For a recent news story on a pilot program in Germany, see this report from last year. 

I thought this bit of news was very interesting, for what it signals about US firms doing business overseas in green energy:

US energy giant First Solar on Tuesday won a deal to build the world's largest solar power plant in China, aimed at helping mitigate climate change concerns.

First Solar will construct the two-gigawatt plant in Ordos City, Inner Mongolia, under a memorandum of understanding (MOU) inked Tuesday with Chinese officials at the company's headquarters in Tempe, Arizona.

It is good to see that business come to an American company.  The article goes on to discuss what's in it for China, beyond the energy to power 3 million homes:

The MOU outlined a long-term "strategic partnership" between First Solar and Ordos City, where First Solar would also consider a manufacturing investment, officials said.

I'll let Keith Hennessey count the ways, in this tour de force of blogging.  I've blogged about CAFE standards each time they've been the subject of policy discussion over the past few years.  Here is some essential reading:

1. Fuel Efficiency or Fuel Consumption?
2. New CAFE Standards
3. Fuel Economy and Safety
4. Cleaning Up the CAFE

Earlier this week, as my family was driving through town, we stopped to let an enormous SUV back out of its parking spot on Main Street.  I thought that the driver must be happy to have heard about the CAFE standards -- that behemoth she was driving just got more valuable, since the new, tighter standards only apply to new vehicles.

Yesterday, CBO Director Doug Elmendorf testified to the Senate Finance Committee on the distribution of revenues from a cap-and-trade program for carbon dioxide emissions.  The most important part of his testimony makes the case for auctioning off the permits.  From the overview at his blog:

Giving allowances to energy-intensive manufacturers would not, by itself, hold down the price of their output, which would rise to reflect the private market value of the allowances. The result could be windfall profits for these firms, which would tend to benefit higher-income households who own most stocks.

I prefer a carbon tax to cap-and-trade, but if we are going to have cap-and-trade, it is critical that we auction the permits.  In this report by the AFP, we get OMB Director Orszag holding to that point:

Today is Earth Day 2009.  President Obama pushed green jobs and a new wind initiative in Iowa, and Congress held lots of hearings, but a sensible energy policy remains far away.

The question is how can we reduce greenhouse gas emissions, make ourselves less dependent on foreign oil, and promote a stronger economy.  The answer is obvious to most economists -- raise the relative price of carbon and return to the revenues to those most adversely affected.

One piece of "news" yesterday was the change in fuel efficiency standards on the horizon.  From the Associated Press:

Also, Obama directed federal transportation officials to get going on new fuel efficiency rules, which will affect cars produced and sold for the 2011 model year. That step was needed to enforce a 2007 energy law, which calls for cars and trucks to be more efficient every year, to at least 35 miles per gallon by 2020.

Obama also meant to set a tone with his promises: Science will trump ideology and special interests, attention will stay high even when gas prices fall.

If you check back in the last paragraph of my June 3 post, I warned that alternative energy investments and conservation would be at risk if we allowed oil prices to decline too far. I suggested a tax to keep oil prices at the equivalent of $80 a barrel.  That seemed like fantasy back then, when crude oil prices were hovering around $125 per barrel.  Now that they have dropped to $62 per barrel yesterday, fantasy has become reality.

Traffic deaths declined 20% nationwide during March and April, 2008 versus the same period a year ago as a result of high gasoline prices according to a study by Michael Sivak of the University of Michigan's Transportation Research Institute.  It pays to be cautious is jumping to conclusions based upon a few months of evidence, but having logged a lot of time on Washington's Beltway recently, I can assure you there's less traffic, and most of that traffic is travelling at slower speed.  The Washington Post interviewed area transportation experts who still see lots of traffic fatalities, particularly on motorbikes, but Sivak predicts we will drop below 40,000 fatalities nationwide in 2008 for the first time since 1961!

Andrew and The New York Times are right on this morning.  Washington energy policymakers pushed electricity deregulation starting in the 1970s without much thought to what that would do to the grid.  Deregulation did lots of good things:  lower prices; peak load pricing; more flexible generation; and more innovation.  Deregulation did lots of bad things too:  Enron price manipulation; reduced safety; and reduced investment in the grid, a collective good not owned by many of the deregulated electiricty companies.  This article gives an excellent overview.  We never seem to learn that every panacea has its downside that needs to be guarded against.

One of my overarching themes in this blog is Washington's incoherent energy policies.  This is a perfect example.  Senator McCain and Senator Obama have campaigned hard in support of alternative energy sources, many of which depend upon transmitting more electricity throught the grid.  Both also offer strong incentives for electric cars, which we won't be able to charge without big improvements in the grid. 

From The New York Times this morning, a sobering article on our antiquated power delivery systems:

Unlike answers to many of the nation’s energy problems, improvements to the grid would require no new technology. An Energy Department plan to source 20 percent of the nation’s electricity from wind calls for a high-voltage backbone spanning the country that would be similar to 2,100 miles of lines already operated by a company called American Electric Power.

The cost would be high, $60 billion or more, but in theory could be spread across many years and tens of millions of electrical customers. However, in most states, rules used by public service commissions to evaluate transmission investments discourage multistate projects of this sort. In some states with low electric rates, elected officials fear that new lines will simply export their cheap power and drive rates up.