Wednesday, April 23, 2014

“Climate Change War” Is Not a Metaphor

The U.N. Intergovernmental Panel on Climate Change has just completed a series of landmark reports that chronicle an update to the current state of consensus science on climate change. In a sentence, here’s what they found: On our current path, climate change could pose an irreversible, existential risk to civilization as we know it—but we can still fix it if we decide to work together.

But in addition to the call for cooperation, the reports also shared an alarming new trend: Climate change is already destabilizing nations and leading to wars.

That finding was highlighted in this week’s premiere of Showtime’s new star-studded climate change docu-drama Years of Living Dangerously. In the series’ first episode, New York Times columnist Thomas Friedman traveled to Syria to investigate how a long-running drought has contributed to that conflict. Climate change has also been discussed as a “threat multiplier” for recent conflicts in Darfur, Tunisia, Egypt, and future conflicts, too.

Climate change worsens the divide between haves and have-nots, hitting the poor the hardest. It can also drive up food prices and spawn megadisasters, creating refugees and taxing the resiliency of governments.

When a threat like that comes along, it’s impossible to ignore. Especially if your job is national security.

In a recent interview with the blog Responding to Climate Change, retired Army Brig. Gen. Chris King laid out the military’s thinking on climate change:

“This is like getting embroiled in a war that lasts 100 years. That’s the scariest thing for us,” he told RTCC. “There is no exit strategy that is available for many of the problems. You can see in military history, when they don’t have fixed durations, that’s when you’re most likely to not win.”

In a similar vein, last month, retired Navy Rear Adm. David Titley co-wrote an op-edfor Fox News:

The parallels between the political decisions regarding climate change we have made and the decisions that led Europe to World War One are striking – and sobering. The decisions made in 1914 reflected political policies pursued for short-term gains and benefits, coupled with institutional hubris, and a failure to imagine and understand the risks or to learn from recent history.

In short, climate change could be the Archduke Franz Ferdinand of the 21st century.

Earlier this year, while at the American Meteorological Society annual meeting in Atlanta, I had a chance to sit down with Titley, who is also a meteorologist and now serves on the faculty at Penn State University. He’s also probably one of the most fascinating people I’ve ever spoken with. Check out his TEDxPentagon talk, in which he discusses how he went from “a pretty hard-core skeptic about climate change” to labeling it “one of the pre-eminent challenges of our century.” (This interview has been lightly edited and condensed.)

Slate: You’ve been a leader when it comes to talking about climate change as a national security issue. What’s your take on the connection between war and climate?

Titley: Climate change did not cause the Arab spring, but could it have been a contributing factor? I think that seems pretty reasonable. This was a food-importing region, with poor governance. And then the chain of events conspires to have really a bad outcome. You get a spike in food prices, and all of a sudden, nobody’s in control of events.

I see climate change as one of the driving forces in the 21st century. With modern technology and globalization, we are much more connected than ever before. The world’s warehouses are now container ships. Remember the Icelandic volcano with the unpronounceable name? Now, that’s not a climate change issue, but some of the people hit worst were flower growers in Kenya. In 24 hours, their entire business model disappeared. You can’t eat flowers.

Slate: What’s the worst-case scenario, in your view?

Titley: There will be a discrete event or series of events that will change the calculus. I don’t know who, I don’t know how violent. To quote Niels Bohr: Predictions are tough, especially about the future. When it comes, that will be a black swan. The question is then, do we change?

Let me give you a few examples of how that might play out. You could imagine a scenario in which both Russia and China have prolonged droughts. China decides to exert rights on foreign contracts and gets assertive in Africa. If you start getting instability in large powers with nuclear weapons, that’s not a good day.

Here’s another one: We basically do nothing on emissions. Sea level keeps rising, three to six feet by the end of the century. Then, you get a series of super-typhoons into Shanghai and millions of people die. Does the population there lose faith in Chinese government? Does China start to fissure? I’d prefer to deal with a rising, dominant China any day.

Slate: That sounds incredibly daunting. How could we head off a threat like that?

Titley: I like to think of climate action as a three-legged stool. There’s business saying, “This is a risk factor.” Coca-Cola needs to preserve its water rights, Boeing has their supply change management, Exxon has all but priced carbon in. They have influence in the Republican Party. There’s a growing divestment movement. The big question is, does it get into the California retirement fund, the New York retirement fund, those $100 billion funds that will move markets? Politicians also have responsibility to act if the public opinion changes. Flooding, storms, droughts are all getting people talking about climate change. I wonder if someday Atlanta will run out of water?

Think back to the Apollo program. President Kennedy motivated us to land a man on the moon. How that will play out exactly this time around, I don’t know. When we talk about climate, we need to do everything we can to set the stage before the actors come on. And they may only have one chance at success. We should keep thinking: How do we maximize that chance of success?

Climate change isn’t just an environmental issue; it’s a technology, water, food, energy, population issue. None of this happens in a vacuum.

Slate: Despite all the data and debates, the public still isn’t taking that great of an interest in climate change. According to Gallup, the fraction of Americans worrying about climate “a great deal” is still roughly one-third, about the same level as in 1989. Do you think that could ever change?

Titley: A lot of people who doubt climate change got co-opted by a libertarian agenda that tried to convince the public the science was uncertain—you know, theMerchants of Doubt. Unfortunately, there’s a lot of people in high places who understand the science but don’t like where the policy leads them: too much government control.

Where are the free-market, conservative ideas? The science is settled. Instead, we should have a legitimate policy debate between the center-right and the center-left on what to do about climate change. If you’re a conservative—half of America—why would you take yourself out of the debate? C’mon, don’t be stupid. Conservative people want to conserve things. Preserving the climate should be high on that list.

Slate: What could really change in the debate on climate?

Titley: We need to start prioritizing people, not polar bears. We’re probably less adaptable than them, anyway. The farther you are from the Beltway, the more you can have a conversation about climate no matter how people vote. I never try to politicize the issue.

Most people out there are just trying to keep their job and provide for their family. If climate change is now a once-in-a-mortgage problem, and if food prices start to spike, people will pay attention. Factoring in sea-level rise, storms like Hurricane Katrina and Sandy could become not once-in-100-year events, but once-in-a-mortgage events. I lost my house in Waveland, Miss., during Katrina. I’ve experienced what that’s like.

Slate: How quickly could the debate shift? How can we get past the stalemate on climate change and start focusing on what to do about it?

Titley: People working on climate change should prepare for catastrophic success. I mean, look at how quickly the gay rights conversation changed in this country. Ten years ago, it was at best a fringe thing. Nowadays, it’s much, much more accepted. Is that possible with climate change? I don’t know, but 10 years ago, if you brought up the possibility we’d have gay marriages in dozens of states in 2014, a friend might have said “Are you on drugs?” When we get focused, we can do amazing things. Unfortunately, it’s usually at the last minute, usually under duress.

This article is part of Future Tense, a collaboration among Arizona State University, the New America Foundation, and Slate. Future Tense explores the ways emerging technologies affect society, policy, and culture. To read more, visit the Future Tense blog and the Future Tense home page. You can also follow us on Twitter.

The U.N. Intergovernmental Panel on Climate Change has just completed a series of landmark reports that chronicle an update to the current state of consensus science on climate change. In a sentence, here’s what they found: On our current path, climate change could pose an irreversible, existential risk to civilization as we know it—but we can still fix it if we decide to work together.

But in addition to the call for cooperation, the reports also shared an alarming new trend: Climate change is already destabilizing nations and leading to wars.

That finding was highlighted in this week’s premiere of Showtime’s new star-studded climate change docu-drama Years of Living Dangerously. In the series’ first episode, New York Times columnist Thomas Friedman traveled to Syria to investigate how a long-running drought has contributed to that conflict. Climate change has also been discussed as a “threat multiplier” for recent conflicts in Darfur, Tunisia, Egypt, and future conflicts, too.

Climate change worsens the divide between haves and have-nots, hitting the poor the hardest. It can also drive up food prices and spawn megadisasters, creating refugees and taxing the resiliency of governments.

When a threat like that comes along, it’s impossible to ignore. Especially if your job is national security.

In a recent interview with the blog Responding to Climate Change, retired Army Brig. Gen. Chris King laid out the military’s thinking on climate change:

“This is like getting embroiled in a war that lasts 100 years. That’s the scariest thing for us,” he told RTCC. “There is no exit strategy that is available for many of the problems. You can see in military history, when they don’t have fixed durations, that’s when you’re most likely to not win.”

In a similar vein, last month, retired Navy Rear Adm. David Titley co-wrote an op-edfor Fox News:

The parallels between the political decisions regarding climate change we have made and the decisions that led Europe to World War One are striking – and sobering. The decisions made in 1914 reflected political policies pursued for short-term gains and benefits, coupled with institutional hubris, and a failure to imagine and understand the risks or to learn from recent history.

In short, climate change could be the Archduke Franz Ferdinand of the 21st century.

Earlier this year, while at the American Meteorological Society annual meeting in Atlanta, I had a chance to sit down with Titley, who is also a meteorologist and now serves on the faculty at Penn State University. He’s also probably one of the most fascinating people I’ve ever spoken with. Check out his TEDxPentagon talk, in which he discusses how he went from “a pretty hard-core skeptic about climate change” to labeling it “one of the pre-eminent challenges of our century.” (This interview has been lightly edited and condensed.)

Slate: You’ve been a leader when it comes to talking about climate change as a national security issue. What’s your take on the connection between war and climate?

Titley: Climate change did not cause the Arab spring, but could it have been a contributing factor? I think that seems pretty reasonable. This was a food-importing region, with poor governance. And then the chain of events conspires to have really a bad outcome. You get a spike in food prices, and all of a sudden, nobody’s in control of events.

I see climate change as one of the driving forces in the 21st century. With modern technology and globalization, we are much more connected than ever before. The world’s warehouses are now container ships. Remember the Icelandic volcano with the unpronounceable name? Now, that’s not a climate change issue, but some of the people hit worst were flower growers in Kenya. In 24 hours, their entire business model disappeared. You can’t eat flowers.

Slate: What’s the worst-case scenario, in your view?

Titley: There will be a discrete event or series of events that will change the calculus. I don’t know who, I don’t know how violent. To quote Niels Bohr: Predictions are tough, especially about the future. When it comes, that will be a black swan. The question is then, do we change?

Let me give you a few examples of how that might play out. You could imagine a scenario in which both Russia and China have prolonged droughts. China decides to exert rights on foreign contracts and gets assertive in Africa. If you start getting instability in large powers with nuclear weapons, that’s not a good day.

Here’s another one: We basically do nothing on emissions. Sea level keeps rising, three to six feet by the end of the century. Then, you get a series of super-typhoons into Shanghai and millions of people die. Does the population there lose faith in Chinese government? Does China start to fissure? I’d prefer to deal with a rising, dominant China any day. More

 

Wednesday, April 16, 2014

Scientists Discover How to Generate Solar Power in the Dark

Meet 'photoswitches,' a breakthrough set of materials that act as their own batteries, absorbing energy and releasing it on demand.

The next big thing in solar energy could be microscopic.

Scientists at MIT and Harvard University have devised a way to store solar energy in molecules that can then be tapped to heat homes, water or used for cooking.

The best part: The molecules can store the heat forever and be endlessly re-used while emitting absolutely no greenhouse gases. Scientists remain a way’s off in building this perpetual heat machine but they have succeeded in the laboratory at demonstrating the viability of the phenomenon called photoswitching.

“Some molecules, known as photoswitches, can assume either of two different shapes, as if they had a hinge in the middle,” MIT researchers said in statement about the paper published in the journal Nature Chemistry. “Exposing them to sunlight causes them to absorb energy and jump from one configuration to the other, which is then stable for long periods of time.”

To liberate that energy all you have to do is expose the molecules to a small amount of light, heat or electricity and when they switch back to the other shape the emit heat. “In effect, they behave as rechargeable thermal batteries: taking in energy from the sun, storing it indefinitely, and then releasing it on demand,” the scientists said.

The researchers used a photoswitching substance called an azobenzene, attaching the molecules to substrates of carbon nanotubes. The challenge: Packing the molecules closely enough together to achieve a sufficient energy density to generate usable heat.

It appeared that the researchers had failed when they were only able to pack fewer than half the number of molecules needed as indicated by an earlier computer simulation of the experiment.

But instead of hitting a projected 30 percent increase in energy density, they saw a 200 percent increase. It turned out that the key was not so much packing azobenzene molecules tightly on individual carbon nanotubes as packing the nanotubes close together. That’s because the azobenzene molecules formed “teeth” on the carbon nanotubes, which interlocked with teeth on adjacent nanotubes. The result was the mass needed for a usable amount of energy storage.

That means different combinations of photoswitching molecules and substrates might achieve the same or greater energy storage, according to the researchers.

So how would molecular solar storage work if the technology can be commercialized? Timothy Kucharski, the paper’s lead author and a postdoc at MIT and Harvard, told The Atlantic that most likely the storage would take a liquid form, which would be easy to transport.

“It would also enable charging by flowing the material from a storage tank through a window or clear tube exposed to the sun and then to another storage tank, where the material would remain until it's needed,” Kucharski said in an email. “That way one could stockpile the charged material for use when the sun's not shining.”

The paper’s authors envision the technology could be used in countries where most people rely on burning wood or dung for cooking, which creates dangerous levels of indoor air pollution, leads to deforestation and contributes to climate change.

“For solar cooking, one would leave the device out in the sun during the day,” says Kucharski. “One design we have for such an application is purely gravity driven – the material flows from one tank to another. The flow rate is restricted so that it's exposed to the sun long enough that it gets fully charged. Then, when it's time to cook dinner, after the sun is down, the flow direction is reversed, again driven by gravity, and the opposite side of the setup is used as the cooking surface.”

“As the material flows back to the first tank, it passes by an immobilized catalyst which triggers the energy-releasing process, heating the cooking surface up,” he adds.

Other versions of such device could be used to heat buildings.

Kucharski said the MIT and Harvard team is now investigating other photoswitching molecules and substrates, “with the aim of designing a system that absorbs more of the sun's energy and also can be more practically scaled up.” More

 

Saturday, April 5, 2014

Exxon Mobil's response to climate change is consummate arrogance

Monday saw the release of the latest climate report from the planet’s scientists.Predictions of famine, flood, and so on – mostly what we already knew, in even more striking language.

But Monday also saw the release of another document somewhat less expected, and probably at least as important in the ongoing battle over the future of the atmosphere and hence all of us who live in its narrow envelope.

Exxon Mobil said: 'we are confident that none of our hydrocarbon reserves are now or will become ‘stranded''

Here’s the backstory. For 18 months now some of us have been campaigning for colleges, churches, cities and the like to sell their shares in fossil fuel companies, on the grounds that their business plans call for burning far more carbon than scientists believe the planet can safely handle. It’s become the fastest growing divestment movement in history — but some have tried to reach out to the industry and reach a middle ground instead, hoping to reform them instead of simply trying to break their power.

Profound thanks are due, then, to those shareholder activists who urged “constructive engagement” with the oil, gas and coal barons.

Because those organisations, groups like As You Sow, CERES, and the Interfaith Center on Corporate Responsibility, managed in very short order to get Exxon Mobil, the leader of the fossil fuel industry, to show its cards. In fact, in a truly historic moment, Exxon Mobil turned over the whole deck — and to its credit it showed it has nothing up its sleeve, no tricky rhetoric or sleight of hand. Just endless amounts of oil and gas.

On Monday the company issued two reports, in formal response to a shareholder resolution that demanded they disclose their carbon risk and talk about how they planned to deal with the fact that they and other oil giants have many times more carbon in their collective reserves than scientists say we can safely burn.

The company said that government restrictions that would force it to keep its reserves in the ground were “highly unlikely,” and that they would not only dig them all up and burn them, but would continue to search for more gas and oil — a search that currently consumes about $100 million of its investors’ money every single day. “Based on this analysis, we are confident that none of our hydrocarbon reserves are now or will become ‘stranded,’” they said.

This is an honest reply. It is as honest as the report that emerged the same day from the world’s climate scientists, which demonstrated that if Exxon Mobil and its ilk keep their promise to dig up their reserves and burn them, then the planet will no longer function effectively.

Some of us, cynically, thought all along that this would be Exxon’s posture. The company, after all, poured millions into denying climate science when that was still possible. That’s why we’ve been calling for divestment.

We’ve never thought that there was a small flaw in their business plan that could be altered by negotiation; we’ve always thought their business plan was to keep pouring carbon into the atmosphere. And indeed Exxon’s statements are easy to translate: “We plan on overheating the planet, we think we have the political muscle to keep doing it, and we dare you to stop it.” And they’re right — unless we build a big and powerful movement, they’ll continue to dominate our political life and keep change from ever taking place.

So now, with that information clearly on the table, it’s time for college boards and foundation heads, church denominations and city mayors to act and act firmly. By divesting — by announcing that they are breaking ties with these companies — they will begin the process of politically bankrupting them. Of taking away the social license that allows them to act with such consummate arrogance, on the very day that the planet’s scientists laid bare the impact of climate change on everything from crop yields to civil wars.

It’s never fun to see one’s cynicism confirmed. But Monday was a day for reality, on the scientific front but also the political, economic, and corporate.

The only open question left is what we’re going to do about it. More

 

Sunday, March 30, 2014

Ex govt adviser: "global market shock" from "oil crash" could hit in 2015

In a new book, former oil geologist and government adviser on renewable energy, Dr. Jeremy Leggett, identifies five "global systemic risks directly connected to energy" which, he says, together "threaten capital markets and hence the global economy" in a way that could trigger a global crash sometime between 2015 and 2020.

According to Leggett, a wide range of experts and insiders "from diverse sectors spanning academia, industry, the military and the oil industry itself, including until recently the International Energy Agency or, at least, key individuals or factions therein" are expecting an oil crunch "within a few years," most likely "within a window from 2015 to 2020."

Interconnected risks

Despite its serious tone, The Energy of Nations: Risk Blindness and the Road to Renaissance, published by the reputable academic publisher Routledge, makes a compelling and ultimately hopeful case for the prospects of transitioning to a clean energy system in tandem with a new form of sustainable prosperity.

The five risks he highlights cut across oil depletion, carbon emissions, carbon assets, shale gas, and the financial sector:

"A market shock involving any one these would be capable of triggering a tsunami of economic and social problems, and, of course, there is no law of economics that says only one can hit at one time."

At the heart of these risks, Leggett argues, is our dependence on increasingly expensive fossil fuel resources. His wide-ranging analysis pinpoints the possibility of a global oil supply crunch as early as 2015. "Growing numbers of people in and around the oil industry", he says, privately consider such a forecast to be plausible. "If we are correct, and nothing is done to soften the landing, the twenty-first century is almost certainly heading for an early depression."

Leggett also highlights the risk of parallel developments in the financial sector:

"Growing numbers of financial experts are warning that failure to rein in the financial sector in the aftermath of the financial crash of 2008 makes a second crash almost inevitable."

A frequent Guardian contributor, Leggett has had a varied career spanning multiple disciplines. A geologist and former oil industry consultant for over a decade whose research on shale was funded by BP and Shell, he joined Greenpeace International in 1989 over concerns about climate change. As the organisation's science director he edited a landmark climate change report published by Oxford University Press.

Industry's bad bet

Leggett points to an expanding body of evidence that what he calls "the incumbency" - "most of the oil and gas industries, their financiers, and their supporters and defenders in public service" - have deliberately exaggerated the quantity of fossil fuel reserves, and the industry's capacity to exploit them. He points to a leaked email from Shell's head of exploration to the CEO, Phil Watts, dated November 2003:

"I am becoming sick and tired of lying about the extent of our reserves issues and the downward revisions that need to be done because of far too aggressive/ optimistic bookings."

Leggett reports that after admitting that Shell's reserves had been overstated by 20%, Watts still had to "revise them down a further three times." The company is still reeling from the apparent failure of investments in the US shale gas boom. Last October the Financial Times reported that despite having invested "at least $24bn in so-called unconventional oil and gas in North America", so far the bet "has yet to pay off." With its upstream business struggling "to turn a profit", Shell announced a "strategic review of its US shale portfolio after taking a $2.1bn impairment." Shell's outgoing CEO Peter Voser admitted that the US shale bet was a big regret: "Unconventionals did not exactly play out as planned."

Leggett thus remains highly sceptical that shale oil and gas will change the game. Despite "soaring drilling rates," US tight oil production has lifted "only around a million barrels a day." As global oil consumption is at around 90 milion barrels a day, with conventional crude depleting "by over four million barrels a day of capacity each year" according to International Energy Agency (IEA) data, tight oil additions "can hardly be material in the global picture." He reaches a similar verdict for shale gas, which he notes "contributes well under 1% of US transport fuel."

Even as Prime Minister David Cameron has just reiterated the government's commitment to prioritise shale, Leggett says:

"Shale-gas drilling has dropped off a cliff since 2009. It is only a matter of time now before US shale-gas production falls. This is not material to the timing of a global oil crisis."

In an interview, he goes further, questioning the very existence of a real North American 'boom': "How it can be that there is a prolonged and sustainable shale boom when so much investment is being written off in America - $32 billion at the last count?"

It is a question that our government, says Leggett, is ignoring.

Crunch time

In his book, Leggett cites a letter he had obtained in 2004 written by the First Secretary for Energy and Environment in the British embassy in Washington, referring to a presentation on oil supply by the leading oil and gas consulting firm, PFC Energy (now owned by IHS, the US government contractor which also owns Cambridge Energy Research Associates). According to Leggett, the diplomat's letter to his colleagues in London reads as follows:

"The presentation drew some gasps from the assembled energy cognoscenti. They predict a peaking of global supply in the face of high demand by as early as 2015. This will lead to a more regionalised oil market, a key role for West African producers, and continued high and volatile prices." More

 

Tuesday, March 25, 2014

The Missing Shale Miracle

The boom in shale gas production in the United States has sparked talk about a U.S. manufacturing renaissance powered by cheap gas. The National Association of Manufacturers notes on its website that “abundant domestic natural gas resources can fuel a renaissance in U.S. manufacturing”; similarly, a 2011 report from PricewaterhouseCoopers found that “shale gas has the potential to spark a US manufacturing renaissance over the next few years, boosting revenue and driving job creation.”

Meanwhile, in Europe and Asia, where energy prices are still high, leaders worry about a coming deficit in competitiveness that will threaten their already fragile economies. Daniel Yergin, the Pulitzer-prize winning author of The Prize, reported that in Davos this year competitiveness was “was calibrated along only one axis -- energy.” Cheaper energy in the United States, he wrote, “puts European industrial production at a heavy cost disadvantage against the United States. The result is a migration of industrial investment from Europe to the United States.” Yet talk of manufacturing renaissances or dark ages is overblown. Natural gas matters far less than either the optimists or the pessimists claim.

Energy competitiveness, the idea that cheap energy can be a source of industrial strength and competitive advantage, is at once intuitively appealing and intuitively suspect. It is appealing because we have been conditioned to believe that energy is terribly important, so big shifts in global energy must cause big shifts in the economy. It has to be a huge deal for the United States -- with profound implications for geopolitics and economics -- if natural gas prices there are a third or a fifth or a tenth of what they are in Europe and Asia.

At the same time, the idea of energy competitiveness is suspect. One rarely associates access to cheap energy with industrial potency (think Saudi Arabia, Russia, and Venezuela). By an accident of geography, the countries with advanced industrial sectors -- Germany, Japan, Korea, Taiwan -- happen to depend on imported and usually expensive energy. If those countries managed to nurture world-class industrial sectors without indigenous sources of cheap energy, there must be more to manufacturing than energy.

Despite low natural gas prices, in other words, spending on energy is hardly out of the historical norm.

The reality is that energy, although very important for some industries, is a marginal driver for industrial activity overall. In 2012, Dow Chemical reported that “expenditures for hydrocarbon feedstocks and energy accounted for 37 percent of the Company’s production costs and operating expenses.” No wonder Dow is the name most often associated with calls to restrict U.S. exports of liquefied natural gas (LNG) from the United States -- energy is a big cost for the company.

But there is more to the U.S. economy than chemicals, which accounted for 2.3 percent of GDP and 0.6 percent of full-time equivalent employment in 2012. The Bureau of Economic Analysis (BEA) estimates that, overall, U.S. businesses spent $790 billion on energy in 2012. Energy represented about 3.7 percent of total costs, similar to the 3.6 percent that companies have spent on average since 1997. (The low was 2.6 percent in 1998 and the high was 4.6 percent in 2008.)

Despite low natural gas prices, in other words, spending on energy is hardly out of the historical norm. In part, the reason is that natural gas made up only about 15 percent of energy spending by industry in 2011, with the rest going to coal, oil, and electricity, some of which generated from gas. Cheap gas has provided only a limited stimulus, on the order of $32.5 billion in savings for American industry -- a paltry sum compared to the $6 trillion in total spending by industry on intermediate inputs and wages.

What about those industries in which energy is a major cost? Among the 69 individual industries for which the BEA reports data, only eight spent more than ten percent of overall costs (energy, materials and services, and compensation of employees). These industries, mostly in the transportation and logistics sectors, made up less than five percent of U.S. GDP in 2012. Adding in industries that use fossil fuels for feedstock would get that total to around ten percent of GDP, of which a significant portion relates to transportation and logistics.

That is why it is hard to argue that investment driven by cheap gas will drive a manufacturing renaissance. In a February 2013 paper that Charles River Associates prepared for Dow Chemical on U.S. manufacturing and LNG exports, it identified over 95 projects in the gas-intensive manufacturing sector that had been announced by various companies since 2010. Together, they comprised some $90 billion in total investment. At the same time, companies spend around $2 trillion a year in other, non-residential investments. Given that not all these gas-intensive projects will materialize and that this investment will be spread over many years, it is hardly transformative.

Of course, shale gas brings other benefits. The Boston Consulting Group, for example, estimates that “the average U.S. household is already saving anywhere from $425 to $725 a year because of lower energy costs that can be attributed to domestically recovered shale gas.” Together with shale oil, shale gas is creating good jobs and yielding tax revenue, and helping shrink the U.S. trade deficit -- all worthwhile goals. But shale gas will not trigger a widespread manufacturing renaissance in the United States, nor will it undermine economies in Europe and Asia by providing the United States with an energy cost advantage. Its effects will be narrower and limited to a few industries. It is time to let go of “energy competitiveness” as a real thing. More

 

Thursday, March 20, 2014

The Peak Oil Crisis: Our Harsh Winter Continues

Two weeks ago we discussed the impact that the polar vortex was having on our natural gas supplies and noted that our stocks of natural gas were already 500 billion cubic feet below where they should be for this time of year.

Two weeks ago the forecasters were optimistic that the record winter of 2013-2014 was over and that things would soon be warming up.

It turned out however that the forecasts were wrong and yet more frigid weather poured down across the U.S., drawing down our stocks of natural gas and heating oil still further and interrupting the drilling and fracking of new shale gas and shale oil wells. New forecasts say that the abnormally cold weather is likely to continue through the rest of March and on into early April.

We won’t have the final figures on how much natural gas was drawn from our stocks this winter for another month, but it is starting to look as if our stocks, which normally range from a high of 3.8 trillion cubic feet to a low of 1.8 trillion, could fall to as low as 750 billion and that the total drawdown this winter will be close to 3 trillion cubic feet as compared to the normal 2 trillion. Since November the U.S. has been consuming an average of 91 billion cubic feet of natural gas each day which is 13 percent higher than the five-year average for this time of year.

The key question is whether this can be replaced in time for the next heating season or the ones after that.

You will recall that our shale gas wells, which now supply about 40 percent of our total natural gas consumption, deplete very quickly so that many new wells need to be drilled and fracked each year just to keep production level.

In addition to increasing our consumption, the cold weather has also slowed our domestic production of natural gas. Our natural gas imports from Canada, about 7 billion cubic feet per day, are down about 10 percent from last year. It is even colder in Canada and they need their gas to keep warm before exporting any surplus to the U.S.

You will recall that our shale gas wells, which now supply about 40 percent of our total natural gas consumption, deplete very quickly so that many new wells need to be drilled and fracked each year just to keep production level. There are very few conventional gas wells being drilled these days and production of shale gas other than from the Marcellus shale in the Appalachians is nearly flat. The rapid pace our gas wells are depleting means that the U.S. now needs about 19 billion cubic feet per day of new gas production just to keep up with our annual average consumption of 71 billion cubic feet per day.

As a goodly share of this 19 billion cubic feet per day of new natural gas production must come from the mountains of Pennsylvania and West Virginia, it should be apparent that this location is not conducive to drilling and fracking during the cold and snowy winter months. A recent weekly EIA report shows natural gas production in the eastern U.S down by 30 percent from last year.

Last week the Department of Energy issued a report discussing how we are going to overcome this trillion cubic foot deficit in our natural gas stockpiles before the beginning of next November’s withdrawal season. The Department starts with the assumption that the drawdown is not going to be as bad as it currently seems and then posits that if everything goes right – higher production and lower consumption – we might be able to inject a record 2.5 trillion cubic feet into our storage caverns this summer. Even this will leave us about 500 billion cubic feet below where we would like to be next fall.

Looking ahead for the next few years, questions are starting to arise about the long-term sustainability of our natural gas production.

Natural gas consumption during the next seven months is problematic. If temperatures are unusually high, a lot of natural gas will go into electric power stations to keep us cool. If it is a cool summer, then we might have considerable surpluses that could be injected into our storage caverns. The relatively low price of natural gas, currently about $4.50 per million BTU’s, is another problem.

Some independent analysts say this is well below what it costs to produce shale gas these days and that producers are solvent only because they are making an effort to produce “wet” gas that contains valuable natural gas liquids such as propane which can be sold for enough to offset the loss on the “dry” gas which is what keeps us warm. Gas coming from the Marcellus shale, mostly in Pennsylvania, is generally dry so that there is a good chance that many producers are simply losing money on their natural gas production while waiting for higher prices that will allow profitability.

Looking ahead for the next few years, questions are starting to arise about the long-term sustainability of our natural gas production. This winter will leave us with a major deficit in our stockpiles which unless the weather cooperates is not likely to be made up in the immediate future. Unusually hot summers or cold winters will make rebuilding of inventories difficult or even impossible. More

 

Wednesday, March 19, 2014

Building the Electricity System of the Future: Thinking Disruption, Doing Solutions

The speed of disruptive innovation in the electricity sector has been outpacing regulatory and utility business model reform, which is why they now sometimes feel in conflict.

That disruptive innovation is only accelerating. RMI’s recent report,The Economics of Grid Defection: When and where distributed solar generation plus storage competes with traditional utility service, sets a timeline for utilities, regulators, and others to get ahead of the curve and shift from reactive to proactive approaches. Becoming proactive and deliberate about the electricity system's transformation, and doing so ahead of any fundamental shifts in customer economics, would enable us to optimize the grid and make distributed technologies the integral and valuable piece we believe they can and should be.

When RMI issued The Economics of Grid Defection three weeks ago, our intent was to stretch the conversation among electricity system stakeholders by looking out far enough in the future to discern a point where the rules of the system change in a fundamental way. We used the best available facts to explore when and where fully off-grid solar-plus-battery systems could become cheaper than grid-purchased electricity in the U.S., thus challenging the way the current electricity system operates. Those systems, in fact, don’t even need to go fully off grid. The much less extreme but perhaps far more likely scenario would be grid-connected systems, which could be just as or even more challenging for electricity system operation and utility business models.

The takeaway is this: even under the fully off-grid scenarios we modeled, we have about 10 years—give or take a few—to really solve our electricity business model issues here in the continental U.S. before they begin compounding dramatically. The analysis also suggests we should carefully read the “postcards from the future” being sent from Hawaii today, and take much more interest in how that situation plays out as a harbinger of things to come.

As an institute with a mission to think ahead in the interest of society, consider this a public service message that these issues will crescendo to a point of consequence requiring dramatic and widespread changes well within current planning horizons. For those who are serious about finding solutions, this is also a call to action and a commitment to partnership.

At RMI, much as we pioneered the concepts of the “negawatt,” the “deep retrofit,” and the “hypercar,” we have also defined what it means to be a “think-and-do tank.” It is not enough to do smart analysis. The solutions we champion must be practically tested, broken, fixed, refined, iterated, and ultimately adopted at scale for us to feel satisfied with our work. Partnering with leading companies and institutions is how we prove an alternative path is possible to a world that is clean, prosperous, and secure.

The highly distributed electricity system of the future

The Transform scenario of our Reinventing Fire analysis, the most preferable outcome of the electricity futures we have examined, described a future for the U.S. electricity system in which 80 percent of electricity is supplied from renewable sources by 2050, with about half of that renewable supply coming from distributed resources. Given the current grid is only a few percent distributed and less than 13 percent renewable (counting a generous allotment of hydropower), we have quite a ways to go.

Achieving that end state requires many changes. Some of those changes already have momentum and likely won’t require intervention, but others will need a kick start or some other form of “strategic acupuncture” encouragement. At RMI, we would certainly prefer that a transition of this scale be orderly and proactive, because having disruption rock the boat of the current system unprepared would undoubtedly leave some combination of shareholders, ratepayers, and taxpayers smarting.

As we look at the future electricity system—the one we need to be building today—we see five critical differences from the present system. Redesigning our regulatory and market models should reflect these emergent needs.

  • The future electricity system will be highly transactive. Increasingly, the grid will become a market for making many-to-many connections between suppliers and consumers, with those roles being redefined on a daily basis as self-balancing systems decide whether to take from or supply to the grid at any given time.
  • Correspondingly, asset and service value will be differentiated by location and timing of availability, and perhaps even by carbon intensity or other socially demanded attributes. In a system that requires instantaneous load matching at the distribution level, and where virtual and real storage are distributed throughout the system, resource coordination will require transparent markets (with increasing automation) that provide the ability to balance autonomously using value signals. A system historically governed by averages will instead migrate to specific, dynamically varying values.
  • Innovative energy solutions will proliferate. As a consequence of market forces already unlocked, we are assured to see a regular stream of distributed resource innovations that better meet customer needs at costs comparable to existing utility retail prices. These could be market-based aggregation plays (e.g., demand response) or personal technologies (e.g., a home “power plant” such as solar plus storage or a gas microturbine).
  • A consequence of these first three points is that the rules governing the network must be adaptive to constantly shifting asset configurations, operations, and other factors. For example, charging EVs may make more sense at night or during the day, depending on the penetration of renewables relative to base needs. There will be lots of inflection points on how and when to encourage the development of different types of assets to reach efficient and stable outcomes.
  • Finally, the customer will be increasingly empowered. The services of the grid must de-commoditize to deliver against exact customer needs for reliability, “green-ness,” and other attributes. Failure to do so will result in customers finding higher-value alternatives.

This future still prominently features a robust wires network; defection from the grid would be suboptimal for a number of reasons. We would assert that everyone is better off if we create a future network that is easier to opt in to, rather than opt out of via the risk of defection.

Moreover, distributed resources—the same ones that could but needn’t threaten defection—have the potential to become a primary tool in the planning and management of grid-based distribution systems. Already, we are working with utilities and regulators in several parts of the country in exploring new ways to incentivize electricity distribution companies to take full advantage of distributed resources to reduce distribution system costs, increase resilience, and meet specialized customer needs. Good regulation will reveal value and facilitate transactions that tap that value, thereby increasing the benefit of distributed resources for all.

Forging solutions: our work on the emerging system

Our programs at RMI are designed to honor and accelerate progress toward an electricity system that harnesses these distributed investments. Hence, we have parallel and interactive efforts to accelerate the progress of economic, distributed, and low-carbon disruptive technologies (because we believe they have an important and positive role to play in the electricity system of the future), even as we work with utilities, regulators, and other key stakeholders to migrate to new business models that deploy and integrate these resources in ways that maximize the benefits to society as a whole. We think these dual efforts place “creative tension” in the system from which progress manifests.

Our work on disruptive technologies is focused on driving down the economic costs of deploying these systems by stimulating direct cost reductions, improving risk management and access to capital, and building new business models that are either behind the meter or aggregations across meters. To do this, we work specifically to help drive down solar “balance of system costs” through understanding cost reduction opportunities and then working to implement them, through identifying pathways to more market capital and then working with consortia like truSolar and Solar Access to Public Capital to unlock, and through working on issues like microgrids or researching the prospects for alternative asset models with a wide range of partners.

These insights into disruptive models directly inform our dialogue with utilities, regulators, technology providers, and other stakeholders around ways to migrate existing business models. Our most ambitious effort at transformation is the Electricity Innovation Lab (e-Lab), a multi-year, multi-stakeholder initiative focused on rapid prototyping and fast feedback on solutions for the future energy system. This network has issued seminal thought pieces on future business models, surveys of the costs and benefits of solar, and worked directly with stakeholders like the City of Fort Collins and the U.S. Navy to develop perspectives on pieces of future solutions for all. Beyond that, we work directly with utilities such as PG&E and states like Minnesota on one-off engagements to test different ideas together in a way that provides important experience for the “think-and-do” cycle that epitomizes our approach.

We at RMI are committed to expanding and accelerating the capacity to transform the electricity industry to one epitomized by innovation and customer service above all else, in a way that meets environmental, social, and economic demands. Toward this end, we are convening 13 cross-disciplinary teams from across the country in two weeks for our first-ever e-Lab Accelerator, designed specifically to workshop some of the toughest issues facing the industry in the transition to the next electricity system. This is just one of the broader set of commitments that we have made to not just thinking about solutions, but putting them immediately to the test. Therein lies the key to our change model: think and do. Then repeat. More