Russia using oil wealth to finance nuclear exports
Russia has announced plans to lend Hungary $14 billion at below market rates to finance the construction of additional nuclear energy production units at the existing Paks nuclear power station.
The announcement is one more piece of evidence showing that Russia continues to diversify its income by exporting nuclear power stations to as large a market as possible. It is winning sales competitions by providing as complete a product as the customer desires. The components of a deal for a nuclear power plant project available from Russia include manufactured parts, engineering services, construction, operations, maintenance, fuel, used material handling and finance.
Recent offerings to countries without nuclear experience or a domestic infrastructure, including Turkey and Vietnam, include a full build, own, operate model. The host country doesn’t need to do anything other than to provide a site and agree to purchase the electricity from the plant once it is operating. At the other end of the deal spectrum, like those with US nuclear power plant operators, Russia’s only participation is to provide enriched uranium.
Some of the nuclear plant export include ancillaries that have little or nothing to do with nuclear energy. Russia and India have a number of wide ranging deals that link a large number of nuclear power plant sales with sales of fighter aircraft, aircraft carrier refurbishment and even a few submarines.
There are liability law-related challenges that are slowing the expansion of the Russian-Indian nuclear power plant trade, but the close involvement of the Russian government provides a path towards resolution that is not available to other suppliers interested in the Indian nuclear market.
Nuclear power plants are long term, valuable assets that provide reliable, emission free electricity for many decades. The rub is that they also require a substantial amount of capital investment before there is any product to sell.
For a government like Russia, which has a history of long term planning and economic integration, decision makers have apparently decided that the capital investment is worthwhile. The capital investment is not a pure cost; the money that customers spend to buy the goods and services associated with nuclear power plant development provide exceptional employment opportunities for Russian citizens.
Russia’s decision to invest in nuclear energy capabilities is a brilliant strategic move befitting a nation of chess players. It recycles an unexpectedly large revenue stream provided by selling oil and gas into assets that will provide long lasting power. Russia’s decision to use recently expanding oil wealth to fund its movement towards nuclear energy provides a stark contrast to the way that America, the home country that I love and served for 33 years, is choosing to spend a similarly large and unexpected revenue stream from selling oil and gas extracted from within its national boarders.
Russia and the United States both occupy land masses that are well endowed with natural resources, especially oil and gas. Both are in the top three producers in the world for those vital and valuable energy commodities. In round numbers, both Russia and the United States produce about 10 million barrels of oil per day and something close to 25 trillion cubic feet of gas per day.
The two countries have a nearly opposite paradigm for taking advantage of their natural resources endowment.
In the US, most of the revenue associated with selling materials extracted from the ground within national borders end up in private hands; taxes and royalties are a relatively small portion of the total price paid by customers for the products. According to the GAO, the federal government’s non-tax revenue from oil and gas production is roughly $10 billion per year. The People of America’s Oil and Gas Industry calculate that their employers provide $31 billion “in revenue to the U.S. Treasury via income taxes, royalties, rents and other fees”, a figure which includes the GAO’s $10 billion in non-tax revenue.
Some might think of $31 billion as a large number of dollars, but in comparison to the total oil and gas revenue figures, it is tiny. Though there are a number of variables, a good guess is that total annual revenue from sales of domestically extracted oil and gas is somewhere close to $400 billion. Federal coffers thus get less than a tithe from domestic oil and gas sales.
Aside: Here are the back of the envelope calculations supporting that guess. $300 billion (9 million barrels per day x 365 days per year x 95 dollars/barrel = $312 billion). Natural gas revenues add another $80-$100 billion (25 TCF x 3.50 per MCF = $87.5 billion) for a total of roughly $400 billion. End Aside.
In Russia, the majority of oil and gas revenue falls under state control, either through national ownership of companies like Gazprom, Rosneft and Transneft or through high taxes and royalties levied on the output from the few multinational companies who have concessions to produce from Russian-owned reservoirs. The Energy Information Agency’s Russia overview states that 52% of Russia’s total federal budget came from selling oil and gas.
In round numbers, RIANovosti reports that Russia’s federal budget is $400 billion per year, indicating that the government counts $200 billion per year from oil and gas sales towards its annual budget. However, the Russians understand the volatility of oil and gas prices, so they do not count all of the revenue in good years as available for the annual budget.
Instead, Russia directs “windfall” revenues that come when prices and production are above a planned level into the Russian Reserve Fund. By current law, oil and gas revenues that exceed 3.7% of planned Gross Domestic Product (GDP) for a given year are directed into the Russian Reserve Fund. The Reserve Fund has a legislated balance cap of 10% of GDP.
The most recently reported balance of the Reserve Fund was $38 billion as of late February 2013. During the period from 2008-2010, the Russian government drew heavily on the Reserve Fund, spending down the balance from a peak of nearly $65 billion in May 2008 to a low of $8 billion at the end of 2010. It is enlightening to note the temporal alignment between fund balance reports and this graph of European (Brent North Sea) oil prices.
When the Russian Reserve Fund balance hits its limit, any additional funds are transferred to the National Wealth Fund, whose mission is to provide support to the pension system of the Russian Federation, supplementing the resources provided by pension savings of Russian citizens. The latest reported balance on the National Wealth Fund is $24 billion.
Some observers have accused Russia as being a “petrostate” that sells only oil and gas and produces few other marketable products, but Russia’s current leaders recognize that steps must be taken to reduce dependence on volatile hydrocarbon income. Here is a quote from a December 10, 2013 article in Russia Today that describes future plans to expand the base of the economy.
Russia’s Prime Minister lauded state plans to boost industrial production, and refutes accusations the economy is running on petrodollars.
“There is a widespread belief that Russia’s only strength is oil and gas, that we live off of oil export revenues and produce nothing. Actually, this statement doesn’t reflect the real picture of our economy, which is based on manufacturing and where industrial production plays a very important role,” Medvedev said on his video blog Tuesday.
In November 2013, Kirill Komanov, deputy director-general of Rosatom, gave an extensive interview to NucNet during which he made the following thought provoking statement:
Nearly 50 countries are considering the possibility of implementing national nuclear power programmes. All of these countries are potential customers. Rosatom is implementing projects to build 28 nuclear power units, including 19 units outside Russia. We also supply nuclear fuel for 76 reactors in 15 countries.
In contrast to its economic rival, the US is spending its current income from oil and gas. The only identifiable investment in nuclear energy projects from the federal government is roughly $700 million in research and development. None of the heavily touted loan guarantees or other incentives that have been promised have begun flowing. Four reactors are under construction in a two US states that have far seeing public utility commissions, but the primary reactor vendor is a company with a venerable US name and more than 80% foreign ownership.
We’ve spent tens of billions of federal dollars on wind turbines and solar panels, many of which have been imported from other countries. We produce about as much oil as Russia, but they export about 60% of their production; we consume everything we produce and import about 45% of our consumption.
Russia apparently recognizes that power is an important business opportunity. They are not attempting to supply solar panels and wind turbines internationally or even domestically. Though I might have overlooked it in my research, I could find no evidence of a production tax credit or a feed in tariff arrangement for renewable energy in Russia. I have found, however, a very strong program of decarbonization that is based on a doubling of domestic hydroelectricity and an increase in nuclear generation from the current 16% to approaching 50% by 2050.
There is one more energy related investment that Russia rarely mentions outright and for which hard evidence is a little difficult to uncover. It is beneficial for Russia to sell as much oil and gas to its lucrative export markets as possible. One way to achieve that goal is to discourage its gas and oil customers from using competitive power sources – like nuclear energy.
That strategic move makes sense to game players, but not to most straight shooting engineers. The same country that does so much to support its own nuclear energy industry also invests in efforts that discourage others from using non-Russian nuclear energy.
One way to uncover Russia’s investment in nuclear energy discouragement is to review RT coverage of the events at Fukushima, paying particular attention to the coverage that the network has provided to people like Chris Busby and Arnie Gundersen. Another way is to understand the implications of Gazprom’s investment in Gerhard Schroeder, the German chancellor who arranged the initial plan for his country to phase out its nuclear plants.
Ironically, the event that is often cited as a primary reason the nuclear phaseout (also known as the Energiewende) achieved such public popularity was a scary accident at a Russian built nuclear power plant. It’s sadly amusing to see how Russia’s nuclear industry is benefiting from Germany’s reaction to Chernobyl.
As soon as the BOO model was announced 4-5 years ago with Turkey it was obvious this was going to be big. It’s getting more and more attention as Russia keeps winning contracts.
You’re mistaken in one sense. Russia does not need oil earnings to do this. Because almost everything is sourced in Russia, foreign reserves are not necessary. Russia is not importing anything. They may be spending some of the money in the country of origin where a trade surplus is useful. But, most of this is paid for in rubles.
So, what is really important are the real resources being used … the skilled men and materials, and whether the real returns will be worth it.
Russia is betting they will be. There is certainly a risk here. The returns are very long-term, and this is in a foreign country, where you cannot enforce your contracts by force (well usually not). No private company could be doing this.
In any case, I am 100% in favor of the spread of nuclear power, for the World’s sake … so this is good news as far as I’m concerned.
In other foreign news CGNPC announced they would commercialize 5 reactors this year. And, they will begin construction of the CAP1400 this year (the larger AP1000 knockoff).
One last note on the CAP1400. The article says that the design is 60% complete, but they have already undertaken site preparation, and will begin construction end of April … and finish the design as they go. We used to have that kind of get it done spirit (or more crudely we used to have a pair).
Get what done?
The russians haven’t accomplished anything significant regards to long standing nuclear system problems. Can’t close the fuel cycle, can’t handle waste., limited applications of electricty, etc.
Look at the problematic Gen 4 designs and then you understand why some people are not that excited about nuclear systems. The problems won’t go away by bravado.
Russia can´t close the nuclear cycle? They have one active fast reactor and are building three fast reactors (BN-800) , one in Russia and two in China. They are already planning another larger fast reactor (BN-1200).
Russia has the technology for handling the waste and closing the fuel cycle and they are exporting the technology to China.
Fuel cycle: I’m not really interested in fuel reprocessing … bury it or save it for use in fast reactors … where, by the way, Russia is also a leader … about to turn on the BN800. If GE ever gets off its ass they can build a Prism prototype.
Limited applications of electricity? You lost me there.
Problematic Gen 4 Designs? They’re nice, but we can work on them while we build several hundred Gen III+ reactors (VVER1200, APR1400, AP1000, CAP1400, EPR, ESBWR). These are very good, and are ready to go.
Ready to go for what?
The welfare state entitlements are paid for by oil and gas revenues. The food system is run by fertilizer and diesel powered engines.
Nuclear systems and renewables have the same problem: they both require oil to fund them. At least with renewables there is growth. With the nuclear pipedream, its not even possible to replace the old reactors.
No oil, you are broke. “Free” “Emission Free” Electricity isn’t going to change that.
“No oil, you are broke. “Free” “Emission Free” Electricity isn’t going to change that.”
The problem for the moment for Russia is not a lack of oil in the world market, it is an excess of oil in the world market that is pushing the price down.
The telegraph had a good article about the world oil market:
“Nuclear systems and renewables have the same problem: they both require oil to fund them”
No you do not need oil to fund reactors or renawables. I can easily find a way to build new reactors without oil here in Sweden. The funny thing is that it was lack of oil that actually made France go nuclear. If anything it is the low oil, gas and coal price that is keeping people from building nuclear plants.
May I ask if you are one of those peak oil people that believes that the oil will run out tomorrow and that will kill our civilization? Because if you are can you explain why we would not see what happen in Sweden during the second world war?
During the second world war Sweden was neutral (because our army was nonexistent). With Nazigermany holding Norway and Denmark, Sweden had problem importing oil. What we did was to focus on creating new energy resources, new hydro power and so on. Today we could do the same with nuclear, wind turbines, and even more hydro power. From electricity could we produce liquid fuels from water. But all that is dependent on that no one finds a way to mine methane hydrates.
I like how you did your best to focus on something else than that Russia could close the fuel cycle. I guess it is hard to be proven wrong?
“It recycles an unexpectedly large revenue stream provided by selling oil and gas into assets that will provide long lasting power”
No, the russian nuclear reactors are trojan horses to gain power over a nation and extract its resources (naturally oil and gas is numero uno on the list). There is no money to be made in exporting nuclear equipment (see CANDU).
Everyday there is news of malware in the control systems of nuclear power plants. Do you really suppose the suckers buying russian nuke hardware are free of that?
Bottom line: oil in the ground is money. Electricity from unsustainable nuclear energy is not.
“oil in the ground is money. Electricity from unsustainable nuclear energy is not.”
First of all, Finland is using Russian reactors and have an availability around 90%. That is not unsustainable. Finland and Sweden could easily mine our own uranium for the forrsible future. After that you could always extract uranium from the ocean.
Second of all, electricity from Nuclear is money. Vattenfalls (Swedish power utility that is owned by the Swedish Government) nuclear assets is profitable, their coal plants in Netherlands, Poland and Germany not that much. Russia could easily do the same.
“First of all, Finland is using Russian reactors and have an availability around 90%.”
Yep, and (cough cough) even the same Swedish design runs a lot better in Finland for some reason-
The reason is political. As Sweden was supposed to close down our nuclear plants no plant owner spent more than necessary on the nuclear plants.
Let’s hope the Swedes are able to keep them working for some more years!
We should have the OL3 operating some sunny year, and then there is the Hanhikivi I VVER-1200 in the pipeline in about ten years.
Its clever. They will be able to charge a premium for fuel designed for their rectors. Host countries will not ever need to create the infrastructure to deal with it.
It looks like they have been working hard and planning on the uranium supply end as well.
Russia’s Nuclear Fuel Cycle ( http://www.world-nuclear.org/info/Country-Profiles/Countries-O-S/Russia–Nuclear-Fuel-Cycle/ )
In December 2010 ARMZ made a $1.16 billion takeover bid for Australia’s Mantra Resources Ltd which has a prospective Mkuju River project in southern Tanzania, which was expected in production about 2013 at 1400 tU/yr.
I didnt even know they were involved in that.
IMO, Russia wants to neutralize Germany as a military threat which I think it’s trying to achieve through surreptitious support of antinuclear Germans by Russian intelligence agencies and diplomats, combined with Russian energy agencies selling the Germans large amounts of relatively cheap gas to get them addicted to gas.
in my suspicious view of things, I am guessing that, in essence, Russians want the ability to throw a gas control switch and shut down Germany on demand if there’s a rise of the Fourth Reich. You can’t blame the Russians for trying to have an off switch for Germany as the memory of World War II and the tens of millions of Russian dead at German hands still weigh heavily on the national conscience.
As for other energy sales like Russian reactors elsewhere in the world, if they can build them cheaper with a similar level of safety to modern Western designs, I say, welcome, tovarich.
@SteveK: no, the design is 100% complete, the *approval* is 60% complete. It’s a longish process.
@Rod…Russia have been open about much of this. Their primary reason for pushing Russian reactors IN Russia is so they can sell more gas to the West. This is equally true with all ‘petro states’ that are going nuclear: UAE and S. Arabia. The UAE actually doen’t export gas anymore at all and so this is important to cut down on gas imports.
The article had that wrong then (100%).
I’m not sure I would call it ‘longish’ compared to what we are doing these days.
Rod, your analysis is spot on. Russia is a competitor in the global marketplace of nation-states. Competition is taking place at the nation level, not at the corporate level. The world’s largest corporation, Exxon-Mobil, is small compared to the national oil companies that are its competitors. If the US is to compete in the global market with players such as Russia, China, or South Korea, vast changes in national industrial strategy are required.
Not so long ago your strategy was Pebble Bed reactors, …now it has changed to molten salt reactors.
In other words, you don’t have a workable strategy other than spend gobs of other peoples money on dumb ideas.
“In other words, you don’t have a workable strategy other than spend gobs of other peoples money on dumb ideas.”
And you do? Really, dude, you just spout off the most silly things about bankers, oil being money, oil revenues being used to fund welfare, randomly accuse random people of supporting equally random ideas that you at the moment dislike, like Gen 4 nukes, make wild claims like nuclear plants having malware in their operating software with more being discovered daily, and just act silly.
Running through your ramblings is an obsession with oil. I thus suspect you are a Peak Oiler; if you’re not, I apologize. Peak oil doesn’t exist, see the Orinoco Belt, the Canadian Tar Sands, the Green River Formation, and gas and coal to liquids.
As long as any source of energy has a substantially positive EROI, we’re not in trouble. We’ll never get there because we have so much coal, uranium, thorium, hydro, biomass, and geo to exploit that we won’t be short well into geological time, thousands of years for coal, probably enough for millions to billions of years for nuclear fuels, and infinity for hydro, geo, and biomass. Energy is fungible (with difficulty for some transformations), and necessity is the mother of inventions.
Wouldn’t it be nice if the US government supported making darn near anything here? Oh I’ll give Mr Obama and company some credit for saving GM. However, I think more needs to be done. If we began building things in the US the way we used to, then we too would be exporting to the world, including nuclear reactors. Think how Pennsylvania and other areas would boom if they had those reactor orders.
“Protectionism” is a bad word to economists, but sometimes a good word for people. Supporting US industry is a way of supporting people. It brings in wealth. Being poor leaves a country vulnerable. History is full of wars and countries being lost by poor armies.
Odd, that the former communists are whipping our tail at selling reactors. Maybe, they are better capitalists than we are. They may even be selling LFTRs in a few years.
Look at the cost of electricity by state.
Every one wonders why there was a boom after the war, well my theory is that electricity was CHEAP. TVA was complete and providing low cost Hydro electricity to most of the Tennessee valley. Alco Alluminum had built ten or twelve dams and started the aluminum boom. Aluminum was a competitive alternative to wooden siding, when you factored in painting and repainting. With low cost electricity soldiers coming home from war building and buying homes and working at a good pay in manufacturing jobs because management could afford to pay more due to the lower cost of electricity. Which also meant making more machinery that used the electric motors.
Wind, Solar and the Renewable (other than hydro) are increasing the cost of electricity and that price will continue to increase. Manufacturing jobs will leave the USA. Get ready. I hope your kids are taking a second language. A language that they can use when they start looking for a job. In the 80’s when the US built reactors for S Korea and others the engineers working with us spoke English. I do not think that will work ten, twenty years from now.
Nuclear power can reduce the cost of electricity down to the point that manufacturing will come here, and we can have a Nuclear Electricity manufacturing boom.
Obama saved the unions. GM’s problems aren’t fixed and he lost a lot of tax payer money in the process.
I would rather buy something cheaper that is imported from another country, than pay much more because it is stamped “Made in the U.S.A.”. You want industry to come back here? Well, regulations need to be reduced to bring down the cost of manufacturing things here. Do you think manufacturers like paying the shipping costs to bring things from around the world to here? It is a similar situation with nuclear reactors. You want the U.S.A. to become a nuclear giant again, get rid of the regulations that discourage investment and increase the cost of any reactor design we could offer for export.
Protectionism results in more expensive processes and products that hurt everyone while only helping those in the industry being protected. You get a net decrease in wealth.
Why do you think the
formercommunist countries dabbling in capitalism are beating us in nuclear technology? They don’t have an NRC. Get rid of the regulations here, institute full liability for the builders and operators of nuclear plants and see what happens. The death of the nuclear industry in the U.S. has come at the hands of interference in capitalism by over-regulation and cronyism.
I do agree with overregulation being the cause of the nuclear industry’s failure to achieve substantial new build here in the US, just as overregulation almost killed the railroads, hobbled airlines, and frustrated motor carriers during the ’60s and ’70s. Price controls led to the temporary decline of natural gas supplies in the 70s and some of the 80s while by hobbling petroleum imports, price controls caused long lines and shortages at gas pumps.
I think a friendly regulator like – as Rod has proposed – the FAA, or maybe the FRA or the NTSB would go a long way to make nuclear energy more viable.
Other friendly measures could include allowing the nuclear waste trust fund to being used for building dry cask storage on plant sites, along with getting a modern enrichment facility off the ground. Both of these should save money and make nuclear more competitive.
I disagree regarding protectionism. Protectionism leads to more folks in the lower income brackets able to earn more because they aren’t in competition with forced labor from large foreign countries whose workers are forced to work by military or hired goon squad guns. Maybe Wal*mart stuff will cost a little
more but, well, such is life.
Why do few people try to justify tariffs on imports as a way of paying for the negative externality (ie higher unemployment) caused by unbalanced trade?
I would guess ideology for some, dogma for others, and inertia for all.
Free trade is programmed into our laws…the USTR is sort of a Department of Free Trade.
I disagree regarding protectionism. Protectionism leads to more folks in the lower income brackets able to earn more because they aren’t in competition with forced labor from large foreign countries whose workers are forced to work by military or hired goon squad guns. Maybe Wal*mart stuff will cost a little
more but, well, such is life.
And that increased wage is by far cancelled out by the high cost to the economy. Cheaper imported products free up capital to be used in more productive ways and creates jobs in new domestic industries or increases the number of jobs available in already existing domestic industries.You also miss the fact that when we artificially increase the cost of material (through protectionism) used in manufacturing products here, the cost to produce things increases and we not only reduce the purchasing power of a dollar, we lose competitive advantage when it comes to global exports.
This does not even address the moral issue of a 3rd party telling me how much I must pay for something in a voluntary trade.
the USTR is sort of a Department of Free Trade.
This is almost an oxy-moron. What would a bureaucratic body have to do with free trade? It seems it could only act to reduce free trade. The only true department of free trade is the contract between two parties who are voluntarily making a trade.
You’d be best to situate your recommendations within the context of “public interest” rather than “friendliness.” Unless it’s primarily self-declared nuclear advocates (who presumably already agree with you) who are your major concern.
How’s this for “public interest”?
Overegulation of nuclear energy has hobbled the only empirically proven method to substantially reduce electrical sector CO2 emissions (see France) in nations without substantial large hydro resources.
Well, if you don’t care about CO2, I suppose that this doesn’t matter to the public interest, but if you do, you can’t deny the truth of the French experience.
Go with it … and please make the best case you can on costs and that France isn’t floundering in debt, a nuclear ship that doesn’t move (and has untold legacy costs), and is struggling with the competitiveness of it’s industries.
So the French economy is having trouble. That isn’t due to nuclear energy. It’s in spite of it. Uncompetitive labor market needs to be reformed. Half the nation can’t go out on strike every third month and lifetime job guarantees are too generous to be sustainable.
Guilt by association tactics like this tickle my funny bone with the evident desperation to not forthrightly confont the facts…that nuclear works, and its the only method that’s been proven to reduce electrical CO2 to very low levels, save large hydro.
Thanks for making me laugh.
France: €48 – 52 MWh.
Germany: €36.60 MWh.
It certainly isn’t helping.
From Der Spiegel:
“As part of Germany’s switch to renewables, industry has been exempt from paying higher prices associated with solar and wind energy. The European Commission, however, believes the practice distorts competition on the Continent. Huge penalties could be in store.”
In sum, Germany cross-subsidizes industrial rates with higher residential rates, higher commercial rates, and the exchequer. They then pay industry thre money raised by keeping an artificially low industrial rate. They aren’t going to be responsible for industry moving because of high rates.
Also, burning lignite is extraordinarily cheap. News at 11.
You don’t think France does this same? They can’t get them low enough (and legacy costs keep rising). Germany can (and the economy is by many measures the strongest in Europe).
Does France charge industrial customers substantially less than all other customers?
It appears they do.
€ 52 MWh (with related costs) for industry in France.
3 bedroom house in France uses around 9 kVA power, and pays a rate of € 0.1249 kWh (including VAT and other tax), and an annual tariff of € 93.94.
If there are better sources than these, I’d love to see them.
Please do not associate me with a call for a “friendly” regulator. I want a regulator that is tough, but fair and a regulator who believes it is their job to enable the safe use of a beneficial technology. I hope that the FAA would never hire someone with a fear of flying, the NTSB should never hire someone who believes that railroads or pipelines are inherently dangerous, and the NRC should review the Atomic Energy Act to realize that elected officials have already decided that nuclear energy is beneficial to the safety, security and prosperity of the United States,
And here is how your friends at the EPA shut down coal.
I provide this because the NRC will (probably already is) use the same techniques with the Nuclear industry, Yucca Mt., SMR type acceptance, etc. and the information will be useful. Not only will these tactics prevent future reactors here they will prevent the US gaining the knowledge and ability to sell the new SMRs to other countries.
“And here is how your friends at the EPA shut down coal.”
As Rich Lentz pointed out an abundant affordable source of energy can help make a pretty good life for most Americans. I really wonder who some of these environmental organizations are serving. Killing our energy sources will harm our industries and there won’t be enough money to go around to sustain environmental programs. Clean air and clean water may not be as much a priority when you are out of work and hungry. Healthy industry will mean that people have jobs and ample resources will be available, Then a controlled sensible approach can be taken to replace the old coal plants with sensible clean sources of energy and money for research in new energy sources.
Here’s a blog comment which illustrates some of the thinking of “Greens”:
Yes. That person’s definitely a true believer in the “I = P × A × T” formula.
Now, are you ready for the really depressing part? One of the guys who came up with that formula is currently the senior advisor to the President on science and technology.
Just in case you were wondering where this country is going … It’s a very hot place and I think that a handbasket is involved.
I guarantee you that Putin doesn’t have someone like that advising him.
Are you referring to the fact that John Holdren was one of three extra participants in the infamous “bet” in which Paul Ehrlich made a wager with Julian Simon about the value of a basket of ten key commodities over a decade long period?
Ehrlich, Malthusian extraordinaire, believed that the world’s population explosion was inevitably leading to an exponential depletion in raw materials that would cause dramatic price escalation. Simon correctly predicted that technology development, markets, and substitution would prevent the crisis from occurring and lead to either flat or negative price escalation when the effects of ordinary inflation were included.
Holdren bet along with Ehrlich; he is a Malthusian population worrier.
I highly recommend The Bet, by Paul Sabin, for anyone who is interested in learning more about the philosophies of the two prognosticators. Holdren’s name is mentioned 91 times in the book; he was a primary apostle of Ehrlich’s faith.
Spoiler – Simon won.
Simon has won, and I generally agree with him winning for the future.
However, I am worried as to the cost and inconvenience of substituting new fuels for old and new resources for old. The world economy can’t turn on a dime when the time comes, even though I’m confident that we’ll be fine in the long run. So, IMO, we might try thinking as to where we’ll be with resources and energy 25, 50, and 100 years down the road, and take action now to achieve those futures with minimal negative disruptions such as shortages, price spikes, and rationing.
Rod – That is a later, more amusing part of the story.
The I = P ×A ×T, or “IPAT,” equation originated from a disagreement between Ehrlich and Holdren on one side and Barry Commoner on the other. If you’re interested, you can find more on the history in a summary by Marian Chertow (PDF).
To summarize, Commoner was of the opinion that change in technology was the driving factor in environmental impact, while Ehrlich/Holdren stubbornly insisted that the most important factor is population, population, population! (I assume that Ehrlich was still hoping to make some more money off of his book, The Population Bomb, which had been published only a couple of years earlier.) It is interesting to note that this quarrel culminated in a pair of articles, a critique and a response, published simultaneously in the March 1972 issue of the Bulletin of the Atomic Scientists.
The actual IPAT formula has its beginnings in a paper by Ehrlich/Holdren — “Impact of Population Growth” (PDF) — which introduced the following relation:
I = P ×F
where I is the total negative impact on the environment, P is the population, and F is the per-capita impact. I’m sure that my fellow scientifically minded readers of your blog must have realized by now that this is so simpleminded as to be a mere tautology! So what’s the point?
Well, Ehrlich/Holdren go on to claim that F depends on P and almost always in a bad way (i.e., to increase I) because of numerous “diminishing returns.” This idea of diminishing returns was the basis of the bet that you mention, Rod.
Eventually, F came to be replaced with the product of two terms: “affluence” A and “technology” T. The most serious ecological scholars in recent years think of T as a mitigating factor. That is, as technology improves, T often decreases. Unfortunately, the most lasting impact of IPAT on the more naive members of society (such as “environmentalists”) has been to confuse and reverse this relationship, so that they have it in their mind that any advances in technology of any kind increase T and therefore increase environmental impact.
This confusion is not without precedent, however, since from the very beginning Ehrlich, Holdren, and Commoner were arguing about such things as the amount of trash from nonreturnable beer bottles in the 1950’s and 60’s, the number of which increased rapidly due to improvements in technology over this time period, whereas increase in the actual amount of beer consumed increased just slightly.
I really wonder who some of these environmental organizations are serving.
By following the money and paying attention to “means, motive and opportunity”, I’ve come to the conclusion that many of the large, high budget “Environmental” groups serve the interests of the oil and gas industry.
They tend to favor high energy prices, and tend to aim most of their opposition at large hydroelectric dams, coal, and nuclear energy. They also fight high profile battles against certain oil and gas developments like Keystone XL, tar sands, or Alaska Arctic Refuge drilling, but those battles generally lead to higher prices (and profits) for established sources of oil, gas, and transportation. (Pipelines compete with oil by rail, new pipelines compete with older pipelines and relieve very profitable congestion, new reservoirs expand supply and lower prices, etc.)
Many of the main funding foundations for environmental causes were established with money from oil and gas enterprises; stocks in those companies often provide part of the endowment base. Rockefeller Foundation, Rockefeller Brothers Fund, Pew Charitable Trusts, Tides Foundation, Ford Foundation, Aspen Institute, George and Cynthia Mitchell Foundation, etc. There are numerous traceable individual cases as well; one high profile example was Aubrey McClendon’s gifts to Sierra Club’s Beyond Coal campaign.
It would take an enormous effort to do a full accounting, but I’ve found enough pieces of evidence spread over a long enough period to produce a recognizable pattern. It is also quite logical – constraints on the supply of any necessary commodity nearly always lead to higher prices. Constraining supply is what opposition groups do best.
Russians see that there is an energy market and use their resources to provide employment to Russians. They sell gas, oil, rectors and uranium to all comers. They even provided nuclear fuel to the US. When Germans closed their nuclear power plants, they even offered firewood from Siberia. When Ukraine interfered with supplies to West Europe, they built the Baltic pipeline.
They are now starting with floating nuclear power plants when even the land commitment is not there. They seem to have got wiser after the break-up of Soviet Union.
There is more to the Russian understanding of the value of power sources than a desire to provide employment.
The common term used in talking about fuel is to call it an “energy” source and to talk about the “energy” industry, but what really counts is the ability to use energy rapidly. That is the definition of “power” from an engineering point of view, but it is also the definition of power from a geopolitical and economic point of view.
Russia is not just interested in supplying power, but in controlling the supply of power.
Truth be told, the US spent about 100 years learning how valuable that endeavor was. We’ve spent about 40 years gradually forgetting what we learned.
While the Russian government pursues nuclear technology exports, the Russian government owned media push alarmist stories about Fukushima.
I tried to explain the “logic” behind that seeming contradiction. Russia likes nuclear energy for domestic uses and in places where it does not compete with their oil and gas exports.
Russia demonizes nuclear in places where it competes with their oil and gas.
Of course, the rest of the nuclear world has spent 27 years demonizing Russian nuclear energy based on exaggerations of the technical issues associated with the RBMK design.
Exaggerations? Nothing worth hanging yourself over I guess?
“By the time of the Chernobyl disaster on April 26, 1986, Legasov was the First Deputy Director of the Kurchatov Institute of Atomic Energy. He became a key member of the government commission formed to investigate the causes of the disaster and to plan the mitigation of its consequences. He took the most important decisions to avoid repeat accidents and informed the government of the situation in the disaster area. He did not hesitate to speak to his fellow scientists and to the press about the safety risks of the destroyed plant and insisted on the immediate evacuation of the entire population of the city Pripyat nearby. In August 1986, he presented the report of the Soviet delegation at the special meeting of International Atomic Energy Agency (IAEA) in Vienna. His report displayed a depth of analysis and honesty in discussing the extent and consequences of the tragedy.
On the second anniversary of the disaster, Legasov committed suicide by hanging himself from the stairwell of his apartment. Reportedly, before his suicide, he recorded himself on audiotape revealing previously undisclosed facts about the catastrophe. According to an analysis of the recording for the BBC TV Movie “Chernobyl Nuclear Disaster” (where he was played by actor Adrian Edmondson), Legasov claims political pressure censored the mention of Soviet nuclear secrecy in his report to the IAEA, a secrecy which forbade even plant operators knowledge of previous accidents and known problems with reactor design. The programme implied that his suicide was at least partly due to his distress at not having spoken out about these factors at Vienna, the suppression of his subsequent attempts to do so and the damage to his career that these attempts caused. The Bulletin of the Atomic Scientists also stated that Legasov had become bitterly disillusioned with the failure of the authorities to confront the design flaws.
Legasov’s suicide caused shockwaves in the Soviet nuclear industry. In particular, the problem with the design of the control rods in Chernobyl-type RBMK reactors was rapidly admitted and changed.” (emphasis added)
There are many ways to interpret the story you have copied out of Wikipedia.
Let’s assume that everything you wrote about Legasov is true and that he really did feel disillusioned about his inability to convince the Soviet nuclear authorities that the RBMK design included a known flaw that contributed to the Chernobyl accident progression. (The control rod issue did not play any role until AFTER many initial “mistakes” by the operators in the pursuit of attempting to complete a very poorly planned and executed test of the coastdown capabilities of the power turbine & generator.)
Suppose he had been aware of the problem even before he was assigned to the government commission to investigate Chernobyl and learned that his theory about the way the flaw would affect safety was frighteningly true — and proven by the “inadvertent” test.
Perhaps he had even tried and failed to convince others that the design needed to be modified, even if that meant some expensive and time consuming repairs.
His effort to make his colleagues aware of the problem would have meant that there were a number of people in the secretive nuclear establishment who knew that an RBMK was an unstable beast IF it was put into a specific operating condition.
What if his investigation revealed that someone had taken advantage of that knowledge to make a mess?
Here is yet another example, with Hungary planning 2 new reactors.
Not to forget Bangladesh in the list of russian financed nuclear projects.
They are clever, placing their bets on countries with large electricity growth rates.
Of course they want to exert political pressure on the receiver countries and also curtail chinese influence in the region…
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