 | Peak Oil Media: "Humans > Yeast?", Moyers, Kunstler, Rubin, Olbermann & Krugman | The Oil Drum | DrumBeat: June 29, 2008 |  |
| World Oil Exports [00] Introduction | The Oil Drum: Europe | Countdown to $200 oil: $140 oil and speculation | |
McCain’s Energy Plan: Correct Diagnosis, Killer Prescription
Posted by Jerome a Paris on June 28, 2008 - 10:00am in The Oil Drum: Europe
Topic: Policy/Politics
Tags: barack obama, energy policy, John McCain, original, peak oil [list all tags]
With gas topping $4 per gallon and oil prices seemingly reaching new highs every week, more pain at the pump is certain in the foreseeable future, and energy policy is rightfully claiming its place as a major topic of the 2008 election. Indeed, John McCain gave a major campaign speech earlier this week in Houston specifically on energy (the full transcript can be found here) and addresses the issue again this week in Santa Barbara. It is worth looking in more detail at how he describes the current situation, and what he is proposing.
The first thing to note is that his description of the current situation is largely correct. While he probably overemphasizes the role of speculation in recent price rises, he does point out that this is correct only as far as it represents a fundamental shift between growing demand from places like China and India and supply which has had trouble keeping up lately. He also rightly points out that US dependency on imported oil has been growing, and that the amounts of money paid out to often hostile oil-exporting countries are reaching record levels. He also pointedly reminds us that the policies of the past 40 years have done little to change this trend.
And his first policy recommendation is most appropriate: “energy conservation is no longer just a moral luxury or a personal virtue. Conservation serves a critical national goal.” This is, of course, an obvious dig to the current occupants of the White House, and in particular to Dick Cheney who famously said that “conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy.” Putting conservation and energy efficiency, i.e., action towards demand reduction, at the forefront of his policy proposals is a good thing and would be a real change from earlier policies.
In his Santa Barbara speech, he also emphasizes energy efficiency, and he fleshes out some sensible proposals in that respect, including direct action to make government offices and vehicle fleets energy stingy. He also suggests to set up a kind of “X-Prize”: a $300 million prize for a highly efficient car battery system. These prizes have shown their effectiveness to motivate inventors and entrepreneurs in other fields, and while this may be criticized like a gimmick given the scale of the challenge, it’s certainly focusing on the right things.
Further, McCain acknowledges systematic climate change, and the widely-supported theory that fossil fuels play a significant role in fostering it. He specifically argues that energy policy must include measures to curb carbon emissions, via cap-and-trade mechanisms. This is another politically-savvy change from the current administration, given that overwhelming majorities of Americans agree with him on this.
But when one moves to his recommendations, the gap is suddenly yawning with this diagnosis. His concrete proposals include more drilling in the USA, more nuclear energy, and, in an apparent nod to standard Republican economic fare, less regulation (for refineries) and lower taxes (on gas). “Apparent” because the targets seem wrongheaded: if no refinery has been built in the US over the past 31 years, as McCain asserts, that does not mean that “refining capacity” and runs has not increased in the past 15 years via investments on existing sites, and it does not mean that there are any refining shortages.
In fact, refining margins are significantly lower than last year, making the increase in gas prices much less than the increase in oil price would have warranted. And lowering gas taxes can only bring results in direct contradiction to his stated goals. By reducing prices at the pump, it will increase demand (or stop demand reduction efforts); more likely, it will lead to higher margins for oil companies — which probably don’t need the help. Either way, it will not help moving away from the addiction to oil, as diagnosed by President Bush in his 2006 State of the Union address.
With his proposals to open currently closed off areas of the USA for oil production, John McCain seems to think that the problem is addiction to foreign oil rather than to oil per se. But a country that controls 3% of world oil reserves while consuming 24% of world demand cannot seriously expect to be self-sufficient for very long. Indeed, the 21 billion barrels of inaccessible reserves that McCain wants to open to production represent barely 3 years of total US consumption. Even if they were brought to the market rapidly, their impact would be temporary. In fact, the Energy Information Agency, in a report published in 2007, concluded that "access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030" and that "any impact on average wellhead prices is expected to be insignificant." Authorising drilling in currently closed areas will not bring more oil to the market, and will not bring prices down. Pushing it as energy policy perpetuates the hope that it is somehow possible to come back to worry-free times of cheap and plentiful oil. But this is by no means a distinguishing feature of John McCain: this is the real "third rail" of US politics, and no politician has dared touch it so far.
Similarly, his policies with respect to coal and nuclear are focused on the supply side rather than the demand side; but at least, in that case, his prescriptions can be implemented. Nuclear energy has become endlessly controversial, as arguments about what to do with the waste or about vulnerability to terrorist attacks are brought against those that point out, as McCain does, that it is an essentially carbon-free, relatively cheap power source. However, it is certainly possible to move towards a significant share of electricity generation coming from nuclear: after all, it took France less than 15 years to go from no nukes to 80% of its consumption coming from 58 nuclear plants - all using an identical US design provided by Westinghouse. On the coal front, US reserves are also sufficient to ensure plentiful power generation for some decades; however such a policy would go against McCain's professed goal to reduce carbon emissions, as carbon capture and storage is still a theory rather than an industrial reality and is likely to remain that way for many years. Moreover, nukes and coal are not - yet - substitutes for the main use of oil: transportation. Until plug-in hybrids or other electric vehicles become dominant, or people move massively to light rail, electricity will not be a meaningful substitute for oil. And coal to liquids technology is unlikely to ever be scaled to the current needs of US motorists, given the need for vast volumes of water in the process.
So, despite his claims to provide a break from the past, McCain's proposals are stuck in the very same mindset he criticizes - the one that drove Hillary Clinton to push for lower gas taxes, Bush to call for renewed offshore drilling, or Obama to support coal production in the Appalachians: the fundamentally American notion that there is no limit to what one can do, and that solutions will be found by going for more, or bigger, rather than doing less or smaller. But as the global scarcity of oil, that incredible, irreplaceable gift of nature, wich packs energy in a dense, easily transportable form, becomes more obvious, and as we need to increasingly fight with the Chinese and others for it, a revolution in our minds will be necessary to no longer take it for granted. It is a pity that McCain, whose description of today's crisis is spot on, cannot take that jump yet beyond that minimalist $300 million reward for better batteries. That would make him a maverick - and a much needed one.
This article previously appeared at Pajamas Media.
Well he isn't great, but he's a whole lot closer than "solar and wind" Obama. Drilling in the US would produce energy. Nuclear power will be required to run the PHEVs.
We should drill everywhere and build nukes, but that is not the answer. Nearly every organism on Earth lives within a solar budget. We can also.
We think of electricity has a high density power source, Edison did not. Here is a quote:
There actually is no energy crisis. Power generation is 69% inefficient and transportation is 80% inefficient (urban transport is 96% inefficient). Inefficiency in both infrastructures can be decreased below 30%.
If 423 miles per gallon is practical, why do we get 18 mpg moving a person in city? Masdar, the zero-carbon city being built in Abu Dhabi will power its transportation network with solar.
McCain's entire energy plan is nothing but Pork-Barrel and Gimmicks:
1) Providing Half-a-Trillion-Dollars (!) in Subsidies to the Nuclear power industry.
http://goliath.ecnext.com/coms2/gi_0199-5785236/Nuclear-power-a-hedge-ag...
http://energyscience.org.au/FS01%20Economics.pdf
http://www.thenation.com/doc/20080512/parenti
http://nirs.org/neconomics/utstatelegislativepresentation091907.pdf
http://www.nirs.org/alerts/05-12-2008/1
2) Create a $300 Million "award" for electric car batteries. Even though the batteries we have work just great. The problem is cost, which can only be solved by economies of scale for production, and purchase of those batteries. As such, offering an award, only after that has been achieved, would be entirely moot by the time the cost is brought down that far.
http://greyfalcon.net/quickcharge3.png
http://greyfalcon.net/batterycost.png
3) He wants to save us about 8 pennies-a-gallon on oil, but 2 decades from now. A price difference that could just as easily be counteracted by global oil markets next week, much less decades from now. At the risk of putting coastal state economies into potential collapse.
(As much as he says Katrina/Rita was "no-problem", even though over 700,000 gallons of oil were leaked offshore. And 4 million gallons were leaked onshore)
And apparently the Supreme Court cut the 20 year old Exxon Valdez damages in to pieces. Probably considering they STILL haven't payed for it in full. Meanwhile 20% of those involved in the class action suit are now dead.
http://theoildrum.com/node/4174
http://climateprogress.org/2008/06/04/opening-anwr-cuts-gas-prices-two-c...
http://thinkprogress.org/wonkroom/2008/06/19/mccain-katrina-spills/
http://www.ft.com/cms/s/0/04a00cc4-42e6-11dd-81d0-0000779fd2ac.html
4) Save us 8 pennies-a-gallon on oil, now for a few months. But at the expense of jeopardizing the 35,000 road maintanence jobs. And crippling the American roadway infrastructure. Which is rather moot because he wouldn't even be President this Summer to begin with.
http://blogs.wsj.com/washwire/2008/04/15/mccains-gas-tax-plan
Well, cap-and-trade will just be another opportunity bubble for Wall Street to push paper around while making big bucks for the dealers. And Sen. McCain's domestic energy policies would surely be just window dressing as "our guys" pump Iraq dry during decades of occupation as we await "stabilization" on the way to our bankruptcy. Sen. Obama's policies may differ in the margins, but once Dick Cheney whispers "Peak Oil" in his ear, his fundamental approach will likely be identical.
Don't make your choice based on energy policies.
And who invented carbon trading ? ENRON who was looking for the big bucks from , as you said it " paper shuffling !".
Pretty standard GOP. To wit, decide what they want to do first, and then claim that will fix any existing problems whether that makes sense or not.
The "X-Prize" idea is a step. But what is needed is a realization by governments that they are not inventors nor very good administrators.
In the mobilization for World War I communications infrastructure was monopolized of security reasons. The concept of "natural monopoly" expanded to power generation and transportation infrastructure. We locked in place for a century the wonderful innovations of Bell, Ford, Edison and the Wright Brothers. Governments managed the details of HOW to implement infrastructure.
Challenging HOW with a different WHAT was not allowed. We created a mono-culture of infrastructure that mirrors the mono-culture of agriculture that caused the Potato Famines.
In 1984 communication infrastructure was de-monopolized. Long protected analog networks were re-tooled to digital and then fiber and wireless. Stunning examples of how free-markets, a rich ecology innovates better than a mono-culture monopoly.
We need a different WHAT. Masdar is implementing Personal Rapid Transit (PRT). Heathrow is implementing PRT. Uppsala Sweden is implementing PRT. This is a great technology. Hopefully we will implement it on a vast scale. Summary of the industry. And here is a statement of Performance Standard for beating 100 miles per gallon.
Also, hopefully PRT will not be monopolize this effort. As great as it will be, it should be modified and/or displaced by better. There is always a better way.
Also, hopefully the concept of "X-Prize" will shift to the government setting standards of performance, WHAT is needed, and allow the rich ecology of a free market to churn the HOW.
BTW, I have talked and/or met with both McCain's and Obama's staffs about this. Not much response from either.
I'm curious, did you really expect much of a response from the McCain or Obama people? (serious question) If so, why?
IMO, politicians do not respond to the individual, or any group smaller than a majority for that matter. They will do the "right thing" only after most constituents agree that it is the "right thing".
Personally, I do NOT expect any political process to help with any of our pressing problems. In fact, I expect political processes to hinder progress in addressing our problems until they have no other choice. And I sincerely hope that by that time it is not too late to provide any meaningful mitigation.
Does that make me a cynic, or a realist?
Did not expect much but was hopeful.
I agree Egon to some degree, however at least this time around the two candidates running seem to be willing to look at reality vs. the current Bush regime which simply decides what they think is right in a vacuum, and then stands by it ad infinitum with Fox Noise supporting their position verbatum. I figure both candidates will need to be educated, but at least their open to the possibilities.
I think the X-Prize idea appeals to the American lottery mentality.... the fantasy of getting fabulously lucky. It also appeals to the movie mentality that one big idea can change everything, or one great person can make all the difference. Most important advances come from lots of people having lots of little good ideas. Most advances are (horrors!) social inventions, and emerge from communities (are we allowed to use that word in Amerca?) of engineers and tinkerers pushing existing (not revolutionary) technology forward.
A functioning patent system should reward them by giving them limited monopoly rights... that's the X prize for everyone... (yes, patent lawyers aren't cheap, but it's more democratic and more practical) rather than one big prize for one big idea. The patent system more closely matches how technologies are created and brought to market.
The X prize idea sounds like one more example of just how dumb the average American is, always ready to believe in a fabulous pot of gold at the end of the rainbow waiting for the one big man who make the heroic journey to discover it. It is designed to sound like a solution to the average Joe. Nothing more. It is not how the world usually works.
Well.... Not really true at all.
The X prize offers large entities like duracell a shot at a large immediate ROI on R+D money. The last X prize resulted in several times the prize money itself being spent pursuing it. It passes the R+D, administration of R+D and all the other aspects that government is bad at off to the private concerns that ARE good at those aspects and leaves government doing the one thing government does well, spending money.
Jerome, you write:
I don't understand why you included a mention of 'more nuclear energy'in a context that implies you consider it to be a bad idea. In fact, 'more nuclear energy' may be the only realistic alternative to 'more drilling'. Or the choice may between 'more nuclear energy' and total economic collapse. It's as matter of relative risk and determining which is the lesser evil.
Do we still have the luxury of a choice? The problem is not lack of oil reserves, at least not yet. It is that in the race to offset the decline of the flow rate existing oil wells, we can't install enough new oil wells fast enough to bump up the flow rate where we want it to be. How could the solution be the move to a totally different energy source? This replaces the oil flow rate with an electricity flow rate. This requires replacing not only oil wells with nuclear power plants, but also all the distribution and storage infrastructure plus the energy consuming devices. This just increases the difficulty of the task by an order of magnitude.
Given infinite amount of time, the replacement of oil with nuclear could perhaps be done. The problem is we are dealing with a race. If the transition is not done on time, then we have to deal with forced demand destruction.
PolR, I didn't make any such proposal. I just suggested that nuclear energy shouldn't be ruled out. If one includes externalities (climate change factor) I would even say that nuclear energy should be 'ruled in'.
The problem to solve is replacing the incremental decline in imports of oil less any efficiency savings
I prefer to say the problem is to find energy savings to match the decline in imports less new energy that can be brought into line in the given time frame. Same equation, different focus.
You must not leave the time out of equation and it is hard to see how non-oil energy can replace oil this fast given the magnitude of the infrastructure. Simple things like using a bicycle to job commute instead of a car can do a lot. Also buying products that are made near where they are consumed instead of made on a remote continent can also help. The good news is these things will occur naturally as oil price rises.
Well
Nuclear ~$3500/kw investment
Wind ~$1500/kw investment
Even allowing for intermittency, correctly sited wind is cheaper, takes about half the time to install, doesn't require a river nearby, and has no waste disposal problem. What's not to like?
Hi TJ,
And let's not forget DSM. The client file I'm currently reviewing: a 3.2 kW reduction in demand and an estimated 26,940 kWh/year in energy savings. Utility cost: $2,370.23. Capacity factor: 100%.
Cheers,
Paul
wind has a 25% capacity factor. That means that to get the equivalent of 1, 1 gwe nuclear power plant you need to install 4 gw of wind which in turn = $6000/kw of similar capacity factor energy production. In addition to that, wind is unreliable, which means that for every watt of wind power you install you need to keep spinning reserve which must be either fossil fuel plant or hydro (which is already tapped). In addition to THAT, in order to exceed 20% of total energy penetration, you must have either energy storage on a vast scale, or long distance transmission capability on a scale that does not currently exist.
Wind is great, but it there's only so much you're going to do with it.
All of this is neglecting the local resistance which always crops up whenever you actually go to build a windfarm.
I did say "correctly sited". Also, if you're using a 25% capacity factor, you do not get to say it's also unreliable and needs backup capacity. You've already installed enough wind to take care of that.
Yes, I DO get to say that it is unreliable. If you build 4 times as much of it to accomodate the capacity factor, you STILL need the storage and backup generation. The 25% capacity factor was just to get to the point where you are producing a comparable amount of KWH total, you then need to make it usable by providing it when you need it rather than when the wind is blowing.
The 25% capacity factor IS for properly sited wind. As penetration grows, the best sites (the ones that provide that juicy 25%) get used up and the capacity factor drops.
Not to mention estimated capital life of 1/3rd that of a reactor.
Wind is neat. It might even be useful. It services a totally different need than nuclear and shouldn't be viewed as an alternative to nuclear. That kind of thinking is why Germany is building more coal plants.
The second part of your comment is very insightful. The first part isn't because of the non lineary nature of the interest cost with the lifetime of the loan. That benefit is mostly societal, not economical/financial.
Or you could accept the cost of intermittiency, i.e. load management is a part of the solution. With any intermittent source or combination of intermittent sources, there will be periods when some degree of load shedding/management is necessary. The trick is to make a mix of intermittient, and reliable sources meet your economies needs. If I had a choice of 100% intermittient power, or 5%baseline plus 95%intermittient (this is a fairly extreme example), I would be willing to pay a premium for that 5%. So the real question (which involves statistics) is how much of a premium I am willing to pay (at any point in the reliability spectrum) for a unit more reliability. The answer to that will involve economics, and industrial design, as well as cultural attitudes.
The cost of money has a giant effect. If you're shooting for 15% ROIs or better on your projects, you always end up with the low investment options. Anything that requires a lot of investment and long construction times just does not get authorized. This is one of the big reasons most nations are building a lot of ultra-cheap gas power plants even now.
re: TJ
==The cost of money has a giant effect. If you're shooting for 15% ROIs or better on your projects, you always end up with the low investment options. Anything that requires a lot of investment and long construction times just does not get authorized. This is one of the big reasons most nations are building a lot of ultra-cheap gas power plants even now.==
Exactly, thats also why the arguments that "Nuclear power has longer lifetimes" doesn't really hold much weight.
Since it has a horrible ROI, with a high default risk, and the loan increment is massive.
Exactly the hallmarks of what makes it poison to investors.
http://goliath.ecnext.com/coms2/gi_0199-5785236/Nuclear-power-a-hedge-ag...
http://www.manhattan-institute.org/html/eper_01.htm#05
Even after spending $13 Million bucks on planning, not even Warren Buffet can find a way to make Nuclear power profitable on an open market.
http://www.nwenergy.org/news/midamerican-withdrawing-nuke-plans-in-idaho
Utility operators won't even touch it unless 100% of the capital loan risk is covered by the Fed.
http://greyfalcon.net/nuclearloans.png
http://gristmill.grist.org/story/2008/6/13/11021/6597
http://www.usnews.com/blogs/beyond-the-barrel/2008/2/21/nuclear-industry...
http://www.greencarcongress.com/2008/04/doe-plans-385b.html
The cost-of-money is more than giant, it's absolute.
The cost-of-money is more than giant, it's absolute.
At the present time, that's for damn sure. Unless you're a defense contractor.
Whether people are for or aginst Nuclear or wind is not the the point Wind is scalable quickly by most developed nations and every Kw/Hr or MJ of energy produced by wind displaces the same amount of gas/coal being burnt .Which we will have to burn on the days there is no wind!
personaly I would rather have a huge wind turbine and not leave all the nuclear Waste Shit to my sons/Grandsons to solve. Bar burying it in a hole nobody has come up with a better a idea yet.
Why everyone frets about spent fuel that can be stored in a parking lot and no one gives a thought to the mountains of toxic waste that will be toxic forever I dont quite understand.
I propose doing geologic storage of nuclear waste under the mountains of nonnuclear toxic waste that no one worrys about today.
"I propose doing geologic storage of nuclear waste under the mountains of nonnuclear toxic waste that no one worrys about today."
I am anti-nuclear, and yet I think this is brilliant :D
Beware the false comparison. Mercury is toxic forever, but it ends up sinking in to what will be future coal. It occurs in nature and we are just overdoing it. Nuclear waste includes isotopes that do not occur in nature and thus has a much more dangerous effect.
Chris
Beware the poorly educated assertion. Mercury is but one of the toxic waste materials that are around forever. PCBs are a second example that come to mind but there are thousands of examples. Whether the isotope "exists in nature" or not has no bearing whatsoever on the risk level posed by the material. Most of the most powerful toxins occur regularly in nature, including among others, cyanide.
Nuclear waste is only dangerous at the "standing next to it kills you" level for 10 years or so, after that it drops to the "eating more than the RDA gives you cancer", it remains there for a few hundred years and then drops to the "I wouldn't suggest building your house out of it" level. The dangers of rad-waste are massively exaggerated.
PCBs last for a long time, but not forever. Perhaps you would care to try again?
Chris
By the time mercury is isolated by the environment, nuclear waste has all decayed. So what? At least we isolate spent fuel from the environment. In terms of measurable risk, there are millions of people who have been killed by toxic byproducts. Compared to how many who have been killed by spent fuel?
We should bury the thousands of tons of spent fuel under the millions of tons of arsenic, mercury, etc. There should be enough just from the founderies of solar cells.
This type of arguments have been busted several times in other threads. Ignorance of grid dynamics, proliferating the baseload fallacy, omitting historical reliability factors, technical power output curves...
All aspects of propaganda. Not really helping to solve the problems.
Think constructive guys.
TJ,
I didn't say I didn't like wind. But your cost calculations are not undisputed. All depends on what you mean by 'correctly sited'. You may have indicated the lowest conceivable cost of wind energy generated electricity rather than the average cost.
Naturally, in regions where there is no wind, wind turbines cannot generated any electricity, and the cost per kw reaches infinity.