Trump's energy policy speech

I haven’t been paying much attention to the statements made by the presumptive Republican nominee, Mr. Donald J. Trump. His bombastic and inflammatory comments early in the campaign had turned me off. On May 26 he gave speech on energy policy at the Williston Basin Petroleum Conference, in Bismarck, North Dakota. A friend sent me a news clip of his speech wondering if his statement about the relative oil reserves of the US and OPEC were correct. Energy happens to be a subject that I am quite familiar with: having worked in the area for thirty years and written a book and blogging on the subject. My immediate response upon hearing him was that he was totally wrong. US oil reserves are only a fifth of those of Saudi Arabia, and even with the recent gush of shale oil, the US reserves remain a tiny fraction.

What puzzled me was why a candidate for the US Presidency would make such an obvious mistake. And so I listened to his statement again; this time very carefully to see if I had missed something—and indeed I had. Here is a link to his full speech.

In a single sentence Trump says that the US has 1.5 times oil than the combined reserves of OPEC. One would think that when he says "US has 1.5 times oil" he is also referring to the oil reserves of the US, otherwise the comparison would not make much sense. But he did not say that US reserves of oil are 1.5 times those of OPEC. He only said that US “has 1.5 times oil…” Such a comparison would be as meaningless as me saying I have more money than Trump has cash in his pockets—a statement while most likely true is totally disingenuous and insincere!

Here are some numbers in cmo units—cmo stands for a cubic mile of oil and is equal to 26.2 billion bbl (barrels) or 3,784 million metric tons of oil equivalent (MTOE). US oil reserves are less than 2.0 cmo; Saudi Arabian reserves are over 10 cmo. The reserves of all OPEC countries add up to 43 cmo. Russian reserves are about 4 cmo. If by “has” Trump is referring to all US resources, including oil shale (not just shale oil, which can be produced by fracking), then yes he may be correct. US has an estimated 70 cmo of oil shale, but for whose recovery we do not have an economic technology. Remember, oil shale is that vast resource that has oil precursors embedded in shale, but the geology has not yet done the job of producing the oil. We have to dig up the rock and heat it to produce the oil or heat it underground to liberate the oil. For a fairer comparison of respective resources we should look at the resource base of OPEC too, which is estimated at about 40 cmo on top of the 43 cmo of reserves.

Trump also makes the audacious claim that the US has more natural gas than Russia, Iran, Qatar, and Saudi Arabia. The natural gas reserves of the US are 2.2 cmo, while those of Russia are 4.0. The combined reserves of Russia, Iran, Qatar, and Saudi Arabia are 23 cmo. Hard as much as I try, I cannot rationalize Trump's statements about natural gas.

A basic premise of Trump’s speech was that the regulations had been curtailing production in the US energy resources. He wants to declare US energy dominance a strategic, economic, and foreign policy goal. He would achieve that goal by getting rid of those onerous restrictions by the EPA and other agencies. He will cancel the Paris Climate Agreement (COP21) and stop all payments of U.S. tax dollars to U.N global warming programs.

His main assumption is that once the regulations are gone, the oil and gas industry could ramp up production and bring wealth to America. This line of reasoning takes no account of the fact that the global market is already oversupplied. Increasing US production will only further depress the prices and make much of the US production uneconomic. When oil prices fell from $100/bbl in 2014 to below $30/bbl in 2015, investments in new drilling ceased, rig counts plunged from 1900 to 400, and many boom towns in North Dakota, Montana, and Texas became emaciated skeletons of their roaring days. This decline was not a self-inflicted wound; it did not occur as a result of EPA-imposed regulations. In order for the US oil to garner a greater share of the global market, it would have to undersell the low priced competition from Saudi Arabia—and there goes the economic incentive for any oil producer in a free economy.

Trump blames regulations like the Clean Power Production as the chief reason coal production and use in the US has dropped sharply—from producing 50% of US electricity to producing only 33%. The Clean Air Act and its amendments dating from the 1970s and 1990s increased the cost of electricity from coal, but they did not remove the dominance of coal in power production. The main reason for the decline has been the availability of cheap natural gas. Cleaner and cheaper natural gas has made coal burning power plants relatively uneconomical. Under Trump’s plan, restrictions on fracking for oil and gas would be lifted and flood the market would be further flooded with cheap gas, which would only hasten the demise of coal. Those coal mining jobs that he talks about cannot be restored as long as there is an abundance of natural gas, unless he artificially raises the price of natural gas. He cannot have both gas and coal industries flourish simultaneously—at least not in a free market democracy.

According to Trump, “President Obama entered the United States into the Paris Climate Accords – unilaterally, and without the permission of Congress. This agreement gives foreign bureaucrats control over how much energy we use right here in America.” To begin with COP21 is an Agreement, not a treaty that would require congressional approval.  Under COP21 foreign bureaucrats do not control how much or how we use energy in America. In fact, the Agreement relies solely on “intended nationally determined contributions (INDC),” which are put forth by the signatory nations themselves.  The problem with COP21 is that the current set of INDCs do not go far enough to meet the reductions required to limit the Earth’s warming to 2°C above the pre-industrialization level.  But then again, Trump does not believe in climate change results from greenhouse gases.

What these considerations show is that Trump lacks the basic understanding of the facts of the global energy market—who has what and how much. He has no appreciation of the interrelatedness of the energy markets. Given the centrality of energy in matters of national security, foreign relations, and trade, I am afraid that should Trump become our next president, we better fasten our seat belts—it’s going to be a very bumpy ride.

Update January 2016

This is a long overdue post!  The BP Statistical Report came out in April, the Pope’s Encyclical was published in June, oil prices have stayed below $50 a barrel for over a year, the Obama administration issued its Clean Power Plan in August, Climate Talks in Paris were held in December.  Lots of items to cover, so let’s get down to it. 

Overall Energy Use

First, a quick review of the global energy scene in 2014 as reflected in the BP Statistical Review of 2015.  Since 2006, the year for which the data were used in the writing of A Cubic Mile of Oil, energy use has increased from 3.19 cmo to 3.74 cmo. Most of 0.55-cmo increase in energy consumption since 2006 has come from increased use of coal (0.23 cmo), natural gas (0.14 cmo), and oil (0.10 cmo), and not surprisingly, the global emission of CO₂ from energy use increased from 31.2 GtCO₂ in 2006 to 36 GtCO₂ in 2014. The updated pie charts of energy sources are in Figure 1.

Figure 1. Distribution of sources of global primary energy in 2006 and 2014.

Energy consumption in the last 8 years has increased by 17.4%. The period includes the financial crisis of 2008 and a marked decline in energy consumption and economic output for two years. Yet, the net increase in energy consumption corresponds to a compounded average growth rate (CAGR) of almost 2%. I should note that the increase in energy demand in 2014 was less than 1% compared to the 2-3% increases seen in recent years.  The low energy demand reflects a softening in the global market. Annual GDP growth in China is down below 7% and there is considerable economic uncertainty in several European countries such as Greece, Spain, Italy, and Russia.

Nuclear Power

There was a noticeable reduction in the production of nuclear power; from 2806 TWh (0.17 cmo) in 2006 to 2537 TWh (0.15 cmo). The share of nuclear nuclear power to primary energy consumption dropped from 5.4% to 4.0% during this period. Japan shut down all its nuclear power plants following the massive earthquake and tsunami in 2011, which caused a major accident at Fukushima. Japan has now begun the slow process restarting those plants. The plan is to resume generating power from all the plants by 2020 but there remains much public opposition to restarting nuclear power plants. 

Following the general elections in 1998 Germany’s coalition government, which for the first time included the Green Party, adopted a plan to phase out nuclear power. The new Social Democratic Party government led by Angela Merkel reversed that policy in 2009, but reinstated it following the Fukushima disaster. It closed down nine out of the 17 power plants, as a result, instead of providing 25% of domestic electricity, nuclear power provided only 16%. Between Germany and Japan, almost 360 TWh of nuclear power production was lost. Some of the lost nuclear production was made up by increases in China (72 TWh) and India (17 TWh). 

Replacing the loss of 300 TWh of nuclear power by coal would increase CO₂ emissions by 0.3 Gt CO₂, or about 6% of the increase in emissions since 2006. The steady increase in CO₂ emissions does not augur well for climate change. The IPCC reports have been steadily increasing the certainty with which anthropogenic emissions of greenhouse gases (GHG) are expected to cause catastrophic damage. Shutting down nuclear plants at a time when there is an urgency to transition to CO₂-free energy is counterproductive.

Low Oil Prices

Starting in mid 2014, crude oil price began a precipitous decline from over $100/bbl to the current price of about $35/bbl. There are a number of factors for this decline. Commentators in the US tend to attribute this decline to the rise in the US production of tight oil (aka, shale oil). Since 2006 the US oil production has steadily increased by about 3 million bbl/day. It may seem a small fraction of the global consumption which is around 90 million bbl/day, but given the tightness in the market between the supply and demand, a swing of 3 million bbl/day is significant.  However, the story of low oil prices a bit more complicated and involves events and policy changes elsewhere in the world as well. Increase in US production took place at a time when global demand was high and when events in the Middle East had constrained the supply. The excess oil in the US more or less offset the loss of oil from Iraq and Libya in the world market. When Iraq oil started to flow and the global demand was softening a global glut was imminent, but that was prevented by the sanctions against Iran. Now with prospects of the nuclear deal and the lifting of the sanctions, 2.5 million bbl/day from Iran would once again flow into the global market and that fact combined with low demand has depressed oil futures. For over 40 years now, the US has had a policy of not exporting crude oil. With the recent availability of excess domestic crude, the US refiners increased their capacity to produce refined fuels—something that was also aided by the increased supply of fracked natural gas. The US recent lifting of the US ban on exporting crude oil only exacerbates the situation and further depresses oil futures.

Saudi Arabia has traditionally played the role of the swing producer and. as recently as 2013, dropped its production by a million bbl/day to stabilize oil prices. In June 2014 Saudi Arabia reversed its policy and decided in favor of retaining market share by increasing oil production back up to over 10 million bbl/day. This oversupply caused the oil prices to tumble and while it has been largely a boon to oil consumers, the price drop is causing economic hardship in many oil producing countries, including Russia, Brazil, Venezuela, Iraq, and also Saudi Arabia itself.  

Saudi Arabia’s has sufficient cash reserves to support running the current level of deficit for about five years. It is counting on the fact that many of its competitors will not be able to sustain their deficits that long, and will be driven out of business. Under the current circumstances it makes little sense to drill for new oil, particularly in hard-to-produce resources like tight formations, deep water, or under the Arctic Ocean. Companies will produce oil only from wells whose up-front costs have already been paid and for which the cost of continued production can be recovered at the prevailing price of oil.  Wells that are no longer economical will be shut down.

Saudi Arabia’s strategy has already had an impact in the US where rigs used for fracking oil is down from 1900 in January 2015 to 650 in December. The total oil production dropped by 400,000 bbl/day. That the drop in rig count is far more precipitous than the drop in production reflects the fact that there is little appetite for digging new wells, and it is wells with poor productivity that get shut down first. If and when the oil price increases oil from fracked formations can resume in a short time. This quick start-up and shut-down of production allows fracking companies to act as the new swing producers. However, if the low prices continue for several years and investments in new production and distribution facilities are not made, any future rise in oil prices will likely be very steep.

Rise of Renewables

The past eight years have witnessed a marked increase in the production of electricity from wind, solar and geothermal energy sources, from 138 TWh in 2006 to 992 TWh in 2014.  The installed capacity of wind increased five-fold from 74 GW to 373 GW, and for solar it soared 27-fold from 6.7 to 180 GW. The last eight years have seen a substantial drop in the cost of electricity from these technologies. In 2006, PV panels used to sell for about $3/watt, their price has dropped to about $0.75/watt.  The levelized cost of electricity from solar in 2006 was around 36¢/kWh; in 2015 it is below 10¢/kWh.  Many Power Purchase Agreements (PPAs) from solar facilities in 2015 have electricity priced at less than 5¢/kWh. Most notably perhaps are the two agreements signed by the utility NV Energy, owned by Warren Buffet’s Berkshire Hathaway: one with SunEdison for power from a solar plant in Colorado for 4.6¢/kWh; and the other with First Solar for power from their plant in Nevada for 3.87¢/kWh. Wind power prices have also come down over these years.  In 2006, wind energy costs were about 15¢/kWh; in 2015 PPAs signed for wind power in the interior states in the US having a purchase price of about 2¢/kWh. These low prices do come with subsidies in the form of a 30% investment tax credit for the solar power and a 2.3¢/kWh of production tax credit for wind power.  

Since 2000 wind and solar power have enjoyed an exponential growth in production. The growth has been driven by market forces—falling prices—as well as government policies like Energiewende in Germany and Renewable Portfolio Standards in many states across the US. Advocates of of these energy sources project this growth to continue at this level or even at an accelerated pace such that electricity production from these sources will soon provide the majority of global electricity, which in 2014 was 24,000 TWh. The graph below (Figure 2) shows the amount of electricity produced by wind and solar plants on a logarithmic scale. While it is true that for a period solar installations were doubling every two years and wind every four, the doubling rate has slowed down. The slow down since 2011 relative to the growth during the preceding five years is a sobering reminder that once the installation base gets large enough resource constraints—such as material supplies, labor and capital—slow down the process. Rosy forecasts by proponents notwithstanding, unless drastic policy measures are taken, it does not look like wind and solar will generate even 10,000 TWh/yr by 2025, by which time total electricity demand could well exceed 36,000 TWh.

Figure 2. Growth of wind and solar power generation has been remarkable, but current rate is not fast enough to allow wind and solar to be the dominant electricity producers by 2030.

Battery Storage

Storage of electrical energy is an important factor for increasing the penetration of intermittent sources like wind and solar.  The only significant electrical storage capacity in the grid currently is in the form of pumped hydro. Although there are a number of battery systems, such as flow cells and liquid metal cells, in early stages of development, they currently do not provide any grid-level storage. 

Noteworthy advances in Li-ion batteries have also been made in these intervening years. In 2006 Li-ion batteries cost about $1000/kWh, and that was a serious impediment to their broad application electric cars. Cost of Li-ion batteries has now dropped to about $300/kWh. The 24-kWh battery pack in Nissan Leaf cars, which cost an estimated $18,000 in 2010 can now be replaced for $5,500 plus the used battery.  If we include the $1,000 for value for the used battery, the cost of the new battery pack would be $6,500 or $270/kWh.  Life of the battery packs has also increased through better management of heat and charging/discharging currents.  A lifetime of over 1000 deep-discharge cycles is now quite typical. For residential applications Tesla announced its PowerWall units in April 2015. Each $3,500 unit can store 7 kWh—there is also a 10 kWh unit available for $3,500. The price is still steep for use as a simple backup power system during power outage; the main value of these units is for homes with PV systems as they extend the use of solar power during nighttime and largely eliminate the need for grid power. 

CO₂ Emissions

There has been increasing pressure on the world’s largest emitter, China, and the largest per capita emitter, the US, to curb emissions. US and China emissions of CO₂ in 2006 were 6.4 and 6.9 Gt respectively. In 2014, the US emissions were down to 6.0 Gt, but China’s emissions had risen to 9.8 Gt. On a per capita basis, US emissions still far exceed those of China—18 metric tons per capita in the US versus 8.2 metric tons in China. In Nov. 2014 presidents Obama and Xi Jinping signed an accord under which the US would reduce its GHG emissions to 28% below 2005 level by 2025 and China would peak its emissions by 2030 after which it would reduce them. President Obama followed up that pledge by issuing the Clean Power Plan (CPP) in Aug. 2015 under which there would be a federal standard for reducing CO₂ emissions from power generation by 32% over 2005 levels by 2030, but it would be up to individual states to determine the mix of technologies to achieve those goals.

It is not clear how successful CPP will be in cutting down GHG emissions. Market forces have already led to a substantial reduction of emissions in the US by the switch from coal to natural gas, and perhaps more could be achieved with further decline in the cost of wind and solar power. Politically, the CPP has not garnered much support.   Many state governors have already announced their opposition to The CPP. Nevertheless, the joint agreement with China and the CPP have helped pave the way for the COP21 Climate Talks in December.

The Papal Encyclical issued in July also drew attention to the growing threat of climate change and its disproportionate impact on the impoverished.  Pope Francis noted, that “… our industrial system, at the end of its cycle of production and consumption, has not developed the capacity to absorb and reuse waste and by-products,” and called for “changes of lifestyle, production and con­sumption, in order to combat this warming or at least the human causes which produce or aggra­vate it.” His statements about combating climate change received much attention, but there was another deeper message in his statement, the one about consumerism and social injustice it engenders when “(w)e fail to see that some are mired in des­perate and degrading poverty, with no way out, while others have not the faintest idea of what to do with their possessions, vainly showing off their supposed superiority and leaving behind them so much waste which, if it were the case everywhere, would destroy the planet.” The pope recognized the need for vastly expanding renewable energy sources, but also noted that, “(f)or poor countries, the priorities must be to eliminate extreme poverty and to promote the social development of their people.” 

Around the same time as the Pope’s Encyclical, the World Bank also issued Sustainable Development Goals for the world which lists goals and targets in 17 areas: eradicating poverty, providing adequate food and clean water, reducing gender inequality, taking urgent action to combat climate change, and ensuring access to affordable reliable energy is listed among the goals. Achieving most of these goals requires increasing global energy supply. Speaking about the enormous progress the world already made Dr. Jim Yong Kim, president of World Bank noted that over a billion people have been lifted out of poverty in the last 25 years, and he could foresee lifting another billion in not too distant future. 

The progress Dr. Kim noted was made on the backs of coal and oil. Can we afford to do the same to help the next billion? The SDG of removing poverty runs up against the need to curb CO₂ emissions. Unfortunately, the one CO₂-free energy source that is capable to generating the required scale of power, nuclear, is something that the World Bank does not support developing. In view of its policy of not funding nuclear power I have to wonder how serious is the World Bank about the SDGs.

In early December 2015 with much fanfare about 200 nations signed the COP21 Agreement to curb global GHG emissions. It was an unprecedented achievement given the previous failed attempts.  All nations acknowledged the peril the world faces from climate change being engendered by continued emission of GHG, principally from the use of fossil fuels. The countries pledged to cut down their GHG emissions either in absolute numbers or relative to an expected business-as-usual (BAU) scenario. The individual countries determine the GHG reductions they pledge to make. However, there is no mechanism of punitive action to force the countries to stick to the pledged contributions except a public shame. The intended nationally determined contributions (INDCs) are reported to the UN and the emissions of each country are measured and reported in an agreed-upon standard way, and both these are in the public domain. The lack of enforcement is a recognition of political realities; any Agreement that had forced compliance would not have had the support of many countries.

COP21 Agreement sets a goal of limiting the rise in global to temperature to 2°C above the pre-industrialization level, with a stretch goal of limiting the rise to 1.5°C. Even achieving the 2°C target is a daunting challenge, and requires a major upheaval of the global energy system. It would require achieving a net zero emissions by 2050, and limiting total emissions to about 350 Gt CO₂. 

The world currently consumes about 3.6 cubic miles of oil equivalent (cmo) of primary energy and emits over 36 Gt CO₂ from energy use.  Under BAU the annual energy consumption is expected to rise to more than 6 cmo by 2050. Burning of each cubic mile of oil releases 12 Gt CO₂, about 17 Gt if it is from coal and about 8 Gt CO₂ if natural gas is the source of the energy. Even under an all-renewable, all-electric scenario, which could conceivably avoid two-thirds of the primary energy, an energy consumption of 6 cmo/yr would lead to a requirement of generating of 82,000 TWh of electricity relative to 24,000 TWh in 2014; in other words, more than tripling the current global electricity production.

I found it appalling when it was brought to my attention (thanks to Morgan Bazilian)  that the word energy appears only three times in the 31-page Agreement. The word appears twice on page two where the Conference of Parties “acknowledges the need to promote universal access to sustainable energy in developing countries, in particular in Africa, through the enhanced deployment of renewable energy.” The third time the word is used is on page 31 as part of the the name of UN’s IAEA:  International Atomic Energy Agency. No wonder then that there is such huge chasm between the target reductions in CO₂ and the pledged INDCs.

I paint a rather gloomy picture, but I would like to end on a more hopeful note. Perhaps the most important outcome of COP21 was the formation of the Mission Innovation fund by many prominent philanthropists like Bill Gates, Richard Branson, Jeff Bezos, Mark Zuckerberg, and others to help innovative solutions cross the “valley of death” and transition to commercialization. They have been joined by 20 governments to double the collective annual budget of energy research from $10 B to $20 B. It may be too little too late, but I can only hope some of the Mission Innovation funds will provide the necessary support to bring the nascent nuclear power technologies that are inherently safe and scalable to market.

Connecting CMOs, ppms, and joules

I have often been asked questions like how many cubic miles of CO₂ do we produce when we burn a cubic mile of oil, and how many ppms does that represent. In this post, I will make some simplifying, yet reasonable, assumptions to provide answers to these and other questions.

In round numbers, one cubic mile of oil weighs 3.8 billion tons and contains roughly 3.2 billion tons of carbon. Burning this quantity of oil produces 153 quadrillion Btu of energy, which we have defined as 1 cmo. This combustion produces about 12 billion tons or 2.7*10¹⁴ moles of CO₂. As a gas, the volume of CO₂ is depends on the pressure and other variables. But let’s say we condense it into a liquid. Liquid CO₂ has a density of close to that of water. As a liquid the amount of CO₂ from burning a cubic mile of oil will occupy 3 cubic miles. If we burn coal to get an equivalent amount of energy, we produce 17 billion tons of CO₂, which as a liquid would take up 4.3 cubic miles.  Burning a cmo worth of natural gas will generate 7.5 billion tons of CO₂—about 1.9 cubic miles of liquid CO₂.

To determine by how much the concentration of CO₂ in the atmosphere changes when we burn a cmo of oil, we need an estimate of the number of moles of gas in the earth’s atmosphere. Here’s a guesstimate. The radius of the earth is 4000 miles, and so its surface area, 4*pi*r², is approx. 200 million square miles, and if we assume that the atmosphere extends to only 5 miles, the volume of atmosphere is 1 billion cubic miles. If we assume that the pressure in this 1 billion cubic miles is 1 atmosphere and 27°C (it is not, but then the atmosphere also extends to over 60 miles) we can estimate the number of moles of gas in it using the ideal gas equation, PV = nRT. The number turns out to be 1.7*10²⁰ moles. Thus, CO₂ introduced from burning a cmo of oil corresponds to 2.7*10¹⁴/1.7*10²⁰ or about 1.5 ppm of the atmosphere.

Table. Volume of liquid CO₂ produced from burning of 1 cmo of various fossil fuels and its concentration if it all ended up in the air.

Fuel	Volume Liquid CO2 (mi3)	Conc. in Air (ppm)
Gas	1.9	1.0
Oil	3	1.5
Coal	4.3	2.1

The world is currently releasing about 36 billion tons of CO₂ each year from combustion of coal, oil, and natural gas, and that would correspond to about 4.5 ppm. The global CO₂ level though is rising at the rate of about 2.5 ppm a year or about half the value estimated. That is because about half of the emitted CO₂ ends up in the oceans and thus increasing their acidity. The increased acidity makes it harder for corals, oysters, and plankton to develop their shells with potentially dire consequences for the entire food chain!

An estimated 530 billion tons of carbon have been burnt since the start of the industrial revolution. The expected rise in atomspheric CO₂ concentration, if all of it stayed in the air, would have been 245 ppm.  The observed rise of 120 ppm (current concentration of 400 ppm minus 280 ppm, the concentration in 1860) jibes well with the assumed 50% staying in the air.

The greenhouse gas effect of the CO₂ in air amounts to increasing the radiative forcing by roughly 0.5 W/m². That seems like a small perturbation compared to solar insolation of 1000 W/m² (at high noon). There is a nice video describing how you can measure the solar insolation in your backyard with a simple experiment. The net heat gained by the earth in a year can be estimated by multiplying the surface area of the earth (41 10¹² m²) by the radiative forcing (0.5 W/m²) times the number of hours (8760) in a year, a factor that corrects for the fact that only half of the earth’s surface is facing the sun at a given moment, and that the sun is not overhead all the time. The result is a net heat gain of 563 trillion kWh or 12.5 cmo! Since we are currently consuming 2.75 cmo of fossil fuels per year that the additional heat being trapped from the greenhouse effect is four-and-a-half times the energy released from burning of fossil fuels. There goes the theory that the global warming is solely due to the heat rejected by the engines.

Deepwater Horizon Disaster: Five Years Later

Five years ago today the BP Deepwater Horizon (DWH) oil well in the Gulf of Mexico burst into flames following a blow out. Eleven workers died in the accident and 11 others were injured. Oil and gas gushed out for months from the broken pipe at the floor of the sea. The actual quantity of the spill was difficult to ascertain initially, and estimates ranged from 10,000 to 100,000 barrels per day. After the fact, it was determined that the maximum rate of spill was about 62,000 barrels a day and over the three-month period of the spill, 4.9 million barrels of oil had poured out. Even though this figure is questioned as it is important to the litigation and fines that BP has to pay, the range of discrepancy has narrowed—somewhere between 3.2 and 4.2 billion barrels. Researchers are still trying to figure where most of the oil went, because only about a quarter of amount has been accounted for.

Over 600 miles of the coastline were affected. Fishery and tourism are major industries of the region, and suffered enormous losses. The damage to the environment, to the local flora and fauna, and the destruction of their habitat was catastrophic in scope. There was a marked decline in the population of shrimp, oysters, and various fish, and the concern was that with the loss of much of their habitat, populations of pelicans, turtles, and dolphins would also collapse. People feared that seafood from the region would be contaminated with toxins threatening the industry. In the immediate aftermath of the tragedy the headlines screamed of the irrevocable damage to the fragile ecology of the area—that the place would forever turn into a wasteland.

Now, forever is a very long time. Not to minimize the catastrophe that the DWH blowout was, it seemed to me though that the alarmist response was uncalled for, and it distracted attention from the real restorative work that needed to be done. Deepwater Horizon was only one of several major events in which large amounts of oil were discharged into seas and oceans and these accidents could provide some valuable lessons.

A year following the DWH blowout, I wrote a post about the accident. I looked at what happened after four specific incidents of major oil spills:  Amoco Cadiz, Ixtoc 1, Exxon Valdez, and the sabotage by Iraqi army following the first Gulf War in 1991.  I also noted that about 10 million gallons of oil naturally seeps in the Gulf of Mexico every year. The main conclusion I drew was that as tragic as these events have been for the people and animals directly affected, they also provide a strong testament to the resilience of the environment as recovery of the environment, and that we would expect the Gulf of Mexico to also recover in three to five years.

I have been reviewing many of the articles about the aftermath of the disaster. Some of the noteworthy findings are:

·      The Food and Drug Administration tested seafood from the Gulf of Mexico for contaminants but has found few problems with toxicity.

·      Studies on the fate of the oil show that the oil-eating microbes, which are endemic to the region because of the natural oil seepage, feasted on the oil spill and biodegraded the oil. The sharp increase in the population of these microbes could have reduced the dissolved oxygen and adversely affect other species, but that scenario did not play out.

·      Fish and shrimp populations have rebounded to pre-disaster levels, and the seafood industry has largely recovered. However, oyster harvests have not yet recovered, possibly because of their limited mobility to move to oil-free areas.

·      Tourists have returned to the region bringing with them the anticipated economic recovery.

To be sure there are still many unanswered questions particularly about the long-term effects. The general point I want to emphasize is that as with previous cases of oil spills, nature has once again bounced back. It is not an excuse to be lackadaisical about oil spills. Safety has to be number one on the minds when drilling for oil in the seas, as it should be in many other industrial operations. Safe operating procedures and disaster preparedness have to be constantly improved as new information becomes available. At the same time we should recognize that oil is not an acute toxin and oil spills do not spell the demise of the region. Nature is remarkably resilient, and that’s worth celebrating.

Getting Real About Energy in Cubic Miles of Oil

Today, with plummeting oil prices and news reports of US oil production poised to exceed that of Saudi Arabia’s, there is a perception on the street that there is no energy crisis. Yet just a few years ago, we were all talking about one. Have things changed so dramatically so fast? We paid considerable attention to the energy crisis following the oil crunch in the 1970s, but then oil prices plunged, and public attention waned, and with it the efforts at conservation and improving fuel efficiency of vehicles. However, the underlying situation and the challenges facing us had not changed, and nor have they changed this time. A crisis is a terrible thing to waste, and we seem to be doing it all over again.  I recently spoke about it with Artist Michael Killen.

Meeting the global demand for energy remains a daunting task, and the energy sources we choose to employ will have a profound effect on the lives of billions of people around the world. People have to be involved in making the choice, or the choice will be made for them. For a sustained, informed public debate on this subject, it is necessary to have a common language that is readily understood by the specialist and the non-specialist. A Cubic Mile of Oil (Oxford University Press, 2010) provides a language to talk plainly yet intelligently about energy, and how to assess our future needs and evaluate our progress.

Energy use is essential to our well-being—it is our sustenance. We use it in all aspects of living: growing food, manufacturing, transportation, communication, lighting, heating and cooling, earning our livelihoods, for entertainment, and more. All these tasks require energy, and we derive it from many different sources such as oil, coal, natural gas, hydro power, nuclear fission, and wind and solar power. Unfortunately, energy from these sources is expressed in different and often unfamiliar units, which makes it hard to assess their relative contributions. We use kilowatt hours for electricity, gallons or barrels for oil, cubic feet for gas, British thermal units (btus) or tons for coal, and so on—it’s a veritable tower of Babel! 

Further, each of these units represents a relatively small amount of energy, and in order to express energy use at a global or national scale, we have to use mind-numbing multipliers like millions, billions, trillions, and even quadrillions. To overcome this problem, my colleague Hew Crane came up with the idea of expressing energy units from all the different sources in one large volumetric measure that is commensurate with the scale of global energy challenge and one for which we can form a mental image. The approximately 90 million barrels of oil the world currently consumes daily adds up to a little over a cubic mile of oil in a year, or one CMO. A CMO thus becomes a very convenient unit to express annual global energy production and consumption. Imagine a pool a mile long, a mile wide, and mile deep, and you have a cubic mile. That’s more than a thousand times the volume of a typical sports arena.

In 2013, the global consumption of oil was 1.1 cubic mile. The world consumed an additional CMO of energy from coal, about three-quarters of one CMO from natural gas, and roughly a quarter of one CMO each from hydrothermal, nuclear power, and wood burning, yielding a grand total of 3.5 CMO. All combined, solar, wind, and biofuels produced less than a tenth of a CMO in 2013. How much will we need in the future? That depends on how seriously we take the UN millennium goals for human development. Between 1981 and 2005, China lifted over 600 million people from poverty, reducing the poverty rate from 85% to 16%. Concomitantly, the infant mortality rate declined from 2100 deaths per day to 770 per day. This achievement was made possible by quadrupling energy consumption. 

Global statistics on poverty are stark: 1.4 billion people subsist below the poverty level, defined by the World Bank as living on $1.25/day; infant mortality is 17,000 children a day; 2.4 billion people rely on wood, charcoal, or dung as their primary source of energy, and women and young girls spend more than 6 hours each day collecting fuel and water and completing other chores that deprive them of opportunities for advancement through education and entrepreneurship. Roughly 1.5 billion people have no access to electricity. Even after implementing measures to conserve and markedly improving energy efficiency, it is estimated that annual global energy consumption will have to increase by several CMO/yr to remove the scourge of poverty and to allow all people to lead healthy, productive lives. 

The challenge of supplying energy to the world’s population is really overwhelming. Even at a modest growth rate of 2% per year (i.e., a doubling every 36 years), the world’s energy demand by 2050 will be over 7 CMO per year. As we seek solutions to the energy crisis, we have to ensure they scale to the CMO per year level¾if not, we will just be nibbling at the edges. When you consider what it takes to develop an infrastructure capable of producing even one CMO of energy, it becomes evident there are no easy solutions, and it will take an enormous effort sustained over many decades to effect meaningful change. 

The slide below illustrates how many power plants it will take to develop capacity for producing 1 CMO/yr.  For each resource, it shows the total number of plants and the rate at which they must be built in order that in fifty years we will have enough of them to produce 1 CMO/yr. Because such analyses are highly dependent on the size and availability factors, I have also included those details. The numbers are truly sobering.

In case you are wondering about the impact of continued use of fossil fuels on climate change, please read my post from June 2012, where I discuss the need for a differentiated approach and a focus on things that matter. And oh, did I mention it is also time to seriously look at nuclear again. Speaking of nuclear power, I was recently informed that this unit was also used by President Jimmy Carter, although—being a navy man—his preference was cubic nautical miles!

Cellulosic Ethanol

The hand-wringing and soul-searching that has gone on at the US EPA regarding a proposed reduction in the amount of ethanol to be blended in the gasoline in 2014 is emblematic of a policy based on optimistic projections divorced from reality.

It began with establishment of the Energy Policy Act (EPACT) of 2005 with the desire to reduce the US dependence on imported oil and to reduce emissions of anthropogenic CO₂. Ethanol could be considered a “carbon-free fuel,” since its combustion would only be emitting the CO₂ the plant had used in the photosynthesis process. Ethanol is produced by the fermentation of sugar using yeast. The sugar may be obtained by expressing it from sugarcane, or by hydrolyzing the starches from crops such as corn.

In the US ethanol is produced mostly from corn, and there is an inherent attraction to the notion of growing one’s own fuel instead of importing it. An additional benefit of EPACT was that it provided US farmers with an opportunity to grow a lucrative cash crop and thereby support the farming industry. There was already a movement afoot in the US to eliminate the use of MTBE in gasoline, and using ethanol as an alternate oxygenate provided a straightforward mechanism to increasing the use of ethanol.

The EPACT required that 10% by volume of ethanol be blended into gasoline. The 10% level was in practice at many locations, and was found to work well with the existing automobile fleet. US gasoline consumption in 2004 was about 130 billion gallons a year, and that meant that ethanol production should rapidly increase from the then 3.4 billion gallons a year to about 13 billion gallons. The act spurred major investments in the biofuels industry, and the installed capacity for corn ethanol grew rapidly.

Over the next few years it became abundantly clear that production of corn ethanol required substantial quantities of fossil energy: fertilizers to grow the corn, diesel for the tractors and other farm machinery, and natural gas or coal for the distillation. Depending on the specifics of the farming practice and processing details the energy return on fossil energy invested (EROI) was found to vary between 0.8 and 1.5, which meant that corn ethanol hardly added to the total pool of energy, although it did provide a storable liquid fuel. Likewise, studies on the life-cycle emissions of CO₂ from using corn ethanol showed that CO₂ emissions could range between 0.7 and 1.3 times that of petroleum-based gasoline. In other words, greenhouse gas emissions could be marginally better or somewhat worse than petroleum, a far cry from the promise of being a carbon-free fuel. Moreover, production of corn ethanol competed for the land and water resources used for growing food or feed, and thus contributed to increasing food prices.

Ethanol can also be produced from lignocellulosic materials, and life-cycle analyses showed that cellulosic ethanol had a markedly lower carbon footprint and a more favorable EROI. The estimated availability of a billion tons of sustainably harvested lignocellulosic materials such as agricultural and forestry residues raises the potential for producing over 200 billion gallons of ethanol, sufficient to displace all gasoline consumed in the US.  

The Energy Independence and Security Act of 2007 (EISA) tried to aggressively promote the development of cellulosic ethanol by setting new standards for renewable fuels (RFS 2). Under it the total volume of biofuels would be steadily increased to 36 billion gallons a year by 2022, which would correspond to 25% of the projected gasoline consumption. The larger fraction of blending would also require more flex-fuel vehicles that could operate with 15% or more of ethanol. To limit the potential conflict of food versus fuel and other negatives of corn-based ethanol, no more than 10 billion gallons of corn-based ethanol would qualify under RFS 2. Most of the rest would be made up by alternate biofuels, notably 16 billion gallons of cellulosic ethanol. Commercial production of cellulosic ethanol in 2007 was in its infancy. The dramatic increase in the production of ethanol, from essentially zero in 2208 to 16 billion gallons by 2022, as envisaged under EISA is illustrated in the graphic below from the Energy Information Administration. 

 

The question before the EPA was whether to increase the mandate of ethanol as required by EISA, or to propose a cut to it in face of the reality. It issued a draft rule last November to cut the mandated volume of biofuels and opened it for public comment. The EPA has received more than 340,000 comments, and although it has made its final recommendation, as of this writing (Nov. 4, 2014) the final ruling has not been announced. Despite that, the mere announcement of possible cuts led to a drop in the price of corn, and many commentators hailed it as a win for Big Oil over Big Corn. However, the important issue is whether the nation wins—whether this action will help in achieving the original objectives of reducing dependence on imported oil and reducing CO₂ emissions.

Given the very limited benefit of corn ethanol and the potential to do environmental harm and raise food prices, EPA had already capped its use to 10 billion gallons. The corn ethanol industry is lobbying hard against any cut back and also promoting the use of higher blends of ethanol. In the absence of cellulosic ethanol, that demand would be met by corn ethanol. Because the installed capacity of all the plants in the US already breaches the blend wall of 10%, higher blends will have to be permitted. The auto industry is opposed to the idea because higher percentages of ethanol in gasoline are not compatible with the fuel storage and delivery systems and could cause engine damage, and there are too few Flex-Fuel vehicles that can use the high ethanol blends.

The only reason for the EPA to stick to the RFS 2 mandates would be to keep the pressure on the advanced biofuels industry, but the installed capacity for cellulosic ethanol is so low that the law would end up penalizing gasoline vendors for non compliance with when there is no way that could comply. In any case, there is no justification to increase the use of corn ethanol.