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Nukes, Gas, Oil and Coal All Losers in EU Energy Strategy

The European Commission issued its Strategic Energy Review yesterday, proposing energy efficiency investments, a shift to alternative fuel vehicles to end oil dependence in transport, and more aggressive deployment of renewable energy and carbon capture and storage to "decarbonise" the EU electricity supply. Figuring prominantly among its first six "priorities essential for the EU's energy security" are the North Sea offshore electric power supergrid that Energywise covered in September and the Mediterranean Ring electric interconnection of Europe and North Africa that I've been harping on this week.

The EC energy strategy not only endorses the MedRing, but views it as a component of a future supergrid traversing Europe and stretching beyond the Mediterranean to Iraq, the Middle East and Sub-Saharan Africa.

How would this new vision (and $100/barrel oil) alter the complexion of European energy consumption? The energy review projects that by 2020 total energy demand drops from the equivalent of 1811 metric tons of oil in 2005 to 1672 MTOE in 2020. Demand met by renewables such as wind, solar and hydro more than doubles in real terms from 123 to 274 MTOE, while their share of total demand leaps from 6.8% to 16.4%. Imported renewables - with the MedRing delivering North African wind and solar power - jump 10-fold from 0.8% in 2005 to 8.8% in 2020.

Oil, gas, coal and nuclear, meanwhile, all see a diminished role, both in real terms and as a share of European energy demand. Interestingly the role of natural gas - the low-carbon fossil fuel - drops the most, from 25% to 21%, reflecting EU concern over dependence on gas imports from Russia. Nuclear's share drops the least, from just slightly over to slightly under 14% of demand; this assumes that nuclear phaseout plans, particularly Germany's, are followed through.

How to make it all come true? Accompanying the EC review is a 'green paper' (the EU's unbleached alternative terminology for what we'd call a 'white paper') outlining a variety of new regulatory and financial mechanisms. The EU is already a world leader in terms of incentives for lower carbon energy with strong price supports for solar and wind and a carbon cap and trade program up and running (though still lacking teeth as Bill noted recently). However, the energy review warns that the primarily national-level financing that drives energy projects today are inadequate to drive infrastructure that is pan-European or larger. A perfect example is the massive investment in high-voltage dc lines needed to turn the MedRing into a bulk power mover (see the second half of our feature on MedRing: "Closing the Circuit").

Even less viable under existing financing mechanisms are those projects that entail considerable "non-commercial risks" such as threats of political instability or terrorism. Did someone say North Africa?

Dire Predictions in Latest Top Energy Agency Report

Last week I reported on a pre-released summary of the International Energy Agencyâ''s major annual report, in which the IEA predicted much higher long-term oil prices. That report has now been released in full, and $200 oil is not the only bad news. The World Energy Outlook says that if the worldâ''s energy business continues as usual, there will be â''shockingâ'' implications for our climate: basically, it will be all but impossible to keep carbon dioxide concentrations in the atmosphere below 450 parts per million (roughly double pre-industrial levels) and limit this centuryâ''s temperature increase to 2 more degrees celsius. Above 450 ppm or 550 ppm (where the average global tempurature increase would be about 3 degrees C), climate change could get â''dangerous,â'' by general scientific consensus.

All words about climate change are loaded and contested, but however you parse them, the IEAâ''s conclusions are almost sure to give you pause. If non-OECD countries like China and India allow their emissions to keep on rising at current rates, then it will be impossible to keep the world at 450 ppm even if the OECD countriesâ''the advanced industrial countriesâ''stopped emitting any CO2 whatsoever, starting tomorrow.

Another equally disconcerting conclusion: because of declining yields from major oil fields around the world, long-term petroleum supply almost certainly will not keep pace with new demand. â''Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 million barrels per day of gross capacityâ''roughly four times the current capacity of Saudi Arabiaâ''would need to be built by 2030 just to offset the effect of oilfield decline,â'' said IEA executive director Nobuo Tanaka.

â''One thing is certain,â'' he said. â''The era of cheap oil is over.â''

Pickens Plan Update

By now, anybody with a television set will surely have heard of the Pickens Plan: the notion that to achieve energy independence, the United States should rely on wind rather than natural gas to generate electricity, and use the freed-up gas to power motor vehicles. Even allowing for the element of self-interestâ''T. Boone Pickens is a major wind developer in Texas and owner of a huge natural gas companyâ''I advised readers earlier this year that if they had to choose between just the Pickens plan and Al Goreâ''s latest proposals, theyâ''d do better to go with the plan. My one reservation, and itâ''s a big one, is that the plan seems to buy little in the way of carbon reduction. Today, in a group interview, I had the opportunity to ask Pickens face-to-face about that point.

The setting for our conversation was an energy conference sponsored by Forbes magazine. In the background were reports that Pickens was having to curtail plans for his Texas wind farm and related investments in the Texas transmission system. Responding, Pickens said he had already purchased the turbines, using his own money for 30 percent of the investment and financing for 70 percent. Not surprisingly, problems are arising with the finance, but he expressed confidence that when the turbines start arriving in 2010, heâ''ll be ready to start installing them. As for a dedicated transmission line he was going to buildâ''a touchier point that he plainly did not want to dwell onâ''he said that the Texas grid operator CREZ would almost certainly build it instead.

Since launching the Pickens Plan early last July, Mr. Pickens has both given and taken some ground. He now says that he really only proposes to replace gasoline in heavy trucking, implicitly conceding that it would be impractical to convert all passenger cars to compressed natural gas. But he now bills his proposals as not merely a plan but a movement: Taking a page from Move-On, he says that more than 12 million people have visited the Pickens Plan website, and that heâ''s enlisted more than 1.4 million of them as movement members. He also had the opportunity to pitch his plan to both presidential candidates during the campaign.

With characteristic faux modesty, he said he only got an hour and a half with Candidate Obama, so they couldnâ''t get into anything in real depth.

When I asked Pickens about climate change, he immediately pegged me as the Al Gore among his questioners, correctly divining my general politics if not my preferred energy policies. He readily conceded that his focus is entirely on freeing the country of dependence on Mideast oil, and that for him, global warming is a secondary issue. But when I pressed the point, he and an aide claimed that converting all U.S. 18-wheelers to CNG would reduce their carbon emissions by about a quarterâ''not trivial, but not a hugely compelling point either.

I will not easily forgive Pickens his role in financing the mendacious swift boat campaign against John Kerry in 2004. But heâ''s a disarming man who often speaks with greater than expected candor. When I asked him whether Obama asked him any Gore-like questions during their conversation, he said no, but that Obama asked to take notes, and did so, with his aide David Axelrod looking on. Obama enthusiastically told Pickens that he wanted to see 1 million hybrid electric cars on the road within 10 years. Pickens told him that 1 million might seem like a lot if they were all parked in a big lot outside the window where they were talking, but that 250 million cars are on the road in the United States, with an additional 9 million being produced every year. â''There are?â'' Pickens said Obama exclaimed.

Pickens obviously came away from that conversation with the impression that he had made an impression.

Somebody asked Pickens what was keeping him at age 80 out on the road, on the job, 24/7. With his trademark self-effacing immodesty, Pickens said that he had been â''given an assignment,â'' and that his job is to promote his plan because â''I know more about energy than anyone.â''

Power Struggles and the Mediterranean Ring

'The Mediterranean Ring' would make a fitting title for a high-voltage action thriller where cut-throat crime gangs vie for control in the labyrinthine medieval medina's of North Africa. Alas it is no such thing. And yet this project to connect the power grids of North Africa and Europe does boast a potentially destructive internal power struggle that could stymie its promise -- clean power supplies for Europe, economic development for North Africa, and a much needed bond between neighbors.

MedRing's power struggle spilled into the daylight on November 21, 2005 when power engineers activated a key electrical circuit linking Tunisia and Libya in a key test of the MedRing. For a moment nearly all of the AC power systems of North Africa operated synchronously with those of Europe. Power plants, transmission lines and controls from Syria to Morocco were in electrical conversation with those of the mighty UCTE, whose 240,000 kilometers of high-voltage lines connect 26 European countries. Add links to Turkey and the MedRing would have been complete.

Seven minutes later the grids had broken apart and the test had failed.

It was a tug of war between North African grid control systems that broke the synchronicity. Understanding why isn't straightforward. Bear with me as I try because the failure of this early trial really captures the challenge inherent in connecting a robust power system like the UCTE's -- the world's biggest -- to weaker grids such as those of North Africa.

Power demand naturally varies as factories start up or shut down and consumers switch appliances on and off. Automated generation control systems (AGCs) ramp power plants up and down to match the load, but thereâ''s always some mismatch. Before the lines between Tunisia and Libya went live the power plants in Egypt to the East were generating slightly more power than was being consumed. Upon interconnection, the UCTE began absorbing this excess, sucking power across Tunisia, Algeria and Morocco like a giant electrical sponge.

Libyaâ''s AGC, sensing over 100 megawatts of westward flow into Tunisia where it expected zero, compensated by ramping down Libyan power generation. Unfortunately Egypt's AGC was answering a different call. Rather than tracking flows over its borders the Egyptian AGC was tuned to the frequency of AC power, which was dropping in Egypt as the UCTE absorbed its excess power. The Egyptian AGC initially fought back by ramping up generation, thus pouring even more excess power into Libya, then recognized the error and ramped down generation hard.

With power plants in both Libya and Egypt ramping down their grids suddenly were undersupplied with power, causing a power surge in from UCTE exceeding 150 MW. That slosh of power back into the East triggered protection plans on lines between Tunisia and Libya as well as Morocco and Algeria, opening the circuit and ending the ill-fated test.

This unforeseen behavior took the power engineers involved (generally a notoriously cautious bunch) completely by surprise. Modelers checking for more complex problems overlooked the normal load deviations present in all power systems because, until now, power lines have always accomodated them. As one engineer involved summed up the failure put it: "It is very easy to 'predict' something once it has happened!"

North African power engineers believe the lines are strong enough now thanks to 400,000-volt infrastructure profiled in my feature story in this month's print issue, "Closing the Circuit." A second test is scheduled for the end of March or April 2009. What will they do if that fails? For that you'll have to read the story (or wait for the thriller).

World Nuclear Will Be Smaller before Getting Bigger

An article in the current issue of the Bulletin of the Atomic Scientists, the magazine founded by Manhattan Project physicists to address global security issues in the widest sense, argues that the world nuclear industry is bound to contract in the coming decades. Though the capacity of the world reactor fleet has continued to increase modestlyâ''by 3 gigawatts per year from 2000 to 2004, then by 2 GW/yr in the following three yearsâ''much of that has resulted from â''uprating,â'' not additional construction. Uprating refers to efficiency improvements made to existing reactors, a process that has added 5 GW to U.S. nuclear capacity since the 1970s

Today, only 35 reactors are under construction worldwide, and even if additional orders are soon placed, new nuclear power plants will not come online fast enough to replace those being retired. Just to stay even, 70 additional plants would have to come into operation by 2015, and another 192 in the decade starting in 2015. Considering the average global lead time for nuclear plant construction is greater than nine years, itâ''s clear that new construction will not outpace retirements at least until late in the next decade.

Note, however, that lead times vary widely by region. In China, India, Japan, and South Korea, it takes just five years to take a nuclear power plant from conception to completion.

New Way of Making Tiny Organic PV Cells Reported

An article in the inaugural issue of the Journal of Renewable and Sustainable Energy, published by the American Institute of Physics, describes very small photovoltaic arrays that could be used to power micromechanical devices. The appearance of a new technical journal in renewables is itself notable; so too the description of techniques that could be used to make tiny PV power supplies for MEMS devices such as those used to detect chemical leaks.

Scientists at the University of South Florida, Tampa, employed a photolithographic technique to isolate individual PV cells and make output contacts for a 20-cell array; they laid down series connections by thermal-vacuum deposition. So far they have engineered arrays to produce 7.8 volts, about half of what would be needed to power a chemical detector made of carbon nanotubes, and they expect to achieve the requisite 15 V by the end of the year.

Solar PoweRING the Mediterranean

Areva's Bir Osta Milad substation in Libya copycreditpeterfairley2008Engineers working in the teeming cities and lonely deserts of North Africa are creating the last links in a power grid that will ring the Mediterranean Sea. Sharing electricity over this 'Mediterranean Ring' could secure Europe's power supply with clean renewable energy, accelerating North Africa's development and knitting together two worlds that seem to be racing apart â'' those of Muslim North Africa and an increasingly xenophobic Europe.

We make the case for all this unabashed optimism in Closing the Circuit - my feature in this month's print issue of Spectrum. Closing the Circuit is the product of two years of on-again, off-again research that came to fruition with on-site reporting in Libya and Morocco this summer.

The timing is fortuitious: North African countries - in many ways among the most progressive in the Muslim world - face a rising threat of Islamic fundamentalism, including increasingly deadly attacks by Al Qaeda-aligned militants. Economic development and democratization are the best hope for a North African renaissance. At the same time Europe's growing dependence on Russian oil and gas and desire to slash carbon emissions has intensified interest in North Africa's energy resources.

The scale of the potential exchange is immense: Analyses by the German government estimate that solar power generated in scorching North Africa could meet Germany's entire electricity demand. No wonder then that the Union for the Mediterranean launched by French president Nicolas Sarkozy this summer to spur cooperation between Europe and North Africa is fleshing out a â''Mediterranean solar planâ'' as one of its first actions.

The geopolitical and social import could be bigger still. Consider what Dominique Maillard, President of French grid operator Réseau de Transport de l'Electricité, said when asked last month what the Mediterranean Ring represents during an interview last month for the European Energy Review. Maillard began his response by noting that the electrical interconnections between the European countries got started in 1951 - well before the signing of the Treaty or Paris, which created a European coal and steel market, and before the Treaty of Rome in 1957. "At the dawn of Europe, energy - and even electrical energy - had therefore already preceded politics," says Maillard.

The implication by extension is clear: Electrical interconnection can be the forerunner for peaceful codevelopment among the countries of the Mediterranean, even including Israel. Call it informed optimism.

Time to Radically Rethink Carbon Pricing?

According to the conventional wisdom, the only way to discourage emission of carbon dioxide is to establish a carbon trading system, despite the cumbersome administrative infrastructure such a system requires and the controversial decisions that have to be made about permits and penalties. Why not a much simpler uniform carbon tax? If you donâ''t mind my echoing James Carville, BECAUSE ITâ''S A TAX, STUPID! But hey, itâ''s an all new ballgame, so perhaps itâ''s time to consider how such a tax could fit into the comprehensive tax reforms President-Elect Obama has outlined.

Mainstream economists have always preferred a carbon tax to a trading system because a tax would establish a completely level playing field, with organizations and individuals penalized in exact proportion to the carbon they emit; everybody would be free to adjust to the new situation as best they could, without the government having to constantly jigger the system to influence whoâ''s coming out ahead and whoâ''s falling behind. A carbon tax appeals to climate scientists too, for essentially the same reason. If youâ''re a coal-fired electricity generator, youâ''ll pay about twice as much tax as an oil-fired generator and three times as much as a gas-fired generator because per unit electricity you produce, coal is about twice as carbon-intensive as oil and three times as intensive as natural gas.

Politicians hate carbon taxation for the obvious reason. Once I asked a top environmentalist who had played a big role in designing Californiaâ''s ambitious carbon reduction program why they had opted for carbon trading rather than taxation. â''If you can ever find me two state assembly members who like the idea of a carbon tax,â'' he said, â''maybe Iâ''ll get interested.â''

Could a carbon tax look different to politicians in the context of the tax reform program Candidate Obama proposed? If the very rich are to be taxed more and the working and middle classes less, so that the Reagan and Bush tax reforms are essentially reversed, why not include a carbon tax, with proceeds earmarked for green tech R&D, relief for low-income people most sharply affected by higher electricity bills, and jobs creation in the coal-dependent states most adversely affected by higher electricity pricesâ''precisely the mid-western battleground states, by the way, that won Obama the election.

If, say, a carbon tax were tuned to hike the cost of coal-generated electricity by 50 percent, as I have proposed in a book, the predictable effects would be roughly as follows: average electricity prices would rise 25 percent (since coal accounts for half of our power generated), prompting consumers to use energy more parsimoniously and rely on more efficient devices; wind energy would be highly competitive with coal, and nuclear energy would be quite competitive enough, so that it would require no further subsidies or guarantees; the various approaches to carbon capture and storage would have a fighting change of asserting themselves in the market over the next 15-25 years. And by 2015 or so, the United States would be in step with international efforts to curb carbon emissions.

President Obama might ask himself this: Does he want to propose yet another cap-and-trade carbon trading system that will run to hundreds of pages and be a sitting-duck target for opponents eager to portray it a tangle of red tape? Such a system will be a target too for critics pointing out, perfectly accurately, that a trading system is just a disguised, roundabout way of putting a price onâ''that is to say, taxingâ''carbon.

Perhaps President Obama would rather say that the honest thing to do is just enact a carbon tax, in a system that can easily be described in three pages, and which will be an integral part of a complete progressive tax system, in the tradition of the Roosevelts and Wilson.

Top Energy Agency Predicts High Long-term Oil Prices

The International Energy Agency, the OECD organization in Paris that has the job of tracking trends and spotting major emergent issues, will report next week that oil prices will quickly rebound to $100/barrel and higher when the world recession recedes and that theyâ''ll be $200/b and up by 2030. So reports todayâ''s Financial Times, having obtained an advance copy of the executive summary. According to the FT, though prices may stay low for a time, â''it is becoming increasingly apparent that the era of cheap oil is over.â''

From now to 2030, says the IEA, there will be transfer of $2 trillion from the oil consuming nations to OPEC (and that calculation does not appear to include non-OPEC suppliers, notably Russia). This means the consuming nations will be expending 5-7 percent of their GDP on oil, compared to 4 percent in 2007.

One caveat: the IEA warns that â''current global trends in energy supply and consumption are patently unsustainable.â'' People seem to forget when they use the word unsustainable what it means: that the trends cannot be sustained. In other words, ultimately the IEA is saying that what it is predicting to happen will not actually happen because it cannot happen.

So all the specifics in next weekâ''s report have to be taken with a big IFâ''that is to say, roughly speaking, the IEA is saying this is what would happen (eg. 7 percent of GDP spent on oil in 2030) if all the things that we cannot anticipate happening in response to higher prices did not happen although they actually will happen, because otherwise economic life would be unsustainable.

A followup to this blog will guide readers to the full IEA report, as soon as itâ''s posted next week.

Obama Energy and Environment Transition Takes Shape, the website and blogging central closely associated with Joseph Romm, is reporting that David Hayes will be in charge of all Obama transition planning on energy and the environment, and that the EPA transition planning team will be headed by Robert Sussman and Lisa Jackson. All have substantial political and professional credentials. Hayes was deputy secretary of the interior in the Clinton Administration. Sussman ran the environmental practice for a leading DC law firm and has been a fellow of Jon Podestaâ''s Center for American Progress, while Jackson most recently was head of New Jerseyâ''s environmental agency and just two weeks ago was named chief of staff to NJ Governor Jon Corzine.

Both Sussman and Jackson are now prima facie leading contenders to be named Obamaâ''s Environmental Protection Administrator. Sussmanâ''s closeness to tranisition chief Podesta would seem to give him the edge, but note that Jackson, an engineer who happens to be African American, has helped New Jersey adopt exceptionally hard-headed and far-sighted energy policies, as reported here, not once but twice.

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