USEA also serves as a bipartisan advisory organisation that represents 150 members across the US energy sector, from the largest Fortune 500 companies to small energy consulting firms.
In his role, Mr. Worthington represents the broad interests of the US energy industry and meets with domestic and international energy leaders to advance information and unearth partnerships to develop energy infrastructure projects across the world.
USEA’s team of international energy specialists works with the US federal government, energy companies and energy ministers to build out energy infrastructure in developing countries.
Mr. Worthington and his team have developed thousands of energy projects globally, from geothermal drilling operations in sub Saharan Africa to smart grid electricity projects in central Europe.
Mr. Worthington chairs the Clean Electricity Production working group within the UNECE Committee on Sustainable Energy.
He dropped by the offices of Inside Canberra last Friday with the Executive Director of the Energy Policy Institute of Australia, Robert Pritchard, and we took the opportunity to interview him.
Mr Worthington opened by telling IC that he preferred a market based approach to energy policy.
He then proceeded to outline the issues that are currently bedevilling the United States market.
He said that tax credits for wind and solar power have created tremendous distortions.
He made the point that there are in fact two electricity markets in the United States: a regulated market and a competitive generation market.
Within the regulated market generators can be compelled to supply the market; within the competitive market they cannot.
He said that in competitive markets, such as Texas, wind is sold into the market at a negative price a measure that could be seen as predatory pricing in some jurisdictions.
Across America this loss leader pricing is having a negative impact on other generators such as nuclear generators that are located in small regional communities where they are often the only employers.
The consequence is that the owners of these generators and local governments are asking for subsidies so that they can compete with wind power generators on a level playing field and state governments who have jurisdictional responsibility find it hard to resist these demands.
More recently coal-fired power generators have been demanding similar subsidies in order to stay in business.
As a consequence almost the entire electricity generation sector is being subsidised and there is negligible impact on emission reductions.
Moreover household solar units have been encouraged by feedback tariffs that come at the expense of other consumers and electric vehicles pay no petrol tax and yet use the roads that are funded by those taxes.
Road maintenance requirements will mean that taxes on fuel will have to rise as the proportion of electric vehicles increases.
As a consequence poor consumers are subsidising rich ones.
Barry Worthington believes that the answer to the problem of low cost electricity is a policy that imposes a uniform carbon tax and encourages carbon capture and storage.
He says that the appropriate cost for the carbon tax is $75.
This is what it costs to process a tonne of CO2 by compressing it into a liquid state and transporting it to the depleted oil fields where it is used to recover oil that has been left behind.
At that rate tax rate carbon capture and storage (CCS) equipped power stations will be competitive with coal gas and wind power and will supply low cost power generation that will provide base load power more cheaply than renewables.
He says that ultimately CCS may replace wind power as the low cost low emission power generation source.
The US wind generators have turned out to have a shorter life span than forecast (12 years rather than 20 years).
This affects the investment model because the returns are not much more than half that previously forecast and the cost of decommissioning moribund plant is likely to be high.
Large scale offshore wind is also likely to strike environmental problems when it is deployed in sensitive areas.
Barry Worthington says offshore wind farms are every bit as large and environmentally damaging as offshore oil fields, something that the environmental lobby hasn’t woken up to yet.
As a consequence Mr Worthington is dubious about renewable energy targets as a mechanism to effect emission reductions.
His combination of a carbon tax linked to carbon capture and storage encompasses bits of both Labor and Coalition policy.
If both sides could shed the ideological baggage they currently carry in connection with energy policy then this could provide the basis for a bipartisan future energy policy
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Image – Barry Worthington, Executive Director United States Energy Association, dropped into the Inside Canberra office last week (photo USEA)