Dieter Helm – Coal Critic, Atomic Agnostic, Natural Gas Enthusiast

Dieter Helm’s The Carbon Crunch: How We’re Getting Climate Change Wrong–and How to Fix It has the potential to be an influential energy policy book, not just for the UK but for the rest of Europe and the United States. Helm has been making the rounds to promote the book and recently gave a concise talk with a Q&A session to the Policy Exchange.

I tend to agree with his diagnosis of our current position, and with his primary prescriptions. We differ substantially, however, in our expectations for the energy system that will result if those prescriptions are implemented as described.

As indicated by the subtitle of his book, Helm believes that the world, especially Europe, has achieved very little in the twenty years since the Kyoto treaty was signed. He believes that there is little hope that the process set in motion by that treaty will result in anything more than the continued annual consumption of a lot of aviation fuel to move people to ineffective conferences that are primarily climate theater.

He believes it is time for a change in direction – what a sailor might call a tack, if you will forgive the pun on his name. Helm includes three main components in his prescription for a future energy system:

1. Establish a meaningful price on carbon that includes embedded consumption in imported products, not just domestic production
2. Provide ample electricity supply by auctioning long term capacity commitments
3. Invest in research and development to find technological breakthroughs

Helm is pretty sure that natural gas will be the winner for the foreseeable future if his prescriptions are implemented; I am confident that nuclear energy will soon dominate under those conditions as long as atomic fission is not artificially constrained.

Though Helm is a self-described “academic scribbler” with no formal position within the multinational petroleum industry, his book and his talks provide strong evidence that he believes in the oil and gas industry’s vision of an energy system supplied primarily by natural gas (methane) in the near term to provide a bridge to a yet to be discovered power source for the distant future.

I’m not sure why Helm thinks that the rest of us would be willing to finance a bridge building effort that is guaranteed to cross no more than 50% of the way to its required destination, but he has worked pretty hard to portray his energy vision as worthwhile and even rewarding. Perhaps he did not expect that his assertions, analysis, and assumptions would be questioned; his CV indicates that he is a firmly established member of a group of people that shares a particular world view about coal, natural gas, renewables and nuclear energy.

Helm accepts the science indicating that human activity is negatively affecting the global climate, he accepts the role of CO2 (which he stylistically has chosen to call “carbon” rather than “carbon dioxide” for ease of reading), and he puts most of the blame for CO2 related problems on mankind’s increasing use of coal. He believes that currently available renewable technologies are hopelessly expensive and inadequate (I concur) and that shale gas is a game changer.

He dismisses nuclear energy as essentially irrelevant to the discussion. On several occasions in his book and during his recent talk to Policy Exchange, he implied that France’s nuclear industry might have had something to do with the country’s decision to ban hydraulic fracturing; he never seems to consider the notion that Germany’s and Japan’s irrational reaction to Fukushima might have been encouraged by the world’s coal, oil and gas industry in order to increase their sales.

His analysis rests on the presumption that the Greens are well intentioned, but misguided with regard to the technical potential of their favorite energy solutions. My analysis includes the strong possibility that at least some of the Green leadership has been pursuing exactly the results we have been getting so far – namely expensive but unreliable wind and solar, more coal, more gas, high-priced oil and more carbon dioxide emissions. There is a lot of money to be made by continuing hydrocarbon business as usual with some distracting expenditures on inadequate substitutes.

Helm believes that the Greens have been sincere when they claimed to have opposed nuclear energy because of a stated fear of nuclear weapons; I allow for the strong possibility that the Green movement has always been opposed to nuclear energy because at least some of the founding members wanted to halt nuclear energy development in order to protect the interests of the established fossil fuel industry.

Helm repeatedly says “you can’t make this stuff up” when pointing to the fact that several decades and enormous sums of money have been wasted in a failed effort to address CO2 emissions growth; I believe that rational – but not terribly moral – people purposely created a situation where irreplaceable resources were transferred from taxpayers and consumers without reducing the world’s consumption of coal, oil and gas. As Helm and most businessmen clearly understand, a decision to invest in one path is a decision to NOT invest in an alternative path; money cannot be spent twice.

Here are some example quotes from the book’s Introduction.

Worse still, whilst this unprecedented expansion of coal burning was going on, and with emissions marching ever upwards, many political leaders seemed to think that the problem could best be addressed by building wind farms and putting solar panels on the roofs of houses and putting insulation in the roofs of houses too. It was as if either all the carbon-intensive, coal-based goods from China didn’t matter, or they could be left for another day.
…
Instead of homing in on coal, China, economic growth and the underlying population growth, the emphasis has been on the production of carbon emissions in Europe. What matters — the carbon footprint — has been largely ignored. Whilst Europe has been deindustrializing its own production, it has not debarbonized its consumption.
…
Far from running out of fossil fuels, we have more than enough to fry the planet, and in Part Two it is explained why, for at least policy purposes, we should probably assume that the supply of gas is infinite, and why oil and gas are more substitutable than the peak oil brigade imagines.
…
Getting out of coal is an absolute and immediate priority, and Part Three explains how gas may play an important transitional role, and what shale gas means for climate change and climate change policies. For while all eyes have been on the promise of renewables, a revolution in fossil fuel technologies has taken place. Huge quantities of hitherto uneconomic gas supplies have become available, transforming not just fossil fuel markets, but geopolitics too. This changes the game. It cannot be reversed, and any serious energy and climate policy has to come to terms with the enormity of what has happened, rather than ignoring it or wishing it would go away.

Here is one more quote from the beginning of Chapter 2 that makes it abundantly clear that Helm is primarily concerned with replacing coal with natural gas, a result that will bring joy and enormous sums of money to petroleum suppliers.

It is not hard to find the prime villain of the piece. It is the burning of fossil fuels — almost everyone knows this. What is less appreciated is that all fossil fuels are not equally bad, and of these, coal bears the lion’s share of responsibility. Coal is worse than oil, and much worse than gas. It is a distinction that really matters.

Though Helm is an influential energy policy leader, there are several passages in the book that highlight the fact that his academic training and professional experience is in economics, not in technology. While it is important to understand how prices and markets work, it is also important to understand when the signals provided by the market reflect technical limitations and when they indicate something entirely different. Carbon Crunch includes several example passages that tell me that Helm does not understand enough about energy technology to be a dependable predictor of the future.

Because coal is so bulky, and hence needs a lot of energy to move it around, power stations tend to be located near coal mines, and therefore not necessarily near the final electricity consumers. There are consequent losses of electricity in transmission. (Gas on the other hand, is cheap to transport, and can therefore be turned into electricity nearer the market.) Once coal gets to the power station (or industrial factory) it is often stored in big heaps. These ‘rot’, giving off gases and losing thermal efficiency. They also tend to have a lot of radioactivity.

One of the reasons that coal became a dominant fuel source for the Industrial Revolution was that it was easy to move from place to place, especially via rail and water transportation systems. British coal ended up fueling the British Navy all around the world via the use of transportation networks that moved bulk coal to coaling stations so that the fleet could fuel no matter where it was.

The coal piles that Helm dismisses are cost-effective, low-loss storage systems, especially when compared to the limited methods available for storing gas. Unlike gas, which varies in price by several hundred percent around the world because it is so difficult to move, coal is a worldwide commodity where Australia, Wyoming, West Virginia and South Africa can effectively compete to supply the European market.

There are certainly losses associated with transmitting electricity, but it is disingenuous to imply that there are not similar or larger losses associated with moving gas from one place to another. Compressor stations that are required pipeline components do not run on magic, they burn fuel to maintain the pressure and flow of the gas inside the pipelines. There are many other losses associated with moving natural gas including the energy required to put gas into storage and the fuel leaks from all of the components in the transmission and distribution system.

Helm mentions that today’s nuclear power stations are quite similar in technology to those that were available in the 1950s, but even though he is a self declared technological optimist for all other technologies, he dismisses the potential for significant improvements in nuclear technology. He implies that the nuclear industry has made and broken many promises in the past and that the industry has already received more than its share of R&D investments with little return.

He does not admit the obvious illogic of the notion that nuclear energy is about as developed as it will ever get while still using concepts developed within a decade or two of its initial discovery.

Despite the fact that there are many improved nuclear technologies that have already been demonstrated at more than a laboratory scale (Generation III and III+ light water reactors, smaller modular reactors, Liquid Fluoride Thorium Reactors, Integral Fast Reactors, High Temperature Gas Cooled Reactors, Pebble Bed Reactors, Fast Breeder Reactors) Helm is more optimistic that there will be a breakthrough in electricity storage than he is about any significant changes in nuclear technology.

There is one more example worth mentioning about Helm’s nuclear agnosticism. He makes the following statement about a marginal improvement in the recovery rate from known hydrocarbon reservoirs:

To see the impact of a small increase in recovery rates, assume that the average recovery rate is limited to 50% of its total physical resources. There would then be more oil left behind in existing wells than the entire world oil production to date. Much of this is of course unrecoverable, and many wells have been seriously compromised by the use of water and other means to keep pressure levels up. But the oil remains, and a 1% increase in recovery rates makes an enormous difference to the reserves position.

(Emphasis added.)

In contrast, this is what Helm writes about the capabilities that would be released by successful deployment of nuclear reactors that increase nuclear fuel utilization rates from the anemic 0.5% achieved by once through light water reactors to something closer to 50-90% in advanced conversion or breeder reactors:

New designs offer more radical opportunities targeted at the plutonium, and in theory are capable of reducing the half-life of the plutonium to a much more manageable 300 years, and using the resultant fuel to generate electricity. If deliverable, such possibilities could close off quite a lot of the nuclear fuel cycle.

This matters a lot. If the nuclear cycle could be at least largely closed off, then nuclear as an option for addressing climate change becomes a whole lot more sustainable. Then there would be the option of making big carbon reductions without the small scale and intermittency that renewables bring. But it is an ‘if’ not a ‘when’, and even then there are still issues to address.

(Corrective notes: Advanced cycle reactors do not change plutonium’s half life; they consume plutonium as fuel. Waste materials from reactors that fully consume actinides do not have a half life of 300 years; they have a half life of closer to 30 years with complete decay in 300.)

Because of its energy density, low fuel costs, and similarities in heat engine technology requirements with fossil fuels, I believe that nuclear fission energy is the real game changer. It will wrest power from hydrocarbon suppliers, provide a long term, secure supply of energy, and change mankind’s overall carbon footprint.

Implementing the new game will require hard nosed business leaders that recognize the technical potential and that can take advantage of the market opportunities that will be available as people recognize just how big a bill of goods they have been sold so far by people who benefit from the hydrocarbon economy and do everything in their power to discourage the use of nuclear energy.