tag:blogger.com,1999:blog-50635855051178787712024-03-18T23:15:35.530-05:00Nick's Energy FAQMy goal is a realistic picture of the present, and our possible futures, without alarmism or wishful thinking.
We need good planning, and the stakes are rising...
Please read old posts - this blog is intended to be a good old fashioned FAQ, with answers to many questions.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.comBlogger145125tag:blogger.com,1999:blog-5063585505117878771.post-34941889481814502292015-11-06T15:35:00.004-06:002015-11-06T15:35:46.444-06:00Do we need crude oil to make plastic?No. We'll find other ways to make things like plastic. We already have, in some cases. We generally don't need to do it now, but it's technically reasonably straightforward, and affordable.<br />
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1) it's not made from crude oil - it's made with NGLs and natural gas, which are in surplus right now.<br />
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"In the United States, plastics are not made from crude oil. They are manufactured from hydrocarbon gas liquids (HGL) and natural gas. HGL are byproducts of petroleum refining and natural gas processing. These liquids are used as feedstocks by petrochemical manufacturers to make plastic and are used as fuels in the manufacturing process. Hydrocarbon gas liquids (HGL): A group of hydrocarbons including ethane, propane, normal butane, isobutane, and natural gasoline, and their associated olefins, including ethylene, propylene, butylene, and isobutylene. As marketed products, HGL represents all natural gas liquids (NGL) and olefins. EIA reports production of HGL from refineries (liquefied refinery gas, or LRG) and natural gas plants (natural gas plant liquids, or NGPL). Excludes liquefied natural gas (LNG)."<br />
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2) Plastic uses less than 3% of overall oil consumption.<br />
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In 20101, about 191 million barrels of HGL were used in the United States to make plastic products in the plastic materials and resins industry, which was equal to about <b>2.7% of total U.S. petroleum consumption</b>. Of those 191 million barrels, 190 million barrels were used as feedstock and 1 million barrels were consumed as fuel to manufacture these products.<br />
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In addition to HGL, about 412 billion cubic feet (Bcf) of natural gas were used to make plastic materials and resins in 2010. This was equal to about 1.7% of total U.S. natural gas consumption. Of the 412 Bcf of natural gas, 13 Bcf were used as feedstock, and 399 Bcf were consumed as fuel to manufacture these products."<br />
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http://www.eia.gov/tools/faqs/faq.cfm?id=34&t=6<br />
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3) There are pretty good direct substitutes for many uses. For instance, a huge fraction of plastics are used for things like disposable beverage containers and food packaging. Those could easily be made out of aluminum, glass, and cardboard.<br />
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4) plastic is recyclable. We don't do a great job of it now, because we don't have to. If you recycle 95% of consumption (cars, for example, are 99% recycled), you only need to produce 5% as much.<br />
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5) We have <i>enormous</i> supplies of fossil hydrocarbons in the form of coal, methane, kerogen (shale oil), heavy oil, bitumen (tar sands), peat, etc, etc. for the next 200 years. They have problems for use as fuels: they don't flow like conventional oil in a way that prevents peak oil, and some have low or negative E-ROI, but they're enormous and perfectly affordable for materials like plastics, which are niche, high value uses.<br />
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Materials like plastic don't have a CO2 emissions problem, assuming they're not burned (see recycling, below).<br />
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6) There's biomass, which is pretty badly suited for conversion to liquid fuel, but good for hydrocarbon feedstock.<br />
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7) Plastic consumption can be made more efficient by reducing packaging and redesigning structures to reduce density while maintaining strength (human bones are a good example: they're hollow, and even the tubular structures are mostly empty space internally).<br />
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Even now, much plastic is made from natural gas and coal. Industrial chemistry can produce very simple hydrocarbons from any source of hydrocarbons, and build them into any compound our heart might desire. Various kinds of feedstocks would work. Some are more convenient or slightly cheaper than others. Whatever fossil fuel is convenient will work; biomass will work just fine, or hydrocarbons can be synthesized from seawater, atmospheric CO2 and renewable electricity (air, fire and water!).Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-50779731434260538472015-03-06T12:01:00.002-06:002015-05-07T12:56:55.159-05:00What's the causal link between Peak Oil and recession/depression, and how strong is it?<span lang="EN">
One possibility: rising oil prices cause inflation, and that causes recession. This is a plausible argument: that PO would cause inflation, inflation would cause central banks to tighten credit, and tightened credit would cause recession.<br />
<br />
But, that wasn't the case from 2004-08. Inflation never rose about 4%, and core inflation rose much less. Interest rates rose at a modest rate on a historical basis, but not because of oil prices - the Federal Reserve made an explicit decision to not worry about the impact of oil prices on the general price level, assuming that they'd come back down eventually (as they partly have). The Fed plans to continue this policy.<br />
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So, what's the causal link between PO and recession/depression?<br />
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James Hamilton showed one: that oil shocks caused fear, uncertainty and doubt among car buyers, who put off purchases, thus reducing overall capital investment, thus reducing aggregate demand, causing recession.<br />
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"..., the technological costs associated with trying to reallocate specialized labor or capital could result in a <b>temporary</b> period of unemployment as laid-off workers wait for demand for their sector to resume. Bresnahan and Ramey (1993), Hamilton (2009b), and Ramey and Vine (2010) demonstrated the economic importance of <b>shifts</b> in motor vehicle demand in the recessions that followed several historical oil shocks."<br />
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page 26 http://econweb.ucsd.edu/~jhamilton/handbook_climate.pdf<br />
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The problem: this is a short term effect. If oil prices stay high, they’ll switch to buying more fuel efficient vehicles and car sales will rise again. Again, this is what we say from 2011 to 2014: oil prices stayed high, and yet car sales recovered to historically very high levels.<br />
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Other research at the St. Louis Fed, which I can show if desired, shows that oil shocks only cause short term recessions.<br />
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So, what's the causal link between PO and recession/depression?<br />
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Hamilton ascribes more importance to it than most, and he thinks that the 2004-08 oil shock (in which prices rose roughly 5x) shaved roughly 2% off of US GDP, cumulatively. That's not TEOTWAWKI.</span>Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com3tag:blogger.com,1999:blog-5063585505117878771.post-13116579985267321702015-02-24T15:18:00.001-06:002015-02-24T15:18:16.791-06:00Are EVs affordable?Yes. In fact, they're the cheapest cars on the road even without tax credits. With tax credits, they're insanely cheap. Let's see. The average car costs about 58 cents per mile to drive.<br />
<br />
IRS Average New Car Cost per mile: <b>57.5 cents per mile.</b><br />
<br />
The Leaf, without tax credit, is the cheapest car you can find to own and operate:<br />
<br />
Total Cash Price $25,327<br />
5 Year True Cost to Own: 28,079<br />
Cost per mile: <b>37.4 cents per mile.</b><br />
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A typical small car like the Honda Civic Sedan is more expensive:<br />
<br />
Total Cash Price $21,644<br />
5 Year True Cost to Own: 36,154<br />
Cost per mile: <b>48.2 cents per mile.</b><br />
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And a Chevy Volt, a car without any compromise because it can run on gas, is less expensive than the average car even without the tax credit:<br />
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Total Cash Price $31,500<br />
5 Year True Cost to Own: 40,129<br />
Cost per mile: <strong>53.5 cents per mile.</strong><br />
<a href="http://www.edmunds.com/tco.html">http://www.edmunds.com/tco.html</a> 1/27/15<br />
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If we subtract just the Federal credit of $7,500 (and several states have credits as well), that subtracts 10 cents per mile. The Leaf costs less than half of the average car, and the Volt is substantially less expensive than the Civic. <br />
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And, you very rarely go to the gas station, and it's much more fun to drive!Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-91552234626630890942015-02-20T15:32:00.000-06:002015-03-10T12:53:42.579-05:00Is it too late to cope with Peak Oil?No.<br />
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Well, personal transportation accounts for the majority of oil consumption.<br />
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Personal transportation is easily done with EVs - a Chevy Volt costs less to own and operate than the average US passenger vehicle, and gets 200MPG. A Nissan Leaf is the lowest cost vehicle on the road.<br />
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EVs can be ramped up pretty quickly - They're 3-4% of sales right now (including hybrids). Production volume could be doubled essentially overnight, and doubled every two years thereafter. In 8 years you could be at 80% of new vehicles, and in another 5 years they'd account for 50% of vehicle miles driven. In another 6 years they'd account for 75% (vehicles less than 6 years old account for 50% of VMT). Ethanol accounts for about 10% of passenger transportation fuel, so a fleet of Chevy Volts could be powered with no oil at all.<br />
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There's a pretty straightforward path forward, if we needed a short term fix to get us through a period of fast depletion, or another oil shock while we were transitioning to EVs. The US could reduce passenger fuel consumption by 50% essentially overnight by raising the average passengers per vehicle from 1.2 to 2.4. Look at Uber, look at smartphones for connecting with people. There are very, very few destinations in the US that no one else is going to. On almost any road, look around: there are other people on the road, going in the same direction.<br />
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With an ad hoc smartphone based system, you could find someone going in your direction almost anywhere. And, even with old-fashioned employer-based systems, about 10% of Americans carpool to work right now.<br />
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Carpooling - the horror.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-55773429725012481442015-02-19T12:59:00.000-06:002015-02-19T13:00:17.650-06:00Has human harm to our planet guaranteed social collapse?No. I think extinctions create serious risks for ecological networks. I'm particularly worried about Climate Change, in all it's manifestations. But, there's a big difference between large, unknown risks and Certain Collapse.<br />
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"These are the megafauna, the big predators of the sea, and the species we most value. Their depletion not only threatens the future of these fish and the fishers that depend on them, it could also bring about a complete re-organization of ocean ecosystems, with <b>unknown global consequences</b>." <a href="http://news.nationalgeographic.com/news/2003/05/0515_030515_fishdecline.html">http://news.nationalgeographic.com/news/2003/05/0515_030515_fishdecline.html</a><br />
<br />
That's bad. That's something that's very important to avoid. On the other hand, it's not Certain Collapse of Human Society.<br />
<br />
"“We may be sitting on a precipice of a major extinction event,” said Douglas J. McCauley, an ecologist at the University of California, Santa Barbara, and an author of the new research, which was published on Thursday in the journal Science. <br />
<br />
But there is still time to avert catastrophe, Dr. McCauley and his colleagues also found. Compared with the continents, the oceans are mostly intact, still wild enough to bounce back to ecological health. <br />
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“We’re lucky in many ways,” said Malin L. Pinsky, a marine biologist at Rutgers University and another author of the new report. “The impacts are accelerating, but <b>they’re not so bad we can’t reverse them.</b>” <a href="http://www.desdemonadespair.net/2015/01/ocean-life-faces-mass-extinction-broad.html">http://www.desdemonadespair.net/2015/01/ocean-life-faces-mass-extinction-broad.html</a><br />
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So, the article is talking about possible catastrophe for ocean systems. But, that's not exactly the same as catastrophe for human societies, and it's avoidable. Again, there's a big difference between large, unknown risks and Certain Collapse.<br />
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So, rather than saying things are hopeless and nothing can be done, it's better to say:<br />
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Fossil fuels are risky, dirty and expensive. We should phase them out as fast as possible.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-88167245214725524872015-02-10T13:03:00.001-06:002015-02-10T14:46:09.044-06:00Who is leading in wind power deployment?Iowa, for one.<br />
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Iowa wind power reached 27% market share in 2014, and they're on track to reach 34% in the next year or so, after they finish building another 1.2GW of wind capacity. Their most recent wind farms cost about $1.73 per watt to build - Iowa tends to achieve a 40% capacity factor, which suggests a pre-tax-credit cost of less than 4 cents per kWh, and a net cost (after Federal subsidies) of about 2 cents. That helps explain average retail prices of about 7 cents - 60% of the US average.<br />
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Iowa's power imports peaked in 1997, at -13.3%, then declined to zero in 2008 and now Iowa exports about 10% of their generation. They and their neighboring states are planning to expand exports of low cost wind power.<br />
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------------------------------<br />
Sources: <br />
<a href="http://www.eia.gov/electricity/state/Iowa/">http://www.eia.gov/electricity/state/Iowa/</a><br />
<br />
<a href="http://www.desmoinesregister.com/story/money/business/development/2014/10/10/midamerican-energy-terry-branstad-expansion/17027407/">http://www.desmoinesregister.com/story/money/business/development/2014/10/10/midamerican-energy-terry-branstad-expansion/17027407/</a><br />
MidAmerican expands Iowa wind foothold<br />
Matthew Patane, <a href="mailto:mpatane@dmreg.com">mpatane@dmreg.com</a> 12:02 a.m. CDT October 11, 2014<br />
Iowa's reputation as a leader in wind energy production got another boost Friday when MidAmerican Energy announced plans to invest an additional $280 million in the renewable energy.<br />
The Des Moines-based utility will add 67 wind turbines at two western Iowa locations.<br />
Most of the turbines, 64 of them, will go to a new wind farm in Adams County in southwest Iowa. The other three will expand an existing O'Brien County wind farm in northwest Iowa.<br />
The turbines have the potential to generate 162 megawatts of energy, enough to power 48,000 homes, company officials said.<br />
Iowa is one of the leading states in the production of wind energy.<br />
More than 27 percent of the state's energy comes from wind, the highest state percentage in the nation, according to a 2014 report by the American Wind Energy Association.<br />
Iowa also has the seventh-best wind resource, or potential for wind energy generation, in the U.S.<br />
William Fehrman, president and CEO of MidAmerican, said the company is continuing to invest in wind projects because they are a good way to reduce costs for customers and bring the state closer to meeting goals for reducing carbon emissions.<br />
Wind generation "... continues the drive to reduce our overall carbon footprint and better position ourselves and our customers and our state to the changing regulatory environment," he said.<br />
Last year MidAmerican began construction on $1.9 billion worth of turbines in five Iowa counties.<br />
That project will add 450 turbines in Grundy, Madison, Marshall, O'Brien and Webster counties, and create 1,050 megawatts of energy, or enough to power 317,000 homes, according to the company.<br />
Combined with the expansion announced Friday, Fehrman said the O'Brien County wind farm would be the largest in the state of Iowa and produce 502 megawatts of energy.<br />
MidAmerican will contract with Siemens, a German-based engineering and electronics company, to build the blades and other components of the wind turbines. Siemens has a manufacturing plant in Fort Madison.<br />
The Iowa Utilities Board still has to give regulatory approval for the $280 million project. Fehrman said his company would file its paperwork with the board Friday.<br />
The utility is not asking for financial assistance from local or state officials, but MidAmerican will pursue federal tax credits offered for wind energy projects, Fehrman said.<br />
If approved, MidAmerican said construction would start at the two sites next summer and be complete by the end of the year.<br />
The two projects would create about 200 construction jobs, and once complete, MidAmerican said the sites would require at least 10 permanent positions.<br />
The company made the announcement during a news conference with Gov. Terry Branstad and Lt. Gov. Kim Reynolds.<br />
Branstad said the project is "the latest evidence of MidAmerican Energy's longstanding and ongoing commitment to renewable energy." He also said this and other wind projects help the state attract companies such as Microsoft and Google.<br />
"Major companies from across the country and around the world are looking at Iowa as a place to locate facilities due to our commitment to providing sustainable, affordable energy solutions," Branstad said.<br />
Earlier this year, MidAmerican signed an agreement with Google to provide 407 megawatts of wind-sourced energy for Google's Council Bluffs data center.<br />
When its construction projects are complete, MidAmerican will have 21 wind-energy locations in the state.<br />
Altogether, Fehrman said the company has invested about $6 billion in Iowa wind energy.<br />
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MidAmerican's wind projects<br />
Once MidAmerican Energy's most recent projects are complete, here's how the utility's investment in wind will stack up:<br />
21 wind projects across 22counties.<br />
$6 billion invested.<br />
3,500 megawatt production capacity.<br />
More than 1 million homes that could be powered.<br />
Source: MidAmerican Energy<br />
Energy generated in Iowa<br />
Iowans get their energy from a number of sources. This was the breakdown from a 2012 Iowa Utilities Board report:<br />
62.3 percent coal.<br />
24.8 percent wind.<br />
7.7 percent nuclear.<br />
3.4 percent natural gas.<br />
1.4 percent hydropower.<br />
Less than 1 percent other renewables and petroleum.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-57462806909110648272015-02-02T15:58:00.000-06:002015-12-22T13:22:24.554-06:00Are renewables low density/diffuse?No, they aren't - not if you compare apples to apples.<br />
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Wind and solar generate a very high "density" form of energy, electricity: electric wires can carry very high energy density thousands of km, to where its needed. On the other hand, wind and solar require a "catchment" area which is no larger than the overall land requirements for producing oil and other fossil fuels. For instance, the US government leases about 35 million acres of land for a minority of US oil production (<a href="http://www.ewg.org/oil_and_gas/execsumm.php">http://www.ewg.org/oil_and_gas/execsumm.php</a>), and since 1982, the federal government has leased or offered 229 million acres of public and private land in 12 western states for oil and gas drilling, an area greater than the combined size of Colorado, New Mexico and Arizona. Another way to look at it: the US has about 500,000 producing oil wells*, each of which requires access and working areas, as well as water disposal wells, etc. - these require a minimu of 1 acre per well, and perhaps much more. There are about 120,000 gas stations in the US, at perhaps 1 acre per (some cities require a minimum of 1 acre). The wells and gas stations add up to a minimum of 720,000 acres. <br />
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Of course, we also need to include 185,000 miles of oil pipelines - at 75 feet of right-of-way, that's 1.7M acres. Then there's storage, refinery and port facilities. Not to mention dry/abandoned/capped wells, of which there are probably several million. - 2.5 million acres total for the US industry appear to be a minimum.<br />
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If 2,500,000 acres are required for 9M bpd oil production, that works out to about 20 watts per sq meter, much less than solar power.<br />
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Looks like oil is pretty low density!<br />
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<strong>What about Coal?</strong><br />
<br />
<span class="mw-headline" id="Estimate:_Solar_thermal_energy_requires_about_16.4.25_less_land_than_coal.2C_and_wind_power_requires_about_96.3.25_less_land_than_coal.2C_to_produce_a_given_amount_of_electricity_over_a_60-year_period.">Estimate: Solar thermal energy requires about 16.4% less land than coal, and wind power requires about 96.3% less land than coal, to produce a given amount of electricity over a 60-year period.</span><br />
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<a href="http://www.sourcewatch.org/index.php/The_footprint_of_coal">http://www.sourcewatch.org/index.php/The_footprint_of_coal</a><br />
<strong></strong><br />
<strong>Liquid petroleum fuel is energy dense and portable. Doesn't that make it hard to replace?</strong> <br />
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No. The perfect is the enemy of the good. Diamonds are the hardest substance know to man: does that mean they're essential for daily tasks that require hardness?
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Plug-in hybrids like the Chevy Volt can reduce light vehicle consumption by 90% with no sacrifice in convenience, and do so cheaply. Electric rail can do the same for freight. Batteries can do for water shipping some of what batteries do for surface plug-in cars. Only airplanes present any real difficulty: for them efficiency and rail substitution under 500 miles can probably reduce requirements by 60%.
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For the residual 10-15% of fuel requirements, there are several solutions, including fuel cells; synthetic fuel (from atmospheric carbon, waste water and renewable electricity); and biofuels. They would be more expensive (maybe the equivalent of $5-$10 gasoline to do properly, especially biofuels), but the greatly reduced consumption would make that matter very little.
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Batteries etcetera are good enough!
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<br />
Some followup questions:
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<b>What's the source of the numbers that say consumption would be reduced by 90%?</b>
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This is from GM's observation of a reasonably large sample of real-world drivers, which found that 78% of miles driven would be within the Volt's 40 mile electric range. The remaining 22% would be on the backup ICE generator, which would give roughly 50 MPG, a 50% reduction in consumption compared to the average 22 MPG vehicle on the road today. That gives you an 89% reduction in fuel consumption.
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<b>Does this just include consumption of oil?</b>
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Yes. Fortunately, PHEV's have an elegant synergy with wind power (see my most recent post describing how PHEV's help buffer intermittency), so that PHEV's will promote and facilitate wind. This means that one doesn't need to be too worried about the CO2 emissions from existing grid power (which would be less than a Prius in any case).
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<b>Aren't little details like having to plug the car in every night important to consider?
</b>
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Think of the inconvenience of stopping for gas at a service station. If people really find it annoying, undoubtedly someone will devise an automatic docking procedure, like that of many cell phones.<br />
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<b>What about pure electric vehicles?</b>
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I think the Volt serial hybrid design is the practical solution. The infrastructure for gasoline will be far more extensive than that of electricity for quite some time.
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OTOH, pure EVs will work for some quite nicely.<br />
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<strong>What about Vaclav Smil's discussion of energy intensity in Energy at the Crossroads</strong>?
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<br />
First, V Smil greatly underestimates wind resources and power density. He uses average wind speed over the entire land mass, a bit like estimating the average oil content of the earths crust or the energy in hydro electricity on rainfall/m^2.
Solar, wind, hydro, geothermal, tidal energy are all concentrated in specific regions so using average power density is meaningless.<br />
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2nd, he's not making a proper comparison of the whole system land requirement, as discussed above.<br />
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*The total number of producing oil wells in the U.S. increased at a steady pace in 2011, reflecting stepped-up drilling programs spurred by $100/bbl prices. World Oil’s estimate of producing wells, based on surveys of state agencies and company sources, indicates a rise of over 16,000 wells to 535,951. This is up 3.2% over 2010. <a href="http://www.worldoil.com/magazine/2012/february-2012/special-focus/2012-forecast-us-oil-well-counts-rise-in-all-regions">http://www.worldoil.com/magazine/2012/february-2012/special-focus/2012-forecast-us-oil-well-counts-rise-in-all-regions</a>Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com2tag:blogger.com,1999:blog-5063585505117878771.post-36323316093289010392014-12-12T16:56:00.005-06:002014-12-12T17:06:34.994-06:00Is CCS (Carbon Capture & Sequestion) viable?No.<br />
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And, no. It's very clear: CCS plants are inferior to a combination of windpower and natural gas. They cost much more, and don't emit any less CO2.<br />
<br />
See the following article in MIT Technology review: <a href="http://www.technologyreview.com/demo/533351/a-coal-plant-that-buries-its-greenhouse-gases/">http://www.technologyreview.com/demo/533351/a-coal-plant-that-buries-its-greenhouse-gases/</a><br />
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The plant only captures 90% of the CO2, and produces only 80% of the output of a conventional coal plant for the same coal input. Coal plants produce twice as much CO2 as natural gas. The output reduction further decreases the CO2 emissions difference. A combination of 50% wind and 50% natural gas would produce the same amount of CO2. <br />
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We find out that a plant with a capacity of 160MW cost $1B to equip with CCS. That's $6 per watt. If we estimate a basic cost of $3 per watt for the coal plant, this plant will cost $12 per watt (adjusted for an average coal capacity factor of 75%). Windpower costs lesss than $6 per watt (adjusted for wind's average capacity factor of 33%). So, CCS coal costs twice as much as a windfarm with comparable kWh output. We could add 100% backup with natural gas generation to a windfarm, and have a far cheaper solution.<br />
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And, of course, there's far more potential for further reductions in CO2 emissions by reducing NG's share below 50%: levels of 20% are currently the optimal cost point, according to German research.<br />
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Finally, most of the CO2 isn't sequestered: it's sold for oil secondary recovery, which means that it 1) doesn't reduce emissions, and 2) generates revenue, rather than creating a cost for storage. Oil well EOR can only use a relatively small amount of CO2 - this is not scalable.<br />
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CCS is clearly a bad solution.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-69420054268922130632014-10-11T18:02:00.004-05:002014-10-11T18:02:30.899-05:00How fast could EV sales grow?In other words, what's the upper limit if we tried hard, perhaps because of an oil supply shock?<br />
<br />
We could do it pretty quickly.<br />
<br />
Heck, EVs of various sorts (including hybrid EVs) are at 4% of new car sales in 2014, and that could be doubled overnight with car maker unused capacity. After that, I’d estimate it could grow by 40% per year. That would allow a doubling every 2 years, which means that it would take about 7 years to get to 90% market share. At that point about 27% of the cars on the road would be electric, and it would take another 3 years to get to 50%, which would probably account for 75% of total Vehicle Miles Traveled. <br />
<br />
Now, obviously that’s incredibly simplistic, but it gives you an idea of the timeline of an aggressive rollout.<br />
<br />
I’m much more worried about Climate Change where the lag time for GHGs in the atmosphere is decades and centuries.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-83743849248873188812014-08-23T18:09:00.001-05:002014-08-24T17:17:51.126-05:00Do utilities try to block solar power?Yes. The rapid growth in rooftop solar is catching utilities off-guard across the U.S. and many are fighting back against the trend due to the threat it poses to their bottom line. Quite simply, more customers installing their own rooftop solar panels means they’re producing more of their own electricity and buying less from their utility company. <br />
<br />
"Since January 1, 2011, Hawaii’s three investor-owned utilities interconnected more than 250 MW of solar PV (almost two-thirds residential) to grids with aggregate peak loads around 1,500 MW. This boom ended five months ago when Hawaiian Electric Company (HECO) abruptly stopped approving residential net metering (NEM) applications for most communities on the island of Oahu. HECO claimed the grid was over-saturated with solar and that further study and infrastructure upgrades were needed to restart the interconnection process. The sudden shift left thousands of consumers stranded in “solar limbo” and caused large-scale lay-offs."<br />
<br />
<a href="http://www.renewableenergyworld.com/rea/news/article/2014/02/the-interconnection-nightmare-in-hawaii-and-why-it-matters-to-the-u-s-residential-pv-industry">http://www.renewableenergyworld.com/rea/news/article/2014/02/the-interconnection-nightmare-in-hawaii-and-why-it-matters-to-the-u-s-residential-pv-industry</a><br />
<br />
<br />
We see below how installations peaked in late 2012 (when credits were cut for 2013),and fell after the Fall of 2013, when the local utility claimed that a large number of local circuits were overloaded, claimed that this overload created dangerous conditions for utility workers, and created a restrictive review system:
<a href="http://s1107.photobucket.com/user/nickz3/media/Hawaii-PVpermits12-14.jpg.html" target="_blank"><img alt=" photo Hawaii-PVpermits12-14.jpg" border="0" src="http://i1107.photobucket.com/albums/h397/nickz3/Hawaii-PVpermits12-14.jpg" /></a>Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-29446935918605564632014-07-11T12:52:00.002-05:002014-07-27T15:11:12.020-05:00How quickly will EV sales grow?Reasonably quickly, but not as fast we'd like.<br />
<br />
US pure EV sales have doubled each year for the last three years (from a very small base) and pure EV and PHEV sales are growing faster than hybrid sales did when they were introduced . Tesla has a large backorder book. Nonetheless, PHEV sales aren't growing as quickly as many people had hoped.<br />
<br />
Cost isn't the problem.<br />
<br />
Hybrids, EREVs and EVs are already the low cost choice for Total Cost of Ownership (per Edmunds.com), so if cost were the driver....we would have reached the tipping point. Buyers of new light duty vehicles (cars, pickups, SUVs) sales just don't seem to be very price sensitive. The minimum cost US vehicle is about $11k, while the average vehicle is more than $30k. The average new car gets about 25MPG, while 55-100MPG vehicles are available. New car buyers just aren't paying much attention to minimizing costs.<br />
<br />
Supply isn't the problem: Toyota, Nissan, Ford and GM will tell you that they could double production of their hybrids, EREVs and EVs literally overnight, if demand were there.<br />
<br />
There are two big problems:<br />
<br />
First, the vast majority of people are very slow to move to new things. Individual consumers have to see people around them using this new thing for quite a while to become comfortable with them. For example, online food ordering has overwhelming benefits for parents, but Webvan went bankrupt: they counted on people moving to a new thing too quickly.<br />
<br />
Commercial users of heavy duty vehicles face large problems of economy of scale, long-lived investments and operating in a tough competitive market. Large fleet customers have been experimenting with pilot programs, but have been afraid of being first movers ("Pioneers are the ones with arrows in their backs"). That suggests that the early rate of adoption may be deceptive. At a certain tipping point fleet buyers will decide high oil prices are permanent, and that electrified/alt fuel vehicles are clearly cost justified. Then, sales will grow quickly.<br />
<br />
Second, the primary reason for EVs is external costs like Climate Change and the cost of military conflict in the M.E., and as a society we haven't prioritized dealing with those costs. We just haven't. Until we do, with things like carbon and fuel taxes (which even the most conservative economists support for external costs) and acceptance by Republicans, it's unrealistic to expect fast movement by consumers.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-51886721299374598972014-05-09T15:27:00.002-05:002014-05-09T17:02:33.531-05:00Does carbon capture (CCS) make sense?No. Two new Carbon Capture and Sequestration (CCS) plants are demonstrating that CCS is extremely expensive. <br />
<br />
The first is in Saskatchewan. It's expected to cost $1.2B, and have a nominal capacity of 110MW. The second, in Mississippia, is called Boundary Dam. Bounday Dam will cost about $5 (up from the initial estimate of $2.4B) for a capacity of 565MW.<br />
<br />
If we assume an average utilization of 75% (a little higher than the industry average) we get an overall cost per average Watt of $12.25. If we assume 7% interest and a 30 year life, that gives us a <b>cost for capital alone of 11.3 cents per kWh.</b><br />
<br />
These plants are selling their CO2 output for Enhanced Oil Recovery (EOR), but that's not scalable to a large number of plants: the market for EOR could absorb only two or three percent of coal CO2, and long distance movement of CO2 for this purpose would be very expensive.<br />
<br />
The article suggests that the IPCC is pushing for biomass with CCS, but I strongly suspect it makes much more sense just to grow biomass and bury it, rather than trying to capture the carbon with CCS. That's after we move to low-CO2 generation first, of course - it's always easier to just not emit CO2 than it is to capture and sequester it.<br />
<i></i><br />
<i><a href="http://www.technologyreview.com/news/527036/two-carbon-trapping-plants-offer-hope-of-cleaner-coal/">http://www.technologyreview.com/news/527036/two-carbon-trapping-plants-offer-hope-of-cleaner-coal/</a></i>Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com1tag:blogger.com,1999:blog-5063585505117878771.post-90896285403858835282014-04-29T17:37:00.000-05:002014-04-29T17:37:11.838-05:00Would a renewable grid provide power in the night, or when wind is slow?Sure. At a point when we're approaching a grid 100% powered by wind and sun, we'd also be approaching 100% use of electric vehicles.<br />
<span lang="EN"></span><br />
EV owners are already using something called demand-side-management: their cars can charge when power is cheap. This doesn't cost the grid anything at all.<br />
<br />
If the 230M vehicles in the US had 50kWh of storage each (more than a Leaf, but less than a Tesla), that would be 11.5 TwHrs of storage, all provided by vehicle owners. That's about 24 hours of grid output. There's enormous potential for absorbing diurnal variance in wind & solar (and nuclear) output, with large savings to drivers: they have to charge sometime, so the large variation in prices during the day would be more than enough to cause owners to program their cars to automatically arbitrage between different times of the day.<br />
<br />
It may be hard to imagine an all-electric fleet with that much storage, but that's where Tesla's planning to go. Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-25764360026184878062014-03-26T18:21:00.002-05:002014-03-26T18:23:30.645-05:00If Climate Change is uncertain, should we wait to address it?No, that would be a mistake.
<br />
<br />
The unspoken assumption here is that the proposed remedies are materially damaging to human economy or society, so we should wait.
<br />
<br />
That is misinformation, which comes primarily from the industries that are resisting change. In fact, the proposed remedies (efficiency, electrification of transportation, etc.) would have both short term and long term economic benefits. For instance, car makes have fought desperately against increases in the CAFE regulation, when such improvements would save consumers enormous amounts of money over the lifetimes of their vehicles.
<br />
<br />
Oil is very expensive compared to the alternatives. New land-based windpower is cheaper than new US coal plants (because they scrub sulfur, mercury, etc). The UK is finding windpower expensive only because they’re not willing to install land based wind turbines – apparently they’d rather spend a lot more money putting turbines out to sea. Of course, if fossil fuel interests weren’t encouraging such astroturf, the UK would have a more sensible policy.
<br />
<br />
The problem is that the cost falls on a narrow part of society (investors and workers in industries that emit CO2), and the benefits are much more widely spread. If you’ve invested your life’s work (or your money) in oil or coal (or internal combustion engines, etc.) then you’re going to fight the transition away from fossil fuels. That’s easy to understand, and one can have compassion for those who are caught in such a bind. Still, the larger society can’t avoid the transition. Ideally, the larger society would find a way to soften the blow. But, the blow must come, and the sooner the better.
<br />
<br />
The cost of a transition away from fossil fuels is, in fact, much smaller than the cost of staying with them. Even the immediate, obvious costs of fossil fuels are higher than the costs of alternatives. But, those who benefit from fossil fuels wish to misinform us on this topic, purely to protect themselves.<br />
<br />
The cartoon in this reputable economist's blog is worth a 1,000 words:
<br />
<br />
http://econbrowser.com/archives/2014/02/a-random-thought-on-the-scientific-method
Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-5374456134592682862014-02-24T15:25:00.000-06:002014-02-24T15:26:30.468-06:00Are anti-Climate Change arguments are just part of group/follower thinking?<br />
Yes, I think so.<br />
<br />
First, because Climate Change really is the scientific consensus, and it's the international consensus: even oil exporters like Russia and Saudi Arabia concede that it's valid. China concedes it too, and they're working harder on it than the US. China has more than enough scientific expertise to independently review climate science, and plenty of motive to disagree, yet they don't. <br />
<br />
2nd, there's a really obvious difference between political parties in the US: the Democrats follow the scientific and world consensus, and Republican's don't. There aren't any leaders of the Republican party that are willing to support Climate Change.<br />
<br />
3rd, the republican rank and file generally agree with their leadership. Now, you can't really argue that those republican followers have all read all of the Climate Change science and come to an independent opinion - it's quite obvious that most of those who hold anti-Climate Change opinions are doing so because of they identify as part of a group that holds that idea. There's a striking correlation with other anti-science ideas as well: most republicans don't believe in evolution.<br />
<br />
So, ask yourself, Do I hold this idea just because I belong to a group that believes it? Do *any* of my friends disagree with me? Do any of the websites I like to read disagree with me?Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-72987002336647897452014-02-21T00:08:00.002-06:002014-02-21T00:08:13.814-06:00Climate Change - the Tribal debateThere's a fascinating debate about Climate Change going on over at Econbrowser.com (their 1st post for 2/17/14) – it’s like watching warring tribes in Papua New Guinea. <br />
<br />
Climatology is relatively new – not like astronomy or biology – but it seems to provide a new intellectual litmus test. In the past, one could identify someone who was unable to rise above their tribe's beliefs to think scientifically by asking them if they thought the earth was round, or if evolution was valid. Now, one can identify them by their inability to agree that Climate Change is a serious problem. <br />
<br />
In the future, if I read a comment on Econbrowser by someone who appears to be guided by ideology, I can confirm (or disprove) my suspicion by referring back to these comments and seeing where they stood.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-35974965221637282852013-12-17T16:04:00.006-06:002013-12-17T16:04:49.877-06:00Why does the "ever growing size of government" meme live on, when it should have died, long ago?Because people like the Koch brothers want to cripple government, to prevent regulation.<br />
<br />
The Kochs know that their oil refining business would be hurt by proper accounting for the cost of pollution (and pigovian taxes based on those costs). Proper accounting can only be forced by government. <br />
<br />
Polluters fund think tanks and media outlets that spread the idea that government, regulation and taxes are inherently bad, because those things threaten their business model.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com1tag:blogger.com,1999:blog-5063585505117878771.post-88506576587214477512013-08-13T13:19:00.000-05:002013-08-13T13:21:04.071-05:00Are Electric Vehicles better?Yes. The Tesla Model S is much better, and much cheaper than it's luxury competitors.<br />
<br />
For $70k you get 0-60 in 4.2 seconds, and better handling and luxury.<br />
<br />
And, the gas savings can reduce the effective price of the car from $70k to well below the $30k price tag for all new cars. That's because most luxury cars get terrible MPG - one owner profiled below is saving $5k per year.<br />
<br />
<strong>The new status car: Tesla</strong><br />
<br />
It's happening in the parking structures at Gold Coast high-rises, in front of the Lycee Francais school in Buena Park, in suburban garages and in the reserved spaces at hospital parking lots: The usual suspects—BMW, Audi and Lexus—are being replaced by the Tesla Model S. <br />
<br />
The Model S, which began delivery late last year and lists for about $70,000, comparable with other luxury sports cars, is a sleek, all-electric sedan that blends sports car zip (0 to 60 in 4.2 seconds) with a luxury car feel. The motor is three times as efficient as a gasoline engine and produces zero emissions. <br />
<br />
This isn't your father's midlife crisis car. “It's a game-changer,” says Joel Baer, a 44-year-old commodities trader from Deerfield. “Forget that it's electric, it's still the best car I've ever driven—the best handling, the fastest, the quietest and with the most storage.” <br />
<br />
Local owners—Tesla says there are about 100—say it lives up to the hype. Many have become evangelists for the brand. <br />
<br />
“It isn't just for the nutty environmentalist like me,” says Ron Saslow, 47, chairman and CEO of Chicago-based dental instrument manufacturer Hu-Friedy Mfg. Co. LLC. He's a Model S owner and an early adopter—he bought Tesla's debut car, the Roadster, for $100,000 in 2008. <br />
<br />
“This car can substitute for virtually any car in (the luxury) category,” he says. “The people who have BMWs or Audis or Mercedes sedans are the ones who are starting to switch over.” <br />
<br />
Illinois Senate President John Cullerton, D-Chicago, bought the car “totally based on the fact that there are no emissions,” he says. For him, the luxury styling was a bonus. <br />
<br />
“It's the fastest golf cart I've ever driven,” says Gold Coast resident Mark Ladd, 43, CEO of Chicago-based mobile-gaming startup LyteShot LLC. “You depress the accelerator and it automatically speeds up. You don't have to wait for a passing gear or for the engine to catch up. Within the first 10 days of owning the car, I managed to get myself a ticket.”<br />
<br />
A CAR THAT KEEPS EVOLVING<br />
<br />
Environmental concern motivated Jason Ebel, 41, co-owner of Warrenville-based Two Brothers Brewing Co., to buy the car. He received his Model S, No. 88, in October. Vehicle identification numbers are low for this relatively new company, and there's a sense of pride among owners with low numbers. “It is certainly the best all-around car I have ever owned,” says Mr. Ebel, who installed a free public charging station at the brewery. <br />
<br />
Robert Tseitlin, 31, vice president of operations at Chicago's Zeit Fine Jewelry and a city resident with two small children, uses the Tesla as a recreational vehicle. “It's definitely a head-turner,” he says. “It kind of looks like a Maserati.” <br />
<br />
The elimination of the combustion engine and transmission tunnel means more cargo space, including a second trunk under the hood, and an oversized back seat without the hump. <br />
<br />
A 17-inch dashboard touch screen controls navigation and Web browsing—there are almost no buttons in the car. It allows Tesla to push software upgrades to the vehicle without a visit to the shop. “It's like a car that keeps evolving,” Mr. Ladd says.<br />
<br />
Mr. Baer drives downtown from Deerfield every weekday and shuttles his kids to activities. He did the math on his Model S, which cost $78,000 with the options he chose. After the $7,500 federal tax credit and the $4,000 tax credit from the state, the car was $67,500. <br />
<br />
“I had a (Porsche) Cayenne before this that got maybe 15 miles to the gallon—so I'll save myself about $6,000 a year in gas,” he says. “It will cost me about $3,000 to charge the car for six years. It's not really as expensive as people think it is.” <br />
<br />
Tesla, based in Palo Alto, Calif., reported an operating profit in the second quarter and revenue of $405 million, up from $26.6 million a year ago. <br />
<br />
The Model S starts at $69,900, with a $10,000 price difference between two battery options—a 60 kilowatt-hour battery earns 208 miles to the charge and an 85 kwh battery earns about 265 miles. <br />
“It's like a phone,” says Mr. Saslow, who commutes from Highland Park to his Avondale office. “If you really don't pay attention to it you can run out of charge, but you don't because when you have a chance you plug it in.” <br />
<br />
Like many Tesla owners, Mr. Baer had a 220-volt outlet installed in his garage, which offers about 30 miles per hour of charge. The battery takes about seven hours to charge fully. The car also can charge, more slowly, on a regular 110-volt plug. But that's adequate for city dwellers like Mr. Tseitlin, who uses the Tesla as a second car. <br />
<br />
In any case, superchargers, which can juice up a battery halfway in 30 minutes, are becoming more common. In late June, Tesla put the first Midwest supercharger in downstate Normal, unveiled with a press conference featuring Mr. Cullerton and his Tesla. <br />
<br />
A second supercharger will open in northern Illinois later this year, and by the fall, Tesla plans to have nearly a dozen Midwest stations. By the end of the year, the company says it will have enough free superchargers for Tesla owners to drive cross-country. <br />
<br />
Tesla sells direct to consumers rather than through dealerships, much to the chagrin of traditional car dealers, who have sued the company in some states. Showrooms with just a few models on display are in Old Orchard Mall and Oakbrook Mall; a service center is on Grand Avenue in West Town. “It's kind of like going into an Apple store and buying an iPhone or iPad,” says Mr. Tseitlin, who ordered his in March. <br />
<br />
Every car is made to order in Fremont, Calif., with buyers customizing everything from paint color to sound system upgrades. The cars are delivered about 60 days later, either to the customer's house, to a Tesla showroom or to the service center, where an employee spends up to three hours going over features with the owner. <br />
<br />
The service center also offers house calls, but since electric cars have fewer parts, this translates into less maintenance. There's no carburetor, muffler, fan belt, spark plug or oil changes. <br />
<br />
Mr. Saslow already has put down a deposit on the Model X, an SUV making its debut in 2014. It has third-row seating that can be accessed through the back and falcon-wing doors that, unlike the DeLorean—whose doors opened out and up—open up and then stretch out like a wing. That allows drivers to park in tight spots and still open the door. <br />
<br />
The Model X price tag has not yet been released, but Tesla’s plans to debut a sedan at $30,000 by 2016 might just push the electric car into the mainstream. Mr. Saslow hopes so. “I want everyone in the world to have a car similar to this,” he says. “It's mind-boggling how great the performance is, and it eliminated my gas usage.” <br />
<br />
<a href="http://www.chicagobusiness.com/article/20130810/ISSUE03/308109994/the-new-status-car-tesla?r=2772E0130356F3W">http://www.chicagobusiness.com/article/20130810/ISSUE03/308109994/the-new-status-car-tesla?r=2772E0130356F3W</a>Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-37774625440950177842013-03-30T12:43:00.003-05:002013-03-31T19:48:56.173-05:00Is our economic model based on cheap energy?Not really.<br />
<br />
First, both the US and other developed
countries got that way with "moderately expensive" energy, not cheap
energy. Oil and electricity have been cheap in the US in the post-WWII
period, but energy was rather higher in years before that: coal and
electricity cost much more, adjusted for inflation. The US, and other
countries, succeeded quite well in growing strongly even when energy was
much more expensive, whether it was coal or oil.<br />
<br />
Wind
power is quite affordable (if perhaps not quite as dirt cheap as US
post-WWII oil and electricity prices), scalable, high-E-ROI, etc, etc.
So are nuclear, and solar even if they aren't quite as cheap at the
moment (coal is also plentiful and cheap, unfortunately), so I see no
reason to expect energy to ever be more than "moderately expensive".<br />
<br />
The
fact that energy pre-WWII was a much higher portion of GDP means that
it was a much heavier burden on the economy. If wind and solar are a
little more expensive, that means that the wind/solar sector has to be a
little larger than otherwise to power the rest of the economy. This
analysis suggests that this is not a big deal: that sector would still
be a much smaller portion of the economy than pre-WWII.<br />
<br />
Second,
fossil fuels aren't nearly as cheap as they seem. Pollution is an
unrecognized, external cost. So are the military costs we're seeing
currently of roughly $500B per year. Those pollution costs aren't
sustainable (especially CO2), but unfortunately the military costs
of security for oil supplies probably are (in fact, many corporate interests are quite comfortable
with them...). Not that they don't entail many costs to the economy, including diverting
scarce scientific and engineering talent away from creating new products, and growing the economy. Moving away from oil and other fossil fuels will actually
be much cheaper in the long-run than BAU.<br />
<br />
Finally,
let's assume that Business As Usual involved spending about 5% of our
economic activity (perhaps measured by GDP) acquiring energy. If the
cost of acquiring energy doubles, then we have to dedicate another 5% to
that activity. GDP might go down by 5% quickly, in case we'd have a
deep recession. Or, it might happen over time - if it took 10 years,
then we'd see a reduction in economic growth of .5% per year, for 10
years. After that transition was complete, economic growth would
continue. So, a reduction in "net energy" has a significant impact, but
it's not TEOTWAWKI.<br />
<br />
<i>Does unusually strong growth since 1945 show the value of cheap energy in that period?</i><br />
<br />
No, US growth was faster before 1945, using moderately expensive, non-oil energy:<br />
<br />
1800-1900: 4.13%<br />
1900-1945: 3.53%<br />
1945-2000: 3.17%<br />
<br />
"real GDP" at http://www.measuringworth.com/growth/index.phpNick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com4tag:blogger.com,1999:blog-5063585505117878771.post-80930714788946631742013-02-19T14:56:00.003-06:002013-02-21T12:45:38.606-06:00How high could oil prices rise?I think prices will stay in a range of $100-125 for quite a while: Saudi Arabia would reduce production if prices were to fall below $100, and consumption would fall if prices rose above around $125. <br />
<br />
When oil went from $20 to $100, US oil imports dropped in half. $2/liter fuel in Europe has been the primary reason (geology and history the 2nd) that personal fuel consumption is only 18% of the US and Canada. If fuel were properly priced in the US at, say, $7/gallon, the US would reduce fuel consumption very quickly.<br />
<br />
<i>Oil consumption only decreased by about 10% when prices even though prices more than tripled from 2002 to 2012 ($30 to $100). Couldn't prices triple again?</i><br />
<br />
Percentage increases aren't important. What's important is absolute increases, and their level compared to the substitutes. Below about $60/bbl there are no economic substitutes for oil, but as oil gets farther and farther above $60 substitutes become more and more obvious and pressing. In other words, this is not a linear function. <br />
<br />
<i>But don't we normally use the percent change when looking at consumer responses to a change in prices?</i><br />
<br />
Sure, and that's just fine most of the time. The problem: that assumes a constant relationship: e.g., "10% increase in price causes 3% decline in consumption". I'm arguing that doesn't apply here. A doubling in price of oil from $20 to $40 is pretty trivial. A doubling from $100 to $200 is a very big deal. A doubling from $200 to $400 just won't happen unless the Persian Gulf is in flames, and even then it wouldn't last that long.<br />
<br />
<i>Why the difference? </i><br />
<br />
Several reasons.<br />
1st, $40 oil is small relative to income.<br />
<br />
2nd, $40 oil is small relative to other costs, including oil production-related costs like refining, distribution, profit and taxes; and small relative to other consumer costs, such as vehicle depreciation.<br />
<br />
3rd, $40 oil is cheaper than substitutes such as hybrids, plug-ins, carpooling, ethanol, CNG, online shopping, etc. As long as prices are below the price of substitutes, there will be no substitution.<br />
<br />
Now, why haven't we seen more substitution since prices rose above $60?<br />
<br />
1st, short term elasticity is much smaller than long-term. Oil prices haven't been high for very long, and Peak-Lite is something that didn't exist in the history of the oil industry until about 2005.<br />
<br />
2nd Many consumers, such as long-distance truckers, don't have good "visibility". Many are *still* waiting to see if, say, natural gas prices stay low, and oil prices stay high. They have good reason, given historic volatility. Others have only recently decided that high prices are here to stay, and are still in the transition - taxis, for instance, will take several years to move fully to hybrids.<br />
<br />
3rd, the oil industry has fought viciously to confuse the public about this issue. It has succeeded pretty well. Only prices staying high for a long time will break through that, and that delays the transition.<br />
<br />
4th, R&D, and capital investments, take a while. Plug-ins (pure and EREV), for instance, only really took off in 2012, 7 years since 2005.<br />
<br />
5th, change has many costs, including new infrastructure, new maintenance procedures, training of everyone involved, etc. As long as the savings from substitution are small, change won't happen. As the difference between oil prices and substitutes rises, the incentive gets larger until it breaks through. That's a non-linear relationship.<br />
<br />
Still, you have to realize that things would change quickly if prices rose above about $150. The last time prices rose above $125 things started to change very quickly. Prices were above that level for 3 or four months only, but Industrial/Commercial users starting cutting back quite sharply, which is part of why oil prices dropped to $40 briefly, before KSA could cut back on production.<br />
<br />
For instance, container ships started slowing down: they can reduce fuel consumption by 50% by only slowing down by 20%. For another example, when oil prices rose in the 1970's Industrial consumers switched away from oil for process heat essentially overnight. There would be many short-term changes like that. There would also be sharp medium term changes: in the 70's the US got 20% of it's electricity from oil - that went to 5% relatively quickly, and now is about .7%. <br />
<br />
That's the nice thing about decentralized markets: they are very flexible, and they can change things around in a million ways to optimize costs. Of course, markets are inhabited by humans who can make mistakes, as noted above, but when they get moving, don't get in their way or you'll be run down. <br />
<br />
<i>But, Europe still uses a lot of oil, half of US levels per capita.</i><br />
<br />
Yes, because European I/C users aren't taxed as much as consumers. Consumers use 18% as much, while Industrial/Commercials actually use more than the US.<br />
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<i>As the BRIC countries and other rapidly growing countries aspire to European levels of petroleum consumption, won't much more reduction of petroleum use will be needed?</i><br />
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Substitutes work as well for them as they do for OECD countries. The economics of batteries, for instance, are the same. Above about $80, electric transportation starts to be cheaper.When oil prices are at $100, the difference is only $20, which isn't enough to overcome the "friction" of change. But prices at $120 double that incentive, and prices at $160 quadruple it.<br />
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Just as importantly, BRIC countries still have some price controls/subsidies for fuel consumption, and those are on the edge of bankrupting the government or quasi-government entities that bear the burden of those subsidies. Those subsidies would have to be abandoned in the face of $200 oil, which would be dramatically raise consumer and I/C fuel costs For instance, India has recently had to abandon gasoline subsidies, and is on the precipice with diesel.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-15321693759174370732013-01-31T18:45:00.001-06:002013-01-31T18:45:24.388-06:00Will driverless cars save fuel?No, I don't think so. It might reduce the numbers of cars somewhat. I suspect driverless cars will make car-sharing much more attractive - having one's car close at hand is a big reason for car ownership, and driverless cars could be mighty convenient even if dispatched from a distance.<br />
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On the other hand, I only take the train because it's safe, and it gives me a chauffeur. I think driverless cars will help kill mass transit.<br />
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Finally, Vehicle Miles Traveled will explode: <br />
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First, driving becomes much, much easier, even attractive.<br />
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Second, who would ever pay for parking?? You'd hop out of the car and tell it to circle the block until you're ready. Any city with sufficient congestion to require paid parking will instantly have much more congestion from all those cars waiting for their owners - an enormous positive feedback loop! Those additional cars will drive very efficiently, so they may not slow traffic down, but they'll be there.<br />
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I think EVs (partial and full) are the only way to reduce vehicle oil consumption.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com2tag:blogger.com,1999:blog-5063585505117878771.post-23628506401783850932012-10-03T12:29:00.003-05:002012-10-03T12:31:04.215-05:00Can Congress be Bought? - Resistance to Change #10<br />
Yes. In fact, the Return on Investment can't be beat:<br />
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Republican Strength In Congress Aids Super-Rich, President's Affiliation Has No Effect<br />
"According to the study, "The Rise of the Super-Rich: Power Resources, Taxes, Financial Markets, and the Dynamics of the Top 1 Percent, 1949 to 2008," following years of relative stability post World War II, the income share of the top 1 percent grew rapidly after 1980—from 10 percent in 1981 to 23.5 percent in 2007, a 135 percent increase. The income share of the super-rich dropped to about 21 percent in 2008, likely as a result of the financial crisis that had begun, Volscho said. By way of comparison, the income share of the top 1 percent was 11.7 percent in 1949.<br />
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"We found evidence that congressional shifts to the Republican Party, diminishing union membership, lower top tax rates, and financial asset bubbles in stock and real estate markets played a strong role in the rise of the 1 percent," said Volscho<br />
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... From 1949 through 2008, the impact of a one percentage point increase in the share of seats (just over five seats) held by Republicans in Congress raised the top income share by about .08 percentage points, according to the study.<br />
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"At first glance, this might seem negligible, but that's really not the case," said Volscho. "Given that the estimated national income in 2008 was more than $7.8 trillion, an increase of only 1 percent in Republican seat share would raise the income of the top 1 percent by nearly $6.6 billion. That equates to about $6,600 per family in the top 1 percent."<br />
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In terms of labor unions, over the course of the study period, Volscho and Kelly found that a one percentage point decrease in union membership among private sector workers was associated with more than a .40 percentage point increase in the income share of the super-rich. According to Volscho, private sector union membership was 34.9 percent in 1949, but had dropped to 7.6 percent by 2008.<br />
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Based on the estimated 2008 national income, the effect of a one percentage point drop in private sector union membership would transfer $33.4 billion to the top 1 percent, Volscho said. ...<br />
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Study: The Rise of the Super-Rich: Power Resources, Taxes, Financial Markets, and the Dynamics of the Top 1 Percent, 1949 to 2008.<br />
<a href="http://www.asanet.org/journals/ASR/Oct12ASRFeature.pdf">http://www.asanet.org/journals/ASR/Oct12ASRFeature.pdf</a>Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com1tag:blogger.com,1999:blog-5063585505117878771.post-33737331495039404022012-08-07T14:18:00.006-05:002012-09-05T18:13:24.157-05:00Will battery prices continue to fall?Yes, battery prices appear to be continuing their long-term decline rate of 7-10% per year. The Reuters article below indicates that consumer li-ion is going for $300/kWh: that's 25% less than several years ago. Please note that consumer devices have the advantage of large volumes, but their size is small and costly. For instance, an iPhone has a 5.3 watt hour battery. The Volt's battery pack at 16 kWh is 3,000 times as large. So, when the Volt gets to 25k vehicles per year, that's equivalent to 75M cell phones (a little more than Apple sold in 2011). That's pretty good scale.<br /><br />http://in.reuters.com/article/2012/07/11/autos-batteries-idINL2E8IB5UT20120711<br /><br />On the other hand, individual cells for automotive uses are much larger, which is cheaper to manufacture (per unit capacity) and can use cheaper materials (because weight isn't nearly as critical).<br /><br />The bottom line: automotive traction batteries will stay cheaper than consumer batteries (which will continue to fall in price, driven by intense pressure from places like Apple).<br /><br />2) The overall price of an EV is a very complex mix, and can't be reduced to the cost of the battery. Car makers have many costs: drive train; ancillary devices such as steering and braking; suspension/wheels; body (including aerodynamics); etc. Almost all of these have to be redesigned for an electric drive train (which includes EV/HEV/PHEV/EREV) because the design requirements are very different. For instance, ICE vehicle efficiency is dominated by weight. Weight is much less important for EVs because they have regenerative braking, so aerodynamics move strongly to the forefront. Another example: elimination of mechanical control and power transmission (brakes, steering, etc) affects a lot of secondary systems. Heck, window wipers get redesigned!<br /><br />Battery packs are complex: there are the individual cells; the connections; cooling and heating systems (air and liquid); charge and discharge management systems; temperature sensors, heat insulators and radiators; electronic communications and control, with hardware and software (including 10M lines of code, more than recent fighter jets); containment systems, structural support and crash protection; etc.<br /><br />So, economies of scale apply to the whole car, and cost comparisons are complex. That's why I raise the example of the Prius C, which has the advantage of Toyota's economies of scale and willingness/ability to aggressively price a new vehicle based on long-term costs before it has achieved the large sale volumes which will enable those low costs.<br /><br />A Prius C has both ICE and electric drivetrains, each of which are sufficient to drive the vehicle. That's substantial duplication. And, they have a full battery pack (with battery management), yet they can price the vehicle starting at $19k. We can get a pretty good idea what a small PHEV could cost, based on that. Of course, we have a plug-in Prius for the purpose of analysis, but it's larger, and IMO Toyota isn't pricing it quite as aggressively because it's newer tech (e.g., it uses li-ion), and Toyota is very careful with it's roll-out rampup of new tech (especially lately, with it's recent quality failures).<br /><br />The Ford quote is a good example of this complexity. Look at the range of costs: 12k-15k! Ford's purchasing guys know the battery cost to the penny, so that tells us that Mulally is including a lot of stuff in that figure, and signalling to us that the line of inclusion is very fuzzy. The alternative is that Mullally doesn't know anything about the EV program, which seems unlikely to me.<br /><br />3) I think everyone in the car industry is agreed that li-ion is the future. On the other hand, Toyota can be paradoxically conservative, and NIMH has worked quite well for them, so they're going to transition away from it slowly. For instance, the main Prius and the C continue to use NIMH, but some new versions like the plug-in, and the V (in Japan and Europe) are using li-ion.<br /><br />A final note - I don't think oil prices will stay above $150 for an extended period of time any time soon. I used hyperbole in my last post to point out the cost effectiveness of EVs (including all their variations), so that we can all be clear that suburbia is not threatened by PO (for better or worse).Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-7984035182539420252012-07-24T13:09:00.004-05:002012-08-06T14:23:32.205-05:00Are EVs affordable in a Post Peak Oil world?Sure.<br /><br />Consider the Prius C: it costs 2/3 as much as the average US new light vehicle($20k vs 30k), and uses 40% as much fuel. <b>If oil prices tripled the cost of fuel per mile in a Prius C would still be no higher than the average US light vehicle.</b> As best I can tell (based on Edmunds data), the C has the lowest total cost of ownership for any light vehicle.<br /><br />Then, if we add $10k in batteries to the Prius C (20kWh, assuming a conservatively high cost per kWh for <i>cells</i> of $500), bringing the cost only up to that of the average US new light vehicle, we'd have a plug-in with an electric range of 60 miles (3 miles/kWh x 20kWh), reducing fuel consumption to less than 10% of the average US light vehicle. That's a scale small enough to be covered by solely by ethanol.<br /><br />Electric vehicles of various sorts will work very well (though some people will have to wait for them to become available used). The only thing stopping them now is artificially low fuel prices.Nick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com0tag:blogger.com,1999:blog-5063585505117878771.post-17832661541201802392012-05-18T17:11:00.004-05:002012-05-18T17:15:54.229-05:00Is it easy to forecast oil production and pricing?No, it's very, very difficult.<br /><br />Here's an example. <br /><br />"Bloomberg’s survey of oil analysts and traders, conducted each Thursday, asks for an assessment of whether crude oil futures are likely to rise, fall or remain neutral in the coming week.<br /><br />...The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004. "<br /><br />That means that we could achieve better accuracy by flipping a coin!<br /><br />http://www.bloomberg.com/news/2012-05-17/oil-may-fall-as-seaway-insufficient-to-ease-glut-survey-shows.htmlNick Ghttp://www.blogger.com/profile/12721405349726668110noreply@blogger.com2