Resource Wars

A lot of things happened in 2006, but I bet you don’t recall reading about peak oil in the headlines. Peak oil refers to when the rate of petroleum extraction is reached, at which time production enters decline mode. According to the International Energy Agency (IEA) crude oil production peaked at 70 million barrels per day in 2006 and will never regain that height again.

What does this mean? It means, “The age of cheap oil is over,” said Fatih Birol, IEA chief economist. With nations making little to no effort to slow the demand for oil, prices will continue to rise.

According to the IEA, to keep production stable, it will mean much more production from oil fields (new and undiscovered) and monstrous investments, about $8 trillion over the next 25 years. The IEA also reports that production of tar sands will need to triple in that same time frame. However, tar sand production (barrel for barrel) is more expensive and worse for the environment, releasing between 5-15% more carbon dioxide compared to conventional oil production.

As Guy Caruso from the Center for Strategic and International Studies says, “It’s partly geological resource limitations,”–production has fallen faster than expected. He goes on to point out that there are other known areas of oil–Venezuela, Iraq, Kazakhstan, and Nigeria. He also points out that because of political turmoil, production in these countries is below its potential.

If we choose to extract oil from any of those four countries, we’ll be in the same (or worse) position we’re in right now. We will still be importing oil from politically volatile places. We will still be vulnerable to price spikes and shortages (spikes being something economies have the hardest time dealing with, says Caruso). We will still be in a position where we want to protect and control the flow of supplies which will require some form of military presence. We will still be shelling out trillions of dollars into a quickly dwindling resource.

Sir David King, director of Oxford’s Smith School of Enterprise and the Environment said that, “historians of the future will look back and see the Iraq war as the first resource war of the 21st century”, and I’m inclined to agree. Since the Carter Doctrine, the U.S. has been dependent on areas of the world subject to conflicts, violence, and overall disturbances for oil. The U.S. has used military force to assure the unimpeded flow of oil to Americans who rely on it for almost every aspect of life.  Oil markets are becoming increasingly volatile, to protect U.S. interests, a strong military hand will be (and has been) present in those oil rich countries as a disruption in oil supply would hit every aspect of the U.S. economy. This was true in the Gulf War, in the Iraq War, and will be true in any country we depend on for natural resources.

If conventional oil production has indeed peaked, we are at a crossroads of how to proceed as far as our energy production and consumption. Will we invest $8 trillion dollars in the oil industry? Will we go into yet another nation wrought with political discourse wielding our military might to secure what we want? Will we spend billions of dollars on said military might?

Perhaps, it’s high time to make a change and invest that $8 trillion into something other than oil. Maybe, it’s time we focus on finding a source of energy that can be produced domestically…something renewable…something sustainable…something that doesn’t spew carbon dioxide and countless other toxins into the environment…

Have you heard of anything like that?

$2 Gas? I’m Not So Sure About That, Newt

I don’t know about where you live, but when I filled up this morning I paid over $4 dollars a gallon for gas. And not just a couple cents over mind you.

I’ve recently read some interesting articles revolving around gas prices. Specifically, about high gas prices and what a president can actually do about lowering them, which turns out to be not a whole lot.

With that being said, it may be a little confusing to some why Newt Gingrich is on his soap box promising gas prices to be $2.50 a gallon (or lower) if he’s elected president. Aside from the fact that his name is Newt and he looks like a goblin, I don’t know if that’s a statement I’m readily willing to believe.

When Obama took office, we were scoring gas at about $1.81 a gallon. We were also in the clutches of the worst global recession since the Great Depression. The recession depressed demand; less people were driving and costs went down. As the economy started chugging along once more, the price of gas rose. If Newt is able to deliver on his $2.50/gallon prices, there’s a good chance that means the economy has gone down the poop-shoot.

Under Obama (and his “all of the above” energy strategy), domestic drilling is booming and we’re importing less oil than we have in years, but as oil functions on a global market, domestic drilling doesn’t necessarily equal lower gas prices. For presidential candidates like Newt who are singing to the chorus of “drill baby, drill” –that won’t lower gas prices.

For those who might already be skipping towards Blame Road and Keystone Pipeline Lane, Obama’s blockage of the oil pipeline is not causing the high price of gas. In fact, Keystone would have little immediate effect on gas prices, and on a long term would probably only lower prices a few cents–maybe.

Gas prices are higher is because the economy is doing better, driving up the demand for gas. And with tensions and uncertainties in the Middle East, in addition to countries like China who are anticipated to use 5% more gas this year, prices will continue to rise.

It’s going to take more than drilling to solve our energy problems. An overall energy efficient economy will help make us more resilient to high costs and price spikes. Hopefully the American people realize that when voting time comes.

And How Should We Proceed? The Future of Solar in California

California has been pushing its solar industry. It’s not a secret. In pushing the solar industry came a flurry of jobs. Based on the “Solar Industry & Occupations: Distributed and Utility Scale Generation” report, California is currently home to 3,500 solar firms employing 25,000 people. Based on these trends, the state could add as many as 18,000 jobs in the solar industry by 2015.

This increase in jobs is of course, welcomed, however at present there may not be enough qualified people to fill them. Although California’s community colleges have done a good job of not only training, but fulfilling the market demand for solar installers, the future of solar in California will require different skill sets, many of which are not being taught in college programs.

The solar curriculum in California’s community colleges needs to be expanded to cover the basics of energy production, power plant management, and solar technologies the report recommends. This will be especially prudent in certain areas of California where the  solar industry is becoming more popular, but the market for installers is saturated. Class options need to be diversified in order to address other skills needed in the solar industry. By incorporating skill sets relevant to other aspects of solar aside from installation (manufacturing and distribution for instance), colleges might be able to better prepare graduates for their impending job searches.

There are 15,000 students enrolled in 300 different green job training programs. There will come a point in the near future where policy makers will need to catch up to educational institutes that are driving green jobs. If California’s community colleges succeed in diversifying classes in green jobs, will California’s green economy evolved enough for these graduates to find work in their fields? California won’t be able to realize the full economic potential of green jobs if this doesn’t equalize. If we train people in green jobs but there is no market for them it will all be for naught.

A Climate Change Deal That Leaves Out CO2??

Leave it to the U.S. to come up with a climate change agreement that doesn’t aim to reduce CO2 emissions which the majority of climate pollution comes from.

U.S. Secretary of State Hillary Clinton introduced this multinational partnership between the U.S. and several other countries aiming to reduce emissions from “short-lived climate pollutants”.

Short-lived climate pollutants refer to pollutants that don’t remain in the atmosphere for as long as carbon dioxide (which likes to hang around up there for about 100 years) and in this case include methane, black carbon (soot), and hydroflurocarbons (used in refrigerants). Though pollutants like methane remain in the atmosphere for less time (12 years), they have about 25 times more warming potential than carbon dioxide. Hydroflurocarbons (HFCs) have a much shorter life in the atmosphere, but are hundreds of times more potent than carbon dioxide, making these important pollutants to decrease the emissions of.

According to recently published research in Science, reducing emissions from short-lived pollution has the potential to decrease warming .5 degrees Celsius by 2050. This may sound like an insignificant decimal, but considering that the goal is to stabilize temperatures to 2 degrees Celsius over pre-industrial levels.

Though this agreement is a step in the right direction, it has its flaws. Methane isn’t the talk of the town. It doesn’t pose any immediate benefits to capture it or reduce emissions. Unfortunately, one major cause of methane emissions comes from fugitive methane escaping from natural gas wells. I can guarantee that natural gas companies will balk until the cows come home about initiatives that keep fugitive methane from escaping as it will increase their costs.

It is also important to realize that by concentrating on these short lived pollutants, we aren’t addressing one of the main culprits of climate change: carbon dioxide.

The U.S. is doing very little to reduce carbon dioxide emissions. It’s smart to implement practices that will decrease greenhouse gases across the board, but our primary responsibility should be cutting carbon dioxide. It seems like everyone except the U.S. is doing everything they can to decrease their carbon emissions…well not Canada…or China…okay maybe not everyone…but Scotland’s government is throwing money at any and every renewable energy option to try to go 100% renewable. Europe is at least looking to decarbonize the economy. All the while the U.S. is still hanging onto things like the Keystone XL pipeline.

This new climate change partnership will be a good step to decrease emissions, but is drawing some concerns that it’s not going to be enough.

Energy Efficiency, the Rebound Effect, and Climate Policy

You would think that if you needed less energy, you would use less energy. Oddly enough this isn’t the case. In a recent series of articles in Grist, author David delves into the idea of the rebound effect, how it effects energy efficiency, and the implications of these in terms of Climate policy.

It takes energy to make energy for the services we use. Energy efficiency refers to the use of technological innovations that give us the same level of energy service using less primary energy.

Energy efficiency is also less expensive–you can pocket the money saved from getting a more fuel efficient car, investing in solar–what have you. But what do you do with the money you save? If you buy an energy efficient car you may respond to the decreased costs by increasing your demand for that particular service; meaning, you might actually end up buying more  gas because you’re driving more. This is called the direct rebound effect.

On the other hand, you might choose to indulge yourself with the purchase of a new phone or a tablet or something you’ve always wanted but haven’t been able to get. But it takes energy to manufacture the item of your deepest desire, so though you might be driving less, your total energy use will increase–this is called indirect rebound effect.

If the economy as a whole is more energy efficient, it will decrease the cost of energy, which means faster growth. But growth is almost always accompanied by more energy use which overshadows the energy savings made by efficiency.

But we’re banking on energy efficiency.  Models to decrease climate pollution and greenhouse gas emissions 50% (and in some cases more) is due to energy efficiency–but these models are not factoring in the rebound effect. Policy projections could be anticipating energy efficiency savings at 30% by 2030, but including the rebound effect that number might be as low as 15% efficiency.

Unfortunately, the rebound effect is difficult to quantify and based on a variety of factors (the type of energy, socioeconomic statuses, time, location…other economist metrics I don’t understand), which makes it hard to predict how much the rebound effect will actually be. But it’s important to acknowledge the fact we’re overestimating the amount of efficiency that can be achieved.

Does the rebound effect in any way diminish the validity of energy efficiency? Absolutely not. Energy efficiency stimulates productivity, creates jobs, and decrease pollutants. It just means it is more important than ever to take into account the rebound effect–even if it is just anticipating it and having a backup plan, or “wedge“, that will close the gap.

Even if we found a carbon neutral way to generate energy, it would still take years to implement on a world wide scale. We need to decrease energy consumption to stay within our carbon budget–whether you think that’s 450 ppm or 350 ppm–and we need to do it quickly. Grist reports 6 tactics that need to be implemented to stay in the climate safety zone:

1. Aggressive innovation and deployment of clean energy sources, storage, and smart grids.
2. Aggressive innovation and deployment of energy efficient solutions.
3. Aggressive pricing of climate emissions–increasing the price of dirty energy (coal) to keep energy demand from spiking.
4. Behavioral and economic alterations, especially in developing countries, to increase conservation and stave off materialistic driven growth.
5. Behavioral and economic alterations in developing countries to skip the carbon intensive technologies that are usually found in the beginning stages of development.
6. (My personal favorite) “Any f*ckingthing else we can think of.”

In terms of climate policy, the rebound effect is definitely not good news. It means we’re overestimating the amount of efficiency we can achieve compared to what we’re actually going to get. In reality though, it doesn’t discount the importance of energy efficiency and how large a role it will have in decreasing greenhouse gas emissions and shaping climate policy. It does however, show how daunting our task is–even more so than perhaps previously thought–and that we need to stop the masochistic behavior of denying and delaying change.