Posted on August 9th, 2016 No comments
In my seemingly futile and interminable quest to reconcile the differences between the data provided by the JODI Oil organisation and BP as revealed in part by the annual BP Statistical Review of World Energy, I have moved on to looking at production (primary supply), found a problem as regards Africa, and had some confirmation that a major adjustment in how the data is collected happened in 2009.
First – the problem with Africa. The basket “Other Africa” for oil production is far less in the BP data than it is in the JODI Oil data – shown by negative figures in the comparison. For 2015, this is approximately 65% in scale (-3800 KBD) of the summed positive difference between the BP and JODI figures for the named countries (5884 KBD). This reminds me that there was a problem with the refined oil product consumption figures for “Other Africa” as well. Without a detailed breakdown of individual country accounts from BP it is almost impossible to know where these differences arise, it seems to me, or begin to understand why these differences are so large. Maybe I should just ask BP for a full country breakdown – if they’d ever deign to communicate this kind of information with me. Standing by my email Inbox right now… Could be here some time…
It is fairly clear from the comparison for North America that a major shift in understanding by either BP or JODI Oil took place in 2009, as the oil production data converge significantly for that year onwards. There was similar evidence of this in the refined oil products consumption data.
As with the consumption data, the production data for the Middle East region is strongly divergent between BP and JODI. I did read something potentially useful in the JODI Oil Manual, which I would recommend everyone interested in energy data to read. In the notes for Crude Oil, I read : “One critical issue is whether the volumes of NGL, lease or field condensates and oils extracted from bituminous minerals are included. All organisations exclude NGL from crude oil. If condensates are able to be excluded, it should be noted to the JODI organisation(s) of which the country/economy is a member. Most OPEC member countries exclude condensates.” Now, I guess, the struggle will be to find some data on condensates. Of which there are a variety of sources and nomenclature, be they light liquid hydrocarbons from oil and gas production or oil and gas refining/processing/cryoprocessing. There may be faultlines of comprehension and categorisation, such as about who considers NGPL or Natural Gas Plant Liquids from Natural Gas processing plants to be in the category of NGLs – Natural Gas Liquids, and therefore effectively in the bucket of Crude Oil.
I’m no closer to any answers on why BP oil data doesn’t align with JODI Oil data. And it looks like I’ve just opened a whole can of condensate wormy questions.Academic Freedom, Advancing Africa, Alchemical, Big Number, Big Picture, Carbon Commodities, Change Management, Corporate Pressure, Energy Calculation, Energy Insecurity, Engineering Marvel, Fossilised Fuels, Hydrocarbon Hegemony, National Energy, Natural Gas, No Blood For Oil, Oil Change, Peak Natural Gas, Peak Oil, Petrolheads, Realistic Models, Resource Curse, Resource Wards, The Data, The Price of Gas, The Price of Oil, The Right Chemistry, The War on Error, Unnatural Gas, Western Hedge
Posted on July 22nd, 2016 No comments
Peak conventional crude petroleum oil production is apparently here already – the only thing that’s been growing global total liquids is North American unconventional oils : tight oil – which includes shale oil in the United States of America – and tar sands oil from bitumen in Canada – either refined into synthetic crude, or blended with other oils – both heavy and light.
But there’s a problem with unconventional oils – or rather several – but the key one is the commodity price of oil, which has been low for many months, and has caused unconventional oil producers to rein in their operations. It’s hitting conventional producers too. A quick check of Section 3 “Oil data : upstream” in OPEC’s 2016 Annual Statistical Bulletin shows a worrying number of negative 2014 to 2015 change values – for example “Active rigs by country”, “Wells completed in OPEC Members”, and “Producing wells in OPEC Members”.
But in the short term, it’s the loss of uneconomic unconventional oil production that will hit hardest. Besides problems with operational margins for all forms of unconventionals, exceptional air temperatures (should we mention global warming yet ?) in the northern part of North America have contributed to a seizure in Canadian tar sands oil production – because of extensive wildfires.
Here’s two charted summaries of the most recent data from the EIA on tight oil (which includes shale oil) and dry shale gas production in the United States – which is also suffering.
Once the drop in North American unconventionals begins to register in statistics for global total liquids production, some concern will probably be expressed. Peak Oil just might be sharper and harder and sooner than some people think.Academic Freedom, Be Prepared, Big Number, Big Picture, Change Management, Climate Change, Climate Chaos, Climate Damages, Corporate Pressure, Cost Effective, Delay and Deny, Disturbing Trends, Dreamworld Economics, Economic Implosion, Energy Crunch, Energy Insecurity, Engineering Marvel, Extreme Energy, Extreme Weather, Firestorm, Forestkillers, Fossilised Fuels, Global Heating, Global Singeing, Global Warming, Growth Paradigm, Heatwave, Hydrocarbon Hegemony, Incalculable Disaster, Natural Gas, Near-Natural Disaster, Oil Change, Paradigm Shapeshifter, Peak Energy, Peak Natural Gas, Peak Oil, Petrolheads, Price Control, Realistic Models, Resource Curse, Resource Wards, Shale Game, Sustainable Deferment, Tarred Sands, Technological Fallacy, Technomess, The Myth of Innovation, The Price of Gas, The Price of Oil, Toxic Hazard, Unconventional Foul, Unnatural Gas, Wildfire
Posted on February 19th, 2016 No comments
Recently, I had a very helpful telephone conversation with somebody I shall call Ben – because that’s his name, obviously, so there’s no point in trying to camoflage that fact. It was a very positive conversation, with lots of personal energy from both parties – just the sort of constructive engagement I like.
Amongst a range of other things, we were batting about ideas for what could constitute a business model or economic case for the development of Renewable Gas production – whether Renewable Hydrogen or Renewable Methane. Our wander through the highways and byways of energy markets and energy policy led us to this sore point – that the National Grid is likely to resort to “fields of diesel generators” for some of its emergency backup for the power grid in the next few years – if new gas-fired power plants don’t get built. Various acronyms you might find in this space include STOR and BM.
Now, diesel is a very dirty fuel – so dirty that it appears to be impossible to build catalytic exhaust filters for diesel road vehicles that meet any of the air pollution standards and keep up fuel consumption performance. It’s not just VW that have had trouble meeting intention with faction – all vehicle manufacturers have difficulties balancing all the requirements demanded of them. Perhaps it’s time to admit that we need to ditch the diesel fuel itself, rather than vainly try to square the circle.
The last thing we really need is diesel being used as the fuel to prop up the thin margins in the power generation network – burned in essentially open cycle plant – incurring dirty emissions and a massive waste of heat energy. Maybe this is where the petrorefiners of Great Britain could provide a Renewable Gas alternative. Building new plant or reconfiguring existing plant for Renewable Gas production would obviously entail capital investment, which would create a premium price on initial operations. However, in the event of the National Grid requiring emergency electricity generation backup, the traded prices for that power would be high – which means that slightly more expensive Renewable Gas could find a niche use which didn’t undermine the normal economics of the market.
If there could be a policy mandate – a requirement that Renewable Gas is used in open cycle grid-balancing generation – for example when the wind dies down and the sun sets – then we could have fields of Renewable Gas generators and keep the overall grid carbon emissions lower than they would otherwise have been.
Both Ben and I enjoyed this concept and shared a cackle or two – a simple narrative that could be adopted very easily if the right people got it.
Renewable Gas – that’s the craic.Academic Freedom, Alchemical, Assets not Liabilities, Baseload is History, Be Prepared, British Biogas, Change Management, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Divest and Survive, Electrificandum, Emissions Impossible, Energy Autonomy, Energy Calculation, Energy Change, Energy Crunch, Energy Denial, Energy Insecurity, Energy Revival, Environmental Howzat, Extreme Energy, Fossilised Fuels, Gamechanger, Gas Storage, Green Gas, Green Investment, Green Power, Grid Netmare, Hydrogen Economy, Low Carbon Life, Marvellous Wonderful, Methane Management, Money Sings, National Energy, National Power, Optimistic Generation, Paradigm Shapeshifter, Peak Emissions, Price Control, Realistic Models, Regulatory Ultimatum, Renewable Gas, Solution City, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, Zero Net
Posted on November 26th, 2015 No comments
Although the Autumn Statement and the Spending Review are attracting all the media and political attention, I have been more interested by the UK Government’s Security Review – or to give it is full title : the “National Security Strategy and Strategic Defence and Security Review 2015”, or (SDSR), document number Cm 9161.
Its aim is stated in its sub-heading “A Secure and Prosperous United Kingdom”, but on matters of energy, I would suggest it fails to nail down security at all.
In my analysis, having dealt with what appears to be a misunderstanding about the nature of hydrocarbon markets, I then started to address the prospect of Liquefied Natural Gas (LNG) imports from the United States.
My next probe is into the global gas pipeline networks indicated by this mention of the “Southern Gas Corridor” in Section 3.40 : “…measures to protect and diversify sources of [energy] supply will become increasingly important, including the new Southern Corridor pipeline, US liquid natural gas (LNG) exports, further supplies of Australian LNG, and increased supply from Norway and North Africa.”
First of all, and perhaps of secondmost importance, the “Southern Gas Corridor” is more of a European Union policy suite than an individual pipeline. In fact, it’s not just one pipeline – several pipelines are involved, some actual, some under construction, some cancelled, some renamed, some re-routed, and some whose development is threatened by geopolitical struggle and even warfare.
It is this matter of warfare that is the most important in considering the future of Natural Gas being supplied to the European Union from the Caspian Sea region : Turkmenistan, Iran, Kazakhstan, Georgia and Azerbijan. Oh, and we should mention Uzbekistan, and its human rights abuses, before moving on. And Iraq and Syria – where Islamic State sits, brooding.
Natural Gas is probably why we are all friends with Iran again. Our long-lasting dispute with Iran was ostensibly about nuclear power, but actually, it was all about Natural Gas. When Russia were our New Best Friend, Iran had to be isolated. But now Russia is being a tricky trading partner, and being beastly to Ukraine, Iran is who we’ve turned to, to cry on their shoulder, and beg for an alternative source of gas.
So we’ve back-pedalled on the concept of waging economic or military conflict against Iran, so now we have a more southerly option for our massive East-to-West gas delivery pipeline project – a route that takes in Iran, and avoids passing through Georgia and Azerbaijan – where Russia could interfere.
The problem with this plan is that the pipeline would need to pass through Syria and/or southern Turkey at some point. Syria is the country where Islamic State is currently being bombed by the United States and some European countries. And Turkey is the country where there has been a revival of what amounts pretty much to civil war with the Kurdish population – who also live in Iraq (and the edges of Syria and Iran).
Russia is envious of the southerly Southern Gas Corridor plan, and jealous of its own version(s) of the gas-to-Europe project, and influence in Georgia and Azerbaijan. So perhaps we should not be surprised that Russia and Turkey have had several military and political stand-offs in the last few months.
We in the United Kingdom should also be cautious about getting dragged into military action in Syria – if we’re thinking seriously about future energy security. Further destabilisation of the region through military upheaval would make it difficult to complete the Southern Gas Corridor, and make the European Union increasingly dependent on Russia for energy.
In the UK, although we claim to use no Russian gas at all, we do get gas through the interconnectors from The Netherlands and Belgium, and they get gas from Russia, so actually, the UK is using Russian gas. The UK gets over half its Natural Gas from Norway, and Norway has been a strong producer of Natural Gas, so why should we be worried ? Well, it appears that Norwegian Natural Gas production may have peaked. Let’s re-visit Section 3.40 one more time : “…measures to protect and diversify sources of [energy] supply will become increasingly important, including the new Southern Corridor pipeline, US liquid natural gas (LNG) exports, further supplies of Australian LNG, and increased supply from Norway and North Africa.”
The problem is that nobody can fight geology. If Norway has peaked in Natural Gas production, there is little that anyone can do to increase it, and even if production could be raised in Norway through one technique or another (such as carbon dioxide injection into gas wells), it wouldn’t last long, and wouldn’t be very significant. Norway is going to continue to supply gas to its other trading partners besides the UK, so how could the UK commandeer more of the Norwegian supply ? It seems likely that “increased supply from Norway” is just not possible.
But back to the Southern Gas Corridor. It is in the United Kingdom’s security interests to support fresh gas supplies to the European Union. Because we may not be able to depend on Russia, we need the Southern Gas Corridor. Which is why we should think very, very carefully before getting involved in increased military attacks on Syria.Academic Freedom, Alchemical, Assets not Liabilities, Be Prepared, Big Picture, Big Society, Change Management, Deal Breakers, Demoticratica, Direction of Travel, Disturbing Trends, Divide & Rule, Energy Autonomy, Energy Insecurity, Feed the World, Foreign Interference, Foreign Investment, Fossilised Fuels, Grid Netmare, Hydrocarbon Hegemony, Incalculable Disaster, Insulation, Mad Mad World, Major Shift, Methane Management, Military Invention, Modern Myths, National Energy, Natural Gas, Near-Natural Disaster, Neverending Disaster, No Blood For Oil, Paradigm Shapeshifter, Peace not War, Peak Natural Gas, Policy Warfare, Political Nightmare, Protest & Survive, Resource Curse, Resource Wards, Screaming Panic, Social Democracy, Stop War, The Power of Intention, The Price of Gas, The Right Chemistry, The War on Error, Ungreen Development, Western Hedge
Posted on November 24th, 2015 No comments
The UK Government’s Security Review (SDSR), published 23rd November 2015, regrettably shows traces of propaganda not supported by current data.
For example, the report states in Section 3.40 that : “…measures to protect and diversify sources of [energy] supply will become increasingly important, including the new Southern Corridor pipeline, US liquid natural gas (LNG) exports, further supplies of Australian LNG, and increased supply from Norway and North Africa.”
I have already addressed my recommendation that the writers of this report should be more careful to distinguish between Liquefied Natural Gas (LNG) which is a methane-rich product that can substitute for Natural Gas; and Natural Gas Liquids (NGLs) which is a methane-poor product that cannot substitute for Natural Gas.
However, assuming that the writers of the report are talking about cryogenically stored and transported Natural Gas-sourced energy gases, there is a problem in assuming that the United States will be exporting any large amounts of LNG to Europe any time soon. In fact, there are several problems.
Just because the business and political press have been touting the exciting prospect of US LNG exports, doesn’t mean that the data backs up this meme.
First of all, although American Natural Gas production (gross withdrawals from oil and gas wells) continues to grow at a rate that appears unaffected by low Natural Gas prices, the production of shale gas appears to have plateau’d, which might well be related to Natural Gas prices.
Next, although the oil and gas industry proposed lots of LNG export terminals, only a handful are being constructed, and there are already predictions that they will run under-capacity, or won’t get completed.
And further, as regards potential future LNG customers, although China is rejecting LNG imports for a variety of reasons, mostly to do with falling economic growth rates, none of that LNG currently comes from the United States. And China is planning to develop its own onshore Natural Gas and will take LNG from the Australia/Indonesia region.
The bulk of US LNG exports go to Taiwan and Japan, and Japan is unlikely to restart many nuclear power plants, so Japan will continue to need this gas.
On top of all this, the United States is a very minor LNG exporter, so major change should be considered unlikely in the near term.
And it any LNG is heading for Europe, it will probably end up in France, perhaps because they need a better backup plan for their turbulent nuclear power plants.
All of which adds up to a puzzled look on my face. How can the British Government reasonably expect the commencement of significant quantities of American LNG exports to arrive in the UK ? The only reason they believe this is because there has been American propaganda, promulgated through media of all kinds, for the last five or so years, to convince the world that the USA can achieve greater energy independence through the “explosion” in shale gas production.
It’s a story told by many successive US Governments – that the US can achieve greater energy independence, but the reality is very, very different.
The UK Government should not believe any narrative of this nature, in my view, nor include it in national security analyses.
…to be continued…Academic Freedom, Assets not Liabilities, Bad Science, Bait & Switch, Be Prepared, Big Picture, Change Management, Dead End, Delay and Deny, Delay and Distract, Disturbing Trends, Divide & Rule, Energy Autonomy, Energy Calculation, Energy Crunch, Energy Denial, Energy Insecurity, Extreme Energy, Foreign Interference, Foreign Investment, Fossilised Fuels, Freemarketeering, Gamechanger, Hide the Incline, Hydrocarbon Hegemony, Insulation, Mad Mad World, Mass Propaganda, Media, Methane Management, Military Invention, Modern Myths, National Energy, National Power, Natural Gas, Orwells, Paradigm Shapeshifter, Peak Energy, Peak Natural Gas, Policy Warfare, Political Nightmare, Public Relations, Pure Hollywood, Realistic Models, Resource Curse, Resource Wards, Shale Game, Stirring Stuff, The Data, The Myth of Innovation, The Power of Intention, The Price of Gas, The War on Error, Unqualified Opinion, Unsolicited Advice & Guidance, Unutterably Useless, Utter Futility, Vain Hope, Western Hedge
Posted on November 24th, 2015 No comments
Our assiduous government in the United Kingdom has conducted a national security review, as they should, but it appears the collective intelligence on energy of the Prime Minister’s office, the Cabinet Office and the Foreign Commonwealth Office is on a scale of poor to dangerously out of date.
No, LNG doesn’t stand for “liquid natural gas”. LNG stands for Liquefied Natural Gas. I think this report has confused LNG with NGLs.
Natural Gas Liquids, or NGLs, are condensable constituents of gas-prone hydrocarbon wells. In other words, the well in question produces a lot of gas, but at the temperatures and pressures in the well underground, hydrocarbons that would normally be liquid on the surface are in the gas phase, underground. But when they are pumped/drilled out, they are condensed to liquids. So, what are these chemicals ? Well, here are the approximate Boiling Points of various typical fossil hydrocarbons, approximate because some of these molecules have different shapes and arrangements which influences their physical properties :-
Boiling Points of Short-Chain Hydrocarbons
Methane : approximately -161.5 degrees Celsius
Ethane : approximately -89.0 degrees Celsius
Propane : approximattely -42.0 degrees Celsius
Butane : approximately -1.0 degrees Celsius
Pentane : approximately 36.1 degrees Celsius
Heptane : approximately 98.42 degrees Celsius
You would expect NGLs, liquids condensed out of Natural Gas, to be mostly butane and heavier molecules, but depending on the techniques used – which are often cryogenic – some propane and ethane can turn up in NGLs, especially if they are kept cold. The remaining methane together with small amounts of ethane and propane and a trace of higher hydrocarbons is considered “dry” Natural Gas.
By contrast, LNG is produced by a process that chills Natural Gas without separating the methane, until it is liquid, and takes up a much smaller volume, making it practical for transportation. OK, you can see why mistakes are possible. Both processes operate at sub-zero temperatures and result in liquid hydrocarbons. But it is really important to keep these concepts separate – especially as methane-free liquid forms of short-chain hydrocarbons are often used for non-energy purposes.
Amongst other criticisms I have of this report, it is important to note that the UK’s production of crude oil and Natural Gas is not “gradually” declining. It is declining at quite a pace, and so imports are “certain” to grow, not merely “likely”. I note that Natural Gas production decline is not mentioned, only oil.
…to be continued…
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Posted on October 4th, 2015 No comments
Status-checking questions. I’m sure we all have them. I certainly do. Several times a week, or even day, I ask myself two little questions of portent : “What am I doing ?” and “Why am I here ?”. I ask myself these questions usually because my mind’s wandered off again, just out of reach, and I need to call myself to attention, and focus. I ask these little questions of myself when I do that thing we all do – I’ve set off with great purpose into another room, and then completely forgotten why I went there, or what I came to find or get. I also use these forms of enquiry when I’m at The Crossroads of Purpose – to determine what exactly it is I’m deciding to aim for. What are my goals this day, week, month, age ? Can I espy my aims, somewhere on the horizon ? Can I paddle labouriously towards them – against the tide – dodge/defeat the sharks ? Can I muster the will to carry this out – “longhauling it” ?
I’ve spent a long time writing a book, which I’m sure to bore everybody about for the next aeon. My intention in writing the book was to stimulate debate about what I consider to be the best direction for balanced energy systems – a combination of renewable electricity and Renewable Gas. I wanted to foster debate amongst the academics and engineers who may be my peers, certainly, hopefully providing a little seed for further research. Hopefully also having a small influence on energy policy, perhaps, or at least, getting myself and my ideas asked to various policy meetings for a little airing. But, if I could in some way, I also wanted to offer a bit of fizz to the internal conversations of companies in the energy sector. You see, it may be obvious, or it may not be, but action on climate change, which principally involves the reduction in the mining, drilling and burning of fossil fuels, principally also involves the co-operation of the fossil fuel extraction companies. Their products are nearly history, and so it must be that inside the headquarters of every transnational energy giant, corporate heads are churning through their options with a very large what-if spoon.Academic Freedom, Assets not Liabilities, Be Prepared, Carbon Commodities, Change Management, Climate Change, Conflict of Interest, Corporate Pressure, Delay and Deny, Delay and Distract, Direction of Travel, Disturbing Trends, Drive Train, Economic Implosion, Emissions Impossible, Energy Crunch, Energy Insecurity, Energy Revival, Extreme Energy, Fossilised Fuels, Fuel Poverty, Global Warming, Green Gas, Green Investment, Green Power, Growth Paradigm, Human Nurture, Hydrocarbon Hegemony, Hydrogen Economy, Incalculable Disaster, Major Shift, Methane Management, Natural Gas, Oil Change, Paradigm Shapeshifter, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Realistic Models, Renewable Gas, Resource Curse, Solar Sunrise, Solution City, Sustainable Deferment, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, Wind of Fortune
Posted on July 14th, 2015 No comments
So I met somebody last week, at their invitation, to talk a little bit about my research into Renewable Gas.
I can’t say who it was, as I didn’t get their permission to do so. I can probably (caveat emptor) safely say that they are a fairly significant player in the energy engineering sector.
I think they were trying to assess whether my work was a bankable asset yet, but I think they quickly realised that I am nowhere near a full proposal for a Renewable Gas system.
Although there were some technologies and options over which we had a meeting of minds, I was quite disappointed by their opinions in connection with a number of energy projects in the United Kingdom.Academic Freedom, Alchemical, Assets not Liabilities, Baseload is History, Be Prepared, Big Number, Big Picture, Bioeffigy, Biofools, Biomess, British Biogas, Burning Money, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Carbon Taxatious, Change Management, Coal Hell, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Dreamworld Economics, Efficiency is King, Electrificandum, Emissions Impossible, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Energy Socialism, Engineering Marvel, Foreign Investment, Fossilised Fuels, Gamechanger, Gas Storage, Geogingerneering, Green Gas, Green Investment, Green Power, Grid Netmare, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Insulation, Low Carbon Life, Marine Gas, Methane Management, National Energy, National Power, Natural Gas, Nuclear Nuisance, Nuclear Shambles, Oil Change, Optimistic Generation, Paradigm Shapeshifter, Peak Natural Gas, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Gas, Shale Game, Solar Sunrise, Solution City, Technofix, Technomess, The Power of Intention, The Price of Gas, The Right Chemistry, Tree Family, Unconventional Foul, Ungreen Development, Unnatural Gas, Wasted Resource, Wind of Fortune, Zero Net
Posted on July 14th, 2015 No comments
Out of the blue, I got an invitation to a meeting in Whitehall.
I was to join industrial developers and academic researchers at the Department of Energy and Climate Change (DECC) in a meeting of the “Green Hydrogen Standard Working Group”.
The date was 12th June 2015. The weather was sunny and hot and merited a fine Italian lemonade, fizzing with carbon dioxide. The venue was an air-conditioned grey bunker, but it wasn’t an unfriendly dungeon, particularly as I already knew about half the people in the room.
The subject of the get-together was Green Hydrogen, and the work of the group is to formulate a policy for a Green Hydrogen standard, navigating a number of issues, including the intersection with other policy, and drawing in a very wide range of chemical engineers in the private sector.
My reputation for not putting up with any piffle clearly preceded me, as somebody at the meeting said he expected I would be quite critical. I said that I would not be saying anything, but that I would be listening carefully. Having said I wouldn’t speak, I must admit I laughed at all the right places in the discussion, and wrote copious notes, and participated frequently in the way of non-verbal communication, so as usual, I was very present. At the end I was asked for my opinion about the group’s work and I was politely congratulational on progress.
So, good. I behaved myself. And I got invited back for the next meeting. But what was it all about ?
Most of what it is necessary to communicate is that at the current time, most hydrogen production is either accidental output from the chemical industry, or made from fossil fuels – the main two being coal and Natural Gas.
Hydrogen is used extensively in the petroleum refinery industry, but there are bold plans to bring hydrogen to transport mobility through a variety of applications, for example, hydrogen for fuel cell vehicles.
Clearly, the Green Hydrogen standard has to be such that it lowers the bar on carbon dioxide (CO2) emissions – and it could turn out that the consensus converges on any technologies that have a net CO2 emissions profile lower than steam methane reforming (SMR), or the steam reforming of methane (SRM), of Natural Gas.
[ It’s at this very moment that I need to point out the “acronym conflict” in the use of “SMR” – which is confusingly being also used for “Small Modular Reactors” of the nuclear fission kind. In the context of what I am writing here, though, it is used in the context of turning methane into syngas – a product high in hydrogen content. ]
Some numbers about Carbon Capture and Storage (CCS) used in the manufacture of hydrogen were presented in the meeting, including the impact this would have on CO2 emissions, and these were very intriguing.
I had some good and useful conversations with people before and after the meeting, and left thinking that this process is going to be very useful to engage with – a kind of dragnet pulling key players into low carbon gas production.
Here follow my notes from the meeting. They are, of course, not to be taken verbatim. I have permission to recount aspects of the discussion, in gist, as it was an industrial liaison group, not an internal DECC meeting. However, I should not say who said what, or which companies or organisations they are working with or for.Academic Freedom, Alchemical, Assets not Liabilities, Baseload is History, Big Number, Big Picture, Bioeffigy, Biofools, Biomess, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Change Management, Corporate Pressure, Demoticratica, Direction of Travel, Efficiency is King, Electrificandum, Energy Autonomy, Energy Calculation, Energy Change, Energy Revival, Engineering Marvel, Fossilised Fuels, Gamechanger, Green Gas, Green Investment, Green Power, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Major Shift, Marvellous Wonderful, Methane Management, National Energy, National Power, Natural Gas, Nuclear Nuisance, Nuclear Shambles, Oil Change, Optimistic Generation, Peak Emissions, Peak Natural Gas, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Revolving Door, Social Capital, Social Change, Social Democracy, Solution City, Tarred Sands, Technofix, The Data, The Myth of Innovation, The Power of Intention, The Price of Gas, The Right Chemistry, Transport of Delight, Tree Family, Ungreen Development, Unnatural Gas, Wasted Resource, Western Hedge, Wind of Fortune, Zero Net
Posted on June 2nd, 2015 No comments
So, some people do not understand why I am opposed to the proposal for a price on carbon put forward by Royal Dutch Shell and their oil and gas company confederates.
Those who have been following developments in climate change policy and the energy sector know that the oil and gas companies have been proposing a price on carbon for decades; and yet little has been achieved in cutting carbon dioxide emissions, even though carbon markets and taxes have been instituted in several regions.
Supporters of pricing carbon dioxide emissions urge the “give it time” approach, believing that continuing down the road of tweaking the price of energy in the global economy will cause a significant change in the types of resources being extracted.
My view is that economic policy and the strengthening of carbon markets and cross-border carbon taxes cannot provide a framework for timely and major shifts in the carbon intensity of energy resources, and here’s a brief analysis of why.
1. A price on carbon shifts the locus of action on to the energy consumer and investor
A price on carbon could be expected to alter the profitability of certain fossil fuel mining, drilling and processing operations. For example, the carbon dioxide emissions of a “tank of gas” from a well-to-wheel or mine-to-wheel perspective, could be made to show up in the price on the fuel station forecourt pump. Leaving aside the question of how the carbon tax or unit price would be applied and redistributed for the moment, a price on carbon dioxide emissions could result in fuel A being more expensive than fuel B at the point of sale. Fuel A could expect to fall in popularity, and its sales could falter, and this could filter its effect back up the chain of production, and have implications on the capital expenditure on the production of Fuel A, and the confidence of the investors in investing in Fuel A, and so the oil and gas company would pull out of Fuel A.
However, the business decisions of the oil and gas company are assumed to be dependent on the consumer and the investor. By bowing to the might god of unit price, Shell and its confederates are essentially arguing that they will act only when the energy consumers and energy investors act. There are problems with this declaration of “we only do what we are told by the market” position. What if the unit price of Fuel A is only marginally affected by the price on carbon ? What if Fuel A is regarded as a superior product because of its premium price or other marketing factors ? This situation actually exists – the sales of petroleum oil-based gasoline and diesel are very healthy, despite the fact that running a car on Natural Gas, biogas or electricity could be far cheaper. Apart from the fact that so many motor cars in the global fleet have liquid fuel-oriented engines, what else is keeping people purchasing oil-based fuels when they are frequently more costly than the alternative options ?
And what about investment ? Fuel A might become more costly to produce with a price on carbon, but it will also be more expensive when it is sold, and this could create an extra margin of profit for the producers of Fuel A, and they could then return higher dividends to their shareholders. Why should investors stop holding stocks in Fuel A when their rates of return are higher ?
If neither consumers nor investors are going to change their practice because Fuel A becomes more costly than Fuel B because of a price on carbon, then the oil and gas company are not going to transition out of Fuel A resources.
For Shell to urge a price on carbon therefore, is a delegation of responsibility for change to other actors. This is irresponsible. Shell needs to lead on emissions reduction, not insist that other people change.
2. A price on carbon will not change overall prices or purchasing decsions
In economic theory, choices about products, goods and services are based on key factors such as trust in the supplier, confidence in the product, availability and sustainability of the service, and, of course, the price. Price is a major determinant in most markets, and artificially altering the price of a vital commodity will certainly alter purchasing decisions – unless, that is, the price of the commodity in question increases across the board. If all the players in the field start offering a more expensive product, for example, because of supply chain issues felt across the market, then consumers will not change their choices.
Now consider the global markets in energy. Upwards of 80% of all energy consumed in the global economy is fossil fuel-based. Putting a price on carbon will raise the prices of energy pretty much universally. There will not be enough cleaner, greener product to purchase, so most purchasing decisions will remain the same. Price differentiation in the energy market will not be established by asserting a price on carbon.
A key part of Shell’s argument is that price differentiation will occur because of a price on carbon, and that this will drive behaviour change, and yet there is nothing to suggest it could do that effectively.
3. A price on carbon will not enable Carbon Capture and Storage
Athough a key part of Shell’s argument about a price on carbon is the rationale that it would stimulate the growth in Carbon Capture and Storage (CCS), it seems unlikely that the world will ever agree to a price on carbon that would be sufficient to stimulate significant levels of CCS. A price on carbon will be deemed to be high enough when it creates a difference in the marginal extra production cost of a unit of one energy resource compared to another. A carbon price can only be argued for on the basis of this optimisation process – after all – a carbon price will be expected to be cost-efficient, and not punitive to markets. In other words, carbon prices will be tolerated if they tickle the final cost of energy, but not if they mangle with it. However, CCS could imply the use of 20% to 45% extra energy consumption at a facility or plant. In other words, CCS would create a parasitic load on energy resources that is not slim enough to be supported by a cost-optimal carbon price.
Some argue that the technology for CCS is improving, and that the parasitic load of CCS at installations could be reduced to around 10% to 15% extra energy consumption. However, it is hard to imagine a price on carbon that would pay even for this. And additionally, CCS will continue to require higher levels of energy consumption which is highly inefficient in the use of resources.
Shell’s argument that CCS is vital, and that a price on carbon can support CCS, is invalidated by this simple analysis.
4. Shell needs to be fully engaged in energy transition
Calling for a price on carbon diverts attention from the fact that Shell itself needs to transition out of fossil fuels in order for the world to decarbonise its energy.
Shell rightly says that they should stick to their “core capabilities” – in other words geology and chemistry, instead of wind power and solar power. However, they need to demonstrate that they are willing to act within their central business activities.
Prior to the explosion in the exploitation of deep geological hydrocarbon resources for liquid and gas fuels, there was an energy economy that used coal and chemistry to manufacture gas and liquid fuels. Manufactured gas could still replace Natural Gas, if there are climate, economic or technological limits to how much Natural Gas can be resourced or safely deployed. Of course, to meet climate policy goals, coal chemistry would need to be replaced by biomass chemistry, and significant development of Renewable Hydrogen technologies.
Within its own production facilities, Shell has the answers to meet this challenge. Instead of telling the rest of the world to change its economy and its behaviour, Shell should take up the baton of transition, and perfect its production of low carbon manufactured gas.Academic Freedom, Alchemical, Assets not Liabilities, Bait & Switch, Be Prepared, Behaviour Changeling, Big Picture, Big Society, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Carbon Taxatious, Change Management, Climate Change, Coal Hell, Conflict of Interest, Corporate Pressure, Cost Effective, Dead End, Dead Zone, Delay and Deny, Design Matters, Direction of Travel, Divest and Survive, Dreamworld Economics, Emissions Impossible, Energy Change, Energy Revival, Engineering Marvel, Extreme Energy, Fossilised Fuels, Freemarketeering, Gamechanger, Geogingerneering, Green Gas, Green Investment, Green Power, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Mad Mad World, Major Shift, Marvellous Wonderful, Mass Propaganda, Modern Myths, Money Sings, Natural Gas, Nudge & Budge, Oil Change, Orwells, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Pet Peeves, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Protest & Survive, Public Relations, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Resource Curse, Solar Sunrise, Solution City, Sustainable Deferment, Technofix, The Myth of Innovation, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, The Science of Communitagion, The War on Error, Wind of Fortune
Posted on June 1st, 2015 No comments
And so it has begun – Shell’s public relations offensive ahead of the 2015 Paris climate talks. The substance of their “advocacy” – and for a heavyweight corporation, it’s less lobbying than badgering – is that the rest of the world should adapt. Policymakers should set a price on carbon, according to Shell. A price on carbon might make some dirty, polluting energy projects unprofitable, and there’s some value in that. A price on carbon might also stimulate a certain amount of Carbon Capture and Storage, or CCS, the capturing and permanent underground sequestration of carbon dioxide at large mines, industrial plant and power stations. But how much CCS could be incentivised by pricing carbon is still unclear. Egging on the rest of the world to price carbon would give Shell the room to carry on digging up carbon and burning it and then capturing it and burying it – because energy prices would inevitably rise to cover this cost. Shell continues with the line that they started in the 1990s – that they should continue to dig up carbon and burn it, or sell it to other people to burn, and that the rest of the world should continue to pay for the carbon to be captured and buried – but Shell has not answered a basic problem. As any physicist could tell you, CCS is incredibly energy-inefficient, which makes it cost-inefficient. A price on carbon wouldn’t solve that. It would be far more energy-efficient, and therefore cost-efficient, to either not dig up the carbon in the first place, or, failing that, recycle carbon dioxide into new energy. Shell have the chemical prowess to recycle carbon dioxide into Renewable Gas, but they are still not planning to do it. They are continuing to offer us the worst of all possible worlds. They are absolutely right to stick to their “core capabilities” – other corporations can ramp up renewable electricity such as wind and solar farms – but Shell does chemistry, so it is appropriate for them to manufacture Renewable Gas. They are already using most of the basic process steps in their production of synthetic crude in Canada, and their processing of coal and biomass in The Netherlands. They need to join the dots and aim for Renewable Gas. This will be far less expensive, and much more efficient, than Carbon Capture and Storage. The world does not need to shoulder the expense and effort of setting a price on carbon. Shell and its fellow fossil fuel companies need to transition out to Renewable Gas.Academic Freedom, Alchemical, Assets not Liabilities, Be Prepared, Big Number, Big Picture, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Recycling, Climate Change, Coal Hell, Conflict of Interest, Corporate Pressure, Delay and Deny, Demoticratica, Divest and Survive, Dreamworld Economics, Efficiency is King, Emissions Impossible, Energy Calculation, Energy Change, Energy Denial, Energy Revival, Engineering Marvel, Environmental Howzat, Extreme Energy, Financiers of the Apocalypse, Fossilised Fuels, Freemarketeering, Gamechanger, Geogingerneering, Green Gas, Green Investment, Green Power, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Major Shift, Mass Propaganda, Modern Myths, Natural Gas, Not In My Name, Nudge & Budge, Paradigm Shapeshifter, Peak Emissions, Policy Warfare, Political Nightmare, Price Control, Protest & Survive, Public Relations, Pure Hollywood, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Social Capital, Solar Sunrise, Solution City, Sustainable Deferment, Tarred Sands, Technofix, Technological Sideshow, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, The Science of Communitagion, Unconventional Foul, Ungreen Development, Wasted Resource, Western Hedge, Wind of Fortune, Zero Net
Posted on May 29th, 2015 No comments
As if to provide proof for the sneaking suspicion that Great Britain is run by the wealthy, rather than by the people, and that energy policy is decided by a close-knit circle of privileged dynasties, up bubbles Amber Rudd MP’s first whirl of skirmish as Secretary of State for Energy and Climate Change : her brother Roland is chairperson of a lobbying firm, Finsbury, which is seeking to get state approval for a controversial gas storage scheme at Preesall, near Fleetwood, on behalf of the developers, Halite Energy of Preston, Lancashire.
Whilst some claim there is a starkly obvious conflict of interest for Rudd to take part in the decision-making process, the Department of Energy and Climate Change (DECC) could have denied it, but have instead confirmed that the potential reversal of a 2013 decision will be made, not by Rudd, but by Lord Bourne.
New gas storage in the United Kingdom is a crucial piece of the energy infrastructure provision, as recognised by successive governments. Developments have been ongoing, such as the opening of the Holford facility at Byley in Cheshire. Besides new gas storage, there are anticipated improvements for interconnectors with mainland Europe. These are needed for raising the volume of Natural Gas available to the British market, and for optimising Natural Gas flows and sales in the European regional context – a part of the EC’s “Energy Union”.
An underlying issue not much aired is that increased gas infrastructure is necessary not just to improve competition in the energy markets – it is also to compensate for Peak Natural Gas in the North Sea – something many commentators regularly strive to deny. The new Conservative Government policy on energy is not fit to meet this challenge. The new Secretary of State has gone public about the UK Government’s continued commitment to the exploitation of shale gas – a resource that even her own experts can tell her is unlikely to produce more than a footnote to annual gas supplies for several decades. In addition, should David Cameron be forced to usher in a Referendum on Europe, and the voters petulantly pull out of the Europe project, Britain’s control over Natural Gas imports is likely to suffer, either because of the failure of the “Energy Union” in markets and infrastructure, or because of cost perturbations.
Amber Rudd MP is sitting on a mountain of trouble, undergirded by energy policy vapourware : the promotion of shale gas is not going to solve Britain’s gas import surge; the devotion to new nuclear power is not going to bring new atomic electrons to the grid for decades, and the UK Continental Shelf is going to be expensive for the Treasury to incentivise to mine. What Amber needs is a proper energy policy, based on focused support for low carbon technologies, such as wind power, solar power and Renewable Gas to back up renewable electricity when the sun is not shining and wind is not blowing.Academic Freedom, Assets not Liabilities, Be Prepared, Big Picture, British Biogas, Burning Money, Carbon Commodities, Conflict of Interest, Corporate Pressure, Dead End, Demoticratica, Direction of Travel, Disturbing Trends, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Extreme Energy, Fossilised Fuels, Freemarketeering, Green Gas, Green Power, Growth Paradigm, Hydrocarbon Hegemony, Low Carbon Life, Mad Mad World, Major Shift, National Energy, National Power, Natural Gas, No Pressure, Nuclear Nuisance, Nuclear Shambles, Oil Change, Paradigm Shapeshifter, Peak Energy, Peak Natural Gas, Peak Oil, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Realistic Models, Renewable Gas, Renewable Resource, Resource Curse, Resource Wards, Revolving Door, Shale Game, Social Chaos, Social Democracy, Solar Sunrise, Solution City, The Data, The Price of Gas, The Price of Oil, The Right Chemistry, The War on Error, Unconventional Foul, Ungreen Development, Unnatural Gas, Utter Futility, Vain Hope, Wasted Resource, Wind of Fortune
Posted on April 8th, 2015 No comments
Hello, hello; what have we here then ? Royal Dutch Shell buying out BG Group (formerly known as British Gas). Is this the start of the great transition out of petroleum oil into gas fuels ?
Volatile crude petroleum oil commodity prices over the last decade have played some undoubted havoc with oil and gas company strategy. High crude prices have pushed the choice of refinery feedstocks towards cheap heavy and immature gunk; influenced decisions about the choices for new petrorefineries and caused ripples of panic amongst trade and transport chiefs : you can’t keep the engine of globalisation ticking over if the key fuel is getting considerably more expensive, and you can’t meet your carbon budgets without restricting supplies.
Low crude commodity prices have surely caused oil and gas corporation leaders to break out into the proverbial sweat. Heavy oil, deep oil, and complicated oil suddenly become unprofitable to mine, drill and pump. Because the economic balance of refinery shifts. Because low commodity prices must translate into low end user refined product prices.
There maybe isn’t an ideal commodity price for crude oil. All the while, as crude oil commodity prices jump around like a medieval flea, the price of Natural Gas, and the gassy “light ends” of slightly unconventional and deep crude oil, stay quite cheap to produce and cheap to use. It’s a shame that there are so many vehicles on the road/sea/rails that use liquid fuels…all this is very likely to change.
Shell appear to be consolidating their future gas business by buying out the competition. Hurrah for common sense ! The next stage of their evolution, after the transition of all oil applications to gas, will be to ramp up Renewable Gas production : low carbon gas supplies will decarbonise every part of the economy, from power generation, to transport, to heating, to industrial chemistry.
This is a viable low carbon solution – to accelerate the use of renewable electricity – wind power and solar principally – and at the same time, transition the oil and gas companies to become gas companies, and thence to Renewable Gas companies.Academic Freedom, Be Prepared, Big Picture, Carbon Commodities, Change Management, Corporate Pressure, Design Matters, Direction of Travel, Energy Change, Energy Crunch, Energy Insecurity, Energy Revival, Extreme Energy, Feel Gooder, Fossilised Fuels, Fuel Poverty, Green Gas, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Major Shift, Marine Gas, Marvellous Wonderful, Methane Management, Money Sings, Natural Gas, No Blood For Oil, Oil Change, Paradigm Shapeshifter, Peak Emissions, Peak Oil, Petrolheads, Policy Warfare, Political Nightmare, Price Control, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Resource Wards, Solar Sunrise, Solution City, Tarred Sands, Technofix, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, Transport of Delight, Unconventional Foul, Unnatural Gas, Western Hedge, Wind of Fortune, Zero Net
Posted on March 5th, 2015 1 comment
There are many ways to make a living, but there appear to be zero careers in plainspeaking.
I mean, who could I justify working with, or for ? And would any of them be prepared to accept me speaking my mind ?
Much of what I’ve been saying over the last ten years has been along the lines of “that will never work”, but people generally don’t get consulted or hired for picking holes in an organisation’s pet projects or business models.
Could I imagine myself taking on a role in the British Government ? Short answer : no.
The slightly longer answer : The British Government Department of Energy and Climate Change (DECC) ? No, they’re still hooked on the failed technology of nuclear power, the stupendously expensive and out-of-reach Carbon Capture and Storage (CCS), and the mythical beast of shale gas. OK, so they have a regular “coffee club” about Green Hydrogen (whatever that turns out to be according to their collective ruminations), and they’ve commissioned reports on synthetic methane, but I just couldn’t imagine they’re ever going to work up a serious plan on Renewable Gas. The British Government Department for Transport ? No, they still haven’t adopted a clear vision of the transition of the transport sector to low carbon energy. They’re still chipping away at things instead of coming up with a strategy.
Could I imagine myself taking on a role with a British oil and gas multinational ? Short and very terse and emphatic answer : no.
The extended answer : The oil and gas companies have had generous support and understanding from the world’s governments, and are respected and acclaimed. Yet they are in denial about “unburnable carbon” assets, and have dismissed the need for Energy Change that is the outcome of Peak Oil (whether on the supply or the demand side). Sneakily, they have also played both sides on Climate Change. Several major oil and gas companies have funded or in other ways supported Climate Change science denial. Additionally, the policy recommendations coming from the oil and gas companies are what I call a “delayer’s game”. For example, BP continues to recommend the adoption of a strong price on carbon, yet they know this would be politically unpalatable and take decades (if ever) to bring into effect. Shell continues to argue for extensive public subsidy support for Carbon Capture and Storage (CCS), knowing this would involve such huge sums of money, so it’s never going to happen, at least not for several decades. How on Earth could I work on any project with these corporations unless they adopt, from the centre, a genuine plan for transition out of fossil fuels ? I’m willing to accept that transition necessitates the continued use of Natural Gas and some petroleum for some decades, but BP and Royal Dutch Shell do need to have an actual plan for a transition to Renewable Gas and renewable power, otherwise I would be compromising everything I know by working with them.
Could I imagine myself taking on a role with a large engineering firm, such as Siemens, GE, or Alstom, taking part in a project on manufactured low carbon gas ? I suppose so. I mean, I’ve done an IT project with Siemens before. However, they would need to demonstrate that they are driving for a Renewable Gas transition before I could join a gas project with them. They might not want to be so bold and up-front about it, because they could risk the wrath of the oil and gas companies, whose business model would be destroyed by engineered gas and fuel solutions.
Could I imagine myself building fuel cells, or designing methanation catalysts, or improving hydrogen production, biocoke/biocoal manufacture or carbon dioxide capture from the oceans… with a university project ? Yes, but the research would need to be funded by companies (because all applied academic research is funded by companies) with a clear picture on Energy Change and their own published strategy on transition out of fossil fuels.
Could I imagine myself working on rolling out gas cars, buses and trucks ? Yes. The transition of the transport sector is the most difficult problem in Energy Change. However, apart from projects that are jumping straight to new vehicles running entirely on Hydrogen or Natural Gas, the good options for transition involve converting existing diesel engine vehicles to running mostly on Natural Gas, such as “dual fuel”, still needing roughly 20% of liquid diesel fuel for ignition purposes. So I would need to be involved with a project that aims to supply biodiesel, and have a plan to transition from Natural Gas to Renewable Gas.
Could I imagine myself working with a team that has extensive computing capabilities to model carbon dioxide recycling in power generation plant ? Yes.
Could I imagine myself modelling the use of hydrogen in petroleum refinery, and making technological recommendations for the oil and gas industry to manufacture Renewable Hydrogen ? Possibly. But I would need to be clear that I’m doing it to enable Energy Change, and not to prop up the fossil fuel paradigm – a game that is actually already bust and needs helping towards transition.
Could I imagine myself continuing to research the growth in Renewable Gas – both Renewable Hydrogen and Renewable Methane – in various countries and sectors ? Possibly. It’s my kind of fun, talking to engineers.
But whatever future work I consider myself doing, repeatedly I come up against this problem – whoever asked me to work with them would need to be aware that I do not tolerate non-solutions. I will continue to say what doesn’t work, and what cannot work.
If people want to pay me to tell them that what they’re doing isn’t working, and won’t work, then fine, I’ll take the role.
I’d much rather stay positive, though, and forge a role where I can promote the things that do work, can work and will work.
The project that I’m suitable for doesn’t exist yet, I feel. I’m probably going to continue in one way or another in research, and after that, since I cannot see a role that I could fit easily or ethically, I can see I’m going to have to write my own job description.Academic Freedom, Acid Ocean, Alchemical, Assets not Liabilities, Be Prepared, Big Picture, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Taxatious, Change Management, Climate Change, Conflict of Interest, Corporate Pressure, Delay and Deny, Direction of Travel, Energy Autonomy, Energy Change, Energy Denial, Energy Revival, Engineering Marvel, Fossilised Fuels, Gas Storage, Green Gas, Green Investment, Green Power, Growth Paradigm, Hydrocarbon Hegemony, Hydrogen Economy, Low Carbon Life, Methane Management, Modern Myths, National Energy, National Power, Natural Gas, No Blood For Oil, Non-Science, Nuclear Nuisance, Nuclear Shambles, Oil Change, Optimistic Generation, Paradigm Shapeshifter, Policy Warfare, Political Nightmare, Protest & Survive, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Science Rules, Shale Game, Solution City, Stirring Stuff, Sustainable Deferment, Technofix, The Data, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, Vote Loser, Wasted Resource, Zero Net
Posted on November 14th, 2014 No comments
This week, I had the opportunity to join the launch of the UKERC’s latest research into the future of gas. The esteemed delegates included members of a Russian Trade Delegation and several people from the US Embassy. Clearly, the future of gas is an international thing.
[continued from Gas by Design ]
Mike Bradshaw, Warwick Business School = [MB]
[MB] I’m somewhat daunted by this audience – the report is aimed perhaps for informed public audience. The media [ambushed us on the question of shale gas, shale gas attracted more attention] but things we didn’t cover much about there we can cover here. It’s been a real rollercoaster ride in the gas industry. Any flights of fancy (in the report) are our faults and not theirs [reference to work of colleagues, such as Jonathan Stern at Oxford Institute for Energy Studies]. A set of shortcomings dealing with the issue of Energy Security. There is a tendency to think that oil and gas are the same. They’re not. The framework, the actors and the networks, trade statistics, policies [much different for gas than for oil]. [In the UK for example we are seeing] a rapid increase in import dependence [and in other countries]. Need to [pay] particular understanding on what will happen in far-flung places. Today, the US-China agreement could influence gas demand. [In the literature on gas, some anomalies, perhaps]. Academics may not understand markets. [What we are seeing here is] the globalisation of UK gas security – primarily Europeanisation. There is growing uncertainty [about] the material flow of gas. [Threshold] balance in three sectors – strong seasonality, impact of climate and temperature [on gas demand]. The Russian agreement with Ukraine [and Europe] – the one thing everybody was hoping for was a warm winter. While the gas market is important [industrial use and energy use], domestic/residential demand is still very significant [proportion of total demand], so we need to look at energy efficiency [building insulation rates] and ask will people rip out their gas boilers ? For the UK, we are some way across the gas bridge – gas has enabled us to meet [most of] our Kyoto Protocol commitments. Not long until we’ve crossed it. Our coal – gone. With coal gone, what fills the gaps ? Renewable electricity – but there is much intermittency already. We’re not saying that import dependency is necessarily a problem. Physical security is not really the problem – but the [dependence on] the interconnectors, the LNG (Liquefied Natural Gas) imports – these create uncertainties. The UK also plays a role as a gas exporter – and in landing Norwegian gas [bringing it into the European market]. I’m a geographer – have to have at least one map – of gas flows [in and out of the country]. The NTS (National Transmission System – the high pressure Natural Gas-carrying pipeline network – the “backbone” of the gas transmission and distribution system of National Grid] has responded to change – for example in the increasing sources of LNG [and “backflow” and “crossflow” requirements]. There are 9 points of entry for gas into the UK at the moment. If the Bowland Shale is exploited, there could be 100s of new points of entry [the injection of biogas as biomethane into the gas grid would also create new entry points]. A new challenge to the system. [The gas network has had some time to react in the past, for example] LNG imports – the decision to ramp up the capacity was taken a long time ago. [Evolution of] prices in Asia have tracked the gas away [from the European markets] after the Fukushima Dai-ichi disaster. And recently, we have decided to “fill up the tanks” again [LNG imports have risen in the last 24 or so months]. Very little LNG is “firm” – it needs to follow the market. It’s not good to simply say that “the LNG will come” [without modelling this market]. The literature over-emphasises the physical security of the upstream supplies of gas. [The projections have] unconventional gas growing [and growing amounts of biogas]. But it’s far too early to know about shale gas – far too early to make promises about money when we don’t even have a market [yet]. Policy cannot influence the upstream especially in a privatised market. The interconnectors into the European Union means we have to pay much more attention to the Third EU Energy Package. Colleagues in Oxford are tracking that. The thorny question of storage. We have less than 5 bcm (billion cubic metres). We’d like 10% perhaps [of the winter period demand ?] Who should pay for it ? [A very large proportion of our storage is in one place] the Rough. We know what happens – we had a fire at the Rough in 2006… Everyone worries about geopolitics, but there are other potential sources of problems – our ageing infrastructure […] if there is a technical problem and high demand [at the same time]. Resilience [of our gas system is demonstrated by the fact that we have] gas-on-gas competition [in the markets] – “liquid” gas hub trading – setting the NBP (National Balancing Point). [There are actually 3 kinds of gas security to consider] (a) Security of Supply – not really a problem; (b) Security of Transport (Transit) – this depends on markets and (c) Security of Demand – [which strongly depends on whether there is a] different role for gas in the future. But we need to design enough capacity even though we may not use all of it [or not all of the time]. We have mothballed gas-fired power plants already, for reasons you all know about. We already see the failure of the ETS (European Union Emissions Trading Scheme) [but if this can be reformed, as as the Industrial Emissions Directive bites] there will be a return to gas as coal closes. The role of Carbon Capture and Storage (CCS) becomes critical in retaining gas. CCS however doesn’t answer issues of [physical energy security, since CCS requires higher levels of fuel use].
[Question from the floor] Gas has a role to play in transition. But how do we need to manage that role ? Too much focus on building Renewable Energy system. What is the impact on the current infrastructure ? For managing that decline in the incumbent system – gas is there to help – gas by design rather than gas by default.
[Question from the floor, Jonathan Stern] [In your graphs/diagrams] the Middle East is a major contributor to gas trade. We see it differently. The Qataris [could/may/will] hold back [with expanding production] until 2030. Iran – our study [sees it as] a substitute contributor. Oil-indexed gas under threat and under challenge. If you could focus more on the global gas price… [New resources of gas could be very dispersed.]Very difficult to get UK people to understand [these] impacts on the gas prices [will] come from different places than they can think of.
[Question from the floor] Availability of CCS capacity ? When ? How much ? Assumptions of cost ?
[Question from the floor : Tony Bosworth, Friends of the Earth] Gas as a bridge – how much gas do we need for [this process] ? What about unburnable carbon ? Do we need more gas to meet demands ?
[Answer – to Jonathan Stern – from Christophe McGlade ?] The model doesn’t represent particularly well political probabilities. Iran has a lot of gas – some can come online. It will bring it online if it wants to export it. Some simplifications… might be over optimistic. Your work is helpful to clarify.
On gas prices – indexation versus global gas price – all the later scenarios assumed a globalised gas price. More reasonable assumptions.
On CCS : first [coming onstream] 2025 – initially quite a low level, then increasing by 10% a year. The capital costs are approximately 60% greater than other options and causes a drop in around 10% on efficiency [because making CCS work costs you in extra fuel consumed]. If the prices of energy [including gas] increase, then CCS will have a lesser relative value [?].
On availability of gas : under the 2 degrees Celsius scenario, we could consume 5 tcm (trillion cubic metres) of gas – and this can come from reserves and resources. There are a lot of resources of Natural Gas, but some of it will be at a higher price. In the model we assume development of some new resources, with a growth in shale gas, and other unconventional gas. Because of the climate deal, we need to leave some gas underground.
[Answer from the panel] Indexation of gas prices to oil… Further gas demand is in Asia – it’s a question of whose gas gets burnt. [Something like] 70% of all Natural Gas gets burned indigenously [within the country in which it is produced]. When we talk about “unburnable gas”, we get the response “you’re dreaming” from some oil companies, “it won’t be our fossil fuels that get stranded”. LNG models envisage a different demand profile [in the future, compared to now]. When China [really gets] concerned about air quality [for example]. Different implications.
[Question from the floor, from Centrica ?] What’s in the model for the globalised gas price – Henry Hub plus a bit ? There is not a standard one price.
[Question from the floor] On the question of bridging – the long-term bridge. What issues do you see when you get to 2030 for investment ? [We can see] only for the next few years. What will investors think about that ?
[Question from the floor] [With reference to the Sankey diagram of gas use in the UK] How would that change in a scenario of [electrification – heat and transport being converted to run on electrical power] ?
[Question from the floor] Stranded assets. How the markets might react ? Can you put any numbers on it – especially in the non-CCS scenario ? When do we need to decide [major strategy] for example, [whether we could or should be] shutting off the gas grid ? How would we fund that ? Where are the pinch points ?
[Answer from the panel] On the global gas price – the model does not assume a single price – [it will differ over each] region. [The price is allowed to change regionally [but is assumed to arise from global gas trading without reference to oil prices.] Asian basin will always be more expensive. There will be a temperature differential between different hubs [since consumption is strongly correlated with seasonal change]. On stranded assets – I think you mean gas power plants ? The model is socially-optimal – all regions working towards the 2 degrees Celsius global warming target. The model doesn’t limit stranded assets – and do get in the non-CCS scenario. Build gas plants to 2025 – then used at very low load factors. Coal plants need to reduce [to zero] given that the 2 degrees Celsius targets are demanding. Will need gas for grid balancing – [new gas-fired power generation assets will be] built and not used at high load factors.
[Answer from the panel] Our report – we have assume a whole system question for transition. How successful will the Capacity Mechanism be ? UKERC looking at electrification of heating – but they have not considered the impact on gas (gas-to-power). Will the incentives in place be effective ? The Carbon Budget – what are the implications ? Need to use whole system analysis to understand the impact on gas. Issue of stranded assets : increasingly important now [not at some point in the future]. On pinch point : do we need to wait another three years [for more research] ? Researchers have looked more at what to spend – what to build – and less on how to manage the transition. UKERC have started to explore heat options. It’s a live issue. Referenced in the report.
[Question from the floor, from Richard Sverrisson, News Editor of Montel] Will reform to the EU ETS – the Market Stability Reserve (MSR) – will that be enough to bring gas plant into service ?
[Question from the floor] On oil indexation and the recent crash in the crude price – what if it keeps continuing [downwards] ? It takes gas prices down to be competitive with hub prices. [What about the impact on the economic profitability of] shale oil – where gas driving related prices ? Are there some pricing [functions/variables] in the modelling – or is it merely a physical construct ?
[Question from the floor, from Rob Gross of UCL] On intermittency and the flexibility of low carbon capacity. The geographical units in the modelling are large – the role of gas depends on how the model is constrained vis-a-vis intermittency.
[Answer from the panel, from Christophe McGlade] On carbon dioxide pricing : in the 2 degrees Celsius scenario, the price is assumed to be $200 per tonne. In the non-CCS scenario, the price is in the region of $400 – $500 per tonne [?] From 2020 : carbon price rises steeply – higher than the Carbon Floor Price. How is the the 2 degrees Celsius target introduced ? If you place a temperature constraint on the energy system, the model converts that into carbon emissions. The latest IPCC report shows that there remains an almost linear trend between carbon budget and temperature rise – or should I say a greenhouse gas budget instead : carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). The emissions pledges of the [European Union ?] have been adopted by this model – also the development of renewable energy and fuel standards. No exogenous assumptions on carbon pricing. On intermittency – the seasonality is represented by summer, winter and intermediate; and time day generalised as morning, night, evening and peak (morning peak). [Tighter modelling would provide more] certainty which would remove ~40% of effective demand [?] Each technology has a contribution to make to peak load. Although, we assume nothing from wind power – cannot capture hour to hour market. The model does build capacity that then it doesn’t use.
[Answer from the panel] On carbon pricing and the EU ETS reform : I wouldn’t hold my breath [that this will happen, or that it will have a major impact]. We have a new commission and their priority is Poland – nothing serious will happen on carbon pricing until 2020. Their emphasis is much more on Central European issues. I don’t expect [us] to have a strong carbon price since policy [will probably be] more focussed on social democracy issues. Moving to a relatively lower price on oil : Asia will hedge. Other explorters currently sticking to indexation with oil. The low price of wet gas (condensate) in the USA is a result of the over-supply, which followed an over-supply in NGLs (Natural Gas Liquids) – a bumpy road. Implications from USA experience ? Again, comes back to watching what is happening in Asia.
[to be continued…]Academic Freedom, Big Picture, Big Society, Carbon Capture, Carbon Pricing, Climate Change, Coal Hell, Emissions Impossible, Freemarketeering, Gamechanger, Global Warming, Green Gas, Hydrocarbon Hegemony, Natural Gas, Oil Change, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Price Control, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Resource Wards, Shale Game, The Price of Gas, The Price of Oil, Unnatural Gas, Western Hedge, Wind of Fortune
Posted on November 12th, 2014 No comments
Today I attended a meeting of minds.
It’s clear to me that the near-term and mid-term future for energy in the United Kingdom and the European Union will best be centred on Natural Gas and Renewable Electricity, and now the UK Energy Research Centre has modelled essentially the same scenario. This can become a common narrative amongst all parties – the policy people, the economists, the technologists, the non-governmental groups, as long as some key long-term de-carbonisation and energy security objectives are built into the plan.
The researchers wanted to emphasise from their report that the use of Natural Gas should not be a default option in the case that other strategies fail – they want to see a planned transition to a de-carbonised energy system using Natural Gas by design, as a bridge in that transition. Most of the people in the room found they could largely agree with this. Me, too. My only caveat was that when the researchers spoke about Gas-CCS – Natural Gas-fired power generation with Carbon Capture and Storage attached, my choice would be Gas-CCU – Natural Gas-fired power generation with Carbon Capture and Re-utilisation – carbon recycling – which will eventually lead to much lower emissions gas supply at source.
What follows is a transcription of my poorly-written notes at the meeting, so you cannot accept them as verbatim.
Jim Watson, UKERC = [JW]
Christophe McGlade, University College London (UCL) = [CM]
Mike Bradshaw, Warwick Business School = [MB]
[JW] Thanks to Matt Aylott. Live Tweeting #FutureOfGas. Clearly gas is very very important. It’s never out of the news. The media all want to talk about fracking… If we want to meet the 2 degrees Celsius target of the United Nations Framework Convention on Climate Change, how much can gas be a part of this ? Is Natural Gas a bridge – how long a ride will that gas bridge be ?
[CM] Gas as a bridge ? There is healthy debate about the Natural Gas contribution to climate change [via the carbon dioxide emissions from burning Natural Gas, and also about how much less in emissions there is from burning Natural Gas compared to burning coal]. The IPCC said that “fuel switching” from coal to gas would offer emissions benefits, but some research, notably McJeon et al. (2014) made statements that switching to Natural Gas cannot confer emissions benefits. Until recently, there have not been many disaggregated assessments on gas as a bridge. We have used TIAM-UCL. The world is divided into 16 regions. The “climate module” seeks to constrain the global temperature rise to 2 degrees Celsius. One of the outcomes from our model was that export volumes [from all countries] would be severaly impacted by maintaining the price indexation between oil and gas. [Reading from chart on the screen : exports would peak in 2040s]. Another outcome was that gas consumption is not radically affected by different gas market structures. However, the over indexation to the oil price may destroy gas export markets. Total exports of natural gas are higher under the 2 degrees Celsius scenario compared to the 4 degrees Celsius scenario – particularly LNG [Liquefied Natural Gas]. A global climate deal will support gas exports. There will be a higher gas consumption under a 2 degrees Celsius deal compared to unconstrained scenario [leading to a 4 degrees Celsius global temperature rise]. The results of our modelling indicate that gas acts as a bridge fuel out to 2035 [?] in both absolute and relative terms. There is 15% greater gas consumption in the 2 degrees Celsius global warming scenario than in the 4 degrees Celsius global warming scenario. Part of the reason is that under the 4 degrees Celsius scenario, Compressed Natural Gas vehicles are popular, but a lot less useful under the 2 degrees Celsius scenario [where hydrogen and other fuels are brought into play].
There are multiple caveats on these outcomes. The bridging period is strictly time-limited. Some sectors need to sharply reduce consumption [such as building heating by Natural Gas boilers, which can be achieved by mass insulation projects]. Coal must be curtailed, but coal-for-gas substitution alone is not sufficient. Need a convincing narrative about how coal can be curtailed. In an absence of a global binding climate deal we will get consumption increases in both coal and gas. In the model, gas is offsetting 15% of coal by 2020, and 85% by 2030. With Carbon Capture and Storage (CCS), gas’s role is drastically reduced – after 2025 dropping by 2% a year [of permitted gas use]. Not all regions of the world can use gas as a bridge. [Reading from the chart : with CCS, gas is a strong bridging fuel in the China, EU, India, Japan and South Korea regions, but without CCS, gas is only strong in China. With CCS, gas’s bridging role is good in Australasia, ODA presumably “Offical Development Assistance” countries and USA. Without CCS, gas is good for Africa, Australasia, EU, India, Japan, South Korea, ODA and USA.]
In the UK, despite the current reliance on coal, there is little scope to use it as a transition fuel. Gas is unlikely to be removed from UK energy system by 2050.
[Question from the floor] The logic of gas price indexation with the oil price ?
[CM] If maintain oil indexation, exports will reduce as countries turn more towards indigenous at-home production of gas for their domestic demand. This would not be completely counter-balanced by higher oil and therefore gas prices, which should stimulate more exports.
[Point from the floor] This assumes logical behaviour…
[Question from the floor] [Question about Carbon Capture and Storage (CCS)]
[CM] The model does anticipate more CCS – which permits some extra coal consumption [at the end of the modelling period]. Gas-CCS [gas-fired power generation with CCS attached] is always going to generate less emissions than coal-CCS [coal-fired power generation with CCS attached] – so the model prefers gas-CCS.
[to be continued…]Academic Freedom, Advancing Africa, Assets not Liabilities, Big Picture, Change Management, China Syndrome, Climate Change, Coal Hell, Deal Breakers, Design Matters, Direction of Travel, Emissions Impossible, Energy Change, Energy Revival, Fossilised Fuels, Green Gas, Hydrocarbon Hegemony, Marvellous Wonderful, Methane Management, Natural Gas, Nudge & Budge, Optimistic Generation, Paradigm Shapeshifter, Peak Coal, Peak Emissions, Peak Energy, Peak Natural Gas, Price Control, Realistic Models, Regulatory Ultimatum, Renewable Gas, Science Rules, Shale Game, Solution City, The Data, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, The War on Error, Unconventional Foul, Unnatural Gas
Posted on May 24th, 2014 4 comments
How to organise a political campaign around Climate Change : ask a group of well-fed, well-meaning, Guardian-reading, philanthropic do-gooders into the room to adopt the lowest common denominator action plan. Now, as a well-fed, well-meaning, Guardian-reading (well, sometimes), philanthropic do-gooder myself, I can expect to be invited to attend such meetings on a regular basis. And always, I find myself frustrated by the outcomes : the same insipid (but with well-designed artwork) calls to our publics and networks to support something with an email registration, a signed postcard, a fistful of dollars, a visit to a public meeting of no consequence, or a letter to our democratic representative. No output except maybe some numbers. Numbers to support a government decision, perhaps, or numbers to indicate what kind of messaging people need in future.
I mean, with the Fair Trade campaign, at least there was some kind of real outcome. Trade Justice advocates manned stall tables at churches, local venues, public events, and got money flowing to the international co-operatives, building up the trade, making the projects happen, providing schooling and health and aspirations in the target countries. But compare that to the Make Poverty History campaign which was largely run to support a vain top-level political attempt to garner international funding promises for social, health and economic development. Too big to succeed. No direct line between supporting the campaign and actually supporting the targets. Passing round the hat to developed, industrialised countries for a fund to support change in developing, over-exploited countries just isn’t going to work. Lord Nicholas Stern tried to ask for $100 billion a year by 2020 for Climate Change adaptation. This has skidded to a halt, as far as I know. The economic upheavals, don’t you know ?
And here we are again. The United Nations Framework Convention on Climate Change (UNFCCC), which launched the Intergovernmental Panel on Climate Change (IPCC) reports on climate change, oh, so, long, ago, through the person of its most charismatic and approachable Executive Secretary, Christiana Figueres, is calling for support for a global Climate Change treaty in 2015. Elements of this treaty, being drafted this year, will, no doubt, use the policy memes of the past – passing round the titfer begging for a couple of billion squid for poor, hungry people suffering from floods and droughts; proposing some kind of carbon pricing/taxing/trading scheme to conjure accounting bean solutions; trying to implement an agreement around parts per million by volume of atmospheric carbon dioxide; trying to divide the carbon cake between the rich and the poor.
Somehow, we believe, that being united around this proposed treaty, few of which have any control over the contents of, will bring us progress.
What can any of us do to really have input into the building of a viable future ? Christiana – for she is now known frequently only by her first name – has called for numbers – a measure of support for the United Nations process. She has also let it be known that if there is a substantial number of people who, with their organisations, take their investments out of fossil fuels, then this could contribute to the mood of the moment. Those who are advocating divestment are yet small in number, and I fear that they will continue to be marginal, partly because of the language that is being used.
First of all, there are the Carbon Disclosers. Their approach is to conjure a spectre of the “Carbon Bubble” – making a case that investments in carbon dioxide-rich enterprises could well end up being stranded by their assets, either because of wrong assumptions about viable remaining resources of fossil fuels, or because of wrong assumptions about the inability of governments to institute carbon pricing. Well, obviously, governments will find it hard to implement effective carbon pricing, because governments are in bed with the energy industry. Politically, governments need to keep big industry sweet. No surprise there. And it’s in everybody’s interests if Emperor Oil and Prince Regent Natural Gas are still wearing clothes. In the minds of the energy industry, we still have a good four decades of healthy fossil fuel assets. Royal Dutch Shell’s CEO can therefore confidently say at a public AGM that There Is No Carbon Bubble. The Carbon Discloser language is not working, it seems, as any kind of convincer, except to a small core of the concerned.
And then there are the Carbon Voices. These are the people reached by email campaigns who have no real idea how to do anything practical to affect change on carbon dioxide emissions, but they have been touched by the message of the risks of climate change and they want to be seen to be supporting action, although it’s not clear what action will, or indeed can, be taken. Well-designed brochures printed on stiff recycled paper with non-toxic inks will pour through their doors and Inboxes. Tick it. Send it back. Sign it. Send it on. Maybe even send some cash to support the campaign. This language is not achieving anything except guilt.
And then there are the Carbon Divestors. These are extremely small marginal voices who are taking a firm stand on where their organisations invest their capital. The language is utterly dated. The fossil fuel industry are evil, apparently, and investing in fossil fuels is immoral. It is negative campaigning, and I don’t think it stands a chance of making real change. It will not achieve its goal of being prophetic in nature – bearing witness to the future – because of the non-inclusive language. Carbon Voices reached by Carbon Divestor messages will in the main refuse to respond, I feel.
Political action on Climate Change, and by that I mean real action based on solid decisions, often taken by individuals or small groups, has so far been under-the-radar, under-the-counter, much like the Fair Trade campaign was until it burst forth into the glorious day of social acceptability and supermarket supply chains. You have the cyclists, the Transition Towners, the solar power enthusiasts. Yet to get real, significant, economic-scale transition, you need Energy Change – that is, a total transformation of the energy supply and use systems. It’s all very well for a small group of Methodist churches to pull their pension funds from investments in BP and Shell, but it’s another thing entirely to engage BP and Shell in an action plan to diversify out of petroleum oil and Natural Gas.
Here below are my email words in my feeble attempt to challenge the brain of Britain’s charitable campaigns on what exactly is intended for the rallying cry leading up to Paris 2015. I can pretty much guarantee you won’t like it – but you have to remember – I’m not breaking ranks, I’m trying to get beyond the Climate Change campaigning and lobbying that is currently in play, which I regard as ineffective. I don’t expect a miraculous breakthrough in communication, the least I can do is sow the seed of an alternative. I expect I could be dis-invited from the NGO party, but it doesn’t appear to be a really open forum, merely a token consultation to build up energy for a plan already decided. If so, there are probably more important things I could be doing with my time than wasting hours and hours and so much effort on somebody else’s insipid and vapid agenda.
I expect people might find that attitude upsetting. If so, you know, I still love you all, but you need to do better.
A lot of campaigning over the last 30 years has been very negative and divisive, and frequently ends in psychological stalemate. Those who are cast as the Bad Guys cannot respond to the campaigning because they cannot admit to their supporters/employees/shareholders that the campaigners are “right”. Joe Average cannot support a negative campaign as there is no apparent way to make change happen by being so oppositional, and because the ask is too difficult, impractical, insupportable. [Or there is simply too much confusion or cognitive dissonance.]
One of the things that was brought back from the […] working group breakout on […] to the plenary feedback session was that there should be some positive things about this campaign on future-appropriate investment. I think […] mentioned the obvious one of saying effectively “we are backing out of these investments in order to invest in things that are more in line with our values” – with the implicit encouragement for fossil fuel companies to demonstrate that they can be in line with our values and that they are moving towards that. There was some discussion that there are no bulk Good Guy investment funds, that people couldn’t move investments in bulk, although some said there are. […] mentioned Ethex.
Clearly fossil fuel production companies are going to find it hard to switch from oil and gas to renewable electricity, so that’s not a doable we can ask them for. Several large fossil fuel companies, such as BP, have tried doing wind and solar power, but they have either shuttered those business units, or not let them replace their fossil fuel activities.
[…] asked if the [divestment] campaign included a call for CCS – Carbon Capture and Storage – and […] referred to […] which showed where CCS is listed in a box on indicators of a “good” fossil fuel energy company.
I questioned whether the fossil fuel companies really want to do CCS – and that they have simply been waiting for government subsidies or demonstration funds to do it. (And anyway, you can’t do CCS on a car.)
I think I said in the meeting that fossil fuel producer companies can save themselves and save the planet by adopting Renewable Gas – so methods for Carbon Capture and Utilisation (CCU) or “carbon recycling”. Plus, they could be making low carbon gas by using biomass inputs. Most of the kit they need is already widely installed at petrorefineries. So – they get to keep producing gas and oil, but it’s renewably and sustainably sourced with low net carbon dioxide emissions. That could be turned into a positive, collaborative ask, I reckon, because we could all invest in that, the fossil fuel companies and their shareholders.
Anyway, I hope you did record something urging a call to positive action and positive engagement, because we need the co-operation of the fossil fuel companies to make appropriate levels of change to the energy system. Either that, or they go out of business and we face social turmoil.
If you don’t understand why this is relevant, that’s OK. If you don’t understand why a straight negative campaign is a turn-off to many people (including those in the fossil fuel industry), well, I could role play that with you. If you don’t understand what I’m talking about when I talk about Renewable Gas, come and talk to me about it again in 5 years, when it should be common knowledge. If you don’t understand why I am encouraging positive collaboration, when negative campaigning is so popular and marketable to your core segments, then I will resort to the definition of insanity – which is to keep doing the same things, expecting a different result.
I’m sick and tired of negative campaigning. Isn’t there a more productive thing to be doing ?
There are no enemies. There are no enemies. There are no enemies.
As far as I understand the situation, both the […] and […] campaigns are negative. They don’t appear to offer any positive routes out of the problem that could engage the fossil fuel companies in taking up the baton of Energy Change. If that is indeed the main focus of […] and […] efforts, then I fear they will fail. Their work will simply be a repeat of the negative campaigning of the last 30 years – a small niche group will take up now-digital placards and deploy righteous, holy social media anger, and that will be all.
Since you understand this problem, then I would suggest you could spend more time and trouble helping them to see a new way. You are, after all, a communications expert. And so you know that even Adolf Hitler used positive, convening, gathering techniques of propaganda to create power – and reserved the negative campaigning for easily-marginalised vulnerable groups to pile the bile and blame on.
Have a nicer day,
The important thing as far as I understand it is that the “campaigning” organisations need to offer well-researched alternatives, instead of just complaining about the way things are. And these well-researched alternatives should not just be the token sops flung at the NGOs and UN by the fossil fuel companies. What do I mean ?
Well, let’s take Carbon Capture and Storage (CCS). The injection of carbon dioxide into old oil and gas caverns was originally proposed for Enhanced Oil Recovery (EOR) – that is – getting more oil and gas out the ground by pumping gas down there – a bit like fracking, but with gas instead of liquid. The idea was that the expense of CCS would be compensated for by the new production of oil and gas – however, the CCS EOR effect has shown to be only temporary. So now the major oil and gas companies say they support carbon pricing (either by taxation or trading), to make CCS move forward. States and federations have given them money to do it. I think the evidence shows that carbon pricing cannot be implemented at a sufficiently high level to incentivise CCS, therefore CCS is a non-answer. Why has […] not investigated this ? CCS is a meme, but not necessarily part of the carbon dioxide solution. Not even the UNFCCC IPCC reports reckon that much CCS can be done before 2040. So, why does CCS appear in the […] criteria for a “good” fossil fuel company ? Because it’s sufficiently weak as a proposal, and sufficiently far enough ahead that the fossil fuel companies can claim they are “capture ready”, and in the Good Book, but in reality are doing nothing.
Non-starters don’t just appear from fossil fuel companies. From my point of view, another example of running at and latching on to things that cannot help was the support of the GDR – Greenhouse Development Rights, of which there has been severe critique in policy circles, but the NGOs just wrote it into their policy proposals without thinking about it. There is no way that the emissions budgets set out in the GDR policy could ever get put into practice. For a start, there is no real economic reason to divide the world into developing and developed nations (Kyoto [Protocol]’s Annex I and Annex II).
If you give me some links, I’m going to look over your […] and think about it.
I think that if a campaign really wants to get anywhere with fossil fuel companies, instead of being shunted into a siding, it needs to know properly what the zero carbon transition pathways really are. Unequal partners do not make for a productive engagement, I reckon.
I’m sorry to say that this still appears to be negative campaigning – fossil fuel companies are “bad”; and we need to pull our money out of fossil fuel companies and put it in other “good” companies. Where’s the collective, co-operative effort undertaken with the fossil fuel companies ? What’s your proposal for helping to support them in evolving ? Do you know how they can technologically transition from using fossil fuels to non-fossil fuels ? And how are you communicating that with them ?
They call me the “Paradigm Buster”. I’m not sure if “the group” is open to even just peeking into that kind of approach, let alone “exploring” it. The action points on the corporate agenda could so easily slip back into the methods and styles of the past. Identify a suffering group. Build a theory of justice. Demand reparation. Make Poverty History clearly had its victims and its saviours. Climate change, in my view, requires a far different treatment. Polar bears cannot substitute for starving African children. And not even when climate change makes African children starve, can they inspire the kind of action that climate change demands. A boycott campaign without a genuine alternative will only touch a small demographic. Whatever “the group” agrees to do, I want it to succeed, but by rehashing the campaigning strategies and psychology of the past, I fear it will fail. Even by adopting the most recent thinking on change, such as Common Cause, [it] is not going to surmount the difficulties of trying to base calls to action on the basis of us-and-them thinking – polar thinking – the good guys versus the bad guys – the body politic David versus the fossil fuel company Goliath. By challenging this, I risk alienation, but I am bound to adhere to what I see as the truth. Climate change is not like any other disaster, aid or emergency campaign. You can’t just put your money in the [collecting tin] and pray the problem will go away with the help of the right agencies. Complaining about the “Carbon Bubble” and pulling your savings from fossil fuels is not going to re-orient the oil and gas companies. The routes to effective change require a much more comprehensive structure of actions. And far more engagement that agreeing to be a flag waver for whichever Government policy is on the table. I suppose it’s too much to ask to see some representation from the energy industry in “the group”, or at least […] leaders who still believe in the fossil fuel narratives, to take into account their agenda and their perspective, and a readiness to try positive collaborative change with all the relevant stakeholders ?
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Posted on April 27th, 2014 1 comment
Sigh. I think I’m going to need to start sending out Freedom of Information requests… Several cups of tea later…
To: Information Rights Unit, Department for Business, Innovation & Skills, 5th Floor, Victoria 3, 1 Victoria Street, London SW1H OET
28th April 2014
Request to the Department of Energy and Climate Change
Re: Policy and Strategy for North Sea Natural Gas Fields Depletion
Dear Madam / Sir,
I researching the history of the development of the gas industry in the United Kingdom, and some of the parallel evolution of the industry in the United States of America and mainland Europe.
In looking at the period of the mid- to late- 1960s, and the British decision to transition from manufactured gas to Natural Gas supplies, I have been able to answer some of my questions, but not all of them, so far.
From a variety of sources, I have been able to determine that there were contingency plans to provide substitutes for Natural Gas, either to solve technical problems in the grid conversion away from town gas, or to compensate should North Sea Natural Gas production growth be sluggish, or demand growth higher than anticipated.
Technologies included the enriching of “lean” hydrogen-rich synthesis gas (reformed from a range of light hydrocarbons, by-products of the petroleum refining industry); Synthetic Natural Gas (SNG) and methane-“rich” gas making processes; and simple mixtures of light hydrocarbons with air.
In the National Archives Cmd/Cmnd/Command document 3438 “Fuel Policy. Presented to Parliament by the Minister of Power Nov 1967”, I found discussion on how North Sea gas fields could best be exploited, and about expected depletion rates, and that this could promote further exploration and discovery.
In a range of books and papers of the time, I have found some discussion about options to increase imports of Natural Gas, either by the shipping of Liquified Natural Gas (LNG) or by pipeline from The Netherlands.
Current British policy in respect of Natural Gas supplies appears to rest on “pipeline diplomacy”, ensuring imports through continued co-operation with partner supplier countries and international organisations.
I remain unclear about what official technological or structural strategy may exist to bridge the gap between depleting North Sea Natural Gas supplies and continued strong demand, in the event of failure of this policy.
It is clear from my research into early gas field development that depletion is inevitable, and that although some production can be restored with various techniques, that eventually wells become uneconomic, no matter what the size of the original gas field.
To my mind, it seems unthinkable that the depletion of the North Sea gas fields was unanticipated, and yet I have yet to find comprehensive policy statements that cover this eventuality and answer its needs.
Under the Freedom of Information Act (2000), I am requesting information to answer the following questions :-
1. At the time of European exploration for Natural Gas in the period 1948 to 1965, and the British conversion from manufactured gas to Natural Gas, in the period 1966 to 1977, what was HM Government’s policy to compensate for the eventual depletion of the North Sea gas fields ?
2. What negotiations and agreements were made between HM Government and the nationalised gas industry between 1948 and 1986; and between HM Government and the privatised gas industry between 1986 and today regarding the projections of decline in gas production from the UK Continental Shelf, and any compensating strategy, such as the development of unconventional gas resources, such as shale gas ?
3. Is there any policy or strategy to restore the SNG (Synthetic Natural Gas) production capacity of the UK in the event of a longstanding crisis emerging, for example from a sharp rise in imported Natural Gas costs or geopolitical upheaval ?
4. Has HM Government any plan to acquire the Intellectual Property rights to SNG production technology, whether from British Gas/Centrica or any other private enterprise, especially for the slagging version of the Lurgi gasifier technology ?
5. Has HM Government any stated policy intention to launch new research and development into, or pilot demonstrations of, SNG ?
6. Does HM Government have any clearly-defined policy on the production and use of manufactured gas of any type ? If so, please can I know references for the documents ?
7. Does HM Government anticipate that manufactured gas production could need to increase in order to support the production of synthetic liquid vehicle fuels; and if so, which technologies are to be considered ?
Thank you for your attention to my request for information.
jo.Academic Freedom, Assets not Liabilities, Be Prepared, Big Number, Big Picture, British Biogas, Carbon Commodities, Change Management, Corporate Pressure, Demoticratica, Design Matters, Disturbing Trends, Energy Autonomy, Energy Change, Energy Crunch, Energy Denial, Energy Insecurity, Energy Revival, Engineering Marvel, Fossilised Fuels, Fuel Poverty, Gamechanger, Gas Storage, Green Gas, Green Investment, Green Power, Growth Paradigm, Hide the Incline, Hydrocarbon Hegemony, Hydrogen Economy, Insulation, Major Shift, Marine Gas, Methane Management, Money Sings, National Energy, Paradigm Shapeshifter, Peak Natural Gas, Realistic Models, Regulatory Ultimatum, Renewable Gas, Renewable Resource, Resource Curse, Resource Wards, Shale Game, Solution City, Technofix, Technological Sideshow, The Power of Intention, The Price of Gas, The Right Chemistry, Unconventional Foul, Unnatural Gas, Western Hedge
Posted on February 24th, 2014 No comments
Here is further email exchange with Professor Richard Sears, following on from a previous web log post.
From: Richard A. Sears
Date: 24 February 2014
To: Jo Abbess
Subject: Question from your TED talk
I was looking back over older emails and saw that I had never responded to your note. It arrived as I was headed to MIT to teach for a week and then it got lost. Sorry about that.
Some interesting questions. I don’t know anybody working specifically on wind power to gas options. At one time Shell had a project in Iceland using geothermal to make hydrogen. Don’t know what its status is but if you search on hydrogen and Iceland on the Shell website I’m sure there’s something. If the Germans have power to gas as a real policy option I’d poke around the web for information on who their research partners are for this.
Here are a couple of high level thoughts. Not to discourage you because real progress comes from asking new questions, but there are some physical fundamentals that are important.
Direct air capture of anything using current technology is prohibitively expensive to do at scale for energy. More energy will be expended in capture and synthesis than the fuels would yield.
Gaseous fuels are problematic on their own. Gas doesn’t travel well and is difficult to contain at high energy densities as that means compressing or liquefying it. That doesn’t make anything impossible, but it raises many questions about infrastructure and energy balance. If we take the energy content of a barrel of oil as 1.0, then a barrel of liquefied natural gas is about 0.6, compressed natural gas which is typically at about 3600psi is around 0.3, and a barrel (as a measure of volume equal to 42 US gallons) of natural gas at room temperature and pressure is about 0.0015 (+/-). Also there’s a real challenge in storing and transporting gasses as fuel at scale, particularly motor fuel to replace gasoline and diesel.
While there is some spare wind power potential that doesn’t get utilized because of how the grid must be managed, I expect it is a modest amount of energy compared to what we use today in liquid fuels. I think what that means is that while possible, it’s more likely to happen in niche local markets and applications rather than at national or global scales.
If you haven’t seen it, a nice reference on the potential of various forms of sustainable energy is available free and online here. http://www.withouthotair.com/
Hope some of this helps.
Richard A. Sears
Department of Energy Resources Engineering
From: Jo Abbess
Date: 24 February 2014
To: Richard A. Sears
Many thanks for getting back to me. Responses are nice – even if they
are months late. As they say – better late than never, although with
climate change, late action will definitely be unwise, according to an
increasing number of people.
I have indeed seen the website, and bought and spilled coffee on the
book of Professor David MacKay’s “Sustainable Energy Without The Hot
Air” project. It is legendary. However, I have checked and he has only
covered alternative gas in a couple of paragraphs – in notes. By
contrast, he spent a long chapter discussing how to filter uranium out
of seawater and other nuclear pursuits.
Yet as a colleague of mine, who knows David better than I do, said to
me this morning, his fascination with nuclear power is rather naive,
and his belief in the success of Generation III and Generation IV
lacks evidence. Plus, if we get several large carbon dioxide
sequestration projects working in the UK – Carbon Capture and Storage
(CCS) – such as the Drax pipeline (which other companies will also
join) and the Shell Peterhead demonstration, announced today, then we
won’t need new nuclear power to meet our 4th Carbon Budget – and maybe
not even the 5th, either (to be negotiated in 2016, I hear) :-
We don’t need to bury this carbon, however; we just need to recycle
it. And the number of ways to make Renewable Hydrogen, and
energy-efficiently methanate carbon monoxide and carbon dioxide with
hydrogen, is increasing. People are already making calculations on how
much “curtailed” or spare wind power is likely to be available for
making gas in 10 years’ time, and if solar power in the UK is
cranked/ramped up, then there will be lots of juicy cost-free power
ours for the taking – especially during summer nights.
Direct Air Capture of carbon dioxide is a nonsensical proposition.
Besides being wrong in terms of the arrow of entropy, it also has the
knock-on effect of causing carbon dioxide to come back out of the
ocean to re-equilibrate. I recently read a paper by climate scientists
that estimated that whatever carbon dioxide you take out of the air,
you will need to do almost all of it again.
Instead of uranium, we should be harvesting carbon dioxide from the
oceans, and using it to make gaseous and liquid fuels.
Gaseous fuels and electricity complement each other very well –
particularly in storage and grid balancing terms – there are many
provisions for the twins of gas and power in standards, laws, policies
and elsewhere. Regardless of the limitations of gas, there is a huge
infrastructure already in place that can store, pipe and use it, plus
it is multi-functional – you can make power, heat, other fuels and
chemicals from gas. In addition, you can make gas from a range of
resources and feedstocks and processing streams – the key quartet of
chemical gas species keep turning up : hydrogen, methane, carbon
monoxide and carbon dioxide – whether you are looking at the exhaust
from combustion, Natural Gas, industrial furnace producer gas,
biological decomposition, just about everywhere – the same four gases.
Energy transition must include large amounts of renewable electricity
– because wind and solar power are quick to build yet long nuclear
power lead times might get extended in poor economic conditions. The
sun does not always shine and the wind does not always blow (and the
tide is not always in high flux). Since demand profiles will never be
able to match supply profiles exactly, there will always be spare
power capacity that grids cannot use. So Power to Gas becomes the
optimal solution. At least until there are ways to produce Renewable
Hydrogen at plants that use process heat from other parts of the
Renewable Gas toolkit. So the aims are to recycle carbon dioxide from
gas combustion to make more gas, and recycle gas production process
heat to make hydrogen to use in the gas production process, and make
the whole lot as thermally balanced as possible. Yes. We can do that.
Lower the inputs of fresh carbon of any form, and lower the energy
requirements to make manufactured gas.
I met somebody working with Jacobs who was involved in the Carbon
Recycling project in Iceland. Intriguing, but an order of magnitude
smaller than I think is possible.
ITM Power in the UK are doing a Hydrogen-to-gas-grid and methanation
project in Germany with one of the regions. They have done several
projects with Kiwa and Shell on gas options in Europe. I know of the
existence of feasibility reports on the production of synthetic
methane, but I have not had the opportunity to read them yet…
I feel quite encouraged that Renewable Gas is already happening. It’s
a bit patchy, but it’s inevitable, because the narrative of
unconventional fossil fuels has many flaws. I have been looking at
issues with reserves growth and unconventionals are not really
commensurate with conventional resources. There may be a lot of shale
gas in the ground, but getting it out could be a long process, so
production volumes might never be very good. In the USA you’ve had
lots of shale gas – but that’s only been supported by massive drilling
programmes – is this sustainable ?
BP have just finished building lots of dollars of kit at Whiting to
process sour Natural Gas. If they had installed Renewable Gas kit
instead of the usual acid gas and sulfur processing, they could have
been preparing for the future. As I understand it, it is possible to
methanate carbon dioxide without first removing it from the rest of
the gas it comes in – so methanating sour gas to uprate it is a viable
option as far as I can see. The hydrogen sulfide would still need to
be washed out, but the carbon dioxide needn’t be wasted – it can be
made part of the fuel. And when the sour gas eventually thins out,
those now methanating sour gas can instead start manufacturing gas
from low carbon emissions feedstocks and recycled carbon.
I’m thinking very big.
jo.Academic Freedom, Assets not Liabilities, Baseload is History, Carbon Capture, Carbon Commodities, Carbon Recycling, Climate Change, Climate Damages, Corporate Pressure, Design Matters, Energy Crunch, Energy Insecurity, Energy Revival, Engineering Marvel, Feel Gooder, Gamechanger, Gas Storage, Geogingerneering, Green Power, Hydrogen Economy, Low Carbon Life, Major Shift, Marine Gas, Marvellous Wonderful, Methane Management, Military Invention, National Energy, Nuclear Nuisance, Nuclear Shambles, Optimistic Generation, Paradigm Shapeshifter, Peak Natural Gas, Realistic Models, Renewable Gas, Renewable Resource, Solar Sunrise, Solution City, Stirring Stuff, Technofix, The Power of Intention, The Price of Gas, The Right Chemistry, Transport of Delight, Unconventional Foul, Wasted Resource, Western Hedge, Wind of Fortune, Zero Net
Posted on January 23rd, 2014 No comments
Dr Paul Elsner of Birkbeck College at the University of London gave up some of his valuable time for me today at his little bijou garret-style office in Bloomsbury in Central London, with an excellent, redeeming view of the British Telecom Tower. Leader of the Energy and Climate Change module on Birkbeck’s Climate Change Management programme, he offered me tea and topical information on Renewable Energy, and some advice on discipline in authorship.
He unpacked the recent whirlwind of optimism surrounding the exploitation of Shale Gas and Shale Oil, and how Climate Change policy is perhaps taking a step back. He said that we have to accept that this is the way the world is at the moment.
I indicated that I don’t have much confidence in the “Shale Bubble”. I consider it mostly as a public relations exercise – and that there are special conditions in the United States of America where all this propaganda comes from. I said that there are several factors that mean the progress with low carbon fuels continues to be essential, and that Renewable Gas is likely to be key.
1. First of all, the major energy companies, the oil and gas companies, are not in a healthy financial state to make huge investment. For example, BP has just had the legal ruling that there will be no limit to the amount of compensation claims they will have to face over the Deepwater Horizon disaster. Royal Dutch Shell meanwhile has just had a serious quarterly profit warning – and if that is mostly due to constrained sales (“Peak Oil Demand”) because of economic collapse, that doesn’t help them with the kind of aggressive “discovery” they need to continue with to keep up their Reserves to Production ratio (the amount of proven resources they have on their books). These are not the only problems being faced in the industry. This problem with future anticipated capitalisation means that Big Oil and Gas cannot possibly look at major transitions into Renewable Electricity, so it would be pointless to ask, or try to construct a Carbon Market to force it to happen.
2. Secondly, despite claims of large reserves of Shale Gas and Shale Oil, ripe for the exploitation of, even major bodies are not anticipating that Peak Oil and Peak Natural Gas will be delayed by many years by the “Shale Gale”. The reservoir characteristics of unconventional fossil fuel fields do not mature in the same way as conventional ones. This means that depletion scenarios for fossil fuels are still as relevant to consider as the decades prior to horizontal drilling and hydraulic fracturing (“fracking”).
3. Thirdly, the reservoir characteristics of conventional fossil fuel fields yet to exploit, especially in terms of chemical composition, are drifting towards increasingly “sour” conditions – with sigificant levels of hydrogen sulfide and carbon dioxide in them. The sulphur must be removed for a variety of reasons, but the carbon dioxide remains an issue. The answer until recently from policy people would have been Carbon Capture and Storage or CCS. Carbon dioxide should be washed from acid Natural Gas and sequestered under the ocean in salt caverns that previously held fossil hydrocarbons. It was hoped that Carbon Markets and other forms of carbon pricing would have assisted with the payment for CCS. However, recently there has been reduced confidence that this will be significant.
Renewable Gas is an answer to all three of these issues. It can easily be pursued by the big players in the current energy provision system, with far less investment than wholesale change would demand. It can address concerns of gas resource depletion at a global scale, the onset of which could occur within 20 to 25 years. And it can be deployed to bring poor conventional fossil fuels into consideration for exploitation in the current time – answering regional gas resource depletion.
Outside, daffodils were blooming in Tavistock Square. In January, yes. The “freaky” weather continues…Academic Freedom, Assets not Liabilities, Be Prepared, Big Picture, British Biogas, Carbon Capture, Carbon Commodities, Carbon Pricing, Carbon Taxatious, Change Management, Climate Change, Corporate Pressure, Cost Effective, Design Matters, Direction of Travel, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Environmental Howzat, Extreme Energy, Extreme Weather, Fossilised Fuels, Fuel Poverty, Gamechanger, Green Investment, Hydrocarbon Hegemony, Low Carbon Life, Major Shift, National Energy, Nudge & Budge, Optimistic Generation, Orwells, Paradigm Shapeshifter, Peak Emissions, Peak Energy, Peak Natural Gas, Peak Oil, Price Control, Public Relations, Pure Hollywood, Realistic Models, Renewable Gas, Renewable Resource, Resource Wards, Shale Game, Solution City, Sustainable Deferment, Technofix, Technological Sideshow, The Price of Gas, The Price of Oil, Unconventional Foul, Unnatural Gas, Wasted Resource, Western Hedge
Posted on January 13th, 2014 No comments
It constantly amazes and intrigues me how human individuals operate in networks to formulate, clarify and standardise ideas, tools, machines, procedures and systems. Several decades ago, Renewable Electricity from sources such as wind power was considered idealistic vapourware, esoteric, unworkable and uncertain, and now it’s a mainstream generator of reliable electricity in the UK’s National Grid. Who would have thought that invisible, odourless, tasteless gas phase chemicals would heat our homes ? It’s now just so normal, it’s impossible to imagine that Natural Gas was once considered to be so insignificant that it was vented – not even flared – from oil wells.
Judging by the sheer number of people working on aspects of Renewable Gas, I expect this too to be mainstream in the energy sector within a decade. What do others think ? I have begun the process of asking, for example, see below.
from: Jo Abbess
to: Richard A. Sears
date: Mon, May 2, 2011 at 11:59 PM
subject: Question from your TED talk
Dear [Professor] Sears,
I was intrigued by your TED talk that I recently viewed :-
Yes, I am interested in the idea of “printing” solar cells, which is what I think you might be alluding to with your reference to abalone shells.
But I am more interested in what you base your estimate of “Peak Gas” on. I recently did some very basic modelling of hydrocarbon resources and electricity, which look somewhat different from the IEA and EIA work and reports from BP and Royal Dutch Shell. My conclusion was that Peak Oil is roughly now, Peak Natural Gas will be around 2030, and Peak Electricity around 2060 :-
I am going to try to improve these charts before I submit my MSc Masters Thesis, so I am trying to find out what other people base their projections on. Could you help me by pointing me at the basis of your assessment of Peak Natural Gas ?
from: Richard A. Sears
to: Jo Abbess
date: Thu, Oct 24, 2013 at 5:30 PM
I am just now finding a number of old emails that got archived (and ignored) when I moved from MIT to Stanford a few years ago. A quick answer is that I did about what Hubbert did in 1956. No detailed statistical modeling, just look at the trends, think about what’s happening in the industry, and make what seem like reasonable statements about it.
A number of interesting things have happened just in the last two years since you wrote to me. Significantly, US oil production is on the rise. When you count all hydrocarbon liquids, the US is or will soon be, the world largest producer. This just goes to one of my points from TED. Don’t expect oil and gas to go away any time soon. There are plenty of molecules out there. I first said this internally at Shell in the mid 1980’s when I was Manager of Exploration Economics and since then I’ve felt that I got it about right.
I did just look at your website and would caution you about extrapolating very recent trends into the future. The rate of growth in shale gas production has slowed, but there’s an important economic factor driving that. Gas prices in the US are very low compared to oil. With the development of fraccing technology to enable oil and liquids production from shale formations, the industry has shifted their effort to the liquids-rich plays. A few statistics. Gas is currently around $3.50/mcf. On an energy equivalent basis, this equates to an oil price of about $20/barrel. Brent currently sells for $110/barrel and the light oils produced from the shale plays in the US are getting between $90 and $100/barrel, depending on where they can be delivered. As a consequence, in the 3rd quarter of 2013, compared to one year ago, oil well completions are up 18% while natural gas well completions declined 30%.
Yes, you are right. Printing solar cells is an example of what I was talking about with Abalone shells. Similarly, what if you had paint that as it dried would self assemble into linked solar cells and your entire house is now generating electricity. I was totally amazed at the number of people that didn’t actually think about what I was saying and called me an !d!*t for imagining that I was going to transform coal itself into some magical new molecule. […]
In any case, I think it’s good that you’re thinking about these problems, and importantly it appears from your website that you’re thinking about the system and its complexity.
Richard A. Sears
MIT Energy Initiative
Massachusetts Institute of Technology
from: Jo Abbess
to: Richard A Sears
sent: Monday, May 02, 2011 3:59 PM
Dear [Professor] Sears,
Many thanks for your reply.
I had kinda given up of ever hearing back from you, so it’s lovely to
read your thoughts.
May I blog them ?
from: Richard A Sears
date: Fri, Oct 25, 2013 at 5:03 PM
to: Jo Abbess
I have personally avoided blogging because I don’t want to put up with people writing mean comments about me. But the data is worth sharing. You should also know the sources of that data otherwise you open yourself to more criticism.
The data on production comes from the International Energy Agency and a research firm PIRA. All of it was in recent press releases. The Energy Information Administration makes similar projections about future production. The data on well completions was recently released by API.
No need to reference me. The data is out there for all to see. But if you do, fair warning. You will get stupid comments about how I used to be a VP at Shell so of course these are the things I’m going to say. […]
By the way, there’s something else that’s very interesting in the world of peak oil and various peaks. I have long believed, as hinted in my TED talk that the most important aspect of peak oil is the demand driven phenomena, not the supply side. It’s worth noting in this context that US oil consumption peaked in 2005 and has declined about 10% since then. This data can be found easily in the BP Statistical Report on World Energy. This is real and is a result of economic shifts, greater efficiency, and the penetration of renewables. Future energy projections (references above) show that this trend continues. A big component of US energy consumption is gasoline, and US gasoline consumption peaked in 2007. I think that data can be found at http://www.eia.gov, although I haven’t looked for it lately. It’s a little factoid that I think I remember.
Richard A. Sears
Department of Energy Resources Engineering
from: Jo Abbess
to: Richard A Sears
date: Sun, Jan 12, 2014 at 11:47 AM
Dear Professor Sears,
HNY 2014 !
This year I am hoping to attempt the climb on my own personal K2 by writing an academic book on Renewable Gas – sustainable, low-to-zero carbon emissions gas phase fuels.
I am not a chemist, nor a chemical engineer, and so I would value any suggestions on who I should approach in the gas (and oil) industry to interview about projects that lean in this direction.
Examples would be :-
* Power-to-Gas : Using “spare” wind power to make Renewable Hydrogen – for example by electrolysis of water. Part of the German Power-to-Gas policy. Some hydrogen can be added to gas grids safely without changing regulations, pipework or end appliances.
* Methanation : Using Renewable Hydrogen and young or recycled carbon gas to make methane (using the energy from “spare” wind power, for example). Also part of the German Power-to-Gas policy.
NB “Young” carbon would be either carbon monoxide or carbon dioxide, and be sourced from biomass, Direct Air Capture, or from the ocean. “Old” carbon would come from the “deeper” geological carbon cycle, such as from fossil fuel, or industrial processes such as the manufacture of chemicals from minerals and/or rocks.
Precursors to Renewable Gas also interest me, as transitions are important – transitions from a totally fossil fuel-based gas system to a sustainable gas system. I have recently looked at some basic analysis on the chemistry of Natural Gas, and its refinery. It seems that methanation could be useful in making sour gas available as sweetened, as long as Renewable Hydrogen is developed for this purpose. It seems that there is a lot of sour gas in remaining reserves, and the kind of CCS (Carbon Capture and Storage) that would be required under emissions controls could make sour gas too expensive to use if it was just washed of acids.
I don’t think the future of energy will be completely electrified – it will take a very long time to roll out 100% Renewable Electricity and there will always be problems transitioning out of liquid fuels to electricity in vehicular transportation.
If you could suggest any names, organisations, university departments, companies, governance bodies that I should contact, or research papers that I should read, I would be highly grateful.
jo.Academic Freedom, Alchemical, Assets not Liabilities, Big Picture, Coal Hell, Conflict of Interest, Cost Effective, Design Matters, Direction of Travel, Electrificandum, Energy Change, Energy Crunch, Energy Insecurity, Energy Revival, Engineering Marvel, Fossilised Fuels, Gamechanger, Geogingerneering, Green Power, Methane Management, National Energy, National Power, Optimistic Generation, Peak Energy, Peak Natural Gas, Peak Oil, Price Control, Realistic Models, Renewable Gas, Shale Game, Solar Sunrise, Solution City, The Data, The Power of Intention, The Price of Gas, The Price of Oil, The Right Chemistry, Western Hedge
Posted on January 1st, 2014 No comments
In the long view, some things are inevitable, and I don’t just mean death and taxes. Within the lifetime of children born today, there must be a complete transformation in energy. The future is renewable, and carefully deployed renewable energy systems can be reliable, sustainable and low cost, besides being low in carbon dioxide emissions to air. This climate safety response is also the answer to a degradation and decline in high quality mineral hydrocarbons – the so-called “fossil” fuels. Over the course of 2014 I shall be writing about Renewable Gas – sustainable, low emissions gas fuels made on the surface of the earth without recourse to mining for energy. Renewable Gas can store the energy from currently underused Renewable Electricity from major producers such as wind and solar farms, and help to balance out power we capture from the variable wind and sun. Key chemical players in these fuels : hydrogen, methane, carbon monoxide and carbon dioxide. Key chemistry : how to use hydrogen to recycle the carbon oxides to methane. How we get from here to there is incredibly important, and interestingly, methods and techniques for increasing the production volumes of Renewable Gas will be useful for the gradually fading fossil fuel industry. Much of the world’s remaining easily accessible Natural Gas is “sour” – laced with high concentrations of hydrogen sulfide and carbon dioxide. Hydrogen sulfide needs to be removed from the gas, but carbon dioxide can be recycled into methane, raising the quality of the gas. We can preserve the Arctic from fossil gas exploitation, and save ourselves from this economic burden and ecological risk, by employing relatively cheap ways to upgrade sour Natural Gas, from Iran, for example, while we are on the decades-long road of transitioning to Renewable Gas. The new burn is coming.Academic Freedom, Alchemical, Arctic Amplification, Assets not Liabilities, Baseload is History, Big Picture, Carbon Recycling, Climate Change, Cost Effective, Direction of Travel, Energy Autonomy, Energy Change, Energy Insecurity, Energy Revival, Extreme Energy, Feel Gooder, Fossilised Fuels, Gamechanger, Gas Storage, Green Investment, Hydrocarbon Hegemony, Hydrogen Economy, Insulation, Low Carbon Life, Major Shift, Marine Gas, Methane Management, Optimistic Generation, Paradigm Shapeshifter, Peak Emissions, Peak Natural Gas, Price Control, Realistic Models, Renewable Gas, Renewable Resource, Solar Sunrise, Solution City, Stirring Stuff, The Power of Intention, The Price of Gas, The Right Chemistry, The Science of Communitagion, Unnatural Gas, Wind of Fortune
Posted on December 11th, 2013 No comments
It was like a very bad sitcom from 1983 at the House of Commons this afternoon. “You saw Ed Balls running around in full Santa outfit ?” “Yeah ! The proper job.” “You know what we should do ? Put a piece of misteltoe above that door that everyone has to go through.” “You do it. I’ve heard you’re very good with sticky-backed plastic…”
Once again Alan Whitehead MP has put on a marvellous Christmas reception of the All Party Parliamentary Renewable And Sustainable Energy Group, or PRASEG. The one flute of champagne in the desert-like heat of the Terrace Pavilion at the Houses of Parliament was enough to turn me the colour of beetroot and tomato soup, so when Alan despaired of getting anything altered, I took on the role of asking the lovely Pavilion staff to turn the heating down, what with Climate Change and everything, which they nobly obliged to do.
In the meantime, I was invited onto the terrace overlooking the Thames by Christopher Maltin of Organic Power, to refresh myself. The winter night had fallen like a grey duvet, and what with the lingering fog and the lighting schemes for famous buildings, and the purple-blue sky behind it all, it was quite romantic out there. But very, very cold, so we didn’t discuss biogas and biosyngas for long.
Back in the Pavilion, we were addressed by the fabulously debonair Lord Deben, John Gummer, sporting a cheery red pocket kerchief in his dark suit. During his talk, announcing the Committee on Climate Change confirmation of the Fourth Carbon Budget, and urging us to be “missionary” in influencing others over Climate Change mitigation, across the room I espied a younger gentleman who had, shall I say, a rather keen appearance. Was he a journalist, I asked myself, paying so much attention ? In fact, wasn’t he Leo Hickman, formerly of The Guardian ? No, he was not, but it was a bit shadowed at that end of the room, so I can’t blame myself for this mistake.
When he had finally worked the room and ended up talking with me, he turned out to be Jack Tinley, Relationship Manager for Utilities at Lloyds Bank, in other words, in Big Finance, and currently seconded to the UK Government Department of Energy and Climate Change (DECC), so that was what explained his preppiness. I explained my continuing research into Renewable Gas, and he recommended Climate Change Capital for all questions of financing renewable energy, should I encounter any project that needed investment. Very helpful. Although he didn’t know who Leo Hickman is. Talking with him, and the guy from TEQs (Tradable Energy Quotas) was so interesting, I absentmindedly ate some…no… loads of party snacks. I need to make a strong mental note not to eat too many party snacks in future.
After the illuminating and encouraging speeches from Lord Deben and Alan Whitehead MP, we were delightfully surprised by the attendance of, and an address by, Greg Barker MP, a “drive by speech” according to Alan. I was struck, that with his new specs, “Curly” Greg looks astonishingly like a young Michael Caine. During his speech he said that we ought to put the damaging controversy about energy behind us and move on into a year of great opportunity, now that the House of Lords had approved the Energy Bill. And then he pushed his glasses back up his nose in a way that was so Michael Caine, I nearly laughed out loud. Greg expressed the wish that the energy industry would become a “sexy sector”, at which point I corpsed and had to turn away silently laughing with a hand clamped over my mouth.
Afterwards, I shook Greg by the hand, and asked if he would please unblock me on Twitter. He asked if I had been posting streams and streams of Tweets, and I said I don’t do that these days. When I suggested that he reminded me of Michael Caine, he was rather amused, but he did check I meant the Michael Caine of the 1960s, not the actor of today.
Other people I spent time talking to at the PRASEG reception were Professor Dave Elliott of the Open University, and author on renewable energy; Steven English who installs ground source heat pumps; and Steve Browning, formerly of the National Grid; all in the Claverton Energy Research Group forum.
I explained the foundations of my research into Renewable Gas to a number of people, and used the rhetorical question, “Germany’s doing it, so why can’t we ?” several times. I bet the Chinese are doing it too. I mean they’re doing everything else in renewable energy. In copious quantities, now they’ve seen the light about air pollution.
I ended the event by having a serious chat with a guy from AMEC, the international engineering firm. He commented that the “Big Six” energy production and supply companies are being joined by smaller companies with new sources of investment capital in delivering new energy infrastructure.
I said it was clear that “the flight of international capital” had become so bad, it had gone into geostationary orbit, not coming down to land very often, and that funding real projects could be hard.
I suggested to him that the “Big Six” might need to be broken up, in the light of their edge-of-break-even, being locked into the use of fossil fuels, and the emergence of some of these smaller, more liquid players, such as Infinis.
I also suggested that large companies such as AMEC should really concentrate on investing in new energy infrastructure projects, as some things, like the wind power development of the North Sea are creating genuine energy assets, easily shown if you consider the price of Natural Gas, which the UK is having to increasingly import.Assets not Liabilities, Be Prepared, Big Number, Big Picture, British Biogas, Climate Change, Corporate Pressure, Demoticratica, Direction of Travel, Energy Change, Energy Revival, Engineering Marvel, Foreign Investment, Green Investment, Green Power, Growth Paradigm, Mass Propaganda, Media, National Energy, Optimistic Generation, Paradigm Shapeshifter, Policy Warfare, Renewable Gas, Social Capital, Solution City, The Power of Intention, The Price of Gas, The Science of Communitagion, Western Hedge, Wind of Fortune
Posted on October 25th, 2013 No comments
Managing the balance between, on the one hand, extraction of natural resources from the environment, and on the other hand, economic production, shouldn’t have to be either, or. We shouldn’t value higher throughput and consumption at the expense of exhausting what the Earth can supply. We shouldn’t be “economic” in our ecology, we shouldn’t be penny-pinching and miserly and short-change the Earth. The Earth, after all, is the biosystem that nourishes us. What we should be aiming for is an ecology of economy – a balance in the systems of manufacture, agriculture, industry, mining and trade that doesn’t empty the Earth’s store cupboard. This, at its root, is a conservation strategy, maintaining humanity through a conservative economy. Political conservatives have lost their way. These days they espouse the profligate use of the Earth’s resources by preaching the pursuit of “economic growth”, by sponsoring and promoting free trade, and reversing environmental protection. Some in a neoliberal or capitalist economy may get rich, but they do so at the expense of everybody and everything else. It is time for an ecology in economics.
Over the course of the next couple of years, in between doing other things, I shall be taking part in a new project called “Joy in Enough”, which seeks to promote economic ecology. One of the key texts of this multi-workstream group is “Enough is Enough”, a book written by Rob Dietz and Dan O’Neill. In their Preface they write :-
“But how do we share this one planet and provide a high quality of life for all ? The economic orthodoxy in use around the world is not up to the challenge. […] That strategy, the pursuit of never-ending economic growth has become dysfunctional. With each passing day, we are witnessing more and more uneconomic growth – growth that costs more than it is worth. An economy that chases perpetually increasing production and consumption, always in search of more, stands no chance of achieving a lasting prosperity. […] Now is the time to change the goal from the madness of more to the ethic of enough, to accept the limits to growth and build an economy that meets our needs without undermining the life-support systems of the planet.”
One of the outcomes of global capitalism is huge disparities, inequalities between rich and poor, between haves and have-nots. Concern about this is not just esoteric morality – it has consequences on the whole system. Take, for example, a field of grass. No pastoral herder with a flock of goats is going to permit the animals to graze in just one corner of this field, for if they do, part of the grassland will over-grow, and part will become dust or mud, and this will destroy the value of the field for the purposes of grazing. And take another example – wealth distribution in the United Kingdom. Since most people do not have enough capital to live on the proceeds of investment, most people need to earn money for their wealth through working. The recent economic contraction has persuaded companies and the public sector to squeeze more productivity out of a smaller number of employees, or abandon services along with their employees. A simple map of unemployment shows how parts of the British population have been over-grazed to prop up the economic order. This is already having impacts – increasing levels of poverty, and the consequent social breakdown that accompanies it. Poverty and the consequent worsening social environment make people less able to look after themselves, their families, and their communities, and this has a direct impact on the national economy. We are all poorer because some of our fellow citizens need to use food banks, or have to make the choice in winter to Heat or Eat.
And let’s look more closely at energy. Whilst the large energy producers and energy suppliers continue to make significant profits – or put their prices up to make sure they do so – families in the lower income brackets are experiencing unffordability issues with energy. Yes, of course, the energy companies would fail if they cannot keep their shareholders and investors happy. Private concerns need to make a profit to survive. But in the grand scheme of things, the economic temperature is low, so they should not expect major returns. The energy companies are complaining that they fear for their abilities to invest in new resources and infrastructure, but many of their customers cannot afford their products. What have we come to, when a “trophy project” such as the Hinkley Point C nuclear power station gets signed off, with billions in concomitant subsidy support, and yet people in Scotland and the North East and North West of England are failing to keep their homes at a comfortable temperature ?
There is a basic conflict at the centre of all of this – energy companies make money by selling energy. Their strategy for survival is to make profit. This means they either have to sell more energy, or they have to charge more for the same amount of energy. Purchasing energy for most people is not a choice – it is a mandatory part of their spending. You could say that charging people for energy is akin to charging people for air to breathe. Energy is a essential utility, not an option. Some of the energy services we all need could be provided without purchasing the products of the energy companies. From the point of view of government budgets, it would be better to insulate the homes of lower income families than to offer them social benefit payments to pay their energy bills, but this would reduce the profits to the energy companies. Insulation is not a priority activity, because it lowers economic production – unless insulation itself is counted somehow as productivity. The ECO, the Energy Company Obligation – an obligation on energy companies to provide insulation for lower income family homes, could well become part of UK Prime Minister David Cameron’s “Bonfire of the Green Tax Vanities”. The ECO was set up as a subsidy payment, since energy companies will not provide energy services without charging somebody for them. The model of an ESCO – an Energy Services Company – an energy company that sells both energy and energy efficiency services is what is needed – but this means that energy companies need to diversify. They need to sell energy, and also sell people the means to avoid having to buy energy.
Selling energy demand reduction services alongside energy is the only way that privatised energy companies can evolve – or the energy sector could have to be taken back into public ownership because the energy companies are not being socially responsible. A combination of economic adjustment measures, essential climate change policy and wholesale price rises for fossil fuel energy mean that energy demand reduction is essential to keep the economy stable. This cannot be achieved by merely increasing end consumer bills, in an effort to change behaviour. There is only so much reduction in energy use that a family can make, and it is a one-time change, it cannot be repeated. You can nudge people to turn their lights off and their thermostats down by one degree, but they won’t do it again. The people need to be provided with energy control. Smart meters may or may not provide an extra tranche of energy demand reduction. Smart fridges and freezers will almost certainly offer the potential for further domestic energy reduction. Mandatory energy efficiency in all electrical appliances sold is essential. But so is insulation. If we don’t get higher rates of insulation in buildings, we cannot win the energy challenge. In the UK, one style of Government policies for insulation were dropped – and their replacements are simply not working. The mistake was to assume that the energy companies would play the energy conservation game without proper incentives – and by incentive, I don’t mean subsidy.
An obligation on energy companies to deploy insulation as well as other energy control measures shouldn’t need to be subsidised. What ? An obligation without a subsidy ? How refreshing ! If it is made the responsibility of the energy companies to provide energy services, and they are rated, and major energy procurement contracts are based on how well the energy companies perform on providing energy reduction services, then this could have an influence. If shareholders begin to understand the value of energy conservation and energy efficiency and begin to value their energy company holdings by their energy services portfolio, this could have an influence. If an energy utility’s licence to operate is based on their ESCO performance, this could have an influence : an energy utility could face being disbarred through the National Grid’s management of the electricity and gas networks – if an energy company does not provide policy-compliant levels of insulation and other demand control measures, it will not get preferential access for its products to supply the grids. If this sounds like the socialising of free trade, that’s not the case. Responsible companies are already beginning to respond to the unfolding crisis in energy. Companies that use large amounts of energy are seeking ways to cut their consumption – for reasons related to economic contraction, carbon emissions control and energy price rises – their bottom line – their profits – rely on energy management.
It’s flawed reasoning to claim that taxing bad behaviour promotes good behaviour. It’s unlikely that the UK’s Carbon Floor Price will do much apart from making energy more unaffordable for consumers – it’s not going to make energy companies change the resources that they use. To really beat carbon emissions, low carbon energy needs to be mandated. Mandated, but not subsidised. The only reason subsidies are required for renewable electricity is because the initial investment is entirely new development – the subsidies don’t need to remain in place forever. Insulation is another one-off cost, so short-term subsidies should be in place to promote it. As Nick Clegg MP proposes, subsidies for energy conservation should come from the Treasury, through a progressive tax, not via energy companies, who will pass costs on to energy consumers, where it stands a chance of penalising lower-income households. Wind power and solar power, after their initial investment costs, provide almost free electricity – wind turbines and solar panels are in effect providing energy services. Energy companies should be mandated to provide more renewable electricity as part of their commitment to energy services.
In a carbon-constrained world, we must use less carbon dioxide emitting fossil fuel energy. Since the industrialised economies use fossil fuels for more than abut 80% of their energy, lowering carbon emissions means using less energy, and having less building comfort, unless renewables and insulation can be rapidly increased. This is one part of the economy that should be growing, even as the rest is shrinking.
Energy companies can claim that they don’t want to provide insulation as an energy service, because insulation is a one-off cost, it’s not a continuing source of profit. Well, when the Big Six have finished insulating all the roofs, walls and windows, they can move on to building all the wind turbines and solar farms we need. They’ll make a margin on that.Academic Freedom, Assets not Liabilities, Behaviour Changeling, Big Society, Carbon Pricing, Carbon Taxatious, Climate Change, Contraction & Convergence, Cool Poverty, Corporate Pressure, Demoticratica, Direction of Travel, Disturbing Trends, Dreamworld Economics, Economic Implosion, Efficiency is King, Emissions Impossible, Energy Change, Energy Disenfranchisement, Energy Revival, Engineering Marvel, Environmental Howzat, Fair Balance, Financiers of the Apocalypse, Fossilised Fuels, Freemarketeering, Fuel Poverty, Green Investment, Green Power, Growth Paradigm, Human Nurture, Hydrocarbon Hegemony, Libertarian Liberalism, Low Carbon Life, Money Sings, National Energy, National Power, National Socialism, Nuclear Nuisance, Nuclear Shambles, Nudge & Budge, Paradigm Shapeshifter, Peak Emissions, Peak Energy, Policy Warfare, Political Nightmare, Price Control, Regulatory Ultimatum, Social Capital, Social Change, Social Chaos, Social Democracy, Solar Sunrise, Solution City, Sustainable Deferment, The Power of Intention, The Price of Gas, The Price of Oil, Ungreen Development, Wasted Resource, Wind of Fortune
Posted on October 20th, 2013 No comments
I generally avoid reading The Economist magazine – apart from the Science and Technology section – as it tends to make my blood boil. The writing style frequently includes such things that I would describe as casual generalisation, unquestioned third party claims, suppositions used in place of factual account, and the selective use of statistics to construct meaning – all of which have the power to annoy. Sometimes an article has so many trigger points, that I simply cannot finish reading it.
This week I risked reading an article recommended to me about power generation in Europe, and I was pretty soon gnashing my teeth and wailing. I was indignant because the arguments being used ignored vital parts of European energy policy, and just parroted the complaints of utility companies, without challenging them, whilst at the same time ignoring the energy sector blackmail and brinkmanship. The article contradicted itself about energy investment and energy prices, and failed to make the case for utilities to diversify in order to survive.
First of all – the contradictions. In The Economist magazine of 12th October 2013, the article entitled “How to lose half a trillion euros”, contains these two sections :-
“[…] During the 2000s, European utilities overinvested in generating capacity from fossil fuels, boosting it by 16% in Europe as a whole and by more in some countries […] The market for electricity did not grow by nearly that amount, even in good times; then the financial crisis hit demand. According to the International Energy Agency, total energy demand in Europe will decline by 2% between 2010 and 2015.”
“[…] the old-fashioned utilities […] So far, it is true, they have managed to provide backup capacity and the grid has not failed, even in solar- and wind-mad Germany. […] But […] it is getting harder to maintain grid stability. […] The role of utilities as investors is […] being threatened. […]”
How can the privatised power utilities on the one hand have “overinvested”, and at the same time not invested enough to protect the grid in future ?
The article writer misses several key points. The underlying reasons for investment in Europe in fossil fuel-fired generation during the 2000s was not in anticipation of higher power demand. The vast majority of new investment in the period 2000 to 2010 in the European Union was in Natural Gas-fired power plants, in anticipation of carbon emissions control and other environmental policy, and in anticipation of the retirement of a number of power plants reaching the ends of their lives. It was also viewed as a no-regrets option given there were plans to diversify the unified European power market to increase competitiveness – incorporating new, smaller players, and new, variable renewable power resources. Flexible gas generation would therefore always be in demand – the ability to turn off and on as required. Requiring gas plants to operate flexibly divorces generation capacity from generation demand, and so invalidates The Economist writer’s statement.
And on to the problem of a contradiction over prices :-
“[…] Renewable, low-carbon energy accounts for an ever-greater share of production. It is helping push wholesale electricity prices down, and could one day lead to big reductions in greenhouse-gas emissions. For established utilities, though, this is a disaster. […] In short, they argue, the growth of renewable energy is undermining established utilities and replacing them with something less reliable and much more expensive. […]”
How can renewable electricity be lowering the prices of wholesale power, and yet also be replacing established utilities with something “much more expensive” ?
I think the clue for this poor reasoning lies with a faulty interpretation of Germany’s Renewable Energy Surcharge – the EEG-Umlage, which is held up as the proof that green power costs more than fossil fuel power. The article says :-
“[…] Electricity prices have fallen from over €80 per MWh at peak hours in Germany in 2008 to just €38 per MWh now […] These are wholesale prices; residential prices are €285 per MWh, some of the highest in the world, partly because they include subsidies for renewables that are one-and-a-half times, per unit of energy, the power price itself). […]”
The Economist’s calculation of the green power subsidies at “one-and-a-half times” the wholesale power price is €57/MWh, so that’s only 20% of the total price of power to the consumer. Other costs besides the actual wholesale cost of the electricity, add up to €190, 67% of the cost of power to the household – far more of an impact than the renewable energy subsidies. I found the data from the BDEW to confirm these figures – from the “Power prices for households” presentation for May 2013, the price of electricity for consumers (for a standard three person house) is at €287.3/MWh, and the combination of Renewable Energy surcharges – including the VAT and the Offshore Wind surcharge – come to €59.82/MWh. So the numbers aren’t wrong, but the way The Economist article paragraph is written it gives the impression that asking end consumers to pay the costs of transitioning to green power is a huge burden. It’s not.
These charges to households would be less if all energy users were to participate in paying for the renewable energy subsidies – but some companies do not, using the argument of anti-competitiveness. If they have to pay the surcharge, they reason, they will lose business to other countries. Quite effective blackmail, burdening the end consumer with higher power bills. In addition the electricity supply companies are trying to maintain their profit margins so may not be passing all the reductions in power costs to their consumers. One calculation suggests the total cost of Germany’s power will reduce by over €5.5 billion in 2014, and yet household electricity costs are expected to rise. The heightening effect of the Renewable Energy Act (EEG) surcharge on power prices is not going to last forever, however, as it’s promoting cheaper wholesale prices, and building in protection from the risks of sharply-rising prices for fossil fuels. Electricity supply companies are going to be able to sell progressively cheaper energy, and this differential will eventually reach the consumers, even if that needs to be legislatively enforced.
Next, on to the assertion that increasing renewable electricity is pushing flexible gas-fired power generation out of the frame :-
“[…] Renewables have “grid priority”, meaning the grid must take their electricity first. This is a legal requirement, to encourage renewable energy in Europe. But it is also logical: since the marginal cost of wind and solar power is zero, grids would take their power first anyway. […] But unlike the baseload providers already in place (nuclear and coal), solar and wind power are intermittent, surging with the weather. […] Now, when demand fluctuates, it may not be enough just to lower the output of gas-fired generators. Some plants may have to be switched off altogether and some coal-fired ones turned down. […] It is costly because scaling back coal-fired plants is hard. It makes electricity prices more volatile. And it is having a devastating effect on profits. […] Gérard Mestrallet, chief executive of GDF Suez, the world’s largest electricity producer, says 30GW of gas-fired capacity has been mothballed in Europe since the peak, including brand-new plants. The increase in coal-burning pushed German carbon emissions up in 2012-13, the opposite of what was supposed to happen.”
The real core of this issue is that baseload is history – or it should be – and it will be for Germany in the near future – as some coal-fired power plants will need to close or be transitioned under the Large Combustion Plants Directive, and it’s successor, the Industrial Emissions Directive (9,000 coal-fired installations will be affected by the IED); and the nuclear power plants are all scheduled to close. It is very unlikely that much in the way of new European nuclear power will come on-stream within the next 15 years. The price of coal fuel might stay reasonable, due to a number of factors, but the cost of burning it is likely to become higher, so the baseload paradigm should be well and truly broken.
That gas-fired power plants would be finding profit margins slim is something that has been anticipated widely, so it’s not exactly a shock, although it’s being used as a bargaining chip by utilities in ongoing negotations to launch an EU-wide “Capacity Market” for flexible power generation (principally gas, of course, since neither nuclear nor coal are flexible, and coal is practically on the edge of extinction in policy terms).
“[…] Gas plant closures : One of the biggest impacts of the disturbed gas and electricity markets is the rapid closure of numerous gas plants in the region. A recent study by IHS estimates that about 130,000 MW (130 GW) of gas plants across Europe (around 60% of the total installed gas fired generation in the Region) are currently not recovering their fixed costs and are at a risk of closure by 2016. These plants – essential to safeguarding security of supply during peak hours – are being replaced by volatile and unforecastable renewable energy installations that are heavily subsidised. […]”
And other sources are also pushing the doom and gloom :-
“[…] The pain being suffered by owners of European gas-fired power plant has escalated over the last 12 months. Weak power demand, subsidised renewable build and relatively high gas prices have conspired to crush gas fired generation margins […] It is difficult to imagine how market sentiment around gas-fired plant could get much worse. About a year ago we questioned the prospect of a European gas plant bust in the form of plant mothballing, closures and the distressed sale of assets. There is clear evidence of a bust gathering steam in 2013, with a number of utilities pursuing exactly these actions. […]”
Instead of complaining and game-playing, electricity utilities should accept the need to adapt. In line with EU Directives, they can expect to be able to make a good profit by diversifying into energy services – so they end up not simply selling energy, but selling energy demand control. They would move from being E. Co.’s to ESCOs. If they accept the challenge to diversify, they can keep their shareholders happy, and they will be able to survive the slim margins they can make from gas-fired electricity generation during periods of peak demand, or to load balance grids increasingly dependent on renewable electricity generation.
If the power utilities fail to adapt, they’re not too big to fail. I would suggest that European Governments renationalise them, as we’re going to have to fork out gazillions of euros to keep the Capacity Market running the way the utilities would like, so we might as well own the assets, too.