Thursday, March 27, 2014

Peace Proposal

Since it seems that a substantial, if not most, of the efforts of many environmentalists are focused on attacking nuclear (the pre-eminent of all low carbon energies) instead of actually trying to curtail fossil fuels, the true climate culprits, this is a Peace Proposal with the intention of achieving harmony in the quest for lower emissions.

The proposal is really very simple:

Let's remove ALL subsidies from ALL energy sources: Fossil Fuels (FF), Renewables (RE), Nuclear, what have you.

Once all subsidies / tax breaks are removed, let each energy compete on its own merits. Let's not try to pick winners / losers from our desk. 

Yes, it could be argued that carbon taxes need to be applied to FF to somehow internalize their externalities, but let's start by just eliminating their subsidies.

Also, it could be argued that for RE to have priority access to the grid is a sort of covert subsidy (and it is), but let's leave it this way for the moment.

Independent of other benefits, the mentioned proposal would cause energy to increase in cost in the short term and thus waste would be reduced.

Is this proposal acceptable to both camps that are trying to reduce emissions?

Thank you.

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Monday, March 24, 2014

Interview with an Oil Company CEO

This is a fictional (but very feasible) interview to an oil company CEO.

GNWR: Thank you, Mr. Oil for accepting to participate in this interview.

CEO: It is my pleasure.

GNWR: In this day and age of global warming, why do you continue to drill and produce oil.

CEO: I ultimately have two bosses, our millions of customers and the board of directors. Customers demand more and more oil in the form of gasoline, diesel, airplaine fuel and other feed stuff. We have to listen to our customers and provide them with what they want. Even though fuel use in the USA and Europe has shown little growth lately, other areas of the world literally can't get enough of the substance. I'm talking of China, LATAM, Africa and India to name only a few.

GNWR: And your second customer?

CEO: Yes, they are the board of directors together with all stockholders. They are VERY demanding, you don't have an idea how much, and they want higher returns on their investments.

GNWR: But, why don't you move your company toward renewables?

CEO: Are you kidding? Renewables almost fully depend on government subsidies. The minute those subsidies are removed, and I mean the minute, that industry will come crashing down. As a CEO I would never gamble with my multi-billion company that way.

GNWR: But, aren't we eventually running out of oil?

CEO: There is no argument with that, but I have to face the market every quarter, I have no time to waste mulling what will happen in 100 years or so. The market is relentlessly harsh and I have to face it four times a year, at the very least. If the company is not performing financially the CEO is the first one to be blamed and frankly, I don't want to lose my job.

GNWR: Is there anything that would conceivably make you decide to move your company away from oil?

CEO: Certainly. If people massively stopped buying gasoline, diesel, all the other final products of oil then we would have to move to something else or maybe even go bankrupt. But thank goodness this is far from happening. Actually every year the consumption of oil goes up, so we are still safe for a long time to come.

GNWR: But, what about global warming?

CEO: I am a believer in global warming but, what are we going to replace oil with? We have nothing in the pipeline and for the people alive today the consequences of energy scarcity would be worse than the consequences of global warming.

GNWR: Would a carbon tax affect your company?

CEO: Yes, it would tend to increase efficiency and reduce consumption but the energy requirements of the world are still booming. A carbon tax wouldn't be fatal for most private oil companies. Actually it wouldn't even be that harmful to us as we would obviously pass the higher costs to the ultimate consumer.

GNWR: What is your vision for the future of the industry?

CEO: For the next 30 to 50 years, it would continue to operate in an almost business as usual way. Eventually humanity WILL have to move away from oil.

GNWR: What are the alternatives.

CEO: Aside from other fossil fuels which would nonetheless continue to be high carbon emitters, the obvious alternative is nuclear. I don't mean nuclear like the current reactors in operation, I mean more advanced designs.

GNWR: Mr. Oil, thank you very much for your time.

CEO: It is always a pleasure.

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Tuesday, March 18, 2014

A Tale of Two Countries

In the energy discourse we hear a lot about renewable energy, zero emissions, Energiewende, installed capacity, etc. However, today we are trying to clear the air a little bit by publishing the results. Yes, here we are removing the hype and the wishful thinking and presenting just the results.
Luckily, we do have two countries that pursued different paths toward a low carbon electric generation system.
The first is Germany that committed to eliminating nuclear and producing most of its electric power with renewables (sun and wind), the other is France that decades ago decided to go mainly nuclear.

Here we can see the latest report from the IEA (International Energy Agency) in which we can see the actual energy generated during 2013 by each type of fuel. First we have Germany:

As we may see, combustible fuels continue to lead in German electricity production. Nuclear is still in second place. Sun + wind, on the other hand, barely increased their actual output in spite of the fact that their installed capacity continued to increase.

Now, let's take a look at France:

Think what we may about nuclear, it is a low carbon electricity producer. So France overwhelmingly produces its electricity via low carbon means and it shows.

If we now take a look at the ultimate climate result, we may see that German electricity is more than six times more carbon intensive than the French one.

This Tale of Two Countries is trying to point out which approach is actually working in the real world.

Thank you.

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