Drops in the Bucket

I think the fact that the renewable energy industry is fairly indifferent to Copenhagen and focused more on procuring government subsidies mostly just goes to show how small a part of the overall energy system it still is.  With an international agreement in place use of renewable energy would presumably increase, but it’s starting from such a low level that it’ll be a while before it has a large impact on emissions.  Conservation and shifts in the usage of fossil fuels are where the big impacts in the short term are going to be, and for those impacts to happen an effective system to price carbon is going to be essential.

Looking Back

The study of energy production and consumption is based heavily on models and projections from those models.  There are a lot of models out there, and they differ from each other to varying degrees based on the assumptions they make.  One criticism people often make of these models is that there is too seldom any effort to compare past predictions with the way things actually turned out in order to evaluate the accuracy and usefulness of the assumptions behind the models.

Given the number of models out there this would be an immense task if attempted on a large scale, but there have been some attempts to evaluate specific models.  One is found in a paper published in Energy Policy in 2007 which looks at predictions about energy consumption made in 1981 based on a model of the world economy and  compares them to data from 200o.  It finds that the model did okay, based on the information and techniques available at the time, particularly in predicting the effects of increased efforts at energy efficiency and conservation, but that there were some major differences between the conditions assumed by the model and the actual course of events.  One major unanticipated event was the fall in oil prices from the high prices of the 1970s to the low ones of the 1980s and 1990s, which not only affected the consumption of oil worldwide but also reduced the GDP of oil-producing countries, which had important effects on their consumption of all energy sources.  Another was the rapid rate of economic development in China and India, which hugely increased their energy consumption.  A third was the collapse of the Soviet Union, which had important consequences for energy consumption in a large number of countries.

These are all things that would be very hard to include in a model, but one conclusion of the paper is that it would be useful when making projections based on models like this to include a wide range of possible scenarios, including such seemingly far-fetched and unlikely events as (from the perspective of 1981) the collapse of one of the world’s major superpowers and the astronomical economic growth of two of the world’s largest and poorest countries.  With the enormous rise in computing power available now compared to then, it is much more practical to do this, and while it may make it harder to decide which assumptions to use, it also makes relying on models for decision-making more reasonable.

Sohn, I. (2007). Long-term energy projections: What lessons have we learned? Energy Policy, 35 (9), 4574-4584 DOI: 10.1016/j.enpol.2007.03.021

Bloomfield Refinery Closing

I would be remiss in not noting the announcement that the Bloomfield oil refinery, pictured in the header image above, will be closing in December.  It’s a small refinery, so it makes sense that Western Refining would want to reduce costs by consolidating their operations at the Gallup facility, but it’s a reminder of how volatile energy can be as an economic base.  It’s interesting to note that the spokesman quoted in the article mentioned the possibility of the refinery being reopened to process biofuels at some point.  A sign of the times, I suppose.  So far the promise of biofuels has not really been fulfilled, but there’s certainly potential there if the many problems that have dogged the biofuels industry so far can be solved.

Oilfan’s Paradise

Keith Kloor links to Roughneck City, a site that appears to offer a wide variety of oil industry memorabilia and paraphernalia.  I’m not sure who the target audience is, exactly, but there’s some interesting stuff there.

Finding Common Ground

It seems the chairman of the Colorado Oil and Gas Association, Don McClure, has called for a “truce” between the industry and state regulators after years of disputes over new regulations.  What I find most interesting is what seems to be behind this more conciliatory attitude:

McClure urged everyone in the crowd to cooperate on boosting the supply and use of natural gas, which burns cleaner and emits less global warming pollution than coal or oil.

Petroleum is not well-positioned for an economy in which carbon is priced, but natural gas is.  As it happens, however, they’re mostly produced and distributed by the same companies.  This gives oil and gas producers both a lot more flexibility in adapting to climate change legislation and a lot more incentive to support it than, say, coal companies, for whom there is no upside.  We’re starting to see that come through in the much more muted response of the oil industry (relative to coal) to climate mitigation proposals.

It’s Not Just Carbon

Most of the discussion of climate change and options for mitigating it has focused on carbon dioxide emissions and the potential for reducing them.  This is reasonable enough, since carbon dioxide is by far the most abundant greenhouse gas, and it’s fiendishly difficult to do anything about once it’s emitted.  It stays in the atmosphere for a very long time, continuing to contribute to the greenhouse effect, and the only real option for keeping it out of the atmosphere is to sequester it, either in plants (not a permanent solution, as they’ll eventually die, decay, and release the carbon) or geologically.  Geological storage is technically feasible, although its economic practicality has yet to be established.  There’s no way to deal effectively with the climate issue without tackling carbon emissions, so it’s quite right that they’ve been the main focus.

There are, however, other greenhouses gases out there which offer quite a bit of potential flexibility in fighting continued warming, especially in the short term.  The most important is methane, which is the second most abundant greenhouse gas.  Methane has a much higher global warming potential than carbon dioxide, but it doesn’t last in the atmosphere for nearly as long.  It’s also of considerable commercial value as the main component of natural gas, so recovering methane emitted from gas pipelines, oil refineries, coal mines, and other sources is not only responsible but profitable.  There has recently been some increased attention to methane as a component of a mitigation strategy, which is all to the good.   There are other greenhouse gases, most of which have much higher global warming potentials than either methane or carbon dioxide, but they are emitted in such small relative quantities that they don’t end up having nearly as much effect.

This issue was addressed in a policy context by a paper in Energy Economics in 2006 which compared the results of a wide range of climate models under different mitigation strategies, with the main difference being either an exclusive focus on carbon dioxide or a mixed approach taking into account the other greenhouse gases as well.  The authors found that while the different models had differing results, the general conclusion that could be drawn from the comparison was that including the other gases would be at least 30% cheaper than focusing purely on carbon, especially in the short term, since reducing methane emissions is relatively cheap and easy.

They caution, however, that the specifics of a climate policy are important, particularly in the target that is set, how progress toward it is measured, and how comparisons are made among the different gases.  One result, for example, of their model studies was that a stricter standard led to less of an effect from reducing methane, because a considerable chunk of methane emissions come from agriculture and are very difficult and expensive to reduce.  That is, while for early stages in reduction or a modest goal in overall reductions methane reduction is a cheap and easy way to make some progress, diminishing returns set in quickly past the point of sealing leaks in pipes and such.

VANVUUREN, D., WEYANT, J., & DELACHESNAYE, F. (2006). Multi-gas scenarios to stabilize radiative forcing Energy Economics, 28 (1), 102-120 DOI: 10.1016/j.eneco.2005.10.003

Climate Bill on the Move

The Kerry-Boxer Bill seems to be moving along, due largely to the really impressive efforts of Sen. Barbara Boxer to ignore Republican delaying tactics and negotiate support from various interest groups, particularly senators from coal states.  This has involved a lot of subsidies for carbon capture and such, which many environmental groups don’t like, but the reality of the situation is that there’s no way this bill can pass without at least some segments of the coal world behind it.  Boxer’s done a really good job with this, which is one of the main reasons I continue to think it’s likely that some sort of climate bill will pass relatively soon.

Water Uses Energy

I’ve mentioned the importance of the connection between water and energy before, looking then at the water needs of energy production, but the connection goes the other way too.  Transporting water uses energy, especially in the arid Southwest where population centers are often distant from water sources and some power plants are mostly or entirely dedicated to producing the power needed to move water.  Via John Fleck (who also links to an interesting graphic showing the carbon and water footprints of various power sources), an article in the Arizona Republic discusses this issue with respect to a coal plant in Page that provides the power to move water from the Colorado River to Phoenix.  Imposing strict emissions control standards on the plant to keep nitrogen oxides it emits from damaging visibility at the Grand Canyon, which the EPA is threatening to do, has the potential to cause the cost of water in Phoenix to skyrocket.  It can be very difficult to figure out the best course of action in cases like this: How much is visibility worth?  It’s hard to quantify these things.  I do wonder if this is really the most opportune time for the EPA to be picking this fight, though, with cap-and-trade legislation likely coming soon.  That legislation could have much more important impacts on coal plants like this one, and it might be better to wait and see how it turns out before making any more decisions on this kind of case.  The EPA is apparently planning to make a decision by sometime in early 2010, by which time a climate bill may well pass, adding another thing to consider.

Other Ways

The New York Times has an interesting article on carbon sequestration, making the point that while coal plants are the worst offenders in emissions of both carbon and other pollutants (something I’ve discussed before), there are lots of other places where carbon dioxide emissions can be reduced much more easily, particularly various types of industrial plants with emissions containing much higher concentrations of carbon dioxide than coal plant emissions.  It also makes the point that carbon dioxide is actually a commodity, used in enhanced oil recovery and some other industrial processes.  It’s generally discussed purely as a waste product, but there is some demand for it out there, and there are even pipelines being built to transport it to depleted oil fields in Texas.

One thing I think this sort of thing underscores is the usefulness of a cap-and-trade system as an approach to climate policy.  A lot of the discussion of carbon capture has focused on subsidies for research into the technology, which is all well and good, but the most effective way to spur companies to develop effective carbon capture and sequestration is to put a price on carbon.  As the article points out, it doesn’t matter where the carbon comes from, and at least in the immediate future it’s going to be easier to capture it from chemical plants, oil and gas refineries, and other sources than from coal plants.  Those sources can then reduce their emissions considerably and end up with surplus emissions allowances.  The coal plant operators can then just buy those allowances and continue to emit, but at a higher price that will give them incentives to try to shift away from coal plants and toward other types of power production in the future.  This efficiently takes advantage of differences in marginal costs of abatement among different emitters.  As a side effect the revenue from selling the permits can be used for subsidies for whatever sorts of technology Congress wants to encourage (although in the current bills it seems most of that revenue is intended to be used to shield consumers from higher electricity prices), but the subsidies are very much not the point of the policy.

Fuel Efficiency Is Not Enough

Jeff Tyndall at Pioneer Planning has a good post about fuel efficiency in automobiles.  I won’t try to summarize the whole thing, but he notes that while overall average fuel efficiency has improved over the past 30 years, the number of very efficient models on the market has actually decreased.  He also makes some good points about how more efficient cars won’t do anything to reduce sprawl, and they may actually decrease incentives to change land use patterns by cushioning the impacts of increases in the price of oil.