Category Archives: Coal Fired Power Plants

The End of Petroleum for Personal Transportation

Every great company in the history of the [silicone] valley started in a technology down cycle. — Shai Agassi

Stories about electric cars usually don’t get me very excited.  They may not generate any emissions on the road, but their batteries must recharged from a national electric grid, which in America is 50% dependent on coal and 20% dependent on natural gas.  Essentially, electric cars always looked like a game of fossil fuel whack-a-mole – trading the limitations and pollution of oil for the limitations and pollution of coal and natural gas.  You could argue that we could power the grid with renewables, but the grid is a 7/24 dance of precisely matching up demand with supply and it can only tolerate a limited amount of intermittent power like wind and PV before the music stops.  Add to that the limited range of electric cars and the whole concept falls apart when you consider that potential buyers must be confined to a tight radius around the umbilical cord of their home’s electric meter.

All of that is about to change as our model of personal transportation built around cheap oil and the internal combustion engine goes the way of the buggy whip.  Imagine a future work day that looks like this:

  1. You enter your garage and pull out your electronic key. The logo on the key is blinking blue, indicating your car is fully charged.
  2. You unplug your car from the wall, open the garage door, and head for work. Your electric system software analyzes the first few minutes of driving and determines your likely destination based on past history: “Work?” it asks to confirm. You answer the question in the affirmative and the system determines how much energy is needed for the day.
  3. During your commute, the GPS enabled system finds and displays three open parking spaces near your office that are equipped with charging pods linked with your electric car’s subscription plan.
  4. You pull into one of spaces and an automatic arm extends to plug into the car. The charging pod then communicates with the control center, and based on the your driving history,  picks the lowest rate time slot to recharge your vehicle.
  5. Before your recharge is complete an unexpected cross town meeting comes up.  You climb into your car and enter the new destination, and the system software notifies you that there is insufficient charge to make the trip, return to the office, and commute back to your home.    To extend your range you order a battery swap.
  6. The system software finds the most convenient battery-exchange location and books a bay. The old battery gets lowered onto a hydraulic plate, and the car moves forward on a car-wash-style track. In no more time than it takes to fill up your old tank with gasoline, a fully charged battery pack is in place, and you are on your way with another 100 miles of driving range.

If all this sounds like an episode from the Jetsons, think again.  Within 15 years, automobile transportation in Israel and Denmark will be carbon neutral, with electric cars powered by wind and solar energy, and the rest of the world may not be that far behind.  This all starts with a business model for the automobile that takes its cues from the mobile phone.

The idea, according to Shai Agassi, the software entrepreneur responsible for this new vision, is to sell electric car transportation on the model of the cellphone. Purchasers get subsidized hardware — the car — and pay a monthly fee for expected mileage, like minutes on a cellphone plan, eliminating concerns about the fluctuating price of gasoline.
As with cellphones the car will become secondary in importance to the network, “You’ll be able to get a nice, high-end car at a price roughly half that of the gasoline model today,”

Agassi’s vision is well on its way to reality.  His company, Project Better Place, has already attracted $200-million in venture capital, a commitment from Renault-Nissan to develop and build the software enabled electric cars, and commitments from Israel and Denmark to be the “beta sites” to prove the concept.  If any of this required some new technical breakthrough, I would find it all interesting in a wait-and-see kind of way.  However, what makes this real is that it all rests on a proven foundation of off-the-shelf technology.  The breakthrough lies in the vision – in the paradigm shifting business model.  The initial selling is done, what comes next is flushing out the partnerships, building he supplier base, creating the system software, and engineering the infrastructure.

The collection of park and charge spots across a country or city, together with software that controls the timing for charging the cars, creates a smart grid—synchronized and extending the country’s existing electric grid, matching excess electricity on the grid with the need to charge batteries flattening the demand curve in the process. When we put together the charge points, the batteries, exchange stations, and the software that controls timing and routing we get a new class of infrastructure—the Electric Recharge Grid (ERG). A new category of companies will emerge in the next few years which will install, operate and service customers across this grid—called Electric Recharge Grid Operators (ERGOs).—Project Better Place white paper distributed at EVS-23

car-pod

The ifs and the maybes are past tense.  Renault-Nissan has promised to have the cars ready by 2011 and prototype testing has already begun in Israel.  These cars will not be glorified golf carts, but snappy full size sedans and small SUV’s.

The consumer’s contract for the EV must be the same – or better – than the consumer’s current contract for gas-powered cars.  We need to change the way consumers buy an EV so that it fits the current social contract we have with our cars, providing a normal car ownership experience even if the car has an electric drive train. –  Shai Agassi

Israel and Denmark provide ideal consumer markets to test the business model.  Each country enjoys low average miles driven per day that fall within the proposed battery pack range and a high likelihood that the electricity used for transportation will be renewable.  Denmark already generates enough excess wind power to supply all of it’s personal transportation needs and Israel has an obvious strategic need to be independent of Middle East oil.

With any infrastructure project of this magnitude, there will be unforeseen problems.  However, none are likely to be more than temporary engineering challenges.  The end result will be a new electric personal transportation paradigm that is equal to or better than the freedom and convenience provided by the internal combustion engine.  It is a business model that has the potential to greatly mitigate the impact of peak oil, positively impact climate change, and by providing a large storage sink in the form of batteries enable much greater use of  solar and wind power on utility grids.

It also extends the age of the automobile, along with the legacy of traffic jambs, suburban sprawl, and mind numbing commutes.  Better Place estimates the the cost to develop the necessary infrastructure in the U.S. is about $500 per car or about a year’s worth of oil imports.  Over $400 of that number is for investments in renewable energy to avoid the shell game of trading oil off against coal and natural gas, so the actual cost for the charging and battery swap infrastructure is only about $85 per car.  Since the U.S. electrical grid suffers from 30 years of under-investment and is a balkanized maze of 500 owners, the implementation of the Better Place model will mimic the cellphone industry and role out by metro region based on local politics and beliefs that favor an early adopter mindset.  It’s no surprise that the California cities of San Francisco, Oakland, and San Jose will combine to be the first U.S. adopters of the model.

A Utopian Future?

Once you have a system of electric cars – a system that knows where every car is and where they are going – it is not much of leap to imagine the end of traffic jams or even the end of actually having to operate the vehicle.  Phase II?

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The Obama Energy Plan and our Homes

How will Obama’s energy polices affect our homes?  We won’t really know until his proposals are debated and enacted by congress, but we can get a sense of what might happen from his campaign’s position statements.  From his campaign website’s fact sheet his stated position on building energy efficiency is as follows:

“Obama…will establish a goal of making all new buildings carbon neutral, or produce zero emissions, by 2030.  [He] will also establish a national goal of improving new building efficiency by 50 percent and existing building efficiency by 25 percent over the next decade to help us meet the 2030 goal.”

This is straight from the playbook of Ed Mazra’s Architecture 2030 Challenge.  As evidenced by the following quote from the 2030 website, the 2030 Challenge is predicated on climate change and the reduction of green house gas emissions associated with the Building Sector.

“Rapidly accelerating climate change (global warming), which is caused by greenhouse gas (GHG) emissions, is now fueling dangerous regional and global environmental events. Data from the U.S. Energy Information Administration illustrates that buildings are responsible for almost half (48%) of all GHG emissions annually. Seventy-six percent of all electricity generated by US power plants goes to supply the Building Sector. Therefore, immediate action in the Building Sector is essential if we are to avoid hazardous climate change.”

I have two issues with the 2030 Challenge.

One is that the 48% responsibility for GHG emissions attributed to buildings is overstated.  The emissions assigned to the building sector are primarily the indirect result of drawing on electrical power generated from coal and natural gas fired power plants, so the question becomes whether to focus our resources on the building “demand” side, or the power plant “supply” side, or some combination of both.  In that broader context, we may find that it is much easier to deal with a few hundred power plants than to transform 150 million residential and commerical buildings.  From a public policy perspective, both the demand and supply side should be considered as a synergistic whole.

My second issue is more fundamental.  Architecture 2030 asks and answers the wrong question.  The question that Architecture 2030 asks is what actions should we take to mitigate the effect of the building sector on climate change.  However, the greater question is what actions should we take to render the building sector sustainable.  Once sustainability is on the table then we have to consider carrying capacity and carrying capacity overshoot at which point climate change is just another canary in the coal mine.

Carrying capacity is all about the ecological limits (capacity) of our planet’s resources and sinks.  By considering GHG emissions as the primary driver for building energy improvements, policy makers are overlooking the much more immediate and serious resource issues of peak oil and gas.  Since both of these peak events will be evident as early as 2010, all buildings should be built or retrofitted to a net zero energy and carbon standard NOW, not 22 years from now.

However, I digress.  Since it will take the actual emergency of these peaking events to mobilize the political will to enact a national zero energy standard, the question is what can we expect when Obama takes office next year.

The first likely step will be to start the process of improving building efficiency by 50% through our building codes.  A significant improvement is already in the works for the residential sector with the IECC 2009. However, at this time, the 30% improvement authored by the Energy Efficient Codes Coalition, will only be a voluntary appendix to the next release of the code.  In addition, once the new code is released, it has to be reviewed and adopted by hundreds of city, county, and state authorities.  In the process, these authorities often dumb down new energy code provisions in response to local politics.  We can also expect a major push back from a decimated housing sector deeply concerned about adding any new code mandated building costs.

My best guess is that under Obama, the voluntary 30% improvement provision authored by Energy Efficient Codes Coalition will be supported by Obama’s Grant Program for Early Adopters policy proposal.  This proposal creates a competitive grant program for states and localities that “take the first steps in implementing new building codes that prioritize energy efficiency, and provides a federal match for those states with leading-edge public benefits funds that support energy efficiency retrofits of existing buildings.”

The grant proposal creates a policy that respects local politics and helps to support those areas of country that have the political will to move forward with improving building energy efficiency.

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The Pickens Plan

I have nothing against wind power and think it will be an important part of our future energy mix.  However, I think The Pickens Plan is misleading and will not lead to the advertised reduction in oil imports.

The Pickens Plan

  • The goal of the plan is to replace 1/3 of our oil imports in 10 years.
  • We would first replace existing natural gas fired power plants (20% of our generating capacity) with wind turbine power.  According to Pickens, this will cost about $1-trillion for the wind turbines and another $200-billion for additional grid/transmission infrastructure.
  • We would then take the natural gas displaced from power generation and use it to fuel compressed natural gas [CNG] cars and trucks instead of using gas and diesel fuel.

All this sounds simple enough, but as usual the devil is in the details.  I see three main fallacies.

Fallacy One – A variable and uncontrollable power supply like wind cannot replace a flexible, on-demand power source like natural gas.   The following is from the DOE’s July 2008 report titled “20% Wind Energy by 2030”:

“There are two separate and distinct power system challenges to obtaining 20% of U.S. electric energy from wind. One challenge lies in the need to reliably balance electrical generation and load over time when a large portion of energy is coming from a variable power source such as wind, which, unlike many traditional power sources, cannot be accessed on demand or is “nondispatchable.

Transmission system operators must ensure that enough generation capacity is operating on the grid at all times, and that supply meets demand, even through the daily and seasonal load cycles within the system. To accommodate a nondispatchable variable source such as wind, operators must ensure that sufficient reserves from other power sources are available to keep the system in balance.

However, overall it is the net system load that must be balanced, not an individual load or generation source in isolation. When seen in this more systemic way, wind energy can play a vital role in diversifying the power system’s energy portfolio.”

Translation:  There is a limit to how much of a variable power source like wind can be accommodated by the system and the DOE estimated that limit to be about 20% of the total electrical power generated.  In addition, after adding this new wind power, the system will continue to need natural gas fired, on-demand, dispatchable power to achieve a balance between supply and demand.

The bottom line – Few if any gas fired power plants can be displaced by wind power.

Fallacy Two – Utilities are unlikely to decommission any of their gas fired power plants.   In 2009, congress will probably enact a Cap & Trade policy for greenhouse gases.  Since coal fired power plants emit 2 times more CO2 than gas fired plants,  to reduce emission costs, utilities are much more likely to decommission older coal plants as new wind generation capacity comes on line rather than gas plants.  It’s even more likely that they’ll just use the additional capacity to meet growing demand.

The bottom line – Few if any gas fired power plants will be displaced by wind power.

Fallacy Three – In the near future, we will not be able produce enough natural gas to meet current demand let alone meet any new demand for transportation.

U.S. natural gas production peaked in 1973 and we have just managed to maintain production levels at near 1973 levels by extracting “unconventional” gas from tight sand and shale formations, deep water sources in the gulf of Mexico, and by tapping into coal bed methane gas.  We are now working almost twice as hard to extract the same amount of gas, and since 1990 the number of active wells has increased from 250,000 to over 450,000.  In addition, since 1996 production per thousand feet of well drilled has fallen from 350 MMcf/1,000ft to 60 Mmcf/1,000ft.  Based on the current trends, U.S. production may soon fall off a cliff.

U.S. Natural Gas ProductionAs a result, 20% of our needs are now met by imports. Canada provides most of these imports with a much lessor amount coming in the form of liquid natural gas [LNG] from Trinidad and few other sources.  Unfortunately, Canadian production is now in decline [~3% per year] and may be unable to supply our import needs as early as 2010.

The arctic pipeline of Sarah Palin fame will be capable of supplying 8% of our current demand, but will not be on line until 2018 at the soonest.  Our best near term option is to import and compete for LNG on the global market at more than twice the cost of our existing supply.  This will put us at the mercy of Middle Eastern and Russian suppliers which control more than 50% of the global supply.  In addition, it is doubtful the the current LNG infrastructure of tankers and de-gasification terminals is adequate to meet U.S. demand.

Bottom Line – Don’t run out and purchase that compressed natural gas [CNG] vehicle any time soon

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Human Carrying Capacity and the 2008 Financial Meltdown

In 1972, a group of researchers funded by the Volkswagon Foundation published a book titled, The Limits to Growth.  Based on a MIT computer model using system dynamics, the book predicted that unless the current trajectory of population and industrial growth was altered, the world would exceed it’s human carrying capacity resulting in a sudden and uncontrollable decline in population and industrial capacity.

By challenging our beliefs in the inevitable rightness and goodness of technical, industrial, and economic growth, the book evoked great controversy and would eventually sell over 30 million copies in more than 30 languages.  Contrary to much of the criticism that the book received, it was neither anti-growth nor did it predict the running out of any specific resource by a date certain.  Noting that it’s research was “preliminary”, the book offered three simple conclusions.

  1. If current growth trends continue we will exceed the earth’s human carrying capacity within 100 years.  This overshoot of carrying capacity will result in a sudden and uncontrollable decline in both population and industrial capacity.
  2. These growth trends can be altered to achieve a sustainable, “ecological stability” capable of supporting a given human population far into the future.
  3. The longer we wait to begin altering growth trends, the lower the probability of successfully achieving a sustainable future.

The 1972 authors gave us some markers to watch for as warning signs or indicators of our possible overshoot of human carrying capacity.

  • Deterioration in renewable resources – surface and ground water, forests, fisheries, agricultural land.
  • Rising levels of pollution.
  • Growing demands for capital, resources, and labor by military and industry to secure, process, and defend resources.
  • Investment in human resources (education, shelter, health care) postponed in order to provide immediate consumption and security demands.
  • Rising debt; eroding goals for health and environment.
  • Growing instability in natural ecosystems.
  • Growing gap between rich and poor – between the powerful and the weak.

I’ll return to these warning signs, but first I think it would be useful to define a few key concepts.

Human Carrying Capacity
In the simplest of terms, human carrying capacity in a closed eco-system like earth is a function of population plus the average rate of consumption of that population.  At a given limit, you have the trade off of a high population and low levels of consumption, or low population and higher levels of consumption.

Human carrying capacity is the maximum rates of resource harvesting and waste generation (the maximum load) that can be sustained indefinitely without progressively impairing the productivity and functional integrity of relevant ecosystems wherever the latter may be located. The size of the corresponding population would be a function of technological sophistication and mean per capita material standards. This definition reminds us that regardless of the state of technology, humankind depends on a variety of ecological goods and services provided by nature and that for sustainability, these must be available in increasing quantities from somewhere on the planet as population and mean per capita resource consumption increase. – William E. Rees

Carrying Capacity Overshoot
To overshoot means to grow rapidly beyond the limits of carrying capacity. When this overshoot occurs, it’s due to a limit or barrier exceeded within the system, and the system (natural and/or economic) corrects and begins to slow, stop, or reverse growth.  In addition, as the limits of our natural systems are exceeded they are degraded, which results in the overall carrying capacity being diminished.   Overshoot leads to a sudden and catastrophe collapse.

As the environment is degraded, carrying capacity actually shrinks, leaving the environment no longer able to support even the number of people who could formerly have lived in the area on a sustainable basis. No population can live beyond the environment’s carrying capacity for very long. – William E. Rees

Humans are hard wired to discount the future, so in the context of carrying capacity, I have often wondered what environmental disaster or resource limit would be the tripwire that would launch us into the kind of collective action required to avoid or mitigate overshoot and catastrophic collapse.  Would our tendency to only react when faced with a crisis, doom us to a fate of too little, too late?  Will we miss our window to achieve a sustainable “ecological stability”?

Perhaps the tripwire won’t be a natural limit like global warming, or peak oil, or fisheries collapse, or soils loss.  Perhaps the tripwire will be a systemic economic collapse.  And if it is, will we see it for what it is, or will we clamor in panic for a return to business as usual?

In the 1992 followup publication, Beyond the Limits, the authors clarified their position relative to growth:

A sustainable society would be interested in qualitative development, not physical expansion. It would use material growth as a considered tool, not a perpetual mandate. It would be neither be for nor against growth. Before this society would decide on any specific growth proposal, it would ask what the growth was for, and who would benefit, and what it would cost, and how long it would last, and whether it would be accommodated by the [natural] sources and sinks of the planet.

In other words, they meant that qualitative growth was still possible, and only quantitative growth was limited….more quality of life, less stuff.  The 1992 authors also remained hopeful and stated that:

The decline [overshoot and collapse] is not inevitable. To avoid it two changes are necessary. The first is a comprehensive revision of policies and practices that perpetuate growth in material consumption and in population. The second is a rapid, drastic increase in the efficiency with which materials and energy are used.

The 2004 follow up publication, Limits to Growth: The Thirty Year Update, would not be so optimistic. Based on thirty years of additional data and refinements in their computer modeling, the authors would be forced to conclude that the world was in a dangerous state of overshoot.  Consider again the list of warning signs from the original 1972 publication.

ECONOMIC SYSTEMS:
Rising debt; eroding goals for health and environment.

  • In the last eight years the U.S. National Debt has grown from $5.7-trillion to over ten trillion dollars. However, that only begins to tell the story.  If we use generally accepted accounting procedures (GAAP) to determine the nations financial obligations and include the net present value of the unfunded liabilities in social insurance programs such as Social Security and Medicare, then the total federal obligation exceeds $59-trillion dollars.
  • According to David Greenlaw, Morgan Stanley’s chief economist, the 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983.
  • U.S. household debt as a percentage of GDP has risen from a low of 12% at the beginning of WWII to over 90% in the year 2006.
  • U.S. credit card currently exceeds $950-billion, 30% of which is carried by “high risk” borrowers.  Innovest estimates that banks will write off $41- billion in credit card debt in 2008, and $96-billion in 2009.  The American consumer is “tapped out”.
  • In 1970, the world’s poorest countries (roughly 60 countries classified as low-income by the World Bank), owed $25 billion in debt.  By 2002, this debt had grown to $523 billion.  Basically, the more the developing countries stay in debt, the more they will feel that they need to milk the earth’s resources for the hard cash they can bring in, and also cut back on social, health, environmental conservation, employment and other important programs.

“Pushing debt has become the easiest and the most profitable business in the U.S. over the past few years. Who wants to take the risks of a producer when financing has become so lucrative? Look at the largest “industrial” corporations in the U.S. over the past decade, or two, and what you see is that they are lot more into financing business than in production business.” – Jas Jain, December 2006

Growing gap between rich and poor – between the powerful and the weak.

  • In 1998 more than 45 percent of the globe’s people had to live on incomes averaging $2 a day or less. Meanwhile, the richest one- fifth of the world’s population has 85 percent of the global GNP.  And the gap between rich and poor is widening.
  • At the beginning of the 19th century, average incomes in the richest nations were about 4 times greater than those in the poorest nations.  100 years later at the turn of the 20th century, average incomes in the richest nations are 30 times larger.
  • An analysis by economists Thomas Piketty and Emmanuel Saez found that despite several periods of healthy growth between 1973 and 2005, the average income of all but the top 10 percent of the income ladder — nine out of ten American families — fell by 11 percent when adjusted for inflation.
  • Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations.
  • The share of income held by the top 1% in America was as large in 2005 as it was in 1928.
  • In the U.S., between 1979 and 2005, the mean after-tax income for the top 1% increased by 176%, compared to an increase of 69% for the top quintile overall, 20% for the fourth quintile, 21% for the middle quintile, 17% for the second quintile and 6% for the bottom quintile.

“…income variance is a long-term (multi-year) indicator of economic activity. The more extreme it gets, the worse the economy and the financial markets eventually will become. Looking at two simplified markets with one man making $100,000,000 per year or 1,000 men making $100,000 per year, there will tend to be more speculative financial markets in the first case, but more automobiles will be sold in the second case. The system tends to be self-adjusting when income variance reaches an extreme, with the speculative market bubble eventually bursting and income and economic activity tending to get redistributed.” – John Williams, Shadow Government Statistics

Investment in human resources (education, shelter, health care) postponed in order to provide immediate consumption and security demands.

  • More than half a million people, mostly children, died from measles in 2003 even though effective immunization costs just 30¢, and has been available for over 40 years.
  • Since 2003, discretionary spending in the U.S. has declined by 9% for education and 17% for health.

Growing demands for capital, resources, and labor by military and industry to secure, process, and defend resources.

  • World military expenditures have increased 45% since 1998 to $1.34-trillion in 2007.
  • The USA’s military spending accounted for 45 per cent of the world total in 2007, followed by the UK, China, France and Japan, with 4–5 per cent each.
  • Defense accounts for over 50% of the U.S. discretionary budget.  This does NOT include the costs of the Afghan and Iraqi wars.

“Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.” – James Madison, 1795

Growing instability in natural ecosystems.

  • Sea level has risen 10–20 cm since 1900. Most non-polar glaciers are retreating, and the extent and thickness of Arctic sea ice is decreasing in summer.
  • Vertebrate species populations have declined by about one-third in the 33 years from 1970 to 2003
  • Global extinction of species occurred in the 20th century at a rate that was a thousand times higher than the average rate during the preceding 65 million years. This is likely to destabilize various ecosystems including agricultural systems.  This will threaten food supplies for hundreds of millions of people.

Deterioration in renewable resources – surface and ground water, forests, fisheries, agricultural land.

  • The first global assessment of soil loss, based on studies of hundreds of experts, found that 38 percent, or nearly 1.4 billion acres, of currently used agricultural land has been degraded.
  • In 2002, the Food and Agriculture Organization of the UN estimated that 75 percent of the world’s oceanic fisheries were fished at or beyond capacity. The North Atlantic cod fishery, fished sustainably for hundreds of years, has collapsed, and the species may have been pushed to biological extinction.
  • The Science journal has warned that commercial fish and seafood species may all crash by 2048.
  • Global water consumption rose six-fold between 1900 and 1995 – more than double the rate of population growth – and goes on growing as farming, industry and domestic demand all increase.

Rising levels of pollution.

  • 40% of America’s rivers and 46% it’s lakes are too polluted for fishing, swimming, or aquatic life.
  • The Mississippi River carries 1.5 million ton of nitrogen (fertilizer) pollution into the Gulf of Mexico each year creating a marine dead zone the size of Massachusetts.
  • Pollution of freshwater (drinking water) is a problem for about half of the world’s population. Each year there are about 250 million cases of water-related diseases, with roughly 5 to 10 million deaths.
  • China already uses more coal than the United States, the European Union and Japan combined. And it has increased coal consumption 14 percent in each of the past two years in the broadest industrialization ever. Every week to 10 days, another coal-fired power plant opens somewhere in China that is big enough to serve all the households in Dallas or San Diego.
  • We can measure CO2 levels in the atmosphere going back over 450,000 years by analyzing polar ice cores.   Prior to the industrial revolution they had never been higher than 300ppm.  They are now in excess of 380ppm.

We were in the beginning of an unprecedented global financial meltdown and when I started writing this post, and I was curious as to whether the current financial crisis is just another economic cycle, or is somehow associated with the overshoot and collapse predicted by the authors.  I cannot say it is or is not with any certainty, but there are too many other warning signs (many more than I have listed) to not be very alarmed.  Just as this financial crisis was sudden and severe, so will be the consequences of overshoot.

I think the greatest contribution of Limits to Growth and the follow-on publications was to bring the concepts of human carrying capacity and overshoot into the public discourse.  The consequences of overshoot are many times more troubling than either global warming or peak oil.  Unfortunately, overshoot, like peak oil, may only be evident to policy makers and the general public by looking back from the context of fear, chaos, and crisis, much like we are doing today with the current financial meltdown.

A  year ago I would have bet that peak oil would be the key triggering event of overshoot.  As I watch the daily spectacle of the financial world imploding, I am no longer so sure.  I’ll leave you with a “some day” vision from one of the original authors of Limits to Growth.

It seems to me a powerful message, worth repeating and repeating, that people want peace, simplicity, beauty, nature, respect, the ability to contribute and create. These things are much cheaper and easier to achieve than war, luxury, ugliness, waste, hate, oppression, manipulation. Some day, when everyone understands that nearly all of us truly want the same kind of world, it will take surprisingly little time or effort to have it. – Donnella Meadows

More about human carrying capacity.

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.” – Thomas Friedman, March 7, 2009

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Electrial Cooperatives and Distributed Power Generation

“Solar [PV] is slowly going to begin to unwind the existing utility economics, to the point where utilities decide they have to get in or they risk losing their core business – exactly [like] the [PC and telcom] transformations we’ve lived through in the last 20 years.”
Travis Bradford, 2008, author of Solar Revolution

For nearly 100 years utility companies have operated with minimal competition as a regulated monopoly. Imagine having a business that nearly always grew and when costs increased, you could just pass them off to your customers in the form of higher prices.  Utilities, much like the long distance telephone carriers of our recent past, are now facing real competition for the first time.  The primary threat is from PV power installed on the rooftops of American homes and unlike revenue losing energy efficiency measures, such as compact fluorescent lighting, efficient heating and cooling equipment, solar hot water systems, and Energy Star appliances, SOME utilities see homeowner PV and wind power generation as a threat to future revenue loss they can block.

The electrical generation and distribution market in America is divided between Investor Owned Utilities (IOU), Public Owned (Federal or city), and Cooperatives formed under the 1936 Rural Electrification Act.

Investor owned utilities have been the first to adopt net metering due to state laws mandating both net metering and minimum requirements for producing power via renewable energy.  Also, because PV power is generated during the hours of peak demand, providing incentives for residential PV makes good business sense because it offsets the higher operating costs of natural gas peak power plants and defers or avoids the capital costs of additional plants.  However, public utilities and cooperatives are typically not subject to these laws, and aside from the preferential Federal hydroelectric power they get on the cheap, cooperatives in particular have resisted pressure to promote and use renewables.

Cooperatives and the Rural Electrification Administration (REA) launched by President Franklin D. Roosevelt in 1935 are one this country’s greatest success stories.  At the time private and investor owned utilities were not willing to take the risk to extend electrical service to rural areas and millions of  american communities, farms, and ranches were without any source of electricity.

The first rural cooperative organizations were humble main street store-fronts and by 1938 the typical coop had about 800 consumer-members with democratically elected directors to manage the affairs of the organization. These early coops were “first name” neighborly affairs and about as formal as your local grange.  A typical “staff” might consist of a manager, a bookkeeper, a line foreman and a single crew.  Growth would be revolutionary, and by the 1940’s REA cooperatives would deliver power to over 97% of America’s farms and ranches and cooperatives would politically band together under the National Rural Electric Cooperative Association.  As the country grew, the demographics of many cooperatives would change from rural to suburban and the original small farm, grassroots, community character would begin to take on a more corporate feel.  In 1987 and 1993, first president Reagan and then President Clinton would attempt to dismantle the REA structure of federal subsidies, but the cooperative “political footprint” had grown too large and powerful.  Today cooperatives are largely resellers of electricity they buy from investor owned and public utilities at wholesale and resell to their members at retail.  Many are “cooperatives” in name and form only and behave and act with the same self interest as any corporation.  Since, in many cases they are neither base or peak power generators, they don’t have the same incentive as the investor owned utilities to manage peak demand and promote and financially support homeowner PV or wind power systems.

The battle for grid access with cooperatives can best be illustrated with a personal example.

I live in geographical middle of Colorado within the service area of the Intermountain Rural Electrical Association (IREA).  The IREA was formed in 1938 and is the largest of 22 Colorado cooperatives serving a population that is both rural and Denver suburban.  The IREA buys it 93% of its power from investor owned utility XCEL and the balance from DOE’s Western Area Power Administration, a federal hydroelectric power provider.  The members of IREA elect board directors in various districts within the IREA service area every four years.  This sounds democratic enough, but unlike the rural members of the 1930’s who helped dig and plant the original power poles, todays members see themselves more as customers and director elections get about as much mind-share as an election for county coroner.  As a result, directors tend to be elected for “life”, getting what amounts to a proxy rubber stamp every four years.  This cozy relationship changed in 2007 when a member revolt in some of the more liberal suburban districts mobilized to elect a director with greener credentials. The trigger for the revolt was IREA’s position on global warming.  IREA’s website devotes an entire page to debunking global warming and they had spent $100,000 that year to fund anti-global warming “research”.  You have to wonder why a relatively small electrical power reseller would spend so much of its members money tilting a political windmills.

The IREA belongs to both the National Rural Electric Cooperative Association and the Colorado Rural Electric Association(CREA).  These lobbying organizations represent large and conservative political footprints at both the state and national levels.  The Colorado state legislature has been at battle with the CREA over a proposed net metering law for cooperatives.  The CREA and IREA’s position is that residential and other customer’s that take advantage of net metering by installing PV or other renewable power technologies do not pay their fair share of indirect costs and that net metering should be limited to a small percentage of customer’s and that excess power generated should only be reimbursed at “wholesale” rates.  This argument is weak at best, and I could apply the identical logic to a customer that weatherizes his home, or installs Energy Star appliances or compact fluorescent lights.  Add to that the irony that over 90% of the electricity I receive from the IREA comes from XCEL energy which has an aggressive Solar Rewards program to encourage net metered generation of PV power.  To promote the program, XCEL has invested $19.5 million in rebates to over 1,000 customers adding more than 4.3 megawatts of solar energy capacity, and plans on adding another 29 megawatts of capacity by 2015.

The Rural Electrification Administration was renamed the Rural Utilities Service (RUS) in 1994 and continues to subsidize cooperatives through low-rate government loans.  The Washington Post recently reported that the RUS “is using taxpayer money to provide billions of dollars in low-interest loans to build coal plants even as Congress seeks ways to limit greenhouse gas emissions.”  Since only 24% of the counties served by cooperatives are completely rural and 200 of the counties served have populations of more than 1 million, the RUS has lost its original rural focus and now subsidizes many urban areas.  Cooperatives are a “New Deal” legacy program that fulfilled its basic function decades ago and now has taken on a life of its own.  It is ironic that the progressive policies that created the electrical cooperatives and brought power to rural American in the 1930’s and 40’s, would evolve into a regressive and entrenched bureaucracy that will probably be the last barrier to a national  policy of net metering and the distributed generation revolution.

Note: The electrical cooperatives eventually lost the net metering battle in Colorado and must now reimburse net metered customers at retail rates.

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Fossil Fuel Whack-A-Mole

“I believe strongly that this country has to get off oil … The electrification of the
automobile is inevitable.”

Bob Lutz, GM Vice-Chairman, in Newsweek magazine, 2007

“Our view is that oil production will peak in the near future. We need to develop power train(s) for alternative energy sources,” to “move beyond petroleum.”
Katsuaki Watanabe, President of Toyota, June 2008

Our pattern of dwelling in America would not be possible without the everywhere, anytime mobility of the automobile. The initial catalysts for our grand experiment with suburbia were abundant and cheap gasoline, the GI bill of 1944, and the vision of William Levitt who brought land outside of cites like New York and Philadelphia and constructed “towns” made of thousands of low cost homes. Levitt’s invention would be duplicated all across America and gradually devolve into the suburban sprawl, traffic jambs, and one hour commutes of the 21st century.

I spent my early childhood in a Southern California version of one of these post WWII developments. We lived amid thousands of homes laid out in military grid formation with wide asphalt streets, concrete sidewalks, and the occasional park and school. We ate 25¢ hamburgers at America’s first drive-in restaurants and fell asleep eating popcorn in the back of our family station wagon at the local drive-in theatre. Cars where central to our lives and Detroit was still king of the automotive world. Like a Paris fashion event, the annual introduction of new car models was exciting news and we all looked forward to how our nation’s car designers would drape and color the latest in sheet metal fashion for America’s showrooms. Everyone in the neighborhood could play “name the make, model, and year of that car” and when a new model arrived in someone’s driveway, we all gathered around to admire and compare.

However, today the shine is off the Studebaker. Levitt & Sons has gone bankrupt. A victim of overreach and the sub-prime mortgage crisis. What’s left of the Detroit auto industry is hemorrhaging cash as they scramble to survive in a $130 per barrel, SUV killing world. In an effort to save our vast investment in suburbia and our automotive lifestyle major auto companies and a few entrepreneurial startups are designing and beginning to promote plug-in hybrid, all electric, compressed air, and hydrogen fuel cell cars as the answer to rising gas and diesel prices.

I have to question whether we will just transition painlessly to the next generation “power train” or will this new autopia be a game of fossil fuel whack-a-mole before we have to face up to to the unsustainable reality of suburbia? In the short term the answer is a tentative maybe as we navigate the two decades between today’s emerging crisis of peak oil and tomorrow’s crisis of peak coal.

Understanding and Comparing A New Generation of Automotive Power Trains
Nothing is free when it comes to energy and transportation, and all of these new automotive power trains will merely transfer the current demand for gasoline into a new demand for electricity. In America, that means we’ll be trading off oil against coal and natural gas which together comprise the base fuels for about 80% of our electrical capacity.

Electric, compressed air, and hydrogen cars often get promoted as super clean, zero emission, technologies and I still get the occasional email from friends who seem to think that the laws of thermodynamics have been suspended for these new technologies and that we’ll be driving around burning water for fuel.

The truth is that all of these new power trains will require fossil fuel inputs to get us to work and back. Electric and plug-in hybrid cars will depend on lithium ion batteries that will need to be plugged into the national electric grid every evening for a recharge. Air cars will depend on high pressure storage tanks of compressed air that will have to be re-pressurized every evening using electrical power. The one question that usually goes unasked and answered for hydrogen cars, is “where does the hydrogen come from?”. The unfortunate answer is that hydrogen will come from the electrolysis of water and that will require an energy input of either electric power or the burning of natural gas. In addition, after creating the hydrogen, much like air, it must be compressed to store enough usable energy for the fuel cells to convert hydrogen into DC electricity for the power train.

Although there are cost tradeoffs between the three options, based on the efficiency of converting electrical power into miles driven, lithium ion electric cars have a clear advantage. A study by the Institute for Lifecycle Environmental Assessment based on incorporating each of the three drive trains into the equivalent of a Ford Taurus gives the lithium ion technology a three to one advantage in miles per kwh of electrical input.

Based on electrical rates in Denver, and 18 miles/gallon for a Taurus, the “equivalent gallon” costs of all three technologies easily beats our current national average of over $4. However, when you compare the CO2 emissions, based on 1.8 lbs/kwh in Colorado, only the electrical car emits less greenhouse gas than the equivalent gasoline powered Taurus.

A Game of Fossil Fuel Whack-A-Mole?
We get about 60% of our electrical energy from coal and about 20% from natural gas. The good news is that coal plants, which provide most of our base load power, have excess capacity after about 10 PM at night, and ased on a study by the Oak Ridge National Laboratory that assumes plug-in hybrids gain a 50% market share by 2030, we’ll only need an additional 8 large power plants to meet that new electric car demand. The bad news is that if we plug in at 5 PM instead of 10 PM, we’ll need an additional 160 large power plants to meet demand.

In either case, we’ll be burning millions of tons of additional coal to power the electric, hybrid plug-in, compressed air, and hydrogen cars of the near future. In the process we’ll be driving up the cost of coal and electricity and hastening coal’s eventual depletion.

An October 2007 report by the Energy Watch Group estimates that we’ll be facing a world wide peak in the production of coal sometime around 2030. This study does NOT factor in a new generation of automotive power trains that rely on electricity. Since electrical power generation is the primary end use of coal, this peak in coal production will only move closer.

I agree with Bob Lutz that “the electrification of the automobile is inevitable”, but if we think coal is the answer then we’re just playing a pathetic energy endgame of Fossil Fuel Whack-A-Mole.

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Energy Productivity and the “Fifth Fuel”

McKinsey and & Company released a report in May titled Curbing Global Energy Demand Growth: The Energy Productivity Opportunity. The report documented how we could reduce the world wide annual energy demand growth rate between now and 2020 from about 2% to around 1%, simply by improving energy productivity.

Not surprisingly, the report states that the “… most substantial productivity improvement opportunity is in the global residential sector, which is also the world’s largest consumer of energy with 25 percent of global end-use demand. By implementing available technologies such as high-insulation building shells, compact fluorescent lighting, and high efficiency water heating, the sector’s energy demand growth would more than halve, from 2.4% a year to only 1.0% a year.”

The report also states that:

“Consumers lack the information and capital they need to become more energy productive, and tend to make [decisions based on] comfort, safety, and convenience priorities. In addition, a range of policies dampen price signals and reduce incentives for end users to adopt energy productivity improvements.”

The report argues that policy changes will be necessary before consumers will take significant action to improve the energy efficiency of their homes. In other words, nothing will happen without leadership from our policy makers

In an example of enlightened leadership, Duke Energy filed a request (also in May) with the North Carolina Utility Commission proposing regulatory authorization to be rewarded for investments in energy efficiency much like they would for a new coal fired electrical plant. I don’t often use enlightened and Duke Energy in the same sentence, but their Save-a-Watt program represents an exciting new business paradigm and addresses the some of the policy issues outlined in the McKinsey report. This is a promising new development that could help pave the way to a more sustainable future.

The following bullets are a summary of benefits Duke sees is this new business model for consumers, themselves, and by extension other electric utilities

  • Allows for the treatment of energy efficiency as a “Fifth Fuel
  • It would displace a portion of the electricity otherwise needed to meet it customers’ energy requirements with zero air emission conservation, and also reduce the amount of new generation that would otherwise be required
  • It would lower costs for customers, when compared to the costs that result would from the addition of new electrical generation resources.
  • It would offer the potential to substantially lower costs for customers who participate in energy efficiency programs (PV, solar hot water etc.).
  • Would provide customers the opportunity to lower their environmental footprint through direct participation in energy efficiency.
  • The program would provide more choices and options that help customers manage their energy costs in an environment of rising energy prices
  • The program would create new energy efficiency service jobs in order to implement energy efficiency programs.
  • The program would provide the Company with an incentive to make significant, sustainable investments in energy efficiency and rewards the Company for the results produced and the risks taken.

The filing by Duke explains this new “energy efficiency” business model as follows:

“The Save-a-Watt approach will encourage and compensate the ultility for investments in energy efficiency at 90% of the avoided supply-side costs. Under traditional regulation, a utility is allowed to recover the depreciation and operation costs for a new plant and also earn a return on the un-depreciated plant. Under the save-a-watt regulatory approach, the utility would be allowed to recover 90% of the depreciation and operating costs avoided by not building the new plant and also earn a return.”

“The Company assumes some risk in the proposed save-a-watt approach. Revenues collected through the proposed energy efficiency rider are intended to cover program costs and the financial impact of lost sales, but will be based on actual results achieved. Lost sales occur when energy efficiency programs reduce energy consumption, thus reducing the revenues available to cover fixed costs between rate cases (e.g. investments in utility infrastructure).”

In perfect accord with the McKinsey report, Duke goes on to say that:

“…customers are unlikely to sacrifice comfort and convenience to participate in energy efficiency. In addition, the initial capital outlay associated with some programs could be a significant barrier to customer participation.”

In addition to addressing capital outlay hurdle for consumers, some of the elements of proposed Save-a-Watt program include:

  • discounted or free Compact Fluorescent Lamps
  • discounted energy efficient air conditioning and heat pump units
  • remote power management of air conditioning and heat pump units
  • PV and solar hot water systems free to the consumer (pilot program)
  • energy efficiency capital cost financing through Duke (pilot program)
  • monthly billing statements correlated with historical usage and weather data to facilitate ongoing improvement

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