Bill Luyties, OWOE Founder and Technical Editor: Last year OWOE published a blog titled "Don’t Blame the Suppliers. It was intended to help focus the narrative related to climate change from attacks on the supply side of the contributors to climate change, i.e., the big oil companies, to the demand side, i.e., consumers who want big cars and to buy lots of everything. However, since that time I have come across several articles published by the BBC: one published in 2020 titled "How the oil industry made us doubt climate change" and another published earlier this year titled "The audacious PR plot that seeded doubt about climate change". These articles document the efforts of the fossil fuel companies to engage in a public-relations campaign to sow doubt in the science of climate change by following the playbook of the tobacco industry from several decades earlier. Thus, I would like to update the title of that blog to "Don't Blame the Suppliers, Unless They Are Big Oil".
The first of these articles takes us back 40 years when a scientist at Exxon created a computer model that showed the earth was warming from the burning of fossil fuels. Exxon chose to disregard their own science because of the risk it posed to their business and instead start a campaign to spread doubt about the dangers of climate change. It then goes into the link back to the tobacco industry campaign starting in the mid-1950s to confuse the public about the danger of smoking cigarettes. The second article addresses the efforts of an organization called the Global Climate Coalition (GCC), started in 1989 by energy companies and fossil fuel dependent industries, to aggressively lobby US politicians and media to persuade the public that climate change was not a problem. This included finding and funding climate sceptics to give speeches or write op-eds and arranging media tours so they could appear on local TV and radio stations. It was all about deception and sowing doubt in an American public that would quickly become confused when supposed experts disagreed on the science (see Figure 1).
Much of this was happening while I worked for a Big Oil company. I spent 30 years as an engineer, engineering manager, and project manager working on the development of offshore platforms used to develop oil and gas fields around the world. I was never privy to high level corporate communication strategy, but I should have been knowledgeable and intelligent enough to sift through the disinformation. I remember discussing climate change issues with my wife and using arguments such as "we're only talking small possible changes in earth's temperature compared with the planet’s history", "carbon dioxide levels were much higher in the atmosphere in the past", "volcanoes and forest fires spew out much more greenhouse gasses in a year than automobiles", and, of course, "oil and gas are critical to the world economies and any alternative forms of energy are less effective and much too expensive".
Looking back now, although much these beliefs might have been correct, they truly missed the point - burning fossil fuels is increasing the earth's temperature, and it doesn't take very much of an increase to have a major impact on human life as we know it. So now I am looking back and recognizing that I had been deceived along with hundreds of millions of others. I remember stories about oil companies purchasing early electric vehicle technology and burying it. I guess I can accept that – it is a time-honored practice to protect one's business by all means necessary. But to know something that will have a fundamental negative impact on the entire world, lead to sickness and death and likely wars over diminishing resources, and then to obfuscate the facts seems criminal. Just as the tobacco industry's effort to promote smoking against all science has been determined to be criminal.
Will Big Oil ever be held truly accountable? Very unlikely. And the reality today is that we still need fossil fuels in the interim until renewable power can replace it across the globe. The OWOE recommendations from that previous blog to make a major push on the demand side of the equation still apply and summarized here in three broad strategies.
Strategy 1 - implement programs that truly reward low carbon energy: establish a carbon tax that truly captures the cost of greenhouse gas emissions; develop markets to trade these emissions with the aim of reducing and eventually eliminating them; clarify what big companies can claim as being green; curtail the current scam in carbon offsets; and, of course, continue to invest in renewable energy technology.
Strategy 2 – capture low-hanging fruit: focus on energy efficiency; and regulate industry to eliminate fugitive methane emissions as quickly as possible.
Strategy 3 – change behavior: stop the political bickering that is driven by individuals and organizations that choose to ignore the science of climate change for greed; rein in the utilities so that their financial objectives align with world needs; and create a public service campaign that helps all Americans understand the benefits of such plans.
But now I will add one more, surely to be very controversial, recommendation – implement a windfall profit tax on the oil companies. Global oil fields currently under production break even on average with oil prices between $18 and $28/barrel (as reported by Reuters) while projects currently under development will break-even with oil prices between $25 and $35/barrel. At today's cost of over $90/barrel for Brent crude, such projects will be enormously profitable. Who knows what the future price of oil will be, but allow the oil companies a reasonable profit on their investments and then collect the remainder to pay for the tremendous costs to mitigate against global warming, a phenomenon that they helped create in search of past profits.
OWOE Staff: The battle against climate change is not going well. President Biden's climate agenda has fallen apart. Russia's war in Ukraine and its fallout within Europe has led to an increase in coal power and a push to increase world oil output. Germany is proceeding with plans to shut down its last 3 nuclear power plants in December which will eliminate 6% of its annual electricity generation and 11% of its non-fossil based generation. World oil production which peaked in 2019 at 99.7 million barrels per day before the Covid pandemic slashed demand has risen back almost to pre-pandemic levels and is expected to exceed those levels in 2023. We can all lament those factors as lost opportunities, but there are two factors driving Americans' behavior that make OWOE seriously question whether any real progress can be made. We call them NIMBYism and IWINYism. We will address NIMBYism, or the Not in My Back Yard syndrome, here and cover IWINYism, or the I Want it Now or Yesterday syndrome, in a future post.
On a recent visit to Cape Cod, Massachusetts, your OWOE editor came across a number of streets in Falmouth sporting yard signs opposed to the Mayflower Wind Project. The Mayflower Wind Project is an offshore wind farm that will be located over 30 miles south of Martha's Vineyard and 20 miles south of Nantucket. The development has the potential to generate over 2,400 megawatts (MW) of power from as many as 150 wind turbines. Current plans are to transmit 1,200 MW of power via subsea cable to a grid connection at Brayton Point/Somerset near Fall River. The next 1,200 MW will be transmitted via subsea cable to a land crossing in Falmouth, then underground to an inland grid connection. Virtually every house on some of the streets displayed the signs – see Figure 1.
At a public meeting held on June 8th, residents overwhelmingly voiced opposition to plans by Mayflower Wind to run electric cables though Falmouth. Arguments included concern about construction traffic and noise, electromagnetic fields from the cables, impact on home values, impact on tourism, aesthetics of the substation, etc. Many finished their comments saying that they support clean energy and even the project itself - just not in Falmouth. And there it is - NIMBY. This brought back memories of the demise of the Cape Wind Project in Nantucket Sound, which would have been the first offshore wind farm in the US and which spent 16 years fighting for approvals from all stakeholders before being abandoned in 2017. The development company dealt with dozens of government agencies, native tribes, organizations, politicians, lawyers, and local citizens and could never get all onboard. One opposition group alone filed more than 25 court appeals to obstruct the construction of the project. In the background were the Kennedy's with all their money funding the battle to not obstruct the views from their estate or to interfere with their yachting in the Sound.
OWOE finds the really interesting issue in the current Mayflower Wind project to be that the actual impact to the community is so minor - a shore crossing, a substation, and an underground cable. And yet, one group or organization can block a project that has undeniable benefit to society as a whole.
There are plenty more examples. If we turn our attention just north of Massachusetts, we can find a battle over a transmission line to transmit 1,200 MW of hydropower from Quebec to Massachusetts. This would entail 145 miles (233 km) of transmission line of which about two-thirds would follow existing power line corridors with an extension of 53 miles through Maine's North Woods. The project was opposed by environmentalists, Maine residents who didn't trust the local power company, politicians who didn't think Maine was getting enough out of the project, and energy firm NextEra which provides fossil fuel to the state. In fact, NextEra donated $20 million to the opposition which was used to by television advertising that many felt killed the project. In a 2021 referendum, a majority of Maine voters did, in fact, vote against the project. The legality of that referendum is currently before the Maine Supreme Court. Again, the impact to Maine is minor - a 53 mile transmission line through the pine trees in a state that has over 17 million acres of forest which cover over 89% of the state’s land area.
How about the Ocean Wind project offshore New Jersey? The project would have a beach crossing drilled 60 feet under the beach, then run below the streets, just like water lines or other utilities. The proposal is deeply unpopular in Ocean City and other shore towns. Opponents cite the visual impact of the turbines from the beach (note they are 15 miles offshore) and also say the plan will damage the environment and the commercial fishing industry.
Or the two lithium mines and a geothermal power plant in Nevada that are in court fighting conservationists, environmentalists, tribes and others who otherwise generally support the effort to expedite the transition from fossil fuels to renewables.
Even in progressive California there is strong NIMBYism. In 2019 San Bernardino county, the largest county in California that is approximately 70% desert, banned renewable energy projects that mostly serve out-of-town utility customers from large swaths of land. Residents see the existing solar projects as eyesores that destroy desert ecosystems, fuel dust storms, and drive away tourists. Just west of San Francisco farmers and environmentalists oppose what would be the largest solar plant built in the San Francisco Bay Area because it will spoil the rural landscape. The company developing the project feels that they have mitigated all concerns except "we just don't want it here".
Hearing all these stories makes one wonder if there is any hope to achieve the goal of powering this country primarily off sustainable low carbon (nuclear and geothermal) and renewable (wind and solar) energy. Both wind and solar farms require relatively large areas for deployment, have visual impact, inevitably cause some disruption to the local environment, and will require transmission lines to high density population centers. Anti-nuclear sentiment remains high (no one wants a nuclear reactor in their back yard!). And even geothermal plants, which have small geographic footprints and produce bundles of clean baseline power, are getting pushback. There are numerous parties who could be impacted (or believe they will be impacted) by these projects, and we give so much power to each of those parties (especially ones who have lots of money), that it is hard to believe we can do something for the greater good of society.
We’re at peak NIMBYism now and OWOE doesn't see any reasonable means to change that soon enough.
or How to Impoverish Newfoundland while Making a Fortune Selling Electricity to New York
Guest blog by S. A. Shelley: A few weeks ago, at a speech in Washington D.C the Premier of the Canadian province of Alberta, Jason Kenney, promulgated the idea of a North American Energy Alliance.
By 2024, the completion of the Trans Mountain pipeline expansion project to British Columbia will give Canada even more capacity to ship oil to the US, Kenney said in an interview on Bloomberg Television. "My point is, let's be visionary about this. Let's have a North American energy alliance, and let's get another major pipeline done because we've got the third-largest reserves on Earth up in Alberta," he said.
It is funny, how when over a year before that speech in Washington, OWOE editorial staff first formulated a North American Energy Alliance, in a slightly more complete form, no news organizations picked up on our idea.
The OWOE energy policy combines several key elements, including: firm commitment to dramatically reduce dependence on fossil fuels in a planned and rational manner, sustainable investment in renewable technologies, and establishment of a North American Energy Alliance (NAEA) between the US and Canada to aggressively develop and globally sell our existing energy resources.
Within a week following the Premier's speech, other analysts have started to chime in about the need and merits for such an alliance (see for example, Ms. Francis' column, North America needs an energy revolution now more than ever). The idea of some sort of coordinated energy alliance or cooperative continued to spread until powerful people in Quebec began advocating for such schemes though on a national level. On May 30, Ms. Sophie Brochu, chief executive of Hydro-Quebec had some thoughts on the creation of a "national energy conversation".
That's when I lost my last shred of faith in Canadian peoplekind, for whenever Quebec public figures (Justin Trudeau especially) talk about national benefits, the rest of Canada needs to hide its valuables. One needs to look no further than the disastrous Churchill Falls hydro project in Newfoundland, or the egregious National Energy Policy of the 1980s for confirmation of my thesis.
The History of Churchill Falls Hydro
Churchill Falls is a hydroelectric generating dam in Labrador (Newfoundland, see Fig. 1). Construction for the dam started in 1967 and was completed and operational by 1971. At the time of operation, there was only one route for the excess power to be transmitted to markets and that was through Quebec. Consequently, under some duress, the Premier of Newfoundland and the Newfoundland Utility agreed to a fixed price contract of $2 / MWh. That was the price and IS the price for a hydroelectric facility that is rated at 5,428 MW. There are roughly 365 days per year, and hydropower is generated 24 hours a day. Using a bit of arithmetic, this means that Newfoundland is paid just under $92 million a year for the power produced by the Churchill Falls project. In 1972, $92 million was a substantial amount of money going into the coffers of the less economically fortunate province of Newfoundland. In 2022, $92 million is insignificant to the budgetary needs of the province that struggles to provide good services (education, healthcare) for its residents.
That's right astute readers, in 1972, Hydro-Quebec with the full backing of the Federal Government of the Liberal Party of Canada with Pierre Trudeau as Prime Minister, locked Newfoundland into a contract for all the electricity generated by Churchill Falls at $2 per MWh, in virtual perpetuity. Newfoundland has tried numerous times to get the contract quashed in the Canadian courts to no avail. The current pricing scheme is supposed to expire in 2041, but by then it is very unlikely that it will change or that Hydro-Quebec will continue to buy power from Churchill Falls.
This is the Arbitrage: Hydro-Quebec sells a lot of electricity to New York state. In 2019, the amount of power sold to New York amounted to about 33.7 TWH at about $67 / MWh, and that looks to increase significantly in the future. Currently, Churchill Falls alone provides about 45.9 TWH to Quebec. Thus, Quebec buys 33.7 TWh (plus more) at $2 / MWH and sells it to New York at $67 / MWH (Figure 1). That's an arbitrage profit of $65 / MWh. I’m ignoring small transmission losses and some infrastructure costs, but when all physical assets are factored in, this is still a huge arbitrage profit that one Crown corporation reaps at the expense of another Crown corporation. How’s that for equity in Canada?
The excess of power from Churchill Falls feeds into the Hydro-Quebec's domestic customers and lowers their overall average electricity (hydro) bill.
Is This a Special Case?
Is this just a special case of Hydro-Quebec and the Federal Government shafting Newfoundland? No, there are numerous other cases in which Hydro-Quebec and the Federal Government shaft other constituents in Canada. For example, 36% of all of Hydro-Quebec's total hydroelectric power is installed on native lands that the Crown corporation and the Crown (The Federal Government in Canada) just outright ignore:
In total, 33 production structures, 130 dams and dikes, 10,400 km2 of reservoirs, tens of thousands of kilometres of transmission, distribution and road lines have been illegally installed.
Again, how is this equity?
Muskrat Falls, Another Hydro Project with Problems
We briefly mentioned the Muskrat Falls Hydro project in the Canada and Energy Blog, Part 3 in 2019. That project is also a fiscal disaster in large part again to Federal Government interference and Federal Government (Liberal Party) insistence on Newfoundland using one federally preferred contractor from Quebec, SNC Lavalin. The residents of Newfoundland and Labrador are kind, hardworking and smart people; they just aren't smart enough to deal with the political influence peddlers from Ottawa and Montreal.
"Nalcor has indicated that they experienced performance issues with SNC shortly after the contract was awarded, including turnover of key project resources, the failure to complete key project deliverables, lack of adequate systems and tools, and significant organization and alignment gaps."
More complete reports about the problems with the Muskrat Falls project are available in the documents: "Muskrat Falls: A Misguided Project - executive summary" and "Muskrat Falls Project - A Critical Review".
When the Trudeau regime crows about providing massive funding support for the Muskrat Falls project, the Trudeau regime simultaneously ignores its culpability that led to the massive project problems. In all likelihood, many of those additional $billions will eventually find their way back into coffers around Ottawa and Montreal.
Is it Just Muskrat Falls?
No, there are far too many problems with big energy and infrastructure problems in Canada. There is the Site C dam in British Columbia, a project started in 1972 and still not complete.
There is the Saskatchewan Carbon Capture Scheme that stumbled in 2015 with the provincially owned utility embarking in a dispute resolution process against contractor SNC Lavalin over serious design deficiencies.
There is the Ottawa Light Rail expansion. "Memo made public Friday confirmed SNC-Lavalin didn’t meet technical threshold". Additional readings about the Ottawa Light Rail fiasco can be found in Trains.com, CTV News, TVO Today, and CBC.
The foul ups in Canadian energy and engineering projects just never seem to end, and Canadian taxpayers and New York rate payers just keep paying.
It is said that Canada was confederated in order to keep the French in, the Americans out and the Natives down. By the actions of the Federal Liberal Governments of the last few decades, I think it would be better to think that the purpose of the confederation of Canada is to keep the Liberals Governing, Quebec Booming and the Natives Ignored. That is why, for example, 66% of Quebec residents would prefer getting oil from Alberta, but the Quebec government insists instead to get oil from Saudi Arabia because it is better to send money overseas than to confederates out west where nary a Liberal can be found. A North American Energy Alliance can be a very good thing, if it involves all forms of conventional and new energies, and I’m all for such. But when Ms. Brochu or anyone from Hydro-Quebec speaks of a national energy and conversion policy, everyone else in Canada needs to be very suspicious.
Vive l'Alberta Libre!
Shut Down Line 5
OWOE Staff: The world recently celebrated Earth Day on April 22 - 52 years after the first Earth Day celebration in 1970. Unfortunately, like pretty much all the prior Earth Days, very little concrete progress was committed to addressing the world's global warming crisis. If I may paraphrase my favorite environmentalist, Greta Thunberg, it was all "bunny, bunny…blah, blah, blah". Perhaps the biggest news in the fight against climate changes was Denmark's proposal for a new corporate carbon tax, which would set a value of 1,125 Danish crowns ($164.21) per tonne of carbon equivalent and make it the highest such tax in the world if implemented. But again, that’s just a proposal. In the meantime, fossil fuel use has recovered from its Covid lows, CO2 levels in the atmosphere continue to rise, the Arctic and Antarctic ice sheets continue to melt, and environmental damage from storms, fires, and rising sea levels continue. I personally witnessed a real-life example of that the very week of Earth Day when I visited one of my favorite beaches in the world, Cancun. I have been going to the beaches of Cancun almost every year since the early 2000s, and the change to the beach caused by the increase in seaweed over the past few years is dramatic. We all tend to miss the big picture when all we see are incremental changes, but after skipping two years because of pandemic travel restrictions, the magnitude of the beach changes was more obvious and led me to look back at my earlier visits and take a broader perspective. Figure 1 shows the change over the last 8 years, with a) from April 2014 and b) from April 2022, both the exact same stretch of beach.
This seaweed is Sargassum which reproduces vegetatively and never attaches to the seafloor. The Atlantic Ocean's Sargasso Sea was named after the seaweed for the large amount of Sargassum that collects there. More recently, an area of Sargassum has developed off the coast of Brazil near the mouth of the Amazon River.
Figure 2 from the University of Florida Satellite-based Sargassum Watch System (SaWS) shows how the Sargassum bloom off the coast of Brazil has evolved. Since 2011, Sargassum seaweed has appeared in the Caribbean Sea every summer except 2013, creating many environmental, ecological and economic problems. The seaweed originates in the tropical Atlantic and drifts with the current into the Caribbean. It is believed to be a result of climate variability combined with other natural and anthropogenic processes and has been getting progressively worse. One of those anthropogenic processes is deforestation, which causes soil erosion that leads to surplus nutrients being washed into rivers and flowing into the ocean, ultimately feeding the Sargassum. Deforestation also releases carbon into the atmosphere which contributes to climate change and increases ocean temperature, which then accelerates Sargassum growth.
2018 was a bad year for the seaweed, but April 2022 seaweed quantities have exceeded all prior years. The overall Sargassum amount increased significantly across the tropical Atlantic, the Caribbean Sea, the Gulf of Mexico, and the Central West Atlantic (the region east of the Lesser Antilles), setting a new historical record for the month of April.
How has Cancun been dealing with this problem? Not very well. Although there has been some attempt to clean the seaweed with vessels, most still washes ashore. Figure 3 shows the various ways the individual resorts in the Hotel Zone have been dealing with the problem: a) bury using tractor, b) what's left after burying – "sandweed fluff", c) leaving to decompose naturally – resulting in a prickly mess that is unsightly and uncomfortable to walk on, and d) haul-off using backhoes and dumpsters. Not shown is another common approach - hotel workers burying the seaweed by hand on the beach. They spend all day raking and shoveling and go home exhausted, only to return the next day and start over again. All approaches, other than leaving in place, result in significant cost for the hotels, and all impact the beach. The famous soft, white, pristine Cancun sand no longer exists.
Ultimately, this has an impact on visitors who hear about the problem and choose a different destination or who visit Cancun, are disappointed in the beaches, and choose to not return in the future. According to the Mexican government, tourism will fall by as much as 30% at Quintana Roo (state that includes Cancun and the Mayan Riviera) beach destinations this year due to the invasion of Sargassum.
When organizations try to calculate the cost of climate change, they focus on measurable costs – how much it costs to fight the impact of the change or repair the damage caused. But what about the indirect costs? What is the value to the world of walking on the beaches of Cancun or scuba diving along the Australian coral reefs or skiing in the Andes mountains or living on the coast of almost any place in the world, all (and much more) of which are at risk of disappearing?
Guest blog by S. A. Shelley: Governments' penchant for wasting taxpayer money and harming the environment is not a recent phenomenon but it went industrial in 20th century at all levels. At the beginning of the century Mother Nature and society had a tremendous capacity to forgive bad decisions even when some such decisions resulted in millions of deaths over the span of several decades. Human, sorry, people-kind abused Mother Nature and the pocketbooks of taxpayers in the name of progress and energy transition but managed to overcome crises such as anthropogenic acid deposition and the oil embargo of the 1970s. People-kind barely limped out of the 20th century into the 21st century. In all likelihood Mother Nature and taxpayer pocketbooks are now beyond the capacity to forgive our shortcomings and bad decisions for much longer. Who is to blame for this? Big business has big shame, but most blame lies entirely before the governments who are elected to be wise but are faddish populists with inherent graft and "ism" agendas. Difficult and complex solutions require deep thinkers, not pot-addled Princes of Privilege (shout-out to Justin Trudeau, see notes 1 and 2).
Let's look at some of those ghosts of decisions past…
In the middle of the last century, many municipal governments operated transit systems with electric trolly buses. Fig. 1 shows such a bus in operation by the City of Edmonton.
However, the continued operation of such clean, green and quiet public transit into the 21st century did not align with the vision of the then progressive city politicians of the late 1980s and 1990s. As one commentator wrote:
The fact that most other North American cities got rid of their trolleys does not mean that they (city councilors) were wise or far sighted when they did so. But if you had stood up then before those city councils and talked about oil at $150 a barrel and vanishing glaciers, you would have been laughed out of the room.
Before the decision was made to get rid of the electric trolley buses in Edmonton, politicians often made two arguments to support their case: 1) maintaining the overhead wires was too costly, and 2) modern diesel buses were cleaner and cheaper to operate. The argument against diesel should be obvious to everyone; the economic case is not as obvious but just as foolish. Studies have invariably concluded that electric trolley buses are, in fact, the cheapest transit system to build and operate, even cheaper than battery electric buses (see Urban Transport Magazine and Low-Tech Magazine). Unfortunately, battery electric buses are now the de riguer choice of city councils everywhere including in the city of Edmonton. Forty years after the initial decision was to get rid of electric trolley buses, the city is now buying more expensive battery electric buses.
Electric street cars were also quite common in urban municipalities, and they operated frequently, conveniently and safely for many years. Fig. 2, shows an electric streetcar operating in Los Angeles around 1960.
By 1960 over 1000 miles of streetcar lines (urban rail system) served the public in the greater municipality of Los Angeles. Yet in 1963 the city began ripping up and dismantling its once impressive system. There are numerous reasons given for the demise of urban rail system, and an often overlooked reason is that "…city rules often kept fares artificially low". In other words, inept political meddling killed a good thing. Now, almost 60 years later, city of Los Angeles councilors have decided that streetcars are again an integral part of the transit system and they have embarked on building a new streetcar system starting with the 3.8 mile downtown route.
On a large scale these days, politicians are justifiably and frantically proclaiming the need for green and energy efficient transportation. Yet when they had it, they got rid of it. How many times must taxpaying citizens pay for the short-sighted planning and outright mistakes of politicians? How often are cities going to switch between urban rail, "clean" diesel (or LNG) buses and E-buses? What is the government transit plan going forward (Fig. 3)?
It's not just municipal transit which has suffered immeasurable damage because of flaky political thinking: personal transit is now under relentless and inconsistent attack by politicians.
In Europe, diesel cars became the government solution to achieving Kyoto Protocol CO2 reduction targets, and governments threw their resources into convincing citizens to drive diesel instead of gasoline powered ICEs. Now politicians everywhere are coercing their citizens to drive EVs, which have their own issues with sourcing critical materials in a sustainable and socially just manner (see Climate Nexus and Inside EVs) and cost. I doubt that any politician knows that it takes about 500,000 gallons of water, or about 2200 tonnes of water to mine 1 tonne of lithium. Then there is the question of battery disposal, with forecasts indicating 2,000,000 tonnes per year of EV batteries will be tossed into landfills each year after 2030. Again, I doubt that any politician is thinking now about that future problem. I also wonder what the future of personal transit will be in the future: Will it be egalitarian or elitist (Fig. 4)?
If politicians are serious about clean and green transit and reducing CO2 emissions, then the politicians need to: (1) stop throwing out working municipal transit technology, and (2) get serious about shutting down all coal burning power plants instead of penalizing citizens for personal EV choices. Shutting down all coal burning power plants would cut umpteen millions more tonnes of CO2 emissions than taking all personal ICEs off the roads (see notes 3 and 4). As taxpayers, we're paying over and over for the mistakes and short sighted woke-infused dreams of politicians at all levels. We need more reality and careful consideration about our next step forward with regards to transit and energy.
Vive l'Alberta Libre!
Shut Down Line 5
Guest blog by S. A. Shelley: It is very difficult to keep up with all the energy changes in the world. Every week, some Big Government Agency, NGO, International Think Tank or Big Company proclaims some new solution to the looming global energy problem of too much of the wrong kind of energy and too often from the wrong place. While most of the analysts and prognosticators seem knowledgeable and well intentioned, OWOE analysts cannot conclude for certain that the resultant big government plans foisted through bureaucrats onto ordinary citizens are based upon sound knowledge and understanding of energy markets, resources, technology and costs. I emphasize technology and cost because most government edicts are based more upon woke and vote political expedience than anything technically attainable without causing significant long term economic pain, e.g., recent decisions to shut down nuclear reactors. Nor have governments shown themselves to understand the political issues of energy supply, as we now see with Europe stuck paying for Russia's conquest of Ukraine. We have some insightful and interesting comments about the Russian war, but these won't be discussed in this blog - maybe later.
There are so many bunny blah blah decisions being made in Western Capitals, that we cannot keep track of all of them. Nevertheless, some recent government actions that have further destabilized energy markets, exacerbated consumer pain and even aggravated the climate beyond keeping the planet comfy and cozy for humanity need to be addressed.
Earlier this year, in response to the Russkies invading the Ukraine, the U.S. Administration ran all around the world trying to find more oil supplies both for domestic consumption and for its European allies. The U.S. went to OPEC, the U.S. went to Venezuela, and the U.S. went to Iran. But the U.S. did not go to Canada or Mexico, let alone Alaska, Texas or North Dakota. Apparently, U.S. policy priority is to buy oil and gas from totalitarian regimes while championing freedom; Words are cheap but cheap all and gas are better. In this regard, the U.S. is following the European, and in particular, the German playbook (see WSJ.com and CNBC.com). Then the U.S. administration decided on March 31 that it would start plundering the Strategic Petroleum Reserve (SPR) at the rate of 1 million bbls / day. Officially, this was to relieve price pressure domestically and hopefully free up more oil internationally for the Europeans. If we look at the effect on oil prices, WTI and BRENT, we see that the release of oil from the SPR had an insignificant impact on prices (Fig. 1).
In the long run, the policy of releasing oil from the SPR is more likely to drain the reserve than alleviate price pain at the pumps. This government action is an attempt to manipulate market supply, not curb market demand: As long as oil (energy) demand is steady and growing, the price pressure will always increase regardless of short-term supply dumping, because demand is a long-term factor (OWOE’s First Law of Energy Markets) There has been a continued draw down of the SPR for quite some time (Fig 2).
When established, the SPR was meant to be a commercial reserve of oil in case of a major supply disruption, such as the1973 Arab Oil Embargo. What happens if the Russkie invasion of Ukraine turns global and Russkie aircraft start lobbing KH-35U missiles at oil tankers headed to America? The U.S. burns through about 20 million bbls / day of oil, of which about 8 million bbls /day is imported. In other words, the US has about 81 days of oil imports stored in the SPR. There is not enough people power and machinery available to turn up the American shale oil fields fast enough to produce 8 million bbls / day within 90 days of a global emergency. Strategic reserves are meant to overcome strategic problems, not temporarily reduce consumer price pain at the pumps. In addition, there are a number of financial analysts who believe any such attempt to artificially lower gas prices will increase demand, further increase inflation, and ultimately make the supply situation worse (see FoxBusiness).
Just before the commencement of Russkie hostilities in Ukraine, but well into the buildup of Russkie armor and troops at the Ukraine border, the U.S. Administration announced a program to spend $5 billion over 5 years to make EV charging infrastructure available to more Americans. This means that on average, maybe 20,000 EV charging stations will be built each year. Again, OWOE analysts understand the great benefit of EVs with respect to Green House Gas (GHG) emissions reduction. But there are better and quicker ways to reduce GHG that will have a quicker impact on the climate than forcing ordinary people to buy and use personal EVs. For one, as we've noted before, methane is a far more potent GHG than the CO2 emitted by personal gas powered vehicles, and thus spending $5 billion on capping leaking wells or stopping methane leakage will be far quicker and effective means of reducing GHGs. Investing money on EV fleets is also a better use of government resources than forcing American families to buy EVs that are still priced above affordability for the average family.
But America isn't the only country afflicted by dumb government policies and actions when it comes to energy. With a war raging on the flanks of Europe, someone in France decided that it would be a good time to simultaneously take offline 50% of France’s nuclear reactors. One can't make this stuff up. France gets about 70% of its electricity from long-term, stable nuclear power, but last week a cold snap coupled with the 'planned' shut down of 50% of France's nuclear reactors for routine maintenance resulted in record electricity prices in France, with a spill-over to European neighbors. The cold snap may not have been foreseeable, but the Russkie war has been raging openly for some time; surely someone in France could have said "Nyet" to the idea of scheduling all that reactor maintenance at the same time?
There are some bright spots in the world with respect to government planning for energy security and sustainability, and in our humble assessment, Finland which is focusing both on nuclear power and wind power is one such place.
Then, on the other hand, there is Canada, a place that totally messes up its energy security and stability. Canada is still one of the worst energy and climate hypocrite nations on the global stage. Canada continues to be one of the largest coal exporters, and Canada continues to operate and support the extremely environmentally hazardous Line 5 Pipeline through Michigan's state waters. If asked by anyone in any other government about what to do with respect to energy security and decarbonization transition, OWOE analysts always respond with "Do the opposite of the Canadian Federal Government, and then you'll be on a good path." A dedicated blog highlighting the historical, current and forthcoming expensive energy follies in Canada will come shortly. Such a "Canadian" blog is becoming sadly repetitive, and it is OWOE's hope that someday soon, someone at the Canadian government level will smarten up about energy and the environment. It is a quickly fading hope.
Vive l'Alberta Libre! Shut Down Line 5!
Guest blog by Mr. R. U. Cirius: Here are some interesting and somewhat offbeat energy stories that haven't gotten much media attention that OWOE readers might have missed.
Very Small Modular Reactors There has been a lot of press coverage for Small Modular Reactors (SMRs) recently, with some touting them as the solution to the world's energy challenges to others expressing doubt that they can actually be successful (see also OWOE blog Nuclear Power: Climate Solution or Hype). However, a new version of these nuclear reactors has just been announced that may actually meet the high expectations. William Fences, the entrepreneur and philanthropist, and his company MicroPower, claims to have developed the first Very Small Modular Reactor (VSMR). This is a stand-alone suitcase-sized micro nuclear reactor for both private and commercial use. The reactor includes: molten salt nuclear fuel module, molten salt pump, thermo-electric battery with inverter to export power at 480v, water coolant system that connects directly to the home or business water supply, and auxiliary air cooling motor that plugs easily into a standard 220v power receptacle, all enclosed withing an easily movable case (see Figure 1). Although not yet available for purchase, MicroPower is planning to sell units with power generation capability ranging from 5kW to 50kW.
HPZ Rigid Dirigible Aircraft On March 15th, accompanied by the soaring lyrics of the rock classic "Stairway to Heaven", the first modern-day commercial hydrogen powered rigid aircraft made its inaugural flight from Seattle, Washington to Portland, Oregon. The HPZ, which stands for Hydrogen Powered Zeppelin, is a so-called rigid dirigible aircraft, consisting of a fabric-covered rigid metal framework made up of transverse rings and longitudinal girders and containing individual gasbags. The gasbags are filled with a lighter-than-air gas, which gives the buoyancy necessary to fly. The HPZ is approximately the size of the ill-fated Hindenburg Zeppelin at 800 feet long (more than three times the length of a Boeing 747) and with a diameter of 135 feet. It can cruise at 75 mph and travel as high as 20,000 feet above sea level. Hydrogen gas is used both as the fill gas, but also as the fuel to power the aircraft. By utilizing the same gas, the HPZ was able to eliminate costly and heavy fuel tanks.
The HPZ was built by start-up technology firm HydroFlight. When asked whether there was a concern over safety using hydrogen gas, given the history of the Hindenburg Disaster, a media spokesman for HydroFlight responded: "There is absolutely no risk of such a thing happening to the HPZ. For one, we have very strict rules against smoking on board. But also, we are using 'blue' hydrogen for our gas that is provided by major oil companies. They have assured us that the 'blue' hydrogen they provide is much safer than the 'green' hydrogen that many other companies are trying to sell."
The HPZ will attempt a cross-country flight later this year from Seattle to New York City.
Wind Turbine Recycling No energy system is entirely neutral in terms of waste produced, including wind power. Fortunately, there are several consortiums of researchers and industry taking on this challenge, specifically how to reuse or repurpose the composite material wind turbine blades:
Bio-power Research Growing Corporate America is looking to improve their Environmental, Social and Governance (ESG) standing by using more animals for tasks, such as blog editing and remote tech support (see Figure 3).
Quote one corporate CEO. "To be truly carbon neutral, you have to return to animal power for many activities." Animals are part of the green cycle and they consume fewer critical minerals and require less power per kilogram than humans for many labor intensive and high tech / high cost solutions.
OWOE Staff: The Russian invasion of Ukraine is a tragedy on many fronts - for the civilians caught in the crossfire, for the concept of democracy, and for the rest of the globe that will certainly feel the impact of economic sanctions imposed in an interconnected world. One impact of those sanctions in the US can be seen in the sharp rise in gasoline prices. In high-priced gasoline states like California, gas prices at the beginning of this week reached an average of about $5.40/gal (up about 10% from the previous week - see Figure 1).
Such a sharp increase, especially coupled with inflation stemming from the Covid pandemic stimulus packages and more recent supply chain issues, is certainly going to have a significant impact on Americans. Other impacts of the sanctions, including the US banning of Russian oil imports will create another round of challenges. US companies curtailing business in Russia will see impact to their financial bottom lines which will have a follow-on effect on the stock market. And now we are now getting warnings that prices for other commodities that Russia exports to the world have become volatile and are surging. But can something good come of this?
OWOE believes that the world can use this opportunity to step back and reassess how it moves forward to address the challenges of energy security, energy transition and climate change. In particular, how we can change our dependence on fossil fuels from a supply-focused approach to a demand-focused approach? This has been a recurring OWOE theme (Don't Blame the Suppliers; The Fundamental (and Somewhat Existential) Source of Climate Change – and How We Might Overcome It). And just recently, Hal Kvisle, a former chief executive of TransCanada Corp., was quoted in BNN Bloomberg as saying: "Until consumers have other alternatives, other ways of getting around, or other ways of heating their homes effectively - until we address the demand on the consumer side - we're not really going to change the balance". Prior to the Ukraine invasion, the Covid pandemic dominated not only the news cycle but our daily lives. In 2020 the demand for gasoline (i.e., oil) dropped dramatically to a level not seen since the mid-1990s. This was driven in part by the economic stagnation during the first year of the Covid pandemic, with many people losing their jobs or being forced to take time off work and many others forced to work from home. As a result, transportation by both vehicle and plane dropped dramatically. Figure 2 shows petroleum consumption history from 1950 through 2020, with consumption by the transportation sector dropping from a yearly average of 14.1 million barrels/day in 2019 to 11.9 million barrels/day in 2020.
But we managed to survive. Then in 2021 as many of the Covid restrictions were lifted, people started to return to a normal life, and, driven by the pent-up demand from the prior year, oil consumption surged. In November 2021 consumption in the transportation sector jumped up to 13.7 million barrels/day, or just 3% under the 2019 peak, as shown with the added data points.
The first conclusion that can be drawn from these numbers is that, with the right behavior, banning Russian oil imports should have essentially no impact on the US economy. In 2021 average oil imports from Russia were 672,000 barrels/day. That was only 5% of transportation needs (and only 3% of total oil consumption of 23.2 million barrels/day across all sectors). Loss of all Russian barrels would mean the November 2021 transportation consumption would have been about 13 million barrels/day, which would still have been well above the 2020 value. Given that Americans in 2022 are now driving on average 14,263 miles/year (on track for 3.2 trillion miles total) and that the average car in the US gets 23 mpg, it would only take a decrease of about 25 miles per year per vehicle to eliminate completely the need for the Russian oil imports. Certainly, support of Ukraine against Russian aggression is worth driving 1/2 mile less each week.
The second conclusion is that we now have a very good data point for what behaviors can quickly result in a 10-15% reduction in oil consumption, i.e., the 2019 to 2020 drop. This drop was not driven by the cost of gasoline; it was driven by a much broader reduction in demand. While a Covid-scale drop might be too aggressive and costly to the economy, an intermediate value seems very doable. Let's continue to support clever ways to work remotely and reduce commuting; let's focus on energy efficiency with electric vehicles, LED lights, home insulation, etc.; let's scale back our rampant consumerism; let's walk and bike more in place of driving. These are easy technology changes that can be made with minimal impact to lifestyle and the overall economy and could be greatly enhanced with government encouragement, including ad campaigns and incentive programs. The result would be a huge step forward in the US effort to reduce oil imports, and, concurrently, reduce greenhouse gas emissions and help slow global warming.
OWOE also notes that we have been pointing out the risk that dependence on oil supplies from non-democratic countries creates for several years now. See OWOE blogs: Is There Any Limit to How Dumb Can Governments Get?, It's a Mad Mad World of Energy, Time for a New Energy Policy, etc. This crisis appears to be the catalyst might make that a reality. The European Commission just published plans to cut EU dependency on Russian gas by two-thirds this year and end its reliance on Russian supplies of the fuel "well before 2030".
Hopefully, the Ukrainian tragedy can be used to change the mindset and approach of governments around the world. We've proven that we can live with less oil; now we need to make that the norm. It is time to eliminate dependence on Russia for any commodity, moderate our seemingly limitless demand for fossil fuels, and save the planet!
Guest blog by S. A. Shelley: The answer is no, there is no limit to how dumb governments can get in terms of irrational legislation, fanciful proclamations and of course impossible energy policies. There are a few fundamental things that governments need to do right for society to survive, let alone thrive. Amongst them are protecting their citizens from external threats (military or viral, for instance) and protecting individual rights to conduct commerce or disagree with the government. After that, arguments start about everything else that people think governments should do or not do. I won't argue those points, but I will argue that governments all around the world, except for China, are being complete idiots when it comes to energy trade and transition.
Access to secure energy supplies is critical for a nation to exist. Henry Kissinger is credited as once saying that "Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world." Energy supplies can be domestically sourced from natural resources and apart from Canada most nations feel blessed when they have an abundance of natural resources. Energy supplies can also be provided domestically by technology such as nuclear power in France or wind power in Denmark. There are many sources of energy, but problems arise in transporting the energy resources from where they are located to where they are needed, or with storing the energy from when it is produced to when it is needed. Access to stable energy supplies can also be achieved through trade (America - Canada), graft (China - almost everyone else) and intimidation (Europe – Russia). Fortunately, most governments recognize the fundamental need for stable energy supplies and the associated problems, but unfortunately every government is completely off base with their approaches.
I've written before about how Germany's energy transition is failing (CO2 emissions are rising), and how total domestic power demand is increasing while the renewable share of power supply is falling. Finally some thinkers and analysts with larger followings are beginning to come to the same conclusion that Germany's energy policy is messed up (techxplore, TheHill, reason.com). A lot of Germany's problems arise from politicians reacting to minority woke feelings and not undertaking thoughtful planning. Reviewing Germany's natural gas imports over the last few years along with the proportion of imports from Russia doesn't look good (Fig. 1).
Even though the import trend seems to be decreasing, the proportion of imports from Russia, even without Nordstream 2, seems to be increasing. The Brookings Institute even suggests that Germany may soon get 70% of all its gas from Russia. From the Russian side, Gazprom is happy to announce that Germany is its biggest customer.
Add in the interdependence of European states to each other, and it becomes obvious that Europe is in an energy pinch (cnbc, msn), which is something that we had long ago predicted in prior blogs. The time for nations to stand up to autocrats is at the beginning of the first autocratic stirrings, not when the autocrats have your economy by the throat.
What about the United States? Just as nuts.
Figure 2 is taken from the EIA and shows the oil imports from Russia. Notice the growth of oil imports over recent years to nearly 800,000 bbls / day?
Another way of thinking about this is that every day, the US pays about $72,000,000 to Russia (I'm using gross payments, and the Brent Price at time of publishing). In a year, that's over $24 billion, which buys the Russians a lot of artillery, tanks and mercenaries to cause mischief in Africa or the Ukraine. In what world does one pay money to one's foes then expect them to not cause trouble?
But in addition, pipelines that could bring oil from the Midwest to the East coast were cancelled (oilprice.com, huffpost). Similarly, oil that could have come from (almost communist authoritarian) Canada via Keystone XL (sized to bring about 800,000 bbls of oil per day to the US) was cancelled. That's a tough choice: 800,000 bbls of oil per day from Russia or 800,000 bbls of oil per day from Canada? Buckle up America, Russia now has you over a barrel too.
But the one pipeline that needs to be shut down, Enbridge Line 5 through Michigan, a ticking environmental disaster that delivers less than 5% of its contents to American states, keeps getting excused by Washington. What is that all about?
Why are governments doing so many dumb things? I don't have the definitive answers, but I have some ideas. Firstly, politicians are starting to believe their own hype and are becoming further removed from reality (narcissism). Secondly, the senior bureaucracy ranks are now filled with woke folks who have no idea about any hard sciences or data (stupidity). Thirdly, those bureaucrats who know hard science and data are being quiet because they enjoy keeping their jobs (fear). Fourthly, too much money is thrown around at governments (short term greed). Et cetera, et cetera, bunny bunny blah blah.
As I've written before, green energy is better energy, but the way that the western democracies and autocracies (Canada) lurch about reacting to minority woke mobs will result in a bigger mess than we have now.
Shut Down Line 5
Vive l'Alberta Libre!
Guest blog by S. A. Shelley: In early November of 2021, the UN'S COP 26 climate conference wrapped up in Glasgow with all sorts of politicians pledging this or that with respect to greenhouse gas emission reductions, renewable tech investments and invoking equity across the world. But really, what are the actions that followed those ballyhoo words bantered about in public? The staff at OWOE took at look at some of the subsequent oil production announcements away from the public spotlight. The following summarizes planned increases / decreases and shares what we found is the most amusing quote associated with each country's plans.
Countries INCREASING oil production
"The surprising reversal began as state-run Petroleos de Venezuela (PDVSA.UL), known as PDVSA, won help from small drilling firms by rolling over old debts and later obtained steady supplies of a key diluent from Iran."
Countries DECREASING oil production
U.S. crude output fell as demand dropped during the COVID-19 pandemic, and has not yet returned to pre-pandemic record production of 12.966 million bpd, seen in November, 2019. The EIA in their Short Term Energy Outlook stated that they "expect production to average 11.8 million b/d in 2022…"
What's the pattern? That for the most part authoritarian regimes are rushing to cash in on oil revenues, while democratic regimes are rushing to make everyone feel good.
More to come about gas, coal, nuclear and of course those dumb California offshore wind farm plans.
Shut Down Line 5!