Volume 5, Issue 6
Welcome to Volume 5, Issue 6 of Currents. We have a wide range of topics in this issue and would love to have your feedback. Do you agree with our insights? Do you have suggestions for other topics? Please let us know!

We hope you enjoy reading.

Co-Chair, Energy Practice Group
"The main draw is the cheap power needed to run the computers that perform the complicated equations for so-called 'Proof of Work' that confirm transactions without a third party, which forms the biggest part of a miner’s outlay."

Why this is important: Cheap and reliable electric power is essential to the "proof of work" component of Bitcoin mining. The bulk of that cheap power in the near future likely will come from China's Xinjiang region, which is becoming a hotbed of Bitcoin mining. The problem is, the article argues, most of that power is produced using coal plants. While the region has large quantities of coal reserves, China has no economical means to move the coal to population centers in other parts of the country. As a result, its become an attractive location for Bitcoin mining operations, which account for a surprisingly small amount (approximately 0.2 percent) of China's total electricity demand. --- Nicholas P. Mooney II
"Production in the country's largest coal-producing basin fell 21.8% year over year in 2020, and two of the largest producers in the region have indicated that 2021 may not be much better."

Why this is important: For the first time in modern history, two Powder River Basin mines are closing. The Decker Mine, in bankruptcy, is slated to close this year as it fulfills its 2021 orders, and now Arch Resources will do the same with its Coal Creek Mine once its 2021 orders ship. Total tons mined from the Powder River Basin dropped 21.8 percent from 294 million tons in 2019 to 230 MTs last year. Arch Resources, which is looking to focus on metallurgical coal, also announced this week that it will begin looking to scale back the operational footprint of the Black Thunder Mine, the second largest coal mine in the U.S., and 21 percent of the Basin’s production. With very limited coal exports, the closing of coal-fired electrical generation plants is severely hurting Powder River producers. --- Mark E. Heath
"According to the patent application, the miniature device could contain and sustain fusion reactions capable of generating power in the gigawatt (1 billion watts) to terawatt (1 trillion watts) range or more."

Why this is important: *Que the X-Files Music* A 2019 patent application reveals technology that, if real, would produce near unlimited clean energy through nuclear fusion from a device no larger than a sports utility vehicle. The patent is among a handful of technologies called “the UFO patents” that the Navy has pursued in recent years. A patent does not necessarily mean the technology described in the patent actually exists, however, and the Navy has not provided any indication that it is prepared to lead the energy revolution. Even if the technology in the patent does not exist, nuclear fusion is a promising clean energy technology that results in zero carbon emissions and zero nuclear waste. The International Thermonuclear Experimental Reactor project will be the world’s largest fusion reactor and is set to begin operations in 2025. --- Joseph C. Unger
"Rather than digging in on controversial measures such as carbon pricing, Democrats should focus on identifying common ground to further progress on climate, Manchin argued."

Why this is important: It is clear that the Biden administration intends to make climate change a central focus of its legislative and regulatory agenda. However, a balanced approach to this initiative, as suggested by Senator Manchin, makes sense from social, political and economic viewpoints. A breakneck approach to the governmental promotion of renewable energy sources will impose economic dislocation on regions of our country that rely upon the coal, oil and natural gas industries. At the present time, a precipitous change to renewable sources of power will impose much higher utility costs to the detriment of all consumers. Ideological differences about energy development will also exacerbate existing political strife. Finally, the artificial imposition of higher cost renewables upon our domestic energy supply will handicap our ability to effectively compete in foreign trade. The most desirable approach would be a measured transition toward renewable energy sources that neither imposes extreme economic hardship on our citizens nor serves to further widen our political differences. --- William M. Herlihy
"Joe Biden’s climate advisors are calling for the immediate approval of a slew of pending offshore wind projects."

Why this is important: Offshore wind is often presented as the panacea to our fossil fuel addiction. Winds are more reliable, and they are away from human habitation. Nations and U.S. states are announcing large projects in coastal waters, but a review of similarly ambitious projects that have failed in the past suggest the difficulty of overcoming significant cost and technical hurdles. In 2011, the Obama administration had a goal of 10,000 megawatts of offshore wind by 2020. As of today, the U.S. has 30 megawatts of offshore power. --- David L. Yaussy
"In a pair of reports issued late last year, the U.S. central bank signaled its intent to measure, analyze, and respond to climate-related risks as part of its oversight of individual banks as well as of the broader financial system."

Why this is important: A recent report by the Federal Reserve signals it is beginning to incorporate the impacts of climate change into its oversight of individual banks. Although not discussed in the article, this report seems to dovetail with efforts being taken by the U.S House Financial Services Committee to combat the rule issued by the OCC during the Trump administration that companies in legal, but disfavored, industries (like coal and oil producers) cannot be de-banked on an industry-wide basis based on the belief that an entire industry poses a heightened risk. Rather, the OCC rule provided that individual company risk assessments must be made before that company can be denied banking services. That rule now is on hold, and the U.S. House Financial Services Committee has advocated for it to be vacated. The report discussing the fact that the Fed could include "climate scenario analysis and climate stress tests to measure the banking system's vulnerability to climate-related losses" seems to complement the Committee's position that entire industries should be suspect and subject to restrictions on their ability to obtain banking services. --- Nicholas P. Mooney II
"The trade dispute has forced Chinese buyers to pay steep premiums for imports amid a supply crunch."

Why this is important: China’s coal war with Australia began in September when Australia wanted a formal inquiry into the origins of COVID-19. In December, China made the ban official. China has seen its internal coal prices rise 84 percent and coal in short supply, but has affirmed it will not buy Australian coal. China does plan to import more coal from other countries, which could help U.S. coal exports. --- Mark E. Heath
"British Airways, owned by IAG, said it would invest in LanzaJet, a company that is building a plant to produce sustainable aviation fuel on a commercial scale in Georgia in the United States."

Why this is important: British Airways parent company, IAG, has committed to achieving net zero carbon emissions by 2050, and a step toward that goal is investing in sustainable aviation fuel ("SAF"). SAF generally has up to 80 percent less carbon emissions than conventional jet fuel and is produced from biomass or recycled carbon. BA plans to power some of its flights with SAF by late 2022 and it is estimated that hybrid and electric flying technology will become viable for longer distance trips by the mid-to-late 2030s. What remains to be seen is whether these green technology investments will win back passengers who realized they do not need to fly as much due to the COVID-19 pandemic. --- Joseph C. Unger
"Electric vehicles are being driven about half the distance of conventional internal combustion engine cars, according to a new paper from the Energy Policy Institute at the University of Chicago."

Why this is important: Electric vehicles are not driven as far as internal combustion engine cars. Researchers aren't sure whether that is because they are perceived as second cars, and therefore not used as primary vehicles, or for some other reason. The answer will be important in determining whether EVs will be widely adopted by those who can only afford one car, a market segment that describes most of the world. --- David L. Yaussy
"As part of the utility’s strategy to become cleaner and greener, Tampa Electric has achieved new sustainability milestones, including completing enough solar energy to power 100,000 homes, with plans to power another 100,000 by 2023 and plans to retire Big Bend Unit 3 in 2023, which is nearly two decades early."

Why this is important: Tampa Electric ("TECO") plans to close its coal-fired unit 3 electrical generation unit at its Big Bend Plant in 2023 -- 18 years ahead of schedule. The utility said it is switching away from coal to avoid costly needed improvements. The Florida utility has added enough solar to power 100,000 homes in recent years and will add additional solar capacity to power another 100,000 homes by 2023. Also, unit 2 at the Big Bend plant will close in November 2021 and undergo a $850 million renovation to replace coal with a natural gas unit that will produce 1,090 MWs of power. These trends reflect a continued acceleration in the closure of U.S. coal-fired electrical generation power plants. --- Mark E. Heath
"The cryptocurrency consumes more electricity than the entire annual energy consumption of the Netherlands, Cambridge University researchers say."

Why this is important: Bitcoin has more than quadrupled in value last year and is up another 27 percent so far this year, and a recent $1.5 billion purchase of Bitcoin by Tesla indicates that Bitcoin’s value is not going down anytime soon. However, because of the way Bitcoin is produced and recorded, an increase in value means an increase in energy consumption; Bitcoin is “mined” using purpose-built computers and the blockchain acts as a digital ledger of all Bitcoin transactions, all of which consume energy. Cambridge researchers estimate that Bitcoin’s energy consumption accounts for 0.5 percent of total global energy consumption. Bitcoin proponents claim these worries miss the point — energy consumption itself is not an issue, the issue is the sources from which we produce energy, which need to be increasingly renewable. --- Joseph C. Unger
Energy Question of the Week
Last Issue's Question and Results

How significantly must gas prices rise before you change your driving habits?

$0.50 a gallon - 16.7%
$0.51 to $1 a gallon - 17.6%
$1.01 to $2 a gallon - 19.4%
Over $2 a gallon - 16.7%
Price Will Not Affect My Driving Habits - 20.4%
Do Not Know/Not Applicable - 9.3%
What is the most effective way you believe you could conserve energy?
Turn Off Lights/Appliances When Not in Use
Drive Less
Buy Green Energy
Use Energy Efficient Light Bulbs
Change Setting on Thermostat
Buy Fuel Efficient Car
EIA Energy Statistics
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