Legislature(2013 - 2014)BARNES 124
02/22/2013 08:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Lessons Learned in Iceland by Institute of the North | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
February 22, 2013
8:02 a.m.
MEMBERS PRESENT
Representative Doug Isaacson, Co-Chair
Representative Charisse Millett, Co-Chair
Representative Neal Foster
Representative Shelley Hughes
Representative Andy Josephson
Representative Benjamin Nageak
MEMBERS ABSENT
Representative Pete Higgins
COMMITTEE CALENDAR
OVERVIEW(S): LESSONS LEARNED IN ICELAND BY INSTITUTE OF THE
NORTH
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
COUNSEL GENERAL STEN ROSNES
Royal Norwegian Consulate General
Chancellery
San Francisco, California
POSITION STATEMENT: Gave short remarks related to his visit to
Alaska.
NILS ANDREASSEN, Executive Director
Institute of the North
Anchorage, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation
entitled, "Report of Lessons Learned in Iceland and around the
Circumpolar North."
IRA PERMAN, Member
Board of Directors
Institute of the North
Anchorage, Alaska
POSITION STATEMENT: Participated in the presentation by
Institute of the North.
ACTION NARRATIVE
8:02:31 AM
CO-CHAIR DOUG ISAACSON called the House Special Committee on
Energy meeting to order at 8:02 a.m. Representatives Hughes,
Nageak, Foster, Millett, and Isaacson were present at the call
to order. Representative Josephson arrived as the meeting was
in progress.
^OVERVIEW(S): LESSONS LEARNED IN ICELAND BY INSTITUTE OF THE
NORTH
OVERVIEW(S): LESSONS LEARNED IN ICELAND BY INSTITUTE OF THE
NORTH
8:03:29 AM
CO-CHAIR ISAACSON announced that the only order of business
would be a presentation by Institute of the North. Prior to the
presentation, Co-Chair Isaacson provided information to the
committee related to previous meetings. For the benefit of
Institute of the North, he asked each member of the committee to
specify the electric generation needs in their communities.
8:05:55 AM
REPRESENTATIVE FOSTER relayed that the electrical needs in his
district are second to the cost of diesel-fueled space heat.
REPRESENTATIVE HUGHES said in the Matanuska-Susitna Valley the
biggest need is for a supply of natural gas.
REPRESENTATIVE NAGEAK said Barrow has natural gas; however, in
the villages the cost is higher because both heat and
electricity are generated with diesel generators.
CO-CHAIR MILLETT said it is all about natural gas.
REPRESENTATIVE FOSTER added that for those not on the road
system, along with the cost of space heat there is the
additional transportation costs that affect goods and services.
CO-CHAIR ISAACSON noted that the aforementioned information
frames the ideas in the presentation that would follow.
8:11:18 AM
COUNSEL GENERAL STEN ROSNES, Royal Norwegian Consulate General,
said it is important for those in Norway to understand what is
happening in Alaska. He said he visited the business community
in Anchorage and studied the electrical supply of Arctic regions
at the University of Alaska Fairbanks. He opined Institute of
the North has done an outstanding job promoting closer contact
between Scandinavia and Alaska, which are regions that can learn
from each other.
8:14:20 AM
NILS ANDREASSEN, Executive Director, Institute of the North (the
Institute), stated Iceland and Norway both consider power as the
backbone of their economy and that the Arctic is the number one
foreign policy issue; Alaska can learn from the successes of
both of these Arctic neighbors. The Institute's values are:
the Arctic is a commons and management of its resources is for
the benefit of the peoples and the communities of the North;
responsible energy and infrastructure development facilitates
sustainability; and sustainability is a goal for healthy,
prosperous, and resilient communities. These values are
promoted by elevating the voices of northern peoples in state,
national, and international arenas [slide 1]. The Institute
works to convene and facilitate civic discourse; to cultivate
and engage citizenry; to inform public policy through outreach
and education; to sustain stakeholders, policymakers, and
technical experts; to synthesize research for broader awareness
and accessibility; and to connect people to one another and with
issues [slide 2]. Fundamental to the Institute's work is the
development of Alaska's resources for the people of Alaska; in
fact, 80 percent of its work is focused on energy and
transportation, both at the Arctic Council and state levels.
Within the Arctic Council the Institute is focused on Arctic
port and airport infrastructure and response capacity in times
of need, beginning with mapping to find the gaps in
infrastructure and planning. Regarding Arctic energy, in 2006
the Institute began looking for the latest technology and
forming policy frameworks so that regions and states can adopt
the best practices of energy technology for their communities
[slide 3]. In response to Co-Chair Isaacson, he explained that
the Arctic Council consists of eight Arctic nations and six
indigenous organizations that participate in the sustainable
development working group (SDWG).
8:19:47 AM
REPRESENTATIVE NAGEAK asked whether the Arctic Energy Summit is
held this year.
MR. ANDREASSEN advised the Arctic Energy Summit will be held
10/8/13 through 10/10/13 in Akureyri, Iceland. Air service from
Seattle is available. He returned attention to the work of the
Institute which is also to strengthen networks through its
Arctic Energy Network, the Pacific Northwest Economic Region
(PNWER) Arctic Caucus, the Bering Strait Region, and with
Circumpolar Policy Tours to Norway in 2011, Iceland in 2012, and
future destinations. The tours delve into common areas such as
mining, offshore development, indigenous issues, and rural
development [slide 4].
8:23:17 AM
REPRESENTATIVE HUGHES asked for all that "Arctic policy"
encompasses and its status in Alaska.
MR. ANDREASSEN explained that each Arctic nation has an Arctic
policy, including the U.S. Most are strategies that support
sovereignty, Arctic domain awareness, healthy communities,
economic development, and environmental protection along with
development. He opined that northern nations recognize
opportunity pertaining to potential undiscovered resources -
Norway is strengthening its relationship with Russia and
collaborating on offshore resource development - and fishing and
mining present other opportunities. At this time the U.S. does
not see the Arctic as the number one priority, but it should be
a top priority for Alaska, and Alaska should take a leadership
role. Mr. Andreassen added that the creation of the Alaska
Arctic Policy Commission (AAPC) is a step forward.
8:26:56 AM
CO-CHAIR ISAACSON asked what lessons Alaska can learn from
Provideniya, Russia, should a policy tour travel there.
MR. ANDREASSEN reminded the committee this year is the 25th
anniversary of the 1988 friendship flight from Nome to
Provideniya that helped open the border. The Institute is
working on a plan to return to build on that experience.
REPRESENTATIVE NAGEAK recalled in 1988 he traveled on a ship
from Nome to Provideniya and on to Magadan to learn about
activities and connect with family. In 1991, an agreement was
signed with Russian Chukotkan Natives to do a bowhead whale
study; this is a very important relationship.
REPRESENTATIVE FOSTER suggested looking to the east for ideas on
how to handle Arctic issues such as shipping, tourism, oil and
gas, sea mammals, and future cooperation between nations.
MR. ANDREASSEN noted the strength of cross-border communications
in the Bering Strait region is unclear, as are the issues of
vessel traffic, travel by individuals, and the environment.
CO-CHAIR MILLETT recalled her circumpolar trip in 1989, and
asked whether reports from that experience are available.
8:32:23 AM
IRA PERMAN, Member, Board of Directors, Institute of the North,
said he has not looked at those reports.
MR. ANDREASSEN said the AAPC recommended a review all of the
information collected over last 25 years to better understand
circumpolar relations. He returned to the presentation and said
the Institute responds to the fundamental challenges of
declining oil production, decreased state revenue, high energy
costs, gas challenges, and fiscal hurdles, and seeks to observe
helpful information from other nations on how to develop
resources for maximum benefit [slide 5].
8:34:21 AM
MR. PERMAN informed the committee he was board chair during the
policy trip to Norway. Current board chair is Drue Pearce and
she and the other board members are interested in the
development of Alaska's resources for the benefit of Alaskans.
The trip to Iceland was the Institute's second policy tour.
Research revealed that Norway is very highly rated in the world
in many areas and the first policy trip went there. A week was
spent in Norway visiting government agencies and industry to get
a good understanding of the energy development polices in
Norway. The next trip to Iceland had a different focus as it
does not have the hydrocarbon resources found in Norway and
Alaska. Iceland is located in an "interesting" air crossroad
between North America and Europe. It is also strategic to polar
shipping lanes transiting the Northern Sea Route which shortens
the distance from Europe to Asia [slide 7]. In fact, Norway is
now shipping natural gas to Asia, saving 40 percent in costs.
8:40:10 AM
REPRESENTATIVE NAGEAK inquired as to the access to the Northern
Sea Route.
MR. PERMAN said shipping is active there and Russia is
increasing its icebreaker capacity from six to fifteen so it can
run convoys of ships through the ice in two directions.
REPRESENTATIVE HUGHES suggested the map on slide 7 should be
provided to legislators to remind them to think about Arctic
policy.
MR. PERMAN observed that Iceland considers itself the front door
from Europe into the Arctic and to the Aleutian Chain.
CO-CHAIR MILLETT recalled the legislature passed a resolution
last year urging the U.S. Congress to build more icebreakers.
MR. ANDREASSEN said the U.S. Coast Guard has an icebreaker in
its budget.
8:44:41 AM
REPRESENTATIVE NAGEAK relayed 94 ships traveled nearby Barrow
last year. He agreed that the U.S. needs more icebreakers and
urged for Alaska to be involved in decisions about shipping and
the protection of those living in the Far North.
MR. PERMAN continued, noting that Iceland developed its energy
policy in a comprehensive manner that resulted in affordable
energy for it residents and for industry. Both of the policy
tours helped to show that Alaska does not provide as much
benefit to its residents as do Iceland and Norway. The policy
tour to Iceland was five days long and began with meetings with
leaders of parliament, the president, and the ministries of
foreign affairs and of industries and innovation. There
followed visits to industrial installations and businesses such
as Landsvirkin - the nationally-owned energy company, the
hydropower plant at Karahnjukar Dam, two geothermal plants,
Mannvit Engineering, Verkis Consulting, the Alcoa plant, the
Verne Global data center, indoor farms, and educational
institutions [slide 9].
8:51:51 AM
MR. PERMAN said the population of Iceland is 320,000 - about the
size of Anchorage - and the island is approximately the size of
Kentucky. The population is centered in the capital of
Reykjavik, where the climate is mild because of the influence
from the Gulf Stream. The income per capita is the lowest of
the major Scandinavian countries, as the economy is recovering
from a devastating economic collapse. Since then exports of
fish and aluminum, and tourism, have brought the economy back to
a degree [slide 10].
REPRESENTATIVE HUGHES asked how the cost of living compares to
Alaska.
MR. PERMAN said the cost of living is similar to that of Alaska.
MR. ANDREASSEN added that the availability of cheap electricity
and heat makes a difference for the residents, and they do not
conserve energy.
8:56:51 AM
CO-CHAIR ISAACSON opined that affordable energy is what
incentivizes private investment, as happened in Iceland.
Alaska, however, provides supplements to residents but does not
provide a new, sustainable way to live. He asked for the
difference between affordable energy compared to cheap energy.
MR. PERMAN pointed out that Iceland provides electricity to
smelters for between 2 cents and 3 cents per kilowatt (kW) hour
without subsidies.
CO-CHAIR ISAACSON asked whether Iceland is similar to Alaska
regarding bureaucracy and environmental controls.
MR. PERMAN said he was unsure about environmental controls. In
Iceland the residential cost is an average of 11 cents per kW
hour on the grid. Iceland formerly imported oil and coal, but
during the oil shortages in the 1970s, it chose to develop
hydroelectric (hydro) and geothermal sources of energy [slide
11].
9:00:01 AM
REPRESENTATIVE NAGEAK expressed his belief that Alaska has the
same geothermal capacity with volcanos and hot springs. Alaska
needs to use the same technology to reduce the cost of energy in
nearby areas. He urged for drastic action.
MR. PERMAN recalled Norway came to that decision after World War
11, and Iceland did so much later and both power systems were
the responsibility of the central governments. In response to
Representative Hughes, he said Norway now exports its excess
power to Sweden and Europe.
MR. ANDREASSEN returned attention to the number one lesson
learned: complete a resource assessment and choose what to
develop. In Norway, the choice was to export oil and gas and
use hydro for domestic use. In Iceland the choice was to use
geothermal for heating and hydro for electricity. Other
technologies were not considered. Investments were also made in
educating people to become experts in geothermal energy, in
institutions, and in infrastructure. He opined cheap power is
provided to industry and affordable power to citizens, thus both
can move toward economic prosperity [slide 13]. Iceland's
energy mix is 80 percent of primary energy supply comes from
renewable resources: 99.9 percent of electricity production and
99 percent of space heating. The remaining 20 percent comes
from imported fossil fuels used for transportation and
fisheries. He characterized this as a strategic and measured
approach [slide 14].
9:06:38 AM
CO-CHAIR ISAACSON said Alaska has a scattered approach.
MR. ANDREASSEN stressed the need to prioritize to move forward
as Norway and Iceland have done. In Iceland geothermal produces
37 percent of electricity and 45 percent of space heating [slide
15]. He presented a map that identified the location of
geothermal sites [slide 16]. The Hellisheidi Geothermal Plant
is the second largest in the world and generates power for 18
revenue streams [slide 17]. The Karahnjukar Hydropower Plant is
the same size as the proposed Susitna-Watana Hydro project and
was built to power the Alcoa smelting plant [slide 18]. The dam
was built with private financing and government guarantees.
9:11:16 AM
MR. PERMAN said the bauxite and alumina ore for the smelting
plant come from all over the world.
CO-CHAIR ISAACSON pointed out that ore from the Red Dog Mine is
shipped to Australia and Portugal for processing elsewhere,
rather than creating jobs in Alaska.
REPRESENTATIVE NAGEAK added that Alaska has incredible potential
from its resources.
MR. ANDREASSEN, in response to Co-Chair Isaacson, said the water
for the Karahnjukar dam comes from glacial rivers; in fact, some
of the rivers now have salmon. The landscape in a fairly
uninhabited area was changed, but community perspectives were
heard and environmental risks were mitigated.
MR. PERMAN turned to exports, noting that Norway exports raw
energy products. Iceland is an island regarding energy so it
uses its low-cost energy to develop products for the world
market such as fish, aluminum, and tourism [slides 19 and 20].
Little electricity is used by fishing or agriculture, moderate
amounts are used for industries and residential consumption, and
most is used to support the aluminum industry. For the aluminum
industry the raw material comes from Brazil and Australia and
the final product is exported for a higher value [slide 21].
Another energy-intensive industry is hothouse agriculture which
supplies tomatoes and bananas to Europe [slide 22]. Added to
these is a pharmaceutical industry and internet server farms
[slide 24].
9:18:48 AM
REPRESENTATIVE NAGEAK noticed there was no smoke coming from the
aluminum smelter [slide 23].
MR. PERMAN advised the data center was located in an area of
declining population in order to provide economic renewal.
REPRESENTATIVE HUGHES asked whether communities in Iceland are
connected by roads.
MR. PERMAN said there is a road around the island, however, as
in Alaska there is outmigration from small villages to
Reykjavik.
REPRESENTATIVE HUGHES observed the transportation infrastructure
removes some of the challenges seen in Alaska.
MR. ANDREASSEN, in response to Representative Nageak, said the
dam was built with local materials but he was unsure of the
source of material for the roads.
9:23:26 AM
MR. ANDREASSEN turned attention to the third lesson: planning.
Faced with the oil crisis in the 1970s, Iceland made a
fundamental energy policy decision looking at long-term benefit
and working toward energy independence. After choosing to
develop hydro and geothermal resources, there was a focus on
infrastructure development and comprehensive planning for 10
years [slide 25]. The goals of the comprehensive energy
strategy were to have renewable energy sources replace imported
energy, to support diversified industry, and to use a protective
approach in energy production. The master plan chose projects
for sustainability, natural environment, tourism, and land use
[slide 26]. Projects were then put in three categories:
proceed with utilization; subject to further research; and not
utilized [slide 27]. In response to Co-Chair Isaacson, he
explained TWh stands for terrawatt hours.
9:27:09 AM
MR. ANDREASSEN, in response to Representative Nageak, stated
that after the identification of the resources and potential
projects, and 10 years in work groups and public discussion
involving the entire society, parliament issued a decision after
16 years of inclusive discussion [slide 27].
REPRESENTATIVE NAGEAK asked for a comparison of Iceland's
educational system with that of the U.S.
MR. ANDREASSEN said Iceland is ranked at near the top of all
nations for education.
MR. PERMAN added that education is free through college and
graduate school.
MR. ANDREASSEN stated that much of the planning process is
handled through the National Energy Agency, Ministry of Industry
and Innovation, and its purpose is to develop and implement the
plan [slide 28].
REPRESENTATIVE HUGHES asked whether employees of the National
Energy Agency are government workers.
MR. ANDREASSEN said they are civil service officials with long-
term experience, and are not political appointments.
9:30:24 AM
MR. PERMAN pointed out that once major policies are set by a
long inclusive process the implementation is not affected by a
change in parliament because employees below the ministry and
deputy ministry level are lifetime employees insulated from the
political process.
MR. ANDREASSEN described Norway's planning process that began in
the 1930s and was revisited in the 1970s.
MR. PERMAN continued to the hallmark of Scandinavian countries
regarding major energy infrastructure: Own the Infrastructure
[slides 29 and 30]. The government owns and maintains the power
grid that parallels the road system around the island connecting
all of the communities. It is a common carrier line which
connects all of the locally-owned generation and power
distribution systems. Because it is an open access grid, all of
the power generators are competing with each other to keep
prices to residential consumers low [slides 31 and 32].
REPRESENTATIVE HUGHES recalled that Alaska "has been burned"
with owning projects and asked whether Iceland has had similar
problems.
MR. PERMAN said, other than its banking system, he was unsure.
The power grid was built privately and purchased outright by the
government.
9:34:32 AM
CO-CHAIR ISAACSON advised the communications industry now has a
successful link from Anchorage to Fairbanks and to Nome.
MR. PERMAN acknowledged that Iceland has communities on its
peninsula that are not attached to the grid which receive
postage stamp rates through a program similar to Power Cost
Equalization. In response to Representative Nageak, he said
communities on the peninsula generate power with diesel, hydro,
or geothermal.
MR. ANDREASSEN informed the committee the policy tour was
attended by Alaskans from various industries, and the public and
private sector. As an aside, he noted that Alaska has built
infrastructure that was sold to private business, in reverse of
Iceland's process.
MR. PERMAN continued to Iceland's energy future which may
include exporting electricity 800 miles to Europe via a high-
voltage direct current (HVDC) cable, even though a connection
to an international grid may increase cost [slide 33]. There is
also the possibility that oil and gas may be developed offshore
by private industry [slide 34].
9:40:06 AM
MR. ANDREASSEN turned attention to four challenges facing
Alaska's investment for long-term prosperity: pick an energy
resource; develop a comprehensive plan; own the infrastructure;
export value-added product [slide 35]. The next steps for the
Institute are to evaluate the lessons from Iceland, Norway, and
others, and how they may apply to Alaska, given that Alaska is
bigger and geographically different. Also, research is needed
for the implementation of these lessons.
CO-CHAIR ISAACSON opined Alaska must take the next step beyond
writing its energy policies. He asked when the Institute will
be able to help focus all the groups that are working on this
problem.
MR. ANDREASSEN said the Institute's goal is to put together a
plan by November that can be addressed during the next
legislative session.
REPRESENTATIVE NAGEAK asked whether Iceland presents
opportunities for private enterprise.
MR. PERMAN stated that the large dam was constructed by private
industry under government contract; in fact, the end goal is the
benefit of residents using a capital-driven system.
9:45:56 AM
REPRESENTATIVE HUGHES asked about the tax structures in Iceland
and Norway.
MR. PERMAN explained that individuals pay high taxes - in Norway
the average income tax is 47 percent. However, residents
receive high benefits in health care, college education, and
retirement.
REPRESENTATIVE FOSTER asked what suggestions the Institute has
regarding legislation. He then requested copies of the
recommendations that were issued after the policy tour to
Norway.
REPRESENTATIVE HUGHES requested Mr. Perman expand on his view of
what is "maximum benefit."
MR. PERMAN explained that within the narrow definition of
energy, Iceland developed its resource in a way that it is
extremely affordable for residents to pay for electricity and
heating. In addition, the aforementioned social democratic
benefits are possible by the careful development of its energy.
CO-CHAIR ISAACSON agreed that lowering the cost of living is key
to a wealth of opportunity.
9:50:52 AM
MR. ANDREASSEN advised that the Institute does not want to
replicate Norway or Iceland, but seeks to find an approach for
Alaska.
9:52:14 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 9:52 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Agenda Energy Committee 02222013.pdf |
HENE 2/22/2013 8:00:00 AM |
|
| Ion_Presentation_Energy.pdf |
HENE 2/22/2013 8:00:00 AM |