Tag: natural gas

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Change comes on little cat feet

I remember when the Soviet Union collapsed. Nobody saw it coming. It even took a while for people to recognize that it did. It went out with a whimper. But soon, everybody claimed that they had foreseen it. We have a game changing change development in energy happening now. The center of energy production is shifting from the Middle East to the Americas. This will be a change almost as important as the collapse of the Soviet Empire. There are other good things happening.

There is good news on both the supply and demand side. The U.S. reached what might be called “peak demand” in 2005; since that time our consumption of oil and declined and is set to continue to decline, as we become more efficient users of oil and shift to plentiful natural gas for many uses.

On the supply side, I have written about the fantastic amounts of natural gas made available in places like New York, Pennsylvania, Ohio and Oklahoma by new technologies. Government & industry need to agree on sensible regulations that protect environment while filling our energy needs but we need to move ahead. No more blocking progress w/o giving alternatives.

New technologies are also at work with so called “tight oil”. North Dakota has become a major oil producer for that reason. It is a big change.

Beyond that, energy is being discovered or developed in friendly places close to home. Newly developed Canadian oil sands are producing more NEW oil than the total Libyan output BEFORE the revolution. Brazil has discovered vast reserves of oil & gas that may rival that of Saudi Arabia.

Alternatives are developing rapidly. Wind power, especially when coupled with natural gas, is becoming viable in some markets. Wind power’s danger to birds and bats is being addressed. Another promising development is old-fashioned biomass. In some parts of the country, especially the Southeast, wood scraps from forestry and sawmills is already making an important contribution to the energy mix. Research on biofuels is continuing and biodiesel is looking more and more promising.

Many of our new energy sources will be able to hitch rides on rapidly developing techniques in nanotech and biotech. For example, solar panels can be more efficiently made using nanotech, which can allow less expensive materials to be substituted for scarce ones. Biotech will certainly help with things like biodiesel and maybe cellulose ethanol.

I am talking about good news in energy, but there is another area of success … and challenge. Success always come with challenges, otherwise life would be boring.

The guy who came to fix my furnace a while back told me that he couldn’t find a helper willing to train and do the work despite the fact that he could make around $80,000 a year. Now I read about a shortage of skilled blue-collar workers. The American manufacturing-base is twice as big as it was in 1970, but productivity gains mean that many fewer workers are required for the greater production AND the workers left are mostly higher skilled. There just is not much grunt work left.

Since 2009, the number of job openings in manufacturing has been rising, with average annual earnings of $73,000 (reference the above link). Booming American energy production, natural gas in places like Ohio and Pennsylvania and oil in unlikely locations such as North Dakota, are already driving a manufacturing renaissance that is putting a strain on available skilled labor sources.

Americans are resilient. We respond to challenges. I graduated with my undergraduate degree in those dark times of the late 1970s. At that time, many of the experts were writing us off. We were running out of everything, they told us. Nobody would have believed back then how much we progressed in the last few decades.

America’s best days are ahead of us. We don’t need to go back, we can look forward. Despite what the pessimists told me in the late 1970s, my life has been better than my father’s. And despite what the pessimists tell me now, I know that my kid’s will have more choices than I had. We will get through these hard times and when we do all those pinheads currently crying about the end of prosperity will think that they knew it all the time.


References here & here

My title is inspired by Carl Sandburg’s poem, “Fog.” I think it accurately describes change.

THE FOG comes
on little cat feet.

It sits looking
over harbor and city
on silent haunches
and then moves on.

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Gas: the Simple Answer to Energy & Economy

The simple answer to our energy challenges & our lackluster economic performance are the vast energy reserves in gas and oil that new technologies have recently made available to us right here in America. This will even help keep us safer, since bad guys control much of the exportable oil and gas outside North America; the less we give them the better.

First let’s talk about our biggest challenge. Overcoming the old-fashioned ideas we learned in the 1970s. These were pessimistic times of shortages. Experts used pseudo-science terms like “peak oil” that frightened and impressed the credulous. Many thought up plans to “manage our decline.” We have less, they told us. President Jimmy Carter put on his sweater and told us to get used to it. 

The pessimists were right in the short term given their unimaginative straight line projections of resources used, obtained & projected. But they lacked the capacity to understand innovation or when they did they thought only in terms of big government investments and a managed energy economy. 

So let’s dispense with that. All those energy challenges that defeated Jimmy Carter and perplexed the pessimists have been overcome by human ingenuity. We have access to more oil and natural gas than we did in 1980 and it seems like we will have even more in the future. In the 1970s, government regulators controlled the price of natural gas and then outlawed the building of new power plants that used that clean fuel. This was logical based on their flawed information. As far as they thought, we ran out of natural gas about ten years ago and we would have, had we listened to those experts.

Supposed shortages of gas and oil playing into the world-view of some folks and they will scream when I assert they were way wrong, but they were/are. What we have today is far beyond any best-case energy scenario envisioned by the luddites of the 1970s.

Business Week has a cover story about natural gas and how it could bring the economy out of the doldrums. Cheap AMERICAN energy supplies would provide a real stimulus to the economy, one that will produce tax revenue rather than add to our debts. There are some environmental challenges, but fewer than with any of the other forms of energy we currently use on a large scale. They can be managed. 

The creation of a whole new world of energy using gas is a heroic story of individuals and small firms fighting against the experts, Federal regulators and powerful interests in places like the coal industry. They also had to fight the ridicule of experts who said that it could never be done. It is a story that shows exactly why big government programs in energy fail and often cause harm. They were going to do what they said couldn’t be done. And they did. Maybe that is why so many people STILL don’t get it. 

So let’s sum up. Technological advances have “created” vast new supplies of American natural gas that can stimulate millions of American jobs. The extraction and consumption of this fuel is more ecologically benign than any of the forms of energy it is likely to replace.  Similar technological advances have made available vast amounts of oil in Canada, but also in places like North Dakota, whose economy is booming with full employment. This will give us a North American alternative to oil from unstable places in the Middle East or Africa. So what do we do? We dither and oppose the infrastructure that will bring it to us. 

There may be no easy answers, but there are simple answers. The simple answer is to just say yes to inexpensive, available American energy, which will create American jobs, improve the quality of our air and help us pull free of the doldrums in our economy. What are we waiting for?

I have been noticing this for years. It just keeps getting better.  

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No Really Green Energy

All forms of energy have benefits and risks. Inexpensive fossil fuels, for example, played a part in the remarkable regrowth of forests in Europe and the United States. (I explain below.) Of course, they also produce pollution. You have to look at the whole cycle, from production, to deployment & use to final disposal. We often see only one part. That is why it was interesting to come across an article about riots at a Chinese solar panel factory. The Chinese villagers said the solar plant was poisoning the air and water.

It seems to me that the most environmentally friendly “new” technology is natural gas. New methods have made massive quantities of this available in the United States. It is cheap; it is available AND it is American. In addition, gas can be used in existing technologies to replace coal fired plants. Gas produces very little pollution and only around 1/3 the CO2 of coal. There is no need to subsidize natural gas production or provide loan guarantees.

It is beyond my understanding why so few mainstream environmentalists are embracing gas production, which will create large numbers of American jobs. I am not saying that there are not challenges. We NEED regulations and we need to work on developing better techniques of extraction. But the idea should be to improve, not impede.

Natural gas is not perfectly clean. NO form of energy is perfectly clean, as we see from the Chinese solar plant example. Our only viable option is a diversified energy portfolio, taking into account the full life cycle of the energy source and trying to understand collateral connections. There is no one best solution and the most appropriate choices will change as society and technologies develop.

One thing for sure is that fossil fuels will remain a big, probably the biggest part of our energy portfolio for the coming decades. This is just true. We can complain about it and wish it were different, but as my father used to say, put your wish in one hand and sh*t in the other and see which weighs more. We need to recognize and work within real possibilities.

How Fossil Fuels Helped Save Forests

Forests in America and Europe reached their nadir between 1900 and 1930. Massive efforts to plant trees and the founding of the U.S. Forest Service, the discovery and promulgation of sustainable forestry methods and organization (such as the American Tree Farm System) all played crucial roles in bring back forests and avert the “timber famine” predicted by experts and leaders like Theodore Roosevelt & Giford Pinchot, among others. But equally important was a shift in demand. Horsepower provided by actual horses requires pastures and pastures preclude forests. When horses were replaced by tractors & cars, land devoted to growing feed equine transport could be converted to other uses. There was also the shift from wood. Wood was still a dominant fuel in 1900 and people cut forests for fuel. Beyond that, it is not well understood by many people, but an important collateral product of fossil fuels is fertilizer, which allows greater production on less land, leaving – again – other land free to revert to forest.

Today there are more growing trees in the U.S. than there were in 1850. Take a look at pictures from the Civil War and compare them to what you see today and you will notice the absence of forests then and their presence now. The regrowth of the forests in American and Europe is one of the biggest – and most overlooked – success stories of the latter half of the 20th Century.

One of my fears re a possible biofuels boom is that we may reverse this as land currently occupied by forests is again put into service for the intensive production of biofuel.

My pictures are not particularly related to the text. I took them today in my yard.  The top picture shows my new banana trees.  Bananas are not really trees; they are the world’s largest herb. The other picture is the tree in my yard leafing out and flowering. 

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Biofuels: Food, Fuel & the Future

Biofuels can be a part of our energy future, but are not a solution and they will never play a dominant role.  That one of the big ideas I took away from a talk on biofuels at the Wilson Center, called Biofuels: Food, Fuel & the Future. The reason we use fossil fuels is that they are so wonderfully concentrated. Coal, gas or oil represent millions of years of concentrated power of the sun captured by photosynthesis. Any crop we grow captures only one season of energy or maybe a couple decades in the case of trees. This is a fundamental limit even if we can figure out how to efficiently capture the energy stored in corn, sugar, wood, palm oil or switchgrass.

We noticed the BP oil spill because it is quick and compelling, but scientists have long known about the Gulf dead zone, a more persistently serious problem. This is a vast area of the sea near the mouth of the Mississippi where fertilizer runoff (especially nitrogen and phosphorus) have caused extravagant growth of algae. When the algae die back and decompose, it sucks the oxygen out of the water, making life for fish impossible. Much of this fertilizer runs off of corn fields. To the extent we turn more corn into ethanol, we increase this problem. We tend to notice fast developing problems like the BP spill while the slow motions ones, like the dead zones, escape notice. 

One of the dangers of something like the BP spill is that people panic and politicians and special interests take advantage. You can see this already in the calls for more biofuels and other alternatives.  Remember the cause of the dead zone in the paragraph above. But it gets worse. The nitrogen fertilizer for the corn is often derived in part from natural gas and we have to account for the fossil fuels that go into planting, moving and refining the 1/3 of the American corn crop that becomes ethanol.
 
W/o massive government intervention, there would still be an ethanol industry. It would just be a lot smaller. Ethanol has a good use as an oxygenator added to gasoline. It makes gasoline burn more effectively & cleaner. In the early 2000s it replaced MTBE (methyl tertiary-butyl ether), which had itself replaced lead as an octane enhancer a generation ago. But a little ethanol is good; a lot is less useful.  Gasoline packs a lot more energy per gallon than ethanol. As you add ethanol beyond a small amount, it begins to decrease mileage. There are also other problems related to corrosion and evaporation, but I will let anybody who cares learn about that elsewhere.
 
Suffice to say that the push to use more ethanol as transport fuel moved it from being a high end additive to extend gasoline mileage to a low end commodity. Since it is less efficient & more expensive than gas, it raised the prices. Yet the push for more ethanol continues because it is driven by politics, not by economics or common sense.
 
Let’s digress a little. You can make alcohol from almost anything that grows on earth. You can see that from the vast array of alcoholic beverages available worldwide, made from potatoes, corn, cactus, grapes, apples and even watermelon. But it is easier to make ethanol from some things than it is from others. It is relatively easy to make ethanol from sugar cane. That is why Brazil has an ethanol advantage. It is significantly less efficient to make it from corn and so far prohibitively expensive to make it from cellulous (i.e. switchgrass, wood chips etc).     

The U.S. does not have a competitive advantage in making ethanol. For one thing, corn is not a great feedstock and to make that worse we (the U.S.) has a relative advantage growing corn as food for man and beast, but when we make it into ethanol, we manage to negate our natural advantages, converting a product we do well into a product that we do merely okay. Beyond that, corn ethanol tends to be produced near where corn grows, i.e. in the middle of the country. Much of the demand for liquid fuel is on the coasts.  Ethanol cannot be transported via gasoline pipelines because it is corrosive and tends to create evaporation problems. Transporting ethanol by road and rail is relatively expensive. On the other hand, ethanol from Brazil is cheaper and closer – in terms of transport – because it is produced near ports in Sao Paulo state and can be easily sent via sea transport to places like Norfolk. That is why we have to subsidize ethanol production in the U.S.  by $0.45 a gallon AND put a tariff of $0.54 on ethanol from Brazil.  

In other words, public policy is pushing us toward one of the most expensive energy alternatives made even more expensive by public policy.
 
What about cellulosic ethanol? This can be made from materials that now go to waste, such as forestry waste or stalks and sticks from crops. We can also easily grow some crops, such as hybrid poplars or switchgrass, specifically for energy. The biggest problem is that we still cannot do it efficiently. Nature has been evolving for millions of years to prevent wood from easily being converted (i.e. fermented or rotted).  There are better alternatives. The more you have to process something, the more costs you add.  Wood chips, for example, CAN be turned into ethanol. But it is a lot easier to make them into pellets or burn them directly to make heat or electricity.

The problem is liquid fuel. Gasoline makes great liquid fuel and alternatives cannot compete. Direct government attempts (such as subsidies and mandates) to change this equation don’t work well for that reason. Beyond that, alternatives and gasoline are locked in a feedback loop. If alternatives, such as biofuels displace a lot of gasoline, the price of gasoline drops relative to the biofuels in question, making them less competitive.

Government has a role, but it is supportive and indirect. Government should not try to pick particular technologies. The ethanol debacle should have taught us that. It can help with infrastructure and basic research. Real, sustainable gains come from increasing productivity that lowers costs or costs of doing business, rather than tries to pay them down with taxpayer money.

A final interesting concept they talked about at the seminar was “peak gasoline.” People talk about peak oil. Peak oil is the theoretical spot where we have used up half of the petroleum available on earth. It is a slippery concept that is meaningless w/o specifying a price. At $5 a barrel, we reached peak oil years ago. We may never reach peak oil at $500 a barrel.  Peak gasoline is an easier concept.  Given the changing nature of our society, our driving habits and mileage efficiency, we probably reached the maximum amount of gasoline we will ever use. We cannot expect consumption to rise forever. Consumption is already dropping. Of course, we have not and may never reach “peak energy.”

There will be no magic solution to the energy problem. We choose our energy portfolio based on cost, convenience, availability and mere preference. This is how it will always be. It is an ongoing situation, not a problem that can be solved. No matter what elegant and wonderful solutions we devise (and we will come up with some) we will still be talking about the same sorts of things fifty years from now.  It is good to remember – despite the current pessimism – that our energy situation is better than that of our ancestors in terms of the amount of work we need to perform for each unit of energy. But as energy gets easier to get, we want more of it.

The picture up top is the inside of the Wilson Center. In the middle is the outside of the of the Reagan building, where the Wilson Center is located. In the lower middle is a sign warning that if you step on the grass, motion activated sprinklers will flow. It is an idle threat. I tested it and stayed dry. 

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Gassy Good News on Energy

The energy news is so good and so comprehensive that it is hard to believe. The federal Energy Information Administration reported last week that greenhouse gas emissions fell 7% last year—the largest- percentage and absolute decline ever. The U.S. carbon footprint has shrunk in three of the last four years. The bad news is that the recession caused some of last year’s decline. However, we managed a 1.3% decline in 2006, the only time this happened during a time of robust economic growth. But we can expect more good news. Our energy intensity (i.e. the amount of energy it takes to produce a unit of GDP) has been improving for many years. Last year it improved by 2%. (You probably have not heard about this improvement either, since it didn’t require new legislation to make it happen and much of the media cannot seem to perceive any positive developments that take place w/o government fiat. If the energy bill had passed, you would have heard a lot more, as they would be taking credit for this number.) And carbon intensity will drop even more. Abundant American natural gas supplies are going to help us reduce U.S. CO2 emissions and allow us to give people like Hugo, Mahmoud and Vladimir a good kick in the kiester, just when the international bad guys thought they would be able to set up a gas cartel similar to OPEC.

are subjects I like (so please excuse me if I go back to the same wells) and I am optimistic that we can solve our problems, or more precisely overtake them, since few problems are ever solved and when old problems go away new ones come. The pessimists keep on telling us we are about to hit the wall, but the innovators keep on finding ways around or through the troubles, often despite the experts.

The pessimistic “experts” can create serious problems, however. For example, back in the 1970s experts said we were running out of natural gas, so the Federal government banned new power plants run on gas, in order to save it for home heating etc. (President Reagan repealed the ban in 1987.) Three Mile Island, the disaster that killed nobody, managed almost to kill the nuclear industry. That is why we are behind on gas and nuclear power stations today. Instead of nearly zero carbon emission nuclear power and low carbon emission natural gas, various government agencies and environmental action groups pushed us into using more petroleum and coal. Go figure out the unintended consequences.

But this is supposed to be a happy occasion. Let’s not bicker and argue over who killed whose program. We have more options than we thought we did and let’s use them wisely.

Natural gas is the cleanest burning of the fossil fuels in terms of CO2 and ordinary pollution. You can understand this when you are cooking your food with gas on your unvented stove. What if your stove and oven ran on coal or oil?

Gas is also relatively clean to extract. A natural gas leak does not spread over the oceans and kill animals and plants. Miners don’t descend into dark pits to pull the stuff out, nor do they remove the tops of mountains in West Virginia to get at gas seams. The environmental danger with natural gas is relatively small. The biggest problem is that gas extraction using the latest techniques requires the use of water and there are some concerns that local water resources could be impacted. So far this has not happened on a large scale, but gas production should be properly regulated.

Maybe it was a divine joke to put most of the world’s exportable oil under unstable and sometimes plain nasty regimes. Or maybe it is just true that the concentration of a resource like oil, which requires little input and almost no actual work from the people under whose land it is found, is the problem. Easy and/or unearned concentrated wealth encourages klepocracies. Maybe the best thing about natural gas is that it is widely distributed and a lot of it is right here in America. While gas won’t put petro-tyrants like Ahmadinejad of Hugo Chavez out of business, it will – it already has – diluted their power.

So let’s get cooking with gas while we develop alternatives to fossil fuels. As long as I can remember, solar and wind alternatives have been “around five years” to viability. It has taken longer than we thought, but progress is being made. The largely unanticipated jump in natural gas reserves has bought us some time. We can meet our environmental goals, while kicking the despots, dictators and jihadist in the keister (as I mentioned above) and do all this w/o crippling our economy.

Gas is not a permanent solution. There are no permanent energy solutions. Our technology and innovations have saved us for another generation and we will live to fight the energy battle another day. By then we will be better equipped to win, but only if we continue to innovate now.

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Energy: Cheaper in the Long Run

Technology is amazing. In the last few years, new technologies have vastly increased American reserves of natural gas and are making North Dakota a leading oil producer, so much for peak oil. The term “game changers” is thrown around in both these cases. I might paraphrase the Godfather about fossil fuel, “Just when we think we’re out, technology pulls us back in.”

Environmentalists have been predicting the end of the age of hydrocarbons ever since I was a kid. Their predictions have a kind of plaintive, even pathetic tone, sometimes a hopeful one. Actually, the resource depletion prediction is a lot like the old Malthusian predictions and wrong for the same reasons. They have consistently made their predictions by simply projecting past trends forward and assuming limited technological progress. In other words, they underestimated the power of human intelligence, innovation and imagination. As Yogi Berra used to say, “Predicting is hard, especially about the future.” It is just impossible to predict discontinuous changes but we are usually aware of things that could go wrong with what we already have.

Back in the 1970s experts predicted that by now, or more commonly by around 1980 or 1990. Yet we persist. Usually such successes would be all to the good. We really don’t have to worry about running out of energy and we can probably expect real energy prices to drop in the next decade. What is not to like? Nothing, except the potential problems of global warming. The problem with switching to alternative energy is price. It has always been price and will always be price. Until people talk about price, it’s only some people talking. As long as fossil fuels are cheaper, they will be preferred. Why would a rational person choose to pay more to get less convenience? Petroleum based fuels such as diesel and gasoline, for example, are nearly perfect fuels for a car. They are very dense (i.e. a lot of energy per gallon. Hydrogen has more energy per pound, but it has such low density that takes up more than three times the space; ethanol is much denser than hydrogen, but not as dense as gasoline and less efficient). Natural gas is great for stationary energy production. It is very clean burning, easily distributed via underground pipes & remarkably efficient.

So let’s be clear. The reason we rely so much on fossil fuels is that they are generally cheaper than the alternatives, convenient to use, easily produced and readily available. When you pit low price, convenience and availability against something that cost more & is harder to use, which do you think wins most of the time? This is the place for some government intervention in the form of a carbon tax . Prices of carbon based fuels will naturally DECLINE as technology increases exploitable reserves. As the prices of carbon based fuels declines in real dollar terms relative to other products, we should tax them back up. The ratchet is a relatively painless way to phase the tax in.

Lest this become merely another source of tax and government waste, we should make this a revenue neutral venture. A good idea here is tax plus dividend. Whereby ALL of the new taxes collected on carbon would be paid out the individual Americans as dividends. To make it simple, every American man, woman or child alive on Dec 31 would get a check for whatever the tax revenue divided by the population. I would make this clean and honest. Everybody gets an equal piece of the action.  I  don’t think politicians will go for it, since it cuts out their opportunities to turn the money to their own purposes, but it is a good idea and if we are serious about addressing climate change, raising the price is one of the only things that really work.

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Overtaken by Events

We rarely solve big problems; we just go beyond them, usually by redefining our goals and priorities and often by employing knowledge and technologies that were unavailable when the problem was initially defined.  In other words, our vision of solutions for the future is often limited because those solutions have not been invented yet. We have a phase “overtaken by events” (OBE’D). It refers to facts, ideas or plans that are invalidated by subsequent events.  Most problems are not really solved; they are just OBE’D. 

Stuff happens sometimes for no reason we can understand

The future is uncertain by definition, but we have learned to manage risk.  Our increasing ability to identify and manage risk is one of the too often overlooked foundations of our complex modern civilization but we never eliminate it and there are many situations where there is so much uncertainty that we cannot even properly assess the risk, i.e. figure out the odds.  (I read a couple good books on this.  I recommend “the Black Swan” & “Against the Gods.”) This is what drives people crazy.   It seems counter intuitive to some, who seem to think that if we could solve our big problems if just worked hard enough and planned well enough.   We things go badly wrong, they look to blame someone.   Well, sometimes we just have uncertainty.  Shit happens in ways nobody could have reasonably predicted and sometimes in ways nobody could have predicted at all.

Not all of this is bad, however.  In fact it is mostly good.  There are upside and downside surprises but in the long run the upside surprises are more important.   Why?  Even if the ups and downs are distributed randomly, we can apply human intelligence to adapt to them.   Within broad parameters, the quality of our lives depends less on the good or bad luck we experience than on the responses we make to what comes along. We have to use an iterative approach that learns from experience and changes responses to changing circumstances.

Einstein was right when he said that we cannot solve problems with the same kind of  thinking that we used when we created them.  

O Fortuna velut Luna

The best system is not one that plans in detail for all the challenges but rather one that is robust enough to adapt to changing conditions and exploit opportunities, one that embraces the statistical nature of the future and takes advantage of it. We need more of a planning process than a precise plan.  We cannot anticipate all the events but we can have processes in place that can recover from setback to adapt to changes. I think of it like a tool box and portfolio.   In an uncertain world, you have to diversity and empower those closest to evolving events. This is how markets work, BTW.

This is a harder sell than the dishonest or self-deceptive statement that you have anticipated and planned for all the eventualities.  Most people crave certainty and they love those who claim to have it, even when they know or should know it is bogus comfort.   We make systematic errors in the direction of imposing patterns of certainty where none exist.  That is why we think clouds look like Snoopy or Albert Einstein.  There is even a five dollar word for it “apophenia”.

Anyway the simple advice is to find or create adaptive robust systems that can survive downside shocks and move quickly to exploit upside opportunities, all the time understanding that the Lady Fortune’s Wheel  never stops turning.  (BTW I am thinking of this in terms of Boethius, not Pat Sajack and Vanna White) It can pull you up and down and some big things can come up pretty fast.

Now you’re cooking with gas

One upside surprise that is a real game-changer is the recent technological advance that allows us to get natural gas from shale deposits. In the last couple of years, we have made available natural gas deposits with more than the energy potential of all the oil in Arabia. A solution that was unavailable and largely unforeseen five years ago will change all our lives … soon.  I wrote about this a couple of months ago as I drove through the Pennsylvanian coal – and now natural gas – country.

Natural gas is the perfect partner for wind energy, since gas plants can be turned on and off relatively easily.   Wind is very good when it is blowing but it can cut off quickly.   In other words, it is unreliable w/o backup.  Nature gas is the backup.  

Natural gas can help us squeeze oil out of our transportation network. According to the linked article, “the chief obstacle to developing a natural gas infrastructure capable of supplying service stations and highway rest stops is regulatory. If that is removed—and here we do need government action—we could expect to see trucks, buses, and cars running on natural gas in a relatively short period of time. The reduction in greenhouse gas emissions would be considerable.”

This new energy future will not only help us free ourselves from the despots who control most of the world’s oil reserves (it seems like kind of a divine joke that most of the world’s easy to get oil is under such regimes) but it will also reduce greenhouse gas emissions w/o the draconian measures contemplated just a short time ago. Natural gas is cleaner than oil and much cleaner than coal in terms of pollution and in terms of CO2.

So a problem that was intractable with the conditions and technology of 2005 could be party solved in ways that nobody really anticipated. But we have to use our intelligence to make an upside surprise into good fortune … before it is OBE’D or Fortune’s wheel takes another turn. 

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Negotiation 101 and Climate Change

“When you say you agree to a thing in principle you mean that you have not the slightest intention of carrying it out in practice.”* I have limited confidence in the efficacy of big global agreements, but I understand the usefulness of participating and we hope our team will be very forthcoming and aggressive in the COP 15 climate talks.

Forget Kyoto

The Clinton Administration never had any intention of implementing Kyoto. The Senate rejected it 95-0 before even being asked to ratify it. This was a unanimously bipartisan rejection of the climate treaty.  Kyoto was dead on arrival, as the saying goes and it  was indeed a seriously flawed agreement but Clinton was clever. He understood the dynamics of the public relations around climate change.  Nobody really intended to carry out the terms of the treaty beyond the extent to which it was convenient. Most of the climate lobby was perfectly content if the U.S. went along rhetorically.  Most of the major players were going along with the mendacious program.   Bush didn’t understand how to play that deceptive game well enough and openly rejected the agreement  & the U.S. got eight years of international crap as a result.

Take credit for what will happen anyway

Kyoto was meaningless. Developing countries got a free ride on the misplaced guilt of the more productive and hence more energy consuming nations (energy consumption is closely related to output). The former Soviet Empire was in the process of shutting down the horribly polluting – and without strong state protection – unprofitable industries built up during the benighted communist era.  Countries in both these camps knew that nothing much would be asked of them and they might even be able to make a little money selling carbon they would not have produced anyway. The Russians were in the now even more enviable position of having been so horribly dirty and inefficient that any approach to normal would be rewarded with unearned credits and cash.


BTW – Russian carbon credits are one of the reasons ostensible carbon reductions in Europe were so cheap and ineffective.The Russians are now lining up to milk what they can out of Copenhagen.


Our European friends also came to the game with a few aces up their sleeves and a lot reductions already cooked into the pie when they signed on to Kyoto. In the British Midlands, they were in the process of converting from dirty coal to much cleaner and less carbon intensive natural gas. The Germans had recently acquired the outdated industry of communist-East Germany.  They were shutting down these inefficient and very polluting industries anyway.  It was sort of like a cash for clunker industries program. 

The fall of communism in Eastern Europe was a significant ecological benefit all around. Just bringing industries up to non-communist standards resulted in a big reduction of all sorts of pollution. Beyond all that, they understood that Europe’s generally slower rate of economic growth would slow demand for new uses of carbon.

The U.S., in contrast, didn’t have any big shutdowns on the way and our economy was growing about twice as fast as those in continental Europe which would mean a growing need for energy. 

Progress is on the way; revel in it and don’t sell it cheap

We are now in a better position in relation to many others.   We can plausibly promise real reduction in CO2 emissions, but it is very important how we sell reductions.  You don’t give things away in negotiations because you get no credit in the international community if you just do the right thing w/o making a big deal about it.  Multilateral negotiations are a kind of kabuki play.  You have to scream and grimace at the proper times or else nobody pays attention. You have to call attention and claim credit for good things that just happen.  You know that you will be blamed for the bad things. 

The free market is remarkably adaptive. When the price of gas rose in 2006, Americans used less energy and emissions of CO2 dropped. This is the only time this happened in a major country during a time of robust economic growth. Did we get any credit?  Did anybody even notice?  I had to look hard to find it in the media.  WITHOUT the hyperbolic rhetoric you don’t even get credit for what you REALLY do. WITH rhetoric you can even get credit for things that just happen even if you do nothing.  It takes a little dose of hypocrisy to make the world go around.

Now we’re cooking with gas

Source


It gets better.  We will soon be able to reduce carbon emissions w/o working up too much of a sweat. Technological advances in only the last few years have made available vast amounts of natural gas within the U.S. Our recoverable reserves have gone up by 39% in the last two years alone and gas is getting very cheap. As the economics of gas improve, we will switch from coal and oil, which emit much more CO2, to gas in many situations. This will reduce our emissions.

Natural gas is also abundant in areas of the U.S. much in need of jobs and investments.

There is an even better good news story. Last year the U.S. displaced Germany as the world’s largest producer of wind energy. Wind is still no big deal as a % of energy consumption, but the trend is continuing and abundant cheap natural gas can play a role. Wind is unreliable. You have to have a back up capacity. Gas is perfect for this. Unlike a coal plant, a gas generator can be easily turned on and off. On windy days, we would get electricity from wind. When the wind wasn’t blowing, gas would fire up to fill the demand.

Other alternatives plus better quality nuclear power is also coming on line. Match this with the generally slower economic growth we expect to suffer during the next couple of years (there is a silver lining to every black cloud) and you see that U.S. emission growth will slow and we may even have some actual drops. If you look at the chart nearby, you will see that the trend started down in 2006. We expect another huge drop of 5% in 2009.  Notice from the chart that our emissions were a bit lower in 2008 than they were in 2000, w/o the benefit of Kyoto, BTW.

That means we can promise AND the United States can deliver. Delivering is important, but it is the promising that is the key to UN success. You need a lot of sound and fury in the international climate game. If we just deliver, we get no credit (cf. carbon reduction under GW Bush).  In the international negotiating arena, especially international public opinion, what you say and how loudly & passionately you say it is at least as important as what you do.

We don’t have to take it anymore

The U.S. also needs to be in a stronger “moral” position to resist unreasonable demands by less developed countries. In fact, we can turn the tables on them. They always said, or at least implied that they were waiting for us, that if we (the U.S.) reduce our emissions they would do likewise.  We are now holding the cards we need to call their bluff. We doubt  most others will actually come through, but it will at least take some of the wind out of their sails when they make unreasonable demands on us. With our emissions dropping and those from places like China (the world’s largest CO2 emitter since 2006) and other developing countries on the rise, we can throw some of the stink in the other direction for a change.

The U.S. will be a leader in the effective use to climate change technologies

This is potentially a real game changer. With President Obama’s smooth rhetoric and proven ability to promise “change we can believe in” hitched to the real potential of the American market to take advantage of favorable energy trends and the unexpected bonanza of natural gas in the short term, we can cram a sock in the anti-American rhetoric on this topic. Yes we can.

Go boldly; no need to apologize

So let’s play hardball by “playing nice.” No need to apologize or send too much money to contribute to kleopocracies in developing some countries who use the poverty of their people and bad weather as bargaining chips. Instead, shift our weight and do a little international style jujitsu. We have little to lose, since we are on track to succeed anyway in reducing our emissions relative to the rest of the world, if we use the cheap natural gas we have found and ride the wave of innovation already coming our way.  But none of it will count unless we make a big deal of promising.  Posturing, promises & procrastination, that is how they roll at these kinds of international conferences. The rules of the game do not require and do not always even encourage actual success anyway, but we can both talk and do in this case.  

Let’s do it and let’s also be seen to be doing it.  It will benefit neither the environment nor us to allow another Kyoto to be hung around our necks.  But with the proper nudge, maybe something can actually get done … even really about the environment maybe.

* The saying is attributed to Otto Von Bismarck

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Yesterday’s Solutions are Today’s Problems

We are starting to notice the remarkable, game changing development in energy. Scientists have discovered a new way to get natural gas out of shale. They call it hydraulic-fracturing. And there is a lot of potential. This new technique has increased American gas reserves by something like 39% in the last couple of years.   Experts estimate that we have as much usable gas in the U.S. as the Saudis have oil and if only half of our coal powered plants converted to cleaner burning natural gas we could easily reach our greenhouse gas reduction goals. 

Gas is cleaner than oil and much cleaner than coal, both in terms of actual pollution and in terms of greenhouse gases such as CO2.  Another important consideration is that WE have our own vast new supplies of gas.  Most exportable oil is under corrupt, unfriendly or unstable countries.  It is better not to send American money to some of these guys.  Our gas, on the other hand, is in peaceful, pleasant American places like Pennsylvania, New York, Maryland and West Virginia.  Many of these rural areas could use the jobs that domestic natural gas could bring.

I traveled though much of the area where the gas is when I drove from Syracuse to Virginia.  It is the same area where we did a lot of coal mining.  This is no coincidence.  The same forces that turned Paleozoic plants into coal also made gas.  The gas is trapped in shale formations and you can easily see how the roads were cut through the shale formations. 

But I noticed something else about the geography of natural gas. It is also the geography of the Chesapeake Bay watershed and much of the water that isn’t running off into the Chesapeake flows into the Great Lakes. We worry about these bodies of water. While listening to local radio driving near Wilkes-Barre, PA I heard reports of firms extracting gas were asking permission to discharge water into the local streams. The HYDRO part of hydraulic-fracturing has to go somewhere.  I don’t know the details of the process, nor do I know about the quality of the water discharge, but I do know that any discharge in large enough amounts is going to create disruptions in the local ecosystem, in this case the Chesapeake Bay watershed.  Some people are already raising concerns.  The process may turn out to be benign.  It could even be beneficial if the water is clean, but we will have to think of this as a balancing among priorities. 

Yesterday’s solutions are today’s problems and it follows that today’s solutions will be tomorrow’s problems.   Abundant American natural gas will help free us from nasty foreign oil suppliers and help us reach climate change goals, no doubt at the cost of something in the future.  This is not necessarily a failure of wisdom or judgment.   It is an ordinary consequence of making choices, setting priorities and doing these things in the context of imperfect information.   All these things are part of the definition of decision making.

Shale gas

Future critics with access to much more information as well as the experience of the past can easily attack earlier choices, but the comparison is usually unfair, as it is always unfair to compare hypothetical solutions with a real ones.  

For now the smart move looks like going for the gas. 

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Changes Takes Time & Energy

Energy transitions take a lot of time and we won’t have that green energy anytime soon.  That was the sobering message I heard at the lecture today by Vaclav Smil, from the University of Manitoba.  I went to hear his talk, Energy Transition: the Time Factor, today at AEI. 

Below are energy saving devices.  I will be riding my real bike soon and I figure that I can walk anyplace that one of these little bikes can take me, but I think that Smartbike is a good idea.

It took nearly 400 years for England to covert from wood to coal.  The U.S. didn’t get more energy from coal than from wood until 1884,  and still has not really left the age of coal, since more than half of our electricity comes from coal fired thermal plants.  Things take time for a variety of reasons. 

Many enabling factor are necessary for an energy transformation to take place.  A resource that cannot be brought to market is useless and sometimes transport is a limiting factor.  That was the problem for natural gas.   Oil and gas are often found together.   In the old days, the oil could be shipped in tanks or barrels.   There was often nothing they could do with the gas, so they just flared it.  Gas couldn’t be transported until particular alloys and welding techniques developed that could move it under pressure and this didn’t happen until the 1930s.  Even then, it took time to construct the network.    W/o these things gas was useless even if it was essentially free at the well-head, demonstrating once again that a resource is not a resource until the technology is available to make it so.

Now You’re Cooking With Gas

Once the pipes were in place, gas became available around the country.  In the 1940s, there was a phrase – “now you’re cooking with gas”– that implied you were up to date.  Gas had been abundantly available for more than fifty years, but not accessible.  Even then, it still took many years for most houses to get hooked up to gas.  Some of our neighbors were still burning coal to heat their houses well into the 1960s. 

Natural gas can now be piped long distances because of better compression engines.   Back in the 1980s, President Reagan tried to block Soviet access to modern compressor technology.  The got the engines in Europe so that today the cappuccino you buy in Italy is probably warmed with Russian natural gas.  

BTW – recent technological improvements allow gas to be more easily shipped in tankers.   Using more gas in place of oil requires less of a shift, so our energy future may be gassier.

BTW 2 – they talked re methane hydrates.  I didn’t know what that was, so I looked it up. This is the link.   This is evidently a big potential source of natural gas, although I saw something on the Science Channel talking re how melting of methane on the ocean bottom had caused the great extinction at the end of the Paleozoic Era, so I don’t know.

Below – this and the next picture are union representations near the White House.  Unions are enthusiastic about getting jobs back and counting on the new energy infrastructure to help.

Professor Smil didn’t have much confidence in solar or wind power.  These things, he said, have significant problem with availability (wind doesn’t always blow and he sun doesn’t shine at least half the time.)  But the bigger challenge is transport.   It is analogous to the problem with natural gas.  The wind blows the strongest where there not many people and we don’t have the transmission lines to move the power.  The same goes for surfaces where solar could be placed.   Beyond that, both types of energy are small scale and locally intrusive.  You will need lots of lines and lots of machines. Some of the people who love wind or solar in theory object when it ruins their view, as Edward Kennedy did when he squashed a wind project  near his home in Massachusetts.  Everybody lives somewhere and many places where the wind blows best have some rich guys nearby who can stop the project.

We also do not have a real electricity grid in America.  We have separate local grids and the connections go north-south.   This means that Canadian hydropower can move from Ontario to Florida or from British Columbia to California, but you probably could not power your I-pod on the electricity you could move west-east from windy North Dakota to busy New York.

Probably the most significant thing that will slow our energy transition is what we already have.  We have thermal plants.   We have paid the up-front investment costs and the variable costs are a lot lower.   Think of it in terms of your biggest investment – your house.   If you build a new house, you will be wise to incorporate energy saving devices, but it is probably a bad idea to tear your house down and spend hundreds of thousands of dollars to build a new one just to save a couple hundred dollars a year.  You will wait until your house “wears out” and that might be a long time.   What does that say about the speed of transition?

Smil thinks that we will be a fossil fuel society for a long time to come.  The most effective thing we can do in the short run is conservation that makes fossil fuels use more efficient.   We can use more natural gas and we can make engines much more efficient, especially if we switch to diesel engines.  Americans are prejudiced against diesel, but up-to-date engines have greatly improved in terms of performance and pollution and they get much better mileage than their gasoline counterparts.  My first car was a diesel.  We were very happy with it.  

BTW – T Boone Pickens disagrees.  Read re the Pickens Plan at this link.  I like the idea of the Pickens Plan better, but I am afraid I think Smil is probably closer to right for the short and medium-term.

Of course, nuclear energy is very efficient, creates no green house gases and can work with the current electrical infrastructure, but some influential Americans harbor a hateful grudge against nukes.   The French get 75%+ of their electricity from nuclear.   I always figured that if the French could do it, so could we.  Guess not.   Viva la France.