Sunday, November 29, 2009

Letter to Bill McKibben, and Friends

In case you haven't read this, Bill McKibben has another nice article in The Nation: A lot of it is about Al Gore's new book, which I will get to one of these days, once it is available in a public or other library (assuming those public ones still exist for long, which is looking more and more to be a less likely prospect these days...state and local taxes are dropping, and libraries are feeling the brunt of that, as per usual, along with lots of other worthwhile services that make for a civilized society).

Anyway, here is some comments on that story, reflecting on why so many environmentally motivated folks will accomplish so little compared to the task at hand. And in particular, renewable energy installations in the USA.

I believe there is a better way...and that is to make renewables economically viable. It also works well with energy efficiency, climate stabilization and job creation and economic stimulation, and from the bottom up, no how cool is that? For that, we need some states to have renewable energy feed-in laws, similar to Germany's, or better yet, what Ontario has recently started with their Green Energy Act ( Granted, Vermont is so far the only state with a FIT, though that is better labeled as FIT Lite. Once a state or 2 implements something like Ontario's GEA, just get out of the way of the stampede. Rumor has it, economic stimulation/job creation, new manufacturing, etc are very much sought after these days. Well, the proof is in the bottle, so to speak.. and we need more than the "3.2 beer" approach.

So, the letter:

After reading Bill McKibben's take on Al Gore's recent book, there is a glaring omission of BOTH of these fine people in their plans and hopes to make our world a better place. It concerns the LACK of a way to make renewable energy economically viable.

First of all, we need Feed-in Laws/Feed-In Tariffs (FITs), such as the ones operating in Germany. In case these are unfamiliar to the reader, check out here: FITs work better than any other system designed to date for getting lots of renewable installed at the lowest real cost, and they also integrate nicely into Keynesian Stimuli, job creation (at core, FIT's are just a job creation policy, not an environmental policy) and energy efficiency programs. These separate the price of renewable electricity from the price of non-renewables, which may or may not be related to the cost of electricity production form these non-renewables. And in this age of financial insecurity, where increased financial risk has lots of costs, FITs are just what the doctor ordered.

One of the virtues of renewable energy is predictable energy production costs. But in much of the US, and especially NY State, the electricity pricing is based on fossil fuel prices, which are inherently unpredictable, and becoming more so as the effects of peak Oil/Peak natural gas get more pronounced. Tying renewable energy pricing to fossil fuel pricing is just plain lunatic, unless you want to hinder the development of renewables, in which case it's just plain brilliant. For technologies with wind turbines, there is essentially no fossil fuel component in the Operation and Maintenance (O&M) or Capital repayment (the largest cost component) - so why should the price of renewable electricity be tied to the price of coal or natural gas?

Many well meaning environmentalists try the subterfuge approaches: "money for nothing" trick of cap and trade, "carbon (dioxide) credits", "carbon (dioxide) offsets", and above all, subsidies for renewables based on bribing the uber-rich with tax deductions and tax credits. These don't work that well; "better than nothing" is just not good enough. These, as well as sufficient CO2 pollution taxes (how about the Stern's "social cost of fossil fuel combustion waste products" value of $85/ton for fossil fuel derived CO2), raise everybody's electricity price. Why not just raise the price that renewable generators receive to a cost of production plus a reasonable profit rate, leaving the prices of electricity made by polluters (nukes and fossils) in the dirt cheap range/and low profit range. As fossils/nukes are phased out by replacement with renewables, prices for electricity will gradually rise to an unsubsidized value, so that electricity consumers are paying the real, full price for this very valuable and useful energy. The FIT strategy of dispersing the extra cost (or extra benefits) of non-polluting electricity among all consumers of electricity on a per-unit of energy consumed basis encourages energy efficiency, and rapidly develops renewables on a lower cost per unit of energy produced than the tax subsidy and quota system used in the US and Britain. Maybe this way, people could actually get a job....,which is really not that probable with the current subsidy systems in the US, and especially to the extent needed.

We need to double renewable energy installations every year in the US for the next 6 years.. For wind, this means going from 8 GW/yr to 128 GW/yr (up to a rate of ~ $250 to $300 billion/yr in largely private investment) within the space of 5 years, and then staying at this level for another 10. You will find that during this interval, the amount of electricity needed will increase significantly, as we will need to replace the natural gas used for home and commercial heating with electricity. Anyway, with about $2.5 trillion invested in wind in the next 13 years, no more need for coal, oil and natural gas burners as well as nukes. Adding in sufficient short term resiliency via pumped hydro and longer term resiliency via reducing CO2 or N2 with hydrogen (from wind turbines and a bit of water) to make storable fuels will also make lots of jobs/require lots of investment/make for lots of new businesses.

But, that won't get done without FITs. Try doing that with the existing tax subsidies (PTC/MACRS)... and you would further bankrupt the federal government, since about 70% of the cost to install wind (about $2 billion per GW of capacity) gets rebated to the investors - but those investors must be rich enough to use them - only the richest of the upper tax bracket types need apply. Thus, the existing wind subsidies (solar ones are even more grotesquely expensive) would mean that a $2.5 trillion of investment in the next 13 years results in $1.75 trillion in less taxes paid by the upper 2% of the income distribution. That's really cute. I doubt that even those folks even will have sufficient "tax appetite" to accommodate a decent renewable energy build out.

The other reason such investments can't happen without FITs is the need for a sufficiently secure investment. The centerpiece of FIT's is a 20 yr fixed price for the energy produced - thus, a known cash flow, and a defined ability to pay back the investment over the 20+ years that these systems will be operating. This allows the renewable energy investments to be amortized over a long time (20+ years), and with lower cost capital and lower interest loans (due to low financial risk). Making electricity prices connected to fossil fuel prices (a central feature of "competitive" and "deregulated" electricity markets like NY's NYISO) means that future electricity prices are unpredictable, and thus investments based on repayment of loans and capital via sales of electricity is really risky. Such "connected" prices will lunge from excess during oil and natural gas price spikes to the pits, where NO new generation plant investments are justified - as in 2009, where average electricity prices for generated power in much of NY state have has been 3 cents/kw-hr.

So, no Feed-In Law, no renewable energy installations of any significance, let alone what is required. It's that simple. Maybe that is why so many enviros who are so well meaning just seem to radiate stupid when it comes to replacing non-renewables in a prompt and economically viable manner. If environmentalists would focus on FITs (which also leads to massive job creation in the millions- and that is just considering the US) instead of moaning and groaning about coal use (been there, done that, and it doesn't seem to do much good, but, if it chimes your bells, go for it), something might get accomplished. But, when crunches come, and people are left with the lose-lose proposition of either no electricity or coal derived electricity (since renewables presently can't be installed because loans for them are TOO financially risky/the cost that the energy is made at can't compete with coal derived electricity, even at an $85/ton of CO2 pollutant tax), people will choose coal (and natural gas is NOT a long term option - way too scarce and once it thermally equilibrates in price to oil, way too expensive - and it is also a CO2 polluter). There is not much future to a lose-lose choice, though in the short term it does avoid freezing to death in what passes for winter these days.

Oh well, so much for trying to inform a public that seems to go out of its way to remain butt-ugly ignorant with respect to renewable energy. Well, I expect no less for the MSM... after all, they tend to be bought and paid for by the highest bidders - in this case, the nukes, fossil fuelers and their Wall St buddies. When will progressive media step up and do the right thing? Got any ideas? Say, within a decade, once it is officially too late? Questions, questions, questions.....

Dave Bradley

Saturday, November 21, 2009

More thoughts on Peak Oil and Wind

There was a crack in the "ignorance shield" last week with regards to Peak Oil and the International Energy Agency (IEA). The IEA both gathers energy statistics and also makes forecasts with regards to future consumption rates/supply rates - especially with regards to oil and natural gas production and usage. Until recently, these estimates had a pretty decent track record. Such estimates (here is the 2009 IEA report)are used by governments, corporations and other entities to make plans for the future. For example, if the IEA were to make the case that worldwide oil and methane (Ngas) production rates had peaked, and future production rates would be lower, well, lots of countries would have to make plans to get by on less oil consumption than is presently the case. In the US, where oil is mostly used for transportation, a "peaking oil production" might lead to massive investment in electric mass transit, higher taxes on gasoline usage (to discourage consumption) and higher taxes on inefficient automobiles.

However, according to The Guardian, a major news organization in Great Britain, various whistleblowers have come forth with a disturbing story. It turns out that the US Government (especially the ex-Bu$h administration - the jury is still out on IEA-Obama administration manipulation) has been pressuring the IEA to "shade"/"distort" its projections of actual recoverable (very different from the amount in the ground!!) oil reserves, oil depletion rates (the percentage of oil removed from existing and operating oil fields) as well as the practical amount of oil production that is likely to occur. The Bu$hies (and many other previous administrations) were pushing the "rosy scenario" of ever increasing production rates able to meet ever increasing consumption rates. And as long as potential supply rates exceed demand rates, oil prices tend to be set on the marginal price (cost to extract the most difficult to get oil needed to satisfy the demand plus some reasonable profit). For example, if tar sands oil at $70/bbl is needed to supply the last 2 million bbl/day of oil to the world market (of 73 million bbls/day of crude oil), that sets the marginal price. Most of the oil produced is a lot cheaper to make ($5 to $10/bbl in Saudi Arabia), but that does not set the marginal price.

However, when demand exceeds supply, things get ugly for consumers and countries that are net importers - like the USA (we import about 13 mbd of crude/refined oil, consume about 19 mbd). Once supply and demand become equal, or demand exceeds supply by even a tiny fraction, a process known as demand destruction sets in. Suppliers ration the amount that can be delivered by raising the price past were some consumers (poor African countries, or destitute North Americans) can pay, and so they get none, and thus demand is reduced a bit. The tiny changes in supply can have drastic effects on price if there is no excess supply available - prices can easily double or triple in less than a year. This happened in 2007 to 2008. And when so many people have to shift to paying 3 times as much for oil and oil based things/services/transportation, they have less to spend on other things, like food, doctors or house payments. The economic devastation of 2008-2009 was significantly precipitated by this oil price spike. prices for coal and Ngas also spiked during this time - there are lots of "interconnections" and "product substitutions" that can occur between coal, oil and Ngas, after all.

So, the deliberate cooking of the books is a big deal. And it's worse than the Guardian story - more of the "inside scoop". This affects investments worth trillions of dollars, and the lives of most people on the planet. And this delays the large scale implementation of alternatives to oil consumption in the USA - like electric powered mass transit, and renewable energy production systems to power up that transportation. Or what fuel is used to keep your house warm in winter. Or where you live compared to where you work, assuming you can get/maintain a job. After all, in a future where a lot more renewable energy is installed, there are a lot more people employed versus the present situation. This IEA "info-fraud" also helps maximize unemployment, as well as perpetuating the transfer of wealth and income up the economic ladder as well as out of the country. And if you don't think that unemployment is a problem, because, for example, you are going to college to get that job that pays so much more than those without those degrees (gotta have at least 2 of them these days), well, try this one out ("Generation Recession").

So the IEA scandal has lots of ramifications. After all, ignorance is not bliss, at least when it comes to future energy supplies for an automobile/truck based society.

Anyway, what a great lead for this article in the Oil Drum, on "The Renewables Gap". Along with a bit of a critique with regards to how oil supply usage and wind turbines mesh, or don't mesh. But, it is designed to rub those TV dulled brain cells together. Consider it a tonic to still another TV blurb about that maiden of hypocrisy - Ms. Palin - now busy selling books (about her) to the "don't read books very much" crowd. Ugggh....


A very interesting article - designed to get people thinking, I guess. However, it seems to rely on an equivalence in energy sources that does not seem to work that well.

Wind turbines are largely made with non-oil, non-Ngas derived thermal energy - though oil and Ngas could certainly be used - it's just too expensive. The major energy uses for wind turbines are preparation of steel and concrete, some copper and aluminum for the wires connecting the turbines to the grid. Oil and Ngas will be used to supply raw materials for the blades (epoxy uses bisphenol A (benzene + propylene --> cumene; + O2 --> acetone + phenol; 2 phenol + acetone --> BPA; proplyene + O2/CL2 ---> epichlorohydrin; EPCH + BPA ---> epoxy monomer; + aliphatic amines (propylene/ethylene + ammonia) ---> polymer) and coal or Ngas gets used to make glass (--> fiberglass for blades). And if push comes to shove, benzene and propylene can be made out of wood or coal, or from ethanol, or CO2 and hydrogen. Sure, some oil is used for transport and construction, but most of the energy used to put a wind turbine up starting form raw materials is either coal or electricity (and that could be made by renewables, too, such as for recycling scrap steel in electric arc furnaces to steel). Who knows, eventually iron could be made from H2, CO2 and iron oxide (H2 made from renewable electricity and water), but for now, it will be mostly coal derived.

So, we don't need to divert a lot of oil and Ngas into making mass quantities of wind turbines, and via things like electric freight rail, renewable electricity powered scrap steel recycling, electrolytic /electric copper heating, renewable electric aluminum preparation, we can take a lot of (not all, but a lot) the oil out of wind turbine manufacture and installation. And there is always EtOH and biomass diesels for trucking, digging and crane operations.

As Starvid on Eurotrib says, Peak Oil is really a transportation issue, not all energy, though the transport item is REALLY important (well, exact quote is: Peak oil is not an energy crisis. It is a liquid fuel crisis.). And since electricity makes for 40% of the CO2 pollution presently being emanated, that would be a good item to concentrate on, which will help mitigate the lack of jobs problem as well as the Global Climate Change Problem. In the US, we still have a grossly inefficient transport system that is gasoline powered. By doubling the fuel efficiency from an average of about 22 mpg to about 44 mpg, we can cut half of our gasoline consumption. Then by cutting the vehicle miles traveled per year, another 50% of gasoline consumption can be chopped - implying less sub-urbia/ex-urbia, and a lot more electric mass transit, too. Maybe plug-in hybrids and all electric cars for the "short hops" around urban areas will also have an effect - after all, most gasoline is consumed in "short hops". As for diesel - electric freight trains could easily replace a lot of long distance trucking and also train diesel usage. As for jet fuel...maybe a lot less airplane flights will be undertaken. With about 75% of most fossil fuel usage thus replaced, some combination of biofuels and renewable fuels (such as reduction of CO2 via renewably made H2, or reduction of N2 with renewably made H2) could keep us going - those these won't be that cheap. Of course, all that electricity replacing SOME big fraction of the oil would need to come from something renewable...which is where the wind turbines come in handy.

And then there is the ramp-up time. Even if wind turbine production is doubled every year in the USA until we are making a decent quantity of turbines (say, from 8 GW of capacity to 256 GW/yr of capacity), this will still take up to 7 years (= end of 6th year) to accomplish. This will not really take that much steel production, assuming ~ 400 tons/2.5 MW (capacity) turbine. It would also take about 400 tons of concrete per turbine (being generous).

8 GW/yr wind turbine capacity = 1.28 million tons steel/yr (one blast furnace's output, maybe)
= 1.28 million tons/yr of year = 2.8 GW average new electricity

256 GW/yr WT capacity = 41 million tons/yr steel + 41 million tons/yr of concrete
~ 90 GW new electricity per year

We have about 40 million tons/yr of excess steel capacity in the US - or if we need some new blast furnaces, big deal, do it.

As for storing electricity - its as easy as pumping water up a hill, and tapping the energy when it goes back down. Since such systems are at best 85% efficient, it makes more sense to minimize the storage, but that can only go so far given the variation in daily use between minimum and maximum usage. But, it can be done. Many would love the opportunity to do it. The harder thing to do is get permission form the so-called "powers that be" to do it. The engineering and construction is the easy part - the financing and permission will mean cutting off the good times to those presently benefiting (fossil fools (?)), and that is the most difficult part of such a plan. And the presently subsidized/still relatively cheap fossil fuel prices does not help much, either. As does the general level of energy ignorance among both the bulk of the population as well as the present ruling class (wealthy corporate types and associated governmental/academic groupies).

Oh well....


Wednesday, November 4, 2009

Selected November Wind News - In Brief

Here are some items of note.

The German Chancellor, Angela Merkel testified at Senator Boxer's Climate and Energy sub-committee recently. She received a loud round of applause from Democratic senators when she described the new jobs/new business opportunities that result when societies move from a regressive, fossil fuel and CO2 polluting based energy system to one based more on renewable energy.The hearing was notable on many levels, including the rudeness of all of the Republican Senators, lead by James Inhofe (inspiration for the Inhofe Scale). Also of note was the capitulation of the U.S. Chamber of Commerce (COC) with respect to the inevitability of climate treaties/agreements. But, fear not, the Chamber will still be roadblocks in the way of progress, as they will try to shape legislation to the benefit of certain key members of the COC - especially fossil fuel extractors, users and beneficiaries (short term basis) of fossil fuels. But due to numerous key desertions (such as Apple Computer) by science based companies who could no longer support the non-science spouted by the COC with regards to Climate Change, they caved.

On a more ominous note, Cielo Wind, a Texas devloper (responsible for 1% of all wind power developed worldwide to date), announced a 600 MW wind farm based on 240 x 2.5 MW Chinese wind turbines. In effect, we are importing the "benefits" of psuedo-slave (or actual slave) labor from China (especially their abysmal coal mines and ultra-polluting oil, chemical, steel and coal based electricity industries), instead of using Made in USA products (2.5 MW turbines Made in USA can be obtained from Fuhrlaender (Montana), Clipper (Iowa) and Nordex (Arkansas), while 2.3 MW wind turbines made by Siemens (Iowa, Arkansas) are also available). This dreadful news of the importation of $1 billion worth of nacelles/blades/towers from a Chinese mercantilist company (China generally does not install 2.5 MW turbines - instead, they mostly install 1.5 MW units, especially in the Mongolia windzone) echoes what Leo Girard, President of the United Steelworkers Union has said in numerous interviews and in testimony in the US Senate - that China has stated it's intention to DOMINATE the wind turbine market, not just compete in it. For the announced Texas wind farm, the $1.5 billion (total cost, or $2.5 million per MW of capacity) will be financed via Chinese companies. So, thanks to Walmart (they make most of their profits/money by importing more Chinese "stuff" and reselling it to Walmart shoppers than anyone else) for THAT one.....those who finance wind farms also get to specify where they are made and by whom. That's about 16,000 job-years of high value added manufacturing by U.S. workers that have been flushed down the drain and off to China. Once again, we import unemployment as well as cheap manufactured items. As to the quality of the products made by the psuedo-slave labor (largely with European and American technology), in the case of A-Power, only time will tell - this is a new model wind turbine. Meanwhile, Nordex has made over 1100 2.5 MW units; they are the acknowledged world leader for this style of wind turbine, and they are installing a factory in the US to make several hundred 2.5 MW units per year. Anyway, there appears to be some pushback on this Chinese economic stimulus project - Senator Schumer is trying to stop any Federal Government aid (PTC, MACRS deductions, which would add up to $1 billion over a 10 year period!!!!!) for this project. Also, at $2.5 million per MW of capacity, this project is actually about 25% more expensive than the going onshore mega project "wind plantation" (could even be more). Why pay MORE for something made in China, and of a dubious/unknown quality (essentially, none of these have been sold/installed to date), at that? Maybe there is more than meets the eye on this scheme.

But, Cielo is also trying out Samsung 2.5 MW wind turbines (made in Korea); anyway at least Korea is no longer home to psuedo-slave labor, but pretty well compensated labor.

In other news, a 102 MW wind farm recently opened in British Columbia (their first of any consequence). This project is centered around 51 x 2 MW Enercon E-82 wind turbines (gearless), which were transported from Germany to Thunder Bay, Ontario by ship, and from Thunder Bay to BC via rail. More work that could have been done on the U.S. North Coast/Canadian South Coast, but was not. The Bear Mountain site in BC is very windy, as the prevailing westerly winds roll off of the Pacific Ocean. Those same winds wash across the Great Lakes, slightly degraded due to friction of the moving air across the land. More details can be found here, including pictures of the distinctive coloring of the bottom parts of the tower.

Also, an announcement that U.S. wind farm installations will be either 6 GW or 8 GW for 2009, depending on how these are counted. About 2 GW of "spillover" projects from 2008 were completed in 2009. Nevertheless, this essentially stagnant/slight decrease from 2008 (8 GW) installation rate is better than some were predicting, due to the drastic and bad effects of "The Great Recession" on the wind industry. For NY, the 2009 "non-spillover" rate will be essentially zero for 2009...meanwhile, China is expected to become the world's leader in wind turbine capacity installation rates (doubling their 2008 rate of 5 GW per year to ~ 10 GW/yr). And this is before their Feed-In Law takes effect, which will really accelerate their wind industry.

Finally, a news blurb that the U.S. treasury Dept has released an additional $2.2 billion in CREBs bonds (Clean Renewable Energy Bonds). Those winning the zero interest bonds must be municipalities, schools, cooperatives, municipal electric companies, etc. There were 805 winners of these awards (application deadline was August 4, 2009). As usual, the CREBs bonds were significantly oversubscribed...meaning that there was a lot more demand for them than there was supply of them. So far, no NY entity has used a CREBs bond for commercial wind turbine installation. More details, including a link to all recipients, can be found here.

NY State's share of the $2.2 billion awarded was a whopping $3.54 million - $1.54 million for a biomass project by the Steuben Rural Electric Cooperative, and $2 million for a biomass project in, of all places, Jamestown, NY. Statewide, while this is not a total "F" grade, it rates a "D-", at best. NY State is in the worst economic recession since the Great Depression, with epic unemployment. Along comes a project designed to stimulate our economy, put people to work by providing stressed out municipalities and other government entities (local public schools, community colleges, state colleges/universities, state entities, and just about every sewage system/municipal water provider (these use LOTS of electricity for pumping, air compression, etc) with ZERO interest loans. But, as close to ZIP as one can get with regard to effort on the CREBs opportunity. For those who like numbers, $3.54 million out of $2.2 billion is 0.161%, or 1609 PARTS PER MILLION. Who will get the axe over such a pathetic performance? Anyway, congrats to Bath and Jamestown...

How come UB, Buffalo State, City of Buffalo and Erie County have not tried to get a piece of the CREBs action for commercial scale wind turbines, to supply some or all of their electricity needs? Oh well, never mind.

On a brighter note, here is an article from the NY Time's "Green Blog" site, showing how Feed-In Laws are gaining in popularity for a renewable energy stimulation system that seems to work batter than those currently in vogue - including quotas (RPS) and tax exemptions/credits.
Also noted is how this can alleviate Global Climate problems associated with fossil fuel combustion better than most or all other approaches tried.

And lastly, another environmental blog - just what the world needs, right? - - here is one of my articles on this Daily Kos (most heavily used political/democratic party blog, with about 1 million distinct hits/day) affiliated group.



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