Your Trillion Dollar Electric Bill

In his long-suppressed and now infamous talk with the San Francisco Chronicle last January, Barack Obama bluntly admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”

So, how much is “skyrocket?”  Can we put a dollar figure on that?

Well, last year, Senators Joe Lieberman and John Warner put forward a bipartisan cap-and-trade plan (Senate Bill S.2191, the Lieberman-Warner Climate Security Act of 2007) that is actually less stringent than the plans put forward by Obama.  Earlier this year, the Energy Information Administration conducted – at Senator Lieberman’s request  -an analysis of the costs and potential effects of the bill.  On the completion of the analysis, Senator Lieberman applauded it for its fairness.

The conclusions are stunning:

“Under S. 2191, average annual household energy bills, excluding transportation costs, are between $30 and $325 higher in 2020 and $76 to $723 higher in 2030.”

“OK,” the average ratepayer might think, “30 bucks more in 12 years isn’t so bad.”  But what if it’s the higher number?  Or even, as is more likely, a median number?

But, the individual numbers only tell part of the story.  The real price is in overall effect on Gross Domestic Product:

“Total discounted GDP losses over the 2009 to 2030 time period range from $444 billion to $1,308 billion  . . . the cumulative discounted losses for personal consumption range from $546 billion  to $1,425 billion.”

Gulp.  Ok, after swallowing hard, surely a pricetag of over a trillion dollars is worth it to save the planet.  What do we get on the environment front for foregoing 1.4 trillion in personal consumption?  For all your hard sacrificies you get . . . a fraction of 1 degree in temperature reduction.  And, if the BRIC countries don’t go along with us, we won’t even see that.  Remember, Lieberman applauded this analysis, so its not like it was a political hit piece.

Obama’s plan is even more extensive and, therefore, probably more expensive thatn Lieberman-Warner.  But, don’t lose sleep if this makes you think you voted the wrong way.  McCain’s plan was essentially Lieberman-Warner, so we were taking a hit either way.  Economists call inflation “the cruelest tax.”  Both candidates campaigned as tax-cutters.  They were both cruelly deluding us, if not themselves.

In the end, I voted McCain

This is not an endorsement by any means.  I think both candidates are terribly flawed and I am dismayed that this is the best we can come up with at such an important time in our nations’s history.  The electorate would have been much better served if the nominees had been Hillary Clinton and Mitt Romney, each of whom was far superior in both intellect and leadership to their parties’ actual nominees.

I’m a two issue voter this year, even with the financial crisis still unfolding around us.  My issues are geopolitics and energy.  Neither candidate, in my opinion, has a genuine understanding of geopolitics or a true theoretical foundation upon which to build such an understanding.  Both are mere ideologues on geopolitics, their positions are non-reflective echoes of partisan positions that may or may not have any grounding in geopolitical realities.  I expected this sort of thing from McCain, but I was amazed at the general thougtlessness of Obama.  He has the reputation of a scholarly, thoughtful man, but I’ve read just about everything he has published (and that is not very much), and find him bright but not particularly insightful.  His work is primarily descriptive and reminds me of a class report one would expect from a college sophomore.  Where he is prescriptive, he is largely an unimaginitive and doctrinaire liberal.  This is not meant to use “liberal” as a pejorative, but merely to state that I find no spark of insight in his thoughts.  There is nothing there to turn me against him, as McCain is similarly unimaginative, but there is nothing to excite me either.

The difference that I do find on the candidates is on energy.  I have found flaws with both candidates’ energy proposals on this blog.  McCain’s nuclear plan is pure fantasy, and his “all of the above” approach has as much depth as a bumper sticker.  But, despite her characterization in much of the mainstream media as a lightweight, Palin is by far the strongest of the four principles on energy policy.  So, McCain has that slender reed going for him.

Obama, on the other hand, lost my vote late in the race solely on the energy issue.  Earlier, I was dismayed at his selection of Joe Biden and Biden’s comments on coal.  Then, over the weekend, Obama’s long suppressed comments on coal were the last straw.  This nation is going to need growing capacity on its electrical grid.  In addition to that, old and obsolete plants will continue to go offline.  There is no way the US will meet increasing demand without utilizing coal fired plants over the next few decades.  Closing the door to coal as Biden wants to do, or making them prohibitively expensive as Obama indicated he plans to do, is unconsionable.  Electricity prices will skyrocket and blackouts and brownouts will increase in frequency.  It is a simple equation – we need capacity, and wind and solar will not be sufficient get us there for several decades.

I don’t like to use the common phrase because neither man and neither party is evil, but my vote for McCain was definitely a vote between two lessers.

on hiatus

I am off to Hawaii for the rest of the month.  I will be back posting on Monday, November 3.

Energy Security

A plan proposed by Dr. Hamid Arastoopour of the Illinois Institute of Technology.

More on energy security by Jatin Nathwani.

These are both from the North America 2030:  An Environmental Outlook conference hosted this past summer by the Joint Advisory Committee of the Commission on Environmental Cooperation.

Gas prices fall below $3 per gallon

For the first time since February, the national average of gasoline prices has fallen below $3.00 per gallon. Here in Los Angeles, I haven’t yet seen it below $3.20 for regular, but I still expect it to be in the $2s for even premium blends by spring . . . and to stay there or lower for a while.  The last time crude oil reached a peak annual price of nearly $100 per barrel (adjusted for inflation), in 1979-81, it immediately began a long descent all the way down to a low of around $14 per barrel in the 1990s.  The decline will neither be that sustained nor go that low, but prices will be low for the rest of the decade, at least.

Gas 2.0: “US Unable to meet EPA’s Renewable Fuel Standards”

Gas 2.0 poses the above as a question, but it seems to me likely that it should be a simple statement.  From the report:

We would need approximately 200 large scale facilities to meet the standards, each one capable of producing about 100 million gallons a year, but of the 13 biofuel projects that are being planned, only four of them are of a commercial scale.

A softening economy and collapsing oil prices will shrink the needed investment beyond even these meager efforts.  Political mandates and wishful thinking cannot bend reality.

The Water Inefficiency of Ethanol

Gas 2.0 has a post spotlighting some particulars on ethanol production – by some calculations, it takes up to 1000 gallons of water to create 1 gallon of ethanol.

Ethanol advocates will dispute these calculations, but by whatever measure, ethanol is water intensive, as are many other alt-fuels.  In a post I did a month ago on alt-fuel possibilities, I sided with those that use the least water.  Fourth-Gen fuels are the most interesting but,also, the ones furthest from productive development.

From Popular Mechanics’ description of Fourth Gen Fuels:

Scientists have genetically engineered algae not just to turn CO2 into oil, but to continuously excrete that oil directly into the surrounding water. Since oil floats, harvesting it becomes simple work compared with the energy-intensive drying and extraction traditionally used for typical algae, which store oil within their cell walls. As with second-generation methods, the oil can then be processed into biodiesel.

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California Fires

In addition to this blog and my “day job,” my wife and I run a horse ranch here in Southern California.  The fires caused a mandatory animal evacuation that ran right up to the borders of our property, so we also evacuated in a precautionary move.  Hence, the lack of a new post today.  Probably won’t be a new one tomorrow (Wednesday), either.

“Pro-poor” crops for biofuels

“Pro-poor crops” are crops “that can be grown with limited resources by small-scale farmers, can be converted to biofuel with existing cheap technology, and can simultaneously provide food, fuel, and livestock feed.”

This post from Gas 2.0 nominates sweet sorghum and cassava as two pro-poor biofuel crops.  I would add jatropha to the list.  In fact, I’d put it at the top of the list due to its versatility.  More on jatropha here.  I will have more to say about this in the future.

The futility of government climate mandates

Controversial Danish scientist Bjørn Lomborg, aka “The Skeptical Environmentalist,” recently penned for the Times of London a review of the immense cost and tiny benefits of existing govenment programs on global warming:

“Many of the proffered global warming policies are designed to help politicians bathe in the warm glow of good intentions, with little or no regard to the mounting costs and infinitesimal benefits.”

Lomborg concludes:

“When it comes to climate, we have to come to our senses. Yes, global warming is real and caused by human beings, but it doesn’t mean we should panic in our policy decisions. We need to do the right thing – and invest in discovering and developing new low-carbon technology.”

To this I would add a program of manageable geo-engineering projects that are (a) cost efficient, (b) focused on particular problems with measurable outcomes and (c) reversible or, at least, terminable.

The “Biofuels Corridor” is officially open, and other miscellaneous news

From AutoBlogGreen:

1. You can now purchase E85 at regular intervals along Interstate 65, from the Great Lakes to the Gulf Coast, what is being called “The Biofuels Corridor.”
2. Also, new doubts about electric vehicles in general and the Chevy Volt in particular:  “The realities of the battery situation will continue to make longer range electric driving unaffordable for the foreseeable future . . ..”

From Frank:

1. An enzyme in cow stomachs may lead to better energy efficiency from corn.
2. An envrionmental group is blocking a new coal program in North Dakota. “The process makes briquettes out of lignite and improves the energy value of coal found in states like North Dakota and Wyoming.”  Environmentalists want the proecess classified as “mining” even though the coal has already been mined elsewhere and this is a form of processing.
3. The liquidity crisis hits ethanol producers.  “With slim profit margins already weighing on the biofuels industry, VeraSun Energy Corp. this month found itself in a liquidity crisis after locking in at higher-than-market prices for the corn that it turns into fuel.”
   

The World is Awash in Oil

Nick Chambers over at Gas 2.0 ponders the research of Dr. Peter McCabe, and frets.

McCabe, like myself, thinks that the world has decades – at least – of fossil fuel reserves, that Peak Oil theory is premature, and that oil, coal and natural gas will remain the dominant sources of energy for the foreseeable future.

Chambers’ fear is that the mere availability of fossil fuels in large quantities will determine their continued use, and that will cause irreparable damage to the climate and the environment.

The issue, though, is not availability.  It is price.  Even at the elevated prices we saw this past summer, fossil fuels are incredibly cheap, cheaper by far than any alternative.  The solution is in making alternative fuels cheap, not merely available.

Some argue that the answer is the opposite – it lies in making fossil fuels more expensive.   This can be achieved by heavy taxes, carbon permits, etc.  The problem with this approach is that it hands to developing economies such as China, India, Brazil, Indonesia, and others a healthy competitive advantage – by not taxing or imposing carbon fees, their energy costs will be a fraction of those countries that do so.  It is a classic “tragedy of the commons” issue.

Continued research on developing realistically cheap (not merely available) alternatives, and on increasing efficiencies in our energy usage is the best immediate path.  Attempting to mandate switches to alternatives, cost be damned, is a fool’s errand.

100% renewable jet fuel?

The Energy and Environment Resource Center (EERC) at the University of North Dakota has announced that it has created a 100% renewable fuel that meets the JP-8 aviation fuel screening criteria.  This new process can utilize crop oils and waste greases to create the fuel.

The US DOD supported this research with a grant through the Defense Advanced Research Projects Agency.  The ramifications of this are huge – the US military is the world’s single largest consumer of petroleum, and JP-8 is by far the largest portion of military fuel use.  This is not the only avenue the military is exploring in its quest for energy independence.  The Air Force is also a major investor in CTL technology.  Anything at allows the US military to become independent of petroleum would, of course, have strategic ramifications, but it would also send a price signal to the energy markets that would be felt all the way to the price you pay at your local filling station.

PHEV reality check

Frank Ganje sends along a link to a Popular Mechanics article on plug in hybrid electric vehicles.  The article focuses on skeptics of the technology.  I think PHEVs have a future, but there are a lot of issues that need to be worked out.  Obama’s pledge of “1 million PHEVs by 2015″ is probably off by half a decade.  In all likelihood, PHEV technology won’t be ready for serious mainstream adoption until 2015, after which we might see a large increase in sales.

New study warns of serious blackout potential in 2009

The NextGen Energy Council has published a study warning that “the U.S. faces significant risk of power brownouts and blackouts as early as next summer that may cost tens of billions of dollars and threaten lives.”

While US demand for electricity has been growing inexorably (and will skyrocket as the next generation of PHEVs hits the market in a few years), we have not been adding power generation capacity at the same rate.    When the lines on that graph – power demand and power supply – cross, power outages are inevitable.  As a nation, we are just about at capacity for hydroelectric power.  Solar and wind are years, maybe decades, away from making significant contributions to power capacity.  It’s time to face reality and embrace the fact that coal is the only immediate way forward.  We can’t build traditonal coal plants, but the technology for clean(er) coal is already here.

It is a domestic fuel source, it can be made to burn relatively clean, and even clean coal is a relatively cheap source of power.  There is no reason – other than slavish devotion to ideology – to not embrace coal as the immediate answer.

progress on cheap solar power

SUNRGI is a startup company that recently unveiled their Xtreme Concentrated Photovoltaics (XCPV) technology.  SUNRGI claims the XCPV panels “will generate electricity cheaper than coal using only a fraction of the space needed by conventional photovoltaic panels” with a targe of just 5 cents per kilowatt hour.  If true, this would be a tremendous breakthrough, but as always – we’ll believe it when we see it.

Finance and economics are not my areas . . .

but I just have to say something about the Bailout Plan now being considered in Congress.

A week ago, I believed the nation was in crisis and something had to be done.  I thought the Paulson Plan was a stinker, but I was willing to hold my nose and support it.  Desperate times, desperate measures and all that.

But now, I have reversed my position.  I no longer believe there is a crisis.  Congress certainly is not acting that way.  The House adjourning for two days?  Loading the bill up with “sweeteners,” earmarks and pork?   This is not the behavior of people who believe we are in immediate danger – it is the behavior of pigs at the trough, who see a $700 billion gravy train and are falling over each other to get on board.  And, now they are trying to kid themselves and one another (and us) that the taxpayers will actually make a killing on these “investments” – investments, mind you, that professional investors consider “toxic waste” and can’t find anyone anywhere in the world dumb enough to take them off their hands.  Some even are trying to peddle the notion that instead of $700B in bad debt, we are really purchasing a means to fund Free Health Care For Everyone.

Yeah, and there is a Big Rock Candy Mountain out there, too.

Forget it.  Count me out.

Using algae to harvest pollution & turn it into fuel

Read this on Instapundit yesterday.

Instead of sequestration, the current preferred method for curbing CO2 emissions, an Oregon coal-fired plant captures its carbon dioxide and feeds it to algae.  The algae can then be converted to biodiesel, ethanol and livestock feed.  It is just a small project now, but within 30 months “it should reduce greenhouse gas emissions by as much as 60% during daylight hours and produce 20 million gallons of biodiesel per year.”

Group calls for rationing meat, milk to fight climate change

The Food Climate Research Network at the University of Surrey is calling for rationing of foodstuffs, including meat, milk, alcohol and chocolate in order to combat “runaway climate change.”  A pdf file of the full report is here, a 28 page summary here.

I have to say it:  They can have my meat when they pry it from my cold, dead fingers.

In all seriousness, though, this is the kind of extreme policy recommendation that does more harm to the cause than it does good.  No government is going to impose this kind of Draconian rationing, and few citizens are going to take seriously this level of fear mongering.  Reports like this open the entire environmental movement up to charges of misanthropy.

If you are serious about the dangers of climate change, then you have to demonstrate it by serious (meaning, realistic) policy prescriptions.  The FCRN is not serious.

Chrysler predicts 1/2 of all cars to be at least partially electric by 2020

AutoblogGreen has the story.