Tech Policy

Missing the mark on Peak Oil

Tim Haab has a couple of posts about Peak Oil on Env-Econ blog. I learned about these via Econbrowser. With all due respect for Tim and John, I believe that one should not try to sound authoritative if one does not know enough about a topic.

First, given the time scales over which energy systems evolve and change, ten years is tomorrow and Thity years is day after tomorrow. I recommend reading the Hirsch report.

I will not get in to resources, and reserves, but one thing I must explain. Even CERA acknowledges that as times goes by definition of what we call oil is changing as  non-conventional oil is being clubbed together with conventional oil.

We currently project worldwide liquids production capacity (not actual production) to grow from 88.7 mbd in 2006 to 105.3 mbd in 2015. This involves a growing role for non-traditional liquids—oil sands, gas-to-liquids, ultra deep water. This represents a widening of the definition of oil. Such a development and accords with the history of the industry, in which non-conventional technologies are introduced and, over time become conventional.

What Peak Oil community wants Tim and similar minded economists to understand is that the issues of transition are far more complex than economists will give them credit for. What exactly do we mean by alternative fuels for transportation?  Unfortunately, we do not have a good substitute for oil.

I must recommend that Tim read Dave Cohen's post at the Oil Drum:The Tragic Consequences of the High Discounting of Oil Extraction I admit that Dave's analysis is not complete, but he makes very good points about backstop technologies and implied high discount rates of oil extraction.

If current prices are sending a good signal, why does IEA feel the need to shout every year that enough investment is not being made in energy sector?

On Stabilization Wedges: I suggest that Tim check out the science paper by Pacala and Socolow.

Tim is right when he says that prices will not peak at peak oil, but they will keep rising. This is precisely the issue that peak oil people want to highlight. John asks what  should we do. There is no clear simple answer, specially when one considers that we can't think of Peak Oil as an isolated topic. What makes this whole debate complicated that in addition to providing a long term secure supply of liquid fuels, we are going to be very concerned about cliamate change. Several of the non-conventional sources of oil are two to six times as Carbon intensive. The issue is not simply of supply, but whether and how we choose to manage our demand as well.

I was very angry when I started sriting this post. In many ways, I have cooled down while putting the links together for this post, which I think is a good thing.  I still think however that Tim and John need to think about this topic in a much more sophisticated manner before making cavalier comments. I recommend reading the Oil Drum and Econbrowser regularly as starters.

 

Who Really Killed the Electric Car?

(Cross-posted on American Automobile Fuel Consumption Debate)

I promised to write something more than just a rant about who really killed the electric car. I had not read Mark Rechtin's review in Automotive News before I saw the movie (see readers responce here). I think that Rechtin makes a good point that instead of engaging in conspiracy theories, the filmmakers could have done a much better job of bringing out the complex technical, economic and social aspect of automobile purchase, and use. A similar, but slightly more angrier sounding take comes from MotorAlley.

I agree with Rechtin and Wasserman on many points. The acquittal of batteries in the movie is quite surprising. The batteries used in EV1 were not up for the job a regular that is expected of an internal combustion engine powered car. It is true that battery technology continues to improve, but even the current Ni-MH batteries would not lead to a satisfactory vehicle performance. Could the next generation of Li-Ion batteries do the job? Possible, but not yet certain since there are a number of cost and safety issues involved.

It is not unvcommon to find a small but highly motivated group of individuals who are supporting a cause such as the group portrayed in the movie. It should be noted, however, that a mere expression of interest by 4000 people in the state of California does not mean that there was a real market for EV1. Most Americans demand not only acceleration and fuel economy, but a number of other vehicle attributes such as interior and luggague space, safety, increasingly automatic and electronic features that consume more power, reliability, convenience and yes, least I should forget, low initial cost of purchase. Neither the EV1, nor other EVs in the movie fit that bill well.

The movie was quite critical of Alan Lloyd and California Air resources Board (CARB) in general. In the end, we should all remember that it was CARB which effectively mandated EVs with its Zero Emission Vehicle (ZEV) rule. As the movie notes, CARB got the idea after seeing a GM demonstration vehicle at an auto show. If CARB is to be blamed, then the blame should lie with the original ZEV ruling which was too optimistic in its estimate of development of electric vehicle technology. Even with the compromise with automakers, the ZEV rule has not been a complete failure. It can be very easily argued that the development of hybrid vehicles by Honda and Toyota would not have been as quick had the ZEV rule not been in place. In short, the CARB was at least partly successful in its technology forcing goal.

Of course, I have noted far too often that the hybrid vehicles, even after being on the market for several years, currently account for less than 1.5% of new vehicle sales. Even with the kind of buzz that hybrids have generated, there are several skeptics. Quite simply, they make a strong argument that even at 3 dollar a gallon of gasoline, the hydrid vehicles just barely make economic sense for a consumer with lower than average discount rate. The fact is that mainstream vehicle technology keeps getting better, and it is hard for newer technologies to break in to the market.

All this being said, my gripe with a movie like Who Killed the Electric Car? lies in the fact that they perpetrate the myth that somehow we are going to solve our energy, and specially oil, problems by means of technology alone. If we are to get serious about challenging the ever increasing petroleum consumption and greenhouse gas emissions, not only will we need better technology, but we will need a change in behavior and strong fiscal and regulatory policy measures that will induce the change. Too often our attention is foucsed on having our cake and eating it too. It is time to stop living in the wonderland.

Who Killed the Electric Car?

Really, Who killed the electric car?

GM?
Chevron?
Toyota?

(via PlugInHybride.com )

Ford Report on Business Impact of Climate Change

In response to a shareholder resolution urging the company to outline its strategy to deal with climate change, Ford Motor Company has released a report on Business Impact of Climate Change.  Related WSJ article here.
As such you may not find anything new in this report, specially if you were looking for specific targets and so on, but yet it is an interesting piece of document. Firstly, Ford has embraced "Fuel+Vehicle+driver" formula:

Within the road transport sector, we see the opportunities to reduce in-use GHG emissions defined by three inter-related factors:
• The embedded carbon content of the fuel available to consumers.
• The carbon efficiency of vehicles.
• The purchase decisions and driving behavior of customers, including vehicle miles traveled
This “fuel + vehicle + driver” formula underpins our engagement with both fuel companies and consumers in addressing the GHG challenge.

Readers of this blog may find this argument vaguely familiar.

Secondly, Ford has very nicely outlined the constraints faced by the auto companies:

...our business involves a long product lifecycle with greenhouse gas emissions that vary at each stage.
...we face at times conflicting regulatory, market and technological signals. The picture varies by geography, market segment, and demographic profile. (Some times) governments are often tempted locally to encourage specific technology solutions, but there is considerable uncertainty about which technologies, combinations of technologies and technology pathways will prevail and over what time frames, ...some policy makers favor demand-side measures such as fuel taxes and Green Public Procurement policies, while others prefer supply-side controls such as fuel-economy or GHG emissions standards, creating significantly different market dynamics and product strategies from one region to another.
...the GHG footprint of the in-use phase of light duty vehicles must be measured on a well-to-wheels basis, that is, the total emissions from the production of the original source of energy (e.g. crude oil, bio-fuels, etc) into a usable fuel, the amount of energy consumed to produce the vehicle, to the fuel consumed by the vehicle during its in-use lifetime.
...the automotive industry operates on long product development times and major capital investments.

All of these points are well made. The heart of this argument is that there are inherent business risks in trying to respond too enthusiastically with all the market and regulatory uncertainties present.

Third, Ford's take on policy matters is in favor of emissions trading system:

...(emission) reduction programs should be based on upstream, carbon trading systems that establish reasonable, gradually reducing the limits on carbon
introduced into the economy. In addition, they must include a safety valve that is based on economic/energy indicators that would allow for the
release of additional emission allowances at reasonable prices to avoid unintended constraints on economic growth, maintain price stability...

Economists would argue that an upstream carbon trading system would be most efficient. Oil and Gas companies are not always happy with the upstream system though. This brings us to the part of the report dealing with stakeholder issues (taken from Ford's sustainability report):

Many factors influence greenhouse gas emissions from vehicles, and many institutions and individuals influence those factors. (click on picture for a larger image)
... to have meaningful, long-term impacts, global patterns of consumption of fossil fuels must be changed. For the transportation sector, this will require not only improvements in fuel economy, but also changes in fuels, infrastructure, mass transportation and driver behavior, as well as a reduction of the overall number of vehicle miles traveled.

Again, this is an argument that readers of this blog should find familier.

What is to be made out of this report? Frankly, not much, but it is a step in the right direction. The reality is that we are going to have to deal with how to respond to climate change sooner or later. Some tough decisions will have to be made. The sooner we prepare ourselves to make those decisions the better off we will be afterwards.

(cross posted on American Automobile Fuel Consumption Debate)

 

Debrief on implications of Weyburn EOR project

Carbon Dioxide Capture and Storage has been one of many favorite topics at TechPolicy. Dave at The Oil Drum has a very nice post analyzing the implications of Weyburn  EOR project. I recommend the whole piece, but the gist of the story is as follows:

What did Weyburn actually demonstrate? What is the longer term meaning of the Weyburn project?
1. Does the Weyburn experiment extend to new (primary or secondary) oil production, deepwater or land-based? -- No.
2. Is carbon capture (as in the Beulah coal gasification facility upstream from Weyburn) viable yet? -- Yes, technologically, but really no, not without laws mandating that CO2 emissions be penalized to justify the higher costs of capturing the carbon, costs which will be passed on to consumers. See the Socolow article in Scientific American cited above.
3. Is carbon capture of fossil fuels industrial production sites better than using a natural CO2 source? -- Sure.
4. Does the Weyburn process reduce future CO2 emissions even if universally applied? -- Only in those special cases where CO2 injection is appropriate for EOR at the tail end of an oil field's production. This will depend on the field's geological characteristics.
5. Does the Weyburn process (universally applied) have a large impact on reducing total anthropogenic emissions from fossil fuels? -- Absolutely not but it does create a very small % reductions in emissions.

Yes, projects like Weyburn are not going to cut the mustard (Dave's words, not mine), but they are extremely important. Even if one does not think that CO2 capture and sequestration is the way to go, we are much better off putting less CO2 in the atmosphere than otherwise. Finally, Dave talks about what he thinks is a good path forward:

...we can implement energy alternatives now, reduce demand and produce the oil with sequestered CO2 as at Weyburn.

Unfortunately, we do not have good energy alternatives NOW for transportation purposes, but we are not doing our part in reducing demand either.

Hybrids, Nerds, and the Search for Truth

When it comes to cutting through all the bulls--t, there is no one better for the job than a nerd. With all the recent interest in hybrid cars due to the price of gasoline, I've heard a lot of chatter about the economics of owning a hybrid. NPR, Nightly Business Report (NBR?), Slate are a few amoung many new outlets talking about the savings (or lack thereof) when switching to hybrids. But who can really trust these media points whose conservative bias and liberal pandering cloud the analytic judgement as they slave for ratings. We really need to hear this from a nerd.

And the nerds have heeded our calls. Omninerd has posted what I perceive as the most thorough analysis of hybrid economics on the web today. Seriously good stuff here. I was always continuously frustrated by people comparing the Prius to a Corolla. The Corolla is a piece of s--t (I kinda like dashing out cuss words, as if you don't know what I'm saying) and one of the lightest cars on the road today, so of course it is cheap and gets better than average gas mileage... in my mind an unfair measuring stick. Omninerd compares multiple hybrids to regular cars across the board. They even consider the costs of loans, the economics of trade-ins, and driving habits for pete's sake (who's pete?) and really boil it down to what would it cost per month. Nice work all-in-all.

A Slashdot post made the results sound like bad news for hybrid fans. My initial reaction to the post was of course hybrids are not economically justified on the gas mileage. If they were, car makers would be giving away the green premium they can charge for them. Hybrids will never be this way until the general public's willingness to pay (...okay the green public's willingness to pay) is based solely on MPG. (Incidentally, the Slashdot posting cause so much traffic to the Omninerd site that the nice graphics in the article were taken down for a period of time last week.)

However, after reading the article I see hope in the nerdy analysis. There are choices for which the hybrid is economically better. In this graphic, Omninerd does the data a disservice by showing the Net Monthly Savings as a negative number. One would have to read a bit to understand that he is comparing a 1999 already owned Accord to buying a new car. Looking closely you can see that if you were comparing a 2006 Toyota Camry with a 2006 Toyota Prius, the Prius is actually more economical. I understand that many would object to compaing these two different "classes" of cars, but to me this shows that the economic divide is not so large as some imply.  At any rate, hybrids will remain more expensive as long as people are willing to pay that much.

Now your job is to cut through my bulls--t and make your own conclusions.  Be secure that you are backed by a nerd.

Pot Holes in Bangalore

Bangalore has made a lot of news worldwide as the software Mecca of India. I had never been to Bangalore until last year, and one of the purpose of my visit was to check out the city from the point of view of livability. Apart from problems with erratic electricity supply, and not so uncommon water shortages, what stood out in that trip was the condition of roads in Bangalore. Now, some Bangalore residents have decided to develop a community response to the poor condition of roads in Bangalore. Check out Bangalore Pot Hole. As the web site says:

Through BangalorePotHole.com, citizens of Bangalore are allowed to share their experiences on the roads, especially with the pot holes. It also provides a valuable insight into inconveniences, accidents and other risks factors attached as result of poor maintenance of roads.
In an effort to facilitate this dialogue, we have put together together information on engineering facts of local street maintenance. We hope that based on this information you and other citizens in your community can become a positive and effective force in working with your local officials for better streets.

There is also an FAQ about Pot Holes and what citizens can do about them. It's high time Bangalore paid attention to it's infrastructure (or lack thereof).

Infrastructure Networks Collapse Redux

Last month I noted how various infrastructure networks collapsed as a result of a lot of rains in Bombay. It looks like the same story has been repeated in New Orleans with hurricane Katrina. Cells phones are out, emails not running properly, electricity supply disrupted in many parts, and the city is virtually inaccessible by most means of transportation. What is interesting is that the catastrophe seemed to have caught the city by surprise in terms of the widespread nature of the system failures. I will try to make a detailed post about it afterwards, but still wanted to make a note of it.

India's President Seeks Energy Security

India is a parliamentary democracy, very much like England. The President, even though designated as the commander in chief with important constitutional powers, is largely ceremonial. Since becoming the 11th President of India in 2002, A. P. J. Abdul Kalam has sought to change this by seeking the role of a visionary statesman. In any year, the president has two opportunities to speak directly to the Indian people, on the eve of the Republic day (26th January) and the Independence Day (15th August). Dr. Kalam, himself an engineer, used his opportunity yesterday to envision energy security for India.

Today on this 59th Independence Day, I would like to discuss with all of you another important area that is "Energy Security" as a transition to total "Energy Independence". Energy is the lifeline of modern societies. But today, India has 17% of the world's population, and just 0.8% of the world's known oil and natural gas resources. We might expand the use of our coal reserves for some time and that too at a cost and with environmental challenges. The climate of the globe as a whole is changing. Our water resources are also diminishing at a faster rate. As it is said, energy and water demand will soon surely be a defining characteristic of our people's life in the 21st Century.

The language is chosen such that Energy Security than an complete independence is sought. In my personal opinion, energy independence is only a pipe dream for any nation which uses abundant quantities of oil. So, no energy independence is possible unless all primary energy is derived from renewable resources such as wind, biomass, or solar. The President explained what he meant by energy security.

Energy Security rests on two principles. The first, to use the least amount of energy to provide services and cut down energy losses. The second, to secure access to all sources of energy including coal, oil and gas supplies worldwide, till the end of the fossil fuel era which is fast approaching. Simultaneously we should access technologies to provide a diverse supply of reliable, affordable and environmentally sustainable energy.

... Energy Security, which means ensuring that our country can supply lifeline energy to all its citizens, at affordable costs at all times, is thus a very important and significant need and is an essential step forward. But it must be considered as a transition strategy, to enable us to achieve our real goal that is - Energy Independence or an economy which will function well with total freedom from oil, gas or coal imports. Is it possible?

Hence, Energy Independence has to be our nation's first and highest priority. We must be determined to achieve this within the next 25 years i.e by the year 2030. This one major, 25-year national mission must be formulated, funds guaranteed, and the leadership entrusted without delay as public-private partnerships to our younger generation, now in their 30's, as their lifetime mission in a renewed drive for nation-building.

Thus, according to Dr. Kalam, energy efficiency, energy accessibility, and development of sustainable energy technologies are the cornerstone of energy security, but that does not stop him from using the rhetoric of energy independence.
I find the use of the phrase the end of the fossil fuel era which is fast approaching rather interesting when President's own speech highlights a three fold growth in coal use in the coming twenty-five years. It is not that Kalam does not recognize this fact.

Even though India has abundant quantities of coal, it is constrained to regional locations, high ash content, affecting the thermal efficiency of our power plants, and also there are environmental concerns. Thus, a movement towards Energy Independence would demand accelerated work in operationalizing the production of energy from the coal sector through integrated gasification and combined cycle route. In 2030, the total energy requirement would be 400,000 MW. At that time, the power generated from coal-based power plants would increase from the existing 67,000 MW to 200,000 MW. This would demand significant build-up of thermal power stations and large scale expansion of coal fields.
...We should operationalize a 500 MW capacity power plant using integrated gasification and combined cycle route within the next three years from the existing pilot plant stage.

It is not clear if India is willing to commit to integrated gasification and combined cycle (IGCC) technology as a cleaner coal technology. All President Kalam is urging is to start building a small IGCC power plant to learn from the experience. At the same time Kalam stressed that he would like to see no natural gas in the electricity generation sector by 2030. If natural gas costs continue to stay at high levels ($8.5 per mcf), then such a plan might sound good, but I am not sure about relying on less dirty coal technologies while doing away with cleaner gas.
Dr. Kalam sounds very optimistic about solar power and wants to add about 56GW of solar capacity by 2030.

The current high capital costs of solar power stations can be reduced by grid-locked 100 MW sized Very Large Scale Solar Photovoltaic (VLSPV) or Solar Thermal Power Stations. In the very near future, breakthroughs in nanotechnologies promise significant increase in solar cell efficiencies from current 15% values to over 50% levels. These would in turn reduce the cost of solar energy production. Our science laboratories should mount a R&D Programme for developing high efficiency CNT based Photo Voltaic Cells.
We thus need to embark on a major national programme in solar energy systems and technologies, for both large, centralized applications as well as small, decentralized requirements concurrently, for applications in both rural and urban areas.

Dr. Kalam also wants about 65GW of capacity addition by 2030 to take place is other renewable energy sources such as wind, ocean and biomass. To what extent this optimism is justified is anybody's guess, but there is no doubt that the vision is quite appealing. Surprisingly, nuclear power receives just one paragraph in the speech, although it is well known that Dr. Kalam is a staunch advocate of nuclear power in India.
Dr. Kalam also touched upon losses in T&D in India.

The loss of power in transmission and distribution in our country is currently in the region of 30-40% for a variety of reasons. Of about one thousand billion units of electrical energy produced annually, only 600 billion units reach the consumer. This is the result of transmission loss and unaccounted loss. We need to take urgent action to bring down this loss to 15% from 30-40% by close monitoring of the losses, improving efficiency, and increasing the power factor through modern technology. By this one action alone we will be able to avoid the need for additional investment of around Rs. 70,000 crores for establishing additional generating capacity.

The unaccounted loss is a euphemism for theft. In addition, it is a well known fact that political interference in the state electricity boards is rampant, and politicians do not think much before announcing free power for farmers schemes.
When it came to transportation and oil use, President Kalam had only two ideas to push: Biofuels and Hydrogen.

We have nearly 60 million hectares of wasteland, of which 30 million hectares are available for energy plantations like "Jatropha". Once grown, the crop has a life of 50 years. Each acre will produce about 2 tonnes of bio-diesel at about Rs. 20 per litre. Biodiesel is carbon neutral and many valuable by-products flow from this agro-industry.
...India has a potential to produce nearly 60 million tones of bio-fuel annually, thus making a significant and important contribution to the goal of Energy Independence.
...The other critical options are development of electric vehicles; hydrogen based vehicles, electrification of Railways and urban mass transportation.

In the recent times, industry leaders like Arun Firodia of Kinetic group have come forward to advocate biofuels. Biodiesel from plants like Jatropha are certainly one of the ways to go forward, but they far from a panacea. The environmental implications of large scale biomass development for fuel production are not yet well understood.
As for hydrogen, I feel comfortable saying that Hydrogen fuel cells will have no impact in India by 2030. I continue to believe that transportation and oil will prove to be the major challenge in the quest for a sustainable energy system, and for now there are no easy answers on the horizon. If price of oil continues to increase from the current levels, rapidly growing economies such as India will be most at risk.
With all of these concerns in my mind, I do not know what to make of Dr. Kalam's aim of making India energy independent by 2030.

By 2020 the nation should achieve comprehensive energy security through enhancement of our oil and gas exploration and production worldwide. By the year 2030, India should achieve energy independence through solar power and other forms of renewable energy; maximize the utilization of hydro and nuclear power and enhance the bio-fuel production through large scale energy plantations like Jatropha.
We need to evolve a comprehensive renewable energy policy for energy independence within a year.
... Energy security leading to Energy independence is certainly possible and is within the capability of the nation. India has knowledge, natural resources; what we need is planned integrated missions to achieve the target in a time bound manner. Let us all work for self-sufficient environment friendly energy independence for the nation.

While I am all for putting together a comprehensive renewable energy policy within a year, I think that the rhetoric that goes with it needs to be a lot more realistic. That being said, and I never thought that I would quote Ayn Rand any day,

Throughout the centuries there were men who took first steps, down new roads, armed with nothing but their own vision.

or better still Maxwell Maltz:

You may live in an imperfect world but the frontiers are not closed and the doors are not all shut.

Amen!

P.S. Kiran at The Indic View has some comments.

America at 10mph

My friend Rose from Boston, travelled through Pittsburgh, my home town yesterday. She was meeting up with her new friends that are travelling to Boston. No big deal right? Wrong!! Her and her new friends are travelling 4200 miles from Seattle to Boston. Still now big deal, right? Wrong again!! They are travelling from Seattle to Boston on a Segway. Max speed of a Segway - 10mph. The point - to slow down and "capture a true sense of what this country is all about." They are filming along the way in order to produce an independent documentary of their trip. Check them out..