The Hamster That Ate The World lol

A must see British video clip that illustrates the seminal idea upon which Herman Daly built his model of Steady State Economics (SSE). It is also important to remember that Mr. Daly never gave himself the credit for the idea, he always stressed that he borrowed the concept; or rediscovered it if you will; from the work of JS Mill.

The Price of Energy

The following article contains factual data about energy prices. Read it and note that low prices do not coincide with clean sources. If you believe that our major environmental challenge is related to carbon emissions then should we ; in this case; let the market rule?
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The price of energy has a very strong influence on the energy choices governments and individuals make. I sometimes hear people ask "Why are we still building coal-fired power plants?" or "Why don't we replace more petroleum with biomass?" One reason is that biomass is generally more difficult to use from a logistical point of view. Another is that there just isn't enough biomass to meet present energy demands. But a major factor comes down to price.

The price and convenience of energy sources are ultimately the keys to customer acceptance. Homes can be heated with wood, heating oil, natural gas, or electricity. Automobiles can be fueled with gasoline, ethanol, natural gas, diesel, electricity, and a wide variety of more unconventional fuels. If consumers have a choice and the supply is convenient, they will tend toward the cheapest energy source they can get.

Below I have compiled a list of current prices for some of the more common energy options on an energy equivalent basis - the British Thermal Unit (BTU). A BTU is simply the amount of heat energy it takes to raise the temperature of one pound of water by 1 degree Fahrenheit. Everything has been converted into U.S. dollars per million BTU (MMBTU). The sources for the data are listed below.

I have included the cost of electricity, although it is important to note that the efficiency of electric motors is higher than for internal combustion engines. For comparison, I have also included the cost of the federal ethanol tax credit (Volumetric Ethanol Excise Tax Credit), which is $0.45 per gallon of ethanol for 2010.

Energy Prices per Million BTU

* Coal - Powder River Basin1 - $0.56
* Coal - Northern Appalachia1 - $2.08
* Natural gas2 - $5.69
* Ethanol tax credit3 - $5.92
* Propane4 - $13.28
* Petroleum5 - $13.43
* #2 Heating oil4 - $14.74
* Jet fuel4 - $15.48
* Diesel4 - $15.59
* Gasoline4 - $17.81
* Wood pellets6 - $18.57
* Corn ethanol7 - $23.46
* Electricity8 - $26.31
* Cellulosic ethanol from corn cobs9 - $30.92

Observations

The list above illustrates why wood pellets for home heating are flowing out of Canada and the U.S. and into Europe. Wood pellets are much more expensive and generally less convenient to use than natural gas in North America. It isn't difficult then to see why wood pellets have a difficult market in North America. For people with access to natural gas, the lower price and convenience of natural gas is compelling. In Europe, natural gas supplies aren't as secure, so they have more incentive to consider wood pellets as an option.

The cost of the ethanol subsidy is interesting. Taxpayers presently pay more for the subsidy than natural gas costs. However, if you consider that the subsidy is on a per gallon basis - and a large fraction of that gallon of ethanol is fossil fuel-derived, the subsidy for the renewable component is higher.

For instance, consider an energy output of 1.5 BTUs of ethanol (and by-products) per BTU of fossil fuel input (this is approximately where today's corn ethanol plants operate). In this case the renewable component per gallon is only 1/3rd of a gallon; the rest of the subsidy is essentially subsidizing the fossil fuel inputs. (An energy return of 1.5 indicates that it took 1 BTU of fossil fuel to produce 1.5 BTUs of ethanol; hence the renewable component of the ethanol in that case is 1/3rd). That means that the subsidy on simply the renewable component is actually three times as high - $17.76/MMBTU. Also bear in mind that this is only the subsidy; the consumer then has to pay $23.46/MMBTU for the ethanol itself.

Of course there are many other considerations, and government subsidies can tilt the playing field toward or away from different options. But if you ever wonder why those long railroad cars filled with coal are headed east from Wyoming, or why we tend to heat homes in North America with natural gas or heating oil, now you know.

Sources for Data

1. U.S. Energy Information Administration (EIA), Coal News and Markets Report for the Week Ending 1/15/2010. (Link).

2. EIA, Natural Gas Futures Prices for 1/15/2010. (Link).

3. U.S. Department of Energy, Volumetric Ethanol Excise Tax Credit (VEETC). (Link).

4. EIA, Spot Prices for 1/15/2010. (Link).

5. EIA, World Crude Oil Prices, U.S. average price for 1/15/2010. (Link).

6. WoodPelletPrice.com, typical premium wood pellet prices for 1/15/2010. (Link).

7. CME Group, Chicago Board of Trade Ethanol Futures for February 2010 Contract. (Link).

8. EIA, Wholesale Day Ahead Prices at Selected Hubs for New England 12/31/09. (Link).

9. POET, POET Announces Cost Reductions in Cellulosic Ethanol. (Link).

Conversion factors

Petroleum - 138,000 BTU/gal

Gasoline - 115,000 BTU/gal

Diesel - 131,000 BTU/gal

Ethanol - 76,000 BTU/gal

Heating oil 138,000 BTU/gal

Jet fuel - 135,000 BTU/gal

Propane - 91,500 BTU/gal

Northern Appalachia Coal - 13,000 BTU/lb

Powder River Basin Coal - 8,800 BTU/lb

Wood pellets - 7,000 BTU/lb

Electricity - 3,412 BTU/kWh

Is Cap And Trade Dead

Cap-And-Trade appears to be dead in the US Senate or maybe not. It all depends on whether you side with Senator Graham or whether you prefer to be on the side of Senator Kerry. The following article appeared in the NYT.

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Advocates of Climate Bill Scale Down Their Goals

Their preferred approach, a cap-and-trade system to curb emissions of climate-changing gases, already faced a difficult road in a bruised and divided Senate. Its prospects grew dimmer after the special election in Massachusetts last week was won by Scott Brown, a Republican who repudiated the federal cap-and-trade proposal in his campaign.

Republicans, industry executives and some Democrats have already written cap and trade’s obituary, at least for this year. And even some of the system’s most ardent supporters now say they must scale back their ambitions and focus on job-creating energy projects and energy efficiency measures if they are to have any hope of dealing with climate change in this Congress.

“Realistically, the cap-and-trade bills in the House and the Senate are going nowhere,” said Senator Lindsey Graham, Republican of South Carolina, who is trying to fashion a bipartisan package of climate and energy measures. “They’re not business-friendly enough, and they don’t lead to meaningful energy independence.”
Mr. Graham said the public was demanding that any energy legislation from Washington focus on creating jobs, whether by drilling for offshore oil or building wind turbines.

“What is dead is some massive cap-and-trade system that regulates carbon in a fashion that drives up energy costs,” he said.

Mr. Graham’s opinion matters because he has been the only Republican willing to work with Democratic senators on some form of climate change legislation. He said that the price of attracting Republican and business support was to use the legislation to provide incentives for building nuclear power plants, stepped-up domestic oil and gas exploration and subsidies for reducing carbon dioxide emissions from coal.
White House officials continue to insist on a broad approach to climate and energy, including a cap-and-trade system for carbon emissions that encompasses the entire economy. They are also pressing forward with Environmental Protection Agency regulation of emissions of heat-trapping gases over the virtually unanimous opposition of Republicans in the House and Senate.

“There continues to be very strong support among a range of legislators for comprehensive climate legislation that includes cap and trade,” Gary Guzy, the deputy director of the White House Council on Environmental Quality, said at a conference last week.

Another White House official, who insisted on anonymity to avoid overshadowing the State of the Union address, said President Obama would restate his commitment to a bill that addresses global warming along with measures to increase energy efficiency and clean-energy technology.

The official said the White House would support legislation that provided incentives for oil and gas drilling and for construction of nuclear plants, as well as provisions that helped industries that use a lot of energy and were vulnerable to foreign competitors.

But the president will also insist that any legislation also contain some form of cap on emissions of heat-trapping gases to make good on his pledge to reduce global warming pollution by 17 percent over 2005 levels by 2020.

“At the end of the day, any and all ideas are on the table because the clock is ticking,” the official said.

Senator John Kerry, the Massachusetts Democrat who is working with Mr. Graham and Senator Joseph I. Lieberman, independent of Connecticut, to try to knit together a global warming and energy measure, said this week that the political climate in Washington was already harsh and had worsened with the special election in his home state. Mr. Kerry said he had held talks with the White House, business leaders and fellow senators in hopes of finding an approach to climate and energy issues that can win enough votes for passage.

“I can’t tell you whether it will happen this year or not,” Mr. Kerry said. “But it’s going to happen. It is inevitable that the United States will deal with climate and energy. The sooner you do it, the cheaper it is.”

Some leaders in the energy industry were almost gleeful in pronouncing cap and trade dead for the year. They see an opportunity to win support from Congress for their businesses and to delay indefinitely the costs of reducing pollution from heat-trapping gases.

“Reality is hitting, and the reality is the American people are interested in jobs, not extreme legislation,” said Larry Nichols, chief executive of Devon Energy and chairman of the American Petroleum Institute. “Because of the shift in raw political power, there now has to be compromise.”

A bill that has the support of Senator Harry Reid, the Democratic leader, and some senior Congressional Republicans, would offer tax incentives to bus and truck fleets to switch to natural gas, a fuel that emits less carbon dioxide than diesel. Some energy industry leaders are also looking for additional money for so-called clean-coal research and energy efficiency measures for buildings.

Two senators, Maria Cantwell of Washington, a Democrat, and Susan Collins of Maine, a Republican, have proposed a system known as “cap and dividend” under which power plants, steel mills, refineries and other major carbon emitters would have to pay for permits to pollute, with all of the money being rebated to consumers to cover the higher costs of energy and manufactured goods.

Another option, but one largely opposed by most businesses, is regulation by the E.P.A. Mr. Obama has repeatedly said that he would much prefer a market-based cap-and-trade system to top-down mandates from the E.P.A.

The partisan gridlock that hobbled health care overhaul could be repeated if the administration and Democratic leaders try to ram through a sweeping measure to rein in carbon emissions and remake the nation’s energy economy, said Paul Bledsoe of the National Commission on Energy Policy, a bipartisan advisory group.

“If cap and trade becomes a political anathema,” Mr. Bledsoe said, “the consequences are very broad. If it is seen as divisive or politically suicidal, it could be discredited as the vehicle for dealing with climate change for the foreseeable future.”

The Flat Earth Society Is Alive And Doing Well In Saudi Arabia

As the world, at least most of the countries in the world, express concern and even regret over the failure of the Conference at Copenhagen to come to a meaningful conclusion the Saudi Arabian chief negotiator at the talks expressed Saudi Arabia’s glee and satisfaction that the Copenhagen Conference failed to take any positive steps towards meeting the most important challenge that civilization has ever met. Mr. Mohammad Al-Sabban went further as to predict that the world seems to be heading towards a stalemate on the question of anthropomorphic global warming, AGW. Mr. Al-Sabban proceeded on an interview on the BBC to predict that the action on climate change will become similar to that on the Doha round of the WTO. The WTO members have been engaged in negotiations for the past ten years with no resolution in sight.

It is shameful that a country takes pride in the fact that it is not likely for the world community to make any progress on the climate change issue for at least the next ten years and furthermore Saudi Arabia is proud of its record on AGW because it was essentially the work of a China-Sudan-Saudi Arabia cabal that sank the Copenhagen Conference. Saudi Arabia’s obstructionist role in Copenhagen earned it the moniker the” most likely villain in the awkward squad”.

When the world was initially presented with the problem of AGW, many countries, institutions , scientists and individuals were skeptical until the world scientific community has practically united in adopting the view that human activities are the culprit behind climate change. It has been estimated by the scientific community that any change greater than 2 degrees Celsius will have profound global catastrophic implications that range from disease , to storms, higher ocean levels, food shortages and extinction of specie. The fact that human civilization has become a major evolutionary force can be seen in numerous scientific studies.

The Proceeding of the National Academy of Science concluded that “ Since 2000, a growing global economy, an increase in the carbon emissions required to produce each unit of economic activity, and a decreasing efficiency of carbon sinks on land and in oceans have combined to produce the most rapid 7-year increase in atmospheric CO2 since the beginning of continuous atmospheric monitoring in 1959. This is also the most rapid increase since the beginning of the industrial revolution.”

And the Intergovernmental Panel on Climate Change, IPCC, has also said that :” Warming of the climate system is unequivocal, as is now evident from observation of increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level. Observational evidence from all continents and most oceans shows that major natural systems are being affected by regional climate changes, particularly temperature increases.”

In light of all the scientific evidence from all over the world that climate change is a fact , that its effects will be dramatic, that it is our duty and obligation to try to mitigate it Saudi Arabia is glad that we are not planning any action. But that position is to be expected. Would we expect the drug pusher to support measures designed to decrease drug usage? Of course not. To allow Saudi Arabia and China to have a major say in how to deal with global warming is similar to the proverbial image of putting the fox in charge of the hen house. I am not sure that Saudi Arabia and possibly all other major exporters of fossil fuels should have a say in what is to be done in order to implement strong steps that are bound to create major withdrawal symptoms but that are necessary if the addict is to be given a chance to overcome the addiction. Saudi Arabia and all the other 25 countries in its camp have prevented the global community from making any progress towards rehabilitation and sustainability by insisting that the world is flat. Such a position is demonstrably evil and unethical. But that fact that the global community allowed the "Awkward squad" to carry the day is a powerful statement about our lack of resolve. Shame on all of us.