When biofuels are FUN!

You have to love it when the best laid plans of bureaucrats gang agley, as the Gaels would have us say.

The latest example to have come my way is the tale of ethanol in the US fuel pool.

The US EPA introduced a Renewable Fuel Standard, which required refiners and importers to add a predetermined quantity of ethanol to every gallon of gasoline. 

When they mix ethanol into gasoline, or import fuel already blended with ethanol, the refiners/importers get a credit from the government. That credit can be sold to other companies that don’t blend ethanol. To monitor compliance, each gallon of ethanol is assigned a 38-digit Renewable Identification Number, or RIN. Six billion of them were generated in the first six months of this year.

RINs started in 2005, when the Bush administration passed an energy bill setting out renewable fuel standards. The law was broadened in 2007, creating a requirement for the amount of biofuel to be blended annually. In 2013, refiners and importers are required to blend 13.8 billion gallons of ethanol, up from 13.2 billion last year. For 2014, the figure is 14.4 billion.

But there is a problem - the quantity of gasoline sold has been falling in recent years.  Cars have become more fuel efficient, and Americans are driving less.  You can only stand so much ethanol in the fuel.  Too much, and fuel systems gum up, both at the pump and in your car.  So the poor gasoline blenders have to put more ethanol into the fuel than necessary, or buy a credit for not blending ethanol. They have been buying credits like crazy, to avoid gumming up the works.

But this is America, right? They aren't all like George Bush.  Someone saw it coming.  They bought up credits.  Now they are selling them into a buyers' market, and making a big fortune.  Who is "they"? The banks, of course, and a few Mafia guys, and anyone who could think faster than the Government.

The net result is that fuel prices are rising even as shale gas and shale oil bring down input costs.  The US EPA is appalled. The official responsible is reported as saying “The last thing we wanted in implementing this program was to get price increases for the consumer.”[New York Times]

Yet another Green Dream bites the dust of reality!

 

Arctic laughter

The scientific study of the basis for humour finds that it stems “from a benign violation of the way the world ought to be.”  http://www.telegraph.co.uk/science/science-news/7938976/Scientists-discover-the-secret-of-humour.html

An excellent example is the Chinese proverb “There is no pleasure so great as watching a good friend fall off the roof.”

In the same vein, I found the story of the Mainstream Renewable Energy Project, which set out in June to row across the North-West Passage in order to draw attention to climate change (http://mainstreamlastfirst.com/we-row-into-cambridge-bay-the-official-conclusion-of-our-mainstream-last-first-expedition/ ), the source of a great deal of laughter. The North-West Passage closed solid with ice before the end of August, and the rowers had to abandon their attempt.

“Over the past 54 days we traversed more than 1500-kms of the Northwest Passage from Inuvik, NWT to Cambridge Bay, Nunavut and have come away humbled and awed by the experience. We had hoped to make it to Pond Inlet, Nunavut by early September but this has proven impossible. Severe weather conditions hindered our early progress and now ice chokes the passage ahead.”

“Our message remains unaffected though, bringing awareness to the pressing issues of climate change in the arctic.”

Errr!  Hang on!  The Arctic turns Arctic, and you have to draw attention to some change?? What change?? Seems to me the Arctic is what it has always been, bloody cold, bloody inhospitable, the sort of place that would humble and awe the strongest. Are you trying to tell us the place is getting cold?  We knew that.  You should have known that. What an absolutely futile mission you went on.

But, of course, there were all those True Believers who financed this futile exercise.  So they have to be told the Good News – “Floyd Roland, the former premiere of the North West Territories and the current mayor of Inuvik speaks of winters that now begin a month later than when he was a kid, of strange and inconsistent weather patterns that were once far more predictable. Elders Billy and Eileen Jacobson of Tuktoyaktuk speak of winters shortened by a fortnight at either end.”  Except that for our intrepid explorers, the winters came sooner and were longer, and the weather patterns were only too predictable.

You have to laugh – if it weren’t true, the self-deception would be quite sad.

The C-c-c-razy Concept of a C-c-c-arbon Tax

Our Treasury proposes to introduce a carbon tax from 2015.  It is a serious mistake.  Not only are the reasons advanced by Treasury flawed, but international experience has shown that carbon taxes do not achieve what is hoped, namely a reduction in carbon emissions.  Instead, they capture wealth that could easily put to better use. They cost jobs. The burden of the tax falls largely on the poor. Treasury’s own paper shows this.

Treasury sought to justify a carbon tax in its 2010 discussion paper.  It claimed that climate change was an example of market failure, in that the environmental costs of climate change were not factored into energy prices. That, of course, presumes that one can determine the environmental costs.  A huge pan-European team laboured for 15 years. It found that the total environmental costs – health impacts from emissions, acid rain impacts on crops, water chemistry changes on fish life and climate change - amount to something between about €0.20 and €0.75/kWh.  That sounds horrendous, but the cost of not having energy, i.e. the benefit of energy, is about €25/kWh, so society is far better off! The market failure thesis fails.

Treasury also argued that South Africa was one of the largest emitters of greenhouse gases in the world.  That overlooks the fact that we are actually quite a populous nation.  When the number of South Africans is taken into account, we are only 34^th in world rankings. We contribute a little over 1% to the total.  Anything we did to reduce our emissions would be invisible against the background of surging output elsewhere in the world.

A third reason Treasury advanced was the possibility that failing to address our emissions might result in trade sanctions.  Our primary trading partners all emit more per capita than we do, so the risk of sanctions would seem remote.

Finally Treasury held out the hope that we might develop some wondrous low-carbon technologies, which would enable us to develop new markets.  Yes, it is possible that we might, but the world is so heavily dependent on fossil fuels that any change towards a lower-carbon energy scene will not happen rapidly.  At best, Treasury’s hopes can only be regarded as a long shot.

So the reasons Treasury put forward for wanting a carbon tax in the first place are all flawed. Matters get worse when we turn to Treasury’s economic arguments.

First, its own models predict a significant loss of economic growth.  It admits its models are inexact, but they produce some surprising results.  For instance, a carbon tax would have, apparently, no impact on electricity sales – yet most of our emissions come from generating electricity! Nevertheless, Treasury’s admission that we will nearly all get poorer seems to be one of those sacrifices we need to make to save the world.

What is really surprising is Treasury’s calculation of where the burden of poverty will fall hardest.  I did not think I would live to see a day when an organ of this Government would seriously propose impoverishing the poorest of the poor while enriching the richest of the rich.  That is precisely what Treasury estimates.

But is there any hope that a carbon tax could achieve what it sets out to achieve, namely reduce our carbon emissions? Treasury has looked at a number of instances of carbon taxes elsewhere, but has not checked the effects.  In the EU, for instance, cited with approval by Treasury, emissions have levelled off – but the price of carbon has recently collapsed, and the Germans are quietly taking full advantage of the collapse by building 23 new coal-fired power stations. The Finns introduced a carbon tax as early as 1990 – and their emissions have grown relentlessly. Costa Rica introduced a carbon tax in 1997, since when its emissions have grown by over 60%.  India slapped a carbon tax on coal in 2010, since when its consumption has grown by nearly 30%.  Australia introduced a carbon tax in July 2012; by July 2013 the economic damage ran to billions, which cost Julia Gillard her government, and Kevin Rudd, her successor, immediately ditched the tax. We introduced a tax on gas-guzzlers, and the streets have grown more crowded with SUV’s.

Why does a carbon tax not work?   Most (over 80%) of global energy comes from fossil fuels, so energy use and emissions go hand in hand. Energy is an absolutely necessary element of wealth creation. It is not sufficient, because other factors such as skilled labour play their part, but without energy you cannot grow the economy, and you cannot create jobs.  As a developing nation, we need to grow our economy. That means our emissions are going to grow whether carbon is taxed or not.  In economist’s terms, the demand for energy is inelastic. Of course, it may become possible to produce energy economically without emissions, but it is going to take a long while to move away from the global level of more than 80% reliance on fossil fuels.

How could Treasury have gone so astray?  I think they were first misled when Government tried to turn the Long Term Mitigation Scenarios into plans. Scenarios explore extremes that have little chance of being realized in practice.  They have also been poorly advised by a British economist, Lord Stern.  Lord Stern moved into Tony Blair’s office in 2007 to produce a political excuse for a carbon tax.  His economics have been severely criticized by fellow economists, so that he has had to rely on ethical arguments to justify his belief in a carbon tax.  Invoking ethics usually means you have lost the argument.  Britain has not followed his prescriptions – why should we?

I can only conclude that Treasury’s proposals are flawed from start to finish.  But does that mean we should just give up on a lower carbon world?  Of course not.  The US has recently managed to get its emissions back to where they were twenty-five years ago.  An analysis by Yale university staff has shown that the arrival of shale gas is largely responsible; energy efficiency, less thirsty cars and fewer miles flown have also helped. We could easily do something similar.  Most nations get about a third of their energy from natural gas; we get only 3%.  If we grew our gas consumption by 20%, and cut our coal consumption by 20%, we would reduce our emissions by nearly a third.  Rather than destroy our economy with a carbon tax, let us explore vigorously for gas.   

Will Government stop dithering and positively encourage gas in all its forms?

Decisions! Decisions!

Every three years I face a difficult decision - shall I renew my subscription to Scientific American? 

I have now subscribed for over 50 years, and am constantly amused by re-reading the stories that were current 50 years ago, now repeated in the 50, 100 and 150 years ago feature. So why would the decision be difficult?

A journal is known by its editor.  Over ten years ago, the then editor was an eco-maniac.  When Bjorn Lomborg produced his Skeptical Environmentalist, the editor hired four hacks to do a hatchet job. Lomborg's book had criticized their weak science. 

The attacks were vicious and self-serving.  They did not address the criticisms.  Instead they criticized back using the worst of all arguments, the ad hominem.  Lomborg was not a biologist/ climatologist/ etc, but a mere statistician. The fact that the mere statistician had used official statistics to convincingly destroy their theses was immaterial.  40 000 species would disappear annually even if the official statistics put the loss rate at ~400 per century.

To add insult to injury, the SciAm editor then refused to allow Lomborg to respond. It was at that point that I seriously began to doubt whether I could ever support the publication again.

But bad habits persist.  I renewed my subscription, and in due course the offending editor left, unmourned.  There were some changes, a few for the worse such as an increasing reliance on science journalists.  Journalists usually have political viewpoints to advance, and it shows. But some changes were for the better. Unchanged was the belief that climate change was proven, but that is part of the overall Nature policy, and SciAm is part of Nature.  

So to the point of decision. This year, it was not made any easier by the collapse of the rand against the dollar.  With just over a month to go, I opened the latest issue with trepidation. For once, I was able to read it cover to cover.  

There was indeed a bit of journalism, but it was a great story about the salvage of the Costa Concordia, that 300-metre long cruise ship wrecked when the captain went to wave to his girlfriend.  The fact that the salvage master is a South African, Nick Sloane, made the tale all the more interesting to me.

There was a great investigation of MOOCs, massively open online courses.  Some really fascinating things are happening, like closing the learning cycle automatically, much like customer profiling in the retail trade.  This frees the teachers and allows them to interact with the more difficult questions personally - so that courses of hundreds of students can come close to the real classroom experience.

But the tale that really grabbed me was an end piece about how storm damage is likely to increase in the US over the next 35 years, not, they stress, because of "climate change" but because more people will put more material in harm's way. For SciAm to confess that carbon dioxide is not the absolute root of all evil has made me resolve to renew my subscription for another three years - and to hell with the rand/dollar exchange rate! 

 

Who's who in the carbon zoo?

Every year, BP produces a "Statistical Review of World Energy".  It is a wonderful resource, not least because it comes complete with a database which allows you to draw your own graphs (and your own conclusions).

This year's edition has just been published.  It includes a listing of the carbon emissions from burning fossil fuels over the past 57 years:

Zowie! We have been told the world is heading for disaster; that we will fry if we don't mend our ways; that eternal damnation awaits us if we continue to burn fossil fuels.  Yet what does this show?  The "Evil US" has actually cut back its emissions, without any guff about signing the Kyoto Protocol.  Europe cut back at the beginning of the nineties - nothing to do with Kyoto, and everything to do with the arrival of North Sea gas. And Asia/Pacific is going absolutely bananas, now nearly half the total fossil-fuel-derived emissions.

The thin brown stripe is the whole of Africa.  For those of us in South Africa who think we can save the world by cutting our emissions, building windmills and huge solar plants, please think again.  In the scheme of things, we are truly insignificant.

The case for nuclear power in South Africa

There has recently been a meeting in Stellenbosch where some energy modellers tried to plan South Africa's energy future.  They had some interesting concepts, not least of which was that the most important driver of any plan should be a reduction in our carbon emissions.

If you or I tried to make a plan, we would probably recognise that what South Africa needs, and needs as soon as possible, is enough power at as low a price as possible.  It goes without saying that the power should be reliable, available on demand 24 hours a day, and that the source of power should have a reasonably long life, so that we had some hope of achieving a return on the considerable investment needed to provide us with the power we need. 

Most people would think, if they stopped to consider a basis for planning our energy future, that this was a reasonable set of requirements.  However, they may also be moved by the fact that our President offered massive reductions in our carbon footprint at Copenhagen in 2009. Surely this should also be taken into account?

If they were so moved, they might also remember that the President’s generous offer was conditional upon large-scale aid from the developed nations, those nations that have done most of the carbon emitting for the past few generations. There is not one sign of any such aid.  There have been several conferences since Copenhagen, and none of the meetings has made any progress towards making aid commitments.  Accordingly, our armchair planners would probably reject reducing our carbon footprint as an additional requirement.  They would say that it is a constraint that can wait until we see the money.

However, the Stellenbosch planners believed that we should still strive for lower carbon emissions.  They believe lower emissions can be achieved while still producing cheap reliable power by using renewable energy such as wind or solar power.  They are wrong.

It is true that the costs of renewable power have fallen in recent years.  However, that does not mean that renewable energy is economic.  Remember, we need sufficient reliable power at as low a price as possible.  Our experience to date with wind power alone is sufficient to cause major concerns.  Eskom installed three large wind turbines at Klipheuvel.  One of them has failed already, and the other two have produced about 10% of their potential output. 

The Darling wind farm was launched in 2008 to great fanfare.  The four turbines have the potential to generate 5.2MW.  The power is bought by the City of Cape Town, which recently reported that the farm had generated 30.8GWh since inception.  Its average output is therefore about 720kW, less than 14% of its potential. It cost R70 million to construct. I have a 2litre diesel car that has 120kW output. It cost just over R100 000 in 2008. The wind farm produces six times more power, but costs about 700 times more.

In Europe, North America and China, all of which have been sold tens of thousands of wind turbines, the story is similar.  This is not yet an established technology.  You need ordinary power to ensure continuity of supply when the wind doesn’t blow.  You need to be able to dump the wind power somewhere when the wind does blow and there is no demand for the energy. Denmark, the home of wind turbines, has to send over half of what it generates annually out of the country at a loss.  The result is that Danish power is presently the most expensive in Europe.

Surprisingly, the technology is comparatively untested.  The large units presently being favoured have only been in operation for about seven years.  Mechanical and electrical failures are still very much more common than the tried and tested conventional alternatives. A recent European report has shown how output falls as the installation ages, until after about 12-15 years it has to be replaced because maintenance costs exceed revenue. In many places there is a realisation that, in the haste to set up a wind farm, they forgot how much it might cost to take it down.

Siting is critical, and the technology of selecting the optimum site has improved in recent years. However, there remain mistakes – one US wind farm was recently hit by a tornado.  Skittles, anyone?

Wind power is the cheapest of the renewables.  The lowest offer under our Integrated Resource Plan IRP2010 was 89c/kWh.  This is impressive, but it has to be remembered that it is private capital at risk.  There is no guarantee that the project will yield investors a reasonable return.  The wind may not be quite as good as the developers had hoped, or the turbines may need somewhat more maintenance than assumed, or maintenance technicians may cost more than budgeted. 

And while 89c/kWh may be impressive, it has to be seen against Eskom’s present costs of 32c/kWh, projected Medupi costs of 53c/kWh, and present independent power producer costs of 77c/kWh.  The recent Eskom price increase includes a significant allowance for the extra cost of the renewables that IRP2010 will bring.

The other renewables are even more expensive.  Solar PV costs have also fallen, but are still over R1.20/kWh at the MW scale.  Solar thermal power is really expensive, around R2.50/kWh, but it is a really unproven technology – last year it made about 0.01% of the world’s electricity.

So what does this leave us? We need sufficient, reliable power at as low a price as possible. The best bet by far is natural gas.  The average global economy gets about a third of its primary energy from gas.  We get about 2%.  There is a strong indication of gas in the Karoo, but it still requires exploration.  We should not be dithering.  There is gas in Mozambique, and, reports to the contrary, it is clearly economic to pipe it into South Africa to generate power.  Sasol is already doing that on a 200MW scale at Sasolburg. Liquefied natural gas is a widely traded commodity, and all it requires is a regassing station.  Gas turbine power stations are cheap and can be built rapidly.  Siting them at the coast would allow sea water to be used for cooling.

Gas would even contribute to a reduction in carbon dioxide emissions.  In the US, thanks to shale gas, the price of natural gas has fallen by a factor of four, coal-fired power stations have been shut down, and the US now emits less CO₂ than it did in 1990. Even Canada has been affected – the increase in energy supply in the US has meant that Canada has been saddled with excess oil.  Recently you could buy tar-sands product at $53/barrel.

But we don’t yet have our own gas, and we are clearly running out of coal, if only because the rest of the world has started to value the rubbish we are presently burning.  Coal mines can get better prices on the international markets than Eskom is prepared to pay.

That leaves us with nuclear.  There is a belief that nuclear is expensive.  It is not much more expensive to build than conventional thermal plant, and with low fuel costs and a long life, the costs of electricity are low.  Indeed, today Koeberg produces the cheapest electricity in South Africa.

Part of the erroneous belief in the high cost of nuclear power arises from the fact that it comes in large units, 900MW upwards.  But that is reliable, continuous power. Koeberg will shortly be delivering 2100MW 80% of the time.  To do that with Darling wind farm technology would require over 9300 wind turbines and would cost about R200 billion today.  For that money you could build quite a few Koebergs.

The case for nuclear in South Africa could hardly be stronger.  Models that show otherwise are driven primarily by the reduction in carbon dioxide emissions, not by our need for cheap reliable power. They rely on assumptions about the possible reduction in renewable energy costs that have little basis in reality. There seems to be a belief that policy should determine our energy future.  The cost of power and the reliability of its supply are far more important. That should be the basis for the next IRP.