ANLA and SAF have done a yeoman’s job of keeping green industry firms informed of what is happening in Washington in terms of the effects of mid-term elections and the critical regulatory and legislative issues facing nursery/floral businesses today. Be sure to check out the Washington Impact section (click here) of the ANLA Knowledge Center and the latest SAF analysis of the effects of mid-term elections on your business (click here). As the saying goes, what you don’t know, can hurt you.
New Age of Natural Gas
The Energy Information Administration released new data yesterday showing that natural gas production in the U.S. reached an all-time historical monthly high in March of 2.313 trillion cubic feet, breaking the previous record of 2.28 trillion cubic feet set in March of last year by almost 33 billion cubic feet (see graph).
As Mark Perry has reported previously, the U.S. is now the world’s largest producer of natural gas, having surpassed Russia’s production last year to become the new “Saudi Arabia of natural gas.” It’s all because of a breakthrough in drilling technology, involving the use of three-dimensional seismic imaging and hydraulic fracturing of shale rock, so that huge amounts of natural gas are being produced in New York, Pennsylvania, Texas, Louisiana and other states. In 2000, shale gas accounted for only about 1% of our natural gas supply, but now about 20% of gas comes from advanced shale drilling, and that breakthrough is responsible for boosting gas production to record high levels.
The abundance of natural gas in the U.S. was completely unexpected as recently as seven years ago when Alan Greenspan in 2003 warned that shortages of natural gas could hurt the U.S. economy. We’re now in a new age of natural gas because of advanced technologies, and it’s going to be a real game-changer. Will this have an impact on how greenhouse growers decide to heat their greenhouses in the future? Duh.
Mark Perry’s full post here.
What goes up must come down and back up again
U.S. prices of fertilizer nutrients began to rise steadily in 2002 and increased sharply to historic highs in 2008 due to the combined effects of a number of domestic and global long- and shortrun supply and demand factors. From 2007 to 2008, spring nitrogen prices increased by a third, phosphate prices nearly doubled, and potash prices doubled. The price spike in 2008 reflects low inventories at the beginning of 2008 combined with the inability of the U.S. fertilizer industry to quickly adjust to surging demand or sharp declines in international supply. Declining fertilizer demand, disruption in fall applications, increased fertilizer imports (July to August), and tightening credit markets for fertilizer purchases contributed to the decline of fertilizer prices in late 2008. The prospect for strong fertilizer demand in early 2009, high raw material costs for the manufacture of fertilizers, production cutbacks, and decreasing supplies from fertilizer imports, however, could put upward pressure on U.S. fertilizer prices in spring 2009.
The other side of the coin
With the news full of failing banks, dried-up credit and falling stock markets, it’s no shock that people are afraid about what’s ahead, entrepreneurs included. And yet even in the midst of all this, the opportunities ahead are bright for green businesses providing renewable energy.
In a recent post, I outlined the non-financial sections of the “Emergency Economic Stabilization Act of 2008” fully expressing my frustrations. But there are always two sides of every coin. Perhaps the silver lining in the “bailout cloud” was an extension and expansion of tax credits for renewable energy. The impact of the $700 billion bailout remains uncertain as this point, but the impact of these incentives for renewable energy is likely to be huge, helping to solve our financial problems, our climate problem, and our energy problems at the same time.
The bill provides for an eight-year extension of renewable energy investment tax credits covering up to 30% of the cost of solar power projects for homes or commercial sites. The short time frame of these tax credits in the past, and their frequent expiration from year to year have created enough uncertainty to dampen long-term growth. Eight years is long enough to allow for long-term planning, and encourage long term growth.
Along with the extension of the credits, the $2000 cap on the tax credit for residential systems has been removed. With a residential system of $30,000, the tax credit will be $9000 in 2009 rather than being limited to $2000 as before. While a large percentage of the solar market has been limited to states like California that have provided the most generous state-level subsidies, removing the cap will greatly expand the market for solar power across the country.
Distributors and installers will see opportunities expand nationwide. A recent study by Navigant Consulting found that extending these credits will create 440,000 jobs, contributing to the growth of green collar jobs, and these numbers did not include the removal of the cap.
Other renewable energy technologies will also benefit from the measures in the bill, including small wind, geothermal, fuel cells, and ocean (wave/tidal) energy. The measure allows utilities to take advantage of the investment tax credit as well, removing another restriction, and allows clean energy bonds to be created to support the creation of renewable energy production.
As renewable energy continues to grow and its costs fall, it’s becoming increasingly competitive with power from other sources like coal. These tax credits will help to get us there. We’re not out of the woods yet by a long shot, but these moves to a greener economy may help us dig our way out.