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The Next 25 Years in Energy

The latest annual energy outlook by the International Energy Agency, though not radically different from earlier editions in broad outline, nonetheless paints a very dramatic picture of the next quarter century.

The global oil market will remain tight, with prices trending toward $120 per barrel, and with all new net demand coming from the transport sector in rapidly developing countries. Though Russia's role as an oil producer and exporter will decline somewhat, its position in natural gas will be more pivotal than ever, with a fast-growing share going to China and a somewhat shrinking share to Europe. So crucial is the role of Russia, the report contains for the first time a special section devoted to it and has posted that section, in Russian, on the report's homepage.

Like previous outlooks, this one distinguishes between a business as usual scenario and a New Policies Scenario in which governments generally try to curtail consumption of fossil fuels and promote green energy; it appears to consider the New Policies Scenario (NPS) the more likely one. Even in NPS, however, fossil fuels remain dominant for the next 25 years and renewables continue to account for only about 10 percent of total world primary energy demand, thought their share of electricity production grows sharply.

Some of the report's most compelling highlights are displayed in a free-standing document containing ten charts, which is well worth a look even if time is lacking to study the whole report. For example, those subscribing to that theory that oil accounted for the decision of George W. Bush's administration to launch a second Gulf War will find Figure 3.17 arresting: Among the countries expected to make large additions to the world's liquid fuel supplies in the next quarter century, Iraq leads the pack by a healthy margin and is well of ahead of Saudia Arabia and total world biofuels. Other highlights incude:

• with oil production declining in all existing fields, an increasing share of liquid fuels will come from natural gas liquids and oil sands

• despite all the current concern about the prospect of declining subsidies for renewable energy, the 2011 NPS  predicts that total renewables subsidies will increase to $250 billion in 2035, from $66 billion in 2010; European subsidies will increase only modestly from a big base, U.S. subsidies more rapidly from a smaller base, and "rest of world" subsidies more rapidly still from an even smaller base

• in terms of power generation, NPS expects additions of renewable energy to roughly equal additions of gas and coal combined, with nuclear accounting for a considerably smaller share of increases

• even so, NPS sees a relatively robust future for nuclear, with the long-term Fukushima impact rather surprisingly small

• looking at where we are right now and how we got here, the Outlook finds that in the last decade, coal has met almost half of new demand for energy, roughly equally all other sources of energy

Mainly because coal is still so dominant, the Outlook finds prospects for greenhouse gas reduction rather grim. While the world is supposedly still committed to limiting the additional increase in global temperatures to 2 degrees Celsius, the Outlook concludes that on a business as usual scenario, the increase will be 6 °C. In the NPS scenario, the temperature rise is held to 3.5 °C, a prospect that is not comforting. Accordingly, the IEA also evaluates a third scenario, a 450-ppm one--that is, one in which the atmospheric concentrations of carbon dioxide goes no higher than 445 ppm, and the rise in temperature no higher than 2 °C.

Achieving the NPS scenario, implying a temperature rise almost twice as great as what the world supposedly wants, would require energy investment of $38 trillion over the next 25 years. The 450-ppm scenario requires a $15 trillion more--that is, $53 rather than 38 trillion.

Even at that level of investment, in the 450 scenario four-fifths of total CO2 emissions in 2035 already are "locked in" by capital stock existing today. "As each year passes without clear signals to drive investment in clean energy, the 'lock-in' of high-carbon infrastructure is making it harder and more expensive to meet our future energy needs and climate goals," said Fatih Birol, IEA Chief Economist.


Is Gas Fracking Inducing Earthquakes?

Fracking for natural gas, whereby gas-trapping rock formations are blasted open with high-pressure water and chemicals, has prompted serious concerns over the safety of groundwater supplies. But another risk is gaining profile: the potential for inducing nerve-rattling microseismicity or, potentially, unleashing a quake of truly destructive magnitude. Like the magnitude-5.6 quake that rocked Oklahoma last weekend.

As Spectrum documented this spring, human activity can and does induce earthquakes. To quote myself:

Tectonic pressures cause the vast majority of earthquakes, but geophysicists also recognize the existence of human-induced seismicity. Hydropower reservoirs, for example, frequently cause small, shallow quakes as shifting water levels change the strains on the rock layers below. Such microseismicity—up to magnitude 4 on the Richter scale—is also caused by wells that inject hazardous waste and wastewater into deep rock formations at high pressure.

And yet, this connection between us humans and something as vast and primordial as an earthquake is hard to accept, much as many (particularly in the U.S.) continue to dismiss the link between such things as cars, coal and climate change.

Take this week's report by West Virginia's Intelligencer / Wheeling News Register: Experts Doubt Fracking Linked to Quakes. The reporter stitches together isolated quotes from reputable geophysicists to present two arguments against a connection between extensive fracking in Oklahoma and this weekend's earthquake, both of which are fallacious.

Argument 1: Microseismicity from fracking is of too little force to unleash a magnitude-5.6 quake that had "the power of 3,800 tons of TNT, which is nearly 2,000 times stronger than the 1995 Oklahoma City bombing."

Argument 2: This and other recent quakes in Oklahoma must be "natural" because they followed "the lines of a long-known fault."

Where these arguments fall down is where they meet. The risk of microseismicity is, in fact, in the very presence of natural faults. Microseismicity can, over time, unlatch the fault like a spring, releasing tectonic strain built up over many years, centuries or even millennia to produce a major shake. As we reported in April, a textbook case occurred in 1967 at India's hydroelectric Koyna Dam (pictured above). Filling of the reservoir behind the then six-year-old dam unleashed a magnitude-6.3 quake on a previously unknown fault, killing 180 people and leaving thousands homeless.

The Oklahoma quake could well have been similarly "triggered" according to Paul Earle, a U.S. Geological Survey scientist quoted by the Intelligencer / Wheeling News Register. As Earle told me this morning: "I believe the earthquake *could* be natural but more studies need to be done to rule out the possibility of an anthropomorphic trigger."

IAEA's Iran Report Represents Critical Inflection Point

The disclosure by the International Atomic Energy Agency in March and November 2003 that Iran had systematically violated Nonproliferation Treaty Requirements for more than two decades was a major turning point. So too was the report disclosed yesterday, in which the IAEA finds that Iran has had a well organized program to develop an implosion bomb that could be fitted to one of its medium-range missiles.

Before, the IAEA had determined that Iran was secretly building facilities to obtain materials for a nuclear bomb--the enrichment plant at Natanz, and a heavy-water production plant that could provide means of obtaining plutonium from natural uranium--and that it only made reports to the agency about the facilities once the agency had learned of them from other sources. Now the agency is saying Iran not only sought materials for a nuclear weapon but also was actively designing the weapon and obtaining components for it, and that in all likelihood such work only appeared to have fully stopped in 2003--04, contrary to previous U.S. intelligence assessments.

The new IAEA report is enormously detailed and takes care to indicate where evidence came from an how it was corroborated. Though it does not name the member state that provided a key 1000-page document, or some ten member states that provided other evidence, it's clear that the agency did an enormous amount of cross-checking over a long period to test the plausibility of various allegations.

What it found was that up to 2003-04 Iran had an elaborate program to develop everything needed for a deliverable implosion bomb. Upon coming under intense international scrutiny and pressure in 2003, it shut down that program and physically destroyed all traces of it. But elements of the program appear to have continued, under the leadership of the same scientist who had managed it up until 2003.





The Opt-Out Continues: Now Mexico

The latest country to back away from nuclear energy, following a recent decision by Belgium to re-accelerate a nuclear phase-out, is Mexico.

According to a report distributed by Bloomberg news, the Mexican government has decided to ditch the idea of building as many as ten nuclear power plants in the next decades and instead build gas-fired generating plants. Behind the decision: the discovery there may be as much as 300 trillion cubic feet of natural gas buried in shale under the  Coahuila border region, in additional to newly discovered reserves of conventional gas under the Gulf of Mexico.

Bloomberg quotes an economist as saying, rightly, that gas-fired plants are cheaper than nuclear power plants and can be built much more quickly. The Mexicans will want to be mindful, however, of growing U.S. evidence of groundwater contamination by methane near shale gas operations

Wind Energy's Maturity

It's not new under the sun: harnessing the movement of air in the atmosphere to drive turbines that generate electricity on a scale much bigger than niche. In the 25 years since a Danish manufacturer of farm equipment initiated the revolution, wind energy has been much of the time and in many places the fastest growing component of new electricity generation.

The current issue of IEEE's Power & Energy magazine, devoted to "the waves of wind," testifies to the technology's technical maturity. Members of IEEE's Power & Energy Society have free access, but for those who are not members, here's a sampler of what kinds of things can be found.

--p. 28: a list of PES working groups devoting time and effort to one technical aspect of another of wind development and wind integration (part of an exhaustive round-up article, "A Blast of Activity")

--p. 29 in the same article: a sidebar explaining issues of harmonics and resonance in wind power plants, arising from the fact that such plants have both inductive and capacitative elements.

--p. 34: a table charting wind capacity value against wind power penetration as a percentage of peak load in selected operating areas around the world (still in the same article).

--p. 48, in an article about the European experience with wind, a table charting some European penetration levels, defined in various ways (the bottom line: In Denmark yearly wind generation as a proportion of gross electricity demand is 21.9 percent, in Portugal 17 percent, Spain 16 percent, Ireland 10.5 percent, and Germany 6.7 percent)

See for yourself: Other articles cover wind development in China, inter-regional planning in the United States, work by a NERC taskforce on wind integration, and reliability. An introductory article in the form of a guest editorial takes stock of what's changed in wind integration during the last two years. The starting point for that assessment is China's surpassing the United States in 2010 as the country with the most installed wind capacity: 42 GW versus 40 GW.

Stray Methane But Not Fracking Fluids Found in Water near Wells

The current issue of Scientific American contains a feature article assessing the issue of water contamination in gas fracking operations, a subject also treated in Spectrum last year. Notably, the SciAm article reports academic research in which water contamination by stray methane but not fracking fluid was found near gas wells. An editorial, building on the article, calls for a slowdown in hydraulic fracturing.

The article by Chris Mooney, "The Truth about Fracking," identifies three ways in which water could in theory be contaminated: leaks or overflows from ponds containing flow-back fluid from fracking operations; cracks propagating from wells deep underground that connect with existing fissures or old wells; and cracks in the cement casing of gas wells, closer to the surface. Mooney reports that a Duke University scientist and colleagues found methane in 51 of 60 drinking water wells nearly mining operations in the Marcellus Shale, but no evidence of fracking fluids.

That strongly suggests to the lead scientist, Robert B. Jackson of Duke's Nicholas School of the Environment, that leaks from well casings are likely to blame--the least ominous and easiest to address  of the three possible pathways. But propagating fissures are not completely excluded.

The editorial, "Safety First, Fracking Second," calls for more research into these issues and revised regulation. It suggests, among other things, required inspection of well casings, storage of flow-back fluid in sealed tanks rather than open ponds, and injection of tracer fluids into wells along with fracking fluid so that any leakage can be more easily and definitively identified. Lacking such precautions, the magazine argues, public support for fracking--a technology with big obvious benefits--could be jeopardized.


Headwinds: Turbine Makers, like Solar Manufacturers, Could Be in for a Shakeout

Energy guru Daniel Yergin tells a nice story in his latest book about how a Danish farm equipment manufacturer, Vestas, took advantage of California subsidies in the late 1980s to initiate a world revolution in wind generation.

Today, however, the pioneering wind companies like Vestas are running into the same headwinds makers of photovoltaic panels have encountered--the prospect of declining European and North American subsidies, combined with growing competition from low-cost Chinese manufacturers. Wind is much closer than solar to being commercially competitive, and so the situation is not quite as dire. But wind also, by the same token, has achieved higher penetration, which means that the best on-land sites are getting exhausted even as the ability of grids to keep absorbing more intermittent energy is increasingly challenged.

On Monday this week, Vestas shares fell one fifth, after the company issued a third-quarter earnings warning. Share values already had declined 50 percent from this year's high, largely because of reported delays in turbine projects and a German turbine factory.

Smelling blood, critics of high subsidies for renewable energy are going after wind. On Oct. 11, the Manhattan Institute--a neoliberal think tank in (you guessed it) Manhattan--issued a short article highly critical of wind's costliness and alleged climate benefits.

Though the Manhattan Institute often produces well-researched and strongly conceived reports that interest even people of sharply different ideological persuasions, its report on "the high cost of wind energy as a carbon-dioxide reduction method" is not one of its better efforts.

Author Robert Bryce asserts that getting 20 percent of U.S. energy from wind by 2030--a commonly stated goal--would cost $850 billion, yield greenhouse gas reductions equivalent to only 2 percent of projected global emissions, and consume 72,000 square miles of land.

Let's start with the least significant of those assertions, about land. It's often said that wind turbines consume a lot of land, but go bicycling in Denmark's countryside, and you see turbines everywhere right in the middle of plowed fields. The same is true in the North German plains.

So my counter-assertion is this: Wind turbines can consume a lot of land where land is cheap or worthless, say in parts of Texas, which happens to be Bryce's home state. But where land is immensely valuable--say in Germany's Mark Brandenburg, one of the world's great breadbaskets, or in Iowa-Illinois, another--turbines need consume virtually no land.

Regarding costs, Bryce bases his calculations on a historic cost for installed wind of $1.70/W and a projected cost of $2.43/W. Those postulated costs, specified in the text and in a footnote but nowhere justified, may be dubious. Seven years ago, Yergin's Cambridge Energy Research Associates estimated the cost of installed wind at slightly less than $1/W, based on historical data to date at that time.

Could average wind costs be higher now than seven years ago, and does it make sense to predict that they'll be still higher a decade from now? Actually, contrary to what Matthew Wald of the New York Times has said in response to Bryce's article, costs may indeed be trending higher. Even a decade ago most of the best wind sites in Germany had been occupied, forcing the country to move to more expensive sites offshore.  British wind developers are having to go offshore too because of intense local opposition to land-based wind farms.

The more important point, as I see it, concerns Bryce's claims about benefits. Here, simply put, he's putting his calculations in the wrong frame of reference: It makes little sense to consider reductions in U.S. emissions as a fraction of total world emissions. The United States is not morally required to solve the whole world's climate problem, and of course it is not in a position to do so. All it's required to do is address its part of the problem.

Simply put, if current coal generation were reduced from 45 percent of total U.S. generation today to 25 percent and wind generation were increased from 2 percent now to 22 percent a decade from now, the effect would be to cut U.S. greenhouse gas emissions by nearly a sixth--a big gain. (That because coal accounts for about a third of U.S. greenhouse gas emissions.)

Bryce complains that the cost of accomplishing that cut would be equivalent to a carbon tax of $45-54 per ton, about twice as high as a tax Australia will introduce next year or the current cost of carbon emission permits in the European Trading System. But everybody seriously concerned about climate change and greenhouse gas reduction knows that the ETS price is still far too low to induce desired changes in energy investment. Bryce's projected cost only seems too high to him because he understating the gravity of the global problem and overstating what the United States needs to do to address it.

Bryce calculates that the cost of obtaining 20 percent of U.S. electricity from wind by 2030 would be would be an increase in electricity prices of 48 percent in coal-dependent states. That's a high price for the states that generate most of their electricity from coal, to be sure--and I do not dispute it--but if the tax is made revenue-neutral and proceeds are fed back to those most severely affected by it, then it would be manageable.

Such a system is sometimes called a "sky tax" or "sky trust" and has been proposed by people like entrepreneur Peter Barnes and University of Massachusetts economist James K. Boyce. Revenue from a sky tax could stimulate economic development in historically coal-dependent areas and help such areas adopt 21st century technologies.

The tendency of U.S. policy in the Obama years has in fact been in that direction, but the administration has yet to fully embrace the idea of using proceeds from auctioned emissions credits or a carbon tax to catalyze desirable economic development and reduce social inequalities. Republicans and independents who once seemed interested in cap-and-trade systems--Lindsay Graham, John McCain, Joseph Lieberman--have all jumped ship.

Belgium Joins Countries Opting Out of Nuclear Power

Belgium's political parties reached an agreement earlier this week that will close down the country's two nuclear power plants. The plants, with seven reactors in total, provide more than half of the small country's electricity, according to the International Energy Agency.

Belgium, home to about 11 million people, aims to be totally rid of nuclear power by 2025. According to a report from Reuters, though, the nuclear phase-out is dependent on finding a reasonable source of power as a replacement. This is far from guaranteed; natural gas and coal, along with some renewables, provide the remainder of Belgium's power. According to a European Wind Energy Association report from earlier this year, the country will more than quadruple its wind power installations by 2020, but this will still only provide 10 percent of the total power needs.

This is just the latest policy effect of the shockwaves that continue to emanate from Fukushima, though Belgium had actually planned a nuclear exit long before the Japan earthquake. A law passed in 2003 set the stage, though in 2009 the country agreed to extend the reactors' lifetime for 10 extra years. Now the shutdown will be re-accelerated, again with the caveat of finding new sources. They join others, most notably Germany, that are trying to phase nuclear out of their energy portfolio.

As our Peter Fairley reported for Spectrum's special issue on Fukushima and its effects, Germany plans to shutter its reactors, which provide 28 percent of its power, by 2022. This will raise some tough questions, just as it will in Belgium. And perhaps more relevant to Belgium's situation, Switzerland, another small country getting a big chunk of electricity (39 percent) from nuclear, announced plans in May that it will shutter its five reactors by 2034. As these deadlines approach, each country will undoubtedly make some difficult choices on how to replace nuclear as a power source.

(Image of Tihange Nuclear Power Station via Geoffrey Gilson)


Desertec Taps Morocco For First Piece of Sahara Solar Development

We've covered Desertec's Sahara solar ambitions in this space before, so it is with some excitement that we note the announcement of the group's first major project, a 500-megawatt solar thermal plant to be built beginning next year in Morocco.

The specific site is yet to be announced, but the solar plant is meant to be just the first in a series of massive installations around North Africa and the Middle East. As the Guardian reported, the Desertec Industrial Initiative's chief executive Paul van Son called the Moroccan solar plant a "reference project," allowing investors and observers to see that the concept can work. There are still, of course, a number of questions surrounding an overall vision involving 470,000 MW of power, but the fact that Desertec seems poised to move from the abstract to the concrete is a welcome development.

And others are starting to notice the massive energy resource hitting the deserts of North Africa every day as well. Earlier this summer Nur Energie announced an agreement with Italian transmission network operator Terna that will send a high-voltage undersea cable across the Mediterranean from Tunisia. This sets the table for development of solar plants in the Tunisian desert; the agreement will allow up to 2,000 MW to be connected into the Italian grid. Elsewhere, Spectrum's Eliza Strickland reported last month on a Japanese-backed initiative called the Sahara Solar Breeder Project, where sand becomes silicon becomes solar panels and sends energy around the region and to Europe.

Of course, the Arab Spring upheaval in the region has called many energy-related issues into question, from oil access to renewables. But there are signs in some places that the result will be positive; Tunisia's transitional government said they will spend $2 billion renewable development, and according to some experts it seems that the progress toward reform across the region will at worst not stop renewable energy's progress, and at best will speed it along.

(Image of Moroccan desert via Joao Almeida)

Beacon Power Hits a Speed Bump with Bankruptcy Filing

Flywheel energy storage developer Beacon Power filed for bankruptcy last weekend, prompting immediate comparisons to infamously failed solar manufacturer Solyndra. But while both firms used millions of dollars in federal loan guarantees to expand their businesses, Beacon Power -- which Spectrum profiled this summer -- has working assets and a good shot at restructuring and carrying on.

No doubt Beacon Power has its work cut out for it. In a statement issued yesterday, Beacon Power CEO Bill Capp says the firm is suddenly unable to cover its obligations because of "severely restricted access to additional investments through the equity markets," which Capp blamed on several factors including the "current uncertain economic and political climate" and the automatic delisting of its low-priced stock from NASDAQ last month.

But Capp calls the comparison to Solyndra unfounded. For one thing, he notes that Beacon's 20-megawatt power grid regulation facility in Stephentown, NY continues operating at full capacity and generating revenue -- it's 200 flywheels continuously accelerating and decelerating to balance electrical supply and demand and thus keep New York state's grid tuned to 60 hertz. In contrast Solyndra's bankruptcy shut its doors immediately. Beacon's employees accepted a 20 percent pay cut to remain on the job, adds Capp, whereas Solyndra immediately shed more than a thousand workers.

Observers appear to be sympathetic to Capp's arguments. CNET greentech writer Martin LaMonica notes in his coverage of the Beacon filing that market conditions are improving for Beacon and other innovative firms that have improved the provision of grid regulation:

"Earlier this month, the Federal Regulatory Energy Commission (FERC) changed the regulations in a way that would significantly benefit Beacon Power financially because its technology can ramp up power very rapidly compared to gas plants. Instead of being compensated only for power, storage providers will also get value for the speed with which power is provided."

LaMonica cites reporting by Bloomberg in mid-October which identified FERC's ruling as a potential "lifeline" for Beacon.

Whether Beacon Power makes it or not, one thing seems certain: this scrappy firm has proven that energy storage is a far smarter way to keep power grids in tune than ramping giant fossil-fueled power plants up and down.


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