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  • It’s the boom stupid

    It’s the boom, stupid.

     

    Michael Stutchbury, Economics editor | October 20, 2009

    Article from:  The Australian

    DURING Australia’s previous resources boom, the Fraser government paraded regular estimates of an emerging wave of mining and energy projects. At one stage, planned investment reached a staggering $29 billion – about $200bn when scaled up to the size of today’s economy.

    You wouldn’t know it from the Rudd government, but Australia’s renewed resources boom is quickly becoming bigger than its ill-fated predecessor, which collapsed along with the Organisation for Petroleum Exporting Countries’ unstable oil price cartel. It will likely also overshadow the late 1960s and early 70s boom that opened up the Pilbara on the back of industrialising Japan’s demand for iron ore.

    The assessment comes from the Reserve Bank of Australia’s assistant governor for the economy, Philip Lowe. In a speech yesterday, Lowe estimated that annual mining investment had surged to nearly 5 per cent of gross domestic product. This actual – rather than planned – investment in new mining capacity amounted to a “record by a large margin”.

    “While we had booms in the mining sector in the late 1960s and the early 1980s, these look relatively small compared with the current one,” he said. The new mine and port capacity already had delivered a one third increase in iron ore export volumes in the past two years.

    Rather than highlighting this, the Rudd government is playing it down in favour of the politics of its budget stimulus. Wayne Swan last week said it was “not true” we had avoided recession because of China’s rebound from the global crisis. Instead, consumer spending stimulated by his budget stimulus had saved the day.

    Yet Lowe noted that Australia’s ratio of export prices to import prices – the terms of trade – had held up at a “very high” 50 per cent above the average of the 80s and 90s. Few would have predicted this in the midst of the most severe global recession since the 30s, he said. And it was mainly due to China.

    For similar reasons, Australia’s stock of productive capital had kept growing through the severe global downturn at “around its fastest rate in several decades”. And immigration had produced Australia’s fastest population growth – 2.1 per cent – since the mid-60s. This was four times more than the average of the advanced economies, all of which, bar Australia, had shrunk in the wake of the crisis.

    Moreover, Lowe said planned liquefied natural gas projects – such as the huge $43bn Gorgon development – meant “very high levels” of resource investment would “continue for some years yet”. And there was a “high probability” that Asia’s rapid China-led growth could continue even while developed economies remained subdued. The US economy had been based on domestic, rather than export, demand for decades. With the right policies, Asia could do the same.

    It is one thing for the world’s most populous nation to grow 10 per cent or so a year off a very low per capita base. It’s another to keep doing that after two decades. The compound result is that China’s economy has expanded six-fold since 1990. It produces nearly half the world’s steel, up from 15 per cent a decade ago. It has become our biggest merchandise export market. China, Japan, India and South Korea are now Australia’s four biggest customers, taking 55 per cent of our merchandise exports.

    China’s rapid rebound only serves to increase confidence in its durability. But this also means that the sort of capacity constraints that emerged just before the crisis hit will reappear as domestic demand picks up again.

    Interest rates will rise because Asia’s demand for our resources translates into a higher return from investing in Australia. As Reserve Bank governor Glenn Stevens suggests, the increased capital inflow could push the Australian dollar to parity with the US dollar for the first time since the Fraser-era boom.

    This increased capital inflow will translate into a wider current account deficit on the balance of payments. This magnifies the need to boost national savings, particularly government saving.

    Australia’s economy is much better placed to deal with this resources boom than when Malcolm Fraser finally decided that life could in fact be easy. Back then, an inflation-prone and inflexible economy protected an inefficient manufacturing sector, ran a managed exchange rate and was burdened by centralised wage fixing.

    These combined to produce a trade union wage blowout that kneecapped the economy just as the collapse of the OPEC cartel brought the resources boom down with it. Encouraged by Fraser’s late-term boosterism, the unions grabbed the resource boom bounty before it had ripened, deepening the ensuing recession.

    Three decades on, it has been the government’s budget that has prematurely dined out most on the resource boom bounty. The Howard-Costello government spent too much of the revenue from the pre-crisis spike in commodity export prices. Then the Rudd government delivered one of the biggest budget stimulus responses of any developed economy to the global crisis.

    This $88bn budget stimulus may have been fair enough at the time. But the economy is now performing much better than forecast, the Treasury reckons Australia’s recession would have been modest even with no budget stimulus, we’ve become the first Group of 20 economy to raise official interest rates and the dollar is headed towards greenback parity.

    In parliament yesterday, Swan did not properly deal with calls from Bob Hawke’s former economic adviser Ross Garnaut to wind back the budget stimulus ahead of schedule. Last night, Garnaut told a Lowy Institute function that “we will need a level of fiscal discipline … that we have very rarely seen in Australia, sustained over a longer period than we have ever had in Australia”.

    Former Reserve Bank governor Ian Macfarlane told the same function that Australia’s new found international pin-up status “makes me worry” because “the hardest thing to cope with is success”. We were becoming a target of foreign capital inflow, in part reflecting the massive new gas projects. Our mild downturn meant the economy had modest levels of spare capacity, underlying inflation had not fallen as low as expected, the dollar was rising “very sharply” and the prospect of a private investment surge posed a “big challenge”. “The government will have to make some room for that,” Macfarlane warned.

    The elders of Australia’s modern economic success are warning that the Rudd government is in danger of fighting a global financial crisis that is fast receding rather than dealing with the China boom challenges ahead.

  • World must shift to low-carbon economy by 2014 or face dangerous climate change, says WWF

     

    With low-carbon industry only able to grow at a certain rate, a delay in taking action will make it almost impossible for countries to roll out the technology in time to cut emissions by the amounts needed to avoid the worst impacts of global warming.

    The research by analysts Climate Risk (pdf) also said countries must take action across a range of industries at once, including renewable energy, technology to capture the carbon emissions from fossil fuel power stations, preventing deforestation and improving energy efficiency.

    If countries fail to tackle emissions across all sectors, they will end up getting the lowest-cost industries up and running first and not developing other areas until they are affordable.

    This would make it impossible to meet targets to reduce emissions, the study warned.

    The report, published as representatives of 17 countries meet in the UK for the Major Economies Forum as part of efforts to secure a new global agreement on cutting emissions at UN talks in Copenhagen in December, called for long-term investment strategies to support clean technology.

    Policies are also needed to improve energy efficiency standards, pay people set tariffs for generating power from renewables and end subsidies for the use of fossil fuels.

    Keith Allott, head of climate change at WWF-UK, said: “Clean industry sectors can only expand so far, so quickly.

    “If we wait until later than 2014 to begin aggressively tackling the problem, we will have left it too late to ensure that all the low-carbon solutions required are ready to roll out at the scale needed if we intend to keep within the world’s remaining carbon budget.

     

    He said the report highlighted the need for a “complete industrial shift towards a low-carbon future” which must begin with a fair and binding deal on climate change in Copenhagen in December.

    An over-reliance on carbon trading – which by putting a price on pollution encourages cutting emissions where it costs least – would lead to a step-by-step approach to developing a low carbon economy that would leave the world struggling to reduce emissions on a sufficient scale and speed to prevent climate change, the study said.

    The report also said that, even without a price on carbon, renewable energy could become competitive with fossil fuels between 2013 and 2025.

  • Families face nuclear tax in power bills

     

    The planned levy on household bills would add £44 to an annual electricity bill of £500 and contradicts repeated promises by ministers that the nuclear industry would no longer benefit from public subsidies. There is mounting pressure on the power industry to show it can keep the lights on, with fears growing of an energy gap as ageing nuclear stations are retired and plans for new coal plants attract hostile protests.

    Nuclear tax ‘An additional 10% on energy bills’ Link to this audio

    Ministers have become concerned that power companies such as E.ON and EDF Energy are reluctant to commit themselves to building nuclear stations because energy prices have fallen and they fear they will not be able to recoup the multi-billion pound cost of building new nuclear stations.

    The government believes that only by artificially increasing the cost of electricity generated by coal and gas stations through an additional carbon levy on household bills can nuclear become more competitive and encourage new reactors to be built.

    One European utility executive told the Guardian: “New nuclear will not happen without sorting out the carbon price.” The Guardian understands that the Office of Nuclear Development (OND), set up by Lord Mandelson’s business department, has promised nuclear companies that the price of carbon under the EU emissions trading scheme – now about €13 per tonne – will not be allowed to fall below €30 per tonne, and ideally €40. According to the energy consultancy firm EIC, the new carbon levy would add £44 to the £500 annual electricity bill paid by an average household.

    The matter has come to a head as governments around the world prepare for December’s global climate change summit in Copenhagen. For weeks officials from the OND have been privately assuring companies that if Copenhagen fails to secure a deal which significantly boosts the market price of carbon, the government will act to do so early next year.

    Politicians and environmental campaigners are increasingly pessimistic about the prospects of the summit reaching any significant agreement, making intervention by ministers to support the nuclear industry likely.

    Nuclear developers, such as the French-owned group EDF Energy, will need to decide whether to commit funds to start building reactors in less than a year, which is why ministers are keen to act soon. The carbon tax would take effect from 2015, to encourage developers like EDF planning to have reactors operational from 2017.

    A senior government source said: “We know what companies’ investment criteria is. If Copenhagen does not reach agreement on it we will do it next year, either via a subsidy, levy or tax. We will look at it – the utilities know it.” He added: “The way we look at it is: the answer is €30 a tonne, what is the question?”

    The executive director of Greenpeace UK, John Sauven, said: “Nuclear power has always been a byword for monumental taxpayer handouts. Now the likes of EDF Energy are getting cold feet over the cost of new nuclear stations, it looks like the government is trying to sweeten the deal with public money. This is despite saying categorically that any new reactors will have to survive without subsidy. Without huge financial support, nuclear power doesn’t make economic sense. Even the big utilities now admit this.”

    The government wants energy companies to build at least eight new reactors – costing more than €20bn – to replace those being decommissioned and to provide a secure, low carbon supply of electricity. After giving public backing to new nuclear early last year, ministers have been overhauling the regulatory and planning regime to make it happen.

    The government’s independent committee on climate change last week floated the idea of intervention in the carbon market, but claimed that this option had not been assessed in the UK before. The revelation that the government is far ahead of the committee on climate change’s thinking shows how committed ministers are to ensuring nuclear reactors get built, even if it means consumers have to subsidise them. The government will make its formal response to the committee’s annual report in January, when it is expected to publicly endorse the carbon tax. Ministers will argue that the tax will also benefit low carbon generators of electricity such as clean coal and renewables. But nuclear would be the biggest winner. Subsidies have recently been boosted for offshore windfarms, while clean coal is at least 15 years from being viable.

    A government spokesman said there were no “current plans” to put a floor on the carbon price or introduce a carbon tax, but did not rule it out in the future. Politicians are loath to admit that they are planning to introduce a subsidy for the nuclear industry. Anti-nuclear groups have accused governments of being too close to the industry, which they say already benefits from indirect subsidies. The government has promised to guarantee the cost of disposing of nuclear waste and also pay for the cleanup resulting from any nuclear accident.

  • Energy Firms Deeply Split on Bill to Battle Climate Change

     

    Some supporters of global warming legislation believe that the division in the once-monolithic oil and gas industry, as well as other splits among energy producers, could improve the prospects for the legislation.

    “It’s much harder to pass clean-energy legislation when big oil and other energy interests are united in their opposition,” said Daniel J. Weiss, climate policy director at the liberal Center for American Progress. “The companies that recognize the economic benefits in the bill can help bring along their political supporters.”

    The American Petroleum Institute trade group, dominated by major oil companies, opposes the legislation, saying it would discourage domestic exploration and lead to higher oil prices. But some natural gas companies, though longtime members of the institute, have formed a separate lobby and are working actively with the bill’s sponsors to cut a better deal for their product.

    The proposal moving through Congress would cap the emissions of greenhouse gases each year and allow companies to buy and sell permits to pollute. That approach, known as cap and trade, is meant to guarantee that emissions will decline, while providing market incentives for companies to invest in low-carbon technologies.

    The measure would effectively put a price on carbon, raising the prospect that some energy producers might have to pay more than others. For that reason, billions of dollars could be at stake in some of the most arcane language in the bill.

    Energy lobbies are using every tactic in the book to protect their industries, producing alarming studies about $5 gasoline and other steep cost increases that might result from a cap-and-trade system. They are also financing protest groups and advertising campaigns. In one case, a public relations firm working for the coal industry even sent opposition letters to Congress under forged names.

    The divisions in the energy sector mirror a split in the broader business community. Several large companies like Apple and the utility Exelon left the United States Chamber of Commerce recently over the group’s opposition to climate change legislation.

    But the biggest fights are among energy producers. They have spent more than $200 million in the first half of the year on lobbying efforts in Washington, according to the Center for Responsive Politics, a nonpartisan research group, up from $174 million in the same period last year.

    “The fact that the lobbying is so fast and so furious is a positive sign that this thing is moving along,” said Mark Brownstein, a managing director at the Environmental Defense Fund and an advocate of climate legislation. “The fact that everyone is rushing to Washington tells you people believe it is real.”

    As legislation inches through Capitol Hill, onetime allies in the utility sector, like Exelon, which operates low-emission nuclear plants, and the Southern Company, a big consumer of coal, find themselves on opposite sides of the debate over renewable energy.

    Utilities that have access to hydroelectric power or operate nuclear plants tend to favor a national mandate to increase the use of renewable power, because their carbon emissions are relatively low. Many coal-dependent utilities, particularly in the Southeast and Midwest, oppose the provision because they emit more carbon and would have to buy more permits over time.

    In past energy policy debates, the oil and gas lobbies were largely united. In 2005, they won incentives for drilling in the Gulf of Mexico. Two years later, after Democrats had taken control of Congress, producers were unable to block a huge new mandate for alternative fuels like ethanol and biodiesel, but managed to save valuable oil industry tax breaks that some Democrats tried to end.

    Today, each energy subsector, fearing any legislation that might give it a disadvantage, is battling for favor. The gas producers, for example, have formed the American Natural Gas Alliance, which is spending heavily on advertising and lobbying to point out that gas emits roughly half the carbon dioxide of coal. The group has also helped organize its allies in Congress into a new natural gas caucus, with two dozen members.

    “These fissures are happening because a policy is increasingly seen as inevitable,” said David G. Victor, an energy expert at the University of California, San Diego. “Old coalitions are splintering and fascinating new alliances are being formed.”

    The most important fight is over whether companies have to buy pollution permits, called allowances, or whether the government hands them out free in the early years to help ease the cost of the transition.

    President Obama has said the permits should be auctioned, an approach that would cost companies tens of billions of dollars. But after fierce lobbying from electrical utilities, the House made the permits free in the first decade of the program, to help finance the transition to cleaner fuels and to shield electrical consumers from higher prices.

    Industry analysts say the utilities’ willingness to negotiate with Democratic lawmakers gained them a huge advantage when the House passed its climate bill in June. The oil and natural gas industries, by contrast, felt shunned in the House debate because they would not negotiate, these analysts say.

    For example, oil companies complained that their mandated purchase of emissions permits would amount to a tax to be used to clean up dirty coal plants.

    “There was an inherent flaw when Congress set off down the road of favoring one fuel source over another,” said J. Larry Nichols, chairman of Devon Energy, an independent oil and gas company, and also chairman of the American Petroleum Institute. “You knew there had to be a feeding frenzy among various competing fuels trying to protect themselves.”

    Half of the nation’s electrical power is generated by burning coal, and emission limits are a long-term threat to the business. The coal industry, through a group it finances called the American Coalition for Clean Coal Electricity, is running a campaign to persuade the public that coal is affordable, abundant and can be cleaned up thanks to still-distant technology that would capture carbon emissions and store them underground.

    Some coal executives aim to scuttle legislation in the Senate by continuing to cast doubts on the science of climate change.

    “A lot of coal-using utilities seem to be on the wrong side of this issue,” said Don L. Blankenship, the chief executive of Massey Energy, the largest producer of Appalachian coal, who has called climate legislation a hoax and a Ponzi scheme. “How can they be so confident that man is changing the world climate?”

    John Broder reported from Washington, and Jad Mouawad from New York. Clifford Krauss contributed reporting from Houston.

  • Deforestation and the true cost of Europe’s cheap meat

     

    Much of the cheap meat and dairy produce sold in supermarkets across Europe is arriving as a result of serious human rights abuses and environmental damage in one of Latin America’s most impoverished countries, according to a new film launched in conjunction with the Ecologist Film Unit.

    An investigation in Paraguay has discovered that vast plantations of soy, principally grown for use in intensively-farmed animal feed, are responsible for a catalogue of social and ecological problems, including the forced eviction of rural communities, landlessness, poverty, excessive use of pesticides, deforestation and rising food insecurity.

    The film, Killing Fields: the battle to feed factory farms – produced by a coalition of pressure groups including Friends of the Earth, Food and Water Watch and with European coordination by Via Campesina, – documents the experiences of some of those caught up in Paraguay’s growing conflict over soy farming and reveals, for the first time, how intensive animal farming across the EU, including the UK, is fuelling the problem.

    Campaigners plan to use the film to highlight the ‘unsustainable’ nature of modern food production, and to spearhead efforts to raise awareness of the largely hidden cost of the factory farming systems supplying much of Europe’s cheap meat and dairy produce.

    The moves come as international concern over global food insecurity grows, and amid fresh warnings that millions of the world’s poorest people face acute hunger in the coming months and years because of the twin threats of climate change – impacting farming in large parts of the developing world – and the ongoing credit crunch which has seen global food aid budgets slashed.

    Protein king
    Soy is prized for use in animal feed as it provides a cheap source of protein for poultry, pigs and other intensively reared animals that require fast growth in order to produce large meat, egg and milk yealds. The EU ban on the use of bonemeal and other animal by-products in agricultural feed following the BSE crisis has further driven demand for soy as a principal feedstuff.

    Globally it has been estimated that as much as 97 per cent of soymeal produced is now used for animal feed.

    Attracted by cheap land prices, poor environmental regulations and monitoring, widespread corruption and low taxation on agricultural export commodities, agribusinesses have long viewed Paraguay as an ideal country in which to do business. In recent decades increasing chunks of rural land have been bought up and turned over to export-orientated soy cultivation.

    Paraguay is now the world’s sixth largest producer of soy, with over 2.6 million hectares of land given over to cultivating the crop, and the fourth largest exporter. Vast quantities are exported to neighbouring Argentina, from where much of the crop is shipped to China to supply the country’s growing demand for animal feed.

    The EU is the second largest importer of Paraguayan soy, with Germany, Italy and the Netherlands among the biggest customers.

    Food supplies shrink
    The arrival of export-orientated soy production in Paraguay has led to significant swathes of forest being destroyed to make way for crops, according to critics, threatening biodiversity and depleting resources vital for many rural communities.

    In testimonies collected by investigators from villages adjacent to soy plantations – and featured in the film – local people complain that there is no longer an abundance of food and other produce:

    ‘We indigenous people used to live from the forests, [from] animals, fruits… now we cannot do that any more because we are surrounded by ranches,’ Jose Dolores Berraro, from the Yrbucua community, says. ‘It’s an invasion because instead of reforesting they come to deplete natural resources and these forests.’

    Although new laws have been introduced to protect forested areas following the decimation of the world renowned and ecologically important ‘Atlantic Forest’ region, campaigners say the rate at which forests elsewhere in Paraguay are being devastated to make way for soy plantations is increasing, with some 500 hectares per day still being lost, according to some estimates.

    Chemical fix
    Industrial scale soy production, particularly for genetically modified (GM) crops – some 90 per cent of Paraguay’s soy is now thought to be GM – is dependent on the frequent application of powerful pesticides and other agri-chemicals which have been linked to environmental degradation and a host of negative health impacts on people living near to soy farms.

    Crop spraying has polluted important water sources in many rural regions, say campaigners, poisoning both domestic and wild animals, threatening plant life, and resulting in a number of health problems in people, including diarrhoea, vomiting, genetic malformations, headaches, loss of sight and even death.

    The film contains harrowing testimony from Petrona Villaboa, who lives in Pirapey, whose son Silvano died after being sprayed with toxic chemicals on a soy plantation.

    Statistics compiled by pressure groups suggest that as much as 23 million litres of pesticides and herbicides are sprayed in Paraguay each year, including several that have been classified by the World Health Organisation as being ‘extremely hazardous’.

    Armed response
    Paraguay has a long history of land conflict, and the arrival of large scale soy farming has been met with significant resistance from many rural communities. Peasant and indigenous organisations have repeatedly protested against the encroachment of their land – organising protests, blockades, land occupations and actions to prevent pesticide spraying.

    But the response from soy farmers, often backed up by police and paramilitary units acting on the orders of the authorities, has been brutal, according to peasant leaders, with violent evictions, frequent shootings and beatings – resulting in numerous injuries and several deaths – as well as arbitrary detentions and frequent disappearances.

    In one of the worst incidents to date, during the forced eviction of the peasant community at Tekojaja, in Caaguaza, soy farmers – reportedly under the protection of police and soldiers – forcibly removed some 270 people from the village, including children, arrested 130, set fire to crops and bulldozed houses, before shooting dead two inhabitants, Angel Cristaldo and Leopoldo Torres.

    In another incident reported by the peasant’s movement MCP, in Canindeyu, activist Esteban Hermosilla disappeared from his house and was discovered dead and half buried, on a nearby agricultural estate. His assassins reportedly cut off Hermosillas’ ear as proof he had been killed, before sending it to the man who it was later claimed had ordered the murder.

    Such cases are far from unique – peasant organisations have compiled a detailed dossier of violent repression linked to the soy industry in Paraguay – and pressure groups are keen to highlight this seldom-reported human cost of intensive farming.

    Since the beginning of the soy boom in Paraguay in 1990, it has been estimated that as many as 100,000 small-scale farmers have been forced to migrate to cities – with about 9000 rural families evicted because of soy production annually.

    Upon arrival in urban areas, many familes are forced into slums and struggle to adapt. With few employment opportunities and little state assistance, many face a life of poverty.

    • Andrew Wasley is a journalist with the investigative agency, Eco-Storm

    • This article was shared by the Ecologist, part of the Guardian Environment Network

  • US headed for massive decline in carbon emissions

     

    The U.S. has ended a century of rising carbon emissions and has now entered a new energy era, one of declining emissions. Peak carbon is now history. What had appeared to be hopelessly difficult is happening at amazing speed.

    For a country where oil and coal use have been growing for more than a century, the fall since 2007 is startling. In 2008, oil use dropped 5 percent, coal 1 percent, and carbon emissions by 3 percent. Estimates for 2009, based on U.S. Department of Energy (DOE) data for the first nine months, show oil use down by another 5 percent. Coal is set to fall by 10 percent. Carbon emissions from burning all fossil fuels dropped 9 percent over the two years.

    Beyond the cuts already made, there are further massive reductions in the policy pipeline. Prominent among them are stronger automobile fuel-economy standards, higher appliance efficiency standards, and financial incentives supporting the large-scale development of wind, solar, and geothermal energy. (See the data.)

    Efforts to reduce fossil fuel use are under way at every level of government—national, state, and city—as well as in corporations, utilities, and universities. And millions of climate-conscious, cost-cutting Americans are altering their lifestyles to reduce energy use.

    For its part, the federal government—the largest U.S. energy consumer, with some 500,000 buildings and 600,000 vehicles—announced in early October 2009 that it is setting its own carbon-cutting goals. These include reducing vehicle fleet fuel use 30 percent by 2020, recycling at least 50 percent of waste by 2015, and buying environmentally responsible products.

    Electricity use is falling partly because of gains in efficiency. The potential for further cuts is evident in the wide variation in energy efficiency among states. The Rocky Mountain Institute calculates that if the 40 least-efficient states were to reach the electrical efficiency of the 10 most-efficient ones, national electricity use would be reduced by one-third. This would allow the equivalent of 62 percent of the country’s 617 coal-fired power plants to be closed.

    Actions are being taken to realize this potential. For several years DOE failed to write the regulations needed to implement appliance efficiency legislation that Congress had already passed. Within days of taking office, President Obama instructed the agency to write the regulations needed to realize these potentially vast efficiency gains as soon as possible.

    The energy efficiency revolution that is now under way will transform everything from lighting to transportation. With lighting, for example, shifting from incandescent bulbs to the newer light-emitting diodes (LEDs), combined with motion sensors to turn lights off in unoccupied spaces, can cut electricity use by more than 90 percent. Los Angeles, for example, is replacing its 140,000 street lights with LEDs—and cutting electricity and maintenance costs by $10 million per year.

    The carbon-cutting movement is gaining momentum on many fronts. In July, the Sierra Club—coordinator of the national anti-coal campaign—announced the 100th cancellation of a proposed plant since 2001. This battle is leading to a de facto moratorium on new coal plants. Despite the coal industry’s $45 million annual budget to promote “clean coal,” utilities are giving up on coal and starting to close plants. The Tennessee Valley Authority (TVA), with 11 coal plants (average age 47 years) and a court order to install over $1 billion worth of pollution controls, is considering closing its plant near Rogersville, Tennessee, along with the six oldest units out of eight in its Stevenson, Ala., plant.

    TVA is not alone. Altogether, some 22 coal-fired power plants in 12 states are being replaced by wind farms, natural gas plants, wood chip plants, or efficiency gains. Many more are likely to close as public pressure to clean up the air and to cut carbon emissions intensifies. Shifting from coal to natural gas cuts carbon emissions by roughly half. Shifting to wind, solar, and geothermal energy drops them to zero.

    State governments are getting behind renewables big time. Thirty-four states have adopted renewable portfolio standards to produce a larger share of their electricity from renewable sources over the next decade or so. Among the more populous states, the renewable standard is 24 percent in New York, 25 percent in Illinois, and 33 percent in California.

    While coal plants are closing, wind farms are multiplying. In 2008, a total of 102 wind farms came online, providing more than 8,400 megawatts of generating capacity. Forty-nine wind farms were completed in the first half of 2009 and 57 more are under construction. More important, some 300,000 megawatts of wind projects (think 300 coal plants) are awaiting access to the grid.

    U.S. solar cell installations are growing at 40 percent a year. With new incentives, this rapid growth in rooftop installations on homes, shopping malls, and factories should continue. In addition, some 15 large solar thermal power plants that use mirrors to concentrate sunlight and generate electricity are planned in California, Arizona, and Nevada. A new heat-storage technology that enables the plants to continue generating power for up to six hours past sundown helps explain this boom.

    For many years, U.S. geothermal energy was confined largely to the huge Geysers project north of San Francisco, with 850 megawatts of generating capacity. Now the United States, with 132 geothermal power plants under development, is experiencing a geothermal renaissance.

    After their century-long love-affair with the car, Americans are turning to mass transit. There is hardly a U.S. city that is not either building new light rail, subways, or express bus lines or upgrading and expanding existing ones.

    As motorists turn to public transit, and also to bicycles, the U.S. car fleet is shrinking. The estimated scrappage of 14 million cars in 2009 will exceed new sales of 10 million by 4 million, shrinking the fleet 2 percent in one year. This shrinkage will likely continue for a few years.

    Oil use and imports are both declining. This will continue as the new fuel economy standards raise the fuel efficiency of new cars 42 percent and light trucks 25 percent by 2016. And since 42 percent of the diesel fuel burned in the rail freight sector is used to haul coal, falling coal use means falling diesel fuel use.

    But the big gains in fuel efficiency will come with the shift to plug-in hybrids and all-electric cars. Not only are electric motors three times more efficient than gasoline engines, but they also enable cars to run on wind power at a gasoline-equivalent cost of 75 cents a gallon. Almost every major car maker will soon be selling plug-in hybrids, electric cars, or both.

    In this new energy era carbon emissions are declining and they will likely continue to do so because of policies already on the books. We are headed in the right direction. We do not yet know how much we can cut carbon emissions because we are just beginning to make a serious effort. Whether we can move fast enough to avoid catastrophic climate change remains to be seen.

    • This article was shared by our content partner Grist, part of the Guardian Environment Network