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OWOE - Blog
Greenhouse Gas Emissions – A Short Summary of CO2
February 1, 2020

Guest blog by S. A. Shelley: As some people, including most notably the Prime Minister of Canada, are confused about greenhouse gas emissions, both during production of electricity and during transportation, I feel that it is time to write a quick blog about this. I will focus mostly on CO2 emissions, which are believed to be the predominant greenhouse emissions driving global warming, even though the effect of methane (CH4) emissions on warming are roughly 20 times as potent (see edf.org, greenplanet.org, and Scientific American), and some other industrially produced gases that are ubiquitous in modern life are yet exponentially more potent.

CO2 Emitted during Electricity Production

Electricity is produced in several ways, including from coal burning power plants, nuclear fueled steam power plants, to windmills and hydropower. Comparing the average amount of CO2 emitted during electricity production by each of these methods (Fig. 1), we see that, by far, coal burning power plants are the worst ways to produce electricity. 

Fig. 1. Comparing Grams of CO2 emitted per kWh of Electricity Produced

What is obvious in Fig. 1 is that burning stuff to make electricity is the most carbon intensive means of doing so. Secondly, if the world really wants to make a fast reduction in CO2 emissions, it needs to quickly switch from coal burning to gas burning. I say this because even though every technology to the right of Biomass is very low carbon technology, none of those, save perhaps nuclear and wind, are available in sufficient quantities in the short term to supplant electricity produced by coal, while gas is immediately available and of sufficient quantity to make a really big impact fast.

CO2 Emitted during Passenger Travel

Comparing amount of CO2 emitted per passenger per mile traveled yields Figure 2. 

Fig. 2. Comparing Grams of CO2 emitted per Passenger per Mile Travelled (200 Mile Trip)

It should be noted that the amount of CO2 produced varies a bit by distance travelled because of such things as airplane take-offs. During take-offs, airplanes are at max power and max CO2 output, but once cruising are sipping fuel, and, thus, CO2 emissions fall. For longer trips CO2 emissions per passenger per mile decrease, but not of sufficient amount to move airplanes further to the right in Fig. 2. For almost any travel, an airplane is the worst way to go. Worse yet is going by private jet.

So what can be done quickly to reduce CO2 output, save the earth and make money doing it? Burn less coal and burn more gas, while providing opportunities for the other clean power technologies to grow and flourish.

For transport, as Greta Thunberg has shown, fly less, and get people out of large cars into smaller, more fuel efficient vehicles. This will work in Europe and Asia with their superb rail networks and preference for more fuel efficient vehicles and nascent surge of interest in EVs. But America needs to catch up, with its limited rail network and where folks still prefer to drive a big truck or SUV for solitary commuting and the occasional bag of groceries.  It's a bit more complicated than that though, but Americans for the most part still prefer displays of conspicuous consumption rather than building financial security. All other things being equal then, if time is no worry, travelling by train and by bus is the way to go. Most importantly, don’t fly by private jet.

How Are Countries Faring with Reducing CO2 Emissions?

It was the best of governments and the worst of governments: A time of pomp and vanity, versus resolve and obstinacy. It is Canada versus the United States in terms of CO2 gas emissions. While we've just entered 2020, the most current data that I can find for both nations is up until 2018. Fig. 3 compares the per capita CO2 emissions between Canada and the United States.

Fig. 3. Comparing per Capita Yearly CO2 Emitted In Canada and the United States

A few things are surprising. Firstly, since 2005, the year of the Paris Accord to reduce GHG emissions including CO2, the United States has decreased per capita CO2 emissions by 17.6% while Canada has only been able to achieve a reduction of 7.0%. The second thing is that by 2015 the United States passed Canada in lower CO2 emissions. Surely the data must be wrong? The data is not wrong.

In the United States, the big reduction in CO2 emissions has come about mainly by replacing coal fired power plants with gas turbine power plants. Some additional reductions in CO2 have been achieved by better vehicle fuel economy and other efficiency gains in using power in the economy. Going forward, the rapidly expanding wind and solar power plants in the U.S. will start eating into the gas turbine power supply, and we can confidently expect further reductions in CO2 emissions per capita. All this in spite of an administration in Washington that is keen on supporting coal and hostile towards alternative fuels. Yet in spite of this hostility, in the United States, utilities have realized that gas and renewables are now the lowest cost and most profitable means to supply power.

Compare this then to Canada, which since 2015 has been governed by a Liberal, neo-communist government that champions environmentalism and green energy. Why then can't Canada achieve similar reductions as that greedy, capitalist state to the south? Well, therein is a big part of the answer.

Vive l'Alberta Libre!

P.S. It is very likely that CO2 emissions per capita in Canada have climbed even higher in 2019. Last December the Federal Liberal Government in Canada released, then quickly removed from public access, its annual GHG emissions report. If CO2 emissions have climbed higher, then expect the Liberal Government to increase carbon taxes to try to hammer CO2 emissions down. Instead it will be Canadians that in the long run will be hammered – the chocolate rations have been increased and the carbon emissions have decreased – until Canada’s utopia equals Ingsoc on all levels.

P.P.S. Forthcoming blogs:

  • Global Oil and Gas - Demand and Supply
  • Another set of blogs explaining why Canada is doomed in its energy and environmental goals
  • The need and means for Western Canada to become independent in order to thrive economically and environmentally


OWOE January 2020 Prediction – A US Legacy Carmaker will Disappear this Decade
January 23, 2020

It’s a new year and a new decade and time to make a bold prediction regarding developments in the energy industry and associated transportation industry. The last few years have been a wild ride for electrical vehicles (EVs) with Tesla continuously in the headlines. Will Tesla go bankrupt? Will Tesla change the way the world views automobiles? Is Tesla stock a good buy at $250/share (2019) or $550 (2020)? But other automakers have made their own headlines: Jaguar began sales of its iPace EV, Volkswagen began sales of its eTron, and Ford introduced its Mustang Mach-E. A prediction concerning EVs is warranted, but OWOE is going to go beyond EVs and make a prediction concerning the broader automobile industry: Within this next decade one of the three US legacy car makers will cease to exist.

This prediction is not an outcome of Tesla getting so big and garnering such a large share of the market that legacy US car makers - GM, Ford, and Fiat Chrysler (subsequently referred to here as "L3") - cannot compete. It is based on the recognition that the younger generations of Americans do not want cars from the legacy car makers. Let's look at some statistics first.

Much news has been made of the fact that sales of sedans from the L3 have plummeted in recent years. The headlines have stated that Americans no longer want sedans. USA Today reported in June, 2019 : "Americans are ditching passenger cars in droves...That puts pressure on the automakers to make up for the lost sales with new SUVs. Luckily for them, the nation's SUV boom is alive and well..." Detroit News reported for 2019: "It's all trucks and SUVs, as General Motors, Ford and Fiat Chrysler increasingly abandon the sedan and small-car markets for what they see as more profitable, in-demand vehicles."

But the reality is that overall sales of sedans in the US did not drop nearly as the headlines implied. Detroit News continues with "industry leaders outside the U.S. are angling to scoop up buyers who decide they don't want a new crossover or SUV in their driveways." Japanese, Korean, and German auto companies continued to sell sedans ranging from low price Kias to luxury Mercedes. And Tesla increased sales of its EV lineup by 50% from 2018 to 2019, driven by its mass-market Model 3 sedan. (See the OWOE blog on Tesla's Model 3.) Clearly, there is still a large market for sedans. Americans just aren’t buying sedans from the L3.

Why is that? Tesla sales are driven by the fact that they are the best performing cars in any segment; they are cheaper than similar size luxury sedans; they are cheaper from an overall cost of ownership than smaller, lower-end sedans; and they have tapped into a market that values the benefits to the planet of driving an EV. Plus, and this is a big plus, they have captured the imagination of younger drivers with their application of technology. Much like the iPhone crushed its legacy cell phone competitors when it was introduced, Teslas have demonstrated how technology can change the driving experience. German sedans continue to sell because of their reputation for good engineering and a certain prestige factor, and Japanese and Korean sedans continue to sell because of a combination of quality and low cost. The L3 automakers fail on all counts - they don't excite, haven't figured out how to integrate technology to enhance the driving experience, they still struggle from a low-quality reputation that they haven’t been able to shake-off from the 1970s and early 1980s, and they can't compete on cost and durability.

Now, let's look at demographics, public policies and personal choices. Young adults are driving less than ever before, prefer to live closer to work, and are delaying having families. Ride sharing is quickly becoming the preferred transport choice, particularly among young adults, for short trips, leading to greater efficiency in miles per vehicle. Many cities are improving the public transportation option by upgrading/expanding their public transportation infrastructure, encouraging development along public transportation corridors, or implementing congestion pricing for driving into city centers. Now throw in the fact that the life of a Tesla is estimated at between 300,000 and 1 million miles, or a factor of 2-7 times the average internal combustion engine (ICE) vehicle. Will Texans give up their pick-up trucks? Will big families stop needing SUVs? Not likely. But all of these trends point to reduced purchases of ICEs, which are the L3's primary, if not exclusive, product.

And how will the L3 react? Most likely, just as they always have, by focusing on the short term. They will concentrate on their big vehicles with the highest profit margin, foresake R&D because they are strapped for cash, and head blindly into oblivion. What about GM’s decision to turn Cadillac into an EV business? Maybe, but there’s hardly a single young person who would consider buying a Cadillac - that’s their parent’s or more likely grandparent’s car.  What about Ford’s plan to shift heavily to EVs? Maybe, given the response to their Mustang Mach-E, but it’s still targeting a small market compared to its F150 pick-ups.

OWOE's prediction - in the next 10 year (and possibly much sooner) one of the L3 will successfully transition to the EV market; one of the L3 will stand by their current big vehicle strategy and successfully maintain market share by cannibalizing their competitors; and one of the L3 will cease to exist. The question is which one?

Indeed it is very likely that a few other large, traditional, international auto manufacturers may also go bust before the decade ends.


Money Laundering and Renewable Energy – A Great Opportunity
January 2, 2020

Guest blog by S. A. Shelley: If the world wants to move quickly to a lot of renewable energy, then maybe money laundering is the key to getting it done.

It's been well known for some time that money laundering is a significant driver in real estate  ( see theweek.com and boingboing.net)   Such shenanigans with real estate began way back in the 1980s in Florida, with cocaine cowboys literally knocking on home-owners' doors and offering cash for homes at above market value.  From there, it moved to California, Hong Kong and Dubai, Vancouver, and of course London...until a large chunk of high-end real estate was infected somewhat by illicit money. There are of course other means to launder money. Cash flow businesses such as restaurants or car washes have also been havens, i.e., anything that can provide a large, difficult to trace production output and revenues versus costs and volumes of input: Was that 1lb of pasta used to make 5 dishes or 6?

Unfortunately financial regulators and the law are getting better at stopping traditional means of money laundering. For a while it looked like crypto-currency, being beyond the control of nation-states, was going to save money laundering, but crypto-currencies have their drawbacks too, including fluctuating values and, of course, limited means to pass through the large volumes of money, around $10 trillion per year, that sustain the illicit economies in the world. Furthermore, as some governments begin moving towards digital currencies themselves, and removing large denomination bills from circulation, money laundering will have additional challenges in the near future. After real estates, there are diamonds, gold and high value art or collectibles, but those, too, are coming under increasing scrutiny, and there are only so many Picassos or Rembrandts to go around.

So where can ill-gotten gains be laundered? What industry is there that offers huge production volumes with some variant transparency?  Renewable energy. That's right, I’m proposing that renewable energy is a great way for elites of dubious background to transform money, makes even more money and at the same time help the earth.

Consider a 1 GW solar plant. Did it produce or 1.0 GW that day or was it 1.05 GW?  Or an EV battery: did it discharge 10 MWH or 11? Those variable margins are a great place for money launderers to sneak in and clean up while helping the earth clean up its emissions mess.   It's not quite that simple, but it's appealing and probably best to get into the business at the outset, when regulations and laws are still poorly defined. Get in very early in the development phase and there are probably government incentives that are also available to guarantee a certain cash flow, payback or tax credit for a time.  The argument for laundering through real estate is that people need a roof over their heads and will pay dearly to have it. The same argument can be applied to energy in that people need to stay warm and need to be able to move about to their job and such, and thus will always pay for some form of energy.

Investing in renewables at the outset also avoids the problem of investing in legacy coal or oil industries, namely any forthcoming liabilities for past externalities.

Years and years ago, I had an interesting chat with a business professor about investing. He candidly suggested to follow the Mob. "The Mob hires the best and brightest from Harvard, Stanford and the like. Invest in what the Mob invests." It remains to be seen whether Harvard and Stanford whizzes are encouraging investments in renewables. I'm all for this, because at this time, if it takes a deal with the devil to save the earth, then let's worry about the details later.

Vive l'Alberta Libre!


The fundamental (and somewhat existential) source of climate change – and how we might overcome it
November 11, 2019

With the news that this past July was the hottest month on earth since record keeping 140 years ago, satellite images of the Amazon and State of California burning, the most powerful hurricane ever measured in the Atlantic Ocean east of Florida, carbon dioxide emissions to the atmosphere rising again to near record levels after a brief leveling, and Swedish teenager Greta Thunberg's stirring call to action while staring down both Donald Trump and Vladimir Putin, climate change has been a hot topic in 2019. While the scientific community remains nearly 100% aligned that global warming is driven by the burning of fossil fuels, a relatively small, yet powerful, group of naysayers fights the science. Who are these very powerful people, and why do they fight? One common characteristic - they are mostly baby boomers = the generation of Americans with an insatiable appetite for consumption and a strong resistance to change.

Fig, 1 - US Household Wealth Distribution

First a disclosure - I am a boomer. Baby boomers are defined as the generation of individuals born just after the end of World War II, from 1946 through 1964. That would put us between 55 and 73 years old this year. As of 2016, this generation has over 74 million members and makes up 22.9% of the population of the United States. (Note that President Trump at 73 years old falls into this generation.). Further, I am a conservative white male, and while I don't feel excessively wealthy, I am certainly better off than most. I own a nice home, my wife and I go on far too many vacations, we own two new cars, and we spend an inordinate amount of money on cafe lattes at Starbucks. I am a registered Republican, and, until recently, believed strongly that the fiscal conservatism and pro-market focus of the Republican Party outweighed their anachronistic social beliefs. Worse yet, I owe my standard of living to fossil fuels, having spent over 40 years working in oil and gas and power generation. I would likely not be as well off as I am today without this country's, and this world's, need for fossil fuel.

I do not feel guilty for where I am or how I got here. Fossil fuels have been critical for economic growth and improving the life of the average American. However, I am ready to admit that the world is changing. The damage to the planet from the burning of fossil fuels is irrefutable. Fortunately, renewable sources of energy are now viable and cost effective alternatives with new onshore wind and solar developments less expensive than running existing coal plants. How quickly America adopts these alternatives will be critical to how the world looks in the future. But change inevitably generates resistance, and the larger the change, the larger the resistance. Let's take a look at the baby boomer generation, the group that has, or believes it has, the most to lose from this change.

Baby Boomers possess about 54% of all US household wealth and 57% of affluent household wealth (see Fig. 1), account for 42% of consumer spending, buy more cars than any other age demographic, account for 80% of all spending on luxury travel, and earn 47% of all income in the United States (see MarketingCharts,com and WiseBread.com). Basically, baby boomers control about two times the wealth in this country as compared to their percentage of the population. On the flip side, 45% of baby boomers have no retirement savings, and of the 55% who have some retirement savings 28% have less than $100,000. The bottom line - baby boomers have made and continue to make a lot of money, but spend it. And what do they like? Big cars, big houses, expensive vacations, cruises, beef, single-use packaging, etc., all of which generate a large carbon footprint. In a very interesting analogy, physicist Geoffery West points out that the average lifestyle in America (counting food, transportation, computers, air conditioning, etc) requires more watts to support than what is required by a blue whale. If baby boomers require about twice the average, we're talking about 150 million blue whale equivalents in the US.

Demographically, baby boomers are 72% white, compared with 50% of all births last year. Politically, they are quite conservative with the difference in percentage between those identifying themselves as conservative vs liberal at approximately 23% (see Fig. 2). And Republicans are much more likely to be the naysayers mentioned above than Democrats.

Fig. 2 - Trend in Conservatives Minus Liberals

Although not a one-to-one relationship, there is certainly a correlation between "old white Republicans" who spend lots of money and deny climate change and baby boomers.

Mea culpa. What have I done to impact climate change? Not as much as I could, but I'm moving in the right direction. In addition to trying to inform the public with my OWOE website and blogs, I am professionally involved in some cutting edge technology developments to reduce the cost of renewable energy, I have traded in one gas powered vehicle for a Tesla (please see my blog), and I am contemplating installing rooftop solar panels on my house.

Now the good news. Baby boomers have a built-in sunset provision. The Paris Agreement of 2015 attempts to control greenhouse gas emissions to achieve a balance by 2050 and limit the average temperature increase to 1.5 deg Celsius. Of course, by 2050 the baby boomers will lie between 86 and 104 years old. That means that the vast majority of us will be either dead or in a rest home, both of which result in a very low carbon footprint (and one of which will eventually result in some carbon returned to the earth). In fact, if you do some simple math and assume that each baby boomer will be replaced by one average next-gen consumer when he/she dies, even with no other reductions in average carbon dioxide emissions due to technology improvements or behavior, and ignore population increase, US carbon dioxide emissions will drop approximately 20% and be at about the 1970s level by 2050 (see Fig. 3). Which means that one strategy that could be very effective is simply to wait us out. OK, boomer. Couple this with a continuation of the rapid improvement in renewable energy technology and the tendency of younger generations to adopt new technologies more quickly and, maybe, humanity has a chance.

Fig.3 - Trend in US CO2 Energy Related Emissions and extrapolation for passing of baby boomers

Why the Canadian Government Fails in Energy Transition and Carbon Reduction
October 14, 2019

Guest Blog by S. A. Shelley: In the matter of the transition to renewable energy, there are some nations and governments which do it quite well, e.g., Denmark, some that don't appear to care, e.g. the US, and then there's Canada. Canada claims to be very concerned about the environment and about the need to dramatically cut carbon emissions and transition quickly to a fossil-fuel-free economy. However, it has failed on a number of fronts and will most likely continue to fail.

The Need to Understand Total Cost

Whatever purchase at the personnel, industry or government level that you have, it is very important to have a good understanding of the TOTAL COST in order to make effective and well-reasoned economic decisions. Most people have an inherent ability to assess TOTAL COST and industry has analysts to help determine TOTAL COST; however, governments rely too much upon ideologues to arrive too often at incorrect TOTAL COST.

Strictly speaking, TOTAL COST = the sum of all costs associated with a purchase (or a project). Typically, this is broken into two components: TOTAL COST = Total Capital Costs (CAPEX) + Total Operating Costs (OPEX) over the assumed life of the product.

Let’s consider an immediate example of a consumer buying a car:

CAPEX = purchase price + dealer prep fees + financing costs - salvage / resale value

OPEX = fuel costs + insurance and registration + maintenance and parts

Consumers often buy a personal vehicle (car or truck) based only on the sticker price and consequently vehicle manufacturers have tuned their sales pitches to this almost exclusively. But if one does a TOTAL COST analysis of a car, EVs are now tending to be the lowest TOTAL COST personal vehicle choice (Fig. 1).

Fig. 1 (Source: CleanTechnica)

Upfront CAPEX for an ICE is still much lower than for a similar sized EV, but when you add in the OPEX to arrive at TOTAL COST, EVs are starting to pull ahead. Therefore, at the personal level, EVs are quickly becoming the best economic choice for those that can overcome the initial high CAPEX, and at the societal level, EVs help reduce carbon emissions and are the right choice for that.

Is it a Good Idea for Governments to Subsidize EV Purchases?

That depends upon the objectives of the government and the consensus of the populace. If the aim is to wean a nation state off fossil fuel reliance, which history has shown can be an Achilles heel to national economies, then yes, do as Denmark and China are doing and ban ICEs while supporting EVs.

If the aim is to eliminate the carbon emissions in order to protect the environment, then do as Norway and ban new ICE sales by 2025.

But if your aim is to reward wealthy and upper middle class voters with subsidies for purchasing EVs, then do as the Canadian government is doing (see CBC news and Electrek). The Canadian Federal EV rebate will not help most Canadians because the average household income in Canada is about $64,000 (CDN) per Statistics Canada 2017 data, while the cheapest marginally useful EV starts at $32,000 (CDN) plus sales taxes. Even if average, working Canadians wanted to buy EVs, the initial purchase cost of EVs is still higher than most Canadians can afford.

Canadian consumers across a broad economic range have correctly calculated that less expensive ICEs, new or used, will be the best economic solution for them for some time. This phenomenon of the citizen consumer being economically smarter than big government is not unique to Canada.

What Must Governments Do to Get More EVs On the Roads?

  1. They must clearly prove the case for EVs: Is it to save the environment or to save the country from the evil oil empires?
  2. They must spend more on subsidies that will benefit more citizens across the whole economic spectrum.
  3. They must spend more on supporting all of the technology and infrastructure that will make EVs cheap, convenient and useful to everyone.

Simple, right?

"Canadian Vehicles Are Big, Heavy and Guzzle a Lot of Gasoline"

Canadians rank number one in the world for having the largest, heaviest, least fuel efficient and highest carbon emitting vehicles.

For the befuddled government in Canada, a better approach to reducing carbon emissions and fossil fuel consumption by personnel vehicles could be to make small nudges and then let market forces takeover. For example, it would be fine to allow ICEs to stay on the roads, as long as the net mileage of ICEs continued to improve each year.  Looking at Figure 2, between 2005 and 2010 average vehicle mileage increased by about 16%. This means that for the same driving habits, 16% less fuel was consumed and 16% less carbon was emitted, on average just five years down the road. 

Fig. 2 (Source: PewTrusts)

As late model used cars get removed from the car pool and are replaced with newer more efficient vehicles, then without changing tech or giving away EVs, it is likely that over time carbon emissions and fossil fuel consumption will decrease just by natural replacement of the personal fleet. Eventually, a new car that gets 30 mpg, will filter down to the used car market and replace an older generation model that only got 20 mpg. That’s an evolutionary way of cutting greenhouse gas emissions by 50% on a personnel vehicle. Instead of promising $2000 camping trips for poor families, it may be more helpful to provide rebates for poor families to replace very old low mileage vehicles with newer used ones that get higher mileage. Eventually such rebates could be expanded to cover PHEVs or BEVS as those filter down through the used car marketplace.

Or if the Canadian government really wants to help the environment by reducing greenhouse gas emissions, maybe it should focus first on those gases which trigger the most warming. "The majority of warming results from gases with a much lower media profile than the paparazzi-trailed starlet of global warming, CO2."

Support Transit Instead of EVs

To benefit more people quickly, Instead of spending $billions on EV subsidies that benefit the wealthiest citizens, those same monies may be more effectively spent on upgrading and improving transit systems that benefit a broader subset of citizens.

Canadian Federal Government Carbon Pricing is a Tax, Simple and Ugly

There are two general purposes for taxes. The first is to collect revenue for the government to provide critical services such as courts and defense. The second is to apply taxes to change consumption behavior, such as with sin taxes on alcohol and tobacco. However, with the Carbon pricing policies in Canada, there is no realistic way that Canadians can alter their energy consumption behavior in order to escape the carbon price: Thus it is a tax of the most egregious kind that siphons money from Canadians into government coffers with low to zero traceability. Natural gas is still the dominant energy source for heating homes and businesses, and there is nothing else available, now or in the short term, on a scale large enough for Canadians to use: It’s either heat the homes or freeze or migrate to Florida or Arizona for winter. Watch out America, you may need to build a wall on the northern border, too.

Furthermore, almost every incentive that the Federal Government has provided for green energy and reduction of carbon emission has been targeted at and benefited large businesses, not lower or middle class Canadians. While the PM uses his perk of zipping around frivolously on a private jet (see National Post and CTV News), it’s time for the Federal Government in Canada to honestly admit that the carbon price in Canada hits a captive market with no substantive, alternative choice available.

Carbon Emissions and Fossil Fuel Consumption Inelasticity in Canada

There is no reasonable and realistic way for the Federal Canadian government to achieve its much touted and promised carbon emission and fossil fuel consumption reduction targets. According to data from the World Bank since 1980 energy consumption in Canada has been very consistent at around 52 barrels of oil equivalent per year per Canadian. During the same period, the yearly carbon emissions per Canadian have slowly dropped from about 20 to 15 tonnes, which is still over twice the yearly per capita carbon emissions of a European at 6.8 tonnes. During this same period, the use of renewable energy in Canada has remained fairly flat so most of the gains in carbon reductions have come from elsewhere, either fuel efficiency improvements or the shuttering of coal power plants.

While the Federal government enacts legislation and policies to reduce Canada's carbon footprint and fossil fuel consumption, historical data suggests that such legislation will be ineffective (Fig. 3) and that it is extremely unlikely for the Federal Government in Canada to meet its international commitments to CO2 reduction. More needs to be done for Canada to succeed, but it is also extremely unlikely that the current administration has the technical, fiscal or social where-with-all to do what is necessary without resorting to brute force diktats.

Fig. 3

The problem is more difficult to resolve when one considers that current Federal objectives in some areas will nullify any possible gains in other areas. For example, without being able to reduce per capita energy consumption or carbon emissions, adding 350,000 immigrants each year to Canada will by default drive up the total energy consumption and carbon emissions volumes: That will mean an additional 2.6 million tonnes of oil equivalent energy consumed and 5.2 million additional tonnes of carbon emissions each year.  Energy will be needed to heat the residences of the newcomers and commute them to their jobs and there is nothing on the horizon to substitute for oil and gas in Canada. Therefore, unless the Federal Government in Canada gives each new immigrant an EV and a solar powered home, there is absolutely no way that the Federal Liberal government can achieve their vaunted carbon reduction targets and the shutdown of Canada’s oil industry.

In Canada, it takes over a decade for new energy projects, renewable or not, to come on stream. In that same decade, 3,500,000 new Canadians will need a lot of energy. Who in the Federal Government in Canada has a realistic plan for that? By realistic, I mean affordable, corruption free, workable and implementable without significant social or economic disruption.

It continues to get worse, because during this year’s Federal Election campaign, the Canadian Prime Minister has decided that he needs two jets while every other prior prime minister or party leader to date has made do with only one jet. To paraphrase Ms. Thunberg, “Shame on You Prime Minister Trudeau”.  For the Earth's sake, if the Federal Liberals are returned to a minority Government in Canada, I kindly ask the Green or NDP coalition partners to reign in the Prime Minister's privileged jet setting and plastic bottle consumption habits.

Canada Can Do Better

Canada has a lot of renewable energy potential and a lot of ability to reuse resources. But maybe the Federal Government in Canada needs to be the first thing recycled before anything real and sustainable can be achieved. I absolutely agree that Canada must change its energy habits, but it needs better moral and technical leadership and a unifying vision instead of a divisive and dismissive cadre of elitist and privileged politicians (see Pierre Poilievre and CBC News).

I’m not against EVs. I commute in Houston on a bicycle and EVs can’t touch me for energy efficiency (15 miles per gallon of beer vs. about 130 mpge for an EV) or lowest lifetime greenhouse gas emissions. In fact, I know that renewable technology has now achieved parity with or surpassed traditional fossil fuel technologies in a lot of areas: My next car will most likely be an EV and my next house will have integrated solar and battery energy. 

But I am very much in favor of evolutionary progress and of governments implementing environmental and energy policies based upon reason, science and economics instead of listening to biased and scandal plagued consultants from New York. In the long run, energy and financial independence requires astute and competent governments. Well done Norway, Denmark, Germany and China. Keep trying Canada.

Vive l’Alberta Libre!


Don’t get too worked up over the President’s actions against the environment
September 30, 2019

Every week seems to bring another attack by the Trump Administration against laws and regulations that have been instituted by prior administrations to protect the environment and fight climate change. The most recent is the campaign to deny California the right to set stricter automobile emissions standards than federal limits. It has caused yet another uproar among environmentalists and liberals and glee among climate change deniers and conservatives and will undoubtedly lead to many years of legal battles. But what is reality? In fact, this move, and all the others, are just meaningless actions that do little more than pander to the Administration's fossil fuel campaign contributors and excite the hardcore Republican base ahead of the upcoming elections. The reality is that technology and market forces are driving the world inexorably and at an increasing pace toward a renewable energy future, despite the last-ditch efforts of the President and his supporters. Let's look at some of the higher profile actions.

Automobiles

Denying California's waiver on automobile emissions goes hand-in-hand with the prior announcement that the administration would rollback automobile mileage requirements set by the Obama Administration. On the surface, this appears to be an extremely serious setback for consumers, the environment and climate. Depending upon the outcome of the various legal challenges, there could certainly be a short term impact. But the transition to Electric Vehicles (EVs) is underway and picking up steam. Looking at California trends as a precursor to what is likely to happen nationwide, the state is experiencing falling total car sales for the third straight year (Fig. 1).

Fig. 1 - California New Vehicle Registrations (Source: California Auto Outlook/IHS Markit)

In contrast, EV sales have been increasing rapidly, and by mid-2019 EVs, including hybrid non-plug-in vehicles, represented 13% of new car sales (Fig. 2).

Fig. 2: California EV Market Share (Source: California Auto Outlook/IHS Markit)

The big question is how quickly that 13% will grow and continue to displace Internal Combustion Engine (ICE) vehicles.

Historically, EVs have been quite expensive compared to their ICE counterparts; however, as the cost of batteries has dropped dramatically over the last few years, so has the cost to build an EV. Nevertheless, the purchase price of an EV such as the Tesla Model 3 is still higher than a similarly sized ICE vehicle, and purchase cost is the primary driver for US car buyers. But the real economic comparison should be on what is called the total cost of ownership (TCO), which includes purchase price, fuel, maintenance and insurance costs over the life of the vehicle, and resale value. There have been a number of TCO comparisons between the Tesla Model 3 and competing ICE vehicles over the past few years. The general consensus has been that the Model 3 TCO is less than other premium sedans from Audi, BMW, etc, but slightly more than mass market sedans such as the Toyota Camry. However, LoupVentures just updated its comparison with recent data on insurance and resale value, plus the latest purchase cost.  In particular, resale data shows that the Model 3 holds its value much better than its competitors. As a result, the TCO for a Model 3 is now less than the best selling sedan in the US, the Toyota Camry (Fig. 3).

Fig. 3: Total Cost of Ownership - EV vs. ICE (Source: LoupVentures)

So the answer to "how quickly" depends on when consumers start to think beyond initial purchase price to the total costs of ownership (TCO). Once consumers realize that they will get a superior product at a lower total cost over time, the transition will begin to accelerate dramatically. Throw in the continued drop in price for batteries and the expanding options as other auto makers begin to offer new EV models, and a date around 2025 for California EV sales to reach parity with ICEs is not unreasonable. In such a scenario, auto mileage standards are pretty much immaterial. In fact, reducing standards makes the TCO of ICE vehicles less competitive and will likely drive the rest of the country to more quickly follow California's lead.

Light Bulbs

How about the uproar over light bulbs? Several weeks ago the administration issued a decree to roll back the Bush and Obama era attempts to improve lighting efficiency by phasing out incandescent light bulbs. But, here, we are well beyond the early adoption stage of new technology, i.e., light--emitting diode (LED) bulbs. The energy required to power an LED bulb for the same illumination is about 90% less than that of an incandescent bulb. The life of an LED bulb is about 20 times that of an incandescent, and the initial cost of LED bulbs has dropped dramatically and is approaching the cost of incandescent bulbs (you can now buy a 4-pack of off-brand 60W LED bulbs at Home Depot for about $6 or $1.50 apiece). Figure 4 compares today’s common bulb types and illustrates the dramatic savings possible for LED over incandescent bulbs.

Fig. 4: Total Cost of Ownership – Lightbulbs (Source: greenisbetterinc.com)

In fact, the cost savings in electricity will pay for the initial cost of the bulb in less than one year of use. Manufacturers could give their incandescent bulbs away, and it wouldn't stop the transition. For more information, see the The Little Bulb That Is Killing Coal for more insight into the transition to LED lighting.

Coal Power

President Trump made saving the coal industry a cornerstone of his election campaign and his administration. How has that worked out so far? In June 2019 the EPA issued the Affordable Clean Energy (ACE) rule, an amendment to the Clean Power Plan, with intent to extend the life of the US fleet of aging coal power plants. Shortly thereafter, in July 2019, Blackhawk Mining filed for Chapter 11 bankruptcy, making it the eighth major U.S. coal producer to file bankruptcy since November 2017 and the fifth so far in 2019.

Since 2010, 289 coal-fired power plants have closed, representing over 50% of the plants and 40% percent of US coal generating capacity, with 50 of those closures coming after November 2016. And that trend isn't slowing with an additional 51 pending closures having been announced by utility companies.  As a result, and for the first time in history, in April 2019 US electrical power generation from renewable sources exceeded generation from coal (Fig. 5).

Fig. 5: US Electrical Power Generation – Coal vs Renewables

Although this was a temporary occurrence due to the cyclical nature of both forms of generation, the long term trend illustrated in Fig. 4 points to a time in the not-too-distant future when yearly coal generation will forever be less than renewables. Again, technology and market forces are driving the change as the cost of new solar and wind power generation facilities continues to drop rapidly. A March 2019 report by Energy Innovation concluded that "America has officially entered the ‘coal cost crossover’…Today, local wind and solar could replace approximately 74 percent of the U.S. coal fleet at an immediate savings to customers. By 2025, this number grows to 86 percent of the coal fleet" The result: no new coal plants will be built in the US, and the existing plants will continue to be shut down.

Oil Drilling in the Arctic

Another focus of the Administration has been to open up the Arctic National Wildlife Reserve (ANWR) in Alaska to drilling and eventual production of oil (Fig. 6).

Fig. 6: ANWR Drilling Location (Source: USGS)

But again, what is the true risk of extensive development of ANWR?  There have been several recent actions in Congress to try to block the drilling, there is the likelihood of lawsuits in the near future, and there is the chance that significant oil reserves don’t even exist in the region. But the greatest risk, again, is the impact of technology. With the world inexorably moving to replace fossil fuel based energy with renewables, the oil industry is facing a point of peak oil demand in the next 5-10 years. In the meantime, it's all about low-cost, quick turnaround production. In the US, that means shale oil which has boomed due to technology advancements in horizontal drilling and hydraulic fracturing (fracking). Why would oil companies invest many billions of dollars exploring for and producing oil in ANWR in hopes of (maybe) generating profits in 10 years, when they can invest a fraction of that and start making money almost immediately? ANWR development isn’t going to happen, but it makes good headlines.

The US may go kicking and screaming into this renewable energy future, but go it will.


Gung-ho for Geo
September 22, 2019

Guest blog by SA Shelley: No doubt about it, the world runs on energy (and money). Nearly 80% of all the world’s energy is still provided by coal, oil and gas though this fossil fuel proportion of the energy mix is now shrinking and in just under 10 years, the world's energy mix will look markedly different. I hope that in addition to coal, oil and gas the OWOE reader is familiar with some of the other large energy sources such as nuclear, wind, solar, hydro and wave. Here at OWOE we try to bring useful and relevant knowledge and ideas about energy to the reader, and one big potential and virtually zero carbon energy source that has been overlooked by a lot of people including the OWOE bloggers is geothermal energy. Well no more. After a bit of research this OWOE blogger has gone gung-ho for geo for good reason.

In short, geothermal energy basically arrives in two flavors, geothermal heat pump (GHP) and supercritical reservoir energy (CRE). GHP uses the earth as a heat source or sink for heating and cooling (think of heat pumps for residential use). CRE uses high temperature water or steam from a hot reservoir to drive generators to produce electricity. The key benefits of geothermal energy are:

  1. It is renewable— the rate of energy extraction can be balanced with a reservoir's natural heat recharge rate
  2. It can provide baseload power 24 hours per day / 7 days per week, regardless of weather conditions
  3. It is domestically and locally available almost everywhere
  4. It has a very small footprint—CRE power plants are compact; using less land per GWh (404 m2) than coal (3642 m2), on shore wind (1335 m2) or solar PV with center station (3237 m2)
  5. It has the very low total life cycle CO2 emissions: four times less than solar PV and six to twenty times lower than natural gas.
  6. It consumes less water on average over the lifetime energy output than the most conventional thermal (coal and gas) generation technologies

In addition, developing geothermal energy can make use of a lot of oil and gas technology and provide jobs for oil and gas workers who might soon enough find themselves in the next oil and gas downturn.

The Case for the United States In terms of GHP, currently about 2 million homes in the United States use it for heating and cooling. However, the DoE has calculated that by using existing technology and business practices there is enough thermal geothermal energy in the continental United States to heat an additional 26 million homes (Fig. 1).

Fig. 1: Percentage of U.S. homes using GHP for heating and cooling

In terms of CRE current and potential electricity generation, the potential to add 23 times the current CRE power to the U.S. grid is possible using current technology and business practices (Fig. 2).

Fig. 2: Electrical power production using CRE

This CRE is clean, baseload, 24 hour energy. Turn it on and it provides power, rain or shine, wind or none. 

The Case for California Thinking about California, there is about 3.2 GW of installed CRE and 16.7 GW potential CRE. It gets really interesting if we compare the potential geothermal power in California (16.7 GW) to the potential wind energy offshore California (58.7 GW ) Let's compare the proposed Morro Bay wind farm rated at 765 MW to an equivalent onshore CRE plant that provides baseload power. Since 765 MW is the rated power of the wind farm that means that the average power output per day will be less. Giving the Morro Bay wind farmers the benefit of technology, let's say that they achieve a capacity factor of 50% offshore, meaning that an equivalent, baseload CRE plant only needs to be rated at 425 MW at 90% efficiency to produce the same amount of power each day. In terms of land or ocean space area required (Fig. 3) the differences are significant.

Fig. 3: Surface area required for equivalent electricity production

The offshore wind farm CAPEX is four times more expensive than an onshore CRE that produces the equivalent amount of power (Fig. 4). Adding operating and maintenance costs, the large offshore wind farm economics get worse.

Fig. 4: CAPEX required for equivalent electricity production

In terms of secondary enviro-economic impacts, such as on fishing activities offshore or potential interference with whale migration, going offshore with large, expansive wind farms in California will be a losing proposition compared to a CRE plant on shore. Geothermal plants with their small local footprints are also designed to minimize any effect upon the local ecosystem.

As presented before on OWOE, it really should be obvious that California does not need large, expensive floating offshore wind farms, not yet, and not for another 10 or 20 years. However, California will soon need a few small offshore wind farms with low numbers of units that feed both into the energy grid and into secondary renewable energy and resource systems.

The Global Case for Geo Returning to geothermal energy for power production, the global potential is also huge (Fig. 5).

Fig. 5: Global electrical power production using CRE

In some places, most famously Iceland, there is an abundance of geothermal energy literally bubbling to the surface. Fully 66% of all of Iceland's primary energy is supplied by geothermal with heating and electricity production being the two largest consumers of this geothermal energy.  Kenya generates about 47% of its electricity using geothermal power plants. In 2018, Turkey added about 219 MW of geothermal power to its grid and has plans for much more in the future. Almost every country has some good potential for geothermal energy and many have started to develop that potential (Fig. 6; see thinkgeo.com).

Fig. 6: Top 10 Countries with installed geothermal power in 2018 (source: www.thinkgeo.com)

A GW of power may not seem like a lot in the United States but in places like the Philippines and Indonesia it is a lot and helps towards sustainable economic progress.

Then of course there is Canada, where the socialist governments are completely blind to geothermal energy and all of its associated very low carbon, renewable potential. They fight too much over historical technologies and cannot see the future among the steam.

Blatant Blogger Recommendation The world needs to be a little more gung-ho for geo.


The little bulb that is killing coal
September 5, 2019

Guest blog by SA Shelley: The amount of energy consumed to light our modern civilization would surprise most people. In the not too distant past, residential and commercial lighting consumed about 20% of all electricity produced. Basically, every fifth coal, nuclear or gas turbine power plant built was used to just to light cities, factories and homes. However, since the advent of the LED, there has been a remarkable drop in the amount of electrical power required to light our modern world. Depending upon where you live and work, recent data suggests that residential and commercial lighting now consumes only between 7% to 12.5% of all the electricity produced. That's a drop in energy consumption for lighting by almost 1% per year over the last 10 years. The good news is that the energy for lighting continues to decline and will only get better as more LED lighting replaces inefficient technologies (see Fig. 1 and Fig. 2).

Fig. 1 Lighting Efficiency
Fig. 2 (Source IEA, https://www.iea.org/tcep/buildings/lighting/ )

The cost for LED lighting has also been falling at an incredible rate (see Fig. 3).

Fig. 3 (Source https://thinkprogress.org/5-charts-that-illustrate-the-remarkable-led-lighting-revolution-83ecb6c1f472/)

Yet, there is still room for additional drops in energy consumption using LEDs. In the typical U.S. residence, about 10% of total energy costs still go to producing light. For sure, the bulk of residences in the U.S. still rely upon many of those outdated lighting technologies, though folks are adapting, as currently half of all lighting sales in the U.S. are LEDs. Doing a bit of math for the U.S. we can see how much power could still be saved, all other thing equal, if we were to hit 90% LED usage for lighting.

Using households as a proxy for residences, there are approximately 127 million households in the United States. Each household uses an average of about 28.5 kWh of electricity each day. Supposing that by LED sales, at 50%, that we’re already at 50% utilization for LED residential lighting. So if we aim for 90% target, then a household should be able to save another 4% of its total electrical power consumption, or about 1.1 kWh each day. Now, multiplying this number by the number of households in the U.S. yields a total electrical energy savings of about 140,000 MWh each day. The total energy production by all coal fired plants is 3,140,000 MWh per day. Ergo, just by switching to LED lighting in residences it is very likely that about 5% or about 17 of the remaining coal power plants in the U.S. will no longer be needed.  

Bow to the LED, the little lightbulb has become a killer of king coal.


Who is hiding all the oil?
August 13, 2019

Guest blog by SA Shelley: I try to avoid writing about oil too often for three reasons: 1) the oil markets are well observed by more than enough highly paid analysts, 2) the changes in energy technology and distribution are more interesting (and still largely misunderstood by highly paid analysts) and 3) I try to build anticipation for my oil industry supply and demand blog in January of each year. But because of some recent peculiarities that have arisen in the oil markets, a short blog about oil now seems warranted.

Fig. 1 - Proportion of world energy supply provided by fossil fuels (World Bank)

For the past 30 years fossil fuels have provided about 80% of global energy needs (see Fig. 1). Oil and gas constitute about half of that supply, so about 40% of all global energy needs are still provided by oil and gas. Even though there are massive investments in renewable energy, most of these renewable investments are displacing coal while oil and gas are still largely unaffected. One of the big reasons for this is that the oil and gas industry is so large and well established that massive amounts energy can be purchased on the spot markets to provide very large, nearly instantaneous energy supplies. Renewables still don’t have that massive market capacity, but it's coming, especially in light of the lower cost investment and higher returns available in renewables compared to fossil fuels.

Historically, the oil market has worked in a very basic way:

  1. When oil supply meets demand, prices have been relatively stable
  2. When there has been less oil supply than demand, prices tended to rise
  3. When there has been more oil supply than demand, prices tended to fall.

Sure there were agreements and cartels (pre-OPEC, OPEC and probably post-OPEC) that have been successful to some degree to control prices, but in the long run the oil markets have behaved market-like. But what's happening now in the world of oil as evidenced by its recent price trajectory (see Fig. 2)?

Fig.2 - Brent crude price for the last 30 days

In March of this year, the IEA released their Oil Forecast during the CERA conference in Houston. The IEA argued then that the bulk of oil supply growth will come from the U.S., followed by a group of five other nations and that supply loss will be mainly from Iran and Venezuela (see Fig. 3).

Fig. 3 - IEA supply growth and loss forecast

In that report, the IEA forecast oil demand growth of 1.2 million bbls / day for 2019, essentially stating that demand is stable and growing modestly.

However, supply has not remained stable. Recent data suggests that supply losses in Iran and Venezuela are much greater than originally thought. Supply loss from Iran onto world markets is actually twice that indicated by the IEA at close to 2 million bbls / day lost instead of 1 million bbls / day.  For Venezuela, it is likely that since March oil supply has fallen by another 1/2 million bbls / day. Between just these two states, since March, it is probable that another 1-1/2 million bbls / day of oil supply has disappeared from the markets. 

So why are oil prices falling again when demand is supposed to be stable, but supply is decreasing (!!!)? Some possible answers:

  1. Oil supply growth is faster than forecast
  2. Oil demand growth is slower than forecast
  3. Both 1) and 2)
  4. Neither 1) nor 2)
  5. Somebody is hiding oil, by under reporting production and/or purchases and by using tankers of dubious flags, or under-scrutinized pipelines

I’m guessing 5). Other overlooked, misunderstood and scary data and analysis from the IEA report will be discussed in the January oil blog.


How good is the OWOE blogging staff?
July 15, 2019

SA Shelley, WH Luyties: OWOE is a small site, with just a few dedicated and experienced staff who follow energy technologies, economics and policies. Occasionally, OWOE bloggers dare to forecast energy developments that tend to be contrarian, and, much to everyone's surprise, they have been very good at forecasting trends correctly and ahead of much larger analytical organizations. Are we that good at more quickly analyzing publicly available information along with some insight and soft analysis? Or do we have access to the dark arts such as whiskey and voodoo?

Fig. 1 - whiskey and voodoo

From the early days of OWOE, and especially over the last six months, the prescience and value of OWOE blogs has been proven by the volume of similar analysis and conclusions that have followed after OWOE blogs have been posted. Some examples:

Oil price collapse (due to building supply and slowing demand)

EVs are Evil (through their ability to destroy industries and the jobs that go along with them)

EBuses will have a greater effect on oil demand than EVs

Canada will lose $trillions in oil revenue

Large oil companies to focus on short term production investments

Switch from ICEs to other forms of transport

  • The Humble OWOE Blogger (Libertarian) - Bicycle Commuter Since 2012 (Personally motivated, self-funded, eco-friendly commuting…)
Fig. 2 - OWOE blogger
  • The Honourable Marc Garneau (Liberal) Federal Minister of Transport (Canada), Twitter, April 2019 (Politically motivated, government funded tweet)
Fig. 3 - Federal Minister of Transport

So, how well have we done at OWOE? Very well, indeed!

And how do we consistently do so well?  There are several reasons:

  1. We use publicly available information, including foreign media and analyses, occasionally supplemented with insight gleaned from conversations with industry professionals – but like good journalists, we don’t reveal our sources.
  2. We do not adjust, select or screen data to match our expectations, and we look at trends outside of a given industry to find connections ignored or overlooked by other analysts.
  3. We interpret data through the eyes of experience and expertise without preconceived notions or hidden agendas.
  4. We are contrarians by nature, and we do not believe that the future always looks like the past.
  5. We do not automatically believe government officials as governments by nature are notorious for hiding bad news and over-hyping the smallest bit of positive news.

If we get stuck or our analysis proves inconclusive, then we may call upon the dark arts for assistance. It is surprising how good a shot of whiskey and a chat with a voodoo doll can help; however, it can be dangerous to rely upon such mystic arts lest too much is foreseen.

In the end, it's all about keeping OWOE readers informed and providing different perspectives.  Please don't hesitate to request from the OWOE bloggers any particular energy related analysis, discussion or forecast for which you may have a need. OWOE bloggers have yet to charge for anything, not even lunch.