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Tuesday, August 10, 2010

ADDICTION, OIL AND THE CLIMATE BILL

     It’s time for politicians and environmental activists to get rid of their addiction to the use of the phrase “our addiction to oil”. This overused cliché implies some sort of unnecessary compulsion which can be cured by therapy. The facts don’t fit the characterization.

     The most common associations that are used with the “addiction” claim are:

     1. The necessity of further developing “renewable energy sources” such as wind and solar power. But wind and solar are only relevant to the production of electricity. According to the U.S. Energy Information Administration, oil combustion produced only 1.1.% of electricity in the U.S. in 2008. Wind produced 1.3% and solar, while growing rapidly is still a tiny percentage of U.S. electricity production (globally only .01% in 2009). Clearly U.S. oil consumption/dependence will not be heavily influenced by the continued development of these technologies for some time. One industry analysis predicts that at current rates of growth, solar technologies will produce only 10% of U.S. needs by 2030.

     In fact, transportation of all kinds makes up 66% of U.S. oil use. That includes cars, trucks, trains, boats, ships and aircraft. That means that any large scale decrease in oil use faces enormous technological constraints. Cars that are more fuel efficient can and should be developed; smaller European style cars can be mass marketed; hybrids and totally electric cars can be made a larger part of the automobile market but large trucks and trains are a long way from such uses and electric ships and planes exist only in the imaginations of some researchers. ( Recently a light aircraft with glider-like characteristics made a solar powered low velocity flight. However applying this technology to large, high speed, transport aircraft is not even on the drawing boards and probably never will be.)

     That leaves the other 34% of U.S. oil use as a potential target for reduction. The largest of these uses is industrial production at 25%. This is the production of petroleum based products such as plastics, fertilizer, asphalt, lubricants etc. Research to find replacement raw materials for such products is undoubtedly underway in some quarters but represents an enormous leap in innovation. The other uses of oil are small i.e. residential heating and commercial uses. Thus automobile design is the only medium term source of possible significant reductions in oil use and oil imports. If dependence on foreign oil and the associated massive transfer of wealth to oil exporting nations is the major threat critics say it is, then the medium and long term strategy must include further development of domestic sources, both off shore and in currently politically protected areas such as the Alaskan Nation Wildlife Area (ANWAR).

     2. Critics also say our “addiction” creates a dependence on foreign sources, many of whom are authoritarian regimes that don’t like us ( i.e. unfriendly and undemocratic Middle Eastern states).

     In fact, 42% of U.S. oil consumption is produced domestically. (37% of U.S. production is “off shore”). Of the remaining 58% of U.S. consumption, the top ten oil exporters to the U.S. supply 86% of all our imported oil. The largest exporter to the U.S. is Canada which supplies 21% of imported oil. The second largest exporter is Mexico which supplies 13.4%. In the top ten exporters, only Saudi Arabia, # 3 which supplies 11.3% and the quasi-democratic government of Iraq, #7, which supplies only .4 % of U.S. imports, are Middle Eastern States. Venezuela, #4 and Nigeria, #5 each supply about 10.5% of U.S. imports. (May, 2010 figures.)

     3. Oil consumption contributes large amounts of atmospheric pollutants which need to be reduced to address global warming.

     In fact this is true. Oil consumption from all sources contributes 40% of carbon emissions in the U.S. (2003 figures). However, as the use figures above indicate, it is largely the transportation sector which is involved in this figure. Clearly, new technology in internal combustion engines needs to be developed to produce less harmful emissions but the transportation sector itself cannot be significantly reduced. Indeed, it will continue to grow as the population increases.

     The second major contributor to atmospheric carbon emissions is the use of coal which is used to produce 48.2% of U.S. electricity. Coal exists in abundance in the U.S. One industry analysis estimates a 200 year supply. It would seem logical to advance research to effectively use this valuable resource rather than simply abandoning it. The alternatives are of course, replacing coal burning generators with some combination of solar and wind, which produce no carbon emissions but are still in their application infancy. Natural gas, which currently produces 21.4% of U.S. electricity is “cleaner” than coal but currently (2003) contributes 20% of carbon emissions. That leaves nuclear power, which in the absence of effective “clean coal technology” is the best long term alternative with respect to carbon emissions, because it produces none.

     The problem with nuclear electricity production has been largely political. Anti-nuclear environmental activists concerned about nuclear waste disposal and catastrophic accidents, have succeeded in making applications for new nuclear plants in the U.S. a decades long process and the cost for such plants nearly prohibitive. This may be changing as public concern in the U.S. for carbon emissions grows, and it has an ironic aspect. Currently the U.S. has more nuclear power plants than any other nation but that too is changing and the use of nuclear energy for electricity production is growing across the globe.

     As of June, 2010, there were 438 nuclear power plants in 30 countries and another 61 plants under construction in 16 countries. The U.S. is home to 104 plants with one under construction. France obtains 80% of its electricity from 58 nuclear plants. China and Russia together are constructing 35 new plants. Anti-nuclear activists are clearly on the losing side of this issue. The U.S., as a nuclear weapons state (NWS) has a treaty obligation under the terms of the Nuclear Non-Proliferation Treaty (NPT) to provide nuclear technology for peaceful purposes to the treaty’s non-nuclear weapons states (NNWS). The U.S. has recently expanded this obligation by agreeing to a nuclear technology transfer to India which has not signed the NPT.

     This then, is the energy use context within which the efforts to pass a “Climate Bill” in the U.S. Congress must operate. The political context provides a whole different set of problems.
Currently the House of Representatives has passed a “climate bill”. H.R.2454, the American Clean Energy and Security Act of 2009, a “cap and trade bill” passed in the House by a vote of 219-212.

     This enormous piece of legislation essentially seeks to reduce greenhouse gas emissions nation-wide over time by establishing annual limits (“caps”) on total permissible emissions. It will identify those entities who are considered emitters under the program and then use a system of issuing and auctioning “emission allowances” to them. Total “allowances” will equal the “total annual cap”. The idea is that different emitters i.e. power plants, manufacturers etc. who emit different levels of greenhouse gases and who have different costs in reducing such emissions will create a market for trading i.e. selling these allowances, but all industries will have a market driven incentive to reduce emissions.

     The bill is much broader than this however, but it is still essentially a “climate bill” and has little to do directly with “dependence of foreign oil”. It’s indirect provisions do require electric utilities to “develop a plan to support the use of plug-in electric drive vehicles.” This includes plans for “electric charging stations”, sort of electric service stations. The bill also provides financial assistance to auto manufacturers to facilitate this program as well as federal loans up to $50 billion for technology research for plug-in cars.

     A Senate version of the “cap and trade” bill has been rejected but there will be continued efforts to pass one compatible with the House version. The arguments in favor of such a bill include the claim that restrictions on greenhouse gas emissions will stimulate enormous technological innovation that will create millions of “green jobs” and of course, over time will significantly reduce global warming.

     The opponents of the bill as currently written believe that it will produce significantly higher energy costs which will be passed on to industrial, manufacturing and retail consumers. Such increases will then reduce demand across all sectors of the economy and cost millions of jobs. More jobs will be lost to international competition from those countries that do not impose similar restrictions.

     Currently the debate on “oil dependence” and “climate protection” has more of an ideological than scientific orientation. The science and economics of both the problems and the strategies for dealing with them need to be better explained to voters. Another economy changing, enormous government expansion, health care like episode of “we know what is best for you even if you disagree” is unacceptable.

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