Monday, September 24, 2012

Evolving Some Wind Turbines Some More


From http://www.vestas.com/en/media/news/news-display.aspx?action=3&NewsID=3153
- an advertisement for the new Low Wind Speed Turbine from Vestas, one of two such turbines (the other from REPower) introduced at the 2012 Husum Wind Energy Fair.

It's a strange time in the wind biz. The US wind turbine industry is imploding back to hibernation mode as the cliff of the end of the Production Tax Credit (PTC) on Dec 31 of this year gets closer and closer. For example, last week Siemens laid off over 600 people at one of its American factories that were recently built due to the fall-off in sales for next year. Meantime, the American Wind Energy Association (AWEA) struggles in vain to get a PTC extension bill passed in some form. But even though a majority of House members would pass it, no such chance is given by the lock step Republican House leadership opposition to allowing the wind industry to exist anymore in this country in any respectable scale. Talk about a gift to Europe, Canada and China.... Well, there are lots of reasons/excuses for the acts of these House Republicans, but deep down, threats from wind turbines to the ability of the natural gas, coal and nuke industry to extract outrageous rentier profits from their old fully depreciated generation units are now recognized (no such threat of significance comes from solar PV), and evidently these won't be tolerated any more. At least until the Presidential election happens in early November. The inability of facts to have any effect on Republicans is a fact that AWEA - which goes to great lengths to be neither Democratic or Republican  but instead pro-wind energy - is having a really hard time with... Maybe they never got the memo from the Romney campaign as well as the Republican establishment and its billionaire funders such as the Koch brothers (Neil Newhouse is a senior Romney campaign worker/manager):


Meanwhile, some parts of Europe are also imploding with "Austerity", notably Portugal, Spain and Greece. The once vibrant wind industry in Spain is having a hard time, and the new conservative government is seriously taking steps to cripple the wind energy industry in Spain (pre--Austerity it directly employed 30,000 people in Spain - equivalent to ~ 200,000 people in the US). Furthermore, just about all economic demand is shrinking at an accelerating rate, as unemployed people do not have the money to purchase stuff and thus keep the economy moving along. In the last year, Euro 224 BILLION (20% of Spain's yearly GDP!!!) in funds from Spanish banks has been moved to other parts of the world, notably Germany, where people and companies now have to pay banks to keep their money (see http://www.nakedcapitalism.com/2012/09/wolf-richter-catalonia-cries-for-independence-while-the-spanish-military-threatens-to-crush-the-vultures.html). Bank runs are not good for countries with 20% overall unemployment rates and more than 50% unemployment among people under 30. Spain now gets around 16% of its electricity from wind, and on occasion (windy times) over half of all electricity used in Spain comes from wind turbines (see http://www.aeeolica.org/en/about-wind-energy/wind-energy-in-spain/).  An example of killing the gooses laying those golden eggs...

And yet, here comes the new models of wind turbines. Last year, new Low  Wind Speed Turbines (LWST) in the 100 to 117 meter range were introduced en masse to the market, with great success. Now comes the 120 or more meter rotor diameter systems coupled to taller towers, which are sort of mandatory for big rotor diameters. The taller towers are often accomplished by the use of hybrid towers - the lower section is made of reinforced concrete sections that are pieced together on site, and then the top section is steel. For example, the 120 meter tower used by Nordex for their existing N117 unit (2.4 MW, 117 meter rotor diameter) has a 60 meter tall concrete section onto which are added 60 meters (often in 3 parts) of steel tower. Or for Enercon, tall towers (135 meters) can be entirely made of reinforced concrete, and often are. These taller towers have to be more rigid than shorter ones, and to do these in all steel requires incredibly thick lower steel sections; all that steel also costs a fortune. The manufacture of longer, slimmer blades which are quieter and more aerodynamically efficient is also important. These blades are flexible and one of the reasons that towers must be made more rigid is so the vibrations of the tower and blade don't add to each other and cause the blade to smash into the tower. Lighter weight blades are also even more important, because the stresses on the tower are a function of the weight at the top of the tower. Lighter blades with greater rigidity have been achieved most by improving their internal designs. 

And then there are manufacturing cost considerations. Lighter weight blades means less resin, which is the bulk of the mass of the blade, and getting more expensive as petroleum rises in price (resins are often made with Bisphenol A epoxy materials, and BPA is made from benzene and propylene, which are often made from crude oil). Incorporating more of the stronger but more expensive carbon fiber instead of glass fiber can also help minimize blade mass, but this is a very competitive industry, so costs can't go up much at all. 

Getting more energy out of a turbine at less cost generally means making the rotors bigger and towers taller, and maybe the generators bigger, but not always. But if you get more energy out for a little bit more investment (more energy out per unit investment in), you're going in the right direction. Since a lot of the soft costs (permitting, wind evaluation, grid connection) and some of the construction costs (crane rental, electrical work, substation, parts transportation and even the foundation) cost about the same for a bigger turbine as a slightly smaller one, economics dictate that lower cost energy production comes from bigger turbines. And for a given location, taller towers tap faster winds. And a bigger rotor intercepts more moving air, which is how electricity gets made. But all this is easier said than done....

There is also a push to get the "net yields" up from the 25% to 35% range (older models with small rotor diameter to generator ratios) to near 50%. In a recent "mini-farm" in Finland, Nordex has quoted a 52% net output for its N117 on a 120 meter tower for a site with 7.5 m/s winds at 120 meters height. If this works out, the final order for this area would be worth around $US 700 million....

So far, the Gamesa 2 MW G114 turbine seems to be the one "most attuned" to low wind speed conditions. They claim a 20% annual energy output increase versus their G97 model in suitable winds, which itself was targeted at moderate wind speeds. This one comes with tower heights of 93 meters (steel) 120 and 140 meters hybrid towers... It was also supposed to be made in Pennsylvania next year, but due to the end of the PTC, that might not happen for a while. Turbines such as this one could be quite the "game-changer" in the Southeast and Northeast parts of the US, allowing about 25% more of the continental US to be considered as having "commercial grade winds". Could be, but "could be" also might be "no way", too...

For the Husum event (41,000 visitors, which is pretty good for an industrial exhibitions...), the newbies of note are the Vestas V126 x 3 MW and the REPower M122 x 3 MW. For the time being, these are only intended to be made and sold in Europe, but for those with sufficient money, they will make them/sell them wherever it is profitable... After all, Vestas and RE Power are corporations making and selling these turbines, not charities.... But, given the lack of motivation in the US to install wind turbines at a rate sufficient to make a difference in our economy or rate at which we are trashing the planetary climate control system, well, no use holding your breath....

Anyway, just a bit of a tease. Based on preliminary information, a site with a 6.25 m/s wind at 80 meters in a forest-like area (roughness length = 1 meter) - quite typical for NY State - would get close to a 39.2 % net output before things like array losses are considered for the V126 on a 119 meter tower. For a V100 x 1.8 MW on an 80 meter tall tower, a net output of "only" 36.4% at this same location would result. And while this only seems like a minor difference in efficiency, the V126 would kick out an average of 1178 kw while the V100 would average 665 kw.... That's about 77% more energy from a given site. No wonder a Vestas rep estimated the possible sales in Europe of these new LWST at over 22 GW (or about $US 55 billion in the next few years). That's quite a lot, given that the V126's "smaller cousin", the 3 MW V112, just had it's 1000th unit sold (in less than 2 years). And again, while this may not seem like much, that's around $US 6 billion in sales... BTW, 72 of the V112's are almost all installed at the Marble River wind farm in northern NY...

As for the REPower approach, their 3.0M122 unit comes with a 139 meter tall tower system, which taps winds that are slightly faster than those that exist at 119, 93 or 80 meters above the ground. Using the same conditions (6.25 m/s at 80 meters height) in a Buffalo, NY like setting, average power production would be around 1266 kw, or a 42.2% net output. This is because winds are slightly faster at 139 meters (7.03 m/s) versus 119 meters (6.82 m/s), and the smaller blade rotor of the M122 system can overcome the advantage of a larger rotor blade for the V126. Of course, the big question is how much does that taller tower cost, and is it worth it compared to the bigger blade shorter tower option form Vestas... But, unless we in the US don't start reaching for excellence in wind energy production that allows for a lot of "low wind" opportunities (great for local grid enhancement and enhanced local economic viability), it won't matter. Even though there are companies in the US capable of making such concrete towers and who have advertised such products. So far, only one of them has been/is being installed in the US, in this case on an Acconia 3 MW by 116 m rotor unit in an Iowa demonstration project.

Now, if only Europe would cease and desist with this vile regurgitation of "Hoovernomics" - the economics of Austerity that brought the Great Depression into full bloom. And this manifestation of Andrew Mellon, the mellonhead (also Herbert Hoover's Treasury Secretary) who made things so much worse by his adherence to conventional Republican "what's good for the rich is good for the rest of ya..." philosophy. After all, sales won't be much if no credit exists, if customers have no access to capital, and if the economy in Europe keeps collapsing in an accelerating fashion. But maybe that's the point of Austerity, especially since all this green energy development just royally trashes the profitability of pollution sourced electrical energy. C'est la vie won't put people to work, or make energy without pollution from a source unlikely to deplete, and with little tendency to make the world worse off. Oh well, a person can always hope that this Austerity nightmare passes, just like the indigestion associated with badly behaving tacos.......



Thursday, September 20, 2012

Euro Exhibitionism



One of the stars of the Husum Wind Energy Fair - the Areva M5000 x 5 MW offshore wind turbine. The red enclosure is where a helicopter can land to drop off technicians when waves are just too darned nasty to bring them in by boat (quite common in the North Sea). Picture of the Alpha Ventus wind farm, from http://www.areva.com/mediatheque/liblocal/docs/pdf/activites/energ-renouvelables/pdf-eolienne-m5000-va.pdf.

No, not that kind of exhibitionism (scantily clad or not clad at all young Russian recent emigres, female of course, in the Hamptons, no less! - http://www.motherjones.com/mojo/2012/09/romney-secret-video-marc-leder-sex-parties), the kind that seems to be all the rage among prominent hedge fund operators on Long Island also known as "friends of Bain Capital" - you can look that up elsewhere. And yes, that Mark Leder "friend of Romney" evidently is quite the chip off the old blockhead party-dude with money to burn and then some. No, this story is about a trade show, one of many done throughout the world, such as the Mac World ones that Apple Computer holds, or the Consumer Electronics one held in Vegas every spring. These tend to be a "show the wares", and advertising in person combined with lots of "Let's Make A Deal"sessions that go on on the floor and in the nearby hotels and especially bars.

So, every year for the last decade around Fall Equinox time the small town of Husum, Germany holds the Husum Wind Energy Trade Fair (see http://www.husumwindenergy.com/content/en/start/start.php). This year they will have 1700 exhibitors, lots of "educational" sessions, and close to 41,000 visitors. And BIG exhibits, since these will be commercial scale wind turbines (and only selected parts of them can fit in the main exhibition hall. But, there are also exhibits right next to the hall, too. After all, what passes for a decent wind turbine is ones with about a 350 ft to 400 foot rotor diameter on a 450 foot tall tower. And then there are the cranes that put those systems together - 500 foot long booms capable of lifting 400 ton objects on top of those towers, way out in the fields, on mountains or out at sea. Of course, there is the money associated with these - last year about US 80 billion was spent on buying and installing wind turbines all over the world (but in certain areas more than others, and often with varying motivations). And the epicenter of the best of what is happening in the wind turbine business and technology can be seen at Husum.

Husum itself is seaside town of 22,000 people located on the North Sea coastline near Denmark. It is very flat, and much of it will be underwater or else need to be protected by dikes (like Holland) if the Greenland icesheet melts due to Global Warming. It is the capital of the Nordfriesland (North Frisia) district (http://en.wikipedia.org/wiki/Nordfriesland) of the German State of Schleswig-Holstein, and is the windiest district of the windiest state of Germany. North Frisia has an area (790 mi^2) a bit smaller than Erie County (~ 1000 mi^2), and it is mostly farmland and fishing/shipping oriented. But it has a LOT of wind turbines - 1393 commercial scale ones in the counties of North Frisia and neighboring (south) Dithmarschen (area = 542 mi^2) - see http://www.husumwindenergy.com/content/en/besucher/messebesuch/anlagen-karte.php. A lot of these are located on marshland, especially in Dithmarschen, and these two counties are where the German wind energy industry got started. Of course, it also helps to be located next to Denamrk; many of the designs for turbines and most especially their renewable energy pricing system - the Feed-In Law - came from and/or were improved upon. There are now 5 times as many people working in the wind biz in Germany than there are in Denmark (27,000). A lot of the smaller turbines in this region are more than 15 years old, and some are older than 20 years. There is a lot of emphasis on replacing these paid off units with newer, bigger and more efficient ones... but the owners of paid off wind turbines tend to be VERY happy with the profits that come from these older, smaller turbines (500 kw or so, on 50 meter to 80 meter tall towers).

Actually, the wind business and most especially the supply chain industries for it seem to be very well integrated. For example, Siemens (a humongous company specializing in all things electrical, and about the size of general Electric) bought the Danish company Bonus a few years ago (why invent again what already exists?). Bonus needed the capital base of Siemens, and last year Siemens was the dominant offshore wind turbine supplier - this is a very capital intensive industry, with several billion in sales and huge market growth. In nearby Cuxhaven, a lot of steelmakers and fabricators are supplying offshore foundations for the new mega-farms in the North Sea (30 to 70 miles offshore in up to 150 feet of water). But most of the employment is in the hundreds of factories supplying the roughly 8,000 parts that go into wind turbines. There is very little "leakage" of money from Europe via imports of wind turbine related stuff, despite the high wages paid to workers. In this business, quality counts more than cheap labor.

For this year, the new buzz  seems to be the next generation of land based Low Wind Speed Turbines on taller towers. Examples include the Vestas V126 x 3 MW unit, and the RE Power MM122 x 3 MW turbine on a 139 meter tall hybrid tower. These systems are great at extracting lots of energy from what were formerly considered pretty useless regions as far as wind energy was concerned. In the US, such technologies put most of NY State into the "viable" category, and a lot of the southeast part of the US. Such very large turbines need tall towers just to keep the lower part of their blade rotation in windy regions (generally 30 to 40 meters (100 to 140 feet) above the ground) and out of severely turbulent zones (turbulence caused by the wind flowing around objects like trees, buildings and hills). For example, Nordex (with their N117 x 2.4 MW LWST) is claiming 40% more energy from a given site with 120 to 140 meter tall towers versus 80 to 95 meter ones. This means that 40% less turbines are required to supply a given quantity, or approximately a 20% lower cost of energy production is possible from low wind sites versus what was once thought achievable from these places.

There is even some efforts at "MWSOT" - Medium Wind Speed Offshore Turbines. The French company Areva (also big in nukes) recently bought up a German offshore wind company (Prokon-Nord) that had a 5 MW x 116 meter fast wind speed model which has tested awesomely at the Alpha Ventus test site. Average production at this 10 m/s wind speed site in the German area of the North Sea was around 51% of net capacity, which is extraordinary for just about any wind turbine (40% is considered great news). Now they plan on introducing a 5 MW model with a 135 meter rotor diameter. There are a lot more regions with 9 m/s winds than there are with 10 m/s winds (equal power outputs for this 5 MW machine with the 135 and 116m rotor diameters) - see http://www.areva-wind.com/1/M5000/konzept/. Anyway, just the thing for someone with a spare $25 million to invest for a 5 MW offshore wind turbine. These MWOST units would be awesome for the Great Lakes....

Of course, the big action at trade fairs/shows such as this is not seen in public. There should be tens of billions of dollars worth of deals wrapped up between bankers/financiers/advisers/developers and construction companies/wind turbine suppliers. And there will also be a lot of business done with the smaller and mid-sized companies supplying the business. After all, Germany plans offshore wind as its major economic stimulus, worth over $200 billion in direct investment by 2020, none of which will be provided by taxpayer dollars. This all gets done at minimum cost and maximum job production via Feed-In Tariffs (FITs). Maybe it's time officials in NY State woke up and smelled the job creating potential of FITs, or got out of the way and let new people do it. It sure beating old-fashioned loser ideas like fracking and nukes.

In fact, offshore wind form the North Sea will be providing the bulk of the electricity now made by Germany's nukes, and all 21 of them that were operating BF (before Fukushima) will be shut down as of 2021. And who says there is no such thing as good news these days? That kind of news just can't happen fast enough...

Tuesday, September 18, 2012

And the New Offshore Wind Champ is.. Greater Gabbard


The first of 140 Siemens SWT-3.6 MW x 107 meter rotor diameter turbines installed in the Greater Gabbard wind farm located off the southeast coast of England. The full 140 turbines are now operational and producing commercial quantities of electricity. The rated capacity of this array is an impressive 504 MW, and close to this output would have been made last week, as it was really windy in that part of Europe. Picture from http://www.rwe.com/web/cms/en/310134/rwe-innogy/sites/wind-offshore/under-construction/the-proposal/. The average output of this wind project should be around 200 MW or more.

What is newsworthy about the Gabbard array starting up is that it was barely newsworthy (here's the news article of the full array generation: http://www.offshorewind.biz/2012/09/07/uk-greater-gabbard-offshore-wind-farm-generates-power/). Arrays similar to this one are now commonplace in Europe, and especially so in Britain, Germany, Belgium, Denmark as well as Sweden, and coming online with increasing regularity. This one happens to be the biggest one completed to date - it replaced the Walney one at 340 MW (which came online earlier this year in its full form), but this will soon be overtaken by the London Array, and so it goes. This wind farm cost around 1.5 billion British pounds, or about $US 2.4 billion, despite using supposedly cheap Chinese monopole foundations (which are about as tall as the white towers in the picture, but which are pounded into the seabed). As it turned out, that was a pretty dumb idea that Fluor, the large American construction company who won the bid to build this farm for the owners, tried. That one could cost them a lot, especially in terms of more work as an EPIC (Engineering, Procurement and Installation Contractor).... A lot of those made in China monopole foundations were found to have defective welds and/or improper documentation (and thus could not be insured against failure since no major insurance company would insure them without proper documentation that they met the specs), so they had to get pulled up, floated over to the Netherlands and repaired/properly inspected. Whatever profit was obtained by using psuedo-slaves to weld these "pipes" (each one weighs over 500 tons, and is made out of up to 4" thick steel rolled into about a 20 foot diameter pipe) got eaten by the repair and re-documentation bill, and Fluor's shareholders ate that one. After all, skilled labor has it's place....

Wind turbine arrays are not installed just for the sake of bigness, or for bragging rights. These are big construction projects (the wind turbines are about 27% of the total cost) which involve coordinating a lot of activities. In order to make a profit on the construction side of things, a complex schedule must be arranged and maintained, and if a certain piece of equipment is not available at the right time (such as the jack-up barge that has the crane and additional towers/blades on it in the picture), well, something has to be brought in for a back-up. Delays add upon delays, there are fees for pushing back other activities, specific equipment required at a certain time months later might no longer be available and losses snowball something fierce. Barges such as that one in the picture rent for close to $200,000 PER DAY, and it can take up to a day to install the tower, nacelle and blades, weather permitting. That's about $34 million just for the "ideal" crane bill, but the weather is never nice for long in the North Sea, so the actual bill was a lot more than that. So that turbine (cost around $US 4.7 million) is not even the costliest part of the installation effort. This project includes two massive offshore "substations" and 3 high voltage cables to bring the electricity onshore. And there are 48 fiber optic cables embedded in these cables, or running adjacent to them; that's a LOT of data (these turbines are all remotely monitored and can be controlled from onshore if the control system in the turbines seems to be behaving inappropriately). The HVAC cables are around 45 km (28 miles) long, and it costs a small fortune to make and then install, too.

The project involved around 37,000 job-yrs of employment (manufacturing plus pre-development and installation). It is one of the few real wealth-producing activities taking place in a growing manner in Great Britain these days (financial machinations don't really create real wealth, they just rearrange it, for a fee, and supposedly theft and fraud only work for so long until the "marks" gets wise). With the discovery of the North Sea oil and gas in the 1980's, Great Britain and Norway developed a huge offshore gas and oil industry, and this requires constantly searching out for new fields as older ones get depleted. Oil and gas wells also do not operate and maintain themselves - a lot of labor and money has to be used to maintain oil and gas flows. This is done is some of the nastiest shallow water in the world - the North Sea, where 60 foot tall waves happen on occasion, and which recorded 130 mph winds a few years ago in a particularly noteworthy storm. The expertise in offshore construction (such as jack-up rigs, which are used when waters are less than 500 feet deep, but especially 300 feet or less) and the vessels, divers, helicopters and other related marine construction expertise in such a hostile (and cold water, too) environment is being used in the offshore wind business in a big way. And there is one nice aspect about wind energy - it does not deplete and it does not pollute when there is a spill (though Stephen Colbert did alert us to the horrors of "wind spills" during the Macondo BP oil disaster in April of 2011.... thanks, dude!).

Anyway, just like grain elevators, offshore wind turbines are meant to be worked. These are big investments, involving lots of commitments between customers (in this case electricity consumers, eventually, via the grid operators/transmission system owners), the suppliers (such as Siemens) and the service providers (like the owners of and makers of that jack-up barge). And then there are the two owners (RWE plus Scottish and Southern Energy, both huge companies, in a 50/50 venture) plus their bankers, effectively taking a $US 2.4 billion loan to be paid off by sales of electricity over the next 25 years. Projects of this size, complexity and also quantity of delivered electricity are not the only way to provide our future electricity free of CO2 and nuke pollution, but they can make an important contribution. And this COULD be done on NY's North Coast (Lake Erie, Lake Ontario), its south coast (Atlantic Ocean off of Long Island) and it can be done onshore in smaller increments. By the way, its also great for an economy that is under-performing (= NY State!!!!), and it is also how you keep natural gas costs low (i.e. keep the demand for natural gas low, and that keeps the price lower than it otherwise would be). This project will eliminate the combustion of 12 billion cubic feet/yr of natural gas (at 50% thermal efficiency) and prevent 735,000 tons/yr of CO2 pollution.

More information about this project can be seen here:
http://www.4coffshore.com/windfarms/windfarms.aspx?windfarmId=UK05

Also noteworthy this week is the official death notice of the San Onofre Nuclear Generation Station (SONGS), a 2 nuke complex in California built on a major earthquake fault (easy to do in California, as there are lots of faults which are quite active, geologically speaking). Details here: http://my.firedoglake.com/gregglevine/2012/09/17/san-onofre-1968-2012/. The world is a safer place now that SONGS has bit the big one in a peaceful way. But, there is the matter of all that radwaste trash still in the swimming pools - up to 44 years worth. Ugh.

Anyway, this is a future trend that we can be happy with - new wind farms replacing old nukes. In my opinion, it can't happen fast enough. Too bad we aren't doing the wind farm installations at rates that will both make the economy better and make the world better at a serious and significant scale and rate in the U.S. After all, we have a wind potential far in excess of what is likely to be needed for several centuries in this country, and not many countries actually have that kind of resource and potential......

Wednesday, September 12, 2012

Get a Job to Cure Future Climate Grief...



Some new Vestas V112 wind turbines being installed at the Marble River wind farm in northern NY (Ellensburg). These are 3 MW units with 112 meter rotor diameters (55 meter, or 180 foot long blades) and 95 meter tall towers (picture credit: http://pressrepublican.com/archive/x2068762065). The Marble River array will have 72 of these units when it is operational later on this year.

Very few people wake up in the morning determined to trash the climate control system of our planet. But even if there is a small contingent of people so hard-core bad they feel energized at the prospect of wiping out a large fraction of the life-forms on the planet via Global Warming, most people are not so evilly inclined, and would probably find such nasty people and their behavior as repulsive. But being climate bad is so easy... just keep spewing fossil fuel sourced CO2 into the atmosphere at rates faster than it is being absorbed (and this happens mostly on the ocean surface waters). The faster the spewing rate, the greater the CO2 content of the atmosphere, the faster comes various tipping points where climates in certain highly inhabited regions (tropical, sub-tropical, temperate and arctic) flip to hotter, perhaps more desert like, where forest fires start easier, last longer and torch a lot more area. And when those ocean levels rise due to the melting of the Greenland and Antarctic icepacks - when the ocean water comes in and does not recede, time to move...Wow, sounds like a good time..... not! Land-based life (including humans) will need to move elsewhere, or perish. After all, such changes have happened before (just not in the last 10,000 years or so), so this is not exactly something novel. But what is novel is how fast it is happening and how it is occurring - mostly via burning lots of coal, natural gas and especially oil at a furious pace, perhaps to the point where the consumption rate of the fuel has to drop because the reserves of it (especially oil) are so much less plentiful than they used to be a mere decade ago...

Instead of planning for an overheated world, people go about their daily lives with little consideration of the consequences of CO2 pollution, consuming energy for transport, heating, cooling, lighting, comfort, growing things and for pleasure. They may even feel a touch guilty or more so about that associated CO2 pollution that goes with fossil fuel consumption, but that guilt is of no real consequence to their day to day actions. And where they work (and which is how they get money to afford food, energy and "etc"), even more energy is consumed. But they want to eat, provide for themselves and their families and generally avoid a survivalist "lifestyle", so that is going to require money or an equivalent. People do what they gotta do to get by and keep on keeping on, and perhaps some (a shrinking minority these days) might even be able to stash away a little extra money for when times require some "extra reserves". When not consuming energy means losing that job, the money that comes from it and the food, water and shelter associated with an income stream, well, that's not much of an option, especially if you've got others depending on your income...

So the other day I get another missive from the good people at 350.org, trying to fire me up to fight the good fight, to get me appeal to politicians to stop this race to the climate cliff like they are an amped up version of Thelma and Lousie (and including in this case, many politicians who apparently have little or no conscience and/or empathy to appeal to).. Perhaps by extending tax avoidance opportunities for the really, really rich those really, really will invest in renewable energy or energy efficiency approaches. Or if we would only tax electricity generation companies on that CO2 pollution (which will promptly be passed on to ratepayers (= energy consumers)), maybe some renewable energy approaches will become the lower cost option, and more importantly, the higher profit one. Anyone for raising import duties on imported oil? That will float like a lead balloon, and drag almost any politician who supports it down with it. And since we live in a place where "majority*" rules (the asterisk is important, as there are all kinds of caveats to the word "majority"), getting a voting majority of Americans to voluntarily pay more (and not just a little more) for the energy they consume will not be easy. After all, the majority of Americans have been experiencing net declines in wealth and and income while at the same time getting more insecure in the ability to earn a living and obtain/keep a job for at least the last decade. The number of jobs that exist in this country has declined in the wake of the Great Recession while more people need them, so adding higher energy costs will make a bad situation even worse for most and will be very unpopular, even if it is good for us in the long run. Paying for external costs of pollution based energy consumption now when it has not been paid in any serious manner up until now also will not be popular; the general sentiment will be to stick those costs on someone else. Besides, if you can't make it in the short term with these added energy costs, you'll never make it to the long term, anyway, and so doing things for the long term makes little sense if you can't make it past the short term... Alice in Wonderland, move aside, because here we come...

The status quo in liberal/progressive/Democratic circles is not working sufficiently (in other words, not working, is unsuccessful), from a climate and renewable energy perspective. After all, us "sane climate advocates" essentially have no media ownership and very little money compared to those with the rentier profits being hauled in by oil companies these days, and it is that combination of media ownership and well crafted advertising merging into propaganda that can dominate politics. So here is an approach that offers a better chance for success.

Make jobs in the renewable energy sector, and a whole lot of them, way more than is presently the case. Make jobs the primary focus, and save the viable climate saving aspects of sane energy for the select few who are really enthused about it and willing to pay extra for it. This may be a difficult pill to swallow for sane climate advocates, who really have been important in the development and commercialization of renewable energy. But for now, the jobs issue rules, and all else appears to be a sucker play for fools.

For example, a million people in this country producing wind turbines and the roughly 8,000 parts that go into them would be a good start. And then there are the jobs associated with the thousands of other manufactured parts that go with the stuff needed to install those units and get the product (electricity) off to customers, either directly or via storage. Those million plus people will in turn lead to a demand for goods and services that could employ around 4 to 5 million other people. And while this won't get all who need a job some needed employment, this is a decent start on things for this country.

So, easier said than done, right? And especially if those jobs are dependent on the really, really rich avoiding really massive quantities of taxes, or if they are based on, in effect, regressive sales taxes on pollution sourced electricity that really nail the poor and middle classes. Or if the approach is to tax lower cost (at least nowadays) coal, oil and natural gas consumption and raise the cost to use them and then subsidize the renewable energy (which is almost all the payback of the installed capital for them) with some or all of the proceeds of those consumption taxes, same problem. And besides, isn't one of our current Major Problems of These Times the decided lack of jobs, and the vast oversupply of people who want/need them compared to the number of available jobs? And that doesn't even get at the issue of income distribution and how so much of our national wealth and productive capacity is getting "cashed in", with most of the proceeds sent to a tiny fraction of our population that is already quite well off, monetarily speaking...

But, perhaps this job creation really is not so difficult, and instead we twist things around something fierce so that a lot of this job creation appears more difficult than it needs to be. After all, if you create a demand for renewable energy by providing a reasonable price for it, there's the money flow to get the ball rolling. For reasonable, how about a price for this energy based on the cost to produce it plus a reasonable, socially determined average profit for the price that is offered for at least 20 years on a renewable energy project? Since most renewables have no fuel price or a need to fix their price to ever changing fossil fuel prices, offering a long term reasonable price is quite doable. The stable price and the predictable quantity of energy produced will provide a steady and PREDICTABLE flow of money to those who install such systems. And that makes such projects bankable, and financeable at low interest rates and for long terms - a lot lower rates than is presently possible where insecurity of future pricing has become the norm. For example, if wind turbines could be financed at rates now offered to home buyers (and not sub-prime), that would drop the needed price of the electricity produced by them significantly. But if owners of turbines have no idea what their annual sales will be because they have no idea what their electricity price will be, the equity and loans needed to buy the renewable systems are apt to get much more expensive, which also cranks up the needed electricity price needed to repay those loans and investments. Hey, aren't circular arguments fun?

As for that great scary "thing" lurking in the shadows - those spiking electricity prices that will be the ruin of our civilization - with the "cost plus a reasonable profit" approach, that's a mirage, especially if we concentrate on low cost renewables, and especially wind turbines in this country. In many cases, this approach will lower prices via the "Merit Order Approach", and for added benefit, more wind energy put into an electricity system drops the demand for natural gas, and that tends to lower prices or at least minimize the rate that gas prices rise. So, putting more wind turbines to work drops the heating bill for those heating or cooking with gas. And isn't that sweet..?

So, step one is to create a viable demand for renewable electricity based on reasonable prices, and to make sure that the product can be sold when it is made. With such a demand for renewable energy (in this case, electricity), step two comes into play - renewable energy systems can be made and installed, as this renewable energy demand creates the demand for renewable energy producing systems. In order to make these systems, this requires workers and parts, and the same goes for installing these systems. This will help many existing businesses expand and allow new ones to form in this capital intensive sector. It also will attract a sizable finance contingent, as there will be lots of money to be made on loans to buy equipment and finance projects via project finance (and in contrast to those squandering wealth via "takeover finance"). The businesses and workers employed by those businesses now have money and/or more money, and they will spend it/invest it for other purposes - this is the famous multiplier effect in action. Cool, and yet at the same time so basic and simple....

At present, there are about 70,000 people employed in the wind business in the U.S., supplying about 70% of the U.S. wind components/products. There will be close to 10 GW installed this year, worth about $20 billion. If all the wind systems were Made in USA (and no reason why this could not be so), that would be a 100,000 person workforce with sales of around $20 billion. But a million people employed would be more like $200 billion/yr in sales and about $200 billion/yr in investments/loans/finance (installation plus manufacture), with close to 5 million people employed directly or indirectly. It would more or less be the equivalent of the auto industry. And for vast parts of this country, lots of people would know people/have relatives, friends and neighbors working in the "biz". Attempts to curtail this industrial complex would be strongly opposed, and lots of politicians would recognize this fact.

This would be around 100 GW/yr of capacity installed, or about 35 GW of delivered electricity installed each year. Within 10 years, most natural gas, coal and nuke sources of electricity would not be needed, and then we could start on replacing natural gas used for heat and petroleum used for transportation in a serious way. And that drops 40% of our current CO2 pollution in a decade, though a faster installation rate would probably be better.

But it is the social and political clout from a $200 billion/yr industry with a million workers directly involved/4 million more indirectly involved that provides protection against attempts to make the U.S. wind resource largely irrelevant, such as the present day Legislative Hostage Taking of the Production Tax Credit by Republicans. Plus, people employed in the wind biz are not going to be opposed to energy efficiency ideas, and will tend to take seriously approaches that will drop our CO2 pollution. Heck, maybe even the idea of setting tariffs on stuff imported into the US based on wage rates as well as the CO2 pollution rates of those countries might make sense to more people, and most especially the Really Serious People who got us into the Great Recession in the first place, or at least allowed it to happen without informing us like those in the press corps were supposed to do.

This approach may not cure everything wrong with us Climate-realted, but it seems to offer a lot more hope than presently employed dead end approaches dressed up like plausible hopes. Most especially, that well intentioned (at first glance, anyway)ideas like making CO2 pollution taxes high enough to induce Demand Destruction which would raise the cost of gas and coal based electricity at least higher than that made by unsubsidized wind turbines without invoking a horrid political backlash is a good idea for now. And without the need for tax avoidance opportunities only available to the really, really rich which can lower wind sourced electricity prices to presently subsidized prices for pollution based electricity, maybe all kinds of wind ownership can occur - small partnerships, individual owners, cooperatives, municipal as well as medium and large sized corporate efforts. This approach has worked in many other parts of the world. Maybe it's time we in the U.S.A. tried something with a proven record of working, too, instead of reveling in a renewable energy pricing system that provides the least gain at higher cost and with profits largely focussed into the hands of a very few. Besides, why should adding more wind turbines to our electricity supply actually increase our nation debt/result in less tax income to our cash strapped Governments? As was said before, move over Alice, it's Tea-Party Time....


Monday, September 10, 2012

Control Fraud and NY Fracking - The Business Model


Ferdinand Pecora: http://www.nytimes.com/2009/01/06/opinion/06chernow.html?pagewanted=all 

Control Fraud is a term coined by William Black (now a law and economics professor at the University of Missouri at Kansas City) back when he was a bank regulator working for the Federal Government. He helped put hundreds of crooked white collar types in jail following the Savings and Loan Scandal in the mid-1980's (which happened right after Savings and Loan banks were deregulated, and that was not a coincidence!). See http://en.wikipedia.org/wiki/Control_fraud -here's the definition:

Control fraud occurs when a trusted person in a high position of responsibility in a company, corporation, or state subverts the organization and engages in extensive fraud for personal gain.
Examples of control fraud include Enron, the savings and loan crisis, Fannie Mae/Freddie Mac, Lehman Brothers and subprime mortgage crisis and Ponzi schemes such as that of Bernard Madoff.

Mr. Black is author of the book "The Best Way to Rob a Bank is to Own One". He is one of our modern American heros, and obviously vilified as well as regarded with horror by white collar criminals such as the banksters who seem to rule our financial world. The term "bankster" was evidently coined by an American immigrant, a  Sicilian-born lawyer by the name of Ferdinand Pecora. He was the chief counsel to the US Senate Committee on Banking set up in the early 30s to probe the origins of the Crash of 1929. Mr. Pecora was also a great American hero...

This background is VERY relevant for the hot-button issue of fracking for natural gas proposed in NY State, and now taking place in Pennsylvania and West Virginia in the Marcellus Shale. It appears that western Ohio is now a target zone for it's Utica Shale because it has oily shale (natural gas (methane) plus crude oil); the shale in NY seems to be almost entirely methane (Ngas), and hence largely worthless given what the prices for Ngas have been since 2009.

Methane currently retails in bulk (known as the Henry Hub price) for around $2.70/MBtu (million British Thermal Units, close to a thousand standard cubic feet), and with delivery costs of around $1.30/MBtu, bulk customers such as major electricity generation facilities that use natural gas could get methane for around $4/MBtu. This delivered price in WNY is below the average "wellhead" price in the US of around $4/MBtu (and that is before the delivery/pipeline transport cost) - see http://www.oilnergy.com/1gnymex.htm. Of course, the average wellhead price happens to be less than than the marginal price needed for natural gas producers, due to the large number of gas wells (mostly fracking ones) that cost around $10 million to drill and cannot deliver off-the-charts volumes of gas but only average quantities. Here's a reference for just some of the costs ($7.6 million/well, and pipelines/waste disposal is extra, as is the cost to borrow money - http://www.frackcheckwv.net/2011/09/11/the-high-costs-of-drilling-marcellus-wells-and-of-laying-gas-pipelines/).

So what is the average quantity produced per well? According to the US Geologic Survey (USGS), most wells in the Marcellus formation in Pennsylvania and West Virginia are delivering about 1.1 billion standard cubic feet over the initial 5 years of the well, when almost ALL of the gas from the well will be freed from the ground (http://energypolicyforum.com/?p=505). Those claims of 4 to 6 bcf per well - those are just the gems from the over 5500 wells drilled to date just in Pa. Those wells make the investors/well-owners and the landowner lots of money. But to average 1.1 bcf, well other wells will not be such veritable gold mines/lottery winners. In fact, at today's prices, these are big money losers, and investors in such wells are getting hosed, big-time.

Even if a well "only" costs $7.6 million to drill, if it only cranks out a billion cubic feet over its economic lifetime, that's still $7.6 per thousand cubic feet. Of course, with the wonders of modern tax avoidance and that 2 year depletion allowance, lots of taxes can be avoided, but in order to avoid paying taxes you have to have taxable income in the first place. So, as the saying goes, "Houston, we got a problem...". Remember, prices are now all of $2.70/MBtu, and those are up from $2/MBtu a few months ago....

So, massive money losses are taking place. Fracking based shale sourced Ngas is now 37% of the US supply which means 37% of roughly 23 trillion cubic feet per year (tcy), or about 8.5 tcfy. If on average it costs $4/MBtu (well head) but the bulk pipeline price is only $2.7/MBtu, that's a cool $11 billion a year in losses.... Of course, a well that chugs out 6 bcf in 5 years will still be really profitable, but those are few and far between. Feeling lucky? That's the new norm in the natural gas business in the U.S., and not good for recruiting the massive amounts of money needed to just maintain current production rates, sometimes north of $100 billion/yr. Average well production these days is around 43.7 million cubic feet per year, or roughly 119,800 cubic feet per day, and if wells need to be replace on a once every 5 year basis and cost around $10 million to do (all in price), that's a lot of dollars. And these days, those with the big bucks only invest in rigged stuff, sure things, or else they sit on it. "Feeling lucky?" does not really cut it...

But how the money losses are happening is mostly invisible to the public. In a typical well, investors put up the money, although borrowing from banks would also be nice (though difficult, as these currently are mostly money losers, so banks don't like those). Traditionally, the Ngas biz has been a very decent money maker, but at the turn of the century (as in 2000), wells were cheap and more productive, too. And if a well peters out at the 1 bcf level instead of the 2 or 3 bcf level, costs $7.5 million (all in) and only provides Ngas sales of $2.5 million, those investors are out $5 million. And since this is a money losing proposition, disposing of 5 to 10 million gallons of toxic wastes will just add to the losses, and this adds tremendous pressure to dispose of the trash as cheaply as possible, no questions asked, either (in other words, with negligible regulation and oversight, environmental and otherwise criminality is greatly incentivised). The only thing that will stop those losses is higher Ngas prices. At $7.5/MBtu, at least this gas well sort of breaks even.... But such prices will not occur until supply and demand are rebalanced, but at such prices there will be no incentive to use Ngas to make electricity instead of coal, which will further depress the demand for Ngas (the cost to make electricity from Ngas in a facility that was 50% thermally efficient would rise from 4.2 to 7.5 c/kw-hr).

So, while Ngas prices will get to $7.5/MBtu and greater in the not-too-distant future, the exact date when this future will happen is not yet apparent. But, the trend to higher Ngas costs is taking place strictly because of the nature of gas fracking wells. These wells have very high initial production rates (high IP's) but then these rates slow down rapidly in an exponential manner. In order to maintain a constant production rate, a lot of drilling needs to be done (running fast (and faster and faster) just to stay in place - the Red Queen analogy from Alice in Wonderland. For example, the Barnett shale field in Texas maintained a flat production rate of 5.7 bcfd only with 1250 new wells drilled last year (on top of the over 12,000 already in existence). The Haynesville Shale field in nearby Louisiana (11.5% of US shale gas production, or 3.5 bcfd) has a 48% decline rate, and needed 748 new wells to maintain a constant production rate (http://blog.shaleshockmedia.org/2012/08/19/fracking-doa-in-nys/).

So where does the Control Fraud come in? It's in the math, which itself is a problem, because a lot of investors (as with MOST Americans) are not that math savvy, and this is more than simple subtraction (of assets, though that is the net result). And to empirically solve the gas well depletion rate problem, a lot of long term well data is needed. But, horizontal multistage fracking gas gas well production on industrial scale has not occurred for a sufficiently long time in order to determine the long term decline rates and what the correct equation is for the average production rates of shale fields like the Marcellus, let alone the Barnett shale (which has gone on for the longest time/had the most gas produced). The Barnett field has only been producing significant gas quantities since 2005, and that one has slightly different characteristics than other shale fields, including the Haynesville.

Here are the equations of interest (see http://seekingalpha.com/instablog/121744-mark-anthony/721811-shale-gas-type-curves-and-profitability-explained for an excellent discussion of this):

Eqn 1 is a simple exponential where P(t) is the production rate at time t, Po is the initial production rate, t is time and b and c are rate constants (they vary depending on the well/field). Eqn 2 is a Gompertz equation (it uses two rate constants), while Eqn 3 is a hyperbolic equation. All of these look similar during the initial few years with respect to production rate data, but if the b term is greater than 1 for the hyperbolic equation, the rate never really goes to zero. But you knew that, right?

The total amount of gas extracted comes when the area under these curves is integrated (you also knew that, too, right?). If the b term is greater than 1, this implies an essentially infinite supply of gas can be extracted from a gas field, which is not physically possible. And if you are promising that which is not possible for a supposedly money making enterprise, that is fraud. Of course, all this well depletion math, as in the Post Office advertisement with the guy and his 10" hose clamps, is like shipping - it's complicated. Most investors rely on experts to simplify this, as well as the past performance of conventional gas wells, which, on average, were decent money making investments. And for experts, who better than the gas drilling companies like Chesapeake Energy, who (supposedly) understand this math, or other industry advisors, who get money consulting for the oil and gas industry. Or from banks and private equity/hedge fund managers who stand to make money selling investments (commissions, fees) and who also make money from some investors called muppets (the new polite term for marks by Wall Street investment bankers) by selling them investments and then betting that the value of those investments will fall by certain dates.

To paraphrase Elizabeth Warren in her recent speech at the Democratic convention, anyone see a problem with this? The experts in the "gas-math" have a vested interest fleecing their investors, as well as anyone else related to/affected by this business (like rural counties who have to pick up the tab for rural road destruction by trucks hauling fracking fluids/wastes over roads never designed for them). But anyway, back to the Control Fraud stuff. Here are some graphical examples.

First, why it is so difficult to tell the difference between a Gompertz and a hyperbolic depletion curve, from the excellent Seeking Alpha article:



The difference only shows up much later (pink line is the exponential (Gompertz), blue line is the  hyperbolic with a b term of 1.1. In the case of the exponential, the Estimated Ultimate Recovery (EUR) is 3.7 bcf after 10 years, while the hyperbolic one would give an EUR of 5.55 bcf after 40.67 years. The hyperbolic EUR gives 1.5 times the gas yield, and since the value of gas is likely to increase over time.... the later gas is likely to be that much more profitable:

  

Here is an example of Chesapeake shamelessly using this math error to provide a rosy scenario about the financial prospects of this particular well. Keep in mind that very few Marcellus wells are much more than 6 years old, and this well has an EUR of 3.11 bcf at 10 years. Also keep in mind that the average Marcellus well is yielding 1.1 bcf when all is said and done, and that this well is one of their better finds.


Of course, Chesapeake has done a lot of other financial trickery, such as "flipping" leases to other companies, who then find out they overpaid enormously. A great example of that is BHP, who just wrote down their $5 billion purchase by at least 50%, and took away their CEO's big bonus (oh no!!!) who did this dumb deal, too (http://www.4-traders.com/BHP-BILLITON-LIMITED-6492795/news/BHP-Takes-$3-29-Billion-Writedown-CEO-Declines-Bonus-14445210/). Chesapeake can no longer make money on futures sales (selling a contract to provide gas several years from now at a given price); those futures contracts sold in 2007 for, say 2012 at $7.50/MBtu, have also bilked a lot of people out of many billions of dollars. Those deals cannot be done anymore, and more and more customers are buying on the Spot market, or only buying gas a few months in advance. This sets the gas market up for even more disturbances. And even Chesapeake has had to declare huge amounts of formerly "proven" reserves as financially non-viable (if they even ever existed at all) - this involves about 5 trillion cubic feet of gas that, in 2008, (if it existed) would have been worth over $50 billion (http://www.examiner.com/article/chesapeake-energy-writes-off-4-6-trillion-cubic-feet-of-shale-gas-reserves). Oh well, easy come, easy go....

Finally, the reason why gas prices will improve is because a lot less gas well drilling is taking place. Gas rig deployment in the US is down to 431 (Sept 7) from over 1600 in the summer of 2008:
http://intelligencepress.com/features/bakerhughes/. And if lots of wells are not continually being drilled, fracking wells will not be able to keep up with the constant demand. And it does not take much of an imbalance between supply and demand to drastically spike prices, or sink them.

Of course, this is a wind energy blog, and there most definitely is a wind turbine aspect to this story. The installed capacity is around 51 GW in the US, and the average net for the initial 5 months (63,476 GW-hr), pro-rated (using 2011 data) using last year would be 17.4 GW, or about 34% of rated capacity (see http://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf). To produce this much electricity (152 TW-hr/yr) with natural gas in 50% thermally efficient units would need 1.077 trillion cubic feet of gas, and 1.54 tcfy for 35% single cycle (peaker) units. That is between 4.6 to 6% of average Ngas production in this country. If demand went up by this value, prices would rise significantly for Ngas. And each $1/thousand cubic feet price rise is another $23 billion of consumer power transferred to (sucked into) the oil and gas industry maw and out of the rest of the economy.

No wonder the oil and gas biz HATES wind power so much. Prices of $7.50/MBtu could mean extra profits of $115 billion per year to just the Ngas business (increasingly owned by oil companies). Of course, Ngas prices that high means that electricity made from that Ngas in 50% efficient combined cycle plants would also need to be 7.5 c/kw-hr, not the present 3 to 4 cents/kw-hr that it is in much of the country, including WNY. And there are a lot of coal and nuke owners who would be able to increase their profits significantly if higher Ngas prices existed (as Ngas often sets the spot market price of electricity, and higher spot market prices yields higher profits for nuke and coal burner owners). After all, if electricity prices were to rise by a penny per kw-hr, due to higher Ngas prices/less wind power (wind now provides close to 4% of all US electricity), that is also another $39 billion in profits that will get diverted to coal burner and nuke owners, and out of the hands of others. I guess that is the definitive "Sweet!" yell that we would hear from those soon to be cash bloated companies, should electricity prices rise from lack of new wind turbine deployment.

Well, one fine hyper-interconnected arrangement, that of natural gas and electricity. The bottom line is that more wind energy means lower priced natural gas and lower priced average electricity pricing. And lower Ngas prices caused by NOT burning gas to make electricity not only means less CO2 pollution and less and probably less CH4 pollution (leaks of natural gas) also means that the winter heating bill is less costly than it otherwise be. And is that so bad? So what if the Main Cheese of National Fuel Gas (NFG)/National Fuel gets less of a bonus? Wouldn't that actually be a positive development?

Sunday, September 2, 2012

Climate Change, Morality, Energy, Economics and Kitten Herding…





From http://www.enercon.de/en-en/1466.htm, the 3rd prize picture in the 2011 World Wind Day, Enercon "section"; picture by Joao Manuel Couto Ribeira         

When tackling a problem that needs to be solved, an assessment of the degree of difficulty of that problem is often a first step. The expression “as difficult as herding kittens” would denote a difficult problem, as herding kittens like they were sheep (who are predisposed to living in herds/herd behavior) should be next to an impossible task. And this seems to be what the complicated matrix problem of climate change, morality, energy usage and economics has devolved into in our country.

Climate Change brought on by (mostly) drastic increases in the CO2 content of the atmosphere is unlikely to be a pleasant experience for most of our planet’s living organisms, or human beings, either. Most people in this country are unaware of what changes are in order, even though they are aware (if only to a limited extent) that our climate is getting warmer, that winters are becoming less severe, and extreme weather events are becoming more common/less rare. In general, the debate concerning Global Climate alteration has moved from “Is it happening?” to “What to do about it?” Furthermore, the “what to do?” aspects are intertwined with “whose ox gets gored”/”who foots the bill?” type questions. Given that the global economy in general and the US economy in particular are finally experiencing a slowdown that is significantly driven by Peak Oil (oil prices that have risen by a factor of five in less than 15 years) as well as aspects related to mal-distribution of wealth and income, paying for the climatic sins of yesteryears is not a popular topic these days. After all, most people in this country have become economically LESS WELL OFF in the last decade/generation, and this will make most people in this country less inclined to pay more for energy and more for damages caused by Global Warming than if their relative financial well-being had increased. This financial predicament for MOST of the US population, as well as the drastic increase in financial/social/economic insecurity (that is, probability of significant decrease in income and wealth, often arising from unemployment/lack of new employment possibilities) cannot be understated in terms of any proposed solutions to greenhouse gas pollution (which are mostly CO2 related) of our planet’s atmosphere.

Until recently, many environmentalists, sane energy advocates and climatologists have employed the “warning of the wrath of God” approach to try and reverse our country’s inadequate climate damage control efforts. Attempting to describe the climatic situation in terms of “if we don’t change our evil ways, we are doomed” has not produced usable outcomes, as evidenced by the election/selection of “W.” as President in 2000 and 2004, or of the routing of Democrats in the US House in 2010 by a more extreme version of the Republican Party. There are many reasons for this tragic development, including the almost complete ownership of US mass media by Republican-friendly corporate owners, but the bottom line is that the “repent ye sinners” approach is not working.

In general, climate change is the result of a slight change in the rate at which heat energy is radiated out into space from earth, as the sun’s radiation output (99.94% of the planetary surface’s energy input) has essentially remained constant for several thousand years, and especially for the last 200 years. This change in out planet’s heat rejection rate has occurred because of changes in the atmospheric composition of trace gases – mostly methane, nitrous oxide and carbon dioxide and of those three, the dominant one is CO2. The increase in CO2 concentrations from 284 ppm in 1832 to 396 ppm in 2012 has mostly taken place in the last 50 years (about 14 billion tons, or gigatons, of CO2 corresponds to 1 ppm of CO2 in our atmosphere). Most of the one trillion tons of CO2 pollution (more CO2 added than is absorbed by the ocean) which humans have added to our atmosphere has been due to the burning of coal, oil and natural gas (fossil fuel combustion), although deforestation has not helped. And our present climate predicament is like a glass of water with ice-cubes in it. No big increase in the temperature of the water in that glass is likely until most of the ice has been melted, but after the ice has melted, the same rate of heat input will produce noticeable temperature rises.

Energy to human society is like food is to human beings. With an adequate energy supply, more food can be grown, more human beings can exist, and their degree of affluence/insulation from thirst, cold, heat and starvation can increase. Take away that energy and the standard of living/degree of consumption and possibly population has to drop. Furthermore, the use of oil has allowed distance to no longer matter so much in terms of transporting people and goods distances formerly difficult to overcome and at relatively low cost. In particular, the US society has been drastically transformed by oil based transportation, for which no ready substitute exists in terms of quantity and price. We are as hooked on oil as we are for the energy that gives us heat and also electricity. And much of the world apparently wants to emulate our consumption rates, even though more than half of the readily accessible oil on our planet has already been consumed.

In the US, we are also experiencing a major conflict in the definition of what is considered moral, especially “planetary morality” and this drastically affects us in a “now versus the future” aspect. In many ways, people’s view of what is moral with respect to energy consumption trumps any science and especially overrides consideration of Global Climate Change as either a problem, or as a problem that can be solved. After all, why worry about a problem that cannot be solved, or even consider changes to energy consumption or lifestyles/other consumption that involve a consideration of “that which cannot be solved”? In particular, this moral framing completely negates the “repent ye sinners” approach that a number of liberals/nominally liberal organizations have tried to employ to “change our evil ways”. In fact, this conservative framing (well researched by scholars such as George Lakoff) ends up getting attempts to rectify the Global Warming problem viewed as itself evil, immoral, weak and unworthy. Such thought patterns are extremely resistant to change, and given media dominance by politically conservative corporate interests, this is even more difficult to change. Many of these media entities get significant revenue from companies who are now experiencing awesome “scarcity profiteering” via oil price rises as well as via “off-shoring” of manufacturing and now some services to de-facto slave labor wage countries (“low wage regions” is the preferred term). As corporations only “speak/hear” in terms of money and are behavior modified via the search for more money, a vicious cycle with self-reinforcing trends gets set up.

There will be no significant change to our country’s energy-climate warming situation if morality continues to be employed as a key strategy by sane climate advocates. Sad but true, as Metalica has stated in one of its prophetic songs.
A sane climate approach requires that the rate of CO2 emanation by human caused activities is no more (and for a while, it must be less) than the rate at which oceans absorb CO2 and trees sequester it via stored photosynthesis (and that is a minor factor). Since about half of any CO2 emitted into the atmosphere tends to get absorbed by oceans within 30 years, our planet could self correct within a couple of generations (though that is a very simple analysis of the role of CO2 in our atmosphere and how CO2 concentrations in air set the average temperature of our planet’s surface). To go from our present energy usage rates and patterns to a sane one will mean that some people, companies and countries will become less profitable/wealthy, especially via oil sales and coal usage (coal sales are pretty irrelevant in the global economy), and with natural gas sales and usage being equally important, economically. The change from “now” to “future” could be entirely negative via a drastic drop in the economic well-being of most people, followed by an equally drastic decrease in population (the “big negative”) or it could also result in a drastic shift of fossil fuel consumption money into renewable energy systems investments and energy efficiency improvements (the “big positive”). And while such changes are economic in nature, the change must be politically driven.

The politics of this change have been mired in morality, or obscured in complexity. One aspect that has not been stressed in the US is that the “big positive” approach is also a big employment opportunity. Most pollution based generation approaches have been highly automated, and are not huge new employment opportunities – most employment in these approaches comes from consuming this energy, or else in the advanced “hunter-gatherer” approaches to finding more oil. The oil discovery employment potential pale in comparison to the “big positive” approach. In addition, due to the rapid rise in oil prices (averaging a doubling every 5 years, and far greater than average national productivity near 2%/year or of median income in the US of zero to slightly negative), most Americans can no longer even maintain present oil consumption rates. Natural gas consumption also could be like oil, especially once market discipline in the natural gas industry is reasserted, and prices at least reflect the cost to obtain new methane supplies.

A probable solution to the “herding kittens” approach lies in the job creation potential and fully predictable energy price aspect of renewable energy via the “big positive” approach. Even the new approach of Dr. James Hansen of focusing on “climatic outliers” and “changes in extremes”, though scientifically VERY VALID, will not overcome the “moral roadblock” of and in conservative’s “thought” patterns. It is still the “repent ye sinners” approach repackaged, and it is still preaching to the converted, and not the “preaching unreachable”. It is long time frame oriented, and while very consistent with liberal and objective science based moral framing, it will not overcome the moral roadblock in conservatives in general, Republicans in particular and especially with that pernicious new form of Republican, the Teabaggers, where such thinking is considered immoral. As the famous philosopher and satirist Colbert (among others) has observed, facts have a liberal bias, and as such, they must be thrown out the window in order to maintain pure conservative thoughts. Dr. Hansen’s and Bill McKibben’s fact based approaches cannot overcome “Truthiness”, where truth is defined as what you want to believe it to be (or the subset of facts that you wish to believe), and not what the facts actually are.

The “big question” now becomes whether money and jobs for most can trump money and profits for a few. Evidence suggests that this does work, though it is a surprisingly difficult to pull off feat in this country these days. Evidence also suggests that most American’s have no idea how renewable energy can translate into jobs and economic activity on a scale necessary to provide millions of jobs and hundreds of billions of dollars per year in economic activity/jobs/profits. Evidence also points out that existing renewable energy pricing systems/incentives in this country will not work at such a scale, especially with any degree of fairness that is required to overcome the fact that the real cost to generate renewable energy will likely be higher than the present prices for pollution based energy (even though these require significant subsidies in the form of externalized costs not paid by such pollution based energies). The most obvious external cost is CO2 pollution, though deferred rad-waste (nuclear reactor spent fuel) and catastrophic nuclear incident insurance costs are also significant. Energy consumers (as in, most people and most government/corporations/business entities) are not going to want to shoulder these costs now – such as the (minimum via Stern Report) $85/ton CO2 pollutant cost. Attempts to impose even a decent fraction of those are going to prove to be extremely unpopular, even if many of those are “rebated” on a per capita basis or used to fund energy efficiency/subsidize renewable energy efforts. CO2 “sin taxes” (also euphemistically called carbon prices) are morally justified (proper allocation of costs instead of dumping them onto future people) but politically toxic, especially to those who benefit from no carbon taxes, and who can purchase/own mass media. Purchased mass media (whose only morality is money and short term profits) can (and have every economic incentive to actually do so) make the moral argument for CO2 sin taxes a political disaster for sane climate advocates. In other words, advocating the moral position will result in the morally horrible outcome of perpetuating conservative political ideology that perpetuates climate ruination policies (and which also ignores Peak Oil).

The solution to this herding kittens problem and to solving a big portion of the US part of the CO2 pollution driven climate disaster is embodied in the “jobs”. And to produce mass quantities of jobs in the renewable energy sector, we need a sane renewable energy pricing system, especially for electricity (since Peak Oil will make oil absurdly expensive in the near future, that kind of “solves” itself via Demand Destruction). With a sane pricing system (such as Feed-In Tariffs, alias FITs), it will become profitable to sell renewable energy, and thus create a demand for renewable energy systems. The demand for renewable energy systems creates a need for employment to make and install these systems, and that also creates businesses to make them or changes existing businesses into making these, as that is where the money is. There, demand creation makes for economic growth, and a lot of this can get “paid for” via creaming off the extraordinary profits that come from gaming electricity pricing systems like the one we are stuck with in NY State (marginal based uniform clearing prices).

Oh, and by the way, done at scale, that knocks off 40% of US CO2 pollution (that used to make electricity) and sets us up to replace most natural gas usage (used for heating buildings) via heat pumps (which use electricity, but in a smart way). Such a deal, eh?

What's your view on this topic, which is unlikely to be more than mentioned in passing this election season?

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