mandated recycling.  In addition to the high costs of compliance, there is still the nagging issue of demand for recycled materials. Virgin raw materials are often much less expensive than recycled versions and it’s a simple economic fact that no business manager can justify spending more money on raw materials.  The intent of the WEEE was to encourage companies to change the design of products to make it easier to recover materials, but given the collective nature of the system, this simply hasn’t happened. 

In the United States, it seems likely that the simplest, and therefore the most likely, way to handle e-waste is to export it.  There is very little that can be done in the way of product reuse with computers that are three to four years old. The rate of technology change is simply too rapid to support component reuse, so we are left with piles of mixed materials that cannot be easily separated.  This situation leads to very expensive recycled materials with no demand.  Recycling feels good, but it simply covers up the problem of e-waste for a short period. In essence, we are putting a Band-Aid on a ruptured artery and expecting a good outcome.  

I advocate finding ways to make product recovery and reuse profitable for the firm.  The remanufacturing industry in the United States is enormous (larger in direct employment than the steel industry) and very profitable.  Remanufacturing is value-added recovery that restores products back to the original quality and performance specifications (and in many instances better performance). Through our experiences with a variety of companies, my fellow researchers and I have found that remanufacturing is value-creating and saves energy and materials. Consumers routinely put remanufactured parts and components into their autos because of the price savings. However, many consumer products are simply not designed for remanufacturing.  Consumer electronics are often manufactured as cheaply as possible and these design choices often prevent product or component reuse.  When this is combined with rapid product obsolescence (80 percent of consumers upgrade their cell phone within one year), the end result is predictable—overflowing landfills and a public outcry.  Until consumers demand that producers make upgradable, or at least standardized designs, there will continue to be growing piles of e-waste.  Recycling programs make us feel better, in no small part because we’ve done the “responsible” thing.  However, all this does is treat the symptoms, not the root cause.

Tags: Guide, Supply Chain, Sustainability
Posted in News | 6 Comments

Michigan Greening

Thursday, June 11th, 2009

With Michigan’s unemployment rate growing right alongside the constricting U.S. auto industry, the state is looking to reinvent its economy in industries other than auto manufacturing. The state is wooing Hollywood film crews and venturing into wind and solar energy manufacturing. In fact, a new report from the Pew Charitable Trusts finds that Michigan gained 23,000 jobs in clean energy between 1998 and 2007.

Smeal’s Gerald Susman, associate dean for research and director of Center for the Management of Technological and Organizational Change, studies the economic impact of the clean energy industry and says that Michigan is well suited to excel in the green economy:

Michigan already has some very good alternative energy companies that are growing rapidly. One is Hemlock Semiconductor Corp. (HSC), a Dow Corning joint venture that makes polysilicon for use by solar cell manufacturers. Also, Dow Corning Corp. is building a facility to manufacture monosilane gas next to HSC. This specialty gas is used in making thin-film solar cells. Another company is United Solar Ovonic, which manufactures solar cells. These examples suggest that Michigan has a good base upon which the solar industry can grow. Growth may not be dramatic, however, as a typical expansion creates 500 to 600 permanent jobs (excluding construction jobs) and Michigan’s unemployment rate is the highest in the nation.

Another area that could result in job growth is solar energy installation. Although more service than manufacturing, the solar installation business is labor intensive and market entry into it is easy. Job growth prospects may be higher here than in manufacturing. 

Additionally, Michigan is well placed to transfer existing technology and skills in metal fabrication from the auto industry to the wind industry. Gear boxes and generators used in wind turbines are similar to those used to make auto transmissions, for example. 

One problem is that most of the major turbine manufacturers are foreign owned (mostly European) and have developed their supply chain relationships with European suppliers, especially for high-value added components. Currently, they would rather source from Europe, even with high transportation costs, than develop new relationships with American suppliers. The exceptions are for low-value added items like engine mounts or nacelles. These products contain little intellectual property and low risk of IP leakage to new and untested vendors. Also, towers and blades are too large and bulky to import so they tend to be manufactured close to where they will be installed.

One prominent study estimates that every 1,000 MW of additional installed capacity would create 3,000 manufacturing jobs, 700 installation jobs, and 600 operations and maintenance jobs. More than 8,500 MW of wind capacity was added last year, which should have created about 36,500 new jobs. Before 2008, this rate of job growth would have been considered highly optimistic. However, recent data from the American Wind Energy Association suggest that such projections are becoming realistic. A recently released study by the Pew Charitable Trusts indicates that California, Texas, Pennsylvania, Ohio, New York, and Florida (in that order) created the highest number of green jobs from all renewable energy sources in 2007. Michigan should look to those states as examples of how to grow its green energy sector.

Tags: Auto Industry, Susman, Sustainability, Unemployment
Posted in News | 3 Comments