WUEG November 2015 Newsletter

whartonundergradenergy

November 2015

November 2015 Newsletter

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Transportation

Toyota Accelerates Toward ‘Hydrogen Society’

José Del Solar – Member, Academic Committee

The new Toyota Mirai has attracted more interest

than Toyota originally anticipated — surprising

considering the car’s hefty price tag of $57,000.

The release of the first finalized cars last month

came at a good time. The Volkswagen diesel

scandal drew fresh attention to the automotive

industry’s cleaner alternatives, giving Toyota an

opportunity to further cement its role as a leader in

producing environmentally responsible

automobiles.

The Mirai’s production volume will be limited,

however. It will be launched “cautiously by

thoroughly manufacturing each and every car to

ensure a high level of quality” because of the

vehicle’s many new technologies, said Toyota.

Production is far from easy. Powering the car

involves a complex process of removing the

electrons from the hydrogen atom (H 2 ) and using

them to generate electricity for the motor. The

electrons then react with the now positively

charged hydrogen atoms, which in turn react with

oxygen in the air intake, forming H 2 O as exhaust.

Refueling, which needs to be done every 312 miles

or so, simply requires the hydrogen tank to be

replenished.

Because Toyota has yet to reap economies of scale

from this relatively new technology, it expects to

lose anywhere from $62,000 to $124,000 per car —

albeit demand far exceeded expectations. It hopes

to minimize losses through government support

and subsidies, which includes taking advantage of

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November 2015

the $385 million Japan has committed to

promoting hydrogen as an alternative fuel in its

push for a ‘hydrogen society’. But what is really

important for Toyota is to gain market share. It has

by far the most aggressive plans to penetrate the

hydrogen-powered vehicle industry, saying it

expects to build nearly exclusively hybrids and fuel

cell cars by 2050.

While Toyota indeed hopes to gain market share,

its approach to entering this new industry is similar

to Tesla’s. Toyota, like Tesla, is granting access to

its intellectual property, which includes more than

5,600 patents that were involved in making the

Mirai. A small number of patents regarding

installation and operation of hydrogen fueling

stations will be offered indefinitely, but most

patents will be offered free of charge only until

2020. This is hardly a selfless move; the company

hopes to generate competition as quickly as

possible to create an infrastructure that allows

fueling stations to be more readily available.

Furthermore, Toyota hopes to “speed the

development of new technologies and move into

the future of mobility more quickly, effectively,

and economically” said Bob Carter, one of Toyota’s

senior vice presidents.

“Toyota has by far the most aggressive

plans to penetrate the hydrogenpowered

vehicle industry, saying it

expects to build nearly exclusively

hybrids and fuel cell cars by 2050.”

Critics of the Mirai should remember when Toyota

debuted the Prius in 1997. People wondered

whether the Prius, or other hybrids, would have

any real lasting impact. They questioned its

battery life and the cost to replace its battery, as

well as the car’s overall high price tag. But it has

since become one of the company’s most

successful cars. Furthermore, hydrogen cars bring

about new advantages: hybrids like the Prius

require gasoline, but fully electric cars require

hours to charge and use electricity, which usually

has its own footprint.

That being said, alternative fuel vehicles have been

struggling lately. Extremely low oil prices mean

that these clean options are less competitive,

shrinking the target demographic to those who

choose alternative options principally for

environmental reasons. But Craig Scott, one of the

executives leading the development of the Mirai,

says that launching a fuel-efficient car during a

period of low energy prices is nothing new.

There is more bad news than just low oil prices.

Critics argue that fuel-cell vehicles are driven by

government policy rather than consumer demand.

Not only is the vehicle expensive, but you can only

recharge the car at hydrogen stations. Fueling

station infrastructure, however, will likely be slow

to develop, too, as each station requires between

close to $4 million upfront, compared to about

$800 thousand for normal gas stations. Because of

this, analysts at Goldman Sachs estimate that fuelcell

vehicles will not gain significant traction until

2025, when they will still only account for roughly

0.5 per cent of global sales.

Indeed, Toyota faces many financial obstacles with

the Mirai. But it echoes Toyota’s bold and

successful bet on hybrids in the 90s. For a

company still recovering from a massive recall

scandal five years ago, this marks an important

moment. The ‘hydrogen society’ Japan hopes for is

still a long way off, but the Mirai is a big step in the

right direction.

Sources:

The Wall Street Journal

The Economist

Financial Times

Green Car Reports

Goldman Sachs

CNBC

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November 2015

Gogoro: The Smart Scooter & the Future of Mobile

Energy

Charlie Gallagher – VP, Academic Committee

Discussions about energy often get caught up in

the current events – solar subsidies, OPEC, and oil

spills – but how about the future? Look to Gogoro:

they’ve made an electric scooter that can excite

consumers and drastically reduce emissions

simultaneously, by helping reshape how energy is

used in ultra-dense urban cities.

Gogoro makes a high-tech, battery-powered, sleek

new scooter called the Smartscooter. It can

achieve a top speed of 60 mph and a maximum

range of 100 km (62 mi). But the truly inspiring feat

is not the scooter but the battery network that

powers it. Gogoro relies on its GoStations –

strategically-placed battery stations where riders

can swap out their two milk jug-sized batteries for

fresh ones when they run out of juice. The idea

behind this network is that by distributing – or

sharing – energy across the city, riders can get

where they need to go without worrying about

having to head back home for an hours-long

recharge (‘range anxiety’). Instead, users simply

remove the two batteries, drop them in the

charging station (which greets you by name), and

two fresh ones automatically pop out. The whole

process takes six seconds.

of malfunctions (and automatically schedule you

for servicing). In the app you can also set your

preferences to, say, maximize your range or up the

torque for quick acceleration. Further, the app can

tell you where you parked if you forget and show a

map of battery stations if you need fresh batteries.

Gogoro was started by a former member at HTC, a

maker of smartphones, and is partnering with

Panasonic, the Japanese electronics giant behind

Tesla’s PowerWall batteries and operator of the

legendary ‘GigaFactory’ mega-plant.

The three models’ prices range from $2,500 to

$3,000, and CEO Horace Luke is hopeful that these

scooters can rapidly gain market share in Europe’s

and Asia’s dense cities. They currently operate in

Taipei, where they have sold over 1,000 scooters,

and they are launching in Amsterdam this spring.

Beyond the battery network is clever smartphone

integration with a real-time feedback experience.

The scooter comes with an app that can show

battery levels, run diagnostics, tell you how to

improve your riding experience, and even alert you

But what does the future hold for Gogoro? “The

greatest challenge of our time is determining how

we manage, distribute and experience energy in

smarter ways,” said Luke. While Gogoro is exciting,

sexy, and practical (in theory), the success of the

company relies on scale; much like Uber, the

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November 2015

sharing economy only works when everyone uses

it. Skeptics point out that since riders don’t own

their batteries and can’t charge at home, the

company will be a flop. But the potential for

energy sharing in dense cities is huge: for instance,

Gogoro is just one part of a wider initiative called

Amsterdam Smart City – a coalition of government

bodies and companies – which seeks to make

Amsterdam a model for urban efficiency.

The network of batteries can power more than just

scooters. Strategically-placed battery stations can

provide mobile energy for servers, construction

sites, you name it. “Imagine what the AA battery

did for the consumer electronic industry way back

when. We think Gogoro batteries – smart batteries

– would enable a wide industry of unimaginable

innovation to happen,” remarks Luke.

See the YouTube video here.

Sources:

The Verge

Gizmag

Gogoro

Oil & Gas

Disaster Avoided or Opportunity Missed? The

Jettisoned Anadarko-Apache Merger

Max Isenberg – Senior Member, Academic Committee

On November 10th, news reached the public of a

potential acquisition of Apache Corporation by

Anadarko Petroleum Company, which would have

brought together the struggling shale oil producer

Apache with the primarily natural gas producer

Anadarko. The offer, at a “modest premium” to

Apache’s stock price, was rejected by the target’s

executives before ever reaching a stage where

non-public information would be shared.

Some argue that the merger could have succeeded

and made good strategic sense for both

companies. Anadarko had recently hit many more

dry holes than in the past, suggesting it had been

exploring less productive properties. Additionally,

Nomura analysts posited a potential structure of a

deal where the international assets of the two

companies could be spun out separately from the

North American ones that could potentially be

more attractive than one company owning both.

Most observers, however, reacted negatively to

the news. Oppenheimer & Co. equity analysts

noted Anadarko’s own struggles with litigation

around its involvement in the BP Gulf oil spill that

made it susceptible to acquisition. Rather than

being a deal to create value, the analysts viewed

Anadarko’s offer as a way to pre-empt takeover

bids of its own. Integration in a low commodity

price environment could also prove difficult, as

both companies are expected to continue to

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experience losses with oil prices well below $70 a

barrel. Additionally, Anadarko’s strong value

derives from its premium deposits; adding

Apache’s less diffused and unattractive Egyptian

and North Sea properties would diminish

Anadarko’s advantage. The very different nature

of the companies’ production (shale oil vs. natural

gas) also minimizes the opportunity for synergies.

With the deal now fizzled, Anadarko and Apache

leave the discussion table more vulnerable than

before. Anadarko’s allowance of making merger

details public could serve as a negotiation target

with Apache to force them to return to the table.

However, several of the oil majors like Royal Dutch

Shell and Exxon Mobil may now have their

interested piqued in both companies. They not

only have the cash to swoop in and pick off

Apache, but also the resources to buy the larger

Anadarko outright. By showing its hand, Anadarko

may have highlighted its own weakness through

the extended downturn in energy this past year.

This announcement is doubtful to be the harbinger

of consolidation in the E&P space, however.

Though many companies hit hard by depressed oil

prices are struggling, Apache had been one of the

hardest hit. Despite a decent balance sheet, its

concentration of unattractive assets, continued

losses, and substantially depressed multiples

suggested it was an outlier in the industry. Thus,

an offer to buy Apache does not necessarily reflect

industry-wide appetite for consolidation, merely

the perceived value of this particular asset. Even

still, as the energy bust drags on, acquisitions may

soon follow..

Sources:

Bloomberg News

Bloomberg View

Barron’s

Nigeria’s Proposed Oil Industry Restructuring

Will Test its President’s Commitment to Democracy

Mark Rinder – Member, Academic Committee

Nigerian president Muhammadu Buhari doesn’t

have the best track record. While military ruler of

Nigeria in the 1980s, Buhari restructured the

country’s industries while imprisoning political

opponents and suppressing personal freedoms.

Now, Buhari is back in power, and he has big plans

for revolutionizing the way Nigeria manages its oil.

country. Those who disliked Buhari were willing to

offer him a second chance: in 2015, he was elected

president of Nigeria with support from most

regions except the southernmost Christian states.

Buhari’s success can be attributed to the rise of

terrorist organization Boko Haram, which led

many Nigerians to favor a strict military ruler.

After taking power in a military coup at the end of

1983, Buhari began a short but intense stint as

dictator of the West African nation. Buhari

adopted quasi-fascist tactics, violating human

rights and encouraging import substitution

industrialization (ISI). The man who took power in

a coup was deposed by yet another coup in

Nigeria’s tumultuous history, exiting office in 1985.

Some Nigerians viewed Buhari as a disciplinarian

who brought some semblance of stability to the

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Buhari claims to have abandoned his dictatorial

qualities while maintaining his staunch opposition

to corruption, but his most recent restructuring of

Nigeria’s oil industry has complicated that

promise. President Buhari has named himself

minister of Nigeria’s national petroleum industry,

claiming that he will be able to keep a close eye on

the sector that provides 70 percent of his

government’s revenue. President Buhari has also

hinted at a potential revamping of the Nigerian

National Petroleum Corporation (NNPC), setting

an 18-month timeline for assessment of the

broken state company.

Unfortunately, Buhari’s challenge goes far beyond

corporate restructuring. Recent estimates place

losses due to pipeline vandalism and theft at

roughly $14 billion annually, an embarrassing

figure for Nigeria’s government. Nigeria’s National

Oil Spill Detection and Response Agency (Nosdra)

reported 900 incidents of pipeline siphoning and

destruction in the past year alone. Many analysts

blame inequity in the distribution of oil profits for

this widespread problem. Tribes in oil-rich

Ogoniland still lack basic public services and

amenities, leading them to pilfer oil for

supplemental income. To make matters worse, the

Nigerian government has done little to clean up

the thousands of hectares of land polluted by

frequent oil spills along exposed, derelict pipelines.

Many miles of piping are above ground and poorly

maintained. Besides addressing local theft and

defunct technology, Buhari must also tackle

complex corruption and oil theft schemes that

could include members of his own government.

Buhari’s approach to the complex problems facing

Nigeria’s oil industry will test his new commitment

to fair governance and departure from

dictatorship. If Buhari decides to oust officials in

the federal government for corruption and oil theft

ties, the country may undergo a period of political

oppression similar to that of his 1984 reign.

Furthermore, Buhari may clash with the

historically disadvantaged Ogoni tribes that live in

the oil-rich Niger Delta. The Ogoni people have

been calling for more government aid and cleanup

of polluted lands. If Buhari begins his restructuring

of the petroleum industry without addressing

Ogoni demands, we can expect massive public

demonstrations similar to those of the 1990s.

Buhari will then be faced with a choice between

encouraging democratic discourse and silencing

those who disagree with him.

The people of Nigeria elected Muhammadu Buhari

with hopes of restoring stability and discipline to

their fractured nation. Buhari seems to share

similar goals and has already taken concrete steps

towards realizing them; whether he upholds

personal freedom and democracy along the way is

yet to be seen.

Sources:

Wall Street Journal

The Guardian

BBC

What Lifting the Crude Export Ban Means for U.S.

Energy Markets

Sheetal Akole – Senior Member, Academic Committee

The crude oil export ban was enacted to keep USproduced

oil domestic in the 1970s, when the

United States was recovering from an oil embargo

implemented by OPEC that drove oil prices up

threefold. Now, as a result of the Shale Revolution

and the developments in hydraulic fracturing

technology, American producers are flooding the

domestic market with crude. In an already low

global oil pricing environment, U.S. crude prices

are exceptionally low, driving profits in the oil

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November 2015

industry into the ground. Lifting the crude oil

export ban would tighten the WTI-Brent spread by

raising domestic prices and lowering international

prices, while also spurring development in

midstream and oilfield services sectors.

The United States crude oil stockpiles have been

consistently increasing for a while now, and if the

ban were to be lifted, these inflated stockpiles and

the current abundance of US crude supply would

shift from the domestic market into the

international market, further increasing the global

oversupply that is currently keeping oil prices so

low. However, there would not be an increase in

American crude production. At current prices, it

would still be unprofitable for producers to

increase production of crude despite greater

demand, especially since such large inventories of

crude are already available.

By increasing the glut, American production would

push international crude prices like Brent even

lower. At the same time, as American crude

becomes exposed to global demand, more

international buyers would be willing to purchase

crude deliveries at Cushing, Oklahoma, since WTI

prices are lower than Brent. However, this increase

in demand will drive WTI prices up, tightening the

WTI-Brent spread. Ultimately, while American

producers will benefit from the lift on oil exports,

American consumers will be hurt by the increase in

prices.

“Ultimately, while American producers

will benefit from the lift on oil exports,

American consumers will be hurt by the

increase in prices.”

Lifting the ban on exports will also spur

development in energy infrastructure, pumping

money into the midstream and oil field services

sectors, while also helping the American economy

by creating jobs and increasing investment.

The extremity of these effects is subject to various

factors such as the price environment of oil, the

supply and demand constraints in other parts of

the world, and the economic growth outlooks for

major oil importers. For example, in the event of

an increase in demand for US oil (which could be

possibly spurred by crisis or supply constraint in

the Middle East) US producers may find exporting

oil more attractive and profitable than selling

domestically. If other international crude

importers are willing to pay a premium, crude may

become more expensive for domestic consumers.

In such a situation, it is also possible that we land in

a similar situation as the one that caused us to

enforce the crude oil export ban in the first place.

Sources:

Wall Street Journal

New York Times

The Economist

Forbes

Why Investors are Returning to Oil Companies

Frank Geng – Member, Academic Committee

Oil prices are still falling and investors remain

downbeat on the commodity’s future. Nothing’s

changed there. What has shifted, however, is

investor outlook for oil companies. The renewed

interest is not tied to any optimistic views on the

oil itself, but rather the recent commitment of

these companies adjust their supply to the lowered

price and produce stronger earnings.

According to a November report from the $450

billion asset manager Schroder’s International

Selection Fund, their holdings in the Italian

multinational oil giant makes up 8% NAV of the

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firm’s Italian Equity holdings. Allianz Global

Investors has similarly been purchasing shares in

BP and Royal Dutch Shell PLC. So what’s with the

new confidence?

What many of these firms are resolved to do now

in this climate of low oil prices, is to aggressively

cut costs and expenditures. More specifically,

these large companies will force oil field services

companies to accept lower supply prices for

refining equipment and technology; staying afloat

means pinching your suppliers’ margins as well.

U.K. oil services company, Amec Foster Wheeler,

announced in early November that it would be

cutting its dividend due to increasing price

pressures from large oil companies. If these oil

giants can reduce their operating costs, as they

had done when oil prices dipped in during the 90’s,

it will create positive potential for long-term

adjustment to global oil demand.

At the same time, investors are finding hope in the

fact that oil companies are still refusing to cut their

own dividends. Patrick Pouyanné, CEO of French

Total SA, said “The dividends and payouts to

shareholders have no reason to be as volatile as

the oil price,” at an Abu Dhabi conference last

week. Chevron, for example, has been raising its

annual per-share dividend for the past 28 years;

Exxon similarly has increased its per-share

dividend by an average 6.4% for each of the past

33 years. Other companies such as Shell or BP have

stated that they will maintain their shareholder

returns. Divestment is also a large part of these

companies’ strategies, as such some companies

are offering shareholders the option to receive

payment in shares rather than cash.

It would be important to remember,

however, that dividend yield itself does not drive

growth. Rather, it is a mechanism by which these

companies can maintain investor interest. It is a

common misperception that high dividend yields

indicate the level of company performance. If a

company, however, has higher yields than others

in the same industry, what might actually be the

case is not a good dividend, but a depressed price.

A trend of depressed pricing may eventually lead

to the cutting or elimination of that dividend. A

better measure, rather, is simply the growth of the

company’s earnings and cashflow.

It makes sense, then, why investors might be

flocking back to these oil companies. The prospect

of a new efficient, cost-cutting, lean operational

mindset is simply good business—especially in a

sector where adjusting to global demand is so

difficult. If these companies are able to make real

deep cuts, like BP PLC, who expects to cut costs by

more than $6 billion in 2017, then perhaps the

strategy will work. It is true, though, that if oil

prices don’t eventually swing back up, all this costcutting

might end up disabling these companies’

exploration and production capacities. Still, the

maintenance of dividend payouts will continue to

draw investors. But ultimately, what should

continue to draw renewed interest in these oil

companies’ is not the sustainment of dividends,

but of their prudent course correction for longterm

oil supply adjustments.

Sources:

Wall Street Journal

Schroders International Selection Fund

ETFTrends

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November 2015

Science & Technology

TriAlpha Energy, General Fusion, and More:

Startups Research Nuclear Fusion Instead of

Fission

Arnab Sarker – Member, Academics Committee

For the past century, nuclear power has referred

almost exclusively to the process of nuclear fission,

whereby a large atom such as Uranium or

Plutonium would be split into two smaller atoms

and the resulting thermal energy is converted into

electricity. However, the other process by which

energy is created by atomic nuclei – nuclear fusion

– can potentially be a safer, more efficient source

of energy than fission. In nuclear fusion, small

atoms such as Hydrogen and Helium are combined

into larger atoms, and energy produced from this

chemical reaction is converted into electricity. The

sun is powered this way.

Nuclear fusion has no carbon emissions and would

have little to no harmful impact on the

environment. While nuclear fusion seems great in

theory, the reality of implementing reactors to

generate energy from this process is much more

complicated. Startups are looking to change that,

and many financial backers are interested in the

results as well.

TriAlpha Energy is one of the most prominent

startups researching nuclear fusion, and their

research focuses on using magnetic fields to

facilitate a reaction between Hydrogen atoms. Its

backers include Microsoft co-founder and Vulcan

Capital Chairman Paul Allenl, Goldman Sachs, and

Hamlin. This June, TriAlpha Energy managed to

heat a ball of hydrogen to over ten million degrees

Celsius for five milliseconds, which may be less

than the blink of an eye, but in reality was an

incredible breakthrough for nuclear fusion. Nuclear

fusion reactors would have to superheat their

materials to produce the fusion reaction, and

sustaining this kind of heat, even for a short

duration, is a vital step to making nuclear fusion

reactors a reality. TriAlpha Energy is hoping to

create a new machine that can handle

temperatures that are ten times hotter for a longer

period of time by next year.

General Fusion is also looking to make nuclear

fusion a reality. Based in Canada, General Fusion

has received financial backing from companies

such as Bezos Expeditions, a firm created by the

founder of Amazon.com, Jefferey P. Bezos, as well

as the Canadian government. In May of this year,

General Fusion also received a $27 million

investment from the Malaysian government.

General Fusion has designed its own reactor that

uses pistons to compress hydrogen to induce a

reaction. By using compression to create reactions,

General Fusion’s designs allow for nuclear fusion

reactors to be smaller and more commercially

viable.

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Dozens of other startups and companies are

researching different forms of nuclear fusion

reactors. Helion Energy, a startup near Seattle, is

receiving funding from Mithril Capital

Management through Peter Thiel, a co-founder of

PayPal, and is using a mixture of magnetic fields

and compression to try to induce fusion reactions.

Even companies such as EMC2 and Lockheed

Martin are opening divisions to research nuclear

fusion.

If a sustainable nuclear fusion reactor were

created, the economic implications would be

tremendous. Helion Energy claims that, with one

reactor, it could power 40,000 homes for less than

$0.04/kWHr, which is significantly less than the

$0.12/kWHr that the average US household pays

for energy. Consumers would prefer the cheaper

source of energy, and eventually nuclear fusion

could hold a large part of the market share for

energy, reducing the demand for other forms of

energy such as coal. Nuclear fusion may not be

commercially available for years, but when it

comes, it will have a huge impact on both the

environment and economy.

Sources:

General Fusion

Helion Energy

MIT Technology Review

New York Times

NPR

TriAlpha Energy

Oscilla Power: New Technology is Making Ocean

Power Generation a Feasible and Economical

Prospect

Emma Dong – Member, Academic Committee

Oscilla Power is a startup based out of Seattle that

has developed a device to harvest energy from

waves using technology that was modeled after

wind turbines. Oscilla Power’s generator is very

simple in design and uses the force of the waves to

generate power. This is beneficial for ocean power

generation because minimizing how many

components it requires prevents the need for

ongoing repairs and lengthens the time span of a

generator.

The system is made up of a generator tethered to

the sea floor and a buoy, which is made up of alloy

bars, magnets, coils, and hydraulic rams. It delivers

about 600 kilowatts of electricity, comparable to an

onshore wind turbine. It will produce electricity at

10 cents per kilowatt hour, also comparable to

current wind farms. Ocean power generators

generate electricity per kilowatt hour at a rate

37.5% below that of offshore wind farms.

In the buoy, the alloy bars are connected by cables.

The tension of the cables changes as the buoy bobs

up and down with the waves, which drives the

hydraulic rams and contributes to the spinning of

the alloy bars.

Oscilla Power’s generator has bars made of iron and

aluminum that are compressed by the rams when

ocean waves push against them. Iron and aluminum

are ferromagnetic materials that have reverse

magnetostriction properties. The waves compress

the metal bar by a scale of at least 1/10,000 which

generates enough force to oscillate the alloy bars.

Oscillating the ferromagnetic bars in the presence

of magnets and a coils generates an electric

current, generating electricity.

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although more expensive to produce, can sustain

for decades. The main cost of the generator is rare

earth metals in the magnets, but they are only used

in small quantities. Other materials that the

generator uses are standard iron, aluminum,

concrete, glass, steel and copper. However, since

the mechanical movement of the generator is

contained in the buoy, the bars won’t become

corroded like the metal of previous ocean power

generators. Further, the parts of Oscilla Power’s

generator aren’t susceptible to external weathering

because they hardly move. The only movement

caused by the ocean waves is the 1/10,000

compression of the alloy bars. The full-size device

will have a buoy 27 meters in diameter, 6 meters

high, and weigh 1000 tons. It will be secured with a

concrete heave plate 70 meters below the surface.

Given the data collected from prototypes of

Oscilla’s ocean power generator, ocean power

could be a more sustainable and more cost effective

option for offshore power harvesting than

windmills. Unlike previous ocean power generators

and offshore wind farms, Oscilla Power’s wave

energy converter can be deployed with standard

vessels that don’t need any custom equipment.

Previous designs of ocean power generators had

much more intricate designs with complicated and

sensitive parts that required frequent maintenance

and repairs. As a result, the generators fell out of

use because the consistent operating costs were

too expensive to maintain. Oscilla Power’s design,

Sources:

Bloomberg

The Economist

Oscilla Power

Special Report: Presidential Candidates

As the Presidential Primaries Approach, Which

Candidate’s Energy Policy Will You Support?

Connor Lippincott – Senior Member, Academic Committee

Energy policy has been at the forefront of the

Democratic Party debates thus far and will surely be

a widely-discussed topic going forward through

election night. Here is where each of the candidates

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(polling at least at 5% nationwide in their respective

parties) stand on the many problems facing the

energy system in the U.S. today.

DEMOCRATS

Hillary Clinton has by far the most detailed energy

policy available online as of now. She has released

both a “Vision for

Modernizing North

American Energy

Infrastructure” and a

“Vision for Renewable

Power”. The former has

three

major

components. First, she plans to make existing

infrastructure, including pipelines, railroads, and

the grid, safer and cleaner through government

sponsored projects. She then plans to expand

investment resources, an initiative which includes

plans to set up a National Infrastructure Bank. All of

this will be done in coordination with Canada and

Mexico as part of a North American Climate

Compact, which is the final focus of her

infrastructure plan.

On the renewables front, Hillary is leaning heavily

towards solar as a means to reducing our carbon

footprint. She plans to have more than half a billion

solar panels installed by the end of her first term. By

10 years after she has taken office, she hopes that

the U.S. will be able to power every home with

renewables. This would be 33% of the total energy

generation by the U.S., while the target right now is

16%.

These lofty goals are mostly in line with her voting

record as Senator from New York. In 2007, she

voted for removing oil & gas exploration subsidies.

And in 2005, she approved a target to reduce oil

usage by 40% by 2025.

Bernie Sanders is equally, if not more, committed

to the environmentalist cause. In the wake of the

Paris attacks of November 13, Bernie doubled down

on his belief that climate change is the greatest

national security threat. He helped introduce

carbon tax legislation that set an emissions

reduction goal of 80% by 2050, which did not make

it through Congress. The bill also called for

increased regulation on fracking, greater

investment in energy efficiency and sustainability,

and international cooperation on the carbon tax.

He led the charge to set up the Center for Energy

Transformation and Innovation in Vermont, which

focused on improving smart meters throughout the

state. The Center was awarded $69 million from the

Department of Energy for the rollout of the new

technology.

He is a supporter of solar energy as well, having

proposed multiple pieces of legislation. The Low

Income Solar Act would have reduced the costs of

installation of solar panels, making them affordable

for more families. Lowering installation costs is

paramount to the future of solar energy. He also

wrote a bill to set up 30 GW of solar into the grid

and set up an additional 200,000 solar hot water

heating systems. Further, he supports increased

wind and geothermal energy sources but is against

nuclear energy. He has called for a moratorium on

nuclear plant license renewals and questions the

environmental and financial effectiveness of

nuclear energy on the whole.

REPUBLICANS

Donald Trump, current GOP poll leader, does not

have energy under the “Issues” section of his

website (telling of his priorities, yes?), and has not

shared many views on the current energy landscape

throughout the debates so far. However, he has

made some statements on energy in the past,

mostly supportive of increased U.S. oil & gas

production and energy

independence. He

strongly dislikes OPEC

and blames them for

volatility in oil prices. He

is a vocal supporter of

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November 2015

fracking and domestic natural gas production. He,

along with the rest of the Republican candidates,

supported the Keystone XL project and supports

upgrades in infrastructure generally.

Ben Carson, similar to Trump, does not have any

published material on his energy strategy. In his

book, he strongly supports energy independence as

a strategy to fighting international terrorism. This

includes supporting oil extraction in the Dakotas,

Montana, Alaska and offshore. He has an

interesting relationship with environmental causes.

He has stated that he would take away $4 billion in

oil subsidies and invest in biofuels and other cleaner

fuels. On the other hand, he downplays the

importance of climate change and has continually

condemned the EPA for over-regulating businesses.

Marco Rubio has a much more detailed energy

policy focusing on optimizing domestic resources,

minimizing bureaucracy, and maximizing private

innovation. He wants to give states the power to

decide whether or not to produce on federal lands,

specifically deregulating fracking. He wants to

rewrite Obama’s Offshore Drilling Plan, letting

companies drill sooner. He wants to lift the ban on

crude exports, which he argues will weaken OPEC.

Similarly, he wants to expedite approval of natural

gas exports.

He wants to limit regulatory agencies, specifically

the EPA, who he believes are overstepping their

bounds with the Clean

Power Plan and the

Clean Water Rule. He

extends this to Obama’s

Carbon Mandates which

he believes can be done

in a more cost-effective way. He wants to expose

the wasted cost of environmental litigation and

simplify the environmental review process for

businesses.

To bolster production, he plans to reform education

models for energy jobs, setting up schools that will

be able to provide workers for oil and gas

companies in a more effective manner. He wants to

decrease government involvement in private sector

energy innovation, allowing the free market pick

and choose the winners. He argues that his tax plan,

which takes additional costs away from smaller

businesses, would encourage development as well.

Jeb Bush has an extensive energy plan almost

identical to Rubio’s. His four main goals are to lift

restrictions on exports of oil and natural gas,

approve the Keystone XL pipeline, reduce

overregulation, and defer to willing states and

tribes for energy decision-making.

He does however place a larger focus on some clean

energy technologies. He mentions providing better

access to a smarter grid system, “unconventional

transportation fuels” (which may mean hydrogen or

biofuels), energy conservation, and advanced

nuclear power devices.

CONCLUSIONS & OPINIONS

Looking at the available information, Hillary has by

far the most comprehensive strategy of any of the

candidates. It focuses heavily on solar, which is a

positive step in the short term, but neglects the lack

of scalability of the technology. Combined with her

lack of support for nuclear, there doesn’t seem to

be a path to a fossil-free future. These same

criticisms apply to Bernie’s plan as well, along with

the general lack of specifics available.

The only candidate to call for a completely fossil

fuel free future is Governor Martin O’Malley, the

third Democratic candidate. He wants to be fossilfree

by 2050 with focus on an upgraded grid,

investment in clean energy research, and denying

future oil and gas production permits. He has

expressed support for nuclear, specifically pebble

bed reactors, in the past, though seems to have left

it off of his website, fearing political backlash.

On the Republican side, the two outsider

candidates, Carson and Trump, are catching up on

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November 2015

specifics of energy policy as they are with many

issues. The two establishment candidates, Jeb and

Rubio, on the other hand, seemed to not make their

energy plans with climate change in mind. Jeb has

acknowledged anthropogenic climate change, but

believes the American economy should come first.

Rubio, on the other hand, questions man’s

involvement, but believes it is not America’s duty to

lead the way even if real. The Republicans would

definitely lead to greater energy independence

sooner, which may have greater appeal with the

recent increase attention to Middle Eastern politics.

The two parties are very far apart on this issue, and

that has been abundantly clear in the number of

energy bills passed and signed in the past few

Congresses. In the four Congresses since Barack

Obama’s election, 14 energy bills were passed. In

the one before that, 24 energy bills were passed.

And 56 before that. For something so important to

the future of our country and the health of the

planet, there should be much more discussion and

action.

Sources:

HillaryClinton.com

FeelTheBern.org

EnergyFuse.org

MarcoRubio.com

Jeb2016.com

Govtrack.us

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