Tag Archives: oil

Opportunities and challenges for a sustainable energy future

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I return this week with a summary of an article written by Secretary of Energy Steven Chu and former director of ARPA-E Arun Majumdar, both from the current administration’s Department of Energy.  This article was published as a Perspective in Nature earlier this month, and provides an overview of the state-of-the-nation in terms of energy technologies (opportunities and challenges).  A couple points that I found particularly interesting are highlighted here:

  • The IEA projects that the world’s energy demand will increase to 17 billion tonne oil equivalents under “new policies” and 18 billion tonne oil equivalents under “current policies” scenarios (from 12 billion tonne oil equivalents in 2009).  While 1 billion tonne of oil equivalents is a substantial amount, the difference between new policies and current policies strikes me as a relatively small fraction of total demand.  So if demand is projected to increase so drastically, efforts towards sustainable generating sources are hugely important. 
  • “In 2011, about 2.690 billion tonnes of oil were consumed; of this, 1.895 billion tonnes of crude oil and 0.791 billion tonnes of refined products crossed national borders.” (Kennedy School of Government).  This speaks to my earlier point that oil is a global commodity and that increasing domestic oil production is a matter of market participation, not of national security.
  • The potential for reducing the weight of vehicles by an additional 20-40% in the next 10-20 years without sacrificing safety is possible.  For every 10% weight reduction of a vehicle, an improvement in fuel consumption of 6-8% is expected (NREL).  This strikes me as a huge opportunity!  A car that achieves 25 miles per gallon could get about 33 miles per gallon simply by weight reduction?  That’s 116 gallons of gasoline saved per year (12,000 miles driven per year), or nearly 2000 gallons of gasoline saved over a car’s 15-year lifetime.  At $3.893/gallon (the average price of gas for Massachusetts this week), that’s a savings of $450 per year, or $6,773 over the car’s life.
  • Creating a nationwide infrastructure for CNG, comparable to the 160,000 gasoline stations in the United States, would be prohibitively expensive (NACS).  I think it is easy to forget just how ingrained in society gasoline is.  Talking to some colleagues last week, I was surprised at everyone’s quick judgment of electric car range, and how just a battery could not possible suffice for their needs.  In America, we live in a society where a vehicle is often a necessity and not a luxury, but for many thousands of people in the world, a vehicle even with a limited range could improve their ability to work, travel, and educate their families by a huge amount.  Is there a place in developing countries for lower-range vehicles?  Are the economics of batteries and the infrastructure of electricity in place for this to happen?
  • “The cost of retrofitting existing pulverized coal plants to achieve 90% CO2 capture with the technology available is estimated to require capital expenditures that approach those of the original plant (NAS).  In addition, 20-40% of the plant’s energy would be diverted.”  This, for me, succinctly puts CCS in perspective, at least for the near term.  Without a price on carbon, generators do not have incentive to scale CCS technologies.  If they did, the levelized cost of electricity for these generation sources would increase by more than a factor of two, seriously changing the game for renewable producers.
  • In 2009, nuclear energy accounted for about 14% of the world’s electricity generation.  This fraction dropped to 12% due to policies from Germany and Japan by 2011 (BP, NAS, IEA).  The events at Fukushima have played a significant role in the future of nuclear power, but it remains to be seen the long term political impact of the disaster.  Governments of countries such as South Africa continue to propose nuclear power plants and are succeeding in implementing this relatively inexpensive form of clean energy.  Safety concerns are valid, but completely writing off the potential of nuclear power is something that I believe governments should not be permitted to do.

Finally, a word of wisdom from Secretary Chu and Dr. Majumdar: “The Stone Age did not end because we ran out of stones; we transitioned to better solutions.  The same opportunity lies before us with energy efficiency and clean energy.”

Of course, the additional commentary in the above bullets is mine and I encourage you to check out the article for more great analysis. 

Energy Independent by 2020?

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If you’re anything like me, you may find that the claims made in an election year start to get a bit irrational by this point.  Still, they give us an opportunity to do a self-check on what is feasible and what is impractical.  Romney’s energy plan, released yesterday, aims to make the United States energy independent by 2020.  He proposes to do this with the following:

  • Streamline the regulatory procedures for coal-fired power plants to facilitate approval and recommissioning.
  • Explore and develop US oil and gas reserves to bring lower energy prices, greater reliability of supply, and jobs.
  • Reform nuclear regulation to issue more permits, begin construction on new plants, and add to existing infrastructure.
  • Overhaul the Clean Air Act and Clean Water Act such that domestic energy companies are less burdened.
  • Invest in Canadian and Mexican sources of oil and gas.
  • Redirect clean energy funding towards basic energy research.

To say nothing of the fact that Canada and Mexico are not technically part of the United States, and to spare you some political rhetoric, I give you the following facts.

First, the United States imported 11.4 million barrels of oil per day in 2011 (EIA 2012).  Despite impressive advancements in technology and cost reductions for oil and gas extraction, can the Shale Gas Revolution really reverse the import trend shown below in as few as eight years?

US Imports of Crude Oil and Petroleum Products (thousand barrels). Source: EIA 2012

For more charts like these, visit the US Energy Information Administration’s website.

And second, there is an element of economics that is often forgotten when discussing oil prices, national security, and energy imports:  the price of oil is set in global markets.  Although increasing domestic production increases supply (and similarly, reducing dependence of oil by using domestically produced natural gas reduces demand), thereby having some impact on prices, the United States is still subject to global price fluctuations that are affected by both friendly and unfriendly countries restricting production or flooding the market.  At the end of the day, being one hundred percent energy independent can help, but is not guaranteed to eliminate the risk of price volatility because the United States is only producing a fraction of the world’s oil supply.

Oil production by region (MT). Source: 2012 BP Statistical Review

For more charts like this one, see the BP Statistical Review.

The United States accounted for just 8.8% of the world’s oil production in 2011.  The total North American oil production was about twice that, at 16.8%.  By contrast, the Middle East accounted for the greatest percentage of global oil production at 32.6%.  Furthermore, although the United States increased its oil production by 3% from 2010 to 2011, the countries in the Middle East increased oil production by 9.3% (BP Statistical Review 2012).  Remember this reality the next time you hear that domestic energy is a silver bullet solution to high energy prices, price volatility, and national security.

Next week, I will do a reality-check on the Obama energy proposal, both present and future.