March 12, 2009

Does Peak Oil mitigation hurt Climate Change?

No, probably not. Here's a conversation I had recently:

Randall Parker said :

Nick G,

Peak Oil versus AGW: Peak Oil has the advantage of causing a shorter term necessity with personal direct feedbacks. When the oil production starts the big decline people will have to come up with solutions. Their choices will be so stark and immediate that they'll act, invest, move, research, insulate, cut back. Each person will see immediate costs and benefits for their own decisions.

I am thinking that, however, Peak Oil helps with AGW in two ways:

1) Peak Oil will accelerate the shift to electric cars. Electricity has many ways to get generated, some much cleaner than others. That shift makes it easier because the cost differences btw the dirtier and cleaner ways to generate electricity aren't huge and they are narrowing.

2) We will do more insulating and have more incentives to develop more efficient ways to use energy.

My guess is that domestic opposition to coal plants will stop coal's growth in the US and then we will use less oil. So the US CO2 production trend will start going downward (if it isn't already trending downward). It is Asia that will keep producing more and more CO2 emissions.

I replied:

I agree with your thoughts on Peak Oil versus AGW.

A few more:

"the cost differences btw the dirtier and cleaner ways to generate electricity aren't huge and they are narrowing"

1) There's some indication that new coal has overall costs similar to or higher than wind! Some proposed coal plants in the US (not sequestering carbon, but cleaning up all other index pollutants, like mercury) have capital costs around $2.5/W, which gives overall costs of $.08-.09/KWH, which is higher than wind: . On the one hand, some of this may have been a temporary capex cost problem, due to a construction bubble, but on the other, this is an "overnight" cost, which doesn't include the cost of the construction period, which is much longer for coal than for wind (or nuclear). In any case, it kind've looks like coal is no longer the cheap option.

2) There is a plausible argument that the swing night-time electricity producer for the near-term will be coal (which has spare night-time capacity, and lower fuel costs than gas), and that therefore new demand, like electric vehicle (EREV/PHEV/EVs), will be mostly supplied by coal. Coal, as we all know, produces twice as much CO2 per BTU as oil. Conversely, electric vehicles are 6x as efficient as your average light vehicle, and 3x as efficient as a Prius. Therefore, it looks like EV's will still produce less CO2 than ICE's.

3) Demand Side Management of electric vehicle charging (and, later, V2G) provides, in effect, almost free storage to wind power. Wind and EV's are synergistic. More electric vehicles supports a higher grid market share for wind power.

"It is Asia that will keep producing more and more CO2 emissions."

The faster we deploy new, cheaper renewable power and electric vehicles, and the sooner we achieve economies of scale, the sooner those things can move to Asia and displace coal. We've said that before...but it's worth saying again.

I think we agree that there isn't a significant conflict between solving PO and solving climate change, and that in fact solutions for one are generally helpful for the other.

The one exception may be a move from oil-fired electrical generation to coal: the US has phased out oil-fired generation (for all but 3% of the market - the remainder is in odd places like Hawaii), but very roughly 25% of world oil consumption is for electrical generation. I kind've think that move won't happen very much, however, as 1) coal isn't really cheap, as we saw above; 2) much of the world's coal is in the US, which probably won't be excited about large coal exports; 3) many countries will put at least a small implicit price on the emissions (both index and CO2); and 4) wind and solar tend to have lower incremental costs and shorter lead times, which helps off-set their higher capital costs.

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