Thursday, June 18, 2009

The Answer Man

Photo by Elliot Moore
How do we save the world as it teeters on the brink of an energy crisis and a climate change catastrophe?

Many governments now are scrambling to put together a coherent set of answers: some sort of plan to address this question.

I recently read a slim volume by investigative journalist and author Edwin Black which steps up to provide such answers.

"The Plan" is nothing less than a no-holds-barred manifesto of energy security politics. It reads as a apocalypse survival plan, detailing week by week how western civilization might save themselves when the black gold stops flowing, and anarchy rules our streets.

From my perspective - not being a politician looking for a policy - the most eye-opening part of the book was the coverage of the fragility of oil supply. The book opens with this important background, before it gets into the survivalist stuff.

Oil has over a century ago stopped being a commodity - it no more follows supply and demand or any other market place rules than nuclear weaponry. Oil is a political issue.

Enter the IEA. This is an organization dedicated to protecting nations who join it from the impact of oil supply loss. Set up after the oil shocks of the 70's, the IEA member nations recognize that loss of even a fraction of supply would lead to an apocalypse - the signatories agree to help each other in the event of such a calamity by immediately executing a three-pronged action:
  • stockdraw - releasing strategic reserves
  • surge production - increase of supply from internal oil sources
  • demand restraint - reducing oil consumption
This material is compelling reading. It puts a lot of what I already knew about the Oil Shocks of the 1970's and later into chilling perspective.

But doesn't this sound like a plan?

It would if the first two items would address a tiny part of the impact of an oil shock. Even a drop in oil supply to the USA of 5% would trigger the stock draw - raiding the Strategic Petroleum Reserve. The month or so that the SPR would last is nowhere near enough time to enable demand restraint. Anything that had not been already prepared would be overwhelmed by chaos before it got off the drawing boards.

And surge production - the USA is already using and drying up its own oil wells. If the 5% drop is more widespread than just the USA then the chances of other countries being willing or able to surge supply enough to get the USA out of the fat-fire are near zero.

But the big flaw is demand restraint.

Demand restraint? Are you kidding?

If there's one thing that will get an American president shaking in his boots, its trying to get US citizens to restrain their gas guzzling ways. And a century of GM marketing teaching them that success is the same as a big car is going to take a long time to turn around.

New Zealand responded with great restraint during the Oil Shock times by instituting carless days.

USA has no plan and no ability to do anything like carless days, even though its obligations through its membership of the IEA decrees that it should.

But do we really have to worry about another oil shock?

Black shows why we should expect it as a virtual inevitability. He covers a range of threats from military, through economic, to pragmatic which will likely realize the substantial ruination of oil supply.

It won't take much.

After Hurricane Katrina hit the continental USA and took a number of refineries offline, the availability there dropped by 5% - this is the figure sufficient to trigger releases from the Strategic Petroleum Reserve.

A drop of 7% is enough to precipitate an international crisis, and trigger obligations under the IEA membership.

Losing 10% of oil supply in the USA is unthinkable: so "off the charts that we can't model it" according to one of Black's sources.

This is because the USA has already hit its Peak Oil - its been many decades since those cocky Texas oilmen were supplying anything more than a trickle of the black gold gushing into the USA's unquenchable gullet.

Around 60% of the oil used in the USA is imported. But what is more interesting is that due to Oil Market intricacies, while it would appear that most of that oil comes from friendly countries such as Canada - the true picture is that USA is far more exposed to the middle-eastern oil markets than raw import source percentages would suggest.

But even looking at raw figures, Saudi Arabia supplies over 10% of US oil.

This fact alone leaves the super-power critically vulnerable. Its why twice during his presidency as Black describes, George Bush went cap in hand to the Saudis asking for price breaks. The volatile nations of the middle-east have the the international oil market in the palm of their hand.

The remainder of The Plan presents a range of energy initiatives that would allow a shattered country to try to survive the impact of an oil apocalypse:
  • upfitting vehicles to CNG, and other alternative energy sources
  • using sugar cane and other sustainable ethanol programs
  • stopping corn ethanol production - it uses more petroleum products than it produces
  • hydrogen and electric vehicles
  • moving off oil fired heating
Of course Blacks point is that if the Plan is instituted now, instead of waiting for the disaster then maybe we can pull back from the precipice.

Hydrogen Update

This is an update on an earlier blog article about Edwin Blacks book "Internal Combustion: How Corporations and Governments Addicted the World to Oil and Derailed the Alternatives".

Mr Black responded to my offer of commentary - his comments are in red below.

Where as for hydrogen:
A 2008 report from the National Research Council estimated it would take $200 million from government and industry over the next 15 years to commercialize hydrogen fuel cell vehicles to the point they could be competitive with gas vehicles.(Reported by reuters)

These are just politicized numbers. Last year, I drove a GM hydrogen car that used water dispensed from a Shell station to create the fuel.

The problems of practical transport using hydrogen are well known - see this article in Popular Mechanics for an even handed analysis.

Hydrogen has its hands as dirty as oil, since it is traditionally made from natural gas, a fossil fuel. Companies mentioned by Black in his chapter on hydrogen, such as Linde, and Air Liquide are now leading members of the National Hydrogen Association, along with guess who: General Motors and Shell.

A common feedstock is not natural gas but pure water.

There are 3 main ways to make hydrogen--reform it from natural gas as some wish so they can use existing infrasture, electrolyze it from water like the Shell station in Santa Monica ( I favor), or use bacterial generation which still being perfected to yield higher amounts.

Hydrogen could be synthesized from your hat--it is in 99% of the universe.

Hydrogen futurists such as Dr Alan Lloyd were pivotal in killing off the California zero emissions mandate. The ZEV laws brought in by the California Air Resources Board to fight chronic smog had led to a huge flurry of electric vehicle activity in California. In the period where Lloyd was the Chairman of the California Air Resources Board and Secretary of the California EPA the electric vehicle innovation and recharge point infrastructure rollout was crushed literally, and replaced with a highly touted hydrogen program.

I know Lloyd. He was not a hydrogen futurist. The hydrogen fuel cell was invented in 1838.

Lloyd was also Chairman of the California Fuel Cell partnership. He vehemently denied that this was a conflict of interest.

Of course proponents of hydrogen with vested interests ranging from pet research to major investment, are ready with all sorts of arguments against the view that electric is superior to hydrogen for transport. Even if they're not all Lloyds with a cash register tune playing in their ears, their views are based on theory.

Remember Sarah--the hydrogen car is just an electric car with the electricity generated from as hydrogen reaction. Now you can generate electricity from a battery, from on-board hydrogen, or a squirrel in a cage--just the end product is all the same--electricity out of the fuel combination to run the wheels. Batteries are a dirty business. It is brown green, not green green. Water is clean. It only takes a zap of electricity to electrolyze it. In Vegas that is done with solar.

Electric Vehicle Update

In October the Australian Electric Vehicle Association has its first ever field day. Yours truly will be there and I plan to report on the event.

The guys from the AEVA have been building and driving electric vehicles, approved for driving on our roads now for decades.

I agree with Mr Black that hydrogen can be generated cleanly, and I hope some day soon that it will.

I believe that avoiding the Oil Apocalypse will take a broad ranging response - a response from all of us. And an effective robust response will involve a range of technologies.

We have to start now - and we can start with non-oil burning technologies that we have on our roads right now - and for me electric vehicles are the most exciting reality, but of course CNG and LPG will play a role, as will biodiesel.

I'm sure that the current success and innovation in electric vehicles will pave the way for a viable hydrogen powered car, since as Mr Black says, hydrogen is essentially another way to power an electric vehicle.

I look forward to seeing a hydrogen vehicle on our shores as soon as possible.

In the meantime, come and join me at the AEVA's electric vehicle open day!