This group brings together the best thinkers on energy and climate. Join us for smart, insightful posts and conversations about where the energy industry is and where it is going.

Post

Are Fossil Fuel Companies Pouring Money Down the Drain?

crude oilDespite an international agreement to reduce emissions from carbon-intensive sources, oil and coal companies continue to pour hundreds of billions of dollars a year into finding new fossil fuel deposits containing enough carbon to more than double global climate pollution emissions.  

This is the conclusion of a new report finding that $674 billion was spent globally last year alone on the discovery of new fossil fuel deposits that will likely never be used. 

The report, Unburnable Carbon 2013: Wasted Capital and Stranded Assets, authored by researchers at the Carbon Tracker Initiative, Grantham Foundation and the London School of Economics and Politics, describes the idea of a “carbon bubble” that is the result of global fossil fuel reserves that already far exceed the maximum amount we can afford to burn and still avoid the most disastrous effects of climate change.

Despite this growing carbon bubble, and the inevitable movement towards a greatly reduced reliance on carbon intensive fuels in the future, energy companies continue to pour billions of dollars into discovering new fossil fuel reserves. 

If this all plays out as researchers predict, energy companies will end up with a potential $6 trillion in stranded assets that will never be exploited – oil and coal reserves that the world will not need.

It’s kind of like buying five cars, when you only need one, so four of the cars just sit and rust in a field. But for oil companies these stranded assets aren’t a few old rusty Fords, but instead vast tracks of land of significantly diminished value in a world that no longer requires their product to operate.

According to the report:

“The analysis shows that between 60-80% of coal, oil and gas reserves of publicly listed companies could be classified ‘unburnable’ if the world is to achieve emissions reductions that mean an 80% probability of not exceeding global warming of 2°C.”

This conclusion is based on the most optimistic reduction targets resulting in only 2 degrees Celsius of warming, but even at 3 degrees of warming (a totally disastrous scenario), the report concludes that there would still be “significant restraints on our use of fossil fuel reserves between now and 2050. Yet companies in the oil, gas and coal sectors are seeking to develop further resources which could double the level of potential CO2 emissions on the world’s stock exchanges to 1,541 billion tonnes.”

These companies are investing billions and billions without taking into account even these most conservative reduction projections.

Professor Lord Nicholas Stern of Brentford, Chair of the Grantham Research Institute on Climate Change and the Environment, said:

“Smart investors can already see that most fossil fuel reserves are essentially unburnable because of the need to reduce emissions in line with the global agreement by governments to avoid global warming of more than 2°C. They can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision. But I hope this report will mean that regulators also take note, because much of the embedded risk from these potentially toxic carbon assets is not openly recognized through current reporting requirements.”

Kevin Grandia's picture

Thank Kevin for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Discussions

Schalk Cloete's picture
Schalk Cloete on Apr 27, 2013 11:00 pm GMT

Yes, it is important to consider the risks of burning fossil fuels, but it is at least just as important to also consider the risks of not burning fossil fuels. Our lives depend totally on energy – 87% of which comes from fossil fuels at present. So, say we follow Bill McKibben’s advice and leave 80% of all known fossil fuel reserves in the ground. Where will we get our energy from? What will keep our society stable? Renewables? Not likely…

Taking into account the low capacity factors and intermittency issues of wind and solar, we will probably need in the order of 100 TW of installed capacity to meet current global demands. If the average lifetime of wind and solar plants is 30 years, we need to install about 3.3 TW per year. The world installed 45 GW of wind and 32 GW of solar in 2012 – about 2.3% of the necessary yearly rate. Projections for 2013 are very similar. 

Meanwhile, China alone adds roughly 100 GW of coal capacity per year. Even when neglecting the intermittency issues, differing capacity factors equate 100 GW of coal to about 400 GW of installed wind and solar – 5 times more than was installed in 2012 (globally). 

Chinese, Indians and all other peoples of developing nations want cars, fridges, TV’s, imported food and all other energy intensive things we in the west take for granted. The world cannot deliver these goods in any way other than fossil fuels. That is why fossil fuels will continue growing whether we like it or not. 

This is also the reason I spend my days developing CCS technology. Trust me, I’d much rather be researching wind and solar power, but we have to face reality…

John Miller's picture
John Miller on Apr 27, 2013 11:57 pm GMT

Oil & Gas Companies invest in added reserves as their existing reserves deplete (from market consumption).  These companies are in the busy of investing in commodities that generate revenues and profits for their owners or their stockholders.  Their investments would not be worth the effort if the markets did not demand increasing levels of fossil fuels that have supported the development and higher living standards found in most Developed countries.  The desire to significantly improve average populous living standards by many Developing countries is the primary source of increasing demand for fossil fuels; as Mr. Cloete states (below).

If your intent is to protect stockholders from losing their equity stakes, you must first convince the markets to reduce their demand for fossil fuels.  Only then will Oil & Gas Companies be motivated to pursue alternative business opportunities outside the hydrocarbon based markets.

Max Kennedy's picture
Max Kennedy on Apr 28, 2013 1:56 am GMT

Yes, investing in your own demise through the destruction of your life support system is a great strategy.  Sort of like buying the gun and giving it to the assassin that has been hired to kill you.  Just proves how idiotic fossil fuel companies and their proponents are.

John Miller's picture
John Miller on Apr 28, 2013 3:14 am GMT

Are you referring to ignorance of ideologies or ignorance of the reality that 89% of all primary energy sources consumed in the world today come from fossil fuels?  Changing the current energy mix more towards alternatives to fossil fuels may take more than trying to persuade some investors to exit fossil fuels, or attempting to insult an industry that the vast majority of the world’s population relies on and overwhelmingly demands the commodities they produce.  Or, should the debate transition towards the ‘addiction’ argument, in which people should not need fossil fuels for warmth, transportation, cooling in hot climates, food production, etc.

Like it or not developing renewables is very expensive and will take many decades to even approach the 50% mix level.  During the interim the only reasonably and economically available energy alternative (unfortunately) comes from fossil fuels.  This statement, of course, assumes that substantial expanded nuclear does not enter the energy mix picture too quickly.

Mark Tracy's picture
Mark Tracy on Apr 28, 2013 3:41 am GMT

Anyone can point to their own group of experts, but I wouldn’t bet against wind and especially solar. This from a recent article from the American Council on Renewable Energy:

“Since solar has increasingly become more cost-effective, Scientific American recently noted âEURoethereâEUR(TM)s frequent talk of a âEUR~MooreâEUR(TM)s LawâEUR(TM) in solar energy.âEUR[15] MooreâEUR(TM)s Law is the famous trend that the number of transistors that can be placed on a microchip will double every 18 months.[16]  This allows a chip to double its computing power. For this reason, computing costs have plummeted astronomically since the 1950âEUR(TM)s, rendering products like iPhones and Kindle Fires commercially viable. 

“Likewise, the cost per watt of solar PV cells has declined by 7% each year, averaged over the past 30 years.[17] Greater solar cell efficiency and an increase in learning how to manufacture solar modules are the two main drivers in reducing costs. Thus, if current trends continue, solar is expected to attain grid parity in the year 2020.[18] By that time, solar will be cheaper than coal nationwide. More impressively, if this solar MooreâEUR(TM)s Law holds until 2030, then solar will actually be less than half the price of coal for electricity.[19] For these reasons, the Institute of Electrical and Electronics Engineers declares that solar will soon become âEURoethe most economical form of generating electricity.âEUR[20]”

Mark Tracy's picture
Mark Tracy on Apr 28, 2013 3:47 am GMT

Wind is already competitive with many fossil fuels while, by 2020, solar is projected to be competitive with coal. No wonder these two energy sources are expanding exponentially.

Paul O's picture
Paul O on Apr 28, 2013 5:19 am GMT

Mark if solar is cost effective..That’s Great.

But simply put, in spite of the of renewables advocates, and enthusiasts, and their publications, renewables are not yet capable of taking the place of fossil fuels.

The whole world is  awaiting the day when we can replace our energy needs with energy from renewables. When tha day arrives, we won’t need anyone to convince us on the cost effectiveness of anything, because it willl be all around us.

 

Paul O's picture
Paul O on Apr 28, 2013 5:10 am GMT

Max,

1) Your comment sounds unfortunately Hyped. We are not destroying our support system. We are modifying the climate, not destroying it. The Earth has been far warmer than it is currently, and it was not destroyed.

2) I don’t know of any proponent of fossil fuels. Everyone realizes and understands the dissadvantages of relying on fossil fuels.

Here are  questions for you: 

a) Does your dislike of Fissil fuels extend to Natural Gas, without which many wind and solar operations will be unuable to be integrated to the grid?

b) Would your outlook and belief system allow for Natural Gas to displace Coal?

Mark Tracy's picture
Mark Tracy on Apr 28, 2013 4:08 pm GMT

You seem to be miscontruing our path to the future. Renewables aren’t likely to suddenly replace fossil fuels. Rather there will be a transition over time to more and more renewables. Indeed, this transition is already happening. More wind turbines and solar generating facilites are being installed all the time (at progressively lower costs), which has already produced a dramatic decline in the number of coal fired power plants under construction in this country as well as Europe.

Schalk Cloete's picture
Schalk Cloete on Apr 28, 2013 1:58 pm GMT

I’m not betting against wind and solar as an important energy source for the long-term future (everyone knows that fossil fuels will eventually peak and we will have to move on to alternatives), I’m just pointing out the fallacy in the notion that leaving 80% of known fossil fuel reserves in the ground is a viable climate change mitigation strategy. 

All major energy authoroties (IEA, EIA, BP, Exxon, Shell) project renewables other than hydro to contribute about 5% of global energy by 2030. By that time, substantially more than Bill McKibben’s maximum of 550 Gt of CO2 would have been already released and renewables would still be a fringe source. And no, the energy companies making these predictions are  not biased towards fossil fuels, they are biased towards profits. Renewable energy can simply not be profitable in an open market and this situation will probably persist for decades into the future. As soon as renewables are genuinely profitable, energy companies will be all-in. 

No-one knows how long the exponential price decline curve for solar power will last, but according to IRENA, only the cheapest solar PV will be competitive with the most expensive conventional power by 2020 (figure ES.2 here). Anyway, comparing the price of intermittent PV to reliable baseline sources is an apples to oranges comparison. Solar PV may very well still need subsidies even when it is half the price of fossil fuels. 

Tom Moriarty's picture
Tom Moriarty on Apr 28, 2013 3:52 pm GMT

The oil/gas  companies are really at an existential decision point and need to transform to being energy providers or go into a death spiral. 

  Right now in the world Germany is leading the way on Renewables and their country does not have a lot of sun in comparison to the US.   They will be adding storage to the mix this year and renewables will be providing a bigger share of their energy.  They will start making money on this too as they share their expertise in managing a smart grid made up of interconnected microgrids.

     In the US renewables will be lead by Hawaii and California.   I will predict that Hawaii will get getting . 90% of their energy from renewables by 2020.  Larry Ellison could lead the way with the island he just purchased.  The IBM prototype 80% efficient solar collector could play a big role in Hawaii.

    California will be the second state to be 90% renewable and while they won’t be there by 2020 I expect they will definitely be there by 2025.

      In general we are getting more efficient in our energy use.  Electric , hybrid and possibly hydrogen cars will reduce our consumption of oil and gas by 50%. The use of heat pumps (air and ground) will reduce heating/cooling consumption by another 25-50%. Led lighting reduces our electrical consumption by approximately 30%.  Even with more electronic gadgets and a bigger population our consumption will decline.  Solar panels on house with storage are more efficient than central power plants because there is no transmission loss. 

  The oil companies should stop looking for new reserves and look at adding wind turbines to the 27000 idle rigs they have offshore, and look at investing in OTEC.  Lockeed Martin is far ahead of everyone else so licensing of technology may be required, but OTEC has the potential to become a trillion $ business with a number of environmental benefits if executed correctly. 

      Culturally it may be difficult for the oil companies to change, but if they do not they will enter a death spiral with decreasing revenues until they are just a small industry providing chemical feed stocks.

 

 

  

 

 

Mark Tracy's picture
Mark Tracy on Apr 28, 2013 5:03 pm GMT

A new report [PDF] from the International Monetary Fund tries to tally up fossil fuel subsidies around the world and finds that they add up to an eye-popping $1.9 trillion a year. That’s 2.5 percent of global GDP!

Max Kennedy's picture
Max Kennedy on Apr 28, 2013 5:07 pm GMT

1) Really, betterlook atthe rates of desertification.  Since it is mostly happening in the major grain belts major impacts on food.  Look at the rates of cancer on the Athabaska river S. of Fort McMurray.  Look at the creation of megadead zones in the sea and the virtual elimination of huge trophic layers.  Look at the collapse of bee populations and ask where you food will come from when these primary polinators are gone. Civilisations that destroyed their surroundings to the extent we are died.

2) BS! The fight of fossil fuel companies and GOP legislators against aything that affects their bottom line is clear evidence of proponents.  The misinformation being put out regarding AGW being smoke and mirrors is even more evidence of proponents.

a) YES, fossil carbon is fossil carbon.  It’s development takes dollars from the requisite development of clean storage options by giving a false sense that it isn’t needed.  FRACKING is in it’s way as damaging as either coal or oil!  It is not needed.  What is needed is an accurate accounting of the external costs of this only slightly less dirty fuel to demonstrate it is not a viable alternative!

b) NO, fossil carbon is fossil carbon.  We have cleaner alternatives and uultimately I fully believe that it will be proven our excessive exploitation of fossil carbon in any form is a death knell for our civilisation as was the cutting down the forests for the Mayans and Easter Islanders.

 

Max Kennedy's picture
Max Kennedy on Apr 28, 2013 5:13 pm GMT

Yes it takes commitment to do what is right and stop the money grubbing exploiters in their tracks.  That 89% rely on it will matter not one whit when climate change floods the coastlines, desertifies our grain producing regions and acidifies the oceans,  This is NOT a popularity contest but a major challenge of the fitness of the human species to survive by being able to take a long term view in preference to short term profiteering!  Our economic system is literally killing us and those profiting the most are the most responsible!

Max Kennedy's picture
Max Kennedy on Apr 28, 2013 5:24 pm GMT

renewables are not yet capable of taking the place of fossil fuels.” 


Let’s look at that.  Let’s take the transportation sector.  Europe and Asia are currently proving quite adequately that long distance electric trains are indeed feasible.  Wind can move our bulk goodsaround the oceans, we just need to be a bit more patient.  In the USA current all electric vehicles could readily meet from 60-90% (depending on source but most are around 80%) of daily vehicular usage.  Looking at it from a reality based viewpoint renewables can easily replace at least 50% of current energy needs right now if fossil fuels were not subsidised to keep them cheap!  The day is HERE, NOW but corporate greed continues to stand in the way!

Schalk Cloete's picture
Schalk Cloete on Apr 28, 2013 6:26 pm GMT

Energy subsidies are indeed an interesting area. Here are a few points for your consideration:

About 75% of the $1.9 billion figure accounts for “externalities”, the estimation of which is a very inexact science. In fact, it is so subjective that it cannot really be called a science. Externality calculations are basically a trade-off between the health and environmental effects of fossil fuels (touted by the renewables lobby) and the social and economic benefits of very low energy prices (touted by the fossil fuel lobby). My guess is that people will argue about this for decades to come producing very little other than political stalemates. 

Most of the remaining 25% of subsidies are not subsidies at all, but simply energy exporting countries selling energy closer to the local extraction cost. It is important to realize for example that the price to extract the average barrel of oil is nowhere near the $100 international selling price. Only the few percent of unconventional sources that came online after conventional oil plateaued requires that price. If global oil demand falls by about 5%, the oil price will once again fall below $30/barrel and the oil “subsidies” in the report would plummet. 

Having said all of that, I have to clarify that I am a proponent of a carbon tax and an overall energy tax (to replace part of the income tax). In my opinion, these price controls are necessary to fix the free market system so that it becomes aware of the long-term threats posed by climate change and peak fossil fuels. I really like the free market and think that it should be interfered with as little as possible, but without these tweaks it may very well cause our society to eventually self-destruct. 

Mark Tracy's picture
Mark Tracy on Apr 28, 2013 7:40 pm GMT

Using your logic, subsidies to the solar industry are not really subsidies, because once solar panels are bought and put in place, they will be able to provide energy at a much lower cost than the original cost to put them in.

Schalk Cloete's picture
Schalk Cloete on Apr 28, 2013 11:05 pm GMT

I’m afraid I don’t quite follow your reasoning. 

Subsidies in the MENA countries allow oil that can be extracted at $10/barrel to be sold for just over $10/barrel (a standard business transaction). Subsidies for solar panels allow electricity that would normally cost 25 c/kWh to be sold for 10 c/kWh (a true subsidy that must be payed by the consumer in some indirect way).

Mark Tracy's picture
Mark Tracy on Apr 29, 2013 12:07 am GMT

Your saying that once the capital expenditures are made to locate the oil, drill the wells and build the facilites, the oil can be extracted at $10 and can be sold for $10 to generate X amount of electricity. Likewise, when someone spends the capital and installs solar on his/her house, the same X amount of electricity can be extracted from the sun for much less than $10 (merely the upkeep on the solar panels and inverter), and sold for much less than $10 — although most homeowners who feed electricity into the grid prefer to be credited fairly for their energy production.

As for where the subsidies come in — the solar panel owner receives them in the form of a rebate at the time of installation. The oil companies, on the other hand, receive their subsidies in the form of tax breaks (the oil company lobby plays a big part in writing the tax code — remember their fight with Obama?). Furthermore, the oil companies do not have to pay for the costs that their carbon produces in the form of increased hurricanes, droughts, and flooding (another subsidy). The oil companies even have paid shills who spew disinformation that climate change is a myth.

Paul O's picture
Paul O on Apr 29, 2013 3:27 am GMT

I am aware of the progressively reduced cost of windmills and pv, problem is that no matter how low these get, they won’t replace CO2 producing facilities. Yes they may reduce the number of planned Coal plants, but since they need Natural gas to be able to join the grid, it could be said that what’s replacing the planned coal plants are actually the Natural gas instalations.

Paul O's picture
Paul O on Apr 29, 2013 4:55 am GMT

Max,

Desertification is part of climate change, already conceeded. Once again, a study of past climate shows that the Sahara desert was once lush and green 100,000yrs+ ago, and it will be come green again. The warming of the climate does not neccessarily mean that everything will whither and dry up. Some places will be drier while other places become wetter, also some places that were cooler will have longer growing seasons due to a warmer climate.

What will happen is that areas now suitable for agriculture may become less so, as other areas previously unsuitable may become more so.

The point is that hyping climate change does nothing, and the changes already set in motion may not be avoidable not whistanding what we do now.

I am in favor of phasing out Coal as soon as is feasible, and Natural gas too eventually, however I don’t believe that a Chicken with the Head Cut Off approach will get us where we need to be. We”ll end up bankrupting ourselves, and starving our populations without solving the energy need problem.

Simply put once again, We cannot replace  CO2 producing sources of power with Windmills and PV, and I agree with IK’s concept of a Global PV grid, and with Gen 4 nuclear,  but none of these things are going to be ready anytime soon.  This is true regardless of howl loudly Renewables advocates wish to scream and shout.

 A cool headed and inteligent approach is needed which might mean that we agressively use climate mitigation if it comes down to it.  In the meantime, the billions of people living in China, India, and the African continent require steady and reliable 24/7 plugin capable power for their health and safety, somehow we have to recognize their needs and ballance it with the need to retard climate change as much as we possibly and realistically can.

Bob Meinetz's picture
Bob Meinetz on Apr 29, 2013 7:49 am GMT

Schalk, the Ningde 1 reactor in Fujian province, China went operational last week, saving 8 million tons of carbon every year. Nuclear energy can provide energy for cars, fridges, and TVs cleanly and inexpensively. By building one nuclear power plant/week (it happened in the 1980s) we could stabilize atmospheric carbon by 2050, but that goal will never be realized by continuing to burn fossil fuels.

I find it ironic that you consider facing reality spending your days working on CCS. The entire concept is rendered useless by the fact that it will be impossible to verify. Instead of spending enormous sums of money pumping carbon into the ground (and making sure it stays there), CCS contractors will simply turn their pipes to the night sky and pocket the change. It’s a non-starter.

Bob Meinetz's picture
Bob Meinetz on Apr 29, 2013 8:03 am GMT

Mark, where are you getting your information that there is a “dramatic decline” in the number of coal plants in Europe?

Despite all of the hype about new solar, there is 10.6GW of new coal coming online in Germany to support Germany’s withdrawal of carbon-free nuclear energy. In 2012 solar provided less than 3% of Germany’s utility electricity, the rest being made up largely of coal (and ironically, imported nuclear from France). Germany’s carbon output actually increased in 2012, proving that the Energiewende is failing miserably at the goal of reducing carbon.

Solar power has become a religion, where wishful thinking becomes gospel truth, and it’s only making a big problem bigger.

Bob Meinetz's picture
Bob Meinetz on Apr 29, 2013 8:12 am GMT

Mark, people can tweak those numbers to support there own view in any number of ways. The Dept. of Energy’s Energy Information Agency, which can be trusted to be objective as much as anyone, says the levelized cost – cost including subsidies – of PV solar is one-third higher than both coal and nuclear, and two and a half times higher than gas. Thermal solar is four times higher than gas.

This is why utility solar is fighting an uphill battle despite the good intentions of its adherents. In isolated regions it can help out on a local level; for utility power it will never make a significant contribution.

Schalk Cloete's picture
Schalk Cloete on Apr 29, 2013 1:59 pm GMT

There is no doubt that CCS is a transition technology, but it is necessary considering that fossil fuels still account for 87% of our energy needs (nuclear accounts for about 5%) and coal has been the most rapidly growing fuel by far over the past decade (in absolute terms). CCS retrofits are also capable of accessing “locked-in” emissions from plants that have already been constructed. This might prove to be a very important application of CCS if climate change science is proven to be correct. CCS is also the only technology capable of realistically cutting large industrial emissions from processes such as steelmaking and cement. 

I don’t understand how CCS it will be impossible to verify though. The CO2 storage facility will be easy enough to monitor. Anyway, storage is only about 20% of the total cost of CCS. The financial rewards for contractors venting the CO2 to the atmosphere will therefore be small compared to the risk of being found out and prosecuted. Even if we assume that the average contractor is as morally corrupt as you seem to suggest, the risk/reward ratio for such a swindle will be highly unfavourable. 

I also believe that nuclear, as a proven and scalable technology, has an important role to play. However, the factors that brought an abrupt end to the nuclear expansion of the 70’s are still largely unchanged and pointing to one plant that will reduce Chinese emissions by less than 0.1% hardly changes this outlook. Perhaps nuclear will experience a resurgence if the CO2 prices projected by the IEA New Policies scenario come true (these prices are of course a prerequisite for the deployment of CCS), but we should be careful in touting any single technology as the complete solution. 

It will be interesting to see the ratio in which the free market deploys different low-carbon energy technologies when there finally comes a price on CO2. Predicting this ratio is impossible. So you keep on promoting nuclear and I will keep on developing CCS. Ultimately, I think it is a fairly safe bet that we will need both. 

Schalk Cloete's picture
Schalk Cloete on Apr 29, 2013 10:26 am GMT

Mark, of course the $10/barrel extraction costs of MENA oil includes the cost of capital, just like the 25 c/kWh price of solar electricity includes the cost of capital. I’m therefore still unclear about the point you are making. 

Say for example you have $10. You can spend that on a barrel of MENA oil which will give you 6100 MJ of energy that you can use now or whenever you want or it can give you about 2 Wp of PV installed on your roof. Over 30 years, your 2 Wp of PV will generate about about 284 MJ of electricity. But of course this energy has to be discounted at a specific rate in order to account for the fact that it is only released over 30 years. At a modest 5% discount rate, your 2Wp of solar is worth 149 MJ today and at a 10% rate it is worth 91 MJ – 1.5% of the energy equivalent of the oil. That is how far solar power still is from good old conventional fossil fuels. 

Max Kennedy's picture
Max Kennedy on Apr 29, 2013 5:35 pm GMT

You know what a tipping point is?  Once reached bad things happen.  We are very close to if not already over a very significant one.  You talk of the needs of people for reliable 24/7 plugin power.  You don’t realise, or deliberately ignore, that most of that is not a need but a want that fills corporate pockets.  The small fraction that is a “NEED” is just that, a small fraction.  Your “cool headed” approach has been denying the need for action since the 1950’s if not before and through it’s bought and paid for institutions such as ALEC it continues to confound real progress.  You don’t seem to understand that once the natural limits of an ecosystem are reached collapse follows quite quickly regardless of how “realistic” you want to be, nature doesn’t care.  This view of our environment as an infinite resource has been proven wrong time and again.  In the past the collapse has been localised, now it will be global.  As for bringing up the spectre of the Sahara, what hubris.  Yes it was lush and green, that didn’t change overnight but over millenia.  We are compressing such change into decades.  Species do not have the resiliency to adapt that quick and neither does our society.  If you want to play russian roulette with the worlds ecosystem please don’t and get realistic on what is needed to keep our earth, it’s myriad organisms and ultimately us, healthy!

Paul O's picture
Paul O on Apr 29, 2013 6:44 pm GMT

Max,

Tell me something Max, since you don’t want to play Russin Roulette:

1) Just precisely what do you want us to do. Tell me, tell us what do you recommend in order to prevent the tipping point, and in what time frame. Please be precise.

2) Please describe with specifics what you classify as Wants as opposed to Needs.

3) Just who the heck is ALEC

I get that you don’t like the Cool Headed Approach, however It is preferable to the Chicken with the head cut off approach.

 
Tom Moriarty's picture
Tom Moriarty on Apr 29, 2013 7:01 pm GMT

Renewables in Germany:

  Bob renewables as a part of Germany’s electrical energy mix grew from 5% in 2003 to 20% in 2012.

The average rate of growth for renewables over this 9 years was 17%.   If the average rate of growth of renewables continues at this same rate Germany will be at approximately 100% of their electrical energy from renewables by 2024. If the rate slows down to half of that 8.5% Germany will be 100% renewable by 2032.    The Germans are adding storage to the mix this year and providing incentives for adding storage, so new solar systems and possibly new wind warms will have storage included in the mix.  This may slow down the installations of renewables because of the added expense, but the storage will add the value of providing energy when the sun in not shining and the wind is not blowing.  The Germans are very clever and proficient engineers. I have a lot of faith in there ability to make this work and fully expect them to lead the way to a non fossil fuel based economy.  

   They will more than likely be deriving a good deal of revenue from selling the expertise they are building now to the rest of the world.

Max Kennedy's picture
Max Kennedy on Apr 29, 2013 8:12 pm GMT

1) stop investing in fossil fuel production and use the money to develop alternatives.  Losses in productivity can be made up by transforming the energy and transportation sectors.  It’s not an immediate off oil but it’s a don’t add any new on.  Efficiency, such as the 64 mpg Ford Focus which isn’t available in N. America but only in Europe, can make up much of the difference.  Price oil at what it really costs, hidden costs included. For that matter beef too, the methane from corn fed cows standing knee deep in their own crap in a feedlot is at least as bad as the CO2 output from the transportation sector.  There are many options which individually won’t make a difference but in total will.  Add the hidden costs on to imports so that locally made goods, and therefor local jobs, are in greater demand.  You really think making a $10 T-shirt in Bangladesh because workers get $0.14/hr then shipping it around the world is a long term viable option??  We may have already hit one tipping point but we NEED to be doing what is necessary to mitigate the effect as much as possible and hopefully avoid a cascade effect.

2)Wants – light at night (could be done with LED’s and a battery system), mankind spent eons without it.  TV, idiot box, need I say more.  Gas powered tractors for industrial farming practices – use oxen/solar tractors etc and smaller farming plots as well as family planning.  Spend dollars being used to force GMO seeds into the farm system of developing countries on curbing population growth and see far greater returns. NEED – would be something along the lines of hospitals where it isn’t simply a matter of convenience or profit.

3)American Legislative Exchange Council

There’s a difference between chicken with it’s head cut of and reasoned urgency.  When you see a train barreling down the tracks at you, you JUMP off you don’t saunter down the tracks to the next crossing then get over.  By then you are run over.

 

Bob Meinetz's picture
Bob Meinetz on Apr 29, 2013 9:26 pm GMT

Tom, this is what I’m referring to when I write about the “gospel” of renewable energy. It’s somewhat telling that you use the word “faith”, although I don’t think faith is anything on which to base policy.

First of all, I was specifically referring to solar when you changed the conversation to all renewables, of which solar makes up only 3-6% and wind makes up 10%. The rest of the 20% comes from mostly biofuels and hydro.

Extrapolating the growth rate to 100% renewables by 2024 is silly. The German government’s target is 80% by 2050, and even that is characterized as “ambitious”. Moreover, there is no energy storage scheme which will be remotely affordable in that time frame. That means not only will coal and gas not be replaced – they’ll be necessary to fill in gaps in contributions of renewable energy, and will be increasing Germany’s carbon contribution as zero-carbon nuclear is phased out.

The Germans may be clever, but I’ll go out on a limb and suggest they’ll never find a way to make -1 equal to 1.

I K's picture
I K on Apr 29, 2013 9:40 pm GMT

France built 0.8 reactors per million of population 30 years ago in just one single decade.

If the USA did that today it would produce 75% of its needs via these new reactors, add in the existing reactors and existing hydro electricity and you arrive at a figure of over 100% of USA electricity needs just repeating what small France was able to do a generation ago

No coal or gas burn in electricity generation would get the USA towards -40% CO2 and this is possible between 2020-2030 if there was the will to do it. The same could not be achieved with solar or wind (at least not without connecting the USA grid to europe, india, china, Australia and a few other nations and relying on them to send the USA about half its needs)

Bob Meinetz's picture
Bob Meinetz on Apr 29, 2013 9:44 pm GMT

Schalk, how could anyone possibly verify that an invisible, odorless, and (relatively) harmless gas is ending up where it’s supposed to – especially when there are thousands of points along the way where that path might be circumvented for profit?

I’ll suggest the average contractor is as morally corrupt as the hundreds of millions of people who have downloaded music illegally. With something as easy to jury rig as CCS, I think you put far too much faith in human nature.

I K's picture
I K on Apr 29, 2013 10:12 pm GMT

CCS is a bad idea.

The world already scrubs around 70-80% of the CO2 burnt into the air (that is to say we add about 8ppm but see an increase of about 2ppm) and there are plenty of techs which can reduce current fossil fuel use by the remaining 20-30% required to keep CO2 at about the level we are at. Nuclear is one, computer driven cars another, a global grid yet another

I K's picture
I K on Apr 29, 2013 10:15 pm GMT

There is no real need for CCS, the earth is already doing “CCS” for us in that it is removing nearly 80% of the CO2 we add into the air.

Tom Moriarty's picture
Tom Moriarty on Apr 29, 2013 10:27 pm GMT

Bob:

  I used all renewables simply because Germany will need to use wind and some offshore resources as apart of the mix.  In projecting forward I looked at what Germany has been doing for the last 9 years and the mix of renewables has been increasing at an average of 17% per year and this includes a couple of very lean years where the growth was only 3%.  I just plugged in that average growth into a spreadsheet to see where it would take us.  I then cut it back in half and still have Germany reaching 100% renewables by 2032.  It is a simplistic approach, but the costs for both solar and wind are decreasing. The operators of the grid are getting much better at managing these variable resources and the grid.   The Germans have just this past month announced a breakthrough in battery technology and there are a number of startups in the US that have the backing of Bill Gates (Ambri) liquid metal batteries, and Sion Power (BASF) lithium sulfur batteries than have high energy densities.   I do not understand why you do not think that storage can be made affordable in a 10 year or 20 year time frame. Thre is plenty of incentive and the storage medium just has to be less expensive than a gas turbine generating plant.   The Germans also have the incentive that they do not like to be dependent on the Russians for GAS.  Mr Putin has proved to be an unreliable source in the not so distant past.

   Lets see where this goes and what per centage of the German electrical generation comes from renewables for this year.   I will look up the German battery development and post it later if you are interested.   A group down in North Carolina came up with a new inexpensive way of producing hydrogen.  That coupled with a fuel cell could be a storage solution. Twenty years is a long time in this day and age. 

  

I K's picture
I K on Apr 29, 2013 10:38 pm GMT

Also worth noting that reactor will have 5 more siblings sited at the same power station which will in total generate about 54TWh annually. Just 32 of those nuclear power stations would be enough to displace all the coal generated power in the USA last year. Or just 165 of those power stations would be enough to generate the same energy as all the worlds coal power stations combined!

Using more advanced European EPR reactors such a 6reactor power station would produce closer to 85TWh annually so the USA would only need 20 such nuclear power stations to displace all the coal energy generated in the USA last year. The world would need just 105 of those 6EPR power stations to displace all the 9,000TWh of coal generated electricity.

Also if the data is correct the Chinese are building nuclear reactors for less than $2B/GW which is absurdly cheap compared to Europe and the USA. In the UK they are planning to build a dual reactor and it is projected to cost $7B/GW and will probably cost more than that. This shows us it is possible to build reactors if you want to build them but if you don’t want to build them you can make them cost 4x as much and make them uncompetitive.

I K's picture
I K on Apr 29, 2013 11:01 pm GMT

Perhaps for marginal generation but what happens when you install your peak output and you find that only somewhere upto 20% is from solar?

You then need to dream up fantasy mega storage projects visible from space, or build a global grid and import 80% of your solar electricity from many other nations (while also exporting a huge amount when the sun is in your part of the world)

Personally I am very pro a global electricity grid and with that in place solar may indeed one day become much cheaper than anything else, but its not possible without this global grid which would take a huge amount of political will to accept having to rely on many other nations for your electricity

I K's picture
I K on Apr 30, 2013 12:31 am GMT

People concentrate far too much on electricity and forget (or don’t know) that it only represents about 5-6TW of the 16TW of power used on earth and even a reasonable chunk of that 5-6TW is generated by nuclear and hydro.

So what if solar can produce 0.5TW and wind 1TW of your 16TW that is only 9%,
You are still “stuck” with producing over 90% of your energy from fossil fuels Nuclear and Hydro.

The solar/wind cheer leaders should spend their energy cheer leading for the infrastructure that will enable solar and wind to potentially produce a majority share one day. That means they should protest loudly for a global electricity grid. with that not only could solar and wind meet 100% of electricity but potentially 100% of heating too. That would mean some 10-12TW (75%) of all needs could be produced via wind/solar.

There is little point in building a billion cars before you build the roads that the cars need just like there is little point in building 10TWp of wind and solar before there is a global grid. The $1 trillion dollars in subsidy solar and wind will have received before this decade is up would have been considerably better spent on building a global super grid.

I K's picture
I K on Apr 30, 2013 12:41 am GMT

Its all fantasy, for a start the German renewable figures that the cheer leaders like to quote include such green things as burning pig dung and Canadian trees imported from the other side of the world.

A more fair look would be to see solar (28TWh) and wind (47TWh) our of total production of 592TWh. Or solar plus wind = 12.7% of generation.

Even that is misleading because electricity is not the whole story. There is heating transport industry chemicals etc etc. seeing as electricity is about 1/3rd of primary energy the true figure for the contribution of wind/solar to germanise total energy use is about 1/3rd of 12.7% or about 4.2%. That means about 96% is still obtained from fossil fuels, nuclear and hydro.

And the problems of intermittent solar/wind have not yet hit the brick wall because they are still at a relatively low penetration (12.7% of electricity)

The idea that storage will somehow become cheaper or better than the free chemical bonds of coal gas or oil or nuclear is also wrong. No amount of R&D is going to make gravity stronger than chemical bonds or make any of the other storage methods stronger than the current chemical bonds. To store intermittent energy requires a scale unimaginable to most people. Simple put if you piled whatever storage you choose to have in one place it would clearly be visible from space and that is why its not going to happen.

However the solution to the storage problem is technically easy, a global grid, although politically hard/impossible.

I K's picture
I K on Apr 30, 2013 12:50 am GMT

and what if I don’t want to live like that, would you prefer taxing me to force me or would you rather jail me instead, in a carbon neutral jail of course…

And if other nations don’t think the way you do, is it better to nuke them or use conventional weapons against them, ideally something natural like a fantasy earthquake machine trigged by chanting to gia?

Paul O's picture
Paul O on Apr 30, 2013 2:45 am GMT

1) “stop investing in fossil fuel production and use the money to develop alternatives”

Even if we were to somehow force the stopping of investing in Fosil fuels and invest in Alternatives instead, Without a certainty that the alternatives will be able to adequately replace FF’s, we run the risk of a self inflicted economic catastrophy that renders us powerless for further action.

We currently need FF’s for transportation and distribution of goods (semi trucks, ships, airplanes), agriculture, industry (even making Cement and steel production, roadways) it will take time to develop non-FF alternatives. Will that be time enough to avert the “Tipping Point”? If not then what is the purpose of this action?

Losses in productivity can be made up by transforming the energy and transportation sectors.  It’s not an immediate off oil but it’s a don’t add any new on.  Efficiency, such as the 64 mpg Ford Focus which isn’t available in N. America but only in Europe, can make up much of the difference “

Again, how many years will it take to replace every car on the road with something like the Focus?

“Price oil at what it really costs, hidden costs included.” 

……..One Word…..Recession! (or worse, a depression).

“For that matter beef too, the methane from corn fed cows standing knee deep in their own crap in a feedlot is at least as bad as the CO2 output from the transportation sector.  There are many options which individually won’t make a difference but in total will.  Add the hidden costs on to imports so that locally made goods, and therefor local jobs, are in greater demand.  You really think making a $10 T-shirt in Bangladesh because workers get $0.14/hr then shipping it around the world is a long term viable option??  We may have already hit one tipping point but we NEED to be doing what is necessary to mitigate the effect as much as possible and hopefully avoid a cascade effect.”

…..Think about the effect of what you’re proposing on society, food and nutrition, on the poor poor factory worker in Bangladesh who will suddenly face starvation.


 

2) I refer you to the reply by IK below. BTW I like LED lights, don’t care for the batteries with Toxic metals, and high replacement costs

3) ALEC…Don’t know why they entered this discussion.

 

My Last Word.

Max, most of the things you have mentioned are highly theoretical, and if done, could have consequeces beyond what was intended. 

I am not persuaded that current renewable tech can in fact replace FF’s, and some of the suggestions you raised could spark a recession that would rob us of the funds to make meaningful changes.

A Cool headed plan may involve banning any future Coal power stations, using Natural gas in the interim. It could involve a joint international effort to produce a next generation of Nuclear power that can be made cheaply with recycled “waste”, and that could be exported to porer countries in lieu of Coal.

We should seriously consider steps to mitigate the effects of GW by reducing the amount of sunlight hitting the poles, and by seeding the oceans with iron. Note that I don’t wish to prescribe the specific mitigation steps, but let’s give the Universities and DARPA an assignment to work out the best GW mitigation techniques.

If at all possible, we should give the Global PV grid a chance.

Max Kennedy's picture
Max Kennedy on Apr 30, 2013 2:41 am GMT

Ah,the I’m so self centered and so won’t change my way of life unless you force me to selfishness.  I’d rather make you pay the true cost of your selfishness, it’s VERY expensive, instead of giving fossil fuels a steady handout of subsidies!  As for other nations, stop buying their cheap crap until they meet our standards and they will, for economic reasons, or their economy will go down the tubes.  As for bringing in Gia, a mythical Mother Earth figure, you demonstrate clearly the lack of either understanding, rectitude or reasonable basis for the position you hold.  That usually is the way of it when the morally bankrupt seeking profit at all costs are confronted with the reality of science you don’t wish to acknowlege.  The reality is that whether you want to live the lifestyle or not changes on our planet will soon require such changes.  The faster we make them and the more willingly will result in less disruption rather than greater for more people.  Of course, given your statement above you care nothing for anyone or anything but yourself and that ultimately is what make the degeneration of our culture a certainty.

Max Kennedy's picture
Max Kennedy on Apr 30, 2013 3:02 am GMT

Instead of taking the $ from programs that have been highly successful in reducing the costs of solar and wind take the trillions that go to subsidising fossil fuels to build this global grid.  Additionally, where do you get your figures for the potential of wind or solar?  1% of the worlds fallow landspace using 10% efficient solar cells, pretty low, would privide about 60TW of energy alone.  Add in wind and you get significantly more energy than is required globally!

Paul O's picture
Paul O on Apr 30, 2013 4:34 am GMT

The Following is a quote from this thread, addressing the subsidies question:

 

” April 28, 2013

Schalk Cloete says:

Energy subsidies are indeed an interesting area. Here are a few points for your consideration:

About 75% of the $1.9 billion figure accounts for “externalities”, the estimation of which is a very inexact science. In fact, it is so subjective that it cannot really be called a science. Externality calculations are basically a trade-off between the health and environmental effects of fossil fuels (touted by the renewables lobby) and the social and economic benefits of very low energy prices (touted by the fossil fuel lobby). My guess is that people will argue about this for decades to come producing very little other than political stalemates. 

Most of the remaining 25% of subsidies are not subsidies at all, but simply energy exporting countries selling energy closer to the local extraction cost. It is important to realize for example that the price to extract the average barrel of oil is nowhere near the $100 international selling price. Only the few percent of unconventional sources that came online after conventional oil plateaued requires that price. If global oil demand falls by about 5%, the oil price will once again fall below $30/barrel and the oil “subsidies” in the report would plummet. 

Having said all of that, I have to clarify that I am a proponent of a carbon tax and an overall energy tax (to replace part of the income tax). In my opinion, these price controls are necessary to fix the free market system so that it becomes aware of the long-term threats posed by climate change and peak fossil fuels. I really like the free market and think that it should be interfered with as little as possible, but without these tweaks it may very well cause our society to eventually self-destruct. “

 

No need to repeat the same theme over and again.

James Thurer's picture
James Thurer on Apr 30, 2013 4:47 am GMT

“This is the conclusion of a new report finding that $674 billion was spent globally last year alone on the discovery of new fossil fuel deposits that will likely never be used.”

Last year the world consumed about 30 billion barrels of oil alone, at a value of about $2.5 trillion.

Maybe the horrible, terrible energy industry isn’t quite as stupid as the study portrayed it to be.

Schalk Cloete's picture
Schalk Cloete on Apr 30, 2013 12:05 pm GMT

Why there are many ways to audit the rate at which CO2 is being deposited underground: flow rate measurements at the injection well, the power consumption of the pumps, monitoring of the underground storage formation and CO2 concentration monitoring at regular distances along the pipeline to name just a few. In addition, releasing the concentrated CO2 stream captured from a full scale powerplant would render a huge area uninhabitable because CO2, being denser than air, would asphyxiate anything unlucky enough to find itself within a few miles downwind.

Three of the many differences between music piracy and intentional CO2 release is that almost no-one is prosecuted for downloading music, the number of music downloaders would probably outnumber the number of crooked contractors by a million to one, and that intentional releases of CO2 can kill people (both directly by asphyxiation or indirectly via climate change). I therefore don’t really think it is a valid comparison. 

I K's picture
I K on Apr 30, 2013 1:03 pm GMT

Why didn’t you say so. If its only 1 percent of the earth I’ll take a dozen….

Less than 0.002 percent of America land mass is used to site its more than 100 million homes. How long did it take to build all of them and at what cost. So how long do you think it will take to cover 50 times as much land with a 50 times as technical substance?

You really do have to question the sanity of those who just spout ‘ if only we did xyz’. The implicit assumption is that the one hundred plus cointries are all fools for not following the obvious path to riches that our internet poster was able to dream and invent over breakfast

Louise Stonington's picture
Louise Stonington on May 3, 2013 10:22 pm GMT

Ah, the Golden Touch, like the legendary King Midas.

Bob Meinetz's picture
Bob Meinetz on May 3, 2013 10:53 pm GMT

Schalk, all of the methods of monitoring CO2 injection you mention would be extremely easy to circumvent, most easily by creating an exit well at some distance from the injection well. And while music downloaders outnumber crooked contractors, the stakes for a crooked contractor would much higher – likely millions of dollars.

Asphyxiation? I live one mile away from a natural gas power plant and thousands live closer than me. Your “concentrated CO2 stream” is exactly the same as what the power plant releases during normal  operation, and I’m not aware of any asphyxiations yet. Nor worried about it.

 

Pages

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »