Sunday, May 28, 2006

The Newest Guest at Your Dinner Table: Your Car

Some 250,000 people are being added to the world's population every day. Of the more than 6 billion people now on earth, 3.7 billion suffer from some form of malnutrition. For these reasons and others now does not seem like a good time to embark on a program to turn a significant portion of the world's food crops into fuel for automobiles. So says David Pimentel (pronounced: pim-men-TELL), the Cornell University agriculturalist whom many regard as the world's leading authority on the energy content of biofuels and their effects on food and agriculture as a whole.

The growing drive for energy "independence" coupled with heavy subsidies has led to a scramble to build biodiesel and ethanol plants across the United States. "I wish that ethanol and biodiesel would save us," Pimentel said at a conference entitled "Peak Oil and the Environment" held in Washington, D. C. recently. Unfortunately, green plants collect relatively little solar energy, he explained. Less that 0.1 percent of the sunlight that falls on plants gets converted into usable energy. That compares with about a 20 percent conversion of sunlight to energy by photovoltaic cells.

This means that biodiesel and ethanol production facilities end up being voracious though hidden guests at the world's dinner tables. Humans get 99 percent of their food from the land and only 1 percent from the oceans, according to Pimentel. (This is in part due to the collapse of the world's fisheries brought on by new forms of industrial fish harvesting and by high demand for seafood.) The more that we demand from the land in the way of fuel, the less that will be left over to eat, and the catch from the oceans is unlikely to make up for this loss.

Lester Brown, president of the Earth Policy Institute and author of the recent book Plan B, spoke at the same conference. He said that as long as oil remains above $60 per barrel, it will be profitable to produce fuel from crops. "The price for oil is becoming the floor for agricultural crops," he explained. "We're setting up a competition between service stations and supermarkets. The prices of agricultural commodities will be determined by their fuel value." (my emphasis)

If oil prices remain high or even rise, they would continue to put upward pressure on grain prices. This could lead to political instability in countries such as Indonesia and Mexico which rely heavily on grain imports, Brown said.

But if, for the sake of argument, we didn't concern ourselves with the effects of biofuels on food supplies, just how far could plant-based fuels go toward solving our looming liquid fuels problem? The U. S. Department of Energy now reports that currently less than 1 percent of all vehicle fuel consumed in the United States is plant-derived. According to Pimentel, even if we devoted all the corn raised in the country to making ethanol, we would be able to supply only about 7 percent of the country's needs. Any claims that biofuels will make us energy independent just don't hold up.

Even if biofuels could be produced in more substantial amounts, there is reason to believe they would not help us address energy shortages in the future. According to Pimentel's work it takes 25,000 kilocalories of energy to produce one gallon of corn ethanol which contains 19,400 kilocalories of energy. That's a loss of more than 22 percent (dividing the loss of 5,600 kilocalories by the 25,000 kilocalories of inputs). Other studies which claim to show an energy gain for ethanol leave out many inputs such as the energy used to create farm and processing machinery, the energy used to irrigate and the costs of the environmental impacts, he said.

(Pimentel's critics argue that his methods underestimate the energy return on ethanol. He encourages them to submit their findings to refereed scientific journals where all of his research articles on the subject have appeared. So far none have done so.)

Many other biofuels perform even worse. Pimentel and his co-author Tad Patzek determined that it takes 45 percent more energy in the form of fossil fuels to turn switchgrass into liquid fuel than that liquid fuel returns in energy. The results for wood biomass, soybeans and sunflowers were 57 percent, 27 percent and 118 percent, respectively. In short, we are currently subsidizing the production of biofuels with fossil fuels such as coal and natural gas which provide the heat and electricity to process those biofuels.

So, given all of this, what is driving the biofuels market? The simple answer is money, said Pimentel. For instance, U. S. government subsidies mean that companies producing corn ethanol receive payments totaling $7 per bushel of corn processed. The corn farmers alas receive less than a 2-cent per bushel subsidy related to ethanol production.

Pimentel offers a simple test for whether ethanol producers really believe their own hype. If ethanol offers such a magnificent energy gain, then why don't ethanol plants run on ethanol instead of coal and natural gas? Not surprisingly, this question has so far been met with dumbfounded silence.

Sunday, May 21, 2006

What Clive Crook Doesn't Know About Energy Will Hurt Him (And Us Too!)

The incurious mind often doesn't know what it doesn't know and so, not surprisingly, doesn't think to ask questions. Such is the case with Clive Crook in his recent piece in The Atlantic Monthly (subscription required, but even if you can't read it, I will outline his main points). While misleading articles about oil and energy are so numerous in the media these days that responding to them all would be an impossible task, it is occasionally worthwhile to critique a typical specimen so as to remain in practice.

In a nutshell, Crook appears to be channeling Daniel Yergin who contends that the main obstacles to an energy-secure future are political, not technical or geological. But Crook should have been more careful to conceal his ignorance of the world's energy landscape. He tells us the following:

Even if prices somewhat lower than those already seen this year were sustained, an array of existing but not yet widely applied technologies would make it economically feasible to extract oil from tar sands or shale, or to convert coal to liquid fuel.

If Crook doesn't know that for many years it has been economically feasible to obtain oil from the tar sands in Alberta and that it is being done currently to the tune of 1 million barrels a day, what else doesn't he know? Apparently, he doesn't know that coal is already being turned into liquid fuel on a large scale in South Africa, either. And, though he tells us in amazement that the economy has not been slowed appreciably by $70 a barrel oil, he doesn't seem to know that this price is about $25 to $30 below the inflation-adjusted high that oil reached in 1980.

Crook also tells us that the American economy is far more efficient in its use of oil and energy in general than it was in 1970. The absolute amount of oil that we use is greater, he admits, but the amount we use per unit of GDP is considerably less. This makes it easier to absorb price increases without hurting economic growth. True, but it never occurs to him to ask how our economy would fare if the amount of oil available actually declined. Then, I think we would find out that we are not less dependent on oil, but, in fact, more dependent on oil since we now balance much more GDP on a given unit of oil. Could our economy grow after even the partial withdrawal of oil supplies? Here we must consider Liebig's Law of the Minimum: an organism's growth is limited by the amount of the least available essential nutrient. In the case of the world economy, that nutrient would be oil.

Crook launches three other obvious canards: 1) that the move toward a service economy is making us less energy dependent, 2) that reserve estimates for oil prove that we have enough oil for decades to come and 3) that some vague group of people is saying that we are running out of oil.

Let's take the claim about the service economy. First, those who work in the service economy depend on mining, agriculture and manufacturing to make what they need to live and work. Those basic sectors of the economy must use more and more resources including energy to make it possible for more people to work in the so-called service sector. But the service sector isn't necessarily all that energy lean. Ask someone who has had to pay the utility bills for a university or a large hotel lately. In fact, some service businesses and institutions are from an energy standpoint nothing but sprawling energy sinks as our large state universities have been finding out recently. Growth in the economy means growth in energy use no matter how that growth occurs. Yes, we've become more efficient. But, nature doesn't care that we are using finite fossil fuels more parsimoniously; it only cares about the absolute drawdown which is getting bigger by the day.

Crook also claims that oil reserve estimates show that we have nothing to worry about for several decades. Here he once again displays his ignorance. He says nothing about the controversy surrounding reserve gains in the late 1980s in nearly all OPEC countries. OPEC was contemplating adjusting production quotas to be commensurate with reserves. Suddenly, OPEC members within the space of a couple years were reporting gains of 50% to 100% in their reserves with no discernible exploration to account for it. The Middle East, where most of OPEC's oil is located, contains 60 percent of the world's remaining reserves. Not mentioning the sudden appearance of these phantom reserves and the recent sudden vanishing of some of the same reserves is no small oversight.

The second error he makes is confining his discussion to reserves. It doesn't matter how big your reserves are if the rate at which you can get oil out of the ground is small. The reserves in the Alberta tar sands are quoted at 180 billion barrels, bigger than that of every OPEC country except Saudi Arabia. But, the tar sands are unlikely to give us much more than 3 million barrels a day by 2025. This sounds like a lot, but it is a mere trickle compared to projected world demand of about 120 million barrels a day.

Another problem with the tar sands and other nonconventional oil sources is that their energy return is poor. Right now, we are running the world economy on oil that gives us about 20 units of energy to use in the non-energy economy for each unit we spend in the energy industry to get it. For tar sands, the ratio is only 1.5 to 1. Efficiencies will surely accrue over time, but it seems quite doubtful that tar sands will approach anything like the 20 to 1 ratio for conventional oil. And, we need to keep in mind that the easiest-to-recover oil from the tar sands is being taken first. The harder-to-get oil, and thus more energy-intensive, will come later. It will be a race between technology and declining grades; but will it be a race up to 20 to 1 returns? I doubt it.

Crook mentions oil shale and indicates that there is ready technology to make it a useful energy source. To date no company has been able to get oil out of oil shale at a profit. Even more important, oil shale remains net energy negative. That means we are getting less than one unit of energy for each unit we put in. In short, it's not an energy source using existing technology, and unless somebody figures out a technique for extracting and processing it which doesn't involve using lots of water, it probably never will be a source of energy. That's because most of the world's oil shale is located on the Colorado plateau where water is already in short supply.

The final canard is a staple among oil optimists: They say the-sky-is-falling pessimists claim that we're running out of oil. This, of course, is an utter straw man. Even the pessimists say that we won't run out of oil anytime soon. What they claim is that we are approaching a peak in the rate of production worldwide. Oil production in every field and in every oil country now in decline has followed the same pattern: a sharp rise in the rate of production, followed by a peak, followed by a decline. No one has convincingly shown why this should not be true for the world. And, in a global economy that is utterly dependent for its growth on ever-expanding supplies of cheap oil, a decline in the rate of production would have profound consequences. If that decline is nearby, we will find that we are simply not ready for it. If it is delayed for many years, we have chance to get ready. But, we will not be ready in time if we stick with the current the-market-will-save-us policies which are in force now.

To his credit Crook notes that global warming also needs to be addressed simultaneously with energy issues. But, he again seems to betray his ignorance by saying that the Kyoto Protocol will "impose immediate, drastic changes at ruinous cost." What he doesn't know or doesn't tell you is that leading climate scientists believe we will have to cut our greenhouse gas emissions by 50 to 70 percent over the next 40 years to save us from disastrous warming. Kyoto only requires reductions of about 5.2 percent below 1990 emissions for industrialized countries only (though these reductions would have meant up to 23 percent for the United States if had it signed the protocol). Unfortunately, total emissions may actually rise because of plans for many new coal-fired power plants in countries not covered by or not ratifying the protocol such as China, India and the United States. If the limits Kyoto calls for are "drastic," then they are clearly not drastic enough.

Crook proposes energy diversification, a carbon tax and subsidies for "oil-saving technologies," all sensible steps. But when it comes to understanding the true nature of our energy predicament, he needs to go back and ask more questions--a lot more questions.

Sunday, May 14, 2006

Triage for the Post-Peak Oil Age

When casualties overwhelm battlefield doctors, they are often forced to sort the wounded into three groups: those who will survive without treatment, those who will likely die even with treatment, and those who will probably live but only with treatment. In the post-peak oil age we will likely be faced with a similar situation in deciding which activities a lower-energy society can support.

Tentatively, I propose the following triage for various broad areas:

1) activities that are "Expected to Make a Full Recovery," ones that I think will spread and intensify out of necessity,

2) activities labeled "Code Blue"--the medical term for emergency treatment of heart attack patients--activities which I think may only survive with our active intervention or which may only be available at the level we want them to be through special efforts, and

3) activities labeled "Do Not Resuscitate" which are unlikely to survive post-peak no matter how much effort we put into them.

Only "Code Blue" items are meant to indicate my preferences for a post-peak oil world.

The other categories are predictions (a dangerous practice) about what I think will and won't thrive in a low-energy society. I will certainly miss some activities such as cheap air travel. Others such as motorized sports, I won't. But, my preferences don't matter since the availability and price of liquid fuels will, in my view, determine the fate of both activities.

The table below is not meant to be a complete list by any means. No doubt readers will disagree--perhaps vehemently in some cases--with my predictions and preferences. My aim is neither to irritate nor to prescribe, but rather to help begin a process that I believe will become absolutely necessary. I say absolutely necessary because our failure to recognize those activities which won't survive under any circumstances may cause us to waste valuable (and diminishing) energy resources on hopeless cases. That lost energy will be energy that we cannot spend on things that we will desperately need such as wind and solar power.

No one likes to choose, but choose we must if we are going to have the future that we want (given our constraints) rather than the one that is simply forced upon us.

Category
Expected to Make A Full Recovery
Code
Blue
Do Not Resuscitate
Agriculture
Organic farmingScientific research on organic practices; non-GMO seed preservation Industrial/Chemical Farming
Transportation
Walking; bicycling; sail powerPassenger and freight train service; water transportationPrivate automobiles; transcontinental trucking; commercial air travel; vacation cruise lines
Telecommunications
Face-to-face conversationThe InternetCable/Satellite Television
Culture
Oral history and storytellingLibraries; certain museums; unique nationally recognized performing groups (opera, theater, ballet, symphony)Theme parks; any sport involving motorized vehicles; large-scale professional sports teams
Education
Neighborhood and home schoolingSmaller, decentralized secondary and higher educationLarge, energy-intensive colleges and universities
Science
Widespread curiosity about and close observation of the natural worldScientific research and education on truly sustainable practicesMegaprojects such as particle accelerators and space exploration
Religion/Spirituality
Spiritual teachings that view the natural world as
sacred
Ecumenism and toleranceMegachurches; television ministries
Government
Local governanceLocal democratic participationLarge, centralized administration
Business
Local, small-scale craft and manufacturing; locally owned retail; personal serviceLocal economic networksBig box chain stores; just-in-time delivery; worldwide logistics
City/Land Use Planning
Planning which focuses on local resourcesVibrant urban centers; preservation of arable landSuburban and exurban sprawl; megacities
Energy
Physical labor; animal powerRenewable energy especially wind and solarCorn ethanol; any net energy negative biofuel

Saturday, May 06, 2006

The Next Casualty of the Oil Depletion Age: State Universities

It is an unfortunate fact for canaries, at least, that these birds are particularly susceptible to methane and carbon dioxide. For that reason coal miners used to bring them down into the mines as an early warming system for monitoring the air. When exposed to even small amounts of these noxious gases, the canaries would show signs of distress and wobble on their perches; if the gases were concentrated enough, the birds would fall over and expire. Either way, it was a sign to get out.

In the business world there are some "canaries" that are already wobbling on their perches as the age of oil depletion unfolds. The airlines are the most visible and obvious casualties since their fortunes are so closely tied to the price of jet fuel. The American automobile industry is another prominent casualty. This is in large part because the industry failed to anticipate the emerging energy crisis and continued to concentrate on manufacturing gas-guzzling SUVs. In addition, the automakers' high pension and health care costs have made them especially vulnerable to financial shocks.

Now, a third important casualty is coming into view: state universities. As with each of the other "canaries" already mentioned, state universities have particular vulnerabilities that make them more susceptible to rising oil and natural gas prices than their private counterparts. First, the "Demographics Project" of the College Board (the organization famous for SAT tests) reports the following:

For almost 20 years, enrollment managers have had the luxury of being able to recruit, select, and help finance their incoming freshmen from ever larger high school graduating classes. Those good times are about to end. Future applicant pools will be smaller and will vary across demographic lines.

Second, state funding as a portion of higher education budgets for state universities and colleges has been trending down from 44.8% in 1979-1980 to just 32.3% in 1999-2000. This trend is leading to a third vulnerability: sharply rising tuition and fees as shown on the right side of the graph below:

Trends in Rate of Increase in Total Four-Year College Costs 1978-79 to 2003-04
Image Hosted by ImageShack.us
                                          U. S. Department of Education

The rate of tuition and fee increases for private and public colleges had been more or less in sync from 1980 until 2001. Then, tuition at public colleges began to rise dramatically. Increasing health care costs were partly to blame and served to make state colleges and universities all the more vulnerable to energy shocks. Higher tuition has also begun to threaten enrollment (and thus revenues) as students find that their education is less and less affordable. Of course, the students and their families are facing higher energy costs as well which means the income that is available to devote to education is dwindling.

State colleges and universities are vulnerable in yet a fourth way; their endowments are often small or nonexistent. While many private institutions can draw on substantial endowments to fund unexpected costs, most public institutions of higher education have little to fall back on.

All of these vulnerabilities leave state colleges and universities especially exposed to rising heating and electricity costs. And, while oil isn't the main fuel for college and university campuses, natural gas is. With natural gas supplies peaking in North America, heating costs for institutions located there are likely to remain high for a long time. One natural gas expert believes that natural gas production could even begin to drop precipitously by 2007 or 2008 sending prices higher still. Unfortunately, many state university and college campuses are sprawling energy sinks with vast energy-hogging laboratories, dormitories, arenas and classrooms. In addition, rising oil prices have begun to feed into higher prices for just about everything colleges and universities and their employees need.

The bad news is everywhere. Both New Mexico State University and the University of New Mexico were heading for huge deficits when a special session of the legislature was called to pass $3.5 million in additional aid to help the state's public institutions of higher education to pay their utility bills. Texas Tech tacked on a special $60 fee per student per semester to defray rising energy costs. Back in September, the state university located where I live, Western Michigan University, decided at the last minute to adjust its academic schedule to add an extra week of Christmas vacation and then tack that lost week onto the end of the school year. The reason given: to save energy.

Most colleges and universities are treating the situation as a short-term problem, one that should go away within a year or two as energy prices decline to more "normal" levels. What few are anticipating is a permanent or at least long-term change in the level of oil and natural gas prices. Under this scenario even elite institutions with large endowments and the ability to raise tuition almost with impunity will ultimately have to make considerable adjustments.

While many colleges and universities are striving to be "green" and "sustainable," the activities they have engaged in to date have seemed more optional than obligatory; these institutions have been trying to do the right thing because they want to, not because they have to. What most of them do not recognize is how thoroughgoing their own transformations will have to be to meet the challenges they will face as energy supplies become increasingly doubtful and expensive.

What those who run institutions of higher education need to understand starting right now is that in the future--perhaps as little as a decade from now--green colleges and universities may very well be the only colleges and universities. There isn't much time to prepare.