I work on energy policy for a national security think tank, so I am often asked to talk about energy security. Last week, I participated in a conference in which we were asked to comment on “U.S. Energy Security: How Do We Get There?” As I listened to the presenters at the conference, I realized that how you viewed the problem of ‘Energy Security’ depends on how you identify it. We all seem to have determined that energy security is a problem, but we each had different understandings of what the term ‘energy security’ actually means! Of course, that means there were very different prescriptions for how to ‘solve’ the problems of ‘energy security.’
In the absence of a definition, everyone defines energy security differently –both speakers and listeners. It is something like the late Margaret Thatcher said about the politics of consensus: “it is something in which no one believes and to which no one objects.” Along those lines, I believe that ‘energy security’ has devolved into simply a buzzword: a phrase that everyone favors, but defines differently. Pundits, politicians, lobbyists, industry, and campaigners from across the political spectrum cry ‘energy security’ because it polls better than their preferred policies. I have done it as well. Listeners, then, are misled because, really, who could actually be against ‘energy security?’ It is like being against mom, America, and apple pie.
As the Years Roll On
API uses ‘energy security’ to argue that we need to open more land to drilling. Proponents of Keystone XL argue that we need a new pipeline from Canada because of ‘energy security.’ Environmentalists argue ‘energy security’ to tell us why we need to build more windmills and solar power. ( Continue… )
How much will replacing coal cost Los Angeles? (Sponsor content)
In a story from yesterday’s Los Angeles Times, a city watchdog has attached a large price tag to the city’s initiative to move the city away from coal-based electricity.
According to the article, “Fred Pickel, the ratepayer advocate at the Department of Water and Power, said Monday that eliminating coal from the utility’s power mix ahead of a state-mandated deadline is projected to cost more than $600 million. What that could mean for ratepayers’ electricity bills is unclear, he said.”
At a meeting of the City Council’s Energy and Environment Committee on Wednesday, Pickel said he would urge city officials to look for ways to lower the costs. “The question is, can we do this cheaper?” he said.
Two coal plants currently provide nearly 40 percent of the city’s energy. Under the new plan, the city would supplant most of that with power produced by switching to natural gas.
Fuel switching is an interesting approach for Los Angeles considering clean coal technology enjoys majority support among California voters. It is especially noteworthy that this support is broad-based, encompassing majorities of Republican, Democratic and voters declining to state a party affiliation. Given that the most important issues to California voters are “jobs and the economy,”voter sentiment that the state’s energy policies have made it less competitive should be a red flag to Sacramento legislators.
In a recent survey of California voters, nearly 57 percent answered yes when they were asked “Do you support or oppose developing new clean coal power plants in California?” When asked the question, “Do you think that California’s energy policies have made the state more or less competitive?”, more than 43 percent answered yes. And particularly telling is the fact that nearly one-quarter of California voters feel that the state’s energy policies have made the state far less competitive.
These numbers are in stark contrast to comments recently made recently by Los Angeles Mayor Antonio Villaraigosa when he announced that the city will become the only city in America that won’t get any electricity from coal by the year 2025.
Coal-based electricity is one of the least expensive, most reliable means of producing electricity, and it’s a central part of the American energy portfolio. Not only that, coal has a long history of providing energy to Americans.
America has depended on the reliable and abundant coal that comes from our land and powers our lives for more than a century. With the energy in America’s coal reserves being roughly equal to the world’s known oil reserves, it’s clear that coal should continue to be a reliable source of electricity for all of us.
For half a decade, Americans have debated the potential risks and rewards of a pipeline that would carry oil from Canada to refineries in Texas. The back-and-forth comes to a head Thursday in Grand Island, Neb., as the State Department holds a public hearing on the Keystone XL pipeline.
Even heavy, late-season snow couldn't keep pipeline supporters and critics from making their voice heard. They lined up outside the hearing hours in advance Thursday morning, according to the Lincoln Journal Star.
If the passionate, opposing sides agree on anything, it's that the debate is about more than just a pipeline.
Keystone XL rests squarely at the intersection of energy security, environmental stewardship, and economic growth, making it a useful proxy for a broader argument over the role of energy and environment in America's future.
The sluggish economy has only cemented Keystone's symbolic role. Environmentalists seize upon the carbon-intensive project as a way to keep environmental concerns part of a political discussion dominated by fiscal cliffs and sequestration. Keystone supporters say the White House's failure to approve the $7.6 billion line more than a year ago is one example of how the Obama administration has missed opportunities to boost the economy by encouraging fossil fuel production. ( Continue… )
Despite the evident risks of climate change – from sea-level rise and coastal flooding to crippling drought – Congress has been slow to respond. Fortunately, states have given us reason for optimism by taking the lead on reducing heat-trapping emissions from fossil fuels.
California, for instance, just launched its cap-and-trade system for reducing global warming pollution. The program was passed under a Republican governor and is being implemented by a Democratic one. The state also has the country’s most ambitious renewable electricity standard, which requires utilities to provide 33 percent of their electricity from renewable sources by 2020.
Such renewable electricity standards are now commonplace: 29 states and the District of Columbia have them. These standards, which were often adopted on a bipartisan basis, have been crucial for making renewables the leading source of new US electricity generating capacity in 2012.
The standards are also consumer-friendly. For example, the Lawrence Berkeley National Laboratory found that as utilities in 14 states complied with renewable electricity standards, they increased rates just 1.5 percent or less. In Minnesota, Xcel Energy – the state’s largest utility – reported that renewable energy investments actually lowered prices in 2008 and 2009 by 0.7 percent. ( Continue… )
General Electric (NYSE: GE) has announced plans to expand its oil and gas business by acquiring Lufkin Industries (LUFK) in a $3.3 billion deal that boost its market share for oil and gas equipment and strengthen its turbo-machinery supply chain.
GE announced last week that it would acquire Lufkin, whose primary business is providing artificial lift technology used in almost all oil wells worldwide, and whose secondary business is industrial gears and bearings used in energy applications.
The acquisition significantly boosts GE’s oil and gas portfolio, which was worth $15.2 billion of its total $147 billion in revenues for 2012. Over the past three years, GE’s oil and gas segment has realized annual growth of 16% due to an ambitious acquisition drive. (Related article: GE to Buy Oil Pump Makers Lufkin for $2.98 Billion)
For Lufkin, we’re looking at $1.3 billion in revenues last year, up 37% from the previous year. The $3.3 billion acquisition price tag on Lufkin represents about 13 times its 2013 estimated earnings before interest, taxes, depreciation and amortization, according to Forbes. ( Continue… )
Progress towards a more sustainable world energy supply has stalled, according to two separate studies released Wednesday.
Despite significant growth in wind and solar, the average unit of energy emits about the same amount of carbon dioxide as it did 20 years ago, according to the International Energy Agency. That's largely because the continued growth of worldwide coal use offsets regional gains in renewable generation, the authors say. A separate Pew study finds investment in the clean energy sector has slowed recently, although overall capacity is up.
“As world temperatures creep higher due to ever-increasing emissions of greenhouse gases like carbon dioxide – two thirds of which come from the energy sector – the overall lack of progress should serve as a wake-up call,” IEA Executive Director Maria van der Hoeven said in a press release. “We cannot afford another 20 years of listlessness."
The gloomy overall picture belies breakthroughs in individual sectors.
Global solar power capacity grew by 42 percent between 2011 and 2012, the IEA found, and wind grew by 19 percent. Sales of electric vehicles doubled and a record 1.2 million hybrids were sold worldwide. India, China, Brazil and other emerging economies have implemented policies to spur development of renewable capacity.
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These advances fall short of what Ms. Van der Hoeven is a necessary global shift away from fossil fuels and towards low-carbon technologies. Governments must dramatically increase investment in energy efficiency and clean energy, the study concludes, to avoid potentially catastrophic warming of the planet. ( Continue… )
With recent headlines trumpeting the entry of Saudi Arabia and China into the shale game, enthusiasm for unconventional natural resources has reached a fevered pitch. Countries in all corners of the world are poised to bolster the global economy when, only a few years ago, concerns abounded that demand would unsustainably exceed supply. Any increase in supply is an investment in future energy security worldwide.
However, it may be time to put a damper on some of the enthusiasm.
What is good for the global economy in the long term may very well cause problems for the countries pursuing shale energy in the short term. Indeed, the stress of infrastructure investments, resource constraints, environmental concerns, and the risk of financial losses from temporary, price-depressing energy gluts could cause nations like Saudi Arabia and China to abandon shale energy before they reap its benefits. Thus, government policy will be key in determining the scale of the shale boom – even in the United States, which has reached a crucial fork in the road in shaping the future of its shale industry.
Saudi Arabia’s chief concern is the immediate need to develop the critical infrastructure necessary to make shale plays a possibility. Much of Saudi Arabia’s shale resources lay in remote, dry areas where no existing extraction or transport facilities exist. Moreover, in order to access this shale, Saudi Arabia will need to commit to the costly, energy- and resource-intensive process of hydraulic fracturing. Not only does Saudi Arabia need to establish the infrastructure to obtain shale gas, but it also needs to develop a viable way to transport the vast amounts of water required to get the process started. In addition, producers will need to bolster their ranks of skilled workers. These challenges indicate that it could take up to five or six years before Saudi Arabia achieves meaningful production. The global energy economy can change substantially in that time frame, and fluctuations in energy prices can make such a vast investment risky. ( Continue… )
The Keystone XL pipeline has idled in limbo since 2008 when TransCanada, a Canadian energy company, first sought presidential approval for the cross-border oil pipeline.
Now, some in the US House of Representatives are again hoping to move forward with the project, sans approval from either the White House or US State Department. The project requires a presidential permit because the proposed pipeline would straddle the US-Canada border.
The latest proposed workaround is the Northern Route Approval Act, which would mitigate potential legal challenges and effectively allow TransCanada to begin construction on the project without a presidential permit. The bill is a sign of continued frustration from Republicans who say the Obama Administration has dragged its feet on a job-creating, economy-stimulating infrastructure project.
While technically possible, such a bill faces significant obstacles. ( Continue… )
Designed by the engineering multinational firm Arup, more famous for designing the Pompidou Centre, the Sydney Opera House and many of the stadium used for the 2008 Olympics in Beijing, the building is the first attempt to create what Arup has called the future of skyscrapers.
With the outer facades covered in glass panelled bioreactors the building can produce its own energy. The algae in the reactors provide biomass and thermal energy, as well as insulating the building from temperature changes and noise.
Currently a total of 129 reactors have been installed, all controlled by an energy management system that harvests energy from the sun, and the algae, to be used to heat water, which then can be used to generate electricity, or as a means of warming the building during the winter. ( Continue… )
Recently, I explained how high oil prices can bring on financial collapse for oil importers. In this post, I’ll discuss the flip side of the situation: how oil exporters reach financial collapse.
Unfortunately, we have many examples of countries that were oil exporters, but are dealing with collapse situations. Egypt, Syria, and Yemen all have had political disruptions since 2011. These may not be called financial collapse, but they all took place as the country’s oil exports decreased and as the price of imported food rose. Another example is the Former Soviet Union (FSU). It collapsed in 1991, after a period of low oil prices, in what looks very much like a financial collapse.
There are several dynamics at work in the financial collapse of oil exporters:
- Oil exporters are often dependent on oil export revenue to fund government programs.
- The need for government programs grows as population grows and as the price of food rises.
- The amount of oil that can be extracted in a given year often declines over time, as initial stores are depleted.
- Exports often decline even more rapidly than oil supply, because of rising oil consumption as population grows.
In general, high oil prices are good for oil exporters (except the effect on food prices). At the same time, oil importers strongly prefer low oil prices. As a result, we end up with a price tug of war between oil importers and oil exporters. ( Continue… )