Twenty-one years ago, President George H. W. Bush admitted that he lacked "the vision thing," but when it comes to energy and transportation policy, nearly all of our leaders since him have been equally impaired.
Despite having lived through the oil shock of the early 1970s, only to see our oil imports since then rise steadily to two-thirds of our consumption today...
Despite increasingly urgent warnings from agencies such as the IEA, who warned one month ago that if oil demand recovers in 2010, global spare oil production capacity would fall to zero by 2013, sending oil prices skyrocketing...
Despite ample evidence and clear mathematics that the world could be down to 75% of today's energy budget in 20 years, down to less than 50% in 40 years, and down to less than 10% in 80 years...
The US still has no plan whatsoever to deal with the impending energy crisis, a crisis that threatens to drastically shrink our economy and change our way of life forever. Nobody is driving this bus; we're all passengers.
After nearly 40 years of evidence that finite energy supplies inexorably reach a point of diminishing returns, I can only ask: Why do we still not have a plan? Any plan?
The Pickens Plan
One plan that we do have on the table is the Pickens Plan, T. Boone Pickens' proposal for making a dent in foreign oil consumption. It imagines a corridor of large wind turbines stretching through the windy heartland from Texas to North Dakota, which would replace the 22% of our current electricity supply that is generated from natural gas. Then we would use the natural gas to run commercial and fleet vehicles, offsetting 38% of our demand for foreign oil.
Pickens critics were quick to sling mud on the plan, alleging that he is only trying to line his own pockets with taxpayer money, despite the obvious fact that at the age of 80, he's unlikely to see the fruition of his plan, let alone realize the fortune that it might bring to its investors. Pickens himself has said as much, indicating that his real motivation is to leave a legacy that will put the country on a more sustainable path. (Pickens is a strong proponent of peak oil and probably understands the oil business as well as anyone else alive.)
I have voiced a number of important questions about the Pickens Plan, including how and when the natural gas fired power plants will be decommissioned, the cost and the time-to-market for natural gas powered vehicles, how the project will be financed, and whether our domestic natural gas resources are up to the job. (See "Will Arctic Oil, Natural Gas, MIT, Paris and Pickens Save the Day?" for more on that.)
Although those questions remain unanswered, we at Energy and Capital and Green Chip Stocks have written a fair bit on the Pickens Plan, not because it's perfect, but because it's a plan. Something is better than nothing. At the very least, to the extent that the wind and natural gas parts of it work out, it would make a dent in our oil imports.
The Better Place Plan
I can only think of one other serious plan that excites me, which seems truly pragmatic and sensible: Better Place, a company with a plan to replace oil-burning cars with all-electric cars.
Better Place starts with a simple objective: How do you run an entire country without oil? (Which immediately makes me wonder: Why are none of our elected leaders asking themselves that question?)
At a Brookings Institute presentation last summer, CEO Shai Agassi ticked off the key elements that will allow his plan to succeed.
The first element is policy. Last year, Israel set a goal to get off oil entirely within a decade. By a simple mechanism that would gradually raise taxes on gasoline-based cars over the decade, consumers would be driven toward zero-oil cars. With Israel's leadership, later joined by Denmark, Australia, California, and Hawaii, there is a bona fide market for the vehicles.
The second element was a commitment by automakers Renault and Nissan to build all-electric cars in partnership with Better Place that would go 100 miles on a single charge. For the majority of users, such a range is more than adequate for a daily commute and errands, and the cars would be recharged from the grid at public parking spaces and at home. For longer distance travel, Better Place envisions that one would be able to drive up to a device like a car wash, and have the battery pack replaced in about the same amount of time that it takes to fill up with gasoline today.
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(There may be an even better option. New research from MIT published in the March 12 issue of the journal Nature found that by coating lithium iron phosphate particles with a thin film of lithium pyrophosphate, they could allow a lithium ion battery to be charged and discharged hundreds of times faster than normal, potentially eliminating the need for battery-swapping stations.)
A third element to the Better Place plan is to deploy a charging infrastructure. A half a million charging parking spots will be established initially, which can recharge the car automatically, billing via a built-in ID chip. The company has already obtained $200 in private seed capital to built the charging stations in Denmark and Israel.
The fourth element is the business model itself. Agassi compares it to that of the cell phone business: Instead of charging consumers for the car, it will essentially lend the cars to consumer for free when they sign up for a four-year plan. Consumers will pay only for miles driven and for access to charging stations, which will cost them no more than they already pay for gasoline Agassi claims, and will be sheltered from the risk of owning an expensive, cutting-edge battery pack.
A final benefit of the Better Place strategy is that enlarging the overall fleet of electric vehicles has a multiplier effect. By enabling vehicle-to-grid (V2G) technologies that can use plugged-in electric vehicles as temporary storage, V2G holds great promise as a way to help solve the storage problem of intermittent renewable energy sources like wind and solar, which further enables their growth. At the same time, it creates demand for renewable electric power.
Cars created under the Better Place program are slated for mass production by 2011. By comparison, Chevy will bring just 10,000 units of its new electric Volt to market in 2010, which will do only 40 miles on a charge, at a cost of $40,000. Remember, the Better Place cars will be essentially free to own.
Agassi estimates that under the Better Place plan, at a cost of $500 per car, or about $100 billion, the US could get its 200 million cars off oil entirely. At $45 a barrel and 20 million barrels per day of consumption, that's equivalent to what the US now spends on oil in only four months!
The German Plan
It's not a serious plan to get off oil, but I should mention a curious program Germany has begun which will give a $3,250 rebate to anyone who will scrap an automobile at least nine years old, provide proof that it has been destroyed, and buy a new or slightly used car. It's mainly a stimulus package for the automobile industry, but if it replaces a potential 1.2 million old cars (out of a fleet of over 40 million) with more efficient ones, it would certainly reduce their import needs.
Again: at least it's a plan.
Congress' Plan
Against the brilliant Better Place plan and the pragmatic Pickens Plan, Congress' plan, as embodied in the $800 billion stimulus package signed into law last month, looks downright shabby.
The $100 billion that Agassi would need to achieve his vision is about one-eighth the price of the stimulus package. Although the latter includes $150 billion in public works projects for transportation, energy and technology, it would only put one million electric vehicles on the road—that's 0.5% of our current fleet—in six years, and there is little else in it that would actually reduce our use of transportation fuel any time soon. It's a start, but it's really far too little, too late. In six years, we'll be about three years past the global oil peak and clawing for solutions.
For another comparison, $100 billion is a mere 4% of the $2.5 trillion that we're spending to shore up the fundamentally insolvent banking system. That includes $175 billion to extend the life of the terminally ill AIG, some of which is going to bail out its default-swap counterparties, including Goldman Sachs.
Even the portion of the stimulus package dedicated to rail—the most obvious, tried-and-true transportation technology we possess—is a mere $12 billion or so. The repair backlog for Amtrak's northeast corridor alone is $10 billion. Just $1.1 billion will be spent on improving Amtrak and intercity passenger rail, and another $1 billion is designated for new commuter and light rail.
At this point, the hopes I once had for a rail renaissance in the 2009 funding spree have all but faded.
(For his part, President George W. Bush proposed eliminating the budget for Amtrak entirely in 2006. Apparently he inherited his father's lack of "the vision thing.")
Meanwhile about $30 billion of the stimulus package is targeted for road-building, a painfully stupid investment on a dead end street. In the wake of the most destructive spike and crash of commodity prices in recent history, Congress still doesn't understand that oil prices will spike again, and that our days of importing 13 million barrels per day of oil are numbered.
Now, I'm not saying that the Better Place vision can be achieved exactly as advertised, because it's a bit too early to say. But at least it's a plan—a plan that absolutely can be implemented with today's technology, that's scalable, and that comes at a very attractive price.
America desperately needs serious energy leaders who will not flinch at telling the truth about the future of energy, and who are willing to figure out how in the world we're going to navigate it. Clearly, presidents and Congressmen are not those people. We can only hope that the visions of business leaders like Pickens and Agassi will succeed despite them.
Until next time,
Chris
P.S. Vehicles that run on natural gas and electricity, and their components, are nothing new to investors who subscribe to the Alternative Energy Speculator. We've been following these companies for years, and know exactly which ones are ripe for the picking. Sign up today and start profiting from the transportation revolution!
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I've refrained from pushing this point on you, because in the near term there's no way to do any investing (except possibly for a heavy hitter or two) to take adavantage. But the implications are boggling. REALLY.
Last fall (Nov. '08), a firm/society duo (Lawrenceville Plasma Physics/Focus Fusion) were finally funded adequately to engage in a two-year push to prove and refine their hydrogen-boron fusion reactor design. It would then require perhaps 3 years of engineering to produce a replicatable prototype, whose design would then be licensed to any and all who wish to make them.
It is ridiculously small and inexpensive; the core is about the size of your palm with fingers up, and the total housing is about the size of a home garage. $¼ million. Output, 5MW at ~¼¢/kwh. This is disruptive tech with bells on. No waste or radiation. One, just one, of the side benefits: the output helium gas, called a "fusion torch", could be played over waste or raw materials, reducing them to pure elements, easily recovered. Toxic dumps and landfills would become mines of valuable material, not problems.
Etc.
Here's a link to a discussion of some transition issues:
focusfusion.org/index.php/site/article/blocks_to_fusion/
(In any case, "fueling" electric cars would be a major benefit. The "long tailpipe" would vanish.)
The other issue Better Place ignores is all the road uses of diesel (trucks, equipment, rail road). Eventually these vehicles will have to converted an electric power source as well.
I my biggest disappoint is hearing GM will only have 10,000 Volts ready in 2010. This finacial crisis has taken the focus off of their more important objective.
Fortunately, there are new types of on-board power generators (so-called "Range Extenders")nearing full development, that will burn a wide range of non-fosill fuels as well as CNG at energy efficiency rates capable of giving a 5-passenger electric a highway fuel economy in excess of 80 mpg-ge (gasoline equivalent.)
As clearly shown by interviews of the public at the electric vehicle stands of the Detriot Auto, the public just won't buy a plug-in car even with all the sugar coating Shai Agassi intends to offer.
The other factor you have not addressed is the weight of the Lithium Ion batteries besides their initial cost.
The Mini-e reduces a four passenger car to a two passenger roadster with the back seat full of batteries.
Popular solar and wind energy are useful for small-quantity power generation in select remote locations. In future energy mixes they may contribute as much as 10% of all electricity generation. But at terawatt levels, immense areas of land or sea would be needed, requiring enormous maintenance operations, spoiling scenic land- or sea-scapes, and destroying local ecosystems - an absolute nightmare for naturalists. As scientifically documented in "The Nuclear Imperative - A Critical Look at the Approaching Energy Crisis" (ISBN 1-4020-4930-7), by the year 2050 when petroleum fuels are basically exhausted, only uranium and thorium can affordably sustain global energy needs for some 3000 years, using proven fuel reprocessing and advanced fast reactor technology. A serious in-depth analysis of our future energy shortage by accredited professional hands-on engineers (not by anti-nuclear armchair philosophers) reveals that nuclear power will be essential to rescue our children from a future economic catastrophe. For the USA, 500 additional nuclear reactors are required, built on 9000 acres (@ $1.5 trillion), compared to 1,500,000 windmills with storage batteries on 6,000,000 windy acres (@ $4.5 trillion). Ten times these numbers are needed for the entire world. (Costs in 2004 dollars; for later years, all costs must be multiplied by the dollar inflation factor).
Because it takes a decade to design, license, and build a reactor, action must be taken immediately to prevent a worldwide depression by 2030 when oil begins to run out. Contrary to false propaganda by anti-nuclear groups, the cost of electricity at terawatt levels is three times more expensive for wind or solar than for nuclear. Solar and wind power generation requires expensive energy storage systems (batteries, etc) when there is no sunshine or wind. Also many miles of access roads for maintenance and repair are needed to keep blades or solar panels clean from bird droppings, dead birds, sand erosion, and storm damage, and to periodically replace electrodes on storage batteries. Aficionados of renewables usually quote peak windmill or solar station capacities, neglecting to multiply their numbers by a factor of four to account for a year-averaged availability of only 25% of peak wind or sunshine. Reactors run continuously all year at 90% capacity. Should a country limit itself to solar and wind energy, it is guaranteed to become impoverished and dependent on portable synfuels imported from other countries (future OPECs ->OSECs), who expanded their nuclear power generation before oil fields were depleted.
Energy consumption for transportation is between 35% and 40% of all energy usage in the world. On the assumption we stop drilling when it costs a gallon of oil to retrieve a gallon, one finds we will run out by 2040/2050, even with exploitation of all the tar-sand fields in the world. There is only so much volume in the 10 km deep surface shell that circumscribes our earth where decayed plants and animals (mixed with lots of sand and river run-off mud) were compressed into oil over a period of 300 million years. We are burning all that up in two centuries. With an increasing world population and with Asia and Africa wanting more of the oil, optimistic estimates show it will all be gone by 2050. While in the next fifteen years, oil and gas may remain major sources of portable chemical energy for aircraft and transport vehicles, beyond 2030 the world can only survive if synthetic fuels are produced on an enormous scale.
Of course nuclear energy extracted from uranium or thorium can not be used directly as a portable fuel to move long-haul transport vehicles (airplanes, trucks, etc). But its heat or turbine-generated electricity can be converted into portable bio-fuels and other synfuels (synthetic fuels) with reasonable efficiency. In bio-fuel production, nuclear electricity can empower farms and the extraction/distillation operations to obtain alcohols or bio-diesels from vegetation. Without input of (nuclear) electricity, bio-fuel farming would be unsustainable since energy needed for cultivation, harvesting, and extraction exceeds the energy stored in combustible plant chemicals. Nuclear-assisted farmed bio-fuels have other limitations however. They can at most replace about 20% of today's petroleum fuels because biofuel farming is limited by available arable land; man also needs to grow food to survive. The other 80% of oil-replacement must come from hydrogen and ammonia synfuels which can empower combustion engines as well as (future) fuel-cells. Hydrogen can be affordably produced by electrolysis (or chemical dissociation) of water into hydrogen and oxygen. But hydrogen has the fundamental problem of being very difficult to compact into a reasonably-sized fuel tank. So ammonia (called "second" hydrogen by some) is now favored, because it can be stored at very moderate pressure in normal-size fuel tanks used today for a comparable driving range. Ammonia is produced by compression of hydrogen with nitrogen (from the air) via the well-developed Haber-Bosch process. This is a less expensive way of storing hydrogen than liquifying it. Ammonia can fuel combustion engines (already commercially available) and solid-oxide fuel-cells (future), and is less dangerous than gasoline in vehicle collisions. Engine exhausts are water vapor and nitrogen (air) again from which ammonia was synthesized with nuclear "mother" energy.
Modern nuclear power plants are absolutely safe. Because of the negative "coefficient of reactivity", reactor fuel elements only melt (an explosion is not possible) during a maximum credible accident in which the emergency core cooling system totally fails. This was "experimentally" proven in the Three-Mile-Island (TMI) accident. A negative coefficient of reactivity means that neutron multiplication is automatically stopped when the temperature in the reactor gets too high. The Russian Chernobyl reactor, which took the lives of 57 people, had a positive coefficient of reactivity because it used graphite as moderator. Such a design for nuclear power plants is now prohibited in all countries. Furthermore the Chernobyl reactor had no containment vessel, as is the law in all Western countries and now worldwide. The assertion that perhaps thousands of people could still die from radioactive fallout around Chernobyl is nonsense. Of the 60,000 inhabitants of Pripyat who had been exposed to fallout, about 9,000 will die at an advanced age of cancer because worldwide 15% of all people ultimately die from cancer. To ascribe those 9,000 deaths to Chernobyl's fallout is equally ridiculous as claiming that such a death toll is due to drinking coffee because 15% of all people drink coffee. Security precautions and containment measures for today's nuclear power plants do reckon with the possibility that terrorists might crash a large airplane or bomb on a reactor. Even if aerial obstructions (e.g. balloons) or underground construction can not prevent penetration of the large dome-shaped containment vessel, the reactor core vessel is designed to remain mostly intact. It can further be inundated with neutron-absorbing borated water which instantly suppresses all uranium fission in case of an accident.
A worn-out anti-nuclear lament is "what do we do with all the long-lived radioactive nuclear waste". The volume of waste amounts to one aspirin tablet per year per person using nuclear electricity, compared to tons of air pollutants and globe-warming gaseous CO2 emitted by coal or fossil-fuel combustion. Nuclear waste can be easily stored and safely transported, as the US nuclear navy has done for half a century. Contrary to allegations that uranium and plutonium in spent fuel elements pose a problem because of million-year half-lives, they are separated from fission products by reprocessing and burnt as fuel in future fast-breeder reactors. They will not be dumped. This reduces 50 tons of spent fuel per reactor per year to 0.5 tons of fission products (with shorter decay lives), taking centuries instead of decades to fill the Yucca Mountain repository in Nevada. The notion that long radioactive lifetimes are undesirable is also erroneous. The longer the decay lifetime, the less the radiation emitted per gram of radio-isotope. Most elements that make up our bodies (hydrogen, carbon, oxygen, nitrogen, etc) have infinitely long decay lifetimes. All humans are "hot" because everyone has radioactive potassium-40 (K-40; 0.012% abundance) in his body, which continuously emits beta particles with a half-life of one billion years! Man successfully evolved in this environment, and there are even indications that low levels of radiation benefit health (called hormesis). The hue and cry about possible terrorism and "dirty bombs" is also highly exaggerated. By reasoning of anti-nuclear activists, we should stop flying 707 jets because they can be used as weapons to kill thousands of people.
Energy is man's third most important need after water and food. Those who hinder expansion of nuclear power will be viewed as irresponsible neo-luddites by future generations and will be held accountable. Any further delay of a committed worldwide nuclear energy program will cause certain impoverishment and deaths of many people by 2050. Without large-scale synfuel production by greatly expanded nuclear power, desert cities like Las Vegas and Phoenix will become ghost-towns. Originally the US had planned to have 200 to 300 reactors (@ 1 GWe each) by the year 2000, but instead there are only 104 today. After the Three-Mile-Island (TMI) reactor meltdown in 1979 in the US (with 0 casualties) and Russia's Chernobyl accident in 1986 (with 57 fatalities), public hysteria fanned by fear-mongering antinuclear activists caused cancellations and moratoria on construction of new nuclear plants. While the USA was once the leader, most US businesses with reactor manufacturing know-how closed. Instead France, Russia, Japan, South-Korea, India, and China are now in charge. Zealous anti-nuclear lobbyists and a mal-informed government have created the pending energy crisis. We are entering a war-like energy-deprivation period as serious as WW-II or Al-Qaida. Strong Manhattan-project-like leadership is now needed to reverse the short-sightedness and follies of prior administrations.
Jeff W. Eerkens, PhD
Adjunct Research Professor,
Nuclear Science and Engineering Institute
University of Missouri, Columbia
I have a plan of my own that is more transformational than all plans I read about. I send my ideas to various politicians (Representatives, Senators, Candidates) but nobody seems to be interested. Surely the plan, when realised, would cost billions. That would start a new way of living and give quality of life that would be really humane. Still, investors could make money. It would be just not as wasteful.
Just in case you would want to know more I gladly present my ideas.
Sincerely,
JM
1. There is NO scarcity of potential energy resources in the U.S. We are one of the richest energy countries on the planet all told.
2. Our shortages are contrived by our political class, which has unilaterally decided to BOYCOTT various types of our potential domestic energy resouces.
3. We should be doing "ALL OF THE ABOVE," so to speak, when it comes to developing our prospective energy resources. When we finally realize this, it will be far more expensive to do so than it would be today.
4. The Pickens Plan is sheer genius, but there is ample room to proceed in other promising venues as well.
5. NGV's will rule the roads one day, probably in our lifetimes.
EVERY ONE of our existing 250 million vehicles can operate on this plentiful resource as well.
6. GAS (ie. methane) HYDRATES contain enough energy to run our transportation economy until 2100 or longer. The U.S. has tremendous such resources, and they will begin production within a decade.
"A third element to the Better Place plan is to deploy a charging infrastructure. A half a million charging parking spots will be established initially, which can recharge the car automatically, billing via a built-in ID chip. The company has already obtained $200 in private seed capital to built the charging stations in Denmark and Israel."