When I gave a presentation on the challenges of electricity generation to 10 classes of local middle school students a while back, one of the things I stressed to them was how we were entering an age of localized energy. I didn’t mean generating electricity local to the end users (that’s decentralization, and we’ll see plenty of that, as well), but local to the energy source. You erect wind turbines where there’s a lot of wind (including coastal areas, like my beloved Great Lakes), solar plants where it’s sunny, geothermal where you have hot rocks, and wave and tidal generators where you have, well, waves and tides. Instead of exploiting very energy dense fossil fuels, we’ll shift to a model of collecting and concentrating renewable energy.[1]

The first problem with that Utopian view is that the “Big Two” of renewables–wind and solar–have that blasted intermittancy problem. This can be overcome, but at added cost. Instead of solar PV, you can use solar thermal with heat storage for non-sunny times (read: night), and wind power can use a similar system or pumped storage or be linked into a much larger supergrid to exploit the fact that “the wind might not blow all the time in any one place, but it’s always blowing somewhere”, as so many others have observed.

The second problem is getting the electrons from those windy plains, sunny deserts, coastal areas, etc. to the consumers who would like to, you know, consume those electrons.

As with any economic decision, the number one thing investors fear is uncertainty. But the growing realization that the climate chaos mess is far more serious than many thought, even just a couple of years ago, seems to be convincing some of the right people that there will be a steady market for pricier electrons for decades to come. In other words, investing a huge amount of money upfront in, say, a series of massive solar generators in North Africa to feed electrons to Europe, looks far less risky now than it did fairly recently. This shift in perception (which is based in reality, albeit via a tardy recognition of such), is a good example of how schemes like this can transmute from bad science fiction into good business in a hurry.

Why pick Africa solar power as an example? TreeHugger tells us about Huge Solar Power in the Sahara Project Moving Forward:

Utilizing the vast solar power potential of the Sahara has been a twinkle in the eye of many a European politician for a while now. Even though the logistics of building huge solar power arrays in the desert and then transmitting that electricity back across the Mediterranean isn’t exactly simple, to say the least. Well, a consortium of German companies wants to turn that dream into reality and is raising money to make it happen:

AFP reports that about 20 companies will band together and attempt to raise €400 billion ($554 billion) to finance the Desertec project.

The plan is place solar power arrays in various countries in the region, concentrating on those which are most politically stable. Taken together all the individual solar power plants of Desetec could generate about 15% of Europe’s electricity. But probably not for some time; the first electricity won’t be transmitted until perhaps 2019.

…

Perhaps the biggest challenge is actually getting the electricity back to Europe, though not from a technical perspective. Speaking last March in Copenhagen, Anthony Patt of the International Institute of Applied Systems Analysis pointed out that Europe’s electricity distribution system is really a collection of 27 different systems. Until these are more fully integrated, distributing the Sahara’s electricity could be difficult.

This obviously won’t happen as soon as we’d like, and it’s clear from the last graf above that Europe, often viewed as a monolithic block from over here in the US, has at least as many issues with a fragmented market as we do.

But this too shall be solved once enough people realize where reality insists we must go, namely to vastly cleaner methods of doing practically everything, and the markets that creates or supports. Never forget Lou’s First Law of Computers (and Life in General): A sufficiently large economic incentive beats a royal flush.[2]

[1] Very few of them had the raised-eyebrow epiphany I was hoping for at this point. Perhaps I should have draw some sort of analogy to American Idol or Jon and Kate plus 8.

[2] To which I feel obligated to add: Lou’s Second Law of Computers: The typos will get you every tiem.

Some days you have to wonder if everyone who’s been sounding the alarm about oil issues for years have been right all along, and the rest of the world, including the US power structure, is just now playing catch-up. At least that’s the thought I had when I read BusinessWeek’s U.S. Reliance on Oil an ‘Urgent Threat’:

A group of retired senior U.S. military officers has concluded that the country’s reliance on fossil fuels undermines its capacity to defend itself. Citing a “serious and urgent threat to national security,” the group has urged the Pentagon to take the lead in shifting to a new age in energy.

The dependence on oil-based fuels left the U.S. military seriously over-extended in Iraq and Afghanistan, according to the officers’ report, issued on May 18 by CNA, a military think tank based in Alexandria, Va. The 62-page report asserts that the true cost of fuel, including logistics and the military protection of sea lanes, can run to hundreds of dollars a gallon.

“Our energy posture is not sustainable. It can be exploited by those who want to do us harm,” retired Air Force Lieutenant General Larry Farrell, a co-author of the report, said in an interview. Finding a suitable alternative fuel and scaling it up to the size of the U.S. economy “is a 30-year project,” Farrell said. “We’ve got to get started now.”

The report, called “Powering America’s Defense: Energy and the Risks to National Security,” was written by CNA’s military advisory board, comprised of 12 retired generals and admirals. It’s a follow-up to a 2007 report by the advisory board called “National Security and the Threat of Climate Change.”

From the report’s executive summary:

This report identifies a series of current risks created by America’s energy policies and practices that constitute a serious and urgent threat to national security—militarily, diplomatically, and economically:

• U.S. dependence on oil weakens international leverage, undermines foreign policy objectives, and entangles America with unstable or hostile regimes.

• Inefficient use and overreliance on oil burdens the military, undermines combat effectiveness, and exacts a huge price tag—in dollars and lives.

• U.S. dependence on fossil fuels undermines economic stability, which is critical to national security.

• A fragile domestic electricity grid makes our domestic military installations, and their critical infrastructure, unnecessarily vulnerable to incident, whether deliberate or accidental.

Looking forward, the report warns that continuing business as usual is perilous because of the converging national security risks of energy demand and climate change:

• The market for fossil fuels will be shaped by finite supplies and increasing demand. Continuing our heavy reliance on these fuels is a security risk.

• Regulatory frameworks driven by climate change concerns will increase the costs—both economic and geopolitical—of using carbon based fuels.

• Destabilization driven by ongoing climate change has the potential to add significantly to the mission burden of the U.S. military in fragile regions of the world.

The home page for the report is here.

You can directly down the report here [74 page, 750KB PDF].

Last week the blogosphere was chattering about the two papers in Nature that addressed the issue of how much of the world’s remaining fossil fuels humanity could burn before we triggered an unacceptable level of climate change. In writing about those articles (It’s Crunch Time), I said:

Casting the situation as a limit on how much of the remaining fossil fuels we can burn in a given time window strikes me as extremely useful. I don’t mean to suggest that legislators and deniers around the world will suddenly slap themselves in the forehead and exclaim, “Oh! Now I get it! Let’s get to work!” But it does seem like a much more approachable way to frame the limits to our behavior than is talking about parts per million of CO2 in the atmosphere. (I’m assuming that the math all works out, and that the authors used reasonable, mainstream estimates for the recoverable reserves of fossil fuels.)

I remember quite clearly thinking how much that news felt like the study I’ve mentioned so many times, Ulf Bossel’s “E21″ paper, Does a Hydrogen Economy Make Sense? [PDF], that does a thorough analysis of the efficiency of a hydrogen fuel cell car vs. an EV.

We now have what feels like another article that seems to ring true in the same unmistakable way, this time concerning biofuels, as described in Green Car Congress: Study Finds Bioelectricity Better Option Than Liquid Biofuels for Transportation Output and GHG Emissions:

A new life cycle assessment comparing the performance of bioelectricity and ethanol from a variety of pathways with respect to transportation kilometers and GHG offsets achieved per unit area of biofuels cropland concludes that bioelectricity used to charge a battery electric vehicle outperforms ethanol for a combustion engine across a range of feedstocks, conversion technologies, and vehicle classes.

The study by University of California, Merced, Assistant Professor Elliott Campbell along with Christopher Field of the Carnegie Institution’s Department of Global Ecology and David Lobell of Stanford University, found that bioelectricity produces an average 81% more transportation kilometers and 108% more emissions offsets per unit area cropland than cellulosic ethanol. A paper on the work appeared in the 8 May issue of the journal Science.

The authors point out their study looked at only two criteria, kilometers travelled and greenhouse gas offsets, but did not examine the performance of electricity and ethanol for other policy-relevant criteria such as water consumption, air pollution or economic costs.

…

The net transportation output per hectare is larger for the bioelectricity case. With BEVs and ICVs of similar size, one can travel farther on biomass grown on a hectare of land when it is converted to electricity than when it is converted to ethanol…For this case, the gross transportation output per hectare is 85% greater for bioelectricity than cellulosic ethanol. This is largely due to fact that the small SUV BEV has an electric motor that is 3.1 times as efficient as the internal combustion engine of the small SUV ICV for highway driving.

—Campbell et al. (2009)

See GCC’s article for more results from the paper, which is not generally available to the public, as well as the university’s press release.

Just to take a blatant guess, I would say that the economic cost (see below) would have to be less for the bioelectricity case; once the crop is harvested (which has to be done no matter its intended use), I can’t imagine that transporting the crop to an electricity plant and burning it would cost more than converting it into ethanol and then transporting the ethanol to a gas station.

Water use might be a more problematic situation; converting the biomass into ethanol takes some water, but so does cooling the thermoelectric generator that burns biomass in the bioelectricity case.

I think we need at least one more study on this.

Related articles:

• Scientific American: What Is The Best Way to Turn Plants into Energy?
• Technology Review: Biofuels vs. Biomass Electricity

Of course, work on biomass to liquid technologies won’t end once word of this study spreads, nor should it, given how early we are in the transition away from petroleum based vehicle fuels. One big breakthrough hit the news feeds just yesterday, Biofuels Digest: Breakthrough at Mascoma holds potential for 60 percent drop in production cost of cellulosic ethanol; ‘golden dream’ of CBP is closer than thought:

In Massachusetts, Mascoma will announce later this morning a breakthrough that is reducing the cost of cellulosic ethanol production by up to 60 percent in lab tests.

The breakthrough relates to consolidated bioprocessing (CBP) - a transformational technology which the DOE/USDA 2006 Roadmap called “the ultimate low-cost configuration for cellulose hydrolysis and fermentation,” and which reduces or eliminates the need for added enzymes to process pretreated lignocellulose into ethanol.

Mascoma is reporting that, in the lab, based on multiple runs with reduced enzyme requirements, it is seeing normalized per gallon operating costs in March at just under 40 percent of the June 2008 baseline.

Assuming this 60% cost reduction is real, it’s a tremendous advance, although it wouldn’t seem to address the basic point of the study quoted above and “field to wheels” efficiency.

BusinessWeek: Car-Scrapping Plans: Germany’s Lessons:

The global auto industry may be facing its worst crisis ever, but you’d never know it at Ford Motor’s factory in Cologne. There, workers are putting in extra shifts on weekends to cope with demand for the compact Fiesta. In fact, Ford (F) sales have been booming in Germany. Customers have placed orders for 68,500 Fiestas, Ka subcompacts, and midsize Fusions in the four months to April, more than triple the year-earlier figure.

Thanks for this gravity-defying performance go—at least in part—to the German government’s so-called environment bonus, which Germans prefer to call the Abwrackprämie, or “wreck rebate.”

The program, launched in January and renewed in March, is Chancellor Angela Merkel’s most visible economic stimulus measure. It pays $3,320 to people who scrap a car that’s at least nine years old and buy a new car instead. The scheme has more than offset the effects of the global downturn on domestic auto sales, preserved factory jobs, and encouraged people to replace gas-guzzling, exhaust-spewing clunkers with the latest engine technology.

…

But the rebate also has some major downsides. Retailers, for example, have complained bitterly that the program sucks spending from other categories. German retail sales fell 1.5% in March—the third monthly decline in a row—a decline that retail industry groups blame partly on incentives to buy cars rather than other goods.

The rebate also is expensive. Nominally it will cost $6.6 billion if Germans take full advantage of the program. The real cost is harder to figure. Increased sales will boost sales tax revenues, and the state will avoid the cost of unemployment benefits for workers who might have lost their jobs. On the negative side of the balance sheet, the program will kill jobs in other parts of the economy, for example auto repair shops or used-car dealers. A study by the Halle Economic Institute, a major think tank, estimates that the net burden on the German government budget will be $3.5 billion.

And you thought public policy involving the economy and energy would be simple… why, exactly?

Monbiot.com: How Much Should We Leave in the Ground?:

The two papers on carbon emissions published in Nature last week were ground-breaking: they show us how much carbon dioxide we can produce if we’re to have a reasonable chance of preventing two degrees of global warming. It’s a completely different approach from the UN’s and national governments’. They set targets for reductions by a certain date but have nothing to say about the total amount of carbon we can release.

One of the papers, by Myles Allen and others(1), suggests that we can burn, at most, another 400-500 billion tonnes of carbon at any time between now and the extinction of humanity if we want to avoid two degrees of warming. The other, by Malte Meinshausen and others(2), suggests that producing 1000 billion tonnes of CO2 between 2000-2050 would give us a 25% chance of exceeding two degrees. That’s a lot less than Allen’s estimate, as one tonne of carbon produces 3.667 tonnes of CO2 when it’s burnt: 1000 billion tonnes of CO2 arises from 273 billion tonnes of carbon.

…

Even ignoring all unconventional sources and all other greenhouse gases and taking the most optimistic of the figures in the two Nature papers, we can afford to burn only 61% of known fossil fuel reserves between now and eternity.

Or, using Meinshausen’s figure, we can burn only 33% between now and 2050. Sorry - 33% minus however much we have burnt between 2000 and today.

So the question which arises is this: which fossil fuel reserves will we decide not to extract and burn? There is, as I have argued before(9), no point in seeking to reduce our consumption of fossil fuels unless we also seek to reduce their production. Yet, apart from the members of OPEC (who do it only to shore up the price), no government is attempting to limit the amount of fuel extracted. Far from it; they all pursue the same strategy as the United Kingdom: to “maximise economic recovery”(10).

The test of all governments’ commitment to stopping climate breakdown is this: whether they are prepared to impose a limit on the use of the reserves already discovered, and a permanent moratorium on prospecting for new reserves. Otherwise it’s all hot air.

George Monbiot gets his geek on breaks out his calculator. Worth reading.

One thing to keep in mind is how hard it is to pin down world oil reserves, a point Monbiot acknowledges. He uses a figure of 162 billion tons (not, not barrels), which is almost exactly what BP last published in their yearly energy stats compendium. The problem is that as we approach and pass peak oil and see some dramatic and sustained price rises, the incentives to find ways to improve the recovery rate for existing wells (typically about 33% today) or go after very expensive fields (like those in ultra deep water locations) will rise considerably. Oil is probably the most susceptible of the fossil fuels to this effect of resources being a function of market price.

I don’t quite get his point about distinguishing between leaving the evil stuff in the ground instead of not using it. If consumers greatly slow their use of fossil fuels, I guarantee that producers will stop mining or pumping them. (For example, there’s been a lot of talk lately about how there’s 100 million barrels of oil sitting in tankers at sea, waiting for a customer, as if that’s a tremendous amount. It’s about 1.2 days of world consumption, so I’m not impressed.)

FT.com: US carbon cap-and-trade - more data on its effects:

The Pew Center on Global Climate Change has become the latest organisation to wade into the murky waters of the Waxman-Markey bill, the proposed legislation that would introduce a cap-and-trade system for carbon dioxide in the US.

The Pew Center’s analysis suggests that the impact of a cap-and-trade programme on energy-intensive manufacturers would be small. The analysts based their study on an examination of historical trends among energy-intensive manufacturing industries, using 20 years of data on 400 energy-intensive subsectors.

They found that energy-intensive manufacturing industries would on average lose only 1 per cent of their annual production to imports, if a carbon price of $15 per tonne was assumed, and if there was no carbon price in other countries.

(That $15 figure comes from projections of the carbon price under Waxman-Markey produced by the U.S. Energy Information Administration and Environmental Protection Agency.)

Such a small impact could easily be addressed through policies targeted to energy-intensive sectors, the authors of the report said, including straightforward compensation or more complex border adjustment measures (tariffs) for imported energy-intensive goods.

In all candor, I’m not sure where I stand on the issue of the impact of a price of carbon on various parts of the US economy. I’m reasonably sure that $15/ton won’t be nearly enough to trigger the cuts we’ll need by 2050, but it’s probably a good start. The key point, as I’ve argued before, is that no one knows in advance how a given amount of reduction in CO2 emissions maps to a market price, which is one reason why we should control the level of emissions (via a cap) and let the evolving market decide on the price (via trade).

Green Car Congress: Study Finds That Plankton Blooms Do Not Send Atmospheric Carbon to the Deep Ocean; Weakens Iron Fertilization as Geo-Engineering Approach:

Oceanographers Jim Bishop and Todd Wood of the US Department of Energy’s Lawrence Berkeley National Laboratory have measured the fate of carbon particles originating in plankton blooms in the Southern Ocean, using data that deep-diving Carbon Explorer floats collected around the clock for well over a year. Their study reveals that most of the carbon from lush plankton blooms never reaches the deep ocean.

The results weaken the applicability of the simplest version of the Iron Hypothesis as a geo-engineering approach to climate change. Iron Hypothesis adherents suggest global warming can be slowed or even reversed by fertilizing plankton with iron in regions that are iron-poor but rich in other nutrients like nitrogen, silicon, and phosphorus. The Southern Ocean is one of the most important such regions.

Oops.

Translation: This lesson in the hubris of geoengineering was brought to you by reality. Remember–if it’s not Reality, it just ain’t real!

People just now seem to be waking up to the fact that, golly gee, the Intertubes run on electrons, and it uses a lot of them.

Two related articles:

guardian.co.uk: Web providers must limit internet’s carbon footprint, say experts

New Scientist: Unknown web: Is the net hurting the environment?

The one thing to keep in mind is that what matters is not merely the cost of the Internet but what we get for it. For example, how many errands do I have to avoid by doing online banking or shopping before I completely offset the carbon footprint of all the Internet resources I use in the process? I’m guessing it’s a very favorable ratio; even several errands bundled together in a single 20 mile trip in my Scion xA would seem to emit far more CO2 than hours of online activity.

Another issue is that a large portion of the Internet infrastructure was built with little attention to electricity consumption. The benefit of adding Internet capacity is (or is perceived to be) high, while the price of electricity is relatively low, so we’ll only feel pressure to make it more efficient as we run up against limits of electricity supply or funding.

Finally, the big issue with data center electricity consumption is cooling. I’ve seen figures that estimate that for ever watt of power spent on running hardware another 1.5 watts is used in cooling it. This means that lower-temp chips and drives could do a lot to reduce data center energy consumption, far more than just the their own power consumption figures might suggest.

We now seem to have an economist food fight on our hands, regarding The Cost of Climate Change Inaction:

Robert J. Samuelson’s April 27 op-ed, “Selling the Green Economy,” was way off the mark on the economics of tackling climate change. It was a call to bury our collective heads in the sand simply because the future involves uncertainty — exactly the opposite of what we need to do.

Samuelson argued that the cost of moving to a clean-energy economy is higher than advocates expect and that transition can’t happen nearly fast enough to meet the ambitious goals proposed in the climate and energy bill sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.).

But this assumes that all costs involved in mitigating climate change — and there will be costs — represent new costs, without acknowledging the massive error in our market system that equates the price of carbon emissions to zero. This fundamental error skews everything that follows, because if emitting carbon costs nothing on a balance sheet, all steps to reduce pollution count as “new costs.”

The real cost of carbon emissions is far from zero. Each new scientific report brings proof of a changing climate that promises to disrupt agricultural patterns, set off a scramble for dwindling resources, raise sea levels, propel population shifts and require massive emergency spending as we try to react to the growing crises. These are the costs of inaction.

A smart climate policy can create a mechanism to put the right price on carbon, and rapid economic change will follow that firm price signal, along with reduced climate risks. Our work with more than 100 economists nationwide and at RealClimateEconomics.org demonstrates the weight of economic analysis supporting this point.

Please go read the original Samuelson piece, linked in the first graf above, and the response by Sheeran and Lubber that I pull-quoted.

A couple of observations:

First, not accounting for the cost of inaction and letting climate chaos just happen is tantamount to saying that either (1) you don’t think climate chaos is real, or (2) you don’t care or actually want Very Bad Things to happen. I don’t know what the story is with Samuelson, but in this case he’s wrong and the people like Sheeran and Lubber who are pointing to the precipice we’re approaching and sounding the alarm are right.

Second, I have a real problem with this notion that carbon emissions being unpriced is a “market failure”. You can find this meme repeated endlessly online, and I don’t think it’s accurate. This is a philosophical point, but I think it relates to the fact that “the market” and everything that term encompasses is a human invention; it’s not a fundamental characteristic of reality, like the atomic weight of boron or the strength of the gravitational constant. The only reason that the millions of other goods and services we trade with each other have prices is that we’ve inserted them into the market system. You invent a machine that makes widgets, and right away you think, “Hey! I bet I could sell some of these widgets to other people! I bet I could even sell the widget-making machines!” So you start advertising and selling both, which is to say you make an explicit decision to insert these two products into the marketplace.

You charge a positive price for your widgets, of course, but some items have a negative market price–you pay someone to take away your trash or accept your recyclable electronics. But what about that relatively small category of things you can’t sell (no one wants them) but you don’t have to pay to get rid of, the things you can just freely dump into a river or the atmosphere? They never get inserted into the market, so they never have a price associated with them unless we collectively decide to force them into the market through legislation that taxes, trades, or prohibits them.

In other words, the fact that we’ve never had a price on CO2 and other greenhouse gas emissions is not a failure of the market, but a failure of society in general to recognize that it was in our best interest for them to have a price that incentivized people to act the way we’d prefer. And our failure is a perversely complex situation; we were emitting large amounts of CO2 for a long time before we really figured out this whole climate change thing. Even in the decades since the light bulb came on over our heads, our response has been slowed by inertia, well financed special interests (cough fossil fuel industries cough), and, most notably in the US, plain old pig-headed stubbornness.

In all thing related to energy and the environment, I think it’s useful to imagine the market as a gigantic, tireless, and remarkably efficient machine for allocating resources according to how we value them. And never forget for an instant that it’s also utterly indifferent to our well being unless we take action and force the issue by putting a price on that, too.

One of the underappreciated aspects of our response to our energy and environmental challenges, at least underappreciated in the online portion of the infosphere, is the evolution of business models and public policy. These are critical elements in how our economy works, and they can potentially play a huge role in how quickly we develop and roll out the much sexier things like new, higher efficiency photovoltaic cells, algae biodiesel, wave and tidal generating plants, and all the other hardware we all love to obsess about. It’s truly amazing how many people forget the painfully obvious, that a breakthrough in a laboratory means precisely nothing unless and until that technology is scaled up and used in the (typically far less forgiving) real world.

One example of a non-technological breakthrough that I’ve mentioned before is the PPA (power production agreement). That’s a contract where some third-party company installs solar panels on your home or business at no cost, and you sign a long-term agreement that says you’ll buy electricity from the panels at a specified price. The company owns all the hardware, and is responsible for maintaining it. These arrangements are becoming very popular, especially in parts of the US that pay higher than average prices for electricity; the PPA price per kWh is often substantially less than the grid price, even without a price on carbon.

The PPA is a major breakthrough because it eliminates the two biggest hurdles small businesses and home owners face when considering adding solar panels: The first is the hassle factors of dealing with one or more contractors to figure out how large an installation is needed plus all the related details, all while trying not get ripped off, plus the need to file for federal and/or state rebates on the purchase price. For a lot of people who are so busy they barely remember to buy food, this is way too much bother, and pushing all the decisions off onto one company and signing one agreement greatly streamlines the process and removes the fear of making an enormous financial mistake.

The second benefit is the building owner doesn’t have to pay upfront for the hardware. Even with subsidies, a 4kw solar PV installation is still quite a chunk of change. Under a PPA there is no upfront money.

Combine PPAs with the reduction on solar PV prices from the continued roll out of thin film technology, and you have a recipe for the kind of mass adoption of PV that its supporters have dreamed of for decades.

Similarly, governments can use a feebate system to create a self-financing subsidy program to encourage the purchase of more fuel efficient vehicles. Under such a plan, vehicles that get less than X MPG pay a gas guzzler tax at purchase time, and those that get over Y MPG would get a rebate.[1]

In this context, a couple of articles I saw recently struck a hopeful note:

Affordable solar purchasing plans gather pace:

Municipalities are catching on to an innovative plan started by the City of San Diego to make solar panels more affordable to city residents, with a number of city governments expressing interest in the new financing scheme.

The San Diego Clean Generation Program, announced in December, will be the first of its kind in any major US city, according to San Diego’s Mayor, Jerry Sanders. Under the scheme, the city will pay for residential solar panels, which householders and businesses will then pay for over time through their property taxes.

The up-front capital cost of installing solar panels can total around $25,000 after installation fees, material costs and inverter equipment is paid for. This scheme gives residents the chance to pay for it over 20 years, according to the Mayor, who added that because the panels are tied to the property, the cost would pass to the new owner if a house with installed panels was sold.

Payment under the San Diego programme would amount to roughly $150 a year on top of the existing property tax bill - a fee advocates of the scheme claim will be largely offset by savings on utility bills.

I’m not sure how $3,000 spread over 20 years pays for a $25,000 system, but the general concept–institute government programs that reduce the barriers to entry for homeowners who want to do the right thing–has to make anyone reading this site smile.

(I would still much prefer to see a top-down approach to subsidies, such as a feed-in tariff, but I doubt we’ll see that mechanism used in the US except in some very localized areas.)

From War Bonds to Environment Bonds:

James Cameron, an executive director of Climate Change Capital, an investment company, is proposing creating “environment bonds” similar to bonds created by governments during the 20th century to fund efforts to fight World War II.

In a talk on Friday at Yale, Mr. Cameron said environment bonds (or climate bonds, as he has called them on other occasions) would be a straightforward way for governments to raise money to develop clean technology and build low-carbon economies.

Governments would collect money from investors who would benefit from guaranteed – but modest – rates of return. In the meantime, governments would invest in green infrastructure.

Because the bonds would offer secure returns, they should appeal to citizens and investors disillusioned by the implosion of the banking sector and worried by the grim economic outlook, according to Mr. Cameron. Additionally, the bonds could tap a vein of renewed idealism among investors who are seeking to use financial system for good causes.

“I sense that there is now will for people to put their money to productive use,” Mr. Cameron said. “There is something powerful in the idea that, ‘My money built that and it works and I use it.’ Building things for a purpose that binds investor, worker, user – and society – is a noble cause.”

I would invest some of my money in a climate/enviro bond in a heartbeat. This kind of program could be added as an option to the current savings bonds that the US Treasury Dept. sells, and would likely not incur a sizable overhead for administration.

If I were running this program, I would take it a step further and appeal to the “Prius factor”–the desire of people who do the right thing to be seen as doing the right thing. I would sell stickers for perhaps $5 a piece (but only available to those who have bought enviro bonds) that people could put in a car window, something official looking that says the person has purchased the bonds. I would even go one step further and sell T-shirts, coffee mugs, etc. through some third-party outlet like Cafe Press. The cost to the government would be zero beyond the labor to create the designs, and the items could be priced at some fixed amount, like $1 or $2 above Cafe Press’ price, with the earnings going into the same fund as the bonds. I can very easily imagine a Prius with several of these stickers in the rear window parking and the driver wearing one of the shirts.

Is it a tacky appeal to the “look at me” characteristic in society? Yes. Would it raise money for a vital cause? Yes. Would I really do this? In a nanosecond.[2]

In short, I beg you not to overlook the critical role that the “boring stuff” like public policy and business arrangements can have on our future. They’re a major part of the economic conduit that will carry the breakthrough technologies we read about all the time online out into the real world where they can and will do a lot of good for everyone on the planet.

[1] Obviously there are several knobs the policymakers can use to tune such a program. X could equal Y, or there could be a gap, e.g. vehicles that get less than 24 MPG pay a guzzler fee, but only vehicles that get more than 28 MPG get a rebate. Also, the exact amount of the fee or rebate as a function of the vehicle’s MPG could be tweaked to no end. Obviously they should increase (higher fee for lower MPG, higher rebate for higher MPG), but the exact shape of those two curves would provide material for endless debates, and, no doubt, loopholes.

[2] Of course, the same nitwits who go apoplectic over the fact that Al Gore (gasp!) travels in an air plane and exhales would scream about the carbon footprint of the shirts and stickers. I couldn’t care less. They’ll find (or invent) something stupid to go apoplectic over anyway, and if the rest of us (meaning the sane people) can point to wind turbines or solar panels or mass transit subsidies paid for with the money, then putting up with their idiocy is the bargain of the century.

A couple of articles just popped up over on Scientific American that touch on a topic I’ve been meaning to write about: Biodiesel from algae.

The thing that put me on this particular line of thought is the movie Fuel, which I viewed recently. While I could argue with some of the details in Fuel, I don’t want to fall into orbit around nitpicking and risk ignoring the big picture: Go. See. It. It’s one of those rare environmental documentaries that merges more than a little passion with a conspicuous amount of skill in storytelling. Sadly, many documentaries I see that deal with energy and environmental issues are either so boring that only the hard core “members of the club” will sit through them or so dumbed down and saturated with overly cute graphics that they seem to be aimed at middle schoolers, not adults.

Fuel takes nearly two hours to tell its story, but it’s time very well spent. We get Henry Ford and his ethanol cars, Rudolf Diesel and his peanut oil, Jimmy Carter and his solar panels, war for oil, a huge dollop of biodiesel, some straight talk about the pros and cons of biofuels, the Veggie Van, a list of things you can do now (during the closing credits, no less), Willie Nelson and Neil Young, and, of course, algae-based biodiesel. It’s all presented by Josh Tickell, with some moving and not the least bit self-indulgent biographical information thrown in. It’s one of those films that brought a tear to my eye in some places and made me want to dash out and save the world in others. As busy as I am with a gargantuan reading and viewing list, I fully expect to watch this one several times, which could be the highest praise I could give any two-hour documentary.

Once again: Go. See. It.

But, back to those SciAm articles and biodiesel, starting with The Next Generation of Biofuels:

They’re not talking about ethanol from corn, however, which has already proved wasteful and environmentally damaging. Instead eyes are on a handful of high-tech labs around the U.S. that are perfecting ways to make the equivalent of gasoline and diesel from the lowest life-forms on the totem pole: yeast, algae and bacteria. The challenge is to make enough of these fuels economically and in a form compatible with today’s vehicles.

Once the next generation of biofuels becomes available, you could swing by the local energy station and fill up on a liquid that is virtually identical to gasoline. It would be made by U.S. companies, not shipped from the Middle East. And even though biofuels release carbon dioxide when they are burned, the organisms they are made from draw an equivalent amount of carbon dioxide from the air—making biofuels essentially carbon-neutral.

…

Other scientists argue that fermentation is not the best way to make fuel. Venter believes his more forward-thinking approach will prevail. The “most exciting” biofuel, he says, will be made from microbes that, when exposed to sunlight, consume carbon dioxide and turn it into energy directly—the equivalent of upgrading to a direct airline flight from one that had a long stopover. The idea might sound too good to be true, but Venter, who is known for his restless ambition, says it is possible.

The earth’s energy comes from the sun. An hour’s worth of sunlight holds enough power to meet a year’s worth of human energy needs. But less than a tenth of 1 percent of that energy is captured by plants. Venter and other scientists are experimenting with photosynthetic microbes such as algae and cyanobacteria (sometimes referred to as blue-green algae). Not only do these microbes remove carbon dioxide from the air, they also grow quickly—some forms double in just 12 hours, whereas grasses and other large plants can take weeks or months to do so. Photosynthetic microbes also store plenty of fat, which forms the basis for fuel. Biologist Willem Vermaas of Arizona State University recently engineered cyanobacteria to accumulate up to half their dry weight in fat; just by opening up the cells, he can harvest the stored fats and convert them, in a few simple steps, into biofuel. Some plants, such as soybeans, also store fats and can be used as fuel sources, but Bruce Rittmann, Vermaas’s colleague at Arizona State, argues that photosynthetic microbes produce nearly 250 times more fat per acre.

…

So which kind of microbe will save the earth? Samir Kaul, a partner at Khosla Ventures, a San Francisco Bay Area venture capital firm that backs start-ups pursuing both approaches, says the companies that survive will be the ones whose fuels can compete with oil at $40 a barrel. Venter agrees: “I think that’s going to end up being the biggest challenge: Can we build these really large facilities and do it in a cost-effective, environmentally friendly way?” It’s a high-stakes game, and even the scientists are hedging their bets; some of Venter’s projects involve cellulosic biofuels, similar to what Keasling is doing. And despite Rittmann’s allegiance to cyanobacteria, he is also working with other microbes.

Clearly I don’t care whether the bug we use is algae of bacteria or who knows what, as long as we get there. And right now, it seems that we’re a lot closer to making fuel from microbes not just work, but work economically, than we are in making cellulosic ethanol viable on a large scale. And I think the break-even goal should be quite a bit higher than $40/barrel for crude oil. With peak oil likely just a couple of years away, plus the all but certain arrival of some kind of carbon pricing (which wouldn’t apply to biodiesel or biogasoline, given their carbon neutrality), I think a much more realistic target is at least $75 per barrel, and would quickly become a moot point if oil flies past that point.

Microbes-to-liquid fuels (MTL) is quickly shaping up to be a critical technology, for the following reasons:

• It uses both land and water very sparingly.
• It has far less impact on food production than corn or soybeans or similar crops.
• It’s grown in large clear tubes, so there’s no need for farm equipment, fertilizers, pesticides, etc. and their attendant fuel use.
• It presents a surprisingly easy transition path (in terms of both economics and politics) from what we’re doing today to using these new fuels on a large scale. Even if you assume that can’t figure out how to make biogasoline right away and have to start off with “only” biodiesel, that still allows even the US, where diesel cars are very rare, to shift a good portion of its transportation fuel consumption (very roughly 25%) to a non-petroleum-based fuel at zero conversion cost for the consumer. (And if we do impose a price on carbon, biodiesel could prove to be noticeably cheaper than the petroleum variant, giving vehicle owners a further incentive to buy diesel vehicles.) This technology would work extremely well in a PHEV platform, like the Volt or the 12-mile battery range 2010 PHEV Prius.
• It could be (and likely will be) hugely important in dealing with both peak oil and climate chaos.

Think for a moment or three about the timing of this development and how well it meshes with everything we’re doing today and the changes we need to make, and it’s almost impossible not to develop a sudden warm feeling for pond scum. Unless, of course, you have a vested interest in exporting oil or seeing a collapse of modern civilization through climate chaos and/or peak oil, in which case it’s not good news at all.

The other SciAm article, is Corn Ethanol Will Not Cut Greenhouse Gas Emissions, which presents yet more evidence that the future will be fueled with something other than food-based ethanol.

One of the sentiments I hear a lot from various people I speak to about energy and environmental issues is a desire to put a wind turbine on their home. I think this is a combination of factors at work, including wind’s (deserved) reputation for being a very clean, renewable energy source, and people wanting to avoid paying their monthly electricity bill, or at least reduce it greatly.[1]

This undercurrent came to mind when I read Small Wind: Southwest Windpower Gets Funding for Home Turbines:

For all the talk of a new “Apollo Program” or “Manhattan Project” to meet America’s energy needs, is the answer to think small?

Plenty of big-name energy investors think so, pouring fresh funds into a company that makes tiny wind turbines for residential use. The idea is to bypass the traditional model of big, centralized power generation stations—whose need for equally large power transmission systems are creating such an expensive headache–to provide electricity on a home-by-home basis.

Investors including GE Energy Financial Services, Altira, Rockport Capital Partners, NGP Energy Technology Partners, and Chevron’s CTTV Investments participated in a new $10 million funding round for Southwest Windpower, based in Flagstaff, Ariz.

In the context of hundreds of billions of dollars of federal stimulus spending, the amount is miniscule. But the idea is big. Southwest Windpower’s Skystream residential turbine can meet more than half a typical home’s energy needs, the company says—and more cheaply than by buying power from the grid. On windy days, residential systems can sell power back to the electric grid, helping shave power bills further and giving power companies access to clean energy.

I’ve never been convinced that small scale wind power would ever be more than “a niche of a niche” in terms of how much power it generated or how much atmospheric CO2 it helped us avoid creating. Still, thanks to the links in the above article, I did a little digging around, and found some good news and some not so good news for those lusting after their very own wind turbine.

First, let me start with the stimulus overview [PDF] provided by Southwest Windpower. In that document and the related spec sheet [PDF], they talk about their Skystream turbine, which has a service life of 20 years and a rated generating capacity of 2.4 kW. See the spec sheet for graphs that map wind speed to both power and monthly energy generation, and the wind resource maps linked from their page Is wind right for me?.

So, is wind right for me?[2]

I checked the wind map for NY State [PDF] to see what they had to say about Rochester. As best I can tell from the odd way the map is colored, they have Rochester in a light green area, which indicates an average wind speed of 11.2 to 12.3 mph, but at a height of 30 meters, the lowest height for which NY data is available. The price quoted for the Skystream model includes a 33 foot tower, quite a bit short of 30 meters, and I suspect it makes a big difference in ow much wind I could catch. In Rochester, we get some incredibly windy days, but we also get stretches of days (like right now) when there’s not enough wind in my neighborhood to muss your hair, let alone spin a turbine. I’m skeptical of that 11.2 to 12.3 mph number, but I’ll use it anyway.

In the stimulus overview [PDF], Southwest Windpower says that the Skystream costs $14,000, with a federal incentive of $4,200, leaving the pre-state incentive cost at $9,800. Eyeballing their cost vs. wind speed graph in that same document, it looks like 12.3 mph average winds over 20 years results in an electricity cost of about 12.5 cents/kWh. This looks like a very reasonable estimate. The spec sheet says that at 12.3 mph the Skystream produces 400 kWh/month. That’s a total of 96,000 kWh/month, or 10.2 cents/kWh, without adding anything for maintenance or interest payments. I would definitely call their estimate accurate, at least as much as any estimate based on averages can be, even though they seem to be making a generous assumption about the needed tower height. Speaking as a consumer, I would definitely consider installing a turbine like this, assuming I had the land, even though the electricity cost would be slightly higher than I pay now for grid electrons.

But wait–there’s more, as in more incentives. The NY State incentives are, to no one’s surprise, vastly more complex than the federal incentives. (My fellow New Yorkers who have filed state income tax forms will know instinctively what I’m talking about.)

The NY State incentives include model-specific values, plus a set of multipliers(!?) to raise or lower the incentive, depending on who is using the turbine. For the Skystream the residential incentive is a whopping $7,200. This drops the cost of the Skystream to $2,600, while the cost of electricity plummets to a mere 2.7 cents/kWh.

It seems that financially small scale wind turbines are a good deal for residential use, provided they’re heavily subsidized. With no incentives at all, the cost of electricity is about 14.6 cents/kWh, at least 3 cents/kWh above what my wife and I pay for 100% green electricity (which comes from wind and small hydro).

So, what to make of all this?

• The economics are more attractive than I thought. I doubt that small scale wind turbines will be broadly economically compelling on their own, unless the price of grid electricity rises sharply in many areas. But for many consumers just the federal incentives alone are enough to make this kind of investment attractive.[3]
• Small scale wind power will continue to be severely limited by the proximity of neighbors. Currently, the spacing requirements are such that only people living in rural or semi-rural areas can install an appropriately sized tower. There will be more creative wind power solutions, such as smaller generators that can be mounted on a roof, as well as turbines optimized for use on office and apartment buildings, schools, etc. For most home owners, solar panels will make much more sense, especially as their price continues to drop.
• My guess is that a residential wind turbine would make little sense without a net metering system in place, which (of course) varies greatly from state to state in the US. I would expect that without net metering some of the gusty winds in Rochester, often at night, would be totally wasted. The turbine would be produce more electricity than we consumed, and we’d get no economic benefit from it.
• The incentive programs (yeah, I’m looking at you, Albany) need to be much simpler. I would prefer to see the incentives based on the average wind speed at the installation site and the size of the wind turbine–in other words, tied to the amount of electricity you actually generate. Even better yet would be to ditch the up-front incentives and estimation process entirely and use a feed-in tariff, which would give consumers a strong incentive to conserve electricity and maximize their net metering receipts, since those would be at a higher cost per kWh than the normal grid rate.
• If we had the space, I would be working overtime to convince my wife that we simply had to have one of turbines, if only for the cool factor.

[1] This is part of the general American desire to “stick it to the man”, whether said man is an oil company, an electricity or natural gas supplier, OPEC, or whomever.

[2] My house isn’t a serious candidate for a this type of wind turbine, as a 33 foot or 30 meter would be far too close to my neighbors, even if I could get the local permits to erect the tower. I will assume for the rest of this post that I do have the proper buffer between properties, which Southwest Windpower says usually requires a one-acre plot of land.

[3] I realize that the cost of electricity is about to start changing dramatically in at least some parts of the US. Putting a price on CO2 emissions means higher prices, likely by a few cents/kWh, for people who primarily get their electricity from coal plants. And by “economically compelling” I mean a price that’s attractive enough to get the attention of and entice the non-energy geeks in the population, you know, the other 99% of consumers.

One of the points I’ve mentioned here — you can’t manage what you can’t measure — is something that I think will become increasingly important in the coming years. Whether you’re concerned about peak oil and the legendary lack of data transparency regarding OPEC reserves and operations that Matt Simmons and other have talked about endlessly, or climate chaos and gathering the information needed so decision makers at all levels of society can choose truly “greener” options (and not merely make semi-educated guesses), measurement is a Very Big Deal.

We’re seeing a lot more attention being paid to measurement and management in the E&E arena. Some things, like WalMart outfitting their 18-wheelers with aerodynamic fairings, seem like no-brainers that were just waiting for the right combination of economic incentive and corporate perception of self-interest to be implemented. Others, like package delivery services planning routes to avoid left-hand turns, seem silly, at least until one sees the actual (as in measured) cost, fuel, and CO2 savings.

All of which is a roundabout way of saying that I think we have to remain open to measuring the real world and the things we do in it, especially when those numbers surprise or annoy us; we’re surrounded by unknown inconvenient truths, to borrow a phrase, and should be aggressively trying to discover, understand, and respond to them. One very minor example of this approach was my recent post, Stop the CNG insanity!, in which I pointed out how little CNG vehicles do to reduce greenhouse gases, despite their being almost universally lauded as a much “cleaner” technology. If you accept that CO2 emissions are a grave problem for humanity, requiring something akin to the “80% by 2050″ emissions reduction target that’s typically used as the standard, then CNG vehicles make no sense whatsoever.

All of this ran through my mind as as I read the article,MIT: ‘Alarming’ use of energy in modern manufacturing methods:

Modern manufacturing methods are spectacularly inefficient in their use of energy and materials, according to a detailed MIT analysis of the energy use of 20 major manufacturing processes.

Overall, new manufacturing systems are anywhere from 1,000 to one million times bigger consumers of energy, per pound of output, than more traditional industries. In short, pound for pound, making microchips uses up orders of magnitude more energy than making manhole covers.

At first glance, it may seem strange to make comparisons between such widely disparate processes as metal casting and chip making. But Professor Timothy Gutowski of MIT’s Department of Mechanical Engineering, who led the analysis, explains that such a broad comparison of energy efficiency is an essential first step toward optimizing these newer manufacturing methods as they gear up for ever-larger production.

“The seemingly extravagant use of materials and energy resources by many newer manufacturing processes is alarming and needs to be addressed alongside claims of improved sustainability from products manufactured by these means,” Gutowksi and his colleagues say in their conclusion to the study, which was recently published in the journal Environmental Science and Technology (ES&T).

Gutowksi notes that manufacturers have traditionally been more concerned about factors like price, quality, or cycle time, and not as concerned over how much energy their manufacturing processes use. This latter issue will become more important, however, as the new industries scale up — especially if energy prices rise again or if a carbon tax is adopted, he says.

…

Solar panels are a good example. Their production, which uses the same manufacturing processes as microchips but on a large scale, is escalating dramatically. The inherent inefficiency of current solar panel manufacturing methods could drastically reduce the technology’s lifecycle energy balance — that is, the ratio of the energy the panel would produce over its useful lifetime to the energy required to manufacture it.

The new study is just “the first step in doing something about it,” Gutowski says — understanding which processes are most inefficient and need further research to develop less energy-intensive alternatives. For example, many of the newer processes involve vapor-phase processing (such as sputtering, in which a material is vaporized in a vacuum chamber so that it deposits a coating on an exposed surface in that chamber), which is usually much less efficient than liquid phase (such as depositing a coating from a liquid solution), but liquid processing alternatives might be developed.

…

The bottom line is that “new processes are huge users of materials and energy,” he says. Because some of these processes are so new, “they will be optimized and improved over time,” he says. But as things stand now, over the last several decades as traditional processes such as machining and casting have increasingly given way to newer ones for the production of semiconductors, MEMS and nano-materials and devices, for a given quantity of output “we have increased our energy and materials consumption by three to six orders of magnitude.”

One message from the study is that “claims that these technologies are going to save us in some way need closer scrutiny. There’s a significant energy cost involved here,” he says. And another is that “each of these processes could be improved,” and using the analytical tools developed by the MIT team for this study would be a useful first step in such a detailed analysis.

Let me try to boil my response down to a few observations:

• It makes absolutely no sense to compare anything except the production of goods that can substitute for one another. Microchips and manhole covers? I couldn’t care less. Tell me what we get in exchange for making those chips (or manhole covers), or show me different alternatives, such as better ways to make the same chips, better ways to make functionally equivalent chips, or ways to reorganize businesses that require fewer chips in the first place. But this kind of comparison is so crude that it’s meaningless.
• Of course manufacturers are concerned about price. And they always will be, too. All businesses measure things by money, whether it’s the cost of inputs and processes or the price of outputs. The only way you can change what companies do is to forbid/mandate them (essentially imposing a very high price for non-compliance), or create financial incentives for them to make more efficient cars or consume less electricity in their offices, or whatever. I had no trouble at all with society using incentives and regulation to alter the behavior of industries, as long as it’s done intelligently and based on solid information.
• The final graf I quoted above contains another one of those broad brushings I see all the time that makes my head spin around. All energy is not the same. Just like the microchips and manholes example from the first bullet above, lumping all energy consumption into a single cell in a spreadsheet is far too crude a measure.[1] It draws no distinction between a kWh produced by burning coal or oil and one produced by a wind or solar farm. Are we to believe that all of the differences we’d see in a total lifecycle analysis of those energy sources are insignificant?

[1] Once again, Albert Einstein comes to the rescue with his reminder to make things as simple as possible, but no simpler.

While reading the article Have we reached peak water? (which I recommend), I came across mention of a new paper by P. H. Gleick and H. S. Cooley, Energy implications of bottled water (6-page PDF). As you might imagine from the title of the paper as well as that of the article that led me to it, Gleick and Cooley are not exactly delivering a boatload of good news. The abstract:

As bottled water use continues to expand around the world, there is growing interest in the environmental, economical, and social implications of that use, including concerns about waste generation, proper use of groundwater, hydrologic effects on local surface and groundwater, economic costs, and more. A key concern is how much energy is required to produce and use bottled water. This paper estimates the energy footprint required for various phases of bottled water production, transportation, and use. We do not develop a single comprehensive life-cycle energy estimate because of differences among water sources, bottling processes, transportation costs, and other factors, but we quantify key energy inputs necessary for site-specific assessments. We also apply these inputs to three site-specific examples of the energy required from production to the point of use: local bottled water produced and used in Los Angeles, water bottled in the South Pacific and shipped by cargo ship to Los Angeles, and water bottled in France and shipped in various ways to Los Angeles. For water transported short distances, the energy requirements of bottled water are dominated by the energy used to produce the plastic bottles. Long-distance transport, however, can lead to energy costs comparable to, or even larger than, those of producing the bottle. All other energy costs—for processing, bottling, sealing, labeling, and refrigeration—are far smaller than those for the production of the bottle and transportation. These data can be used to generate specific estimates for different sources, treatments, and delivery options.

And from the conclusion:

Combining all of the energy inputs totals, we estimate that producing bottled water requires between 5.6 and 10.2[MJ/liter]—as much as 2000 times the energy cost of producing tap water. Given an annual consumption of 33 billion liters of bottled water in the US, we estimate that the annual consumption of bottled water in the US in 2007 required an energy input equivalent to between 32 and 54 million barrels of oil or a third of a per cent of total US primary energy consumption. We estimate that roughly three times this amount was required to satisfy global bottled water demand.

I won’t bother dragging my soap box to the middle of the room, climbing on it, and expounding on The Evil That Is Bottled Water. Readers of this site are more than capable of providing their own analysis/histrionics.

Instead, let me take a different angle on this issue and say something that will remind us all why so many people hate economists: Of course we use energy and other resources so lavishly on something as seemingly mundane as bottled water. People want the convenience, and all those inputs can be had cheaply enough that the product can be supplied to the public at a price it finds acceptable. Period.

It has nothing to do with energy or plastic or what we “should” be doing or what’s in our own best interest or anything else; it’s 100% driven by costs and a profit incentive. I’m astonished by how many people I interact with online and in the real world, most conspicuously in the peak oil community, have a hard time grasping that notion. Many of them scream about EROI (energy return on investment) to make the case that oil shortages will ensue when the energy needed to pull oil out some fields exceeds the energy in the oil itself. Nope, not even close. If it were that simple, would we be making, using, and disposing of batteries at the rate we do now?[1]

So, what are our options if we don’t like where brute force economics has delivered? We can ignore it and focus on bigger pictures, like whether a carbon tax or cap-and-trade system is the best way to get CO2 emissions down, or what policies governments should use to make our transportation far less oil-intensive.

Or we could try to get the government to impose a tax on bottled water in an effort to make people use less of it by making its price align better with our sensibilities of what it “should” cost. I’m always very hesitant to take this step, as it can very easily backfire when the new law leaves a big loophole (accidentally or intentionally, depending on the lobbying budget of the company whose product is being disadvantaged) or it works and the impact to workers, for example, is much greater than expected.

Personally, I would like to see people in the US simply buy reusable bottles and fill them with tap water (which is often much cleaner than they realize), or, at worst, resort to an add-on filter.

[1] I’ve tried several times to track down a good number for US (or world) battery sales. One source I found says US sales are 15 billion batteries/year, while another says that in 1998 it was “only” 3 billion/year. In either case, it’s a lot of batteries.

The debate over the size and scope of nuclear power’s role in our future won’t be settled any time soon, I suspect. Between the people who truly love the technology (or have a huge financial incentive to love it), and those who consider it the technological equivalent of the Ebola virus, we can safely assume that the verbal arm-wrestling over nukes will be an essentially permanent fixture of of our shared infosphere, kind of like nuclear waste, sad to say.

This came to mind in recent days as I read several articles related to nuclear power, starting with Is small the future of nuclear power generation?:

Distributed energy generation, hailed by most environmentalists as the future of sustainable electricity production, is about powering a country with hundreds, potentially thousands, of renewable and clean energy systems with some help from natural gas.

It’s efficient because power is generated where it’s used. It’s flexible because projects can be built quickly when needed. It saves money in the long run because there’s less need for expensive transmission lines that carry the power elsewhere. And if one generator fails, its relatively small size means it doesn’t threaten the stability of the entire system.

This, of course, is the antithesis of centralized power generation that relies on a dozens or so large nuclear and fossil-fuel plants. Proponents of distributed generation cite the massive size and cost of nuclear power plants as one reason, beyond safety and waste-management concerns, and the technology is unsustainable and far too risky.

Not so, argues one start-up firm from Santa Fe, N.M., which has high hopes of expanding the definition of distributed generation to include nuclear power.

Hyperion Power Generation Inc. has developed a garden shed-sized nuclear reactor that can produce enough heat to generate 25 megawatts of electricity for up to 10 years.

That’s enough energy to power 20,000 homes, but still tiny by current nuclear standards. An Advanced Candu Reactor, for example, is 48 times larger and a next-generation Areva reactor is 64 times larger.

Hyperion, which calls its reactor as a “nuclear battery,” licensed the technology from the Los Alamos National Laboratory in New Mexico. It plans to sell the reactor for about $30 million (U.S.) and says there’s potential to sell 4,000 of them around the world by 2025.

Ignoring the silliness of the “nuclear battery” name, the basic thrust of this idea–smaller, decentralized, and likely diversified electricity generation is definitely where I think we’re headed. Just the need/desire to exploit local resources–wind, geothermal, wave/tidal–will push us in that direction, in addition to the savings mentioned above. But neighborhood nukes? Really? Despite the manufacturer’s claims of perfect security for thousands of these units dispersed around the US (or the world?), there’s still that nasty and expensive issue of managing forever the nuclear waste. Using nuclear power now amounts to putting a permanent tax on ourselves for the cost of managing and guarding that waste. That’s of the same degree of shortsightedness as building new, non-sequestered coal-fired power plants in 2009.

And then there’s the whole “where’s the evidence we can trust ourselves to manage nuclear materials on that time scale?” issue, as pointed out a pair of Independent articles this week.

Nuclear power station owners ‘allowed leaks’:

Nuclear power station operators unlawfully allowed radioactive waste to seep from a decontamination unit for 14 years, Chelmsford Crown Court has heard.

Waste leaked into the ground from a sump at Bradwell power station in Essex between 1990 and 2004, the Environment Agency claimed.

Magnox Electric Ltd, which had operated the station, denies 11 breaches of legislation governing the disposal of radioactive waste. Mark Harris, on behalf of the Environment Agency, told the jury that leaks were caused by a combination of poor design and a lack of checks and maintenance. He said the power station was no longer running.

IoS Investigation: Officials plotted Sellafield cover-up:

Top civil servants and nuclear administrators colluded to prevent MPs from challenging a massive sweetener to a private business taking over the running of Sellafield, internal documents in the hands of The Independent on Sunday reveal.

The documents, obtained through the Freedom of Information Act, also disclose that the Government pushed through the handover at breakneck speed because it feared that the “unstable management arrangements” of the controversial Cumbrian nuclear complex risked its safety.

Yesterday, a leading Labour MP announced that he would try to get a parliamentary investigation into the revelations in the documents, which run to 140 pages and had been so heavily censored prior to release that many whole pages, and the names of most of the officials involved, have been systematically blanked out. Paul Flynn MP, a member of the House of Commons Public Administration Committee – which examines the performance of the Civil Service – is to ask it to inquire into what he calls “an egregious example of obstruction of parliamentary accountability”.

The bottom line is that there are many people in this world who value money more then your safety or mine, and at least some of them wind up in positions of incredible power, whether in government or in corporations that oversee or actually run things like electricity plants.

But I digress.

Let us assume, for the moment, that we can overcome all of these management and oversight issues. We figure out, somehow, a way to hire only those people people with the highest standards and deepest commitments to the common good for critical positions regarding electricity generation. And those people do a perfect job of managing that vast, interlocking, set of agencies and companies. What will nuclear power cost us then?

As Joe Romm points out in Exclusive analysis, Part 1: The staggering cost of new nuclear power, the economics of nuclear power ain’t a pretty picture, either:

A new study puts the generation costs for power from new nuclear plants at from 25 to 30 cents per kilowatt-hour — triple current U.S. electricity rates!

This staggering price is far higher than the cost of a variety of carbon-free renewable power sources available today — and ten times the cost of energy efficiency (see “Is 450 ppm possible? Part 5: Old coal’s out, can’t wait for new nukes, so what do we do NOW?”).

The new study, Business Risks and Costs of New Nuclear Power [PDF], is one of the most detailed cost analyses publically available on the current generation of nuclear power plants being considered in this country. It is by a leading expert in power plant costs, Craig A. Severance. A practicing CPA, Severance is co-author of The Economics of Nuclear and Coal Power (Praeger 1976), and former Assistant to the Chairman and to Commerce Counsel, Iowa State Commerce Commission.

This important new analysis is being published by Climate Progress because it fills a critical gap in the current debate over nuclear power — transparency. Severance explains:

All assumptions, and methods of calculation are clearly stated. The piece is a deliberate effort to demystify the entire process, so that anyone reading it (including non-technical readers) can develop a clear understanding of how total generation costs per kWh come together.

I haven’t yet read the 37-page report, linked in the quote above, but I suspect it’s safe to say that the infowar over nuclear power will play out pretty much as one would expect: Nuke lovers will bash this report as being deeply flawed and presenting a wildly high estimate of the costs of nuclear power, and nuke haters will consider it proof that “nuclear power just doesn’t make sense/work/can’t compete with renewables”. Lather, rinse, repeat.

)Note: As I was writing this, Joe posted the follow-up to the above article, Warning to taxpayers, investors — Part 2: Nukes may become troubled assets, ruin credit ratings.)

So, where does this leave us? Have we done nothing more than execute a perfect plot loop[1], fueled by a few billion keystrokes in print and online, and come back to where we began? Not entirely, as we’re now talking more openly about the wisdom of using nuclear power (or coal or wind or …) as well as the notion of decentralizing and diversifying electricity generation, something I’ve been yapping about for nearly four years on this site, and other people have likely been pushing for a lot longer than that. That’s not as much progress as I’d like to see, especially given the proximity of nasty things like peak oil and the growing impacts of climate chaos, but it’s inarguably progress nonetheless.

Having learned nothing from my prior attempts at crystal ball gazing, let me end this post with some predictions:

• The debate over nuclear power will continue to expand to include “nuclear batteries” and a more explicit discussion of economics, possibly even including questions over the supply of nuclear fuel. Here in the US, the main focus is mainly on safety issues, including the proliferation of nuclear material and safe storage of waste.
• The proliferation issue will be solved (or we’ll simply convince ourselves it’s been solved) in not much longer.
• The waste issue will be an enormous mess essentially forever.
• The nuclear option will only be rejected after at least one, likely several, spectacular failures. I’m not talking about core meltdowns, but economic and failure-to-build-out-quickly-enough catastrophes. The companies that build reactors and do everything else in the nuclear power food chain are too well financed to be simply turned away. They will continue to get their government financial incentives, they will build some more plants, but they will be very expensive and nowhere near what we need to replace the massive installed base of coal-fired plants. Nuclear power will indeed help us reduce CO2 emissions, but only at a high cost and to a very limited extent.
• Anyone (like me) who points out the reductions in CO2 emissions and cost savings possible from plain old conservation will continue to be labeled a wacko tree hugger.

[1] A plot loop is a phenomenon in fiction where some seemingly big, important set of occurrences takes place, but then turns out not to matter when the story continues on as it was pre-loop.

With the stock market, and therefore the retirement savings of millions of US consumers, forcing financial writers to search their thesauruses for yet more synonyms for “unprecedented”, it’s as predictable as it is depressing that peak oil has fallen off the radar screen of so many. Gasoline is now selling at the stunning price of only $1.82/gallon, something few people not confined to a psych ward would have predicted six months ago. More to the point, it’s seen by many individuals as “proof” that There Is No Oil Problem, There Wasn’t and Oil Problem, and There Never Will Be An Oil Problem.

Yes, this is, once again, Lou’s Favorite Topic #473: Perception vs. Reality and Their Role in the Infowar. For once, I’ll spare everyone the details and instead point you to an excellent piece on the general topic, written by Robert Bryce, “Gasoline’s Cheap Again, But Peak Oil Still Looms Large”, which I found via Jim Kingsdale’s site:

And yet – and yet – some of the best minds in the energy business insist that this latest bear market is only baiting the trap for a huge price run-up that will likely come around 2015. And – despite all of the current turmoil – they may end up being right.

Before going further, I readily admit that I have, for several years, had a rather flippant attitude toward peak oil. When asked my opinion, I would generally respond: so what? My rationale being, we will only know that we’ve hit peak oil when the event has actually passed. And second, regardless of prices or supplies, we will only move away from oil when something else comes along that is cheaper/cleaner/more convenient, or all of the above. Thus, I’ve long felt that all the fretting about peak oil has been largely misplaced and that even if the peak were imminent, there would be little that the U.S. or any other country could do to avoid the difficult energy transitions that are looming.

That said, I’ve spent a good bit of time over the past couple of months talking to two of the sharpest analysts in the oil business: Peter Wells and Charley Maxwell. And both are convinced that peak oil is real, it’s coming, and the pain that will accompany its arrival will be severe.

…

What sets Wells apart from the pack of alarmists is that he has done the deep and dirty analysis of individual field production data. In fact, Wells utilized field output info supplied by Denver-based consulting firm I.H.S., which owns one of the world’s most extensive oilfield databases. This same field-by-field data was utilized in 2006 by an I.H.S. subsidiary, Cambridge Energy Research Associates (CERA), to come up with their study on future global oil production, which claimed that global output could reach an “undulating plateau” of 130 million barrels per day by 2030. The study concluded that the peak oil argument “is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.” The study also claimed that the remaining global oil resource base is about 3.74 trillion barrels.

Wells took the same data and came up with a far different conclusion. He estimates that global liquids output will peak in about 2015 at no more than 100 million barrels per day. And that’s when things will get very interesting for automakers like Toyota and, of course, for the rest of us.

…

So will demand destruction take the peak out of peak oil? While it’s tempting to answer in the affirmative, several factors appear to show that it will not. Before going to those factors, let’s look at the forces that could lead to slower demand growth. They include, most obviously, a sustained recession. If world economic growth stalls for a sustained time, oil demand will continue to be slack. Second, automakers are working hard on hybrid vehicles and electric cars that could slow gasoline demand. Third, new tougher efficiency standards for U.S. automakers, combined with ongoing additions of billions of gallons of corn ethanol into the gasoline pool, will likely further dampen U.S. gasoline demand. (Note, however, that decreasing gasoline demand will not necessarily mean lower overall oil consumption, as refiners will still have to refine crude in order to produce diesel, jet fuel, and other products.)

Even so, there are major differences between the current situation and the conditions that existed in the ’80s and ’90s. First and foremost is the paucity of spare production capacity to be had. Further, there are far fewer oil producers with big reserves remaining to be tapped. As shown in Table 2, 10 different oil-producing nations peaked between 1996 and 2004. Those producers will not be able to add significant amounts of new crude production to the global market.

…

Perhaps the best single point was made by Maxwell, who said that peak oil will not be as damaging to the U.S. and other developed countries as it will to the less-developed world. Why? Because higher oil prices will mean “rationing by price.” That is, the wealthier countries and consumers will be more able to afford motor fuel that costs $5, $10, or even $15 per gallon. Consumers in poor countries will be unable to compete for fuel at those prices. And that could create serious social problems. Wells largely agrees with this outlook, saying, “Rising prices will drive demand destruction and the development of new technologies to make much better use of supply.” He goes on, explaining in a recent e-mail, “This will be painful and potentially fatal in the really poor countries of the world where access to fuel for generators, fertilizers, transport, etc., will mean risk of famine/starvation/reduction of the capacity of nations to provide basic services.”

Of course, consumers have long had rationing by price for other commodities, such as Rolex watches and Mercedes cars. But the rationing of a commodity that is so crucial to modern society could have dramatic negative effects on billions of people around the world. After all, some 2.5 billion still use biomass – dung, wood, straw, etc. – for their home cooking needs. If they are completely priced out of the market for hydrocarbons, they will be destined to continue living in dire poverty.

But Wells and Maxwell, and the many other analysts who have been predicting peak oil, could still be proven wrong. Given the cyclical nature of the commodities sector and the recent slump in oil prices, it is foolish to make huge bets on oil prices. Furthermore, as the ongoing financial crisis seems to prove, no one knows anything. Forecasts and models are handy, but markets – and of course, prices – are inherently chaotic. A prolonged recession or a depression could choke world oil demand to the point where a peak in production matters little. And of course, other technologies could come along that could allow significant substitution for oil.

But inventors and investors have been searching for an alternative to oil for decades, and they have yet to find anything that approaches the flexibility and versatility of crude. The sudden oil price drop may result in a corresponding investment decline in alternative energy technologies. The punch line seems obvious: consumers around the globe will be relying on oil for decades to come. The unanswerable question is equally obvious: how much will that oil cost in 2015, 2020, or 2030?

If Wells and Maxwell are right, and I’m increasingly inclined to believe that they are, the U.S. and the rest of the world would be well served if they began taking steps to ameliorate the potential disruptions that will come from the oil price shocks that are looming large on the horizon.

A few observations:

• I’ve said many times here that the only useful way to assess world oil production is via a bottom-up analysis, and I stand by that opinion.
• The conclusion that our current economic circus doesn’t change the cold fact that peak oil is coming, still at a rate of about 86 million barrels/day, is likewise unshakable. The amount of oil in the ground isn’t changed by our economic woes up here; if anything, the amount of oil that’s economically recoverable is less at $50/barrel than it is at $147/barrel. If you focus on what can possibly come to market in a useful time frame, then that $97/barrel price swing makes a huge difference.
• I don’t think there’s an appreciable probability that a near-term peak can be avoided. The question of a supply peak vs. a demand peak (i.e. we use less oil because we must or because we choose to) will likely become moot, simply because of the timing involved. We’re too close to the peak to make enough of a voluntary transition away from oil to escape all but a small portion of the pain.
• Sadly, I can’t disagree with the conclusion that peak oil will hit the developing world much harder than it will the developed countries. The explanation given above is right, and it could well result in considerable human suffering.
• The last point I quoted above from Bryce, that it’s in our own best interest to get to work now, before the pain of a supply peak is felt, is why I find peak oil to be a relentlessly depressing topic. We here in the US certainly could have done far more than we did over the last 20 or 30 years to help ourselves, but we never quite got around to it. It was far too easy to buy a shiny new SUV and believe the fairy tales that “there’s plenty of oil to last forever (i.e. at least until I’m dead)”, “we’ll find a substitute for oil”, “car companies will find a way to get 100 miles/gallon”, etc., than it was to believe the scientists and other experts who warning us that we had a problem, even if it wasn’t biting us in the wallet yet.
• The shortsighted countries like the US, plus those like China with an equally warped view of our shared future, have signed up ourselves and the whole world–some more so than others–for one hell of a rough ride in the coming years and decades. I’m just glad that there’s nothing else of equal importance and scale we have to deal with, like, say, the billions and billions of tons of CO2 we pump into the air every year triggering phenomenally quick climate change, ocean acidification, and a looming, worldwide fresh water crisis. That would be really bad.

Few things bother me more in the energy/enviro field than pundits and bloggers[1] going on about one topic or another with an unreasonable level of certainty. The magic term/fudge factor in that sentence is, as always, “unreasonable”; my degree of conviction about the exact number of aliens residing in my neighborhood disguised as dogs might strike you as being, shall we say, a bit over zealous, while I might not share your views on the best way to make large and lasting reductions in our CO2 emissions.

Having said all that, I was very pleased just now to see one of my favorite writers, Jim Kingsdale, chime in on where the US economy stands regarding the numerous large and uncertain issues it currently faces. In particular, Jim addresses the car company train wreck in There Are Still Many Shoes Left to Drop:

On the front burner, obviously, is a required “resolution” to the U.S. auto industry’s decades of mismanagement. The money’s running out and the party’s about over. Their problems include legacy costs (the pensions and health care of retired workers), high cost union contracts, uncompetitive products, and “bad management” such as having too many product lines or too much overhead costs. My personal favorite problem of the U.S car companies is their unattractive and ineffective dealer networks.

Congress and the new administration are coming to understand - as even the board of GM is now admitting - that many of these problems have legal bases which essentially require a bankruptcy proceeding to clean up. But Chapter 11 could be especially daunting for a huge car company for many reasons, not least being questions it would raise in the minds of future potential customers. Therefore, it appears that the government is moving toward providing some sort of debtor-in-possession financing to GM and perhaps Chrysler as part of a plan that I hope will include dramatically revamped operations, new management and new directors.

Even this “solution” is fraught with risks. Will the new plan and/or the new management effectively allow the reorganized company to compete successfully or will it fall into Chapter 7? Will a domino effect on suppliers - and perhaps competitors - hurt many other companies? Will too many people be thrown out of work? Wouldn’t it take several years at least to see good results? In other words, the ripple effects from any G.M. resolution may have unintended consequences and may take a good deal of time to play out.

In the short term perception is reality. I suspect that when a specific re-organization plan for GM is agreed upon there may be a rally in stocks as investors and the public are relieved that strong steps are finally being taken to resolve a very long smoldering infirmity in the American economy.

Just to be clear–I’m not quoting this because Jim echoed my recent reminder about perception being reality (Wrapping our brains around our challenges), but because it’s such a sober, if distinctly unsatisfying and unsettling, approach to this one component of our economic mess. All the people dashing about the infosphere[2] shouting about how “all we have to do is X” are either lying or pathetically deluded; you can decide for yourself which is the greater problem. This is a horrendously difficult situation, with staggering degrees of human impact and monetary cost associated with virtually any public policy, which most definitely includes doing nothing and “letting the market work itself out”.

That tradeoff–how much human pain are we willing to attempt to avoid at what monetary cost–is at the heart of numerous public policy decisions, but seldom so obviously and in such large, rough-hewn blocks as it is in this case. People often get upset with economists for assigning a dollar figure to a human life (or the quality of ongoing life), but as I’ve pointed out before, all of us involved in making public policy (which is everyone who votes), has no choice but to make such tradeoffs. Those of us who are neither economists nor in a formal policy position often have the luxury of making implicit decisions and avoiding talking or even thinking about this uncomfortable topic. We reduce the decisions to tidy, sweeping statements, e.g. “we can’t let GM crash and burn and take all those jobs!” or “we can’t bail out an industry that will only squander the money the way they’ve thrown away almost every other opportunity for decades”, never saying explicitly that we’re willing to spend $X per job saved, but not $X+Y.

When actual human lives are on the line, such as when the conversation turns to “how much should we be willing to spend to restore and protect New Orleans, given that it has a bleak future thanks to geological factors and climate chaos?”, we become all the more dogmatic and even less inclined to discuss those unthinkable issues and attempt to reach a rational conclusion. Even referring to this process with the word “rational” can raise blood pressure among some; I have the angry e-mail to prove it.

But this is the world we’ve created, thanks to a long list of mistakes and sins we’ve committed against ourselves and our children. Car company mismanagement, peak oil, climate chaos, excessive zeal for deregulating everything in sight until the entire US financial system is on the brink–we’re certainly good at painting ourselves into some tight and nasty corners. Now we get to find out if we can be adult enough to make sober and correct decisions about how to rescue ourselves.

And yes, you should go read the rest of Jim’s post, as he touches on energy and the banking crisis, with a nod to the ultimate monster under our bed, deflation.

[1] The difference is that pundits are paid for their opinions and typically don’t work in their Star Trek footie PJ’s.

[2] This includes the blogosphere, talking head shows (especially on the cable channels), talk radio, and print media.

When you obsessively read and write about peak oil (and global warming), as I do, it’s very easy to get so close to the topic, so thoroughly cocooned in your own vision of said Big, Scary Event that you don’t just miss big patterns (forests and trees, and all that), but you skip over some details that deserve a bit more discussion. This latter phenomenon came to mind recently in an e-mail exchange I had with Kory Sorrell, a TCOE reader and occasional commenter.

With permission, I’m quoting his observations on peak oil and where we’re collectively heading:

I would suggest that the peak oil debate has shifted a bit. There is little support for the idea that we can increase flow rates (that is what peak oil is about) significantly going forward, certainly not at the rate an extrapolated demand would require.

I believe peak oil theory gets a bit muddled — and folks started talking past one another — because it starts off as a geological concept, but one then has to start adding political (oil is largely a national resource) and economic influences like the export land model or current drops in demand due to the economy or changes in prices due to fluctuating currency valuation to get a more complete picture. Actual flow rates at any one time vary due to a number of causes, but putting this all together, some folks are suggesting we have hit at least Peak Oil Lite - we may not produce much more per/day going forward and this may trail off for a variety of factors, including resource nationalism, geological constraints, (eventual) decreases in demand. Whether this is good or not, I don’t know. I’ve seen suggestions that, all considered, it’s better to hit an earlier constraint, as we can deal with it sooner and face unremitting geological constraint later — in other words, at least political constraints can be mitigated, whereas there’s just no persuading the earth to yield more than it can.

Having read my share of peak oil books, articles and websites, I now focus more on (1) decline rates, since this informs our pace of adaptation — that’s why this upcoming IEA report is a Monster. One way or another, we will adapt, and the Doomsday scenarios are hardly inevitable, though I suspect we may have some unpleasant times, especially if we are looking at rapid decline scenarios. (I have a hunch that this early report will be qualified in several ways, but we’ll see). (2) The second thing I now focus on, already indirectly touched on, is forms of adaptation. The Hirsch Report is a great place to start, but that is primarily an assessment of mitigation through liquid fuels substitution (CTL, etc.). I think there is also a tremendous amount of change in the offing in terms of behavior — all the sorts of things Simmons, for example, suggests: telecommuting, carpooling, 4-day work week, moving closer to work, etc. — but also other changes that include reducing the number of cars on the road (China is already doing this in at least two ways: encouraging electric motorscooters (there are some 15 million in use now, I believe) and taking cars off the road by license plate number (800,000 per day)). And of course this is in addition to the just over the horizon gradual replacement of our fleet with much more efficient ICE cars and then all electrics. To put it much more briefly, we are going to rapidly diversify and electrify our transport sector to use less oil; the question is, how quickly can we start outrunning depletion? While the numbers are daunting — how do we make up for a 5% a year reduction (4-4.5 mbd)? — this is spread out over a lot of economies. Assuming that since the US has to make up 25% of that (since the US uses 25%), that is 1.125 mbd. Hard, maybe; impossible, no. Note in the Hirsch Report that 70% of all driving is /discretionary/:

In the short run, much of the burden of adjustment will likely be borne by decreases in consumption from discretionary decisions, since 67 percent of personal automobile travel and nearly 50 percent of airplane travel are discretionary.32

page 24, http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf

(In other words, to echo a recent article I read elsewhere, we’ll have to do something “radical” to conserve oil: stay home.)

To draw this to a point, I would invite responses to the following. As the above paragraph suggests, I have a somewhat middle of the road view of what’s in front of us. I think we really need to steel ourselves for some very difficult and sobering times, but I see Martenson’s “the next 20 years” to be a bottleneck, on the other side of which we may have genuine progress and a future worth fighting for. In other words, I do not see an inevitable Long Descent to a world of ever-less-energy, but a painful travail opening on to a lush energy future. This is a future with very little coal, lots of renewables and 4th generation nuclear power (see Kirk Sorenson’s website). It is also a world where we are coming down from our peak population (fast forward that population bulge Martenson depicts in the Crash Course). Obviously, we have plenty of opportunity to ruin this melioristic vision, have had plenty such opportunities already (the usual reference to the Cuban Missile Crisis will do), and will likely make this all a lot harder than is necessary. But even tempered thus, it seems to me that this “20 years from now” is entirely possible, maybe likely, and in any case is the future we should work for.

My take on this:

• I think we definitely tend to talk past each other in this debate, and part of the reason is the failure by people in different parts of the debate to ignore certain parts of the big picture. KS is right that what constitutes or triggers peak oil is far more complex than simply geology. I’ve made this point perhaps a billion times on this site, but given how seldom it’s recognized online (except in the most perfunctory way and then ignored),
• I’m firmly in the camp that says the sooner we hit peak oil for above ground reasons, the better. That leaves more carbon in the ground, where it can’t contribute to global warming, and it also leaves us more of a supply buffer for future years, in case we can’t find the political spine to transition away from oil as quickly as we “should”.
• The IEA report, which is due next week and has already been the subject of much press leakage (e.g. Highlights of the IEA report), will indeed be a Monster–at least for those of us who pay attention to such things. I fear that between mainstream consumers who’ve never heard of the IEA and some of their elected representatives[1], this will be just one more Monster that gets swept under the bed, at least in the short term. I will have more to say on the IEA report in time.
• We will indeed make very large changes in our behavior, but only after we’re sufficiently forced by economics to do so.[2] The tiny minority of people who lead significantly greener, less oil-dependent lifestyles will be a sliver of the market until either the free market or our elected representatives raise the cost of living a gray life.
• The key point in Sorrel’s e-mail, and the part that moved me to get his permission to post it, is his observation about how we’re in for some very tough times, but we’re not necessarily making a monotonic descent in terms of the quality of life. This is the crucial dividing line between the ever gleeful doomers and those of us who recognize the reality and seriousness of peak oil, but temper that with the knowledge of humanity’s ability to respond to a crisis. It’s also the point that triggers the bizarre e-mail I get from people who accuse me of being nothing more than the latest economist villain straight out of central casting, someone who thinks we can sit back, ignore peak oil and global warming and everything else so many fret about, and watch as the magic and glorious market solves our problems.

  Put another way, on the spectrum of views about peak oil, we have the peak oil deniers at the far right. Just to the left of them is a mix of camps, including those who think that peak oil will only happen 50 or 75 years from now, as well as those who think the rate of decline in production will be so gradual that natural market adjustments will gently ease us out of oil consumption without so much as mussing our hair.

  Further left is my crowd–the “peak oil is real, imminent, and a very serious problem” camp.

  Far to my left, in the “here be dragons” part of the map, are the doomers.

  I’m not entirely sure where one group should be placed, the people who think “the” problem we face is global warming and that peak oil is therefore a blessing because it will constrain our emissions. They probably belong to my right, between me and that mix of people who think peak oil is real but won’t be a major problem for a variety of reasons. This group, which is almost entirely devoted and passionate environmentalists, is definitely worth paying attention to, however, as they present a perfect example of why viewing such vast and complex problems as peak oil or global warming as standalone issues is so dangerous. Once again, blind men, meet the elephant.

Thanks to Kory Sorrell for the e-mail and permission to reproduce it.

[1] I note, with a mixture of resignation and horror, that in this week’s elections everyone’s favorite Senator, James “global warming is the greatest hoax in the history of mankind” Inhofe of Oklahoma, was returned to office via 56.7% of the popular vote.

[2] Regulation and legislation fall under economics, as the cost of violating the law and being caught and punished offsets all or part of the gains from cheating.

I’ve been surprised by how (and how quickly) the dominant online view of peak oil has changed recently, thanks to the ongoing soap opera known as the “financial crisis” and the dramatic drop in oil prices by almost exactly 50% since hitting its high of around $147/barrel.[1] Much of this reaction is simply wrong, and I think it stems from a simple and understandable misconception, that the current price of oil is a valid predictor of our position with regards to the peak of world oil production. More on this below.

I was reminded of this simmering issue of how to view peak oil yet again this morning when I saw the article Was ‘Peak Oil’ a Multi-Billion Dollar Hoax? and the reader comments it drew. My first objection is the title of the article–raising the question of whether something is “a hoax” should only be done when there is significant evidence that the phenomenon in question was triggered by not just intentional actions, but with an explicit attempt to deceive.

The author of that article recounts the recent history of the price of oil, and then quotes the president and CEO of Saudi Aramco as saying:

We have grossly underestimated mankind’s ability to find new reserves of petroleum, as well as our capacity to raise recovery rates and tap fields once thought inaccessible or impossible to produce….we still have almost a century’s worth of oil under the conservative scenario…and nearly 200 years’ worth under the target scenario. As a result I do not believe the world has to worry about ‘peak oil’ for a very long time.

That’s a reliable source? There’s not even the slightest chance that this person would have an enormous financial incentive to lie and tell the world not to panic over oil because there’s more than we could possible use in the lifetime of virtually anyone alive today?

Another, ongoing reminder of the change in perspective has come via my in-box. Apparently there’s a sub-group of the energy-aware people in this world who are not merely peak oil deniers, but enjoy waiting for something like a looming recession and a major drop in the price of oil before showing up in my e-mail to crow about how current conditions “prove” that there is no such thing as peak oil, I was duped, I helped dupe others, I must be on the payroll of some nefarious group to talk about peak oil being a real and imminent phenomenon, etc.

All of which brings me back to that fallacy I mentioned above: The belief in a hard and fast relationship between the price of oil and whether we’re near, at, or even past the point of peak worldwide oil production. This is most obviously wrong simply because the current price of oil is determined by the interaction of supply and demand, plus some other factors, such as a “war premium” and the effect of general market speculation. Imagine that President Bush addressed the nation and said that the US would soon be attacking Iran, the country that’s made no secret of their desire to block the critical choke point for oil shipments, the Strait of Hormuz, if attacked. Anyone care to guess how high such an announcement–before a single shot was fired–would push the price of oil in a matter of minutes?

To be a bit more precise, I think we need to distinguish between several separate but related events, which I define as follows:

Peak oil. This is the all-time high peak in oil production. Period. It says nothing at all about the total production capacity, the various reasons for reduced output (including politics), the quantity of oil demanded by consumers, the price of oil (either with or without some of those above-ground factors, like hurricanes, wars, and recessions, factored in), or the human and economic impact of the price of oil. It’s nothing more than a measure of actual production.

The price of oil. This is determined by a range of factors, with constrained supply due to falling production being the one many peak oil adherents point to first and most loudly in the price run-up. It was just as wrong to use price as a proxy for “having peaked” as it is now for those from a different camp to use it as “proof” that peak oil is a flawed concept.

The price of oil is not, in and of itself, interesting. It only matters because of the effects it has, such as spurring (or hindering) demand destruction or the development of more expensive oil fields, as well as the human impacts (see below).

The human and economic impact of the price of oil. This is the most important issue, of course. Modern civilization is so thoroughly dependent on oil, mostly for transportation, that a significant, sustained increase in its price could have a devastating effect on the world, national, and local economies. It would also greatly impact public policy at nearly every level, from subsidies for public transportation to decisions to go to war over dwindling oil supplies.

So where does this leave us on the issue of peak oil? I still think that the view I’ve expressed here repeatedly holds: We’re headed for a near-term peak, roughly in 2011. All of the basics of that analysis, from the list of countries that have already peaked, to our extreme level of dependence on a commodity that we consume at the rate of about 85 million barrels/day, to the numerous difficulties in transitioning away from oil (e.g. the time needed to replace a meaningful portion of motor vehicles that don’t rely on petroleum-based fuel) still point to the peak being a real and imminent threat.[2] A looming recession doesn’t change any of that, and some of it, including most of the transition challenges, are made worse by a recession.

Is it possible that we’ll have a severe and long enough recession that the drop in consumption will mean we’ve already passed peak oil? (I.e. by the time demand recovers, we will have consumed enough of the cheap, easily produced oil that we’ll have skipped past the peak.) There’s a fair amount of talk about this, and it’s certainly possible; I would rank it as the second most likely scenario, just behind a 2011 peak. But even so, we have to be very careful about our assumptions. With the price of oil dropping and the credit crunch showing signs of thawing (a much more important sign that what the stock markets do on any given day), the recession could well turn out to be shorter and/or milder than many people (including me) have feared for some time.

The result of all this “on the other hand”-ing is that we should do everything possible to avoid viewing current market events from an overly narrow perspective. Letting ourselves fall into that trap is the equivalent of becoming one of the blind men describing an elephant. And that, in turn, is a perfect formula for reaching bad conclusions and then responding to events in well intentioned but wildly wrong, and even counter productive, ways. With peak oil and global warming both being immense, imminent threats, that’s a mistake we can’t afford to make.

[1] When I say “dominant view” I’m talking about essentially the loudest opinions online, not necessarily the majority opinion. And I’m certainly not implying that any one individual person has changed his or her mind on the topic.

[2] Before anyone succumbs to the urge to e-mail me with a reminder of how much oil in the average field is left unrecovered (about 2/3, I believe), and how a higher oil price will give companies all the needed incentive to find a way to extract more of that oil, let me say: Save your keystrokes. There will certainly be some additional production triggered by a sustained higher market price for oil, just as we’ve seen natural gas production in the US increase thanks to the application of new technology. The question is not whether such a scenario repeats for oil, but how soon it happens and how much oil it generates. And that extra oil production will appear in the context of many large oil fields around the world continuing to decline in their output due to geological factors.

A further complication comes from the nature of business. The current collapse in the price of oil will greatly reduce the incentives for international oil companies to incur the huge costs needed to exploit the most expensive fields. This means we’re left hoping the oil companies make these investments now, as opposed to buying back their own stock or giving their executives obscenely large compensation packages, even though the payoff will be years down the road.

Some semi-random thoughts on the psychotic, roller coaster-from-hell ride we’ve been on recently:

First and foremost, do not assume that today’s 900+ point, record setting, skyrocket routine by the Dow means that “the financial crisis is over”. Nor should you assume that the barely visible signs of the credit market loosening up mean the same thing. While I would dearly love to say this event is over and we avoided nearly all of the human and economic pain we were headed for, I know that any such pronouncement would be nothing more than a guess based on wishful thinking. This situation will continue to evolve, with plenty of surprises, both positive and negative, over the coming days, weeks, and months. But I would be lying if I said I wasn’t breathing a little easier right now, compared to the last couple of weeks.

Second, don’t forget that even if we’ve taken “the Second Great Depression off the table”, as Jim Cramer of CNBC is likely to continue saying, we’re still left staring down the barrel of a recession, looming peak oil, the ever-terrifying risks of climate chaos, and a US auto industry on the brink of a much earlier than (I) expected carmaggedon. That’s one hell of a full plate, by any measure.

Third, do not fall into the trap of assuming that OPEC is run by a bunch of potted plants who will sit by idly and watch the price of oil continue to fall as we slip into a recession. Those exporters have come to really like the price they’ve received for each barrel over the last few months, and they will very likely “trim output to maintain a stable market”, i.e. restrict supply to prop up the price at their November meeting.

Fourth, don’t get caught up in all the hyper-knee-jerk discussion online about how “the financial mess means we’ve hit peak oil already,” or the financial mess we’re in will be the end of capitalism as we know it, etc. The reasoning on the peak oil point seems sound enough at first blush–we go into a worldwide economic slowdown that last for two or three years, but we still keep consuming oil at 90 or 95% of today’s rate, so by the time the economy is ready to turn up again, we’ve slipped right past the peak. But that reasoning is built atop some perilous conclusions. For example, a few years ago, how many people were predicting that US natural gas production would increase again, thanks to new drilling techniques? Sure economists talk about how higher market prices inevitably mean more money is spent on research, development, and deployment of new technology (like ultra deep water oil drilling), and how that can often increase output over what was expected. But I honestly don’t think anyone specifically predicted this increase in natural gas production. At least not publicly. Will the same miracle of technology ride to our short-term rescue regarding oil? I doubt it, and if anything I would say that the “we’ll recess our way through the peak” scenario is probably the most likely outcome, but that’s no reason to bet the farm (or your reputation) on it.

Fifth, it’s not the peak of oil supply that matters, it’s the interaction between supply and demand. That latter dance of the numbers largely determines how much human and economic pain we’ll experience as we approach and pass the peak of oil production. If supply peaks, but we manage to transition away from oil consumption quicker than most people (including me) expect, then we could very easily avoid a significant part of the human impact of peak oil. I have grave doubts that we’ll manage that trick, but it’s by no means certain we won’t.

Sixth, do not assume that all parts of the economy as we know it will be hurt equally by much higher oil prices. Airlines, as I’ve pointed out perhaps a billion times, will be crushed by $250 (or higher) oil down to a microcosm of their current selves, like a styrofoam cup under a few thousand feet of water. Many other sectors of the economy will manage much better (or perhaps less badly).

Some people like to point out that peak oil means the end of organized sports. Nope, not even close. Some high school and college programs will likely be killed off, simply because their institutions can’t afford to put money into such things when they’re struggling with other energy costs (not because the cost of busing or flying a team somewhere is itself too expensive). But here in the US and Canada, MLB, the NFL, and the NBA all make so much money that they will stay in business a long time. Other leagues at other levels of various sports will have their own challenges and ways of trying to adapt, some more successfully than others. Painting them all with one too-wide brush is a huge mistake.

I’m not nearly naive enough to think that anyone will actually take my advice on these matters. The warp-speed, self-reinforcing nature of communication in 2008, especially when it pertains to baseless opinion or analysis (for which read: yet more baseless opinion), means we will see many, many people ricocheting around the blogosphere, leaping from one (mostly) imaginary problem or (mostly) laughably bad set of conclusions to the next. And people like me will continue to bitch about it, only to be ignored yet again. [shrug] Oh well… them’s the breaks.

For those who have wondered: I’ve been mostly offline lately thanks to a couple of real-world situations I had to deal with. Nothing tragic, just time-consuming “personal stuff”. I hope to get back to more regular writing and number crunching this week, but I’m not making any promises.

The energy geek portion of the blogosphere is shuddering like a crackhead French poodle running on linoleum this morning. What has people buzzing along at such a high pitch? GM’s official photos of the 2011 Volt were released today. You can see AutoBlogGreen’s photo gallery here.

I will no doubt incur the wrath of the GM fans out there, as well as the “PHEVs will save the planet” crowd (and I happen to be a card-carrying member of that group, I hasten to note), but let me encourage everyone to take a really deep breath and look at the big picture.

• The very good news is that the “Batman’s economy coupe” look of the concept car is long gone. That design exercise was hideous, in my opinion, and the new version has an excellent mix of US and Euro design elements. Even the interior, where US car companies tend to utterly lose their minds, is something I could live with, even if I think it’s far too George Jetson for my taste and I would much prefer being wrapped in something from Honda’s or Toyota’s designers.
• Any notion that Volt sales will “save” GM is ludicrous. In 2007, GM sold about 3.8 million vehicles in the US, and this year, through August, GM had sold 2.1 million vehicles in the US, down from 2.6 in 2007. All the early projections are that GM will sell very few Volts in 2010, since the car is set to hit the market very late in the year, and even in 2011, they will be lucky to sell more than a few tens of thousands. By comparison, GM sold over 30,000 Chevy Imapalas in the US in August alone (see above link for data). Sales of the Volt, which will be much pricier than higher volume vehicles, like the Imapala, will be so small that the direct financial benefit to GM will be negligible.
• The Volt will be a huge PR asset, though, something GM could need even more in late 2010 than they do now. And they know it. When was the last time any car company made this much noise about a new model, including featuring it in TV ads and showing photos of the final design, over two years before it ships? So far, GM is playing the PR game masterfully, and the media is providing more than its share of help. The one downside here is that GM is pushing specific details, most notably the 40-mile battery range, that could make life very difficult for them if they have to dial that back to 20 miles to keep the cost reasonable or they decide to take a huge risk and sell it at an even higher price than they’re currently saying. A major back peddle on the cost/benefit ratio would hurt a lot.
• Never forget the timing. November 2010 is a long way off, meaning the exterior design of the car could change (although I suspect it will be pretty close to today’s photos), and the interior could (and hopefully will) change a lot. (Interiors tend to be easier to tweak than exteriors, so the odds are in our favor on this one.) I suspect we’ll see the anticipated price of the Volt change at least three or four times between now and the day when you can actually buy one, plus the announcement of other vehicles that will use the same basic platform. (Hint: A higher price will simply beg for a Cadillac version.)
• An even bigger part of the timing issue is the competition. The odds are that by the time we can plunk down bucks for a Volt we’ll also have the option of a Prius PHEV from Toyota plus full-bore EVs from Mitsubishi, Subaru, and Nissan. And who knows what else will be announced over the next 26 months. The Volt is getting 99% of the press now, but by the time it’s available, it will likely be far less exciting.

Having said all this, I’m still glad to see GM not only developing the Volt but pushing it so publicly.

Most notably, GM and the media are doing a lot to educate the public about what a PHEV is, what they’re like to live with, etc. This is a crucial step in transitioning our transportation infrastructure to a much less oil intensive state. When I describe PHEVs to newbies, I tell them, “You plug it in at night, and in the next day you can drive up to 20 or 30 or 40 miles on the battery–no gasoline. If you need to drive further or if you forget to charge it, the gasoline engine kicks in and you’re driving a hybrid. And every mile fueled with electrons is about 20% of the cost of gasoline.” To a person, they love it and want one, now.

The Volt sales won’t make much of a difference to GM’s business prospects, but the PR boost plus the follow-on vehicles built using the same basic technology really will trigger a sea change in the US car market.

The Volt also puts a lot of heat on the competition to accelerate or change their plans. How many people here think Honda will stick by their “no plug-ins, ever” stance until the Volt launches? I sure don’t. Once they see how eager consumers will be for PHEVs, and once battery prices come down out of the stratosphere, I’m sure Honda will suddenly unveil a plan to sell a PHEV version of the new Insight no loater than the 2011 model year.

Finally, here in the US we need as many transportation companies as possible to be healthy as possible. We need them to have the resources to continue to push the engineering envelope and make cars ever more petroleum efficient and safe. And if they do that by jump-starting the electrification of US transportation, that’s good news for everyone.

The common perception in the US and around the world is that the US wastes a lot of gasoline because so many of us drive light trucks (pickups, minivans, SUVs) that could easily be replaced by smaller, lighter, and far more fuel efficient cars. As I drive around US roads and strain to see around all these rolling living rooms, this is quite easy to believe. But how does it stack up to hard analysis? Bust out your calculators as we once again go inside the numbers…

The Transportation Energy Data Book Edition 27 has a wealth of fascinating information for the average energy geek, including one juicy tidbit in Table 5.7, “Percentage of Trucks by Size Ranked by Major Use, 2002″. That table says that 81.5% of trucks[1] under 10,000 pounds average weight are for “Personal” use.[2] Combined with other data in the TEDB27, this magic number lets us make an interesting calculation.

The big question is: If we could instantly convert 81.5% of the trucks on the road to cars, how much less gasoline would the US consume?

Tables 4.1 and 4.2 show that in 2006 in the US:

• The 135.4 million cars on the road consumed 74.983 billion gallons of fuel while traveling 1,682,671 million miles, delivering 22.4 MPG.
• The 99.125 million “two-axle, four-tire trucks” consumed 60.662 billion gallons of fuel while traveling 1,089,013 million miles, delivering 18.4 MPG.

Before you do a pit-take over those low MPG numbers, please keep in mind that these figures reflect the actual performance, including people sitting in traffic, waiting at red lights, leaving their vehicles idle needlessly, etc. They also include a lot of older, less efficient vehicles.

After we wave our magic wand, we have a new mix of vehicles on US roads that looks like this:

• 100% of current cars, driven the same distances and in the same way as they are today.
• 81.5% of current trucks replaced by cars that average the same MPG as the current mix of cars, but are driven the same number of miles as the trucks they replace. (I’ll return to this assumption below.)
• 18.5% of current trucks, driven the same distances and in the same way as they are today.

For fuel consumption, we have:

• Pre-magic wand wave: 135.555 bg of fuel/year.
• Current cars: 74.983 billion gallons of fuel. This value is taken directly from Table 4.1.
• Trucks converted to cars:39.728 billion gallons of fuel. This is the current truck fuel use, 60.662 bg, reduced by 18.5% (giving us 49.439 bg), and scaled down by the ratio of actual fuel efficiencies (18.0/22.4).
• Remaining trucks: 11.222 bg of fuel. This is simply 18.5% of the current truck fuel use from Table 4.2.
• Post-magic wand wave: 125.843 bg of fuel/year.
• Savings: 9.712 bg of fuel, 7.16% of combined car plus truck fuel, 4.55% of total US transportation oil consumption (213.393 bg of oil, converted from Table 1.12; this includes airplanes, boats, trains, larger trucks, etc.), 0.74% of world oil production (1,312.248 bg of oil, converted from Table 1.5).

I’m sure this is the point where truck haters will leap on these numbers and say, “We could save almost 10 billion gallons of fuel per year by replacing trucks with cars!” And the truck lovers will likewise seize on the 7.16% (or 4.55% or 0.74%) figure as “proof” that nothing is their fault. Honestly, I don’t care how people spin this one. It’s inevitable that discretionary use of light trucks in the US will be wrung out of the economy in time, with the next big twist of the towel coming in about two or three years when we experience the next big oil price run up and the acceleration of carmageddon.

As with any analysis at such a high level, there are opportunities to quibble with these numbers. Specifically:

• Notice that in the car and truck stats I quoted above that the average car is driven 12,427 miles/year, while the average truck is driven only 10,986. The ratio of the truck:car miles/year figures, 88.4%, is strangely close to the ratio of the car:truck MPG figures, 80.4%. Do we conclude from this that lower MPG vehicles are used less purely because they cost more per mile to drive? (In other words, households with more than one vehicle tend to shift miles driven from trucks to cars as a way to economize.) Or does it say something more fundamental about trucks, as in many of them among that 81.5% for “personal” use are bought more for toy purposes than for hard day-in, day-out driving? Or maybe the people who buy trucks for personal use know they cost more to run, so the customer base self-selects for lower miles/year applications, even at the lower fuel prices of years gone by?
• Regardless of how you feel about the navel-staring questions immediately above, there is still the question of what other knock-on effects we’d see from such a significant change in the rolling stock of US vehicles. Would those people suddenly driving cars instead of trucks drive more miles? Would the reduction in gasoline consumption lower fuel prices and trigger other car drivers to drive a little more?
• It would probably be more realistic to use a figure slightly higher than 22.4 MPG, since we would presumably have the sense to replace all those trucks with modern, more efficient cars, and not a mix similar to those on the US roads. I doubt the figure would be much higher, though, unless we conjured up a fleet of Priuses. (You can use the numbers in this post to do your own analysis of the savings from doing that conversion, changing some arbitrary portion of existing cars to Priuses, etc.)

An even scarier prospect is what happens to US car companies as new truck sales, under pressure from gasoline prices, decline over time to a level that just maintains that 18.5% base of trucks that are used for non-personal purposes. This phenomenon will be particularly painful in the next few years, as we’re likely to see an incredible glut of trucks on the used vehicle market.

[1] I’m assuming that “trucks” means “light trucks”, and include SUV’s minivans, and pickup trucks. I suspect this assumption is correct, or if it isn’t, that it’s close enough to leave the ensuing analysis still in the ballpark.

[2] Since this 2002 survey, my guess is that this rate rose slightly thanks to our continued truck addiction, and then started to decline just slightly in the last year or so as at least some of us started to come to our senses and run screaming from truck ownership. This number refers to all trucks in use, not just those being bought in any one year, so the percentage will likely change slowly. My guess is that 81.5% is very close to the actual 2008 value.

As oil and gasoline prices continue to slide (oil is $119.25 on the NYMEX as I type this), an immense question looms over the landscape: How quickly and to what extent will US consumers suffer from short-term amnesia?

Assume for the moment that my current Most Likely Scenario is accurate, and that the prices of oil and gasoline will continue to decline for a little while before the next big run-up, starting in 2010 or 2011 and lasting for at least a couple of years before it levels off via demand destruction. And just to be clear: By “big run-up” I mean potentially much higher prices than anything we’ve seen to date. My best guess is that peak oil will hit us quicker and harder than we can react in the short term. Notice how painfully long motor vehicle development times feel right now, for example, as the Big Three struggle to adapt.

Will the people who have been howling about gasoline prices silently go back to shopping for their next Ford Excess SUV, or even the deluxe version, the Wretched Excess? Or will they remember how much pain they’ve been in for months, and continue to find ways to economize, possibly including trading in their current SUV (once resale prices rebound just a bit) for something that’s a more frugal match for their genuine needs?

The answer, of course, is that we’ll see a mix of responses. The most painfully myopic will instantly assume that cheap gasoline is here again (”…and this time it’s forever!”), dash out and buy a Behemoth Belchfire 9000, and feel very good about their decision, at least until the next mule kick arrives.

Most people (he typed with crossed fingers) will probably still be stinging (and paying off bills) from these recent months and won’t trust the “happy days are here again” crowd. They will have learned the crucial lesson about the end of cheap gasoline, at least well enough that it will carry over to the next price run-up.

The real issue is the secondary effects–what happens if pickup truck and SUV sales rebound more than most people reading or writing this site assume? What will the Big Three do in response? Will they continue to dash as quickly as possible to a future product line up of smaller vehicles, smaller engines, PHEVs, EVs, etc.? Or will they succumb to the siren call of truck profits, use every crack dealer’s favorite excuse, “we’re just giving the market what it wants”, and shift and delay some parts of the plan. Sadly, I have no trouble imagining them congratulating themselves for having weathered this latest “energy crisis” and then telling the world (i.e. Wall Street and the investing class) how “fiscally prudent” they’re being. And then, when the next big oil price run-up kicks into gear, I’ll be here screaming about why these companies are dumber than a sack of rocks because they didn’t learn anything from the latest mule kick, just a couple of years ago, back in 2008.

My point in all this hand wringing is not to beat up the car companies or consumers or even to, well, wring my hands. I’m convinced that the entire US economy and how we exploit various energy sources has arrived at one of those inflection points in human history, with almost limitless ramifications for our shared future. Fans of alternate history fiction, or “counterfactuals”, in more formal terms, know the genre well; the thrilling and slightly disorienting story that emerges from one historical event having turned out differently than it did in our world.[1] We’re balanced on a knife edge, and it’s not at all clear to me which direction this mix of economics, politics, international relations, weather patterns, and who knows what else will make us fall.[2]

[1] Yes, I’m a fan of counterfactuals. My favorite example of the genre is Robert Sobal’s For Want of a Nail: If Burgoyne had won at Saratoga, which postulates a failed American Revolution. It’s a book-length work in the form of an alternate history text book. Highly recommended.

[2] If you think I’ve been obsessed lately with this question of where US transportation is going, then you get a gold star for being observant. The reason for this focus is simple: In addition to all the sea changes happening at once in US energy use overall and transportation, there’s the sheer size of the oil flows involved. Of the world’s current oil consumption of 86 million barrels/day, the US uses 20.7. And of that 20.7, 14.26 is used for transportation. That’s 68.9% of US oil consumption, or 16.6% of the entire world’s consumption, and over 118% of US daily petroleum imports. What the US does in the next couple of years in our transportation sector will have a huge impact on the entire world economy. (All US numbers are from the current Annual Energy Review.)

The clowns, that is.

In researching and writing about energy and environmental issues, there are times when I want to scream and beat the walls with my fists until they’re bloody. And thanks to our friends in the automotive business, today provided yet another example of the towering idiocy that sends me into such virtual rages.

What am I blabbering about, one might ask? Try this gem:

Auto Makers Tap Brakes On Fuel-Economy Goals:

The auto industry said federal regulators are pushing too far, too fast in their effort to raise fuel-mileage rules. The complaints from the industry, which had previously voiced support for tougher standards, underscore how economic hardship is affecting a major policy debate.

Auto makers are objecting to new rules being crafted by the National Highway Traffic Safety Administration. The rules would require car makers to achieve a fleet-wide average fuel efficiency of at least 31.6 miles per gallon for cars and trucks by 2015, up from about 25 mpg today. The rules are a first step toward Congress’s goal of achieving average fuel economy of at least 35 mpg by 2020.

The agency is expected to finalize the rules this year, after considering public input and analyzing confidential product-plan submissions from manufacturers.

At a meeting with NHTSA decision-makers on Monday, industry officials laid out some of their objections to the rules. Advocates for more-stringent standards, on the other hand, argued that the agency needs to force auto makers to raise fuel efficiency beyond the proposed levels.

Auto makers earlier had praised the new standards. At an auto show in January, Toyota Motor Corp. President Katsuaki Watanabe challenged his company’s engineers “to meet the new standards well in advance of 2020.” In April, after NHTSA proposed its rules, Dave McCurdy, president of the Alliance of Automobile Manufacturers, said “the industry has made a commitment to step forward and support these aggressive standards.”

In May, Ford Motor Corp. Chief Executive Alan Mulally told industry analysts: “I think we are going to be able to satisfy those requirements.”

…

Asked about the difference between the earlier pronouncements and the more-pessimistic view presented to NHTSA, Ford and the Alliance said their executives continue to support the 2007 energy law that mandates a 35-mpg target by 2020, but worry that a 31.6-mpg goal by 2015 would be too hard to achieve.

…

Many Democrats, consumer advocates and environmental activists said the industry is resisting an important regulation and could pay a political price in future battles on the issue. “They’re playing the same old game of insisting they can’t do it, even though reality is hitting them in the face,” said Mark Cooper, director of research at the Consumer Federation of America.

I’m going to try very hard to get through the next few paragraphs without violating my self-imposed rule about keeping this site family friendly. But I make no promises.

First and foremost, why in the world would any of these executives think they’ll have a prayer of selling a product mix with a fleet average of under 31.6 MPG in 2015? Seriously. They’re being strangled to death by consumers who have very little interest in their current lineups, with gasoline at roughly $4/gallon in the US. By 2015, four bloody years after we’re likely to hit peak oil, what do you think gasoline will cost in the US? Five? Six? Seven dollars a gallon? How many people will want to buy any vehicle that gets less than 40 MPG or doesn’t have an electrical plug? Thirty-one MPG will be seen as a ridiculous gas guzzler from a bygone era, and these guys are whining about having to average that across the fleet, meaning some vehicles can (and will) do worse.

Second, their “Woe is us! We can’t meet those tough requirements!” shtick has grown more than a little tiresome a very long time ago. As others have pointed out, the car companies have been wailing over such things for many decades; the business writer for The New Yorker, James Surowicki, has pointed out that this behavior goes back to the original introduction of safety glass. And it continued through virtually every safety and efficiency requirement proposed or enacted, and none of them turned into the doomsday scenario they predicted. At what point do these sorry excuses for executives and supposed leaders of a major industry feel enough shame when they look in the mirror that it keeps them from saying such things? Whatever that threshold is, obviously we’re not there yet, even when it requires them to make a stunning reversal, as they did in this case. If they were just a smidge more cowardly and greedy and duplicitous they could work for the tobacco companies.

Finally, in the current political climate, I have no confidence at all that all this latest bout of whining by the car makers won’t work. The US is hip-deep in the “silly season” (a.k.a. a presidential election cycle), so all bets are off.

Bah.