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Has the U.S. Passed Peak Gas (Demand)?

An interesting Associated Press article that's making the rounds asserts that the United States has actually passed the point of peak demand for gasoline, and instead of a continued rise in the coming years we will actually see a decline from 2006 onward. The data seem solid on that assertion, but the implications may be more complicated than at first glance. According to the article:

"Americans are burning an average of 8.2 million barrels — 344 million gallons — of gasoline per day in 2010, a figure that excludes the ethanol blended into gasoline. That's 8 percent less than at the 2006 peak, according to government data."

Also, Americans will burn 20 percent less gasoline in 2030 than they do today. However, as the AP article does note, this is far from a done deal. There have been declines in demand before, and there's no reason that shifts in the economy or marketplace in the future couldn't shift the demand trajectory as well. The Washington Post has a timeline of gas use and demand since the first gas station was built in 1905, and it highlights just how volatile -- over the long term, at least -- gas demand can be.

Also, there are caveats: as mentioned above, the 8.2 million barrels burned each day in 2010 does not include ethanol blended into the gasoline. If we're talking only about gas, fine, but if the point is to examine the impact of this declining demand then that note becomes important. The bulk of environmentalists, and some of the government at this point, believe that corn ethanol carries its own set of environmental risks and may not even have much of a greenhouse gas emission benefit over gasoline. With ethanol mandated to make up about a quarter of all gas bought at the pump in 2022, are we really sure that the resulting decline in oil-based gas demand is such a great thing?

Even aside from the ethanol questions, a decline in gas demand doesn't necessarily translate directly into greenhouse gas emissions savings. Improved fuel economy -- one of the factors involved in the anticipated demand decline -- can certainly lower emissions, but among the reasons for that improved fuel economy is the use of plug-in hybrid and electric vehicles. What electricity source is powering those vehicles? If it's coal, then we'll have traded one dirty energy source for another, limiting the greenhouse gas savings.

Declining gasoline demand is clearly better than increasing demand, but such issues are rarely completely straightforward when it comes to the impacts.

(Image via Daryl Mitchell/Wikimedia Commons)

Canada's Controversial Oilsands Get Top-Level Review

The Royal Society of Canada has issued a major report on the environmental and health impacts of oil sands development in northern Alberta, a subject that has huge economic implications for the province and country and big implications for North American fossil fuel supplies. The report will not be the last word on this immensely important subject.

The report, commissioned in October 2009, was prepared by a panel of well-qualified experts in environmental health, toxicology, land reclamation and ecological restoration, hydrogeology, integrative biology, economics, and engineering. It primarily addresses concerns articulated by environmentalists, representatives of indigenous peoples (the groups Canada calls its First Nations), and other local citizens. What it does not do is make a comprehensive cost-benefit analysis of whether, on balance, oil sands development is worth the prices paid in environmental degradation, scenic squalor, and human discomfort.

The Canadian oil sands are located in a relatively remote area that is sparsely inhabited and yet, to judge from photos, splendid in its vast isolation. It includes one major protected zone, the Buffalo National Park. So worries about oil sand development are not limited to just how it might affect this or that, here or there, but how it will transform the character of a whole region.

Thus, however authoritatively the report addresses the specifics, it remains open to the charge that it almost literally sees only the trees, but not the forests.

Among major findings of the report, Environmental and Health Impacts of Canada's Oil Sands Industry:

--no evidence of contaminant exposures at levels that could affect downstream populations adversely

--need for more frequent biological monitoring and more accessible research results

--enhanced regulatory capacities, with emphasis on acquisition of needed technical personnel

--more adequate provision of financial security, to cover projected costs of environmental reclamation and restoration

Given the critical edge of those recommendations, no reasonable person would accuse the Royal Society of whitewashing oil sands development. But the report nowhere adds up the total benefits expected to accrue from development and nowhere weighs such benefits against aggregate costs--including the costs that may in some sense be greater than the sum. And at times the report comes across as a little tin-eared, as in the first point above, where it says there's no evidence of contamination at levels that could hurt people. What is does not say is whether there's evidence of people being actually hurt.

Not surprisingly, First Nation representatives have reacted to the Royal Society report with skepticism, if not outright disdain.

At times the report expresses itself in a style bordering on the ludicrous: "Is the oil sands industry collectively Canada's largest emitter for air pollutants other than greenhouse gases?" "Is the oil sands industry the most environmentally destructive project on earth?" Such questions bring to mind, embarrassingly, the amusing Geico ads running these days on U.S. television--"Can Geico give you more for less money? Did the three little pigs squeal all the way home?"--except that in the Royal Society report the rote answer is no rather than yes.

No, oil sand development is not the most environmentally destructive project on earth. No, it is not Canada's largest emitter of air pollutants.

Given that style, it's not always easy to stay focused on Royal Society's technical specifics. But it's often worth the try. Take greenhouse gases. The report says that oil sands currently account for only about 5 percent of Canada's total emissions, compared to 17 percent from electricity generation and 27 percent from transportation. But sands also are the fastest growing share and therefore "create a major challenge for Canada to meet our international commitments for overall GHG reduction."

What are those international commitments? This too is a subject that requires a little extra concentration to correctly fathom. As the report notes, in the first Kyoto commitment period, 1990 to present, Canada's GHG emissions increased 24 percent, rather than decrease 7 or 8 percent, as the protocol required. As Canada, unlike the United States, is party to the protocol, it is in gross violation of it. Not surprisingly, then, it attempted earlier this month at Cancun--together with two other countries-- to have the Kyoto process canceled. But it failed after the Japanese leadership defected from the anti-Kyoto cause, having received personal phone calls from the leaders of the UK, Germany, and Mexico. .Accordingly, Canada ended up signing agreements in Cancun that in theory require it to do by 2020 even more than Kyoto asks, rather than much less.

To come anywhere close to conform to that obligation would be a Herculean task for Canada, and in fact, it might be flatly incompatible with oil sands development.

Solar Energy Zones: DOI, DOE, Announce Renewables Plan

A joint effort between the Department of the Interior and the Department of Energy has yielded a plan involving "solar energy zones," or massive tracts of public lands in the western United States deemed appropriate for industry-scale solar power development.

The eloquently named Draft Solar Programmatic Environmental Impact Statement outlines some of the best areas for solar power in six western states. It excludes a number of types of area: "those prohibited by law, regulation, Presidential proclamation, or executive order; lands with slopes of 5 percent or greater and/or sunlight levels below 6.5 kilowatt-hours per square meter per day; and areas with known resources, resource uses, or special designations identified in local land use plans that are incompatible with solar energy development."

That may seem like a lot of exclusions, but the Bureau of Land Management (part of the DOI) manages 120 million acres in the six western states alone. Even with all the exclusions, about 22 million acres are left over that could be suitable for development, and 677,400 acres have been included in the solar energy zones; the zones are in California, Colorado, Nevada, New Mexico, Utah and Arizona.

The government's aim to fast-track renewable energy development also means that the permitting processes for big solar projects are moving relatively quickly. Eight industrial-scale solar plants have been approved recently, which will eventually produce 3,572 megawatts of electricity. If all of the additional 104 applications currently on file with the BLM are built, that would mean another 60,000 megawatts.

These are lofty goals, no doubt, given that the total installed solar capacity in the US only climbed past 2,000 MW in 2009. However, it has become increasingly clear that solar installations have only begun to scratch the surface of both the US and worldwide potential. As discussed here earlier, some see the potential to jump as high as 980 gigawatts of solar power around the globe by 2020, so the joint DOI/DOE effort to get that started is certainly a good step.

(Image via DOE/DOI)

Unconventional Gas Revolution Goes Global

The revolution in unconventional gas, which began in Texas, Lousiana and other western states and now is transforming the energy picture in northeastern ones as well, is not just a North American phenomenon. Argentina's main energy company, YPP, announced a shalegas find that will guarantee the country adequate supplies for many decades to come; the company, controlled by Spain's Repsol, is teaming up with Brazil's Vale mining group in a $140 million deal to develop the Pataonian reserves, using advanced hydraulic fracturing techniques. Meanwhile, Norway's Statoil reportedly is "closing in on a deal" to undertake shalegas exploration in China, because of its extensive Marcellus shale experience and despite Nobel Prize tensions; Statoil already has agreements with Sinopec to evaluate shalegas prospects in the South China Sea and with Sinochem to do work in Brazil and elsewhere. It recently bought a big stake in Texas's Eagle Ford formation, and it's looking at opportunities in South Africa.

As the unconventional gas boom continues in the United States with no end in sight, many of the relatively small independent companies that have dominated exploration and development so far are selling non-essential assets to raise capital for further exploration--or they are letting themselves be acquired by the majors. Most recently, Chevron paid $3.2 billion for Atlas Energy, which owns Marcellus acreage in West Virginia, Ohio, Pennsylvania and New York. Earlier in the year, Atlas launched a $1.7 billion joint venture with India's Reliance Industries, for Marcellus work. Such lists go on and on . . .

The reasons include not just gas's relative abundance and cheapness, its cleanness, and its low carbon content compared with coal, but also its flexibility, as a recent Worldwatch report observes. Whereas baseload coal and nuclear plants are designed to run all the time and come generally only in large sizes, gas-fired plants "come in a variety of scales" and can be ramped up or down quickly. That makes them a nice fit with intermittent energy from wind and solar generators.

Assessing Cancun

The Copenhagen conference that ended this last weekend exceeded expectations and was a definite success, especially  by comparison with last year's Copenhagen Accord. That agreement really only papered over profound and sharp differences, which threatened to wreck the conference and derail the process of international diplomacy being carried out pursuant to the Rio Framework Convention on Climate Change of 1992 and the 1997 Kyoto Protocol.

The Cancun agreements were adopted almost unanimously, with just Bolivia rejecting them. Besides containing some important specifics, they may also provide a vehicle for further undertakings that do not depend on treaty making and treaty ratification. Though such agreements do not have the full gravity of treaties, they are generally considered binding on the states that sign them.*

The two important umbrella agreements adopted at Cancun concern long term cooperation and Kyoto followup. The Kyoto document addresses issues raised by the ending in 2012 of the first "commitment period" in which advanced industrial countries were to make scheduled cuts in greenhouse gas emissions, and the impending second commitment period, which is to run from 2012 to 2020. It is a compact two-page document that declares global warming to be an urgent problem, as described in the 2007  IPCC assessment report, and "urges" the industrial countries to make more aggressive efforts to curtail it than they have made so far. It calls on the world's climate diplomats to see to it in the coming year and at the next climate conference, to be held in Durban, South Africa, that there is no gap between the first and second commitment periods.

In signing onto that statement, the United States seems to be conceding implicitly that it needs to do more than it has promised to do so far to reduce its carbon emissions. Notably, the Japanese government, which came to Cancun wanting to ditch the Kyoto process, was dissuaded from that position by phone calls from the leaders of the UK, Germany, and Mexico. (The Mexican foreign minister, Patricia Espinosa, is credited especially with having worked skillfully to make Cancun a relative success.) The Kyoto Protocol to the Rio treaty took force in 2005, and 191 of the 194 parties to the treaty have ratified the protocol; the United States is one of three that have not.

The second Cancun statement, on long-term cooperation, calls on the developing countries to report regularly and verifiably their emissions, as sought by the United States, starting at Copenhagen. The document outlines and specifies how an institution will be established to channel climate aid from the rich countries to the poor--the Green Climate Fund--and, just as importantly for the Third World, specifies how countries can be rewarded for deforestation efforts.

The document on long-term cooperation puts the emphasis equally on greenhouse gas reduction and adaptation to climate change, an important provision for island countries and deltaic regions that are acutely and imminently threatened by global warming. But at the same time it "agrees" that parties should cooperate in achieving the peaking of global and national greenhouse gas emissions "as soon as possible," bearing in mind that "the time frame for peaking will be longer in developing countries." This provision implicitly points a finger at China, which refused to make a peaking commitment at Copenhagen. Like the United States, in signing onto the document, China implicitly concedes that it soon will be expected to do more than it has been willing to do in the past.


* According to the constitutional authority Louis Henkin (Foreign Affairs and the Constitution, Norton, 1972, pp. 184-7), the United States had entered at the time of that writing into thousands or even tens of thousands of executive agreements with foreign countries. While some held that such agreements could not be truly executed without action of Congress, there is no clear consensus on this point. In an important test case, which involved recognition of the Soviet Union by the Roosevelt Administration and the associated Litvinov Agreement, New York State challenged a provision enabling the Federal government to take control of assets held in New York banks to which the USSR laid claim; the Supreme Court held that with respect to "international negotiations and compacts . . . state lines disappear. . . . As to such purposes, the State of New York does not exist." Henkin attributes such reasoning mainly to the primacy the constitution affords the president in the conduct of international relations: If the president agrees to something in that realm, prima facie, it holds.

Save the Birds: Altamont Pass Wind Turbines to be Upgraded

The Altamont Pass wind farm has long been cited by conservationists as a primary reason why wind turbines can sometimes do more harm than good. The 5400-turbine site is so crowded with relatively small windmills that it kills thousands of birds every year, including about 70 federally protected golden eagles as well as other raptors. After decades of operation, though, the Altamont wind farm is finally getting a facelift.

NextEra Energy agreed to upgrade many of the 2,400 turbines it owns at Altamont; it will replace small turbines with fewer larger ones, resulting in a similar power generation capacity of about 240 megawatts. Having fewer turbines spaced slightly farther apart will theoretically reduce the risks for birds who fly through the migration corridor.

The agreement, which could see 80 megawatts of turbines upgraded by the end of 2011 if permitting happens fast enough, stems from a lawsuit filed by the Audubon Society aimed at protecting the birds of the Altamont area. “This agreement addresses the problem arising throughout the state: balancing the need for renewable energy generation with subsequent impacts to wildlife,” said Bob Power, Executive Director of the Santa Clara Valley Audubon Society, in a press release [pdf].

It will be interesting to see results from subsequent monitoring of wildlife impacts at Altamont. It does seem likely that fewer, bigger turbines will reduce bird fatalities, but what about bats? Bats most likely die around wind turbines not because of impacts but because of barotrauma: sudden drops in air pressure that exist immediately around the spinning turbine blades basically cause the bats' lungs to explode. Will bigger turbines create bigger pressure drops, and thus more bat fatalities?

It is difficult to predict, but at least one study [pdf] showed that higher turbines do increase bat fatalities. Still, it is undoubtedly progress to try and maintain the energy output of Altamont while minimizing an ongoing point of contention in renewable energy circles by reducing bird fatalities.

(Image via Xah Lee/Wikimedia Commons)

Russian Uranium Company Makes Major North American Acquisition

ARMZ, the uranium mining arm of Russia's state-owned atomic energy monopoly, Rosatom, is taking a 51 percent interest in Canada's Uranium One. The acquisition will make ARMZ the world's fourth largest uranium mining company, according to a report in the Financial Times,  and is part of the company's program of aggressive international expansion. It already has deals or is in serious discussion of deals with France, India, and South Korea, and hopes to be the world's second largest producer within a decade, trailing only Kazakhstan.

Evidently the deal is structured financially in a way that will enable the paired companies to boost production not only in North America and Russia but also Kazakhstan, Australia, and possibly South Africa. Mainly because of new nuclear plants coming online in East Asia, world uranium prices have climbed  about 50 percent this year, from $40 to $60 per pound, and ARMZ is guessing they might stabilize in the long run in the range of $70-80 per pound.

Acknowledging concerns about Russia's trustworthiness as a business partner and its growing role in the U.S. nuclear fuels market, ARMZ director general Vadim Zhivov conceded that the company has a "long hard road" to show Canadian investors that "a Russian state-owned company can . . . play by the rules of the modern developed world." ARMZ's proposed acquisition of Uranium One won the approval of the U.S. Committee on Foreign Investment in the United States last October, and last week the company's management was honored with an excellence award by Platts, the McGraw Hill energy speciailists.

Could Oil Tankers Be New Reactor Market?

With rising fuel prices, pending international limits on sulfur emissions, and concerns about greenhouse gas emissions in mind, the British shipping consultancy Lloyd's Registry has launched a study of whether oil tankers should be nuclear-powered. At present, reactors have been used almost exclusively to power  military ships, starting with the famous U.S.S. Nautilus submarine (above). In civilian shipping, with the exception of one Russian container boat, nuclear propulsion is used only for icebreakers. Vince Jenkins, global marine risk adviser at Lloyds, clients of the firm are showing interest in alternative propulsion technologies that would cut carbon emissions. "Nuclear power is the only technology that can replace carbon emissions entirely," Jenkins told the Financial Times. 

Two for the Price of One: Singlet Fission and Improved Solar Cells

New research by investigators at the National Renewable Energy Laboratory suggest an interesting way of improving the output of solar photovoltaic cells. Singlet fission is a process in which the absorption of a single photon can produce two electron-hole pairs, thereby potentially doubling the output of a solar cell.

The research, published in the Journal of the American Chemical Society, involved the molecule 1,3-diphenylisobenzofuran. In an e-mail, one of the investigators told me that singlet fission is closely related to another process called multiple exciton generation, previously indicated as another possibility for improving solar PV output. MEG occurs in quantom dots, though, compared to the chromophore molecules used in singlet fission, according to Dr. Justin Johnson, of the NREL.

"There is a lot of fundamental research yet to be done to understand singlet fission before it could be useful in solar energy," Johnson told me. He guessed that commercial-scale use of the idea in solar technology is at least five years off, but added that the idea could be applied right away for two types of solar cell: "One is an organic photovoltaic designs (e.g., pentacene/fullerene systems) and the other is dye-sensitized solar cells (i.e., a molecular dye attached to nanocrystalline titanium dioxide)." Johnson continued:

"The efficiency gain arises from the fact that without singlet fission these configurations waste energy to heat during the steps after light absorption and before charge collection. In many cases, the two excitons produced by singlet fission can both be harvested in the same way that one exciton is harvested in a conventional device but without the lost heat, leading to a factor of two increase in efficiency. This is just one scenario, and the exact details of how the device is configured must be taken into account to determine the actual expected enhancement."

He also said that though the molecules used in the recently published work can be difficult to work with, his group is now starting to use easier materials that could be mass produced and would remain stable for at least 10 years, meaning the eventual cost of such solar cells wouldn't be much higher than currently available PV technology.

(Image via NREL)

Coal and Cancun

To first approximation, the political struggle over climate policy can be reduced to the future of coal. The Cancun climate talks are going nowhere because of a stalemate between the United States and China, which each account for about a quarter of the world's greenhouse gas emissions. China gets about three quarters of it electricity from coal, the United States close to half, and neither country is willing to confront its coal industry head-on.

Countries like the UK and Germany, which have been systematically winding down their coal industries, have cut their greenhouse gas emissions sharply and are inclined to stick with the Kyoto formula--first the industrial countries reduce their emissions, then the developing countries. That principle of "differentiated responsibilities" is considered sacrosanct in the Third World. But the United States wants the fastest developing countries, China in particular, to join the industrial in emissions cuts.

That in essence is why Cancun is deadlocked, just as Copenhagen was this time last year.

So if it's a question globally of whether to systematically reduce carbon emissions or to reduce reliance on coal, Big Coal is winning the Big Political Battle. On the ground, however, where it's a question of costs, resources, and technology, coal may be starting to lose. The two biggest factors in play? The revolution in unconventional gas, which already is transforming the future of fossil fuels in the United States and soon may have a similar impact in China. And the world market in coal, which could be undergoing the same kind of transition we have witnessed in world oil during the last decade.

Speaking last week at Platt's Global Energy Outlook Forum in New York City, reporter Bill Holland of Platts Gas Daily cited two recent reports--one from Credit Suisse, one from Deutsche Bank--both concluding that if natural gas prices are at $4 per million BTUs, there is no poiint in building a new coal-fired power plant in the United States and little point in continuing to operate one. As it happens, current U.S. gas prices are roughly $4/mBTU, and futures prices as far out as twelve years are in the vicinity of $5/mBTU and never higher than $6/mBTU. So there's little prospect, Holland concludes, that it will make sense for U.S. utilities to remain as dependent on coal as they are now.

To be sure, some very large coal plants are  continuing to be brought online in the United States. But tighter restrictions on emissions of mercury, SO2 and NOx already are in the works, so even if EPA's soon-to-be-released carbon restrictions are relatively lax, operators of coal plants are sure to see their costs rise quite sharply. Credit Suisse estimates that almost a third of current coal-generating capacity in the United States is subject to no controls whatsoever. As regulation firms up and inexpensive "fracked" gas increasingly enters the picture, demand for coal could drop as much as 30 percent and demand for gas rise as much as 15 percent, Credit Suisse estimates.

Natural gas already is making rather sharp inroads into coal generation in the United States, causing domestic demand for coal to drop somewhat. But the global picture is the opposite. China, whose voracious appetite for coal is generally explained in terms of its seemingly inexhaustible supplies, recently has turned into an importer of significant scale. Those who haven't already lost their short-term memory will recall that early in the last decade China suddenly emerged in the world petroleum market as an importer, which turns out to have signaled the run-up in world oil prices that has the most important single feature of the global economy since mid-decade. Proponents of King Hubbert's "peak oil" theory, which had correctly predicted a peaking in the United States, claimed vindication.

Now similar claims are being made about coal. Writing in a recent issue of Nature, Richard Heinberg and David Fridley argue that economically recoverable reserves in the major producing countries may be much lower than the conventional wisdom has had it, and that China's coal production could peak as soon a 2015. If China's imports continue to grow at current rates, the country will be buying the equivalent of total Asia-Pacific coal exports. Two years ago, the world's entire seaborne trade in coal amounted to barely more than a fifth of what China alone consumes annually.

Hubbert correctly foresaw that U.S. oil production would peak in the early 1970s. In terms of energy content, U.S. coal production peaked at the end of the 1990s, Heinberg and Firdley note.


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