The Oil Drum

Maryland Legislation Taps Energy Efficiency as the First Fuel

Governor O'Malley's Energy Efficiency Bills Are Passed by Legislature

Washington, D.C. (April 9, 2008): Maryland's legislators gave final approval this week to two landmark energy bills that together aim to reduce the state's energy consumption by 15% by 2015. The legislation, proposed by Governor Martin O'Malley, sets the stage for Maryland to become a leader in capturing the benefits of energy efficiency.

"These two bills provide a foundation for a clean and sustainable energy future for the state of Maryland," said Steven Nadel, Executive Director of the American Council for an Energy-Efficient Economy (ACEEE). "Maryland's policies now recognize energy efficiency as the 'first fuel' for meeting its future energy needs.

The prospect of going through a cold winter with inadequate heat is a real one.  More and more Americans are putting their winter heating fuel on credit, increasing their level of debt and the burden of servicing it.  This cannot continue indefinitely.  When the ARM resets or the credit cards max out, the whole house of cards (including paying the mortgage) falls down.  Foreclosure is the problem in the mid-term, but freezing strikes as soon as there's no fuel for the furnace.

This problem is made much worse by fuel shortages and the consequent price spikes.  As fuel supplies go down, prices go up.  The alternative is rationing, but this has costs too; if commerce is shut down, employees don't get paid and the problem of paying for heat is much the same.

The problem comes down to affordability.  Whether there is a limit to the gas available, or if incremental supplies command unaffordable prices, the alternatives are to do more with less, or do without.  As N. American gas supplies are already shrinking, any good solution has to involve getting out in front of the problem and staying there.

Can improvements in energy efficiency “save” modern civilization as we face declines in world oil production? While the efficiency revolution may let us drive on half the gas, the productivity revolution may make it affordable to twice as many--or more...

One argument against the efficacy of improving energy efficiency is called Jevons’ Paradox. This suggests that, when we improve our energy efficiency, we also reduce our demand for energy from that same use. That decreased demand in relation to supply makes energy cheaper, which in turn makes us use more of it. It has been suggested that this “rebound effect” only accounts for 5-20% of efficiency gains, but I have written previously about the potential for a “shadow” rebound effect that potentially accounts for nearly the entire efficiency gain.

The Tata Nano: While the efficiency revolution may let us drive on half the gas, the productivity revolution may make it affordable to twice as many--or more.

Often, I find it difficult to apply the very theoretical Jevons’ Paradox to pragmatic thinking about our energy future. The recent launch of the Tata Nano, however, stands as an example of Jevons’ Paradox in action. Possibly of much greater importance, however, are two related issues: the feedback effect between increased economic productivity and increasing energy consumption, and the aspirations of an emerging global middle class.

This is a guest post by Mike Pepler. Mike lives in Rye, UK, and works from home for the Ashden Awards for Sustainable Energy (www.ashdenawards.org). He is also one of the founding members of PowerSwitch (www.powerswitch.org.uk), and together with his wife Tracy manages eight acres of coppice woodland near Rye.

On 25th September 2007, the BIEE, the UKERC and the Energy Institute held a seminar in London where they invited academics to critique the 2007 Energy White Paper.

Background

In 2003 the UK government released the Energy White Paper 2003: Our Energy Future - Creating a Low Carbon Economy. As we all know, events in the energy world have moved fast since 2003, and faced by falling gas supplies from the North Sea and ageing nuclear power stations, the government launched another energy consultation in 2006, details of which are available online here. The result was another Energy White Paper, published in May 2007, this time with the subtitle Meeting the Energy Challenge. It seems to me that the change in the energy world over the intervening years can be seen from the change in the tone of the titles from 2003 to 2007!

The purpose of the seminar was to bring together a range of academics to give a critique of the Energy White Paper – and they certainly were critical! So, without further ado, here are the key points form the speakers, with comments from me in italics where appropriate.

The slides are available on the BIEE website here: www.biee.org/downloads.php

The situation in the credit markets continues to worsen as a sudden attack of risk aversion rapidly dries up liquidity. And this is before the resetting of adjustable rate mortgages (ARMs) begins in earnest - to the tune of $50 billion - in October. Watch this space.

On the Canadian energy scene, Shell pumps $27 billion into the oil sands, even as oil patch profitability falls. Abu Dhabi wants to invest in Canadian power plants, and there are plans for BC to host an LNG terminal. Wind power grows rapidly in Ontario and Quebec, making a few enemies along the way. In BC they ask: should public transit be free?

On the climate front, water is the issue - too little and too much. Finally, in the tug-of-war between efficiency and resilience, efficiency has the upper hand, but what price will we pay for allowing our life support system to become brittle?

Going With The Flow?

You may remember that our definition of household cash is as broad as can be. We include all household "banking products", per se, but also include all household holdings of bonds, inclusive of Treasuries, Agencies, corporates, muni's and mortgage backed paper. Implicitly, we are assuming bond holdings could be converted to cash at a moments notice. So what follows is simply total household cash less total household liabilities over the last six decades.

While writing the recent piece on home heating, I was surprised to calculate many different numbers for the energy return on firewood. Though the outputs were only slightly different in quantity of BTUs, there was a wide range of inputs. But the primary reason for the return disparity was the presence of the market economy - those processing firewood for their own use had higher energy returns than those selling wood for profit - the accelerated drying time to process large amounts of wood required an additional wood input which dropped the energy return. Graphically this showed up as a tradeoff between maximizing energy return on TIME versus maximizing energy return on ENERGY. This reminded me that energy return is not a hard-and-fast principle, and also that society, obviously, will optimize its resources based on what it perceives to be its most limiting input(s). However, in an upcoming world constrained by energy, or any limiting variable other than time/money, we can increase our energy available by reducing the return on other inputs, such as time.

Apologies for the delay, but dinner with Stuart Staniford (great guy!) took up most of Thursday evening and there's little power and even less connectivity in Yosemite.  (Great waterfalls and cool geology and other stuff, though.)  Now that I'm landed in Kansas with a bit of connectivity for a couple days, I can give you more of what I saw!

8:30:  Lawrence DuBois

The first session I caught was with Lawrence DuBois of SRI International.  SRI is a contract R&D organization which has its fingers in many pies.  This gives them a great deal of expertise in many areas, some of which are applicable to energy.

DuBois noted that alternative energy systems use massive amounts of materials compared to at least some conventional systems (gravity dams excepted, I suppose).  He cited some numbers I didn't write down fast enough.  He then went on to other developments.

The first one he mentioned was... a Direct Carbon Fuel Cell (DCFC)!  I was rather surprised to hear SRI claiming credit for this, but this matter was clarified later.  The attraction of the DCFC is that the coal market has very different dynamics from oil and gas, and coal is still a great deal cheaper per BTU than the others.  Coal is still a major energy source (as little as some of us like it) and forms a $150 billion/year market (I believe this is world-wide).

Major Loss Of Gas Reserves Seen If ExxonMobil Scraps Pipeline

ExxonMobil's possible move to scrap natural gas pipelines in Alaska and Canada could amount to the equivalent of losing all the country's production in the Gulf of Mexico, an energy analyst said Thursday.

"It's the biggest energy story of the year," said Andrew Weissman of FTI Consulting.

Although natural gas and gasoline prices fell on Thursday following a rise in supply, Weissman said the market has yet to weigh the implications of ExxonMobil's (XOM) decision to possibly back away from building the Mackenzie Valley pipeline in Canada.

ExxonMobil Chairman and CEO Rex Tillerson told reporters after the company's annual meeting Wednesday that the $16.2 billion price tag for the delayed Mackenzie Valley pipeline is too expensive without more government subsidies.

"We are now in a situation where it's not economic at current costs," Tillerson said in an article published by The Globe and Mail. "It may just be that the project is going to have to wait for a different cost environment."

This is a guest post by Jeff Vail.

Is the push for greater energy efficiency a good policy choice to address energy scarcity after Peak Oil? Here’s a bold answer: NO, at least not in a vacuum. Efficiency is not a standalone solution, but part of the much more complex problem of reducing total energy consumption that must address Jevon’s Paradox and the Rebound Effect.

A lot's been said lately about how much energy is in a cubic mile of oil.  This is roughly the amount the world uses in a year.

Assumptions: The Three Gorges Dam is rated at its full design capacity of 18 gigawatts. A nuclear power plant is postulated to be the equivalent of a 1.1-GW unit at the Diablo Canyon plant in California. A coal plant is one rated at 500 megawatts. A wind turbine is one with a 100‑meter blade span, and rated at 1.65 MW. A solar panel is a 2.1‑­kilowatt system made for home roofs. In comparing ­categories, bear in mind that the average amount of time that power is produced varies among them, so that total energy obtained is not a simple function of power rating.
src: Joules, BTUs, Quads—Let's Call the Whole Thing Off, IEEE Spectrum, January 2007
Illustration: bryan christie design. Click to enlarge.

Leaving aside some errors (the coal and nuclear numbers are off by about 10% to each other, and the capacity factor of wind turbines should be closer to 30%) the most essential oversight in that equation is elephantine:

It compares oil's inputs to the other's outputs.

Compared to that, the rest is small potatoes.