Monday Open Thread/Which Battle Plan Would You Draw?
Posted by Prof. Goose on March 6, 2006 - 12:06pm
Topic: Supply/Production
Tags: iran, iraq, khuzestan [list all tags]
Posted by Prof. Goose on March 6, 2006 - 12:06pm
Topic: Supply/Production
Tags: iran, iraq, khuzestan [list all tags]
I think the thing that is not fully appreciated by a lot of people is that going with any alternative energy scheme such as solar, wind, wave, etc) will actually worsen the fossil fuel situation over the short term, even if that time period is only a few years.
This is not to say that we shouldn't be pursuing such alternative energy schemes, it's just that we have to factor in the reality that such schemes will actually increase fossil fuel demand for some time period. If we wait till the supply/demand situation gets really bad, it will become far more expensive and difficult to implement such systems. It's analogous to the starving farmer who can't afford to buy seed for next season's crops.
It's also become almost an article of theology among financial and business types that a unless a certain percent return on investment is guaranteed, there is no justification for going with a project. I think when it comes to trying to develop a whole new energy infrastructure, the insistance on such criteria is highly flawed. What if NOTHING you can do in the way of alternative energy shows an acceptable return on investment? What do you do then - just wait around until things collapse?
There is also a displacement in what we include as 'investment'. Arguably, a certain fraction of the US military budget of over $400 billion can allocated to maintaining our access to oil and in obtaining new sources of oil (read that as taking control over someone else's). But this huge amount of money doesn't get charged against the current price of imported fossil fuel. Rather, it shows up under another account, euphemistically called, 'national defense'.
So, what if we were to take say 25% (just to pull some number out of the air) of the $400 billion US defense budget, or $100 billion, divide that by the total number of barrels of oil we import per year from the Middle East, and then add that number to the market price of oil? That sum would more accurately represent the true price of imported oil - the market price plus the price of the 'externiality' (I believe that's the word economists love to use) of maintaining a huge military presence to ensure the continued flow of that oil.
Of course, neither the government nor the oil companies would ever accept such a number as valid, as it would be far too embarrassing. I maintain that the number is valid because if the US were to magically obtain a reserve of oil equal to that of the whole Middle East, it would be possible to reduce our military spending by some huge amount because there would be no need to perpetually meddle in the Middle East.
None of this will ever happen, but it's a way I prefer to look at the situation.
Not exactly, projects or investments are evaluated based on a hurdle rate and not judged acceptable unless the expected return is higher than the cost of capital. Your comment about a guarantee is overstated as is calling ot theology. But you are right that the private sector requires that their money earn more in any given investment than they would get in the next best option. If oil is subsidized by military spending, it skews this decsision.
What would you suggest as an alternative? There are a limited number of possibilities:
- Investors agree to lose money - which is highly unlikely
- Governments (or other bodies) agree to subsized certain investments - which is difficult and subject to political influence. None-the-less, it is the logical way to include the externalities you mention above ("what if we were to take say 25%...") in allocating investments in alternatives.
So how would you see these subsidies determined? Would this favor coal and nuclear energy - or would you also make adjustments for climate impacts? Who would decide all of this?I agree with your fundamental point - oil is subsidized by miltary spending, which makes all alternatives more expensive than they should be. I would just be curious to see more details on how we can move to mitigate ths problem.
However, if a corporation can realize returns of anything above their cost of capital they should be able to raise this from the market. Companies with access to returns above their cost of capital should not be capital constrained and hence can invest not only in the projects that return 25%, but those that return 24%, 23%, 22%, etc.
However, I dispute this statement "The floor now for projects is more around 15-20% ROI". No one in the world has access to a steady stream of projects with an expected return of 15 - 20% unless they are very risky.
Many individuals have reached this point. I think the industry as a whole is pretty far from this point.
This theology is the heart of our problem: the debt-and-interest financial system that requires endless "growth" to survive. Without a new paradigm we're doomed.
Those investors that refuse to "lose money" now will lose everything later. Sort of like the claim that reducing GHG is "bad for the economy". Tell that to NOLA.
Here's the link to a paper I wrote in an attempt to outline the paradigm of an organic economic system. An organic economy is an economy that does not require perpetual growth (an impossibility on a finite earth) , but balances the forces of growth and decline.
The Organic Economy
We can experiment with wind and solar today, when fossils are cheap and we are not confronted yet with the necessety to store the renewable energy, but stubornly refusing to face the realities of tomorrow is a perfect recipe for disaster.
The reality is the following: either we start building nuclear power plants (EROEI ~ 50, potential reserves in the order of million years) or we decide to give up the industrial civilisation. The stubborn refusal of enviromentalists even to mention the word "nuclear" makes me think they want us to pick the second option. What they do not tell us is what their "bright, non-industrial future" will be like which tells me that they simply don't know. They don't know neither what it would look like, nor how we can get there without shooting ourselves along the way. They are pushing their vague daydreams to all of us and we are buying it, because we are the same daydreamers that like and even demand to be fooled.
One thing is sure - either thing happening - a massive die-off or a massive but hard switch to nuclear power, our kids will be looking at us and wondering what kind of idiots were living at the beginning of the 21st century.
I don't think that's fair. Many environmentalists are supporting nuclear these days, because of global warming.
IME, it's local residents who don't want a nuclear plant in their backyward. Even in Japan.
True, but it is almost as far to becoming a MSM as the economists acknowledging PO as a serious problem. I'm sorry for generalising too much but it is the MSM that the public is getting the messages from.
As for the NIMBYsm - it is mostly function of the way the media presents things. While media is being a double whore (sorry for the expression) - serving both what the public wants to hear and what their sponsors want to be published, you can not rely on anything meaningful as a public opinion. IMO it is obvious there are situations it needs to be overriden - who supported USA going to war against Nazi Germany for example? For a reversal to happen it is the responsibility of those that ignited the NIMBYsm at the first place to admit they could have been wrong. I don't expect this to happen.
I am one of those environmentalists. I've had my share of marches and blockades, but I have done a 160 on this issue after 30 years (not quite 180).
The environment movement is split on this issue, but the pro-nuke wing is a minority wing. Same over the question of immigration as we witnessed with the election last year for the Board of the Sierra Club. The let us stop immigration minority wing was labeled as "racist" over wanting less people to illegally enter the USA.
There are many environmentalist (a minority) who want to go back to the Rousseau "noble savage" world too. They may get their opportunity, but it is interesting to note that those same noble savages killed off the mammoth, mastodon, etc.
"
Worth repeating. Making some past culture your latest and greatest mental refuge (religion) is silly. Our ancestors were just as cut-throat as us.
Otherwise The Mother of Nature would be looking on a group of Homo Saps doing something Other than making plans to gor at eachothers throat and ask questions later.
"it is interesting to note that those same noble savages killed off the mammoth, mastodon, etc."
There is still a debate going among archaeologists as to the proximate cause of the extinctions--climate change or overhunting. See one discussion: http://www.sfu.ca/archaeology/museum/mammoths/extinct.htm
Most likely it was a combination of the two, but there are good arguments made on both sides. The so-called "savages" lived with the same pressures we do--finding enough resources to survive and reproduce. In an environment where there was an abundance of other game, I doubt there was much pressure to conserve one species. Mammoth and mastodon were preferred because there was a lot of return on your investment of energy. Once they were gone, people switched to other sources but probably not without difficulty. In general (there are always exceptions of course), tribal hunter/gatherers evolved ways of living sustainably in their environments, including keeping their population sizes stable through infanticide if necessary. While that statement might be construed as an argument for the validity of:
"Our ancestors were just as cut-throat as us" there are also examples of hunter/gatherer cultures that are much more cooperative and non-agressive than we are. Google the Kung people of the Kalahari, or the Mbuti people of the Forest in Africa. There are also the Yanomamo in the Amazon, however. My point is that it's not necessarily true that humans are by nature wasteful or "cut-throat". Culture has much more to do with it and that is something we can change. Given the dwindling supply of the resources that keep our culture going, IMO we are definitely going to have to change and adapt in order to survive.
Would you PLEASE email the Midwest Renewable Energy Association at: info@the-mrea.org ???
(please just once though or they get quit owly at you - "pest" stone repelant they use (organic even)
PLEASE talk to them. Like the NewAge Repbulicans, myself and the EcoCulturally Correct, we have the SAME GOALS (goals - like in tag as a kid).
But I feel their (MREA) good intentions only serve to CLOUD the rode to HAdes we are now Paving In Progress...
1. Those who advocate immediate and big-time investment in nuclear energy.
versus
2. Those who apparently cannot do even simple algebra, maybe not even sixth-grade-level percentage-type computations.
Politics rules, and most politicians appear to be innumerate, or too scared about the next election to tell the truth. Or both.
We have oil that can power our civilisation for 10 year, NG for 20 years, coal for 100 years, uranium/thorium for many thousands of years, while wind could at least partioally power it indefinately (after you factor out the resources you need to build it). It is the availability and the impact of the resources we use that matter.
Even economicaly - just look 20 years ahead. Price of oil will probably be in the stratosphere, NG and coal will be somewhere above the clouds, while uranium will still be cheap. Because it is abundant, and we will not have to worry about it in the next several thousand years.
It's just like with wind - you need a public support to do it, because wind needs subsidies. In this case the subsidy required is "trust" plus "public control". It is simple - nobody will bury $2-3 billions if they are not sure that the next goverment will not just close down the project because of NIMBYsm. Public control is needed to ensure everything is built safely. I feel it is the need for public control that drives many people away - they prefer not to care. I think it is time to care.
VS the subsides oil gets (do you think the military isn't one?)
VS the subsides nuclear power gets (by law, the libality is limited)
VS the subsidies (of whatever) gets (insert tax law treatment, laws or whatever)
Is the 'propping up' of wind less than, say nuclear power? The occational failure of a wind turbine means something on the ground gets hit. What IS the downside when nuclear power fails?
I'm not advocating oil. Using it and especially coal is probably the greatest liability we're leaving for the future.
VS the subsides nuclear power gets (by law, the libality is limited)
Where is the subsidy here? Make a research how much nuclear power plants are paying on insurance yearly. Many, many billions. How much is it paying to government in terms of license fees, fees for building that storage in Yuca Mountain, etc. etc? Even more. There is a reason why governments like nuclear - they are profitable and a cash cow at any stage of their operation. Unfortunatelly the fear from not being re-elected is stronger for any politician than the concern for budget balance (we can always print money, right?).
Usually governments give guarantees for financing of new plants, but this is because of the nature of the business and does not affect taxpayers in 99% of the cases.
Finally wind will also be developed by huge corporations seeking profits. I don't see any place for idealism here.
That would be the rates under the Price-Anderson Nuclear Industries Indemnity Act?
Its a mighty BIG government handout.
But, go ahead. Figure out what the libality of operatioon of a nuclear plant would be WITHOUT that law,
they are profitable and a cash cow at any stage of their operation.
What an over-the-top statement. When they are being built, they are not operational and therefore tyou have choen to ignore the cost. When they are de-commissioned, they are not operational and therefore you have chosen to ignore the costs.
Most businesses have to pay for their waste liability. Yet, the nuclear power industry has the government take on that libality. (Yet another subsusidy)
How was Chynerboyl and Three Mile Island 'profitable' due to their operation? Lets concentrate on the last few days of operation, because they ARE profitable at ANY stage of operation, right?
Finally wind will also be developed by huge corporations seeking profits.
Yea, because if you have land, some skills, copper, magnets, steel and resin you too could be a wind turbine maker AND user.
http://www.otherpower.com/
http://www.otherpower.com/17page1.html
(Yup a wind turbine 3kw all home made)
Enjoy poking about at otherpower!
Utilities pay interest on capital for the time they are constracting the plants. They have also accumulated close to 100 bln. in payments to the govt for that waste disposal site we still hope to see in our lifetime. Bad decision to rely on our govmnt to do that - it seem that former Soviets was much more effective, because it solved their problem decades ago and many times cheaper.
Chernobyl was in former USSR, where everything was payed by the government and utilities did not pay insurance. Don't start me on that topic for I'll be long.
First there is a question of arithmetic--adding up how much capacity is needed. I see no evidence that you have done this.
Second there is the question of whether coal and nuclear are complementary or competitive approaches. Clearly, they are complementary. Again, doing the simple column addition, how much added capacity is going to be needed (on reasonable demand projections) over the next ten two twenty years? After you have done this computation, please find me one knowledgeable coal person who claims that coal alone can do this.
Third: If coal is so great, why don't the French and Japanese use more of it? They have good ports and if it made any economic sense (which it does not) they could have opted to import huge quantitities of coal rather than going nuclear.
I look forward to seeing your computations.
Wow. Now, I've asked you in the past to answer questions about the special laws which protect nuke plants and limit the legal libality in the US of A.
Yet I've not seen your response.
Why is that? Did I miss your response?
You also forget a 3rd, 4th, 5th, 6th et la types like Monte Quest over at PO.com who advocate a powerdown or population reduction (or both).
Because the same people that talk about "power down" and a return to the pastoral living of shepherds in the loans of ex-suburbia, will be the first that will start screaming when homo sapiens begins eating itself and the whole planet alongside, trying to protect what it has now.
Obviously, anyone who speaks of a pastoral living of sheperds has never actaully BEEN a farmer or had to deal with more than a cat or a dog.
Powerdown is GOING to happen. The overall energy used by machines and humans WILL fall. The only question is, what rates of fall, and if the watt/human ratio will fall also.
Importing energy from space into the envelope of the earth will result in heating. The use of fusion power at a level to support all of the humans now on the planet would also add heat to the atmospheric envelope.
Getting off planet and harvesting the other planets in an orgy of consumption would work...if the energy source like fusion were to become more harvestable than just collecting photons from fusion.
screaming when homo sapiens begins eating itself and the whole planet alongside, trying to protect what it has now.
Then education has no hope, does it? Because what it has in the recient past was cheap energy. That cheap energy is at an end. Nuke power isn't AS cheap/flexable as oil. Nor is wind, PV, or hydro. Biomass can be as flexable (bvecause oil is just old biomass...processed), but it will not be as cheap.
I'm far from being hopeless. There is a huge resource available in terms of efficienty, conservation even renewables will help.
The reason nuke power is not cheap is that it is not mass produced. It is not mass produced because of cheap fossils before and because of NIMBYsm now. And not to last extent because of not enough international cooperation in the sphere plus strong oil/coal industries receiving huge profits for relying on their dwindling and polluting resources. All of this can change if we start working for it. And - again - and of course - we must fire all guns. ALL of them.
But really, it's going to be nukes, coal, solar, and wind. Or maybe coal, nukes, wind, and solar.
Now if only we could get wave costs down to wind costs, there's so much slamming into the California, Oregon, Washington, and British Columbia every day...
At least no hope for the Global Village Mass Delusion.
The one where Every Tom, Chen, or Ahmoud (sp??) can live in a First World Home Country. "Not gonna happen, uh-Ah, no sir, not gonna happen."
I think Fractured Fairy Tales is coming. Pockets of Civilization instead of Pockets of 3rd World-or-less poverty will become the norm for a while.
Religious nutz will hopefully voluntarily Remove themselves from the Gene Pool in the process thank their godzain'treal.
EEeeeeventually of course this will all be followed by a Tousind year Raign of Terror if the Religious Fanatics decide to use their Tool to Crush Skulls instead of Build Communities.
Or, maybe some Phantasm will come riding out of the clouds and usher in a thousand years of peices-of-8.
Mother says, "git ta bed and i mean it now."
Insurance is not an especially effective way to handle very large and very uncommon accidents. How do you correctly size the insurance funds? How do you keep them liquid, where are they to be invested and what is to be done with the raw economical power those massive funds will have?
I use to advocate that a large number of nuclear power producers, preferably all of them, should agree to write contracts with a clause to all raise their prices with 0.1 cent after a major accident and use the massive money flow to compensate victims and work with decontamination etc. This would create a money flow that could pay for any reasonably sized relief effort for manny years.