A Fresh Look at Coal

A large number of coal-fired power plants will be shut down over the next two years.

Many applaud this as progress, though real progress would have been to build ultra-supercritical coal-fired power plants in a planned program to replace old plants.

With the current very low price for natural gas, it’s reasonable to conclude that we can afford to shut down old coal-fired power plants and replace them with natural gas combined cycle (NGCC) plants and not worry about ultra-supercritical coal-fired power plants.

An earlier article  established that 167 old coal-fired power plants could be shut down without endangering our supply of electricity – providing they weren’t closed too quickly.

During the next few years the price of natural gas will rise, to the point where coal would again be competitive.

It would then be wise to consider building ultra-supercritical coal-fired power plants, and allow market forces to make the determination.

Old coal-fired power plants had a thermal efficiency of only 32% HHV, and emitted SOx, NOx, particulates and mercury, though emission controls allowed them to meet required regulations.

Ultra-supercritical coal-fired plants have a thermal efficiency of around 45% HHV, which represents a 40% improvement over old coal-fired plants.

This translates into 40% fewer emissions of SOx, NOx, particulates and mercury, permitting lower cost methods for cutting emissions by 90% or more. They would meet new mercury emission regulations. Interestingly CO2 emissions would be nearly as low as from NGCC plants.

Ultra-supercritical coal-fired power plants deserve the title “clean coal”.

We have over a 200-year supply of coal which is a national resource that should be put to good use by allowing market forces to decide the mix between coal and natural gas.

Ultra-supercritical plants operate at very high temperatures and pressures. Advances in metallurgy have allowed the use of higher temperatures and pressures in boilers and turbines. Continuing research is aimed at further improvements and the building of advanced ultra-supercritical coal-fired plants.

The United States has one ultra-supercritical plant under construction in Arkansas, while China and Europe are moving ahead with many more units. With the closing of nuclear plants in Germany, it’s very likely that Germany will turn to coal and ultra-supercritical plants for new power generation.

Real science should allow us to make good choices, and allow the construction of ultra-supercritical coal-fired power plants.

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Smart Meters and Efficiency

Smart meters are being promoted as a key part of a strategy for improving energy efficiency. Some utilities, such as Commonwealth Edison, have sold state legislatures a bill of goods so that utilities can charge customers for installing smart meters.

Whether smart meters can improve energy efficiency is questionable, but they do save utilities money.

In Illinois, Commonwealth Edison wins both ways, charging customers higher rates while cutting costs.

The main savings come from eliminating meter readers. Advanced meters can be read at the utility’s office so there is no need to send a person to people’s homes to read the meter.

Smart meters also make it easier for utilities to identify the location of faults, such as downed power lines. This results in quicker fixes and shorter outages for customers, but it doesn’t improve energy efficiency.

Some magazines, such as energybiz, persist on touting smart meters as a way to improve energy efficiency.

A recent article described how smart meters could help utilities maintain required voltage levels more precisely. Voltage is usually maintained between 114 and 126 volts at the home, office or factory. (Appliance motors are designed to operate at no less than 110 volts and a 4 volt line drop in the home would lower a 114 volt input to 110 volts.)

Utilities use voltage regulators, essentially a type of transformer, to maintain voltages within this band. Because it’s currently difficult to know precisely the voltage level at homes, etc., utilities err on the high side and keep the voltage level above 120. (See note.)

The energybiz article claimed that smart meters could identify precise voltage levels at homes, etc., thereby allowing utilities to maintain voltage levels closer to 114 volts which would reduce the power consumed, and result in improved energy efficiency. (Power equals volts times current, with an adjustment for power factor.)

But why not maintain the voltage at closer to 120 volts? This would allow motors to run closer to their rated horsepower and light bulbs or lamps to shine brighter.

In other words, the claim of improved energy efficiency is a shell game that benefits the utility rather than the consumer.

The other claim made by advocates for smart meters is that they would allow homeowners to reduce the amount of electricity they use and save money. This assumes customers would be charged more per kilowatt-hour during peak hours and less during off-peak hours (typically at night).

The claim is spurious since there are very few ways people can change their use of electricity. Customers could use less air conditioning by raising the thermostat and keeping the house warmer in the summer, while lowering the thermostat in the winter and keeping the house cooler.

It also assumes people can shift usage from peak to off-peak hours, but food needs to be cooked at meal time, refrigerators need to run during the day and lights are needed on cloudy days. Theoretically dishes could be washed at night, as could laundry and cloths driers, but this isn’t convenient for most people.

In short, there aren’t very many ways for homeowners to shift their use of electricity from peak to off-peak hours, certainly not enough to justify charging customers for installing smart meters.

A respondent in Florida said, “He couldn’t save anymore unless he switched to candle light”.

There was also a proposal in California to require utilities to use smart meters to control the thermostat in people’s homes, which would facilitate controlling air conditioning and heating loads, especially when there was a need to shave load during periods of peak usage.  Thus far, this bad idea hasn’t been adopted. If the utility can control the thermostat in people’s homes, it’s conceivable government could mandate the high and low temperatures in people’s homes.

Some individuals have claimed that radio waves (electromagnetic fields) emanating from smart meters could affect people’s health, but this is not true, and is no reason to prevent the installation of smart meters.

There are problems with the way in which smart meters are being promoted, but fear of health affects shouldn’t deter their installation.

Advanced meter installations aren’t going to result in large improvements in energy efficiency, though they may lower costs for utilities and improve reliability for customers.

Note:

For those who are interested, there is a 2005 report issued by Global Energy Partners entitled, “Evaluation of the Utility Distribution System Efficiency Initiative.”

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More Hydro is Better than Wind

There are 54,000 dams in the United States that are higher than 5 ft., and do not currently have equipment installed for generating electricity.

An assessment by the Department of Energy (DOE) of all non-powered dams (NPDs) in the United States determined that these dams could provide 12,000 MW of generating capacity.

A mere 100 of them could provide 8,000 MW of generating capacity.

The report did not determine the cost of installing generating equipment at these existing dams, but there is little doubt that these dams could generate electricity at a lower cost than wind turbines.

The cost of building the dams has already been incurred, and since the dams are already built, there would be little environmental impact. For example, they wouldn’t kill birds and bats as do wind turbines.

The electricity from the NPDs would be dispatchable, and would therefore have greater value to grid operators than electricity generated from wind farms.

The DOE study was conservative, and estimated that the capacity factor (CF) for dams installed with generation equipment would on average be around 43%. The location of the 100 NPDs having the best potential are in areas where the capacity factor could easily be higher. Figure 9 in the report shows CFs for these areas of between 43% and 67%.

It’s interesting to compare the 100 best NPDs with the over 8,000 wind turbines installed during 2011 and 2010.

These 100 NPDs would produce more electricity than all the approximately 8,000 wind turbines installed during the past two years.

They also wouldn’t require expensive gas turbine backup generators running 24/7, ready to step in when the wind stopped blowing.

This begs the question as to why this administration hasn’t stressed generating electricity from the 100 NPDs having the greatest potential for generating electricity, rather than promoting subsidies for wind.

The subsidies for wind can be eliminated and we can still generate renewable electricity that’s dispatchable, low cost and reliable – and without building new dams.

Notes:

• Capacity factor measures the amount of electricity actually produced over the period of a year, compared with what could theoretically have been produced based on the nameplate rating of the unit.
• The NPDs and associated generating equipment are not the small, experimental Hydrokinetic units that would be installed in rivers and which have been promoted by Greenpeace.

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The End of Peak Oil

In 1956 a geologist, M. King Hubbert, set in motion a hypothesis, often referred to as a theory, that oil production would peak and that after the peak, there would be a diminishing supply of oil throughout the world.

Many subscribed to this hypothesis and published articles and books promoting the concept. There are even web sites devoted to promoting the idea that we would be running out of oil.

Hubbert originally based his hypothesis on what was happening in Texas in the 1950s, where Texas oil production was declining.

The idea that we would run out of oil was part and parcel of Malthusian thinking, that the world only has finite resources. While Malthusian thinking has been consistently debunked, it serves the purpose of those who would like to control the economy.

In the Malthusian view, government must control the use of resources so they may be evenly distributed to people around the world.

Malthusian thinking is anathema to those who believe that science and mankind can develop more resources, or alternatives to any resources that may be in dwindling supply, so that the economy can continue to grow for the benefit of all mankind.

The free market has consistently shown that it is superior to Malthusian thinking and government control.

Now Hubbert’s “Peak Oil” hypothesis goes the way of all Malthusian thought.

“Peak Oil” is dead.

It has been killed by the free market and innovation.

Initially, development of oil from deep under the sea undermined the peak oil hypothesis.

Now, innovators have developed fracking to extract natural gas and oil from shale.

Fracking has made huge supplies of oil and natural gas available in the United States and around the world.

Today, the United States has, within its grasp, the ability to become self sufficient in the production of oil.

There are many countries around the world, besides the United States, where there are large shale basins that can produce oil and natural gas.

The EIA has identified China, Argentina, Canada, South Africa and Australia, besides the United States, as having large technically recoverable oil and natural gas resources. Even Europe has some, as does Russia.

“Peak Oil” is dead, though there will be people who will continue to flog a dead horse to promote their political agendas.

“Peak Oil” is finished for this century, and probably the next.

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The Gift that Keeps Giving Part II

Fracking has provided us with the opportunity of becoming energy independent.

But there’s more: Fracking can lead to the reindustrialization of America.

Because of fracking, and all that it implies, America could have the lowest cost feedstock of any country in the world, with the possible exception of Qatar.

Increased output of hydrocarbons, coupled with secondary effects on other areas of the economy, from steel to transportation, can increase GDP by 2% – Or more. (Source, Citigroup.) A 2% increase in GDP growth would be huge for the United States, where GDP quarterly growth has languished at 1% for the past six years and around 2.5% for the past ten years.

Imagine consistent GDP growth of between 4.5% and 5.5% with the creation of 3 million new jobs by 2020.

Energy consumption in major industries can be a significant cost component. Using low cost natural gas can lower production costs. In the metals segment for example, natural gas has represented nearly 60% of energy usage so that natural gas at $2.2 per million BTU can significantly lower costs. Natural gas usage in the machinery segment represents 45% of energy usage.

Then there is the ability to shift from coal and oil to low cost natural gas. These substitutions will also lower the cost of production.

In transportation there has been the beginning of a shift from diesel fuel to natural gas, either CNG or LNG, for long haul trucks and truck fleets. The shift to natural gas could expand to construction equipment and possibly even to light vehicles, such as pick-up trucks.

The Chemicals industry will be a major beneficiary of low-cost natural gas, shifting production from foreign countries back to the United States. Examples of this are the restart of the Dow Chemical ethylene plant, the reopening of a large ammonia plant in Beaumont, Texas and CF Industries planned $1 billion investment in a new ammonia plant.

The list goes on, with Brownfield expansions becoming prevalent.

It should be noted that it will be necessary to build many new pipelines in order to provide unrestricted transport of natural gas and oil from the new production regions, such as Bakken and Ford, as well as from Canada. Building pipelines also creates jobs and increases GDP.

Increased natural gas usage is bound to result in the cost of natural gas increasing as demand begins to overtake supply, but any large increase is several years away.

Natural gas has fallen from a peak of nearly $13 per million BTU to a low of under $2 per million BTU. More realistically, before the peak, the average price was around $5 per million BTU, but had been rising steadily because of dwindling natural gas supplies in the United States.

The question will be: How long can natural gas prices remain at current low levels?

The ebb and flow between production, which can cause an excess of supply, and increasing demand, will keep the price of natural gas fluctuating for many years – assuming that government regulations don’t curtail fracking.

It’s highly likely that prices will remain below $5 per million BTU, with $5 per million BTU being the forecast made by Chesapeake Energy. On the low side, it’s possible the price will reach $3 per million BTU after the current glut is worked off.

This $5 to $3 range can sustain continued growth in GDP at levels 2% higher than the recent past for many years to come, because of fracking and all the benefits arising from new oil and natural gas production.

The major obstacle to achieving energy independence and the reindustrialization of America is politics – specifically, overzealous environmental groups such as Greenpeace.

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Basic Costs for Generating Electricity

Knowing what it costs to generate electricity will help to understand why alternatives such as wind and solar are bad bets for the United States. Spain and Germany have both already come to the realization that subsidizing these alternatives, wind and solar, is economically devastating.

Table I shows the costs applicable to base load power plants.

TABLE I
Method	Fuel & Operating Costs	Costs incl. Depreciation	Construction Costs
Traditional Coal	$0.02 /kWh	$0.04 /kWh	$2,000 /KW
Ultra Supercritical Coal	$0.02 /kWh	$0.06 /kWh	$2,800 /KW
Natural Gas Combined Cycle	Currently <$0.02/kWh	Currently <$0.06 /kWh	$1,100 /KW
Nuclear	$0.02 /kWh	$0.10 /kWh	$5,000 /KW
Integrated Gasification Combined Cycle	NA	NA	$5,000 /KW

Ultra-supercritical coal-fired power plants operate at very high temperatures and pressures.

Table II shows pollutants, from best to worst, associated with these types of generation.

TABLE II
Method	Comments
Nuclear	No emissions. Spent fuel must be stored or reprocessed.
Natural Gas Combined Cycle	Produces lowest emissions of NOx & SOx. Has no emissions of Hg. Emits CO2.
Integrated Gasification Combined Cycle	Can capture >90% of NOx, SOx and Hg, and also 90% of CO2
Ultra Supercritical Coal1	Has a thermal efficiency of around 45%. Emissions of NOx, SOx and Hg reduced 85% to over 90%. Emits slightly more CO2 than NGCC plants.
Traditional Coal	Existing fleet has a thermal efficiency of 33%. Emissions of NOx and SOx are largely captured from the flu gas. Hg capture has been difficult. Emit ~40% more CO2 than NGCC plants.

 

Nuclear has no emissions of pollutants and also doesn’t emit CO2. Nuclear is the most expensive in terms of construction costs, but is very competitive in terms of fuel and operating costs. Its costs for generating electricity are higher than the costs for natural gas and ultra-supercritical coal.

Natural gas combined cycle has low emissions and produces electricity at low cost. The current very low cost for natural gas, because of fracking, results in NGCC currently being the lowest cost alternative.

Ultra-supercritical coal-fired power plants have low emissions and produce electricity at low cost. They have vastly better thermal efficiencies than traditional coal.

Integrated gasification combined cycle (IGCC) plants have construction costs twice as great as ultra-supercritical coal and will probably produce electricity at a very high cost, perhaps two to three times higher than ultra-supercritical coal-fired power plants. To be effective, they must be able to sequester CO2.

Note that IGCC plants are those proposed for capturing CO2 so that the CO2 can be sequestered. They convert the coal into gasses that can be burned in a gas turbine.

Table III shows construction costs for various alternative generation methods adjusted to reflect their capacity factors. They reflect the true cost of building a power plant based on the amount of electricity they produce.

 

TABLE III
Alternative	Capacity Factor	Construction Costs
Wind, land based	30%	$6,600 / KW
Wind, off shore	39%	$6,200 to $12,800 / KW
Solar, PV	16% – 25%	$24,000 to $37,000/KW
Solar, concentrating	22% – 30%	$12,000 to $20,000 / KW
Ultra-supercritical coal	80%	$3,500 / KW

 

Capacity factor measures the amount of electricity actually produced over the period of a year, compared with what could theoretically have been produced based on the nameplate rating of the unit.

A 1 MW unit with a capacity factor of 30% delivers one third the electricity that a 1 MW unit with a capacity factor of 90% would produce. It will take three of the 1 MW  units having a capacity factor of 30% to replace the single unit with a capacity factor of 90%.

Wind and solar are intermittent and can’t be relied on to generate electricity when needed.

The costs in Table III for wind and solar do not include the cost of building dedicated transmission lines or the cost of keeping gas turbine generators in spinning reserve 24/7, ready to be brought online when the wind stops blowing or the sun stops shining.

When the construction costs of alternatives such as wind are compared with base load power plants, it’s clear that electricity from wind and solar will be much more expensive even though they have zero fuel costs.

These tables and data are worth referring to when evaluating different methods for generating electricity.

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Fracking: The Gift that Keeps Giving

Not only has fracking revolutionized natural gas production so that we now have enough natural gas to last 100 years, fracking has also allowed production of crude oil from shale, thereby potentially transforming the United States from being an importer of oil to one that’s self sufficient in oil sometime in the 2020s.

In addition, fracking also spins off additional liquids from the production of natural gas.

Natural gas liquids (NGLs) are the icing on the cake from fracking.

As mentioned earlier (see Foiling OPEC), the United States currently produce about 6 million barrels of oil per day (mbd) with Canada producing an additional 2 mbd.

We have the technically recoverable reserves to allow the United States to produce 10 mbd and Canada to produce 6 mbd – in other words, we can double our combined output to 16 mbd.

NGLs can add another 2 mbd by 2020, to bring the total of all liquids to 18 mbd.

Mexico has the potential to add to these amounts, but current conditions, legal and otherwise, cloud the picture as to whether Mexico can actually increase output.

It’s important to remember that this forecast can only become a reality if we allow drilling in all the areas that are now off-limit to drilling – ANWR, federal lands and the outer continental shelf.

Today, we must rely on Saudi Arabia to take-up the slack for any decrease in Iranian oil production: Unfortunately this won’t change until we are well on our way to doubling our oil output.

We are blessed with huge reserves of oil and natural gas. There is conventional oil, and shale oil, which can allow us to produce 18 mbd. There is also the very tight shale in Colorado, Utah and Wyoming that has the potential to add another reserve that, by itself, is greater than Saudi Arabia’s oil reserves.

In ten years, fracking will have led to reducing our current account deficit. Canada could remain the major beneficiary of payments from us, for oil.

In addition to reducing payments to other countries for their oil, our state and federal governments will reap higher taxes and royalty payments for the oil we produce in the United States.

Fracking has created the glut in natural gas which has the chemical industry bringing jobs back to the United States. Only Qatar might have lower cost natural gas than the United States.

The glut in natural gas has also lowered energy costs to industry, such as the steel industry, making the United States more competitive in the world market.

In addition, we can export refined petroleum products that can create additional jobs. We may even be in a position to export crude oil if the government allows it.

Perhaps, fracking’s greatest gift has been to make us aware that it’s possible to achieve energy independence.

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Strategic Petroleum Reserve Size

An op-ed in the Wall Street Journal by Austan Goolsbee, Council of Economic Advisers from 2010 to 2011, claimed we needed to follow Linda’s rule, which was the supply of toilet paper kept in the home by the op-ed writer’s mother in the event of a California earthquake. Basically, “only have enough insurance to cover the anticipated interruption in supply.”

The op-ed pointed out that the Strategic Petroleum Reserve (SPR) had increased until it can now cover a 100-day interruption in oil supplies. The author then declares that a 100-days’ supply is more than is needed. He says that it could be cut 25%, which would add $20 billion to the U.S. treasury.

The op-ed makes no effort to explain why a smaller SPR would cover what we would need in an emergency.

In fact, the author underestimates the need for the SPR.

Blocking the Strait of Hormuz could use all of the current supply of oil in the SPR, and perhaps more.

Last week’s article, Blocking the Strait Of Hormuz, explained why the current size of the SPR may or may not be large enough to protect us if the Strait of Hormuz is blocked – where 20% or more of the world’s oil supply is cut.

Blocking the Strait Of Hormuz didn’t conjecture about what could also happen if there was a war with Iran. The article merely focused on how long it might take to open the Strait of Hormuz.

If Iran found its back against the wall, which it assuredly would, it’s likely to lash out, not only against Israel, but also against Saudi Arabia.

The most logical attack by Iran would be a missile attack on Abqaiq which processes around eight million barrels of oil daily, or about 80% of Saudi Arabia’s oil output. It’s well within range of Iranian missiles, both old and new.

The facility at Abqaiq removes the hydrogen sulfide and reduces vapor pressure. Oil can’t be shipped without being processed to remove the hydrogen sulfide.

Depending on how extensive Abqaiq was damaged, it could take six months or more to repair the facilities, which would extend the time before world oil supplies could return to normal. Whether oil from the SPR would still be available depends on how long it would take to not only open the Strait of Hormuz, but also return Abqaiq to operation.

We’ll likely need more, rather than less oil in the SPR so long as there is a possibility of war with Iran.

The op-ed also, rightfully noted, that fracking had allowed domestic oil production to rise.

Unfortunately, it isn’t clear that our government will lift drilling restrictions and allow us to substantially increase our production of oil. Until oil production is increased, possibly doubled, it makes little sense to cut the SPR.

Selling oil from the SPR to temporarily reduce the price of gasoline could weaken our ability to withstand an Iranian caused oil shock. The $20 billion added to the treasury by selling oil from the SPR would seem piddling if the price of oil doubles in a real emergency.

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Blocking the Strait of Hormuz

At least 20% of the world’s oil supply transits through the Strait of Hormuz which is, on average, around 30 miles wide.

Strait of Hormuz Shipping Lanes

 

The Wall Street Journal recently had an analysis of the military challenges in what would be an asymmetrical war, with big ships challenged by swarms of speedboats carrying anti-ship cruise missiles. This is similar to China’s current strategy for access denial in the South China Sea.

The WSJ article mentioned that Iran had over 5,000 mines, but the number is of only secondary importance.

Iran’s ability to lay a few hundred bottom mines in the Strait is crucial to any analysis, and this wasn’t discussed in any detail in the WSJ article.

A cursory look at the map shows that Qeshm, an island about two-thirds the length of Long island in New York, and larak island, are bordering the entire northern flank of the strait, while the eastern flank is bordered by Iran proper.

Not shown on this map, but a serious consideration, is that mountains 10,000 feet high rise abruptly from the Iranian shoreline. Qeshm Island is relatively flat, with cliffs and heights at the western end.

Iran’s strategic position is important since clearing bottom mines is a lengthy process involving surface ships and helicopters that will be exposed to fire from Qeshm and Larak islands and the eastern Iranian shore.

Mine warfare detachments, helicopters and ships are stationed in Bahrain, with Oman also being a probable base of operations. Most mines will be between 150 and 300 feet under water, with mud and other objects making it difficult to locate their exact positions.

The mine clearing operation consists of discovering where the mines are located using scanning arrays towed by helicopters or ships, and then using unmanned underwater vessels (UUVs) to attach explosives to the mines to destroy them.

The UUVs are controlled from the surface, either with helicopters or ships.

It will be necessary to completely neutralize Qeshm and Larak islands and the eastern shore of Iran in order to protect the mine clearing helicopters and ships. Most likely, Qeshm and Larak will need to be occupied.

Under the best of conditions, it will require months, not days, to clear a few hundred bottom mines from the strait. No official estimates have been made public, but it could easily require four to six months to clear the bottom mines from the strait.

Our strategic petroleum reserve (SPR) has been established to provide oil in the event the Strait is closed.  The SPR is designed to help offset a loss of our normal imports, but due to physical limitations, only about 5 mbd can be pumped from the SPR. This, coupled with domestic production and reduced imports, can supply our needs at high cost for about four months, but then there would be shortages.

It’s highly likely that price controls and/or gasoline rationing will be instituted when world oil prices head toward $200 per barrel or the SPR is emptied.

Obviously, the more oil we can produce in North America, the less need there will be for rationing or price controls.

Exactly how oil prices and supplies will react is conjecture, but worth taking into consideration.

It is a simple matter for Iran to lay a few hundred bottom mines across the Strait of Hormuz.

Here is one such fictional scenario occurring before hostilities actually begin.

In eight minutes, heading north from Bandar Abbas, the planes had passed over Qeshm Island and were over the Strait.

They flew side by side with three miles separating each plane. In this formation they cut a swath 20 miles wide as they headed for the shipping lanes.

Each C-130 was equipped with rails on each side of the plane’s cargo floor leading to the rear ramp and door. Mines were placed vertically on dollies that rolled along the rails with 10 mines on each side of the plane. When the rear door was opened, the mines could be rolled out the C-130. As the mines were released from the plane, a cord attached to the plane would pull out the arming plug so the mines were armed as they left the plane.

Each bottom mine weighed 2,000 pounds, and the load of 20 mines were well within the carrying capacity of each C-130 aircraft.

The crews of these planes practiced for the past three months over the interior of Iran. Using dummy mines, they had flown about one hundred feet over the ground and had become proficient at releasing the mines at one- to two-minute intervals. Flying at slightly over 100 knots, they would lay a mine every two to three miles.

Now they headed over the Strait of Hormuz to perform the mission for which they had trained.

When the lead, left most plane in the formation was five miles from the shore of Qeshm, they started to lay their mines. As each mine fell from a plane, a small drogue chute opened to help slow the mine so as to minimize any damage that might occur as the mine entered the water.

In 35 minutes, all 200 mines were laid in the Strait of Hormuz and shipping was completely blocked.

A swarm of small boats could also lay bottom mines that sit on the ocean floor waiting for a ship to pass overhead.

Blocking the Strait of Hormuz by Iran would be an act of desperation and national suicide, but whether Iran’s government is rational, in the Western sense, is a question mark.

While Iran would ultimately fail, it will take more time than many contemplate to open the Strait to shipping – and it only makes sense for us to expand our oil production to minimize the effect of any such disruption in oil supplies.

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Willing to Pay More For Renewables?

This is an interesting question since over twenty states now require utilities to sell a rising percentage of electricity as coming from renewable sources, such as wind and solar. These laws are referred to as Renewable Portfolio Standards (RPS) or Renewable Energy Standards (RES).

The consulting form Accenture addressed the question in a recent survey.

By around 2020, states with RPS laws will require that 20 to 25% of the electricity sold in each state to come from renewable sources. (California will require that 33% come from renewable sources.)

In addition, Senator Bingaman (D, NM) is still trying to get the Senate to pass his Clean Energy Standard Act of 2012 (CES) that would require utilities in every state to sell electricity from renewable sources,  and meet minimum amounts similar to state RPS requirements. (The Bingaman Act has features surprisingly similar to the Waxman-Markey cap and trade bill.)

The Bingaman Act requires that 84% of electricity in 2035 to be “Clean Energy.” The Act includes Hydro and Nuclear as “Clean Energy” if built after 1991. The Act also has a federal trading program – shades of cap and trade. The Act is only 24 pages long and is worth reading as it provides a sense of how big government thinks and regulates.

These laws, RPS or CES, will force homeowners and industry to pay more for the electricity they use, because electricity generated from wind and solar costs more than electricity generated using natural gas or coal.

The consulting firm Accenture recently conducted a survey, spread over three years with 30,000 respondents, to measure how utilities can improve their customer communications.

As a part of the survey Accenture asked the question:

“Would you be willing to pay a premium for your electricity in order to receive these additional products/services?”

Among the added products or services was “Greater mix of renewable energy sources.”

Over 70% said No, they wouldn’t be interested in paying more. (Fig 8, page 14 of the survey.)

The Premium, “Save the Planet” package was roundly voted down, with at least 71% of the respondents not interested. (Fig 9, page 14)

And the “Save the Planet” package had a price increase of only 5%, which is far below what RPS or CES will require.

In spite of the propaganda about having to cut CO2 emissions 80% by 2050, a large majority of people aren’t interested in paying more for their electricity, which is what happens with RPS or CES.

 Notes:

From Accenture: Actionable Insights for the New Energy Consumer – Accenture end-consumer observatory 2012

 Bingaman CES Act available at: http://www.energy.senate.gov/public/index.cfm/files/serve?File_id=b3580f37-ec8c-4698-a635-3e19f9815b9a

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Victory is Within Reach

For half a century, our objective has been to achieve independence from OPEC, loosely described as independence from foreign oil.

Finally, we can achieve this objective.

Admonitions that we only have 2% of the world’s oil reserves are irrelevant and bunkum.

We have enough oil in North America to last us for decades, if not well into the next century.

Fracking has been the breakthrough that allows us to produce enough oil to counter price manipulation by OPEC. See Foiling OPEC.

Today, we produce about 6 million barrels of oil per day (mbd), with Canada producing another 2 mbd. (See note.)

Doubling our output, and also that of Canada’s, would bring our collective output to 16 mbd.

We can accomplish this objective by continuing the use of fracking to develop tight oil in shale at several areas around the United States, while also developing our oil resources in the Outer Continental Shelf (OCS), in federal lands and in Alaska, including ANWR. The federal government has essentially placed all these areas off-limits to drilling.

Producing 16 mbd would likely stabilize the world price of oil – OPEC couldn’t manipulate its output to affect the price of oil, but would have to continue producing as much oil as it could.

The recent meeting at CERA Week 2012 projected that we and Canada combined could produce 15.1 mbd by 2020. This reaffirms other projections

Doubling our output is a reasonable and doable objective.

The growth of China and India, and other developing countries, will increase demand.

We can help offset that new demand with our oil output, so that we won’t have to import oil from OPEC – that oil will be available for importation by China and India.

Once again, we will be able to export petroleum products, such as jet fuel and gasoline, which will create additional jobs.

According to CERA Week 2012, Brazil is projected to produce 4.5 mbd by 2020, which will help supply the increased imports of China and India.

The United States is blessed with huge reserves of oil, natural gas and coal.

We are already independent with respect to coal.

Fracking has allowed us to become independent with respect to natural gas.

Opening the OCS, federal lands and ANWR to drilling, and using fracking to obtain oil from tight shale, will allow us to become independent with respect to oil – if we have the political will.

Victory is within reach – we can finally achieve our objective of being energy independent for at least the rest of this century.

 

Note: Does not include natural gas liquids (NGL) which amounted to approximately 2.3 mbd in 2011, and which are also forecast to increase to around 3.8 mbd by 2020.

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Continuing Solar Debacle

Bankruptcies of solar firms are happening so rapidly it’s hard to keep up with them.

Last week Q-cells, one of the larger German manufacturers, filed for bankruptcy. The bankruptcy will result in the layoff of 2,000 employees.

Now there is a report that Solar Trust of America is going to file for bankruptcy.

Solar Trust of America was to build a 1,000 MW concentrating solar power plant near Blythe in southern California. The Department of Energy (DOE) had awarded a $2.1billion conditional loan guarantee to Solar Trust of America. The Solyndra loan was only $0.5 billion.

Solar Trust of America is expected to have liabilities in excess of assets, of between $10 and $50 million.

(Amazingly, Solyndra’s web site on April 4, 2012, was still advertising that Solyndra’s roof top solutions “offer a strong return on investment.”)

Solar Trust ran into trouble when Solar Millennium AG, that held a 70% investment in Solar Trust, filed for court protection last December.

But the story gets worse.

Solon, based in Berlin, filed for bankruptcy last December.

Solar Millennium, mentioned above, also filed for bankruptcy in December.

Scheuten Solar filed for bankruptcy in March of this year.

Solarhybrid also filed for bankruptcy in March of this year.

Odersun also filed for bankruptcy in March of this year.

Der Spiegel said, “more bankruptcies would likely follow.”

This list is dominated by German companies, which reflects the very large subsidies, in the form of feed-in tariffs that were used by the government to promote the solar industry.

Feed-in tariffs required German utilities to buy electricity from people who installed solar panels, and to pay them a very high fixed price, approximately 55 cents/kWh which was at least four times what it cost the utilities to generate electricity using natural gas or coal.

These subsidies have thus-far amounted to over $100 billion.

Philipp Rösler, Germany’s minister of economics and technology, has called spiraling solar subsidies a “threat to the economy.”

Now that subsidies have been drastically reduced, the solar industry in Germany is collapsing. Solar can’t pay for itself, even with cheap Chinese PV products. (See Feeding at the Subsidy Trough.) There is a lesson to be learned from these bankruptcies.

Solar power is expensive, and is unaffordable without subsidies.

Renewable Portfolio Standards (RPS) that require utilities to provide a minimum amount  of electricity from renewable sources, such as solar and wind, merely force people to pay higher prices for electricity, which is another way to subsidize the solar and wind industries.

Government loans to companies that can’t be profitable without subsidies are a bad idea.

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EPA’s War Against CO2

Many have speculated that recent EPA rulings and regulations targeting coal were really aimed at cutting CO2 emissions.

Now the EPA proves that the speculation was right.

Congress refused to enact Cap & Trade legislation that would target CO2 emissions and cut them 80% by 2050. This was after the “people” made it clear that the legislation was not wanted. The act drafted by Representatives Markey (D-MA) and Waxman (D-CA) was over 1,400 pages long (The American Clean Energy and Security Act of 2009).

When Congress rejected the Waxman-Markey legislation the president warned that CO2 emissions could be reduced through other means. (The Bill passed in the House, but the Senate didn’t act, so the Bill died.)

Then, the Supreme Court ruled that the EPA could regulate CO2 under the Clean Air Act unless Congress legislated otherwise.

This gave Congress an opportunity to prevent the EPA from regulating CO2 under the Clean Air Act, but Congress didn’t act because many Senators and House Members wanted CO2 to be regulated by the EPA.

To put such a program in place, however, the EPA first had to issue an Endangerment Finding to the effect that CO2 was harmful to health and the environment, which it did in December 2009.

In doing so, the EPA claimed that the UN’s IPCC documents provided a scientific basis for the Endangerment Finding.

Over the past year, the EPA issued regulations on mercury emissions and cross-state pollution that had the effect of curtailing CO2 emissions.

Many claimed that the real intent of these regulations was to cut CO2 emissions.

The EPA is now issuing the New Source Performance Standard that essentially bans construction of new coal-fired power plants so as to cut CO2 emissions.

The new rule specifically says that no new power plant can be built unless the power plant emits no more than 1 pound of carbon dioxide per kilowatt-hour (lb CO2/kWh). The typical coal-fired power plant emits about 40% more than that, while natural gas plants emit slightly less.

Existing coal-fired power plants are exempt from the rule, at least until the plant has work done on it.

In essence, new coal-fired power plants would have to capture and then sequester the CO2 underground for thousands of years. These plants, such as the Integrated Gasification Combined Cycle (IGCC) plant, cost almost as much as a nuclear power plant – over $5,000 per KW versus $1,100 per KW for a natural gas-fired power plant and $2,800 per KW for a modern ultra-supercritical coal-fired plant.

Electricity produced by competing natural gas combined cycle (NGCC) and coal plants cost about the same until fracking created a glut of natural gas. Right now, with natural gas costing about $2.4 per million BTU, NGCC plants are the least expensive to operate.

It’s fortunate that fracking has permitted the development of huge amounts of natural gas so that natural gas power plants can be built now that new coal-fired power plants have been outlawed.

The EPA is, however, doing what it can to prevent the use of fracking.

At some point in the future, we will need to build coal-fired power plants – either because natural gas plants become too expensive as gas prices rise or because coal-fired power plants are better suited for base load operation.

In reality, the EPA is now subjecting Americans to the requirements of the United Nations. The EPA used the UN’s IPCC as the scientific basis for its Endangerment Finding – and the UN has said the United States must cut its CO2 emissions 80% by 2050.

Global Warming is an energy issue, and the EPA’s war on CO2 is now out in the open.

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Swept Under the Rug

What happens at the end of a wind turbine’s useful life?

This question shouldn’t be overlooked, because someone is going to be responsible for their removal.

Will it be the operator of the wind farm? The farmer or land owner? Or the city or town in which they are located?

The potential size of the problem can be demonstrated by comparing the number of wind turbines required to replace one 1,000 MW coal-fired power plant. The coal-fired power plant will be in operation for at least 40 years.

It requires 1,900 1.5 MW wind turbines to generate the same amount of electricity during a year as the single 1,000 MW coal-fired power plant. A 1.5 MW wind turbine is typical of those built until now.

If the life of a wind turbine is 20 years and that of the coal-fired power plant is 40 years, it means that 3,800 wind turbines will have to be removed (i.e., torn down) when they come to the end of their lives vs. one coal-fired power plant.

By one estimate, there are over 14,000 abandoned wind turbines in the United States that require removal. Most of these are old units in California.

The picture shows a few of 37 abandoned wind turbines in Hawaii. They were put in operation in 1987 and the final one was shut down in 2006. Note missing blades and rusting structures.

Abandoned Hawaii Wind Turbines

It’s only recently that people have started to focus on the maintenance of units when they are no longer in warranty, where warranties are typically for five years. Because of this lack of experience, little is known about the costs that will be incurred when the units are out of warranty.

Aside from the fact that wind turbines are uneconomic without subsidies, there are the important issues of wind turbines killing birds and bats, the noise they generate, the fact that they produce electricity intermittently and at night when it isn’t needed and the question of what will happen to them when they are no longer in use.

It’s the last concern that hasn’t received very much attention.

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Where Freedom and Energy Intersect

The UN’s Rio+20 meeting will take place in June of this year. Rio+20 is being held on the twentieth anniversary of the 1992 Rio Earth Summit, popularized by Al Gore.

Rio+20 is where freedom and energy intersect.

My earlier article, Rio+20 Alert cited the report on sustainability by the UN’s High-level Panel on Global Sustainability, which stated:

• “Achieving sustainability requires us to transform the global economy.”

The UN’s report has now been followed by a report from the Earth System Governance Research Alliance, which says:

• “[Global warming] requires fundamental reorientation and restructuring of national and international institutions toward more effective Earth system governance and planetary stewardship …”

They state further that:

• A “constitutional moment is required”

The group also calls for the creation of a UN Sustainable Development Council to better integrate sustainable development concerns across the UN system.

This is an outrageous threat to the United States, because the group is calling for no member of the UN to be able to thwart the will of the majority … in other words the United States would be forced to adhere to any rulings or actions taken by the UN that fall under the sustainability umbrella.

As reported by the BBC,

• “The most radical idea in procedural terms is introducing majority voting in UN fora to prevent a few recalcitrant nations from blocking the will of the vast majority.

“There have been many times in the past when just one or two countries held up progress in UN processes such as the climate change convention.” (This refers to the United States not ratifying the Kyoto protocol.)

Under the proposals being formulated for Rio+20, the United States wouldn’t have the protection of a veto, such as it has in the UN’s Security Council.

Sustainability is all about controlling energy.

The Malthusian doctrine is alive and well in the eyes of the United Nations, though now it is referred to as the framework of “planetary boundaries” designed to define a “safe operating space for humanity”.

See the earlier Rio+20 Alert article that demonstrated how sustainability controls energy. Specifically by:

• Incorporating social and environmental costs in regulating and pricing of goods and services.
• Expanding how we measure progress in sustainable development by creating a sustainable development index.

Very little is being reported in our media about Rio+20, though Rio+20 could have a huge impact on the United States.

Rio+20 is the latest annual meeting under the United Nations Framework Convention on Climate Change (UNFCCC).

The 1992 Rio conference created the UNFCCC, a treaty that WAS ratified by the United States. The United States is a member of the UNFCCC and has attended its annual meetings since 1992. The United States has been consistently out voted by roughly 190 to 1, and has been ostracized at these meetings for not adhering to the so-called will of the majority. At the Bali meeting, our delegation was booed by virtually every other delegation because of a planned “no” vote.

This administration will send our delegation to Rio+20. It will be interesting to see how our delegation behaves, and what we agree to under our existing UNFCCC treaty commitment.

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Biofuel Shooting Stars

Last month, ethanol from algae was the shooting star that lit up the media and enthralled the public.

Unfortunately, at $15 to $25 per gallon, ethanol from algae has a long way to go before being competitive with gasoline.

Earlier, the hype was about diesel fuel from Jatropha and palm trees.

Unfortunately, it turned out that Jatropha needed large quantities of water to produce small quantities of diesel fuel, while palm oil caused forests to be decimated to make room for palm trees.

Then there is ethanol from corn which has been an economic disaster for tax payers because of large subsidies, combined with higher food prices caused by using a food crop for fuel. And, there is also the moral issue.

Against this backdrop of shooting stars, was the successful production of ethanol from sugarcane in Brazil. It was effective at the time it was introduced because of Brazil’s shortage of oil, but as Brazil develops its newly discovered huge oil reserves, time will tell whether ethanol from sugarcane remains popular.

This month, we had the latest shooting star streaking across the firmament: Ethanol from seaweed.

A new process developed by BioArchitecture Lab., Inc. (BAL) and the University of Washington in Seattle can produce ethanol from kombu, a widely available seaweed. The secret, as it were, is a new E. coli bacterium that can turn the sugars in edible kelp (kombu) into ethanol. Supposedly, the new E. coli will not harm the environment when it is introduced into the ocean to mix with kombu.

As we are all aware, some strains of E. coli can cause serious food poisoning so there needs to be certainty about the safety of the modified E. coli before it is released into the environment.

Pacific Northwest National Laboratory indicates that the United States could produce enough ethanol from kombu to replace 1% of the nation’s gasoline usage by using 1% of the nation’s territorial waters to produce ethanol from Kombu.

The corollary to this is that it would require using 100% of our territorial waters to replace all the gasoline we use with ethanol from seaweed. Since that’s obviously impossible, ethanol from seaweed can never significantly reduce our use of gasoline.

There is no information about the cost of ethanol from Kombu, so that part of the equation is still unknown.

There is, of course, the question of why we would make the effort to produce ethanol from kombu when we have enough oil in North America to supply all our needs for decades.

If it turns out that ethanol from kombu is financially viable, it could be used by countries, such as the Philippines, where there is a shortage of oil resources and an abundance of territorial waters in which to grow kombu.

For us, it’s probably another shooting star, or will of the wisp, that’s talked about as the new alternative to oil, but that will never have any real effect on our energy usage.

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Assessing Transportation Fuels

It’s possible to say the race is on, but perhaps it’s already finished.

Dividing vehicles into three segments and then comparing fuel types allows for some quick conclusions.

• First, heavy-duty, long-haul highway trucks
• Second, busses, local delivery trucks and other medium-size trucks
• Third, light duty vehicles

The articles, published in April 2011, provide background details about fuels for these various vehicles. See NG for Transportation PI and PII.

With regards to heavy-duty trucks, LNG appears to be the most cost-effective fuel. The $70,000 premium for trucks using LNG and the lack of fueling stations stand in the way of wide scale use of LNG. However, slow progress is being made toward establishing LNG fueling stations along trucking corridors. The transition from diesel-fuel to LNG appears to be underway.

The second category, busses etc., also seems to be transitioning to natural gas, primarily compressed natural gas (CNG).

The third category accounts for the largest use of gasoline and these vehicles are currently caught up in a media, environmental and government driven frenzy; with EVs and PHEVs being widely touted by these three groups.

What are the alternative fuels for light vehicles, and which one will be the ultimate winner?

• Gasoline
• Electric Vehicles (EVs)
• Plug-in Hybrid Electric Vehicles (PHEVs)
• Natural gas (CNG)
• Ethanol
• Hydrogen
• Methanol

Gasolineis fairly inexpensive, has the highest energy content, and has a nationwide fueling station infrastructure already in place. Gasoline-fueled vehicles have a range of around 325 miles. There is sufficient oil in North America to provide the nation with gasoline for decades.

EVs and PHEVs cost about $10,000 more than comparable gasoline-powered vehicles and require a new nationwide infrastructure for quickly recharging batteries. A fast charging station costs around $25,000 each. There are over 100,000 gasoline stations in the United States, which provides some guidance as to the total cost of installing fast-charging stations nationwide. Some recharging stations, where charging can take several hours, cost $2,500. Electricity costs less than gasoline. EVs have a range of, at most, 100 miles, while PHEVs have a range similar to gasoline vehicles, but only travel 35 miles on electricity without recharging the battery.

CNG vehicles use natural gas, which is less expensive than gasoline, saving about $1.20 per gallon. They currently cost about $6,000 more than a gasoline-powered vehicle, and require a new nationwide fueling infrastructure. Each station, with sufficient capacity to fuel a few vehicles simultaneously, costs about one million dollars. CNG vehicles have a range of around 225 miles because of the space required for cylinders holding the compressed natural gas and, currently, the cylinders use much of the trunk space in a car.

Two recent announcements could help accelerate the development of CNG usage in vehicles.

1. Manufacturers of pick-up trucks announced the introduction of pick-up trucks with CNG cylinders located in the bed of the truck.
2. GE and Chesapeake Energy Corporations have announced their decision to provide prefabricated CNG fueling stations (CNG in a Box). Pricing for  CNG in a Box is not yet available.

Ethanol (from corn or sugarcane) has about 73% of the energy content of gasoline and therefore gets fewer miles per gallon. A vehicle using E85 (85% ethanol and 15% gasoline) will probably have the same, possibly greater, fuel cost as gasoline alone, because of ethanol’s lower energy content. Flex-fuel vehicles are required whenever the ethanol concentration is greater than 10%. When using E85, the range will be about 220 miles. For any concentration above 10%, the engine must be modified at a cost of around $100 due to ethanol’s corrosiveness. The current supply of ethanol from corn is essentially maxed out.

Hydrogen-powered vehicles use very expensive fuel cells (costing ten times more than a conventional gasoline engine), and require a new nationwide fueling infrastructure. Fueling stations capable of fueling a few vehicles simultaneously would cost about one million dollars each, assuming the hydrogen is trucked to the station from where it is produced centrally. Storage of hydrogen on a vehicle would be in cylinders rated 10,000 psi. In reality, vehicles need to be built around these cylinders. (See an earlier article for more on hydrogen vehicles.)

Methanol has only about half the energy content of gasoline, but costs considerably less to produce. Cost on a per-mile basis would be slightly less than gasoline alone. Range would be about 150 miles with the same sized “gas” tank. A nationwide fueling structure would need to be built. Each fueling station would cost about $60,000, assuming there is sufficient space in an existing service station for a new underground tank for storing methanol. It also requires a Flex-Fuel vehicle, the same as does E85. (See above.) Methanol has some serious safety issues in terms of inhaling vapors and getting liquid methanol on the skin. Whether these safety issues preclude the use of methanol in self-serve service stations needs to be determined.

Other Bio-fuels, such as from algae and cellulosic materials, are purely speculative and merely muddy the waters in any rational discussion of alternative transportation fuels. For example, ethanol from algae costs around $25 per gallon, with no foreseeable prospects for dramatically lowering its cost. Some producers of cellulosic ethanol have gone bankrupt. Algae is better for sound bites than for real solutions.

Given this information, which fuel system would you select?

Here are my thoughts.

Gasoline-powered vehicles seem to provide the lowest total cost, because of the existing fueling infrastructure. To me, even though we have all the oil we need for powering our light vehicles, the largest negative is the volatility associated with the worldwide oil market that drives prices. It’s hard to predict whether this volatility and our huge supply of low-cost natural gas will result in widespread adoption of CNG for light vehicles.

A steady increase in using LNG for long-haul trucks is cost effective, and reduces oil and refinery usage. Using natural gas (CNG) in fleets and busses, etc. has the same benefits. Natural gas for these applications will probably continue to grow, possibly faster than in the recent past.

Time will tell how consumers choose between the other transportation fuel alternatives, PHEVs etc.

 

Post script:

I don’t receive payment from anyone for writing these articles. You can be sure that the facts in the articles are the best available, and that my comments have not been influenced by payments of any kind.

I mention this because a recent WSJ op-ed touted methanol, but didn’t mention the safety issues, or the other negatives (listed above) surrounding its use. The author of the op-ed is a respected individual and member of an organization working to minimize the use of oil in transportation, but his organization lists on its website a group that is pushing methanol: It’s not clear how much influence the methanol organization had on the author.

 

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Speech by Canadian Senator on Global Warming

It’s seldom I comment on global warming, but a speech in the Canadian Parliament by the Hon. Nancy Greene Raine this week, is particularly noteworthy.

Here are excerpts:

“Honourable senators, I rise to address Bill S-205, an Act to amend the Income Tax Act. If passed, this amendment would give tax credits to Canadians who invest in so-called carbon offsets. While I have no objection to citizens spending their own money in any way they choose, I do not support the government’s giving tax credits for carbon offsets.

“I say this for several reasons.

“First and foremost, I consider it an unnecessary and undesirable expense at a time when we should be looking for ways to reduce the tax burden on Canadians. While it is true that the amendment would benefit those who invest in carbon offsets, it would be an expense that would have to be covered by all other taxpayers.

“I say it is unnecessary because, contrary to the assertions of the honourable senator sponsoring the bill, it addresses an issue that is more and more being questioned by new scientific evidence.

“We simply do not know that our actions have a significant impact on the global climate, let alone that ‘the consequences of not acting can be catastrophic,” to quote Senator Mitchell.“

…

“Before I outline what I think would be a logical, ‘no regrets’ approach to climate change, I need to clear up some misconceptions about so-called carbon emissions, a term erroneously used by the honourable senator sponsoring this bill in his speech in this chamber on November 23.

“In Canada and in the United States and, indeed, in many industrialized countries, about 85 per cent of the greenhouse gas we release, other than water vapour, is carbon dioxide.

“This is not carbon, but a compound of one carbon atom and two oxygen atoms, yielding a molecule that has the chemical formula CO2. This is not merely an academic point. Ignoring the oxygen atoms and calling CO2 emissions carbon emissions is as appropriate as ignoring oxygen in water vapour or H2O and calling it hydrogen. Most Canadians would regard it ridiculous to have their water bill labeled a hydrogen bill.“

…

“Throughout most of earth’s history, CO2 levels have been significantly higher than they are now, and life flourished.

“Unlike a decade ago, when few scientists dared express doubt that humanity’s CO2 emissions are causing dangerous global warming, it seems now that not a week goes by without some leading expert condemning the hypothesis.

“On January 27, The Wall Street Journal published an open letter from 16 leading scientists in which they told politicians that they must, and I quote: ‘. . . understand that the oft-repeated claim that nearly all scientists demand that something dramatic be done to stop global warming is not true. In fact, a large and growing number of distinguished scientists and engineers do not agree that drastic actions on global warming are needed.’

“Signatories to the letter included such eminent scientists as Claude Allegre, former director of the Institute for the Study of Earth at the University of Paris, and Antonio Zichichi, president of the World Federation of Scientists, in Geneva.”

…

“Honourable senators, if carbon dioxide and other greenhouse gases are not causing climate change, what is causing it? In December, the Standing Senate Committee on Energy, the Environment and Natural Resources heard from leading climate experts whose research indicates that the primary driver of climate change is the sun.

“They maintain that the greenhouse gas reduction recommendations of the United Nations Intergovernmental Panel on Climate Change, the IPCC, are simply in error and that humanity does not control our planet’s climate.”

…

“For example, researchers at the Instituto Bruno Leoni in Italy found that for every so-called ‘green job’ created by subsidies, nearly five times as many ordinary jobs could have been created in the general economy at the same cost. The Italian researchers add: ‘What’s often ignored is that the creation of green jobs through subsidies or regulation inherently leads to the destruction of job opportunities in other industries. That’s because any resource forcibly taken out of one sector and politically allocated in favour of renewable energy cannot be invested elsewhere.’

“A November 2009 German economic paper from the Ruhr University Bochum and RWI, a publicly funded research institute, concluded: ‘It is most likely that whatever jobs are created by renewable energy promotion would vanish as soon as government support is terminated.’

“University of Guelph economics professor Ross McKitrick, sums it up best by saying: If spending money on greenhouse gas reduction is profitable and makes people better off, then there is no need for government to force it to happen.’”

…

“We should also continue to support scientific research in the field so that some day we may be able to forecast climate to help us get ready for whatever nature throws at us next.”

 —end of Senator’s Speech—

 

Global warming is an energy issue, because authorities in the United States, including the EPA, and some state governments, are attempting to restrict the use of our most efficient energy resources.

 

The entire speech can be seen at www.tasugust.org

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EPA’s Mercury Ruse

The EPA has singled out coal-fired power plants for drastic action to cut mercury emissions.

Yet, the EPA is allowing compact fluorescent lamps (CFLs) to be used indiscriminately.

Why is this? Is there a big difference between the amounts of mercury that can be released to contaminate the environment? Or people’s homes?

According to Power Magazine, there doesn’t seem to be much difference between coal-fired power plants and CFLs.

The EPA says there is about 4 to 5 mg of mercury in each CFL.

The EPA estimates that the life of a CFL is 8,000 hours, and that over that same period a coal-fired power plant will emit 4.3 mg of mercury to produce the electricity consumed by the CFL.

Let’s see, 4 to 5 mg from a coal-fired power plant vs. 4.3 mg from a single CFL: Not much difference, is there?

Obviously, most CFLs will end up in a landfill and the mercury will enter the environment.

On one hand, the EPA sets out stringent rules for homeowners to follow if they break a CFL, supposedly because of the dangers from mercury, yet the EPA doesn’t do anything to control the use of CFLs.

Why doesn’t the EPA ban CFLs to the same extent that they target coal-fired power plants?

The EPA’s rules for cleaning up a broken CFL are draconian.

Here are a few items from two pages of instructions contained on the EPA website for cleaning-up a broken CFL lamp.

• Escort all people and pets out of the room. Next, open doors and windows for 5-10 minutes to air out the room. Turn off the heating or AC system and leave off, if possible, for several hours.
• Collect the residue using stiff paper, sticky tape, and damp towels. Seal all materials used in cleaning up the broken CFL in a glass jar with metal lid or in a sealable plastic bag. Do not vacuum up the residue, as it may spread the mercury-containing powder into the air. (Don’t break the glass jar.)
• Store the broken pieces, residue and materials in an outdoor trash container until the materials can be taken to a hazardous waste facility or whatever is required by state law.

And, when installing a CFL, use a drop cloth to prevent contamination in the event the CFL is dropped and broken.

If mercury is as dangerous as the EPA claims, why doesn’t the EPA ban CFLs to the same extent the EPA targets coal-fired power plants?

One can only conclude that the EPA is biased against coal-fired power plants, not because of mercury, but because coal-fired power plants emit CO2.

The logic is straight forward.

1. Coal-fired power plants emit CO2, therefore coal-fired power plants are bad.
2. CFLs reduce the need to generate electricity which reduces CO2 emissions, therefore CFLs are good.

As has been shown before, see article Mercury Reality,  mercury found by the USGS deposited in the soil from all sources, is 3,400 times below the safe limit established by OSHA for the workplace. And, mercury from coal-fired power plants is less than ½ of one percent (0.5%) of total mercury depositions from all sources.

Conclusion?

Mercury is a ruse used by the EPA to cut CO2 emissions.

 

See Power Magazine, Battle of the Bulb: http://www.powermag.com/issues/departments/speaking_of_power/Battle-of-the-Bulb_4315.html

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Feeding at Subsidy Trough

A novel approach for promoting solar on rooftops has emerged in California. It was described in an article in Wired Magazine.

Basically, it allows slick entrepreneurs to feed at the government subsidy trough.

Unfortunately, there is no economic justification for using taxpayer dollars in this latest gimmick.

With the price of solar panels falling to less than half what they were five years ago, it’s now possible for entrepreneurs to lease rooftop installations to homeowners for a fixed monthly rate that’s below what the homeowner would have paid the utility for electricity. This is largely made possible because of subsidies that amount to 40 to 50% of the installation cost of the PV panels.

While the homeowner is happy to pay less for electricity, and environmentalists are happy because more PV is installed, and entrepreneurs are happy to reap a return on their investment, tax payers should be aghast at this latest perversion.

The average homeowner isn’t in a position to spend $20,000 to install rooftop PV panels, but the entrepreneur can invest $20,000 and use depreciation and subsidies to earn a profit.

It takes awhile to do the arithmetic, but I’ll summarize it briefly so that the absurdity becomes clear.

Under the best of conditions, PV solar rooftop panels can produce 0.75 kWh of electricity per square yard of panel.

A two-story, 3,000 square-foot home will have a total roof top area of approximately 1,500 square feet. But, since only half can face the sun, the available area is 750 sq ft.

With electricity costing 11 cents per kWh, this installation can save $6.88 every day the sun shines. If the sun shone 365 days every year in every city in America, there might be some small justification for these investments.

However, the sun does not shine every day and this is one reason why the economics are bad.

In Phoenix, Arizona, where the sun shines 211 days each year, an installation on a two-story, 3,000-sq.-ft. home would save $1,451 during a year.

According to the Wired Magazine article, an installation now costs $20,000, where a few years ago it would have cost $45,000.

Dividing $20,000 by $1,451, we arrive at a payback period of nearly 14 years. This is a bad investment that only gets worse as we look at the results in other cities.

In Atlanta, GA, the payback would be over 26 years.

In Lincoln, NE, it would be 25 years.

In Washington DC, it would be nearly 32 years.

In Albany, NY, it’s over 42 years.

The results for a ranch-style house with more roof area would, of course, be better.

In many instances, PV panels might only last for 20 to 25 years, so homeowners might never recover their investments.

It’s true that there would be partly sunny days that might improve the picture, but few homes can have their roofs aimed directly at the sun, and this would reduce the efficiency of the rooftop PV panels.

Even with panels now costing half of what they did a few years ago because they are made in China, installing them makes no economic sense.

The entrepreneur, however, reaps important benefits from a $20,000 investment.

First, he receives $8,000 to $10,000 of tax payer money as subsidies.

Next, he receives the lease payment from the homeowner.

Next, he can depreciate the cost of the installation.

Next, he can sell any electricity that’s generated in excess of what the homeowner uses, to the utility. If net-metering is in place, the electricity is sold to the utility at the same price the utility charges, say 11 cents per kWh. If there are feed-in tariffs, the utility will pay the entrepreneur much more for the excess electricity.

Once again, a few sharp people are gaming the system at taxpayer’s expense, for installations that make no economic sense.

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Foiling OPEC

A recent WSJ op-ed by Robert McFarlane said, “If we produce more oil, OPEC will sell less to keep prices high.”

While this has been true in the past, it might not be true in the future, if we produce enough additional oil.

In OPEC, Saudi Arabia has received the most money from oil exports, over $180 billion in 2010.

But, Saudi Arabia and many other OPEC countries are Petro-welfare states, and they need the revenue to keep their populations happy. There is a limit to how much OPEC can cut its oil output before revenues, even with today’s high prices, fall to levels that would be untenable for OPEC nations.

Only Saudi Arabia can absorb significantly lower oil output, with other OPEC nations, such as Iran, Iraq, Libya and Venezuela, needing to sell every drop of oil they can produce.

Saudi Arabia produces around 10 million barrels of oil per day.

Today we produce about 6 million barrels of oil per day (bbls/day) with Canada producing an additional 2 million bbls/day.

What if we produced 10 million bbls/day and Canada produced 6 million bbs/day?

That’s 16 million bbls/day, which would make us (Canada and the United States combined) the largest oil producer in the world, and we would have the upper hand.

Saudi Arabia couldn’t cut its production by 4 million bbls/day without threatening the overthrow of its government. Saudi oil production would have to remain at 10 million bbls/day.

And if world oil demand increases, as expected, with China and India using more oil, our increased output would still be enough to keep OPEC at bay.

But, can we produce 16 million bbls/day? This is twice what we produce today.

Reputable forecasters, such as Bentek Energy, are already predicting that we and Canada will produce 12 million bbls/day by 2015, and that’s without opening the outer continental shelf, federal lands and ANWR for oil development.

This is all because of fracking, which has been the greatest boon to the United States energy supply since the Spindletop gusher in Texas in 1901.

There’s every reason to believe that we and Canada can produce 16 million bbls/day.

It goes without saying that we would be in a better position to withstand the impact of a sudden cut-off of Mideast oil if we increased our production of oil, though increased production couldn’t completely insulate us from higher prices resulting from such a dramatic event. This is where the strategic petroleum reserve would come into play.

The WSJ op-ed was wrong in suggesting we couldn’t drill our way out of our current pricing predicament.  OPEC would destroy itself if it had to cut output by 4 million bbls/day.

Our strategy should be to open up all our potential drilling sites, aggressively use fracking, and then drill, drill, and then drill some more.

OPEC nations couldn’t survive if OPEC tried to cut its output in the face of this juggernaut.

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Stop Fracking and Help Russia

We can help Russia by stopping, or substantially curtailing, fracking.

Do we want to help Russia, or is this only an unintended consequence of efforts to stop fracking?

Russia, a major supplier of natural gas to Europe, has sold its natural gas to Europe using long-term contracts with the price tied to an oil index.

Now, fracking has upended the market with substantial pressure on Russia to tie its contracts to the lower spot price for natural gas.

The shale gas revolution in the United States has freed huge quantities of Liquefied Natural Gas (LNG) for use in Europe and elsewhere. This has driven the spot price for natural gas down, to where it is substantially below the oil index.

Russian natural gas is now expensive, and this is potentially bad news for Russia. Russia needs the higher price in order to help rebuild and maintain its natural gas infrastructure, and to build new upstream supplies and capabilities.

Russia has used its economic clout as a major supplier of natural gas to Europe, to put political pressure on Europe, as well as the Ukraine. European governments have talked about building the Nabucco pipeline that would access natural gas from Azerbaijan and Kazakhstan in an effort to free itself from Russian political pressure. To discourage Europe from building Nabucco, the Russians countered by threatening to build a rival South Stream pipeline and by actually building the Nord Stream pipeline under the Baltic. The first half of the Nord Stream pipeline started delivering natural gas to Europe in November of last year.

The UK’s National Balancing Point (NBP), a large European gas hub, has attracted large quantities of unconventional natural gas, as well as LNG from Qatar, which has created liquidity in the market and driven down the spot price for natural gas.

Some existing large distributors and users of natural gas in Europe are tied to long-term contracts with Gazprom. They are coming under pressure from their competitors, who obtain lower cost natural gas from the NBP hub, to get out from under their Gazprom contracts. This would hurt Russia.

It should be noted that Russia has decided not to develop shale gas while encouraging Europe to also not develop shale gas, as this would only add to gas supplies and drive down prices for Russian gas.

The other factor to consider relates to Qatar, which has been pricing its natural gas sales to the NBP using spot prices. Qatar is the largest, or second largest, producer of traditional natural gas in the world. Russia recognizes the importance of Qatari gas, as it is a large supplier of the NBP hub. If Russia can convince Qatar to price its natural gas using an oil index, it would help remove the supply of natural gas that is available at the spot price.

The Gas Exporting Countries Forum, also known as the Gas OPEC, recently met in Qatar. At the meeting, Russia encouraged Qatar to sell primarily to Asian countries, using long-term contracts based on an oil index.

If the United States stops or substantially curtails fracking, it will once again mean that the United States will import LNG. The natural gas that is now available to Europe as LNG, will be diverted to the United States, eliminating the low spot price in Europe, and, thereby help Russia maintain high prices for natural gas sales to Europe.

Importing LNG into the United States will result in higher natural gas prices for homeowners and industry.

Higher prices will hurt homeowners who heat with natural gas and also hurt industry. Chemical companies will again move offshore to produce chemicals, and, once again, American jobs will be lost.

Russia is hoping for two events. First, that the United States substantially curtails or stops fracking. Second, that Qatar can be convinced to price gas sales to the UK’s NBP hub using an oil index.

Note: A source for this article is the European Energy Review.

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Fracking Indictment

On December 8, the EPA issued a draft report on fracking in Pavillion, Wyoming.

The report said:

“Data indicates likely impact to ground water that can be explained by hydraulic fracturing.”

The media immediately proclaimed that fracking was responsible for contaminating water supplies.

But is the media correct in jumping to that conclusion?

The IPAA and AXPC, industry groups, quickly raised questions about the EPA’s report.

Questions were also raised by Wyoming state officials about the quality of the EPA report.

Briefly here are some of the issues raised about the EPA report.

• There were improperly tested samples from six drinking water wells (admitted to by the EPA).
• Contamination was found in pure water control samples (cited by Wyoming Water Development Commission).
• Test wells were not properly purged before taking samples (cited by Wyoming Water Development Commission).
• Insufficient number of samples (cited by Wyoming Water Development Commission program manager and professional geologist).
• The pH value used by the EPA as proof of fracking contamination could easily have come from dense soda ash or cement used by the EPA when drilling the test wells, while the materials used by Encana had a near neutral pH level.
• The assertion by Encana, that it “never used a peroxide breaker or gasoline in the Pavillion field”, rebuts the EPA assertion that “Tert-butyl-alcohol” found in the tests are attributed to Encana’s fracking.
• Ketones found in test samples by the EPA are “not used in hydraulic fracturing.”
• According to Encana, “the majority of man-made organic compounds detected by the EPA are not used in hydraulic fracturing and were introduced by the EPA in the process of sampling or construction of the deep wells.”

There are several other, ever more complicated issues that undermine the EPA’s assertion that, “ground water [impacts] can be explained by hydraulic fracturing” or the more radical media assertions that fracking caused contamination of water supplies.

Many wells in the Pavillion area have been contaminated for many years. Complaints about contamination resulted in the EPA conducting the tests that are now under scrutiny. It’s not known whether the contamination has been a natural result of the local geology or because of the drilling of gas wells in the area.

The comment period for the EPA report ends on March 12^th, so it will be awhile before a peer review of the report will be completed.

We can, however, reach two, possibly three, conclusions.

1. Whatever the outcome of the Pavillion report, it will have virtually no bearing on fracking elsewhere in the United States. Geologic conditions in the Pavillion area are unique and not generally found elsewhere, so results cannot automatically be extrapolated to other areas.
2. That there was contamination from surface water storage or due to defective cementing of casings, which would exonerate fracking.
3. Environmentalists, and possibly the EPA, will continue to condemn fracking, no matter the outcome of the peer review of the EPA report.

 

Additional information is available at:

For EPA draft report, go to http://www.epa.gov/region8/superfund/wy/pavillion/EPA_ReportOnPavillion_Dec-8-2011.pdf

For Encana technical briefing, go to http://www.encana.com/pdf/news-stories/encana-pavillion-technical-briefing.pdf

For Casper Wyoming Tribune Editorial, go to http://trib.com/opinion/editorial/epa-document-barrage-adds-nothing-to-fracking-debate/article_9224dc98-81c9-5050-ae07-8d0496ade2ba.html

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Geomagnetic Storm

A recent report by Homeland Security establishes that a rare Geomagnetic Storm could cause substantial damage to the grid in North America and Northern Europe.

The science behind the threat is that eruptions on the sun (solar storms, seen as sunspots) could induce ground currents (GICs) in the Earth capable of damaging extra-high-voltage transformers and other elements of the grid.

The largest known geomagnetic storm occurred in1859. Known as the Carrington Event, the storm was “three times as intense as the most severe geomagnetic storm of the past thirty years.”

The Carrington storm took 17 hours, 40 minutes to reach the Earth, and it produced auroras seen around the world.

The Carrington Event is vividly described in the book: The Sun Kings, The Unexpected Tragedy of Richard Carrington & the Tale of How Modern Astronomy Began, by Stuart Clark.

A geomagnetic storm in 1989 caused the grid in Quebec, Canada to fail.

The report says, “GICs can overload the grid, causing severe voltage regulation problems and, potentially, widespread power outages. Moreover, GICs can cause intense internal heating in extra-high-voltage transformers, putting them at risk of failure or even permanent damage.” And, there are “300 EHV transformers in the United States” that are at risk.

Satellites, GPS and all communication systems are also at risk with a severe geomagnetic storm.

EHV transformers take at least a year to build and there are only a few manufacturers in the world capable of building these units; possibly none in the United States.

It should be noted that all services that depend on electricity, such as lighting, elevators, gasoline station pumps, refrigeration, etc. won’t function when the grid goes down.

There is the potential for extended outages, weeks or months, that could cause severe unrest in affected populations.

These storms are virtually impossible to predict. Fortunately, storms of sufficient intensity to bring down electric grids are rare. In North America, a severe storm would probably only affect the northern parts of the United States and the major cities of Canada, but these are intensely populated areas.

The report indicates that hardening all grids, by using capacitors, etc., is probably economically prohibitive.

No matter how small the probability, a Carrington-like event is bound to occur in the future.

While there is no immediate solution to the threat, it spotlights how the sun affects the Earth.  Could Svensmark be right in his assertion that solar storms, or the lack thereof, affect the climate?

The book, The Sun Kings, provides an historic perspective on the sun’s relationship with the Earth.

 

Notes:

I first became aware of the report from Anthony Watt’s, Watts Up With That, Web Site at http://wattsupwiththat.com/

The “Geomagnetic Storms” report is available at, http://www.oecd.org/dataoecd/57/25/46891645.pdf

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Rio+20 Alert

The UN’s Rio+20 meeting will take place in June of this year, and already the propaganda machine is at work.

The UN’s High-level Panel on Global Sustainability, has just issued its report on sustainability.

A single line in the report establishes its intent:

“Achieving sustainability requires us to transform the global economy.”

The word government(s) was repeated 193 times in the 99-page report.

While issues such as social justice and inequality are continuously mentioned in the report, energy is central to what the report requires governments to do.

Two of the goals in the report are:

• Incorporating social and environmental costs in regulating and pricing of goods and services.
• Expanding how we measure progress in sustainable development by creating a sustainable development index.

Both of these goals are to allow governments to manipulate the free market economy by establishing costs and indexes relying on people’s opinions. GDP is no longer an appropriate measure. Both goals have their greatest effect on energy development and use.

For example, the report says, in two locations, “A tax on the most important energy-related greenhouse gas, carbon dioxide, would be another economically efficient means of addressing externalities.”

The report says:

“Integrating environmental and social issues into economic decisions is vital to success.” And

“[It’s time] to bring the sustainable development paradigm into mainstream economics.” And for “a new political economy”

Incorporating the concept of externalities into cost structures has been the dream of environmentalists for decades.

Externalities are theoretical costs that aren’t included in a financially based, cost structure. CO2 emissions are one such fabricated cost, as is damage to the landscape from mining. But, one wonders whether eye-sores created by wind turbines will be included as an externality cost?

Obviously, attempting to include externalities in a cost structure is speculative, largely based on opinions and prone to abuse.

Stopping CO2 emissions and preventing climate change is a major part of the sustainability report.

The old idea of resource scarcity is also a central part of the report … in spite of the fact that we have always found more resources, or developed alternatives when needed. The Malthusian doctrine is alive and well in the eyes of the United Nations, though now it is referred to as the framework of “planetary boundaries” designed to define a “safe operating space for humanity”.

The report seems to cast a very wide net in so far as to what issues are included in sustainability.

They include:

• Universal health care
• Social assistance
• Fighting corruption
• Employment guarantees
• Equal rights

The report also raises the old canard that increased extreme weather has caused increased financial losses, even mentioning Katrina. It’s well documented that increased financial losses are due, not to increased extreme weather events, but, rather, to growing populations, building in areas subject to threats, such as next to the ocean, and the increased  cost of construction.

It also repeats the need for developed countries to contribute $100 billion annually to a development fund.

Prerequisites for sustainable growth are identified in the report as:

“Democracy, the rule of law, respect for human rights and fundamental freedoms, and equality for women and men, as well as access to information, justice and political participation.”

But the UN report omits a key prerequisite for economic development: Property rights. Without property rights, people cannot benefit from their efforts.

Why does the report omit Property Rights, an essential prerequisite for economic growth?

It’s interesting to look at the authors of the report.

Out of 20 members of the UN Panel that prepared the report, only one was from the United States … and she was Susan Rice, a member of the current president’s cabinet.

Seven of the 20 were at some time, environmental ministers or proponents of green growth.

Only one, James Laurence Balsillie, former Co-Chief Executive Officer of Research in Motion, had any connection to business.

The report says that a “new global sustainable development council” should be established under the UN General Assembly.” Its duties will include having the United States explain its Policies.

The United States has only one vote in the General Assembly, and is repeatedly outvoted there.

Rio+20 could result in actions that severely restrict the ability of the United States to develop and use its energy resources.

The 1992 Rio conference created the United Nations Framework Convention on Climate Change (UNFCCC), a treaty that WAS ratified by the United States, and where the UN holds UNFCCC meetings every year at which the United States is consistently outvoted.

It’s not certain what will evolve from Rio+20.

There is more, much more in the UN report. It’s available at http://www.un.org/gsp/sites/default/files/attachments/GSPReport_unformatted_30Jan.pdf

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