Sierra Club, Shell Oil, Cato, RMI, Exelon and ExxonMobil All Agree – Just Do Without So We Do Not Build Any Disruptive New Capacity
I’m going to go out on a limb – I oppose energy efficiency programs that are marketed as a source of new energy. I know that some people who work in this field are quite sincere, but I have been paying close attention to energy issues for too many decades now to get hoodwinked. When Shell Oil Company, the Sierra Club, the Cato Institute, the Rocky Mountain Institute, Exelon, and ExxonMobil (among many other strange bedfellows) all agree on the “best” source of new energy that is not really a source at all, I get really suspicious of the underlying motives.
A few days ago, I went into Washington, DC to visit with my in laws who were passing through Union Station on their way north. Hung on the side of RFK stadium – a location that catches a lot of traffic flowing in from Central Avenue across the Anacostia River bridge – there was a huge yellow banner with a Shell Oil logo encouraging people to “make what we’ve got go further” and asked them to “let’s go.” As we wandered through Union Station window shopping and stopping for a meal, I counted at least two dozen similar banners and signs in prominent locations. I have also seen the same campaign in at least two major weekly magazines and all over the web.
A few weeks ago, Patrick Michaels, one of the senior fellows of the Cato Institute told CNN’s Fareed Zakaria that we do not have any available replacement technology for fossil fuel and that he favored efficiency as the best way to reduce greenhouse gas emissions. By stating that we do not have any replacement technology available today, he is recommending inaction or continuance of the status quo – at least until something better comes along.
On August 21, 2010, Amory Lovins, head of the Rocky Mountain Institute, recently joined three people – Tom Blees, Dr. Yoon Chang, and Dr. Eric Loewen – in a panel to discuss whether or not nuclear energy was renewable. Lovins made a presentation stating that the best energy source of all was not using energy. His position that stood in stark contrast to the optimistic future that the other three panel members described. They discussed their excitement for a world of abundant energy made possible by fast reactors that could effectively recycle used nuclear fuel and depleted uranium to produce energy from the 99.5% of natural uranium that currently is stored as “waste”.
That abundant, nearly inexhaustible energy that does not produce any greenhouse gas emissions could be used to solve water supply issues, avoid the health effects of indoor pollution caused by burning available biofuels like cow patties in poorly ventilated hovels, and raise living standards for the billions who already use 1% or less of the energy available to the average American. For Lovins, a better path is to just use less. The underlying message is that we can get by on what we already have without investing in a production system that produces even more useful and reliable energy than the one that we have in place today.
At a recent public meeting to discuss a proposal to build a new nuclear power plant on the site of the Piketon Ohio enrichment facility, Jen Miller, of the Sierra Club’s Ohio chapter spoke up and said that energy efficiency programs would be cheaper than a nuclear power plant. Though that might be true, the implicit assumption is that it would be better for Ohio to simply continue producing electricity in the plants that it already has – which are nearly all heated by burning coal. Efficiently using electricity from a coal fired power plant is a bit like reducing from a three pack a day habit to a two and a half pack a day habit.
ExxonMobil is also running an expensive advertising campaign to promote energy efficiency and make better use of the fossil fuels that they are already producing.
Exelon CEO John Rowe was interviewed a few days ago on CNN. He repeatedly said that there is no demand in the market for any new capacity and that the cheapest new capacity was energy efficiency. Those statements reinforce the establishment message that there is no need to build any new plants that produce more reliable, cleaner power than the plants that are currently running. Based on what Rowe told CNN, when there is a need for new capacity, he recommends building new gas plants because gas is currently cheap.
Aside: Did you know that Exelon feels so strongly that there is not enough market demand that they are currently destroying – oops, I meant decommissioning – a nuclear plant that could be renovated for far less than the cost of building new plant. In 2008, TVA demonstrated the value of increasing clean energy capacity by renovating a long shuttered nuclear plant at Browns Ferry. End Aside.
During the interview, Rowe stated that his company benefits by higher gas prices. When a CEO whose company benefits financially by higher gas prices recommends that future capacity additions should be gas fired, alarm bells should sound. A critical thinker who understands markets should know that increasing demand for a commodity with a limited capacity to increase the rate of production will raise the price of that commodity – especially when there are also pressures to increase regulations that will slow production. There is a very interesting segment of the video near the end where the visual is even better than the audio. Here are the words – please watch the video to see the facial expressions. (As a teaser for what you might notice, I would love to play poker with Rowe.)
STEVE HARGREAVES: There is a lot of concern with water contamination associated with gas extracted from shale. You don’t think that will play out in the form of tighter supply?
JOHN ROWE: I think it will have an effect on the economics of shale production. I’m quite certain there will be regulation because of that concern. I think some regulatory structure is legitimate. I would be sitting here smiling like a chipmunk if I really thought that it would have a massive effect on the gas market because it would make my nuclear plants even more valuable than they are. But I really think shale gas is good for consumers and with some reasonable regulation will have a major impact on the long run gas supply.
Bottom line – you should only be excited about energy efficiency programs if you are excited about the current methods that we are using to supply the energy we use. Since the United States burns about a billion tons of coal and 23 trillion cubic feet of natural gas every year; I am not satisfied that our current supply is sustainable from either an energy supply perspective or from a perspective of environmental stewardship. We need to replace the aged infras
tructure that is limited to burning massive quantities of fossil fuels and we need to start doing it now.
The efficiency message is seductive; there is still a strong influence in American society from people who adhere to the Depression era mentality of doing more with less. My experience has been that doing less with less is a far more likely consequence of a single minded devotion to “saving” and conserving.
Wind and solar power systems are – at best – distractions that also support continued demand for fossil fuels. Take a hard look at the results in countries like Germany, Spain and Denmark that have tried really hard to make those sources work. Unless you like very high electricity prices with higher risk of system failures, you would not like those results coming to your state or nation.
I’m not sure why Amory claims that cogeneration is more economically competitive than central stations, even though the majority of electricity in 2030 will be from centralized sources, and the majority of new capacity to 2030 worldwide be centralized. I’m unsure why he talks about free market (etc)… in my state of Australia, feed-in tarriffs are at 66 cents per kilowatt hour for solar. Also the lack of including capacity factor in his presentation gives him the grade of ‘F’. Adjusted for capacity factor, 12 gigawatt of new nuclear construction started last year, whereas 13 gigawatt of wind was implemented (with natural gas backups) so nuclear is by no means as inferior as Amory made out.
@Rod: Your final conclusion that a devotion with “doing less with more” typically leads to “doing less with less” doesn’t really seem to jibe with the argument you posit above (one I strongly agree with) that we absolutely should be doing more with less by recycling used nuclear fuel. This is the definition of doing more with less, and seems to stand in stark contradiction of how you’re concluding your argument.
I don’t think energy efficiency is bad in and of itself, and it’s actually fairly obvious why utilities get behind it; adding capacity costs money, especially incremental capacity like gas turbines. But I think the real argument against energy efficiency as a solution unto itself is something you elude to but never quite hammer home: energy efficiency means we can do more of the same activities for the same energy. It’s extremely unlikely we’ll be putting energy to new uses by efficiency alone – and by new uses, I mean the kinds you elude to, like desalination, industrial process heat, etc.
Likewise, it’s not hard to see why the fossil industry is getting behind efficiency, and in this case, I think you touch on it a well, but it should be more strongly emphasized: energy efficiency with fossil sources means that they get to pretend to do something about CO2 and a rapidly diminishing resource while actually changing nothing about the way we get energy. In that sense then, it’s a delay tactic, as it gives the fossil industry the pretense of being “part of the solution.”
What they mean by efficiency is reducing energy consumption no matter if it lowers the quality of life! Real efficiency would mean there is some new technology that allows us to get the same product with less effort. Trying to pressure individuals to conserve energy is like trying to hold a basketball under water: As soon as the pressure stops (e.g. an economic upswing, economic freedom etc.) these “savings” disappear.
Wow, there is so much here, I’m not sure where to start, so I will just dig in…
Energy efficiency: Anyone who is sane supports this. Where the economic payoff is quick enough, it is a no-brainer. But there are people so seem to consider energy use as immoral (I think Lovins falls into this category). They would have us either reduce our standard of living, or force us to use massive, complex and expensive systems in order to reduce energy usage. Perhaps this would be justifiable if we all we had were fossil fuels, since they are being depleted. But that is not the case. The world is awash in energy, if we are bold enough to do the work it takes to use those sources (i.e., develop advanced nuclear reactors). If we can provide abundant, inexpensive energy, we need not spend as many resources on energy conservation. We need to look at the solution as system, rather than take energy use as evil, to be minimized even at high cost.
Rod Adams wrote:
On August 21, 2010, Amory Lovins, head of the Rocky Mountain Institute, recently joined three people – Tom Blees, Dr. Yoon Chang, and Dr. Eric Loewen – in a panel to discuss whether or not nuclear energy was renewable.
It is irrelevant if nuclear is renewable. What is relevant is whether it is sustainable. Wind turbines may be renewable, but that becomes irrelevant when the sun swallows the earth when it becomes a red giant. If we have enough nuclear fuel to last until that happens, it makes no difference that it is not renewable.
Fossil fuel companies calling for conservation: Here is the “nut” of the discussion as I see it — the fossil fuel companies are playing the other side of Jevon’s paradox. In Jevon’s paradox, using energy more efficiency does NOT cause energy consumption to go down, and may even increase energy consumption. At root, the cause is that as energy is used more efficiently, each unit of energy delivers more value. Here is where the fossil fuel companies benefit — since each unit of energy delivers more value, they are able to charge higher prices for the energy they sell, capturing part if not all of that added value for themselves. So they have a vested interest to encourage efficiency, especially since they are NOT the ones having to make the investment in efficiency (except for what directly affects their operations).
Exelon and the Zion nuclear power plant: While rebuilding it would be cheaper than building a new nuclear plant, running their existing coal plants more is even cheaper, especially since the cost of fuel is passed through to customers. A tragedy of short-sighted thinking.
Don B. writes: But there are people so seem to consider energy use as immoral (I think Lovins falls into this category).
Amen, Don. How about this quote from Amory: “If you ask me, it’d be little short of disastrous for us to discover a source of clean, cheap, abundant energy because of what we would do with it.”
What sort of nonsense is this? This is the same sort of thinking that is so widespread among neo-Luddite environists, who would have us believe that their solution to energy problems is for everyone to be more virtuously ascetic.
As long as a purported solution relies on human behavior and conscientiousness, that is no solution at all. What we have to do is create a system
Tom – I cannot agree more. I watched the C-span video of your panel; I often wish that nuclear energy supporters would stop being so darned polite when matched up against Lovins. He spreads a very dangerous message in a seductive way, but it is hard to see that unless you listen carefully and know a bit about math and machinery.
Look at this article –
What is that going to do to the cost of coal? Ohio and Indiana are next, then Montana, Wyoming, etc.
I could save energy by adding more insulation in the attic, but since I already have 18″ I would almost need to double that to see any real savings on my heating/cooling bill. Using today’s prices, with a 3% per year increase, it would take 20 years to break even on just nine more inches – if I install the insulation myself! So why should I do it? How many homeowners would DIY? The installers want three times the cost of the material to have a kid blow the stuff in, and I would never make back what I paid for that. All that does is redistribute the wealth.
And donb is absolutely correct! even if the cost of coal/oil does not go up the cost of electricity per unit will if we use less. There are many articles on the internet about how the rates went up in this recession due to the decreased use. Google it!
The Environmentalist’s Creed –
I PAT is the lettering of a formula put forward to describe the impact of human activity on the environment.
I = P
The I PAT formula is fundamentally flawed. From my observation, I would exactly invert the effect of technology:
I = P x A / T
That is to say, for a given level of affluence. better technology reduces the impact. The use of “technology” to mean something quite different is simply spin.
The alternative way to fix the formula is to call the final term something else; say Luddism:
I = P x A x L
Where L (Luddism) is the resistance to efficient new technology.
I think the T needs to move downstairs 🙂
The rates for electricity do go up when the usage decreases because all the line costs and stranded costs remain the same. I experienced that effect this year in Manila when my costs went from 22 cents to 35 cents a KWH in two months and we had rolling black outs. As the supply increased the costs went down. The cost of coal is going to rise because coal mines are selling to overseas contracts during this recession. When the economy recovers the cost of coal will likely more than double.
Rod, do you think fossil fuel companies promoting efficiency are 1) greenwashing and 2) preparing the way for price hikes? And if these corporations really cared about efficiency, they would not also be touting inefficient resources like wind power–which of course requires fossil-fuel combustion as backup.
The notion of efficiency as an energy source to be mined comes from the Rocky Mt. Institute. A visitor there told me that the parking lot is full of SUVs.
No question that we can be more frugal. Europeans have always paid a lot more than we do for fuel and are by habit much more conscientious about conserving energy.
@Gwyneth – I believe that the fossil fuel companies are not only “preparing the way for price hikes” in the sense of making them somewhat acceptable, but they are promoting efficiency to make them inevitable. The people running fossil fuel companies are not much different from any other corporate leader – they are in the business of maximizing profit each quarter and growing that number steadily if possible.
The fossil fuel companies have recognized that they are nearing the point where the rate at which they can produce their product is going to slow down because of the increasing difficulty of finding and extracting it from the tighter and more remote sources. The only way to keep profits up and going higher is to sell at higher prices. If better technology is allowed into the market, that spoils their whole “endgame” and why I think it is kind of interesting that Lovins chose a title of “Winning the Oil End Game” to talk about a vision of conservation and renewables.
The only people that win with his prescription are the suppliers, though that is not what he SAYS in the book. Maybe his supporters have a better ability to read between the lines and think his book is a great tactics manual. Sun Tzu often advised his readers to master the art of deception, and I know from personal experience that business leaders often keep a copy of his work close at hand.
You know, if the RMI parking lot is full of SUVs, it deserves photographs and a story (along with Frannie Armstrong’s jetsetting tour to promote the ‘Age of Stupid’ – about, of course the evils of amongst other things air travel) and Al Gore’s mansion (and thousand dollar energy bills for his house..)
I know, I know, these stories have been done before, but I’m hoping that enough of them are done (and especially in the right venue) that they will eventually ‘stick’ in the minds of people..
I = P*A*T is patent rubbish on every level.
It presupposes that I, P, A and T are meaningful concepts.
Human impacts on the environment are extremely diverse in type and quality. What could it possibly mean to bake mercury pollution, the aesthetically unpleasing effects of mountain top removal, the aesthetically pleasing effects of intentionally burning the underbrush and hunting the herbivores to near extinction in yellowstone(this is what the natives did and this is what resulted in the “natural” beauty of yellowstone before it was made a nature preserve), global warming and land use changes into a single numerical value?
The same is very true of T and somewhat true of A(GDP is only weakly correlated with the vague notion of affluence; in much the same way IQ is weakly correlated with “general intelligence”, whatever that is ). P is probably the least arbitrary, but age and health characteristics matter.
It presupposes that all human impact is bad; this too is patent nonsense’. Most human impacts on the environment are very good for humans; which is what counts if you happen to be a human. Forests are miserable places to live in and thanks to cultivating so much farmland we live in an era of greater food security than has ever existed in human history.
Notions such as “harming the Earth” are inherently tied to the value judgement of human beings; without consideration of human beings such statements lack meaning. To a good approximation all species that have ever existed are extinct; in one or two billion years the level of CO2 will be too low and the temperature too high for complex, multicellular life as we know it, Earth will enter a second bacterial age and linger there until the sun expands and boils off the atmosphere and oceans a few billion years later. All animals are merely plant parasites; would it be “good for the planet” to kill all animals for the benefit of plants? Would it be good for the planet to maximize biodiversity by dividing the entire planet into fenced in zones, with widely varying initial conditions(if regions are large and interconnected efficient species will hamper the evolution of new species to fill nich
Well stated! I couldn’t agree more with your assessment. The “energy/work” expended to do just about everything has decreased with each technological innovation since man had a brain. But since “John P. Holdren is advisor to President Barack Obama for Science and Technology, Director of the White House Office of Science and Technology Policy, and Co-Chair of the President
Here are some more of John Holdren’s good ideas and intentions. http://www.cnsnews.com/news/article/75388
The reason that Western Europe and North America are cleaner than China is because we have moved all manufacturing to China, where they are free to pollute land, air and water to feed Western consumerism.
And, by the way, Earth is not just a big, dumb rock sitting there for the benefit of today’s human population.
Amory Lovins is right to worry about discovery of a clean, cheap source of energy in today’s world. There are already so many selfish, unaware people who feel it is their “right” to have as much energy as they want (GWB sure helped Americans on this score). So, I can imagine (as I’m sure Amory Lovins can as well) people who never turn off their TVs, radios, computers, etc. because, quite frankly, they could give a damn. Lots of those people already in our petroleum age; will there be a shift in consciousness with a different source of energy?
@Kare – The reason that we moved our manufacturing to China was that we no longer had access to a sufficient quantity of cheap energy. We still have some of the most educated and productive workers in the world.
The Earth has no intelligence, so yes, it is just a big, dumb rock. Humans are its most valuable inhabitants.
Lovins is just doing what his employers want him to do – convince people that energy should be expensive. Since Lovins freely admits that he has worked for oil companies for more than 35 years, his interest is in helping them make more money by selling their product at a higher price without competition from nuclear energy.
I do not want to tell people how much energy they can use. E=MC^2 and both M and C are very large numbers. I used to go to sea on a nuclear powered submarine; I know how clean that energy is.
A great slogan for nuclear energy salesmen would be “Use all you want – we’ll make more.”
“The reason that we moved our manufacturing to China was that we no longer had access to a sufficient quantity of cheap energy.”
Well, there’s also the access to very cheap labor, whose social benefits are provided by the state, rather than by the employer, and a serious lack of any significant environmental regulations.
Your employees start killing themselves by jumping off of the company buildings? Don’t worry. Just put a few nets around the buildings. Problem solved. Could you imagine Apple Inc. being able to get away with that at any of its facilities in the US?
@Brian – you are correct; China has certain competitive advantages that reduce their production costs. However, there are many components to cost. If the only way we could compete in manufacturing was to make people work outrageous hours, to pay them poorly and to accept an environment where no one can breathe freely, then I would claim that we were right to give up trying to compete in that endeavor. It would not be worth the effort.
However, with cheap energy, more productive labor, cultural knowledge that allows us to design better suited products and shorter transportation distances we have our own advantages in trying to compete for American customers. We can, and should compete – especially if we can find some better business leaders who have no desire to fly to Shanghai.
There’s also the old adage, “you get what you pay for.”
The thing that struck me, from talking to people who have toured Chinese factories, is the utter waste of their manufacturing strategies. Forget lean six-sigma. Labor is so cheap that preventative QA strategies don’t save much money. Thus, all of the quality control is done in the final inspection step, and the rejection rate is mind-boggling high.
All of the labor and resources that were put into the rejected units are all wasted, but since the marginal costs per item are so low, it all works out.
I avoid buying anything made in China if I can find an alternative. The Chinese-made stuff is almost always poorly made junk that is destined for the landfill sooner than it should be.
And on that note – we agree completely.
Rod Adams wrote:
I’m going to go out on a limb – I oppose energy efficiency programs that are marketed as a source of new energy.
I feel the same about this sort of “marketing”, but for the sake of argument, let’s grant this “new energy” idea. That granted, let’s see what this “new energy” looks like. Well, it looks a lot like our present “old energy”, because that’s exactly what it is. Problem is, the present energy mix is not all that wonderful. We have a lot of electrical generating plants using our shared atmosphere as a disposal site for their waste products. We have things like wind turbines providing us with unreliable energy. Conserve as we might, all this “new energy” doesn’t get any closer to the clean, reliable and abundant energy that we really need (not to mention minimizing environmental impact).
Prosperity depends on Energy –
There is an almost linear relationship between use of energy and prosperity (http://bit.ly/9xJSAs).
If you are willing to let those who preach that the preferred new baseload power source is efficiency and energy conservation you had better be prepared to sink back into the middle of the pack among nations in terms of prosperity and all of the free choices that prosperity enables (lower infant mortality, leisure to pursue higher education, adequate supplies of food and water, etc).
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