Sunday, June 13, 2010

Unquenchable thirst: The many things we do with oil.

Dave Rochlin -

With BP's broken underwater well still leaking oil into the gulf at an alarming rate, there are many calls to reduce our dependence on oil of all kinds.

Animator Mark Fiore recently did a wonderful video highlighting the bizarre notion of using "dinosaur squeezings" to power cars.

But oil is used in a lot more than our gas tanks. Petroleum is in many other products, and we use it for many of our processes. We also rely on it to grow, cook, eat, and even enhance our food. This second video, featuring eco-man and badger girl (which I made with the cool web tool xtranormal), highlights this.

I'm no Mark Fiore, but you get the point, I hope. A fairly exhaustive web list of many of the everyday goods that come from oil is available here, courtesy of the Illinois Oil and Gas Association. The list covers everything from ballet tights to venetian blinds. It certainly is food for thought. The list isn't 1001 items long, but easily could be.

The website also quotes Jeane Kirkpatrick, former U.N. Ambassador for the United States.

"Oil is a product that arouses so much passion. A lot of people have a passionate fear, or distaste, or downright hatred almost for oil. There is no other product that so many people need so badly, yet so many people believe should be produced entirely without profits."

As long as we need it "so badly", there isn't much chance we are going to stop drilling for oil off our shores. While there is a lot of talk about alternative energy, it seems that we also need to reconsider the role of oil as an input for all the other things we consume.

Photo copyright TommL at

Saturday, June 5, 2010

President Obama calls for a price on carbon. Will it work?

Posted by Dave Rochlin -

In a recent speech at Carnegie Mellon University, President Obama called for a price to be put on CO2 emissions, in order to move us on the path towards renewable energy. He figures the market will help do the rest.

" ...the only way the transition to clean energy will succeed is if the private sector is fully invested in this future, if capital comes off the sidelines and the ingenuity of our entrepreneurs is unleashed. And the only way to do that is by finally putting a price on carbon pollution."

A price on carbon has dual purposes:
  • It raises the cost of energy, which should encourage conservation.
  • It closes the cost gap between fossil fuels and alternative energy.
But will it work?

According to the most recent EPA greenhouse gas inventory, US greenhouse gas output is 7 billion tons a year. At a price of $25 per ton -- as envisioned in the Kerry-Lieberman American Power Act -- the total added cost if we priced all US emissions would be $175 Billion dollars per year, or about $1750 per household per year. Of course we won't be charging for all emissions....more likely just those above our 17% reduction cap, so the short term number (in grossly oversimplified terms) is really more like $350 per household....and that's only if we were not simply giving away all the permits. And in the long term? The senate bill targets an 80% reduction by 2050...but I'll believe that commitment when I see it.

I suppose this could show up as an additional $.25/gallon at the gas pump, or perhaps another $.01- $.02 per KwH for electricity. More likely, a lot of it would be buried in the cost of all the things we buy...carbon pricing by a thousand paper cuts!

When I talk about offsets (which I do a lot), I often have people tell me that a carbon tax is a much better answer, because it sends clear signals about the cost of consuming energy. So let's look at some major sources of emissions to see what pricing carbon might do:

Driving (roughly 20% of US emissions)
I really doubt that adding another $10 per barrel to the cost of oil is going to change driving habits or vehicle choices much. Demand only seems to change with massive ($30 or more per barrel) type price shocks, and even then only temporarily. If you don't like a Prius at $60 per barrel, you probably still don't like it at $70. Rather than carbon pricing, we either need to tax the real price of oil (including military expenditures, health costs, and deficit-related currency weakness) or simply rely on higher mandates on gas mileage, like the ones the EPA just enacted.

Flying (roughly 3-5% of US emissions)
Much of the cost of flying is fuel related, and this is an area where carbon pricing could have the greatest impact. While 10% at the gas pump does not scare drivers much, a 5% or 10% increase in the price of flying has a big impact on demand....there are plenty of pricing studies that confirm this. But even in this case, the drop in passenger miles would probably not hit the 17% reduction target. Of course airlines are already looking for exemptions to cap and trade in both the US and Europe. Perhaps we need some sort of mandatory fuel targets (per passenger) for airplane flights?

Electricity Generation (roughly 30% of US emissions)
For a home using 9,000 KWH per year, the carbon penalty would be around $15 per month. Most homes could easily save this much by using cold water for washing clothes and changing out a few lightbulbs, or shutting off vampire appliances and computers. And yet most of us don't. We don't seem to be that rational when it comes to electricity.

The utilities would look at both cost per kWH and capital expense, if it is a purely market based decision. Many uilities don't really compete, so any cost increases would simply be passed on anyway. This makes it rational to avoid new capital expenses, and stick with the old power plants. Emissions and renewable energy targets and other mandates (like additional scrubbers) could be much more impactful.

Industrial Energy Use (roughly 10% of US emissions)
Businesses have gotten smart about energy use in a big way. The more energy intensive the business operation, the more they are conserving in order to cut cost. But if they are taking action anyway, how much more impact will carbon pricing have? For those on the margin (less energy intensive businesses) some may start to care. But the big polluters are already paying attention to conservation. The senate bill also has some trade protections (carbon tariffs) so simply raising prices on goods and services ever-so-slightly is an need to worry about foreign competition.

Agriculture (roughly 7% of US emissions)
This sector seems to be given a waiver: If so, the CO2 equivalent of agriculture related Methane (21 times that of CO2) and Nitrous Oxide (310 times that of CO2) will not be priced. Need I say more?

Another big issue is that the price on carbon - as envisioned in current climate legislation - will go right back into the pockets of US consumers, either in the form of rebates or in defict reduction that will keep both taxes and inflation down. So the more we reduce our consumption or switch to renewables, the less we get back in rebates....sort of a reverse incentive.

While I think capturing the true cost of energy is an important step, I am not all that optimistic that carbon pricing alone will change behavior. What are some other options? Here are a few I can think of:

Conservation Capital
There's a high ROI on energy reduction (which would be even higher if energy costs go up due to carbon pricing.) But many changes require upfront capital. How about a low interest or no interest capital fund or Fannie-Mae type system for businesses and households to fund conservation and energy retrofits? This scheme is already being considered for residential solar.

Hard Targets
We could simply set renewables and emissions targets, as has been done with automobiles. If the market knows that a utility needs to get to 20% renewables in ten years, the "ingenuity of entrepreneurs" that The President referred to will kick into high gear an compete vigorously for a piece of the pie, lowering costs and increasing innovation.

Cost Transparency
Better feedback on energy use and costs would lead to better decisonmaking. Let's hook those smart meters into our thermostats and iphones, so we can see at anytime how much we are spending on power. And instead of an MPG gauge on cars, how about a taxi-meter style read out that shows how much we are spending on gas as we drive? These sort of in-your-face mechanisms are more likely to change behavior.

Spend Intelligently and Holistically
While we are pricing carbon at $25 or higher, I can think of an amazing innovation that 'eats' carbon for $10 per ton, and has years of successful field trials. It's called a tree, and we are losing as much as 80,000 acres of them each day. Trees also can preserve biodiversity and provide income in poverty zones. Using less and cleaner energy is a worthwhile goal, but a planet covered with solar panels and turbines instead of trees is not the kind of future we should aspire to. It's all about balance.

Follow ClimatePath on Facebook!

Original photo CC license modified by ClimatePath. All rights reserved.

Tuesday, June 1, 2010

Coal Use and CO2 Emissions Projected to Rise By More Than 50% By 2035

Dave Rochlin -

The world's hunger for energy is insatiable, according to the most recent Energy Outlook published by The U.S. Energy Information Administration (EIA).

And if nothing changes, this will lead to an increase in coal consumption from 132 quadrillion Btu in 2007 to 206 quadrillion Btu in 2035, most of which will come from growth in India and China. As a result, annual Greenhouse Gas Emissions could rise from 29.7 billion metric tons in 2007 to 42.4 billion metric tons in 2035.

Things are generally flat in the OECD countries, as they move from manufacturing to service based economies, and focus on efficiency rather than growth in their transportation sectors. But as manufacturers locate factories in developing countries where wages are cheapest, and those wage earners increase their standard of living, the countries least equipped to invest in renewable energy and public infrastructure will be the most active in growing their energy and fuel use. So the EIA projects plenty of additional coal and oil consumption.

Policymakers refer to this as an issue of energy intensity of the economy (how much energy is used for every dollar of GDP) and carbon intensity of energy (the sources used to produce the energy.) Most of the projected growth is in countries with high energy and carbon intensity.

This good news is that this scenario is based on the reference case—which assumes that current laws and policies remain unchanged throughout the projection period. There seem to growing public and political will to make some changes. But while China and India have floated the idea of cutting their emissions intensity in half as a percent of GDP (primarily through improved energy intensity) growth in their economies and only small reductions in the carbon intensity of the energy will overrun these reductions. Before we start finger pointing, however, keep in mind that exports to the US and other OECD countries have been powering China's industrial growth.

In any case, the reference scenario is quite scary, and we have to do much better. A healthy dose of conservation and alternative/renewable energy is needed, both in OECD and non-OECD countries. This means supporting a strong and effective energy and climate bill in the US, and the completion of the UN climate work that was started in Copenhagen. It's going to take a global solution to tackle this problem.

Chart by U.S. Energy Information Administration (EIA) from The International Energy Outlook 2010.