The EIA (Energy Information Administration), the statistical arm of the US Department of Energy, has suddenly changed its mind about what most energy prices will do across the years 2008 and 2009, and it’s not happy news.

The data below is from the STEO (Short Term Energy Outlook), which the EIA issues around the first week of each month. The home page for the STEO is here, while the archive of prior versions is here.

So, what do the numbers say?

First up is everyone’s favorite, oil:

In the May 2008 release, the EIA projected that crude oil would average $103.36/barrel in 2008, and then decline to $97.62/barrel in 2009.

But in the June release, which was posted yesterday, they upped their estimate for 2008 to $122.15/barrel (quite a jump from that $103 value in May, but not too surprising in light of the current $135+ price). Even more surprising is that they’re now projecting oil to average $126.00 in 2009, almost $4/barrel higher than in 2008.

From May to June, the projection for the 2008 average price rose 18.2%, and the projection for 2009 rose by 29.1%. The projected change from 2008 to 2009 went from a decline in the May report to an increase in the June report.

Gasoline (regular unleaded, retail price):

May: $3.52/gallon in 2008 declining to $3.44 in 2009

June: $3.78 in 2008 rising to $3.92 in 2009

From May to June, the projection for the 2008 average price rose 7.4%, and the projection for 2009 rose by 14.0%. The projected change from 2008 to 2009 went from a decline to an increase.

Diesel fuel (retail price):

May: $3.94/gallon in 2008 declining to $3.67 in 2009

June: $4.32 in 2008 and 2009

From May to June, the projection for the 2008 average price rose 9.6%, and the projection for 2009 rose by 17.7%. The projected change from 2008 to 2009 went from a decline to no change.

Natural gas (US average wellhead price):

May: $8.64/thousand cubic feet in 2008 declining to $8.52 in 2009

June: $9.82 in 2008 rising to $9.96 in 2009

From May to June, the projection for the 2008 average price rose 13.7%, and the projection for 2009 rose by 16.9%. The projected change from 2008 to 2009 went from a decline to an increase.

(Note that this is not the retail price of natural gas; that price is much higher, and is projected by the EIA to be about $15 for residential customers in 2008 and $17 in 2009, both very high numbers by historical standards.)

Coal:

May: $1.87/per million Btu in 2008 rising to $1.91 in 2009

June: $1.89 in 2008 rising to $1.96 in 2009

From May to June, the projection for the 2008 average price rose 1.1%, and the projection for 2009 rose by 2.6%. The projected change from 2008 to 2009 was an increase in both months.

Conclusions

First and foremost, don’t go nuts over price projections from the EIA or anyone else. As I so often point out here, the energy field is littered with predictions that didn’t exactly hit the mark. The EIA seems to have a particularly inaccurate dart board. That’s not to say that I think this revision of their numbers is wrong; if anything I think it’s conservative and overdue. In fact, it’s hard to look at this flip in projections–from generally downward (2008 to 2009) to generally upward–and not leap to the ever so slightly tin-foil-hatted conclusion that the EIA held out as long as they could before delivering the bad news. A month ago they were predicting an average price for oil in 2008 of only $103.36, for example. In those intervening four months did they suddenly notice (as they say in the STEO release for June):

The combination of rising consumption, further downward revisions in the supply outlook for countries outside of the Organization of the Petroleum Exporting Countries (OPEC), and low surplus production capacity reinforce the perception that supply is having a difficult time keeping up with demand growth, accounting for much of the upward trend in oil prices. Consumption in countries outside of the Organization for Economic Cooperation and Development (OECD) continues to grow rapidly, offsetting weaker consumption in OECD countries, especially the United States. Declining production in a number of non-OPEC nations, including Mexico, United Kingdom, and Norway, is largely offsetting increases in other countries. Slow growth in non-OPEC supply is coinciding with disruptions in supplies from some OPEC countries, such as Nigeria. Ongoing geopolitical concerns in several producing countries, including Venezuela and Iran, have contributed to oil price volatility.

The market remains concerned that the cushion of surplus production capacity of less than 2 million bbl/d (almost all located in Saudi Arabia) and/or stocks is insufficient to protect against possible changes in supply or consumption, especially as we enter the summer hurricane season. The absence of a Saudi commitment to add capacity beyond its current goal of 12.5 million bbl/d adds to the uncertainty about the adequacy of future supply capacity growth.

See the June STEO for the other stunning revelations behind these latest projections, revelations that absolutely no one (by which I mean practically everyone on the planet) has been talking about for a long time.

Combine this report, which I’m sure has a huge influence on commodity traders, with the big drop in US oil stockpiles released in today’s TWIP report (likewise), and you probably have all the explanation you need for why oil is up $6.29/barrel and gasoline is up over 17 cents/gallon on the NYMEX as I type this.

Frequent correspondent EP sent along some real-world data regarding the power supplies in computers.

I’m posting it here in its entirety to stress the importance of “little” energy savings. Many people are focused on really huge, obvious savings, like increasing the US CAFE standards to something that will have an effect (the new ones are a bad joke), but the small changes can add up to a major benefit. Saving 10 or 20 watts on a PC power supply becomes very important when you have [1] many millions of them running, and [2] they’re running for hours every day, and in many cases 24/7. We have a pretty sizable amount of potential savings right there for the picking, as soon as we get serious about pursuing it.

(Speaking as someone who’s done far more than my share of Windows re-installs and upgrades, for myself and friends and consulting clients going all the way back to version 1.0, I wonder how many kWh of electricity could be saved every year if Windows booted in a reasonable amount of time and didn’t give people such a huge incentive to leave computers running around the clock. But I digress.)

Anyway, on to EP’s missive:

90% efficiency should be possible. Part of reaching that would be to stop chasing insanely powerful power supplies. My P4’s and AMD desktops and servers are between 40W and 160W power draw.

First some interesting sites. This one assumes a lot such as a 40W to 60W power draw with estimated savings of only 5W or so. In reality - my tests show 25% savings - even at low power levels like 60W. But these power supplies shine on a server or high end machine sucking back >100W - giving a payback of 2 years or less (asuming $0.10/kWh, computer on 24×7).

http://www.silentpcreview.com/article684-page5.html

The EarthWatts PS seems to have been released around OCT 2007 and I’d not heard of it - and I’ve been asking my suppliers for just such a power supply. Antec server cases I bought just 8 months ago had the older, much less efficient power supplies.

A web site with info about the 80Plus certifcation - this is just a PDF on it which Google found.

http://www.80plus.org/manu/psu/documents/CORSAIR-CMPSU-550VX-550W-Report.pdf

Ok - the numbers as I measured them.

Basically most computer switching power supplies are only about 65% efficient. I’ve seen exceptions - IBM Evo, Compaq micro case which were signif. more efficient (65W for the Evo and Compaq P4’s vs 100W for a P4 with a generic power supply).

The Antec I tested is PS-AN-EA380, $53 Cdn each (compared to about $30 for a run of the mill 300W power supply).

By “regular power supply” I mean older and non Earthwatt Antec, AOpen, SPI, DTK or other generic power supply.

Test case - P3 computer system
------------------------------

                Standby Draw   In BIOS   In Win XP

AOpen FSP250        4W            52W       52W

Antec Earthwatt     4W            36W       36W

Test case - AMD 2.4GHz Athlon 64 system with Cool 'n' Quiet 

enabled (double the power rating if Cool 'n' Quiet is not 

enabled and double it, nearly, again if it's not enabled on a 

dual core CPU)

-------------------------------------------------------------------

                Standby Draw   In BIOS   In Win XP

AOpen FSP300        7W            84W       59W

Antec Earthwatt     5W            64W       43W

I’m not impressed by the standby power draw. I was hoping that it would meet the 1W or less spec. But there is an aprox 25% improvement in efficiency of conversion from AC to DC. Part of this issue is, I believe, the actual amount of power drawn by the motherboard when it’s in standby.

For new servers I have - 153W in Linux for Core 2 Duo’s - the power draw would be reduced to 115W. Savings would be about $40/year in electricity alone. Other benefits include less load on the UPS, better uptime with the UPS, less heat generated (basically 25% less since server rooms don’t have monitors).

I’ve emailed to complain to SPI and AOpen about their horrible power supply efficiency. I’d heartily suggest that you all do that too. This is one of the easiest ways to cut costs, deal with heating and beat a path to a slightly greener future. Only Antec provided a phone line to complain to - SPI and AOpen only provided an email forum on their sites.

Responding to urgent energy challenges - IEA calls for greater investment in the oil sector and for CCS to be made eligible to receive revenues generated by the CDM

“With oil prices surging over USD 110 a barrel and growing concerns over the environmental repercussions of the world’s spiraling energy demand, the dialogue between energy producing and consuming countries is more meaningful than ever”, said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA), in his key note address to the 11th International Energy Forum (IEF) today in Rome. Stressing the value of this unique forum for policy dialogue to which Ministerial delegations and senior policy makers from over 90 countries have been invited this year, he detailed IEA analysis of the key global energy challenges the world needs to address in the coming years.

High Oil Prices

“Current oil prices are too high, especially for developing countries which face other significant cost increases, and considering the threats to global economic growth at the moment”, Mr. Tanaka emphasised. Amid various views about the reasons behind the price rally – some blame market fundamentals, others speculation and financial flows - the IEA sees a combination of different factors driving this phenomenon: primarily, strong demand growth in the developing world coupled with constraints in bringing new oil to the market. During the past five years, spare capacity has fallen below the 3-4mb/d typical of the past decade. IEA analysis shows that there is no quick fix on the supply side and spare capacity is likely to remain tight. This underscores the need for more investment.

Investment

“Investment is one of the main challenges we are facing in the global energy sector”, Mr. Tanaka said: “USD 22 trillion in investment will be needed in energy-supply infrastructure by 2030. The oil sector alone needs USD 5.4 trillion. Although spending has recently increased, supply growth could remain sluggish, because of increasing costs and a proliferation of above-ground risks, such as more frequent access limitations and tighter fiscal and regulatory regimes.” The IEA calls for investment now to ensure adequate supplies of all forms of energy. Unless current policies change, world energy demand will more than double by 2030. There is a clear need for governments and industry to do all they can to increase the output response of new investment and for national and international oil companies to enhance cooperation. In the short to medium term, increased energy efficiency can yield substantial savings in energy consumption and can help improve the country‟s energy security while at the same time reducing CO2 emissions.

Climate Change

Climate change is another key challenge, against the background that fossil fuels will still continue to dominate the global energy mix in the foreseeable future. Without new policies, CO2 emissions could jump 56% by 2030, leading to an eventual increase in average global temperature of up to 6oC.

With this in mind, the IEA is currently analysing what would be needed to meet the most ambitious IPCC scenario of cutting emissions by 50% by 2050. A report to be presented at the G8 Summit in Hokkaido will show that meeting such a target would entail a huge amount of investment and unprecedented technological breakthroughs such as in carbon capture and storage (CCS). Mr. Tanaka urged Ministers gathered in Rome to support making CCS eligible to receive revenues generated by the Clean Development Mechanism (CDM) as it could accelerate deployment of this crucial new technology. “The deployment of CCS should be a ‘litmus’ test for the seriousness of environmental negotiators dealing with climate challenge.”

“In short”, Mr. Tanaka said, “the world´s energy economy is on a pathway that is not sustainable”. This is valid for the oil market, where there is an urgent need for investment, to ensure an adequate cushion between supply and demand returns to the market. This is also true from an environmental perspective. “In the long term, to meet environmental concerns, we will require a veritable energy revolution that completely transforms the way we produce and use energy. However, the energy sector should not be viewed only as the cause of the climate problem but also as part of the solution”, Mr. Tanaka said. After all, it readily lends itself to provide the type of transferable skills required to prosper in a low carbon economy.

An essential step in this process would be to continue the dialogue between producers and consumers, Mr. Tanaka said and stressed that the dialogue had already resulted in concrete achievements such as the Joint Oil Data Initiative (JODI). “It must now focus on areas where progress is needed and where mutually beneficial outcomes are possible”, he said, citing as an example cooperation between the IEA and OPEC on carbon capture and storage — a technology which would be doubly beneficial as it would lead to lower CO2 emissions while enhancing oil recovery.

My take on all this:

While I have no doubt that current oil prices are hurting developing nations more than they are the US and EU, Japan, et al., and I also agree that these prices are the result of a mix of factors, mostly supply, I was still disappointed by the lack of clarity in the IEA statement. They say that there “is no quick fix on the supply side”, but they call for more investment. Are they taking the classic Cornucopian viewpoint and that the supply shortage is due to above-ground factors, and that it can be relieved in time with greater investment? Or are they both more enlightened and more short-sighted, and they see the peak looming but want to get at least some relief in the shorter term, even at the price of making the longer term situation even worse? At this point in human history, I’m not sure which view would be more damaging.

When they speak of investment, they seem to want a mix of more energy coupled with conservation. As long as the increased energy supply is from an extremely low CO2 source (with no other nasty problems hanging over it) then I agree. I would have preferred a little more emphasis on the conservation front, perhaps as an implicit poke at the US to get moving on that front.

I’m not sure why the IEA is focusing on the 50%/2050 goal, when so much discussion from experts assumes that the real goal should be 80%/2050, but that’s the least of my concerns with this portion of the IEA release. I find their emphasis on CCS, to the point of essentially elevating it to silver bullet status, very unnerving. We don’t even know for sure that we can make CCS work on the scale needed, or what it will truly cost to retrofit it onto the thousands of coal-fired electricity plants around the world, almost none of which were sited or designed and built with CCS in mind. In that light, the IEA release sounds like a very polite way of saying, “We have to do everything we can to get CCS working, now, because without it we’re screwed beyond belief.”

And then the release returns to the oil issue, and how investment can provide “an adequate cushion between supply and demand”. Taking them at their word, just how long, one wonders, does the IEA think this cushion would last? If the peak in world production is really just three or four years off, as I and many others think, then a wave of new investment now wouldn’t even bring new supply online before we hit the peak. And even then, all it would do is help deplete oil reserves even quicker. We would literally be paying now for the ability to steal oil from our future selves.

I agree completely that we need to take a more holistic view of the situation, and consider both energy and environmental issues as one tightly interwoven mega-topic. But that view has to be based on a realistic accounting of the peak oil situation and the steps we can and must take to reduce our CO2 emissions.

OK, time to wrap up my whirlwind tour of energy and environmental predictions, projections, and blatant guesses. I posted Part 1 three days ago, and you can see my caveats about this exercise there.

Global warming
Like my prediction for peak oil, I think it’s clear that the info-war between the believers and the deniers will only get worse. In particular, the deniers will continue their well established pattern of latching on to every minor detail, whether it has any significance or not, and claiming that it somehow proves that “global warming is a hoax” or that it’s some sort of plot to make scientists or policymakers rich or powerful. (I’m still trying to figure out how I cash in on all that supposed money sloshing about.) They will also continue to indulge in the flip side of that pattern, and claim that every collapsing ice shelf or heat wave that kills thousands is merely part of a pattern that has been going on for millions of years. The fact that they treat events that support their denialist views differently from those that are inconvenient (to borrow a term) will never seem to occur to them.

The facts on the ground (and in the air and under the sea) will continue to show warming. Because we live on a big planet with lots of flows of air and water moving heat around, there will be temporally local dips and surges, but unless the basic laws of thermodynamics are repealed the planet will continue to absorb more heat than it reflects back into space, which means it will continue to heat up. These local fluctuations are directly analogous to peak oil and someone finding a big oil field with a few billion barrels of crude–it makes headlines, and causes a lot of running in circles and shouting, but it doesn’t change the fundamentals of the situation.

I don’t even know how to feel about the prospect for continued melting in the Arctic and Antarctic. I would like to think that dramatic, record-setting events at the poles might be enough to move us to action, but I now think that’s being naive. There will be such a chorus of people screaming about how cycles in the melting are normal, and how an ice-free Arctic will be a boon to shipping and oil exploration, that it will only feed the war of words and lead to further policy paralysis.

On the policy front, we will see a lot of false starts on cap-and-trade programs. It will take a lot of arm twisting and some truly ugly compromises to get from where we are now to a reasonably comprehensive and “fair” (whatever that means) CO2 cap.

Water
Water is at the intersection of global warming and peak oil issues. In brief, peak oil means higher prices for gasoline, which pushes people to electrify transportation, which means greater reliance on thermoelectric generation (coal, oil, natural gas, nuclear), which in turn means more water draw for electricity generation.

At the same time, global warming means less summer melt from smaller snowpacks, which reduces hydroelectric generation. Global warming also will cause droughts in some areas, leading to reduced electrical output from generating plants.

In short, just when peak oil is leading us to rely ever more on generating electricity, global warming will make it more difficult and expensive to keep the electrons flowing.

We will increasingly have to add water consumption and availability as a major planning point in electricity generation, along with the availability and cost of fuel and the emission of CO2.

Wind, solar, wave, tidal, underwater turbines, geothermal
All of these will see a lot of R&D, and even more policy support, albeit unevenly as various politicians enter and leave office and things like the PTC (production tax credit) expire (or nearly expire) and are renewed. In this area, the US will continue to look like hapless idiots in comparison to the EU.

Nuclear
There will be more nuclear power plants built in the US and around the world, even though no one will find a truly good answer to the issue of how to deal with existing and newly created nuclear waste.

US government subsidies will provide a major push for nuclear power’s “renaissance”, although the portion of electricity it supplies (currently about 20%), will rise only slightly over the next couple of decades.

Thousands of years from now, archaeologists will find Yucca Mountain and wonder why we dug this immense, elaborate facility in a desert mountain and never used it for anything. After much theorizing they will conclude it was some sort of cult project that was abandoned because we couldn’t figure out how to make toilets work.

Cars
The US car companies are just beginning their struggles. They’re far too heavily dependent on trucks, and even when they try to embrace hybrid technology they often get it wrong, as in GM’s big advertising push on full-size SUV hybrids. (Most people crushed by gasoline prices won’t trade in a big SUV for another big SUV, hybrid or not. They’ll instead go for a Camry-size car that costs much less than a full-size SUV and gets better mileage than even the hybrid variants.)

The acceptance of diesels in the US will be slowed by the high price of diesel fuel over gasoline (or at least the fear that such a price disparity will resurface). As I write this, the US average for gasoline is $3.36/gallon, while diesel is 20% higher, at $4.06/gallon. That 20% premium is close enough to the usual miles-per-gallon advantage of diesel over gasoline that most people will stick with gasoline and avoid the hassles of finding diesel fuel, which can still be an annoyance in some places in the US.

Hybrids will gain even more traction through a trio of effects: Green image, lower hybrid price premium (a major focus for Toyota and Honda, in particular), and ever-rising gasoline prices.

It will become apparent just how ridiculous the new 35MPG/2020 CAFE regulation is–the price of gasoline will provide far more incentive than that law ever will. But you can expect the Big Three to complain endlessly about the horrors of a 35MPG fleet average.

The big event on the car front will be the arrival of plug-in hybrids and full electric vehicles. GM’s Volt, Nissan’s Denki Cube, Subaru’s R1e, and Mitsubishi’s iMiEV could all be in US car dealerships in late 2010 or early 2011. US consumers will absolutely love them, if the people I’ve presented to are any measure, and this will set off a scramble among other car companies to accelerate their in-place development work for similar vehicles.

The biggest unknown in electrifying transportation will be how much better and cheaper batteries (by which I mean both batteries in the traditional sense plus ultracapacitors) will be at production volumes in a few years. A lot of very smart people are doing a lot of extremely well funded R&D in this area, so I’m pretty optimistic.

Airlines
Airlines will face considerable pain for years as the price of fuel rises. There won’t be any alternative fuels available in significant quantity for at least a decade, leaving the airlines to cut corners, cut flights, merge, and struggle to stay afloat while they wait for a miracle.

The recent rash of bankruptcies among smaller US airlines will probably continue for a while as the entire industry is contracted by rising fuel prices and a recession. Most of the contraction will come from the larger carriers as they fly fewer seats between destinations in a struggle for profitability.

In the longer run we could see these trends continue until airline travel becomes a much smaller volume and higher priced option, a boutique industry that caters to the wealthy and powerful.

US psychological factors
Even though I touched on this to some extent in part 1 of these predictions, I want to address it here as a standalone item, as I think it’s the biggest unknown of all: The overall mindset of the US consumer and voter. Someone commented in response to part 1 and reminded me about Dick Cheney’s (in)famous remark about how the US lifestyle is “not negotiable”, and I think that cuts right to the heart of the matter.

It’s not just a matter of how green and efficient US consumers are willing to be. I see a lot of people making real change. Yes, it isn’t happening with the breadth and depth I would prefer, but it’s there and it’s gaining traction.

No American reading this should think for a nanosecond that this will be easy. We’ve barely done anything in the US to curb our CO2 emissions or oil consumption. It’s not hard to see why–the current “high” gasoline prices here are laughably low compared to those in many other places in the world, and the price on CO2 emissions is precisely $0.

Even something as simple as building smarter homes is a struggle. Many home builders offer endless options for things like setting up entertainment rooms or adding in-ground pools to a new house project, but ask them about beefing up the attic insulation or (horrors!) adding a solar thermal water heating system and you may as well be speaking Neptunian. (I think this is largely due to the inherent business conservatism of many people in the construction business. While it’s arguably an example of a very small group of people creating a large road block, I think it’s representative of the kind of mental barriers we have to knock down.)

But I have to ask: What happens when, as I fully expect, oil prices rise substantially in a few more years? How willing will Americans be to use military force to “secure” a supply of oil? For that matter, will many Americans, who now overwhelming dislike the Iraq War, suddenly and secretly be glad that it bought us free-market access to an immense amount of both oil and natural gas? (And is this what Bush referred to when he talked about how history will judge his Iraq policy favorably?) How many of us will be happy with that exchange of other Americans’ blood for oil? And how willing will some of us be to do it again, rather than negotiate a new lifestyle?

Are you uncomfortable with those questions? How uncomfortable will you be with the answers, if they turn out to be what you and I fear the most?

Summary
By now you’re probably thinking that I’m pretty pessimistic about all these looming energy and environmental challenges and how we’ll deal with them. In fact, I’m confident that we’ll handle all of them–peak oil, global warming, water shortages, and more. It won’t be fun, it won’t be cheap, and we’ll make some truly stupendous mistakes along the way, including a least a couple that will make the current US corn ethanol policies look brilliant by comparison.

The number one thing that gives me hope isn’t the grudging change made by people my age, but the eagerness to attack the problems I saw in the ten classes of middle school students I presented to at Greece Athena here in Rochester. These kids didn’t care how bad the problems were, they didn’t care how much worse the old people of the world were still making them–they wanted everyone to get out of their way so they could get to work fixing them right now.

Sure, a big part of that mindset is naivete–these kids don’t know enough to know what “can’t” be done. Good. Right now we need a little more of that boundless energy and determination and a lot less of the greed and battle-scarred cynicism so rampant in the people currently running the world.

In talking with various other writers and visitors to this site, the question of “OK, so where do you think we’re headed?” often comes up. Since I think this is a useful way to address all these interlocking issues in the energy + environmental arena, I will lay out my views on all the various sub-topics in two posts, beginning with this one.

Please note that in this sweeping exercise I’m focused mostly (but not entirely) on the US, and mostly (but not entirely) on the next 10 years. I also reserve my right, as detailed in the US Constitution, to be wildly, laughably, stupefyingly wrong.

Oil
The world production of oil will peak around 2011/2012. It won’t be a sharp peak-and-decline, but an undulating plateau as rising prices make it economical to bring ever more expensive supplies online and also constrain demand. In particular, those rising prices will provide the political pressure needed to make the US drill wherever we can find oil. And drill we will–ecologically sensitive offshore areas, ANWR, etc., will all be tapped, in time. The same basic conclusion applies to oil extraction in the Arctic or anywhere else on the planet. This is an inescapable conclusion once you accept that peak oil is real and imminent.

The price of oil will fluctuate a lot, with a generally upward path. There may be a slight dip in the next couple of years, but this will be a short-term anomaly, not a “return to the good old days of cheap oil”.

The biggest wild cards in oil demand over the next decade will be China and the domestic consumption of the exporting nations. Both of these factors could make the tight world oil market effectively much tighter from an oil importer’s viewpoint.

The war of words over peak oil will continue and get ever louder and more annoying. Every time someone finds a new oil field, it will be trumpeted by the cornucopians as proof that peak oil is “wrong”, and every shortage or price spike will be paraded around the blogosphere as proof that we’re all going to die shivering in caves in five years. I will continue to detest both groups and complain about them here, or on whatever online form this blog evolves into during the next decade.

Coal
The big political battle in the energy and environmental world will be in the building of new, non-CCS coal plants in the US, as the pressure to “do something” about coal will become overwhelming, even as CCS technology looks less and less promising.

The third rail of US enviro-politics will be what we do with the nearly 1,500 coal plants already in service here. No one will come up with a good plan to retrofit them with CCS (carbon capture and sequestration) technology, and any attempt to replace them with natural gas or nuclear or renewables will be an extremely hard sell, thanks to the sheer number of coal plants.

The US coal-fired electricity issues will be nothing compared to the growing mess in China. Getting Kansas to forgo new coal plants was a struggle; getting China to stop using coal in dirty plants will be virtually impossible.

As oil prices continue to rise, possibly with some supply interruptions added to the mix, the pressure to convert some of the US’ vast coal reserves into liquid fuel will be overwhelming. Can it be done in a way that doesn’t aggravate the global warming situation? Can it be scaled up to replace a meaningful portion of US transportation fuel demand?

Natural gas
The very general price trajectory will follow that of oil, but with less volatility and likely less of a percentage increase. But the overall scenario–higher prices, more difficulty in meeting worldwide demand, more exploration and development of previously off-limits or marginal reserves, and some perverse above ground factors (such as local opposition around the US to the building of new LNG terminals)–will look hauntingly familiar to anyone who follows oil issues.

It’s not clear to me how much new electricity generation will rely on natural gas. Utilities will like the greatly reduced CO2 emissions, relative to coal, but they’re probably quite nervous about the prospects for prices decades from now.

Ethanol
The boondoggle of starch-based ethanol in the US will continue. The political influence of corporate agriculture and Iowa (thanks to its early position i the US presidential primary process) will guarantee it.

Cellulosic ethanol will continue to develop, and we’ll likely see the first large scale plants online within five years. That’s when things will get interesting, as the market interaction between starch and cellulosic ethanol supplies, plus the change in the biomass supply infrastructure, all begin. Will we see land currently used for growing food converted to growing genetically modified poplars and switch grass? Probably not on a large scale, but such effects are influenced by so many other factors–public policy, world oil price, the food/fuel interaction potentially pushing some farmers to revert corn acres back to wheat and other grains–that it’s almost impossible to make a firm prediction.

Unless there is a stunning advance in cellulosic ethanol production (with a matching transformation of the infrastructure), it will become obvious pretty quickly that the US government mandate for producing 35 billion gallons of ethanol per year won’t be reached and was a ridiculous goal.

Hydrogen
Hydrogen fuel cells for cars will continue to draw lots of research money (i.e. government grants), and will never be able to answer the simple question: How can you fuel a significant number of such vehicles at a lower price/mile than plug-in hybrids or electric vehicles, and without creating an unacceptable amount of CO2 emissions? It may well take more than a decade for the hydrogen fairy tale to die.

Algae biofuels
This is one of the biggest unknowns in our energy future. Current work in this area seems extremely promising, and I would love to see algae farms popping up near coal plants worldwide turning some of those CO2 emissions into something that can then be refined into motor fuel. But how well will it really scale, and at what cost? This could turn out to be anything from a “niche of a niche”, a parlor trick technology that never makes a meaningful contribution to our energy needs, to a game-changing breakthrough. I’m optimistic, as it seems like the technology is simple enough and inherently scalable enough that it should be a significant player in just a few years.

US consumers
US mainstream consumers will continue to present a very mixed picture. Many more of them will become much more efficient in their transportation choices: More efficient vehicles, less driving, more use of public transportation, etc. Similarly, we’ll see a lot more interest in improving the performance of homes through better insulation, windows, and doors, more efficient heating and cooling systems, more adoption of solar thermal water heaters, plus more use of alternative strategies, including zone heating and cooling, using auto-setback thermostats, etc.

Some will even take the astonishing steps of educating themselves about energy and environmental issues and getting involved in the political process. They will write to their elected representatives, volunteer and vote for better candidates, and work to help educate others about the myriad of issues involved in our consumption of energy.

Sadly, not nearly enough Americans will take these steps. Many will continue to insist that high oil prices are just another example of “the oil companies screwing us” and spend all their time complaining about their gasoline and heating bills instead of taking action. There will be no end of peak oil and global warming deniers getting more than enough free press to help feed these perverse, uniquely American, tendencies.

US politicians and public policy
A far greater disappointment than US consumers will be US politicians. Nearly all of them will continue to shun “peak oil”, at least openly, and will focus on global warming and the every candidate’s favorite canard, “achieving energy independence”.

This head-in-the-sand approach is partially due to demographics–politics is dominated by old, rich people who have never studied economics or energy issues in any detail outside of the legislative process or campaigning for office, so they can’t grasp that such fundamental shifts are happening right before their eyes. But mostly it’s the influence of money, which badly warps the entire US political system in favor of those entities with the resources and the most to gain from buying politicians.

With all the talk recently of EV’s being tested in various countries and three models (Subaru R1e, Mitsubishi iMIEV, Nissan Denki Cube) potentially arriving in the US in just a few years, it’s worth revisiting once more the notion of how well such a product would be received here.

My longtime position has been that if you make even minimally reasonable assumptions about the vehicles–they’re safe, they’re as efficient as one would expect a small, all-electric vehicle to be, they’re affordable, and they don’t have any weird “gotcha” details–they’ll find millions of happy owners.

My reasons:

• By the time these vehicles come onto the market as a mainstream transportation option, circa 2012, gasoline will likely be much higher than it is today, giving people a far greater economic incentive to switch to an EV. The price of electricity will also have risen during that time, but it will still be far cheaper per mile driven to fuel with electrons than with hydrocarbons.
• Even if the car has a modest range, say 50 miles (although I expect 100 to the the norm), it will still work very well in daily commuting and local errand duty. Families with more than one vehicle won’t replace all of them with EV’s, but they could replace one, and in time up to N-1, with EV’s. Eventually I would expect a lot of American households to adopt the strategy I first heard from my father-in-law at least 15 years ago: You own only EV’s and you rent a gasoline or ethanol powered vehicle when you need to make a long distance trip. There would be more initial social resistance to that model in the US, but the rise of very short term car rental services, already well underway, could ease that transition nicely.
• Consumers and businesses will quickly figure out the benefits of EV’s. You will likely be able to buy one with a choice of battery pack size, as well as upgrade it years after the initial purchase through the dealer or a third-party company. I would also expect to see companies, including car dealerships, rent auxiliary battery packs–extend the range of your EV from 100 miles to a more trip-friendly 250 miles for a week, etc.

I’m not predicting that EV’s will instantly be a universal replacement for vehicles with internal combustion engines. Some people won’t like EV’s for whatever perverse reason, some really do need larger vehicles with special capabilities, some don’t have a handy way to recharge them overnight (as in their own garage), and there’s the most obvious problem, a battery range that’s far less than the even a single fill up range for a gasoline powered car of the same size.

So far, even restricting EV’s for commuting use sounds pretty revolutionary: Millions of drivers piling up billions of short-trip miles without a drop of gasoline being consumed, and considerable savings in CO2 emissions.

This was exactly the line of thought that led me to the conclusion that the real EV revolution is in the second plug.

Nearly all discussions of EV’s assume the same basic operating model: You plug it in overnight to slowly recharge the battery, and in the morning you drive off. If you’re lucky, you can plug in during the day (note to hotels, airports and parking garages: here be profit potential), but most people will return home on that same charge from the previous night. The critical detail is that it takes hours. not minutes, to recharge a battery that’s even half discharged.

But what if your EV had two plugs? One that connected to a normal 110-volt socket in your garage, and one that could handle a much larger current and give your battery, say, an 80% recharge in 15 minutes? Would you be willing to stop at a filling station for a 15 minute recharge and cup of coffee every 100 miles (instead of a 5 minute gasoline fill up every 300 miles) if it meant you could save 10 to 15 cents per mile in fuel costs? And remember, you could still top off your battery at home overnight, so you would only have to resort to the filling station for longer trips.

This isn’t just speculation, as there’s been a lot of talk about quick charging car batteries, with that “80% in 15 minutes” capability seeming to emerge as “the” target, and I’m sure that the engineers working on driving down the cost of battery packs are also spending time finding ways to make them withstand the considerable stress of such high-current recharge cycles. This could, in fact, be the perfect market opening for ultracapacitors, which should be able to take on a full charge much easier than a true battery. But for the purpose of this post I don’t care what’s inside the “battery pack” as long as it safely and efficiently stores and then delivers electrons.

Once such dual-plug EV’s hit the road, how long do you think it would take before filling stations started adding quick-charge capability? This infrastructure build out would take time before charging stations were available “everywhere”, but that limitation would be buffered by the potential, mentioned above, for people to buy or rent battery pack upgrades for special circumstances.

At that point, how quickly would you and most people you know ditch your gasoline cars completely, knowing that you would pay much less for fuel, pollute less, contribute less to your country’s trade deficit, and no longer care what the price of oil is doing in response to events halfway around the world?

If that’s not the beginning of a complete revolution in personal transportation, I don’t know what is.

In this episode: green jobs, glaciers, Russian nukes, oil and money

Execs see green energy policies preserving US jobs:

Top U.S. business leaders see government regulation and policies on climate change as key to protecting manufacturing jobs that could be lost to overseas rivals who are investing heavily in renewable energy sources and technologies.

Executives from manufacturers to oil companies to venture capital firms criticized the United States government sharply for failing to invest in new energy technologies, create aggressive energy efficiency standards and extend tax subsidies for clean energy sources such as wind and solar — measures they say would create jobs for Americans.

“The entire chemical industry and manufacturing sector has lost 3.1 million jobs due to bad energy policy or a lack of a coherent energy policy,” Dow Chemical Co (DOW.N: Quote, Profile, Research) Chief Executive Andrew Liveris said in an interview at a Wall Street Journal conference near Santa Barbara. “We have a manufacturing crisis in this country … The leadership of this country needs to step up.”

Improved energy efficiency standards for buildings and appliances; more research and development into biomass, clean coal and other technologies; and opening more U.S. acreage to oil exploration would all help create jobs, Liveris said.

Wait a second–are they saying that promoting business is good for jobs? That can’t possibly be true, or the current “better for business than you can imagine” Republican administration would have been all over this opportunity like sweat.

But seriously, folks…

This is one of those details that drives me nuts. The global warming delayers and deniers will tell you endless fables about how man-made global warming is some kind of uber-plot to make vast sums of money or control the planet or some such insane thing. (I wish someone would clue me in how to become part of the Star Chamber running that scam; I’d love to be a billionaire or own my own troical island. Heck, I’d settle for a mile of property long Lake Ontario.) And they tell you how expensive it will be to transition to cleaner, more sustainable technology. But they never seem to get around to talking about two aspects of our situation, namely [1] what the impacts will be, economic and otherwise, if we don’t make the transition, and [2] what economic benefits we’ll see from doing things like those mentioned in the article above.

U.N.: Glaciers shrinking at record rate (emphasis added):

Glaciers are shrinking at record rates and many could disappear within decades, the U.N. Environment Program said Sunday.

Scientists measuring the health of almost 30 glaciers around the world found that ice loss reached record levels in 2006, the U.N. agency said.

UNEP warned that further ice loss could have dramatic consequences particularly in India, whose rivers are fed by Himalayan glaciers.

The west coast of North America, which gets much of its water from glaciers in mountain ranges such as the Rockies and Sierra Nevada, also would be affected, it said.

“There are many canaries emerging in the climate change coal mine,” UNEP’s executive director Achim Steiner said in a statement. “The glaciers are perhaps among those making the most noise and it is absolutely essential that everyone sits up and takes notice.”

(I can’t find this item on the UNEP web site. Perhaps it’s just not posted yet.)

The problem here is the effect on summer water supply for all purposes, including hydroelectric and thermoelectric generation, drinking and sanitation, manufacturing, etc.

Putin Beats Soviet Sword Into Atomic Weapon for Generator Sales:

For decades, Russian civilian nuclear scientist Vladimir Asmolov lived in the shadow of the bomb makers. They were the elite, their names and work secret, building the arsenal behind a superpower.

While the Soviet Union lost the Cold War, the Russians are back as a nuclear force. Asmolov, deputy head of nuclear-plant operator Rosenergoatom in Moscow, is tapping yesterday’s military brains to develop a new generation of atomic plants. Russia’s reactor industry aims to compete with Westinghouse Electric Co., General Electric Co. and Areva SA.

Since the 1986 meltdown of a reactor at Chernobyl in Ukraine, Russian engineers have adopted safety measures similar to those used in the U.S., including reactors that shut down automatically when there’s a fault. Rosatom Corp., the state-run nuclear holding company, expects to build as many as 42 plants in Russia and 60 abroad by 2030, according to Chief Executive Officer Sergei Kiriyenko. The value may total $300 billion, based on Russian estimates.

See the article for much more detail about this effort and their potential customers.

Oil Retreats From a Record Amid Signs the Fed Will Cut Rates:

March 14 (Bloomberg) — Crude oil in New York retreated from a record, amid signs that the Federal Reserve will reduce interest rates next week to spur economic growth.

Five U.S. interest-rate cuts in the past six months along with steady rates in Europe have driven up the euro against the dollar. Investors project the Fed will lower the benchmark rate by three-quarters of a point at its next meeting on March 18. The falling dollar has spurred a rally in commodities.

“This market won’t fall until either we enter a very deep recession or the Fed stops pumping money into the market and weakening the dollar,” said Kyle Cooper, director of research at IAF Advisors in Houston.

Economics doesn’t get much simpler than that. The Fed needs low interest rates to save the housing and credit sectors, but it also needs high interest rates to rein in inflation and strengthen the dollar. It (and we here in the US) can’t have it both ways.

In the next few months, perhaps longer, look for the Fed and Helicopter Ben Bernanke to do everything possible to get lenders lending again, even at the cost of moderate to high inflation and a substantial boost to oil prices. As ugly as that could get, it will still probably be better than the alternative–letting the US housing sector all but burst into flames around us while credit dries up even further. (I’m not passing judgment on whether the Fed can actually fix this mess, merely describing what it’s likely to do.)

This is no great insight on my part, as practically everyone in the “investing class” and the financial press has figured it out. That’s why there’s such a flood of money going into five-year US treasuries that they currently have a negative yield; people are scared spitless of a major bout of inflation.

The US housing situation will likely get worse before it gets better. The last update I saw showed that the peak in mortgage resets (when those variable rate mortgages jump in monthly payments) happens this month, which implies that the peak in foreclosures is at likely three to six months away, with a continued low interest rate policy until that storm passes.

In this episode: CCS, Canadian switcheroo, nuclear bottleneck?

Carbon Capture in the U.S. Faces Hard Realities:

When the Department of Energy announced in January that it would cancel funding for the vaunted FutureGen project (to build the world’s first coal-fired power plant with zero carbon dioxide emissions), the decision was widely viewed as the biggest setback to date for carbon capture and storage (C.C.S.) technologies.

…

Meanwhile a number of other proposed designs for C.C.S. projects have suffered FutureGen’s fate.

- Minneapolis-based Xcel Energy, an electric utility that serves eight states across the Midwest and the Rockies, said in November it will postpone for at least two years its plans to build an I.G.C.C. plant with carbon capture capability in Colorado.
- Rebuffing a coalition of mayors headed by Laura Miller of Dallas, Mike Green, CEO of Texas energy giant TXU Power, said that I.G.C.C. will not work with Texas lignite or Western coal. Green told The Dallas Morning News that I.G.C.C. and C.C.S. are “not ready for prime time.”
- In 2006, Governor Brian Schweitzer of Montana announced a grandiose scheme for coal plants featuring C.C.S. technology, saying that Montana and three other Rocky Mountain neighbors could produce enough liquid fuel from coal and oil shale to supply America’s oil and gas needs for the next 800 years. But he has been forced to concede that his original vision was overblown, and that none of his envisioned projects have gotten past the press-release stage.

Despite years of glowing pronouncements from politicians and D.O.E. officials, and hundreds of millions in research and development funds from the states and the federal government, not a spade has been turned to build clean coal plants in Montana – or anywhere else in America, for that matter. Does that mean that carbon capture and storage, and its associated technologies like I.G.C.C., are beyond repair? Hardly. But it does mean that we are moving beyond the period of artists’ renderings and enthusiastic press conferences to a phase of hard realities, as the promise and the challenge of capturing and storing large amounts of carbon dioxide are examined in a harsher light. A look at a pair existing C.C.S. projects – one on the Northern Plains and one on the Gulf Coast of Texas and Mississippi – demonstrates that capturing carbon from coal-based power generation is difficult, storing it for hundreds of years is quite feasible, and building the infrastructure to do so on a national scale is going to be very, very expensive.

…

There are several “ifs” embedded in that statement: if you could find a way to economically retrofit the existing plants; if the utilities could find financing to build the new capture systems; if consumers could be convinced to absorb the added price per kilowatt-hour of their electricity; and if you could successfully store the CO2 underground once you ran out of oil wells needing E.O.R.

That last question is the piece of the puzzle being examined by a team of geologists and oilfield engineers, at the Bureau of Economic Geology at the University of Texas. With funding from the D.O.E.’s Regional Carbon Sequestration Program, which is backing seven such partnerships around the country, the researchers have spent the last 4 years injecting 1,850 tons of carbon dioxide into the Frio formation, about 30 miles east of Houston. Soon they’ll begin scaling up the system for a much more ambitious project near Natchez, Mississippi.

Scheduled for 10 years, with $38 million in D.O.E. funding, this second phase will be the first long-term project in the U.S. to study the feasibility of injecting large volumes of CO2 into underground storage locations. Unlike the Frio project, which stored relatively small amounts, the Mississippi experiment will handle commercial volumes, from a plant owned by Denbury Resources, Inc. of Plano, Texas. According to lead scientist Susan Hovorka, that will come to around 1 million tons of carbon dioxide a year. “We need to go to the next level,” says Hovorka. “We’ll be injecting at a rate of 1 million tons a year in four wells.”

Noting that a typical 450 MW power plant produces 5 million to 8 million tons of CO2 annually, Hovorka says, “The math is easy – you’ll need a well field. If we can get 1 million tons [a year] easily in four wells, and you want to do five times that, that gives you 20 wells.”

So far the data from the Frio tests has been encouraging. The carbon dioxide injections have been stable, and no leaks have been detected – to the extent that even drilling a well and trying to “produce” carbon dioxide (i.e., pump it to the surface) proved difficult. The storage part of capture-and-storage is “in the bag,” says Hovorka. “If you want it, it’s there,” she adds. “The question of whether you want to pay for capturing it also remains open.”

But many questions remain. First and foremost: what will all this cost?

Sorry, but I’m still not convinced that CCS will work as well as we need it–which is to say with a very low leakage rate over many decades–or that anyone has proved it with the degree of certainty needed to place that large a monetary and climate bet on the technology.

Don’t misunderstand my position. I’m not a zealot who hates any and all uses of coal. I don’t give a flying fig how we push electrons so long as it’s at a reasonable monetary and non-monetary cost and doesn’t emit more than about 10% of the CO2/kWh we emit now in generating electricity. If someone can find a way to change “clean coal” from a bad joke into an economically viable, scalable reality, I’ll be the first to celebrate.

(I feel the same way about hydrogen fuel cells, not that anyone asked. I have no grudge against the technology, I just can’t see any way in which it turns out to be the best solution, even decades from now.)

Huge nuclear plant in works (emphasis added):

The first nuclear power plant to be built in Ontario in more than 20 years could be more than three times larger than what the Liberal government said was needed when it first outlined its nuclear plan in 2006.

Environmentalists are calling it a classic “bait-and-switch” aimed at avoiding a public backlash when the plan was first announced.

According to a request for proposals to build the new plant, the province is now looking to construct “a stand-alone, two-unit nuclear power plant … to provide roughly 2,000-3,500 (megawatts) of baseload generation capacity.”

The call for bids was issued last week to federally owned Atomic Energy of Canada Ltd. and three foreign nuclear-reactor companies that made a short list.

A 3,500-megawatt plant would be one of the largest nuclear projects in the world, roughly equal to the size of the existing generating station at Darlington, and would be big enough to power all homes and businesses in Toronto. It would be located either at Darlington or the Bruce generating station near Kincardine. The document also asks that proposals give the government the “option” to build one or two additional reactors.

…

Estimates for new nuclear plants are anywhere between $8 billion and $15 billion. But rising costs for labour and materials make the figure a moving target. Electricity customers will foot the bill, but Queen’s Park is adamant that the bulk of any cost overruns is expected to be shouldered by the winning bidder.

Yet another problem with large, centralized generation of electricity, regardless of the technology in question: It’s much more prone to political gamesmanship. And when the technology involved is inherently politically sensitive, like nuclear, the situation is all the more ripe for bait and switch tactics.

Don’t overlook those prices, either. $2.28 to $4.28/watt for this project is pretty steep.

Samurai-Sword Maker’s Reactor Monopoly May Cool Nuclear Revival (emphasis added):

From a windswept corner of Hokkaido, Japan’s northernmost island, Japan Steel Works Ltd. controls the fate of the global nuclear-energy renaissance.

There stands the only plant in the world, a survivor of Allied bombing in World War II, capable of producing the central part of a nuclear reactor’s containment vessel in a single piece, reducing the risk of a radiation leak.

Utilities that won’t need the equipment for years are making $100 million down payments now on components Japan Steel makes from 600-ton ingots. Each year the Tokyo-based company can turn out just four of the steel forgings that contain the radioactivity in a nuclear reactor. Even after it doubles capacity in the next two years, there won’t be enough production to meet building plans.

“If there are 50 to 100 reactors or more to be built, there will be a real shortage and real delays in deliveries, so it’s a good hedge to get in line now,” said Ron Pitts, senior vice president for nuclear operations at the construction and engineering company Fluor Corp. in Irving, Texas.

Pitts estimated the cost of heavy forgings, including reactor containment vessels, steam generators and pressurizers, at $300 million to $350 million for each generating unit. Japan Steel wouldn’t comment on the size of the down payment, which Pitts estimated at $100 million.

…

Orders for nuclear generators are multiplying as electricity use surges worldwide and governments pressure companies to cut carbon emissions to fight global warming. As many as 237 reactors may be built globally by 2030, an average of more than 10 a year, according to the World Nuclear Association in London. That compares with 78, or fewer than four a year, started since the 1986 Chernobyl meltdown in Ukraine.

Given Japan Steel’s limited capacity, the math just doesn’t work, said Mycle Schneider, an independent nuclear industry consultant near Paris. Japan Steel caters to all nuclear reactor makers except in Russia, which makes its own heavy forgings.

…

Another alternative is to turn back the technological clock and weld together two smaller forgings, said John Fees, CEO of McDermott International Inc.’s Babcock & Wilcox Co., which built the Three Mile Island reactor. That technique was used over the past 40 years in the U.S. and France and is still applied in China.

“It shouldn’t be off the table,” he said at Babcock’s headquarters, also in Lynchburg, Virginia.

…

To make the 600-ton ingot, workers heat steel scrap in an electric furnace to as high as 2,000 degrees Celsius (3,600 degrees Fahrenheit). Then they fill each of five giant ladles with 120 tons of the orange-hot molten metal. Argon gas is injected to eliminate impurities, and manganese, chromium and nickel are added to make the steel harder.

The mixture is poured into a blackened casing to form ingots 4.2 meters wide in the rough shape of a cylinder. Five times over three weeks, the ingots are pressed, reheated and re-pressed under 15,000 tons applied by a machine that rotates them gradually, making the floor tremble as it works.

The heavy forging is needed to make the steel uniformly strong by aligning the crystal lattices of atoms that make up the metal, known as the grain. In a casting, they would be jumbled.

I have no bloody idea how to interpret this article.

There’s just one plant in the entire world that can make these single-piece cores, so they supply the entire world, except for Russia, so that’s a Really Big Problem. Unless the industry switches to multiple-piece cores, which has been done for decades, in which case it seems not to be a problem, after all. But if companies can do that, then why are they making $100 million deposits on new cores from this plant in Japan?

Oy.

The one thing I am sure of is that I would love to see this process in person, or even find a decent video of it.

In this episode: electricity conservation, privatized nuke waste, mystery sea level rise, EDF press release

Intelligent Demand Response to Prevent Electricity Shortages, Brownouts and Blackouts:

Demand response isn’t a topic that comes to mind for most people when they think of energy conservation. When the summer sun is beating down, it’s stifling hot, and the air-conditioners are on full blast, we’ve all heard the requests from our local utilities to save electricity as electric power supplies get tight so, we voluntarily conserve energy, individually, to prevent power shortages.

Back in the “old days” — 10 years ago — companies participating in the early demand response programs did it the old-fashioned way, literally going around and turning off lights and equipment to consume less electricity, helping out their local utility to reduce their electricity consumption and prevent potential brownouts and rolling blackouts.

Very sophisticated, automation technologies — some introducing technology imported from Europe — are now being promoted by a number of companies, including Powerit Solutions. These technological advancements allow computers to make “intelligent” decisions for each individual industrial facility using demand response technology, carefully “shedding,” in progressive stages, the electrical requirements for each company. By acting in this “intelligent” manner, production is minimally affected until the energy squeeze crisis passes.

Demand response has proven tremendously successful for the utilities and big, electrical-grid operators in managing an impending, peak-power crisis. Though the technology is growing quickly in popularity with systems installed in more and more industrial companies, there is still a great deal of potential in the management of even more fundamental industrial energy loads.

See the article for more detail. Note that the author is the President of the company mentioned above, Powerit Solutions.

My general reaction to this article is: Welcome to our future. We live in a world where we emit far too much CO2 and other pollutants per unit of electricity we generate. That means we’ll be hard pressed to build up those technologies with very low or no marginal CO2 emissions/kWh, such as solar, wind, wave, tidal, geothermal, nuclear and CCS retrofitted onto coal plants as quickly as we’ll need them. One way to avoid some of the pain of this emerging market pinch is through conservation–and it goes far beyond changing your light bulbs.

While it’s true that we have a ridiculous amount of low-hanging fruit to pick in almost all areas of our energy use, it’s equally true that it will take a very different mindset than most people have today before we actually take those steps and exploit that untapped energy source. Modern industrial society has evolved in an era of absurdly cheap energy, including electricity and oil, and we’re suddenly faced with a sea change in the basic rules of the game that’s making our decades of experience and learned habits obsolete.

When people talk about energy issues they tend to fixate on oil and its most obvious use, transportation, and with at least some justification. But I’m increasingly convinced that the biggest challenge will not come from keeping goods and people moving, but in keeping the electrons flowing while we deal with the need to reduce CO2 emissions as well as the growing impact of past emissions, including drought, rising sea levels, and warming temperatures.

It bothers me deeply that so few people seem to be connecting these dots and talking about the larger picture, particularly the overlap of peak oil and global warming, which is where electricity generation lies.

DOE Idea: Going Private With Nuke Waste:

Energy Department officials trying to promote nuclear power are suggesting that private industry assume some responsibility for the country’s nuclear waste.

Edward F. “Ward” Sproat said Thursday that the idea could ensure more stable management and financial support for the long-delayed Yucca Mountain nuclear waste dump project in Nevada that he manages.

“I do think that providing some sort of an organization with legislative fiat that provides that stability and fixes some of these institutional problems is a good idea,” Sproat said after addressing a conference of nuclear regulators. “But it’s got to be done right.”

He heads the Energy Department’s Office of Civilian Radioactive Waste Management.

Even Yucca Mountain supporters say stability has been lacking at the 77,000-ton repository planned 90 miles northwest of Las Vegas. It is intended as the resting place for the spent reactor fuel and high-level defense waste piling up at power plants and other sites around the country.

…

A power point briefing prepared for lawmakers by Dennis R. Spurgeon, the Energy Department’s assistant secretary for nuclear energy, includes a slide showing a “nongovernmental entity” that would manage nuclear waste disposal and fees from nuclear utilities in concert with a still undeveloped recycling program supported by the Bush administration.

…

Yucca Mountain’s opening date has been delayed repeatedly since the original 1998 goal. Sproat had pegged 2017 as the best achievable opening date. But that has slipped and he could not give a new one on Thursday.

He did say that plans to submit a required construction license application to the Nuclear Regulatory Commission by the end of June are back on track, after coming into doubt this year because of Reid’s budget cuts.

Meanwhile, liability to taxpayers is surpassing $7 billion because the department contracted with utilities to take possession of their nuclear waste beginning in 1998.

Somebody tell me that this is a bad joke. Please.

Reservoirs keep sea levels down:

The water stored worldwide in reservoirs has stopped global sea levels by rising by more than an inch in the past half century alone, cutting the effects of global warming on ocean levels significantly.

A new study suggests that even though global sea level has been climbing steadily by 1.8 mm per year over the same period - a rate that is now increasing - the contribution from melting ice or thermal expansion may have been much greater than realised by scientists.

…

In the journal Science, the Taiwanese scientists point out that the total rise in sea level over the past century is due largely to ocean water expanding in volume as it warms up, and ice melt from mountain glaciers and Greenland and Antarctic ice sheets.

Subtracting the effect of thermal expansion from the observed rate of sea level rise should give a reasonable estimate of the rate of ice melting, but the equation leaves out the amount of water locked up in reservoirs, which stops run off into the oceans.

The researchers estimate that trapping the reservoir waters has artificially dropped sea levels by 30 millimeters over the past 50 years. Add that water back in, and suddenly the contribution of ice melt, or thermal expansion, or both, “plus some other unidentified causes,” must be higher than previously thought.

The latest climage change report from the Intergovernmental Panel on Climate Change report indicated that, after summing up all the known natural causes, scientists are still short of explaining fully the observed rise; “so the (man-made) reservoir impact actually makes the situation even worse - or more difficult to explain.”

I get a lot of e-mail from people asking why I’m so alarmed about global warming when peak oil is, as I say endlessly, likely only three or four years off. This article perfectly exemplifies why: We keep making discoveries about climate change and the environment and they’re almost universally bad news.

We don’t know exactly how bad the situation is. We don’t know for sure precisely how much we have to cut CO2 emissions and how soon. The conventional wisdom at one time was that CO2 had to remain below 500 parts per million. Now we’re talking about 450 as the “magic number”, but there’s already been talk that it might be 350–which we passed some time ago, given that we’re above 380 and still climbing.

But back on point: What do you think accounts for the mystery sea level rise? My hunch is that it’s the obvious candidates, accelerated melting of polar ice and other glaciers, plus thermal expansion of the oceans.

Related article, from 1996(!), about the same scientist talking about dam building: Dams for Water Supply Are Altering Earth’s Orbit, Expert Says

See also Melting glaciers bigger cause of rising sea levels than estimated for some detail about dams and glaciers, from an Indian perspective.

Statement on NAM-ACCF Analysis of Lieberman-Warner Climate Security Act:

FOR IMMEDIATE RELEASE

Contact: Tony Kreindler, 202-572-3378 or 202-210-5791 (cell)

(Washington – March 13, 2008) An analysis released today by the National Association of Manufacturers and the American Council on Capital Formation dramatically overstates the potential cost of reducing global warming pollution under the Lieberman-Warner Climate Security Act and ignores the severe economic impact of inaction.

“Unfortunately, we’ve seen this sort of scare tactic every time Congress takes up a major environmental law. The fact is, the dire predictions never come true,” said Steve Cochran, director of the National Climate Campaign at Environmental Defense Fund. “Instead of rehashing wrong assumptions about climate policy, it would be much more productive for NAM and ACCF to take a hard look at what it will cost if we do nothing at all.”

The analysis of S. 2191 released today is based on the National Energy Modeling System (NEMS) model, which is used by the Energy Information Administration. However, the “input assumptions” used by NAM and ACCF produce dramatically different results from other estimates – including previous EIA modeling of similar legislation and work done by the Massachusetts Institute of Technology.

The misguided assumptions used by NAM and ACCF include:

• No use of market tools to manage costs. This is directly counter to the provisions of the Climate Security Act, which provides for banking and borrowing of emissions allowances to keep costs down.
• Artificially limited use of offsets. The analysis caps offset use at 20 percent. This also is counter to the provisions of S. 2191, which allows 30 percent of reductions from offsets.
• Very limited carbon capture and storage (CCS). The modeling appears to assume that there will be few if any coal plants built with CCS, causing prices to go through the roof.
• Very limited use of renewable energy. In fact, the “low-cost” assumption about wind power (less than 5 gigawatts per year) is lower than the actual amount of wind power deployed in 2007 (5.244 gigawatts).
• Unreasonably high oil prices and no price response as a result of climate policy. MIT on the contrary predicts producer prices falling as a result of curtailed demand.

Most importantly, the analysis only looks at one side of the ledger. NAM and ACCF consider the costs of reducing emissions, but not the costs of inaction. According to recent studies by the University of Maryland and Tufts University, unchecked climate change will strain public budgets and impact jobs and competitiveness in every economic sector. According to the University of Maryland study, the most expensive climate policy for the U.S. is not having one.

About Environmental Defense Fund

Environmental Defense Fund is at the forefront of an innovation revolution, developing new solutions that protect the natural world while growing the economy. Founded in 1967 and representing more than 500,000 members, the group creates powerful economic incentives by working with market leaders and relying on rigorous science. For more information, visit edf.org.

And you thought all of our friends in the business community were going to play nice… why, exactly?

In this episode: oil price fetish gone wild, CCS mysteries, OPEC as a true cartel, have a FIT, please!

New ’super-spike’ might mean $200 a barrel oil:

With $100-a-barrel here for now, Goldman Sachs says $200 a barrel could be a reality in the not-too-distant future in the case of a “major disruption.”

Goldman on Friday also boosted by $10 the low end of its 2008-2012 projected range for crude to $60 a barrel — significantly lower than current prices, to be sure, but a possible mark for oil if “normalized” trends return to the marketplace.

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Tacking on $15 a barrel to all of its oil estimates, Goldman now sees average selling prices of $95 a barrel for 2008, $105 a barrel for 2009 and $110 a barrel for 2010. The high end of its range is now $135 a barrel — but Goldman hinted that prices could be headed even higher.
“As the lack of supply growth and price-insulated non-OECD demand suggest a future rebound in U.S. gross domestic product growth or a major oil supply disruption could lead to $150-$200 a barrel oil prices,” Goldman said.

Here we go again.

For the newbies on this site (and I know you;’re out there), let me go through this one more time.

Of course oil could hit $200/barrel thanks to a “major oil supply disruption”. Why on earth would anyone think that with oil already persistently over $100 and the market still tight as a drumhead that it couldn’t be pushed to $200?

If you think that’s an extreme position, then ask yourself just what “major oil supply disruption” could entail. A terrorist attack closes the Gulf of Hormuz for months? Another war breaks out in the Persian Gulf region, leading to sharply curtailed exports, again, for months? Perhaps Venezuela, Iran, and some other exporting countries decide they’ve had enough of the US’s hamfisted foreign policies and band together to form a mini-OPEC that drastically cuts back shipments for, once more, months?

Frankly, not only are these comments From Goldman Sachs about the possibility of $200 oil pointlessly obvious, they also sound like a pretty blatnat attempt to get attention. “Hey everyone! We got that $105 price spike thingie right, look at what we’re saying now!”

Ottawa’s carbon plan jumps gun, critics say:

The [Canadian] federal government is relying too heavily on unproven technology as part of its efforts to fight climate change, critics are warning.

“We need an independent assessment on something of this magnitude,” said Ken Ogilvie, head of Pollution Probe.

Green Leader Elizabeth May said the Tories are relying on the promise of carbon sequestration as if it were a “future magic silver bullet.”

Ogilvie and May were commenting on a federal plan to get Canadian industry to start pumping its pollutants deep into the ground as part of the effort to fight climate change.

The Conservative plan to cut greenhouse gas emissions weighs heavily on Alberta’s oil sands and promises to put an end to “dirty coal-fired power plants” by 2012. Oil sands projects launched in 2012 or later must either capture and store emissions in underground rock formations or find another method of cutting the equivalent greenhouse gases.

See the article for a lot more detail on this evolving situation.

CCS (carbon capture and sequestration) is an almost perfect example of something Radar O’Reilly once described on the TV series M*A*S*H as being “pretty breakdownable”. Everything I’ve read on CCS says that we haven’t made it work on anywhere near the scale or time frame needed, plus it will be quite expensive to retrofit onto existing coal plants that were not sited or designed with CCS in mind.

What happens, for example, if we here in the US start pumping a significant portion of the 1.9 billion metric tons of CO2 we generate every year just from coal-fired electricity plants into the ground, and then a few years later discover that some of the repositories are leaking? We’ve spent a lot of money to sequester that CO2, only to find out it had other plans. How do we stop those CO2 deposits from continuing to leak? How do we make sure that others don’t do likewise?

And for that matter, how closely will we monitor these formations to ensure that we’ll know if and when they leak? Which utilities are interested in spending additional money for monitoring once they’ve been convinced that they must spend so much to sequester the CO2 in the first place? Put another way, where is the political will to pass laws that say either utilities must do extensive monitoring, permanently, or that they must pay an additional fee to the government so it can do the monitoring.

Why do I get the feeling that CCS will turn out to be one of several ways in which we find out that our on-paper CO2 emissions reductions don’t match reality? As I’ve pointed out before, what happens when the proclamations by industries or governments don’t line up with the observations of scientists? How do we determine who is cheating, and how do we force the cheaters, particularly when they’re in another country, make their actions match their claims?

This line of thought is why I think CCS will turn out to be a colossal waste of time and money. We’re far better off focusing on minimizing the initial creation of CO2 instead of trying to figure out how to deal with it after the fact.

Related article: A win-win-win solution

The Triumph of OPEC:

For much of its 47-year existence, the Organization of the Petroleum Exporting Countries (OPEC) has been a cartel in name only. It could not, in practice, control oil prices because many of its members regularly breached the production quotas that were intended to regulate the market. So OPEC generally followed oil prices up and down, as supply and demand conditions shifted. But now OPEC may be the real deal: a cartel that works. If so, that’s bad news for us.

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What’s wrong is that a fall of oil prices is one of the mecha­nisms by which a recession or economic slowdown corrects itself. Lower prices for gasoline, home heating oil and diesel fuel improve consumer purchasing power. They muffle inflation and in­crease confidence. In this sense, they’re an important “automatic stabilizer” for a faltering economy. If the automatic stabilizer is disarmed—or, worse, transformed into an automatic “destabiliz­er”—then the slowdown or recession may get worse.

Oil producers don’t much care. High prices have been good to them. Since 1999, annual oil revenues for OPEC countries have more than quadrupled, to an estimated $670 billion in 2007, says energy economist Philip Verleger Jr. What’s less clear—to ex­perts, at any rate—is whether OPEC has merely benefited from good luck (tight oil markets) or has acted as a true cartel, restrict­ing output and raising prices. The right answer is: both.

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The American approach is to rant at foreign producers on the silly presumption that they should subordinate their interests to ours. The resulting self-righteousness rationalizes a refusal to do much that would actually influence their behavior and limit their freedom of action. It was only last year that Congress raised fuel-efficiency standards for new cars and light trucks: the dampening effects on oil consumption will be years in coming. We have steadfastly re­jected higher gasoline taxes to curb unnecessary driving and strengthen demand for fuel-efficient vehicles (better to tax ourselves than let foreigners tax us through higher prices). And we have consistently restricted oil drilling in Alaska and elsewhere.

It is a fair commentary that, by doing so little to check its own thirst for imports, the United States has unwittingly con­tributed to OPEC’s present triumph. The extent of that tri­umph will be tested this year and next. The U.S. Department of Energy projects that non-OPEC oil supplies—from Brazil, Canada and Kazakhstan, among other places—will increase. Meanwhile, a weaker global economy may dampen demand. Even OPEC may be unable to hold prices at today’s high and undesirable levels. Whatever happens, the long-term threat of a global oil cartel will remain. We should be taking the hard steps to limit its power. Considering our past complacency, we probably won’t.

I have more than a few quibbles with this author, Robert Samuelson, in his other writings, but I’m largely in agreement with him on this one. We (the US) screwed up, and gave OPEC not only a stick to beat us with but more than enough incentive to use it.

I think anyone expecting a mild-to-moderate global recession to significantly trim oil prices is engaging in faith-based analysis, though. Even in such a situation we can expect to see India and China continue buying cars at record clips, and OPEC can easily maintain higher prices by trimming output. We’re so dependent on those imports that they can ship less oil and push up prices enough to more than make up for the lower sales volume–that whole inelastic demand curve thing cuts both ways.

And as for relying on the DOE’s projections, well, the less said about that, the better.

Building a FIT Renewable Energy Market in the U.S.:

As renewable energy developers and generators in the U.S. maneuver through a patchwork system of tax incentives, renewable energy credit markets and net metering policies, many in the industry are calling for the adoption of a national feed-in tariff (FIT), which they say will create a more simple, stable market.

Adding to the call for a U.S. FIT were two high-level political figures attending the Washington International Renewable Energy Conference (WIREC) in Washington, D.C. last week. U.S. Representative Jay Inslee (D-WA) and former California Energy Commissioner John Geesman have joined a growing number of FIT supporters who want to bring the renewable energy promotion policy to the U.S.

Geesman came out in support of a FIT for the state of California last October. He reaffirmed his commitment to FITs at a WIREC side event last Thursday, saying that they are the “best way to rapidly bring down the cost of renewable energy technologies and allow the state to live up to its aggressive policy targets.”

Congressman Inslee, who will soon introduce FIT legislation to the House of Representatives, said that a national performance-based incentive will “open the floodgates to innovation and the growth of these industries,” and help rebuild the shrinking U.S. manufacturing base.

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Now operating in 37 countries around the world, FITs are viewed by many people in the industry as the key to rapid, uncomplicated deployment of clean energies. Under a FIT law, renewable energy generators who connect to the grid are guaranteed a payment for the electricity produced by their system over a 15-20 year period. Tariff prices can vary based upon technology type, size of system and geographic location and are stepped down each year to reflect the cost-curve of each industry. The incentives are paid for by charging each ratepayer a small fee on their monthly utility bill. It is commonly said that the monthly fee in Germany is “about the same as a loaf of bread.”

See the article for much more detail.

I think a nation-wide FIT in the US would be a fantastic idea.

The key point here is that we can’t worship the free market (as some on the right would have us do), nor can we demonize it (as some on the left would do). The optimal approach is to view it as simply another tool, albeit an extremely large and powerful one, and figure out how to make it help us reach the goals we as a society value, such as reducing our CO2 emissions.

A lot of people, myself included, like the idea of a cap-and-trade system to force the market to monetize CO2 emissions and reduce them. We need more than that, however, and a FIT, which would suddenly give individual homeowners and businesses a strong incentive to not only conserve electricity but to become producers, would be a complementary and critical addition. I think of it as pairing a “push” and a “pull” signal in the market. The cap creates a push, downward pressure on doing the wrong thing, while a FIT would create a “pull” to get people to do the right thing.

In a way, this is similar to the view I’ve expressed in the past about vehicle policies. I’ve said that we need a combination of incentives, such as a high gasoline tax coupled with an offsetting payroll tax cut, to increase the financial benefits of conserving gasoline, regardless of what kind of vehicle they drive, with a feebate system to get people to buy more efficient vehicles, sooner.

I know that a lot of people find public policy to be about as interesting as watching dry paint peel. But I’m convinced that it’s worth talking about here simply because it has the potential, if done right, to be the closest thing to a silver bullet we’re ever going to see.

Assuming we can find some leaders, that is.

The abstract of The Water Intensity of the Plugged-In Automotive Economy (7 page, 3.9MB PDF) (also available in HTML format):

Converting light-duty vehicles from full gasoline power to electric power, by using either hybrid electric vehicles or fully electric power vehicles, is likely to