My Book Has Been Published

On August 23, 2016 I became a published author. Pan Stanford Publishing, along with CRC and Amazon, listed the book on their websites. Information from the Amazon website is shown below; the Table of Contents is from the CRC website:

The U.S. Government and Renewable Energy: A Winding Road
Paperback – August 23, 2016
by Allan Hoffman (Author)
ISBN-13: 978-9814745840 ISBN-10: 9814745847
Price: $49.95 FREE Shipping for Prime members once available

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This is a book on how the U.S. and other governments have changed their thinking about energy issues over the past four decades, a change triggered by increasing concern about the role of fossil fuels in global warming and climate change, greater awareness of the risks of nuclear power, and the emergence of viable renewable energy sources. It will help understanding of how this change came about in the United States from the unique perspective of a well-placed participant and observer. It will enhance understanding of the global energy transition that is finally getting underway in the second decade of the 21st century at an accelerating, even dizzying, pace.

The book’s main purpose is to illustrate how the U.S. government moved along its winding path to where it is today in getting ready for a renewable energy future. Target audiences are the young people who will inherit the transition and shape its future, those in government who currently shape our public policies, and those colleagues, friends, and family members who lived through many of the times and events discussed in the book.

Editorial Reviews
“Hoffman played a substantial role in the development of a wide variety of renewable energy technologies over the past 40 years, while employed at the U.S. Senate, the National Academy of Sciences, and the DOE. Much can be learned by examining the failures as well as the successes. Hoffman tells us what needs to be done for a gentle landing on sustainable technologies with a smart grid. This is an important and necessary path for the nation and the planet.”
―Emeritus Professor David Hafemeister, California Polytechnic State University, USA, and Author of Physics of Societal Issues

“I always had great admiration for those in government who were able to establish programs for the advancement of renewable energy (RE). This is especially true for people in the U.S. government (USG), which was highly influenced by the fossil fuel and nuclear energy industries. Allan R. Hoffman was one of these USG officials who led this effort for many years. He now presents us with this interesting and informative book that describes how RE programs were first formulated and then traveled through a winding road in the USG.”
―Dr. Peter F. Varadi, Co-founder of Solarex Corporation

“Dr. Allan Hoffman presents a unique personal record of the U.S. energy policy development during four decades. He is one of the top driving forces in this progress and conveys a fascinating description of the successes and disappointments from the inside of the federal government. Earlier than most people, he recognized the potential of renewable energy. He has also been a pioneer in comprehending the water–energy linkage. For anybody who wishes to understand how technology relates to politics, this book is a must-read.”
―Prof. Gustaf Olsson, Lund University, Sweden”

Table of Contents

Introduction

The New England Years: How It All Got Started

Introduction to Capitol Hill

OPEC Oil Embargo and Corporate Average Fuel Economy

First Tour of Duty in the Executive Branch and the DPR

Post-Domestic Policy Review Period and the Ronald Reagan–George H. W. Bush Years

The Clinton–Gore Years (Part 1 of 3)

The Clinton–Gore Years (Part 2 of 3)

The Clinton–Gore Years (Part 3 of 3)

The 1996 Summer Olympic Games in Atlanta

Cooperation with Other Countries to Develop Renewable Energy Technologies

The George W. Bush–Dick Cheney Years

Time in the Obama Administration and Final Years in Government

Summarizing and Looking at Today’s Renewable Energy Situation

Looking Ahead

The Importance of Energy Policy
…………………………………………..

A digital edition of the book is also in preparation and will be released in the near future.

Long-delayed update

To the readers of this blog:

I apologize for not adding posts to my blog for quite some time, while I have been distracted by writing a book and five chapters for a colleague’s new book on solar energy. The book is entitled ‘The U.S. Government and Renewable Energy: A Winding Road’ and will be published by Pan Stanford Publishing later this summer. It will be available initially in softcover, and after a while in digital form. A hardcover version may also be published.

The five chapters will be published toward the end of this year in a book being edited by Dr. Peter F. Varadi and entitled ‘Sun Towards High Noon: Meteoric Rise of the Solar Industry Continues’. It will also be published by Pan Stanford Publishing.

With the completion of these writing activities I plan to return to blogging, starting with an analysis of the energy policies put forward by the two U.S. presidential candidates, Donald Trump and Hillary Clinton.

Updating My Blog

My readers may be wondering why I’ve not posted any new blogs in recent weeks. The principal reason is that I’ve been devoting a good chunk of my time to writing a book. It is a book on the energy transition from fossil fuels to renewable energy as I’ve experienced it since I first got interested in energy issues in 1969. In its present third draft (I expect there will be more) it includes 15 chapters with the following tentative titles:
Chapter 1: The New England years – how it all got started​
Chapter 2: Working on the Staff of the U.S. Senate
Chapter 3: The 1973 Oil Embargo and Corporate Average Fuel Economy (CAFE)​
Chapter 4: Joining the Executive Branch and leading the Domestic Policy Review of Solar Energy
Chapter 5: Post-DPR Period and the Reagan-Bush41 Years
Chapter 6: Clinton-Gore Years (Part 1 of 3)​
Chapter 7: Clinton-Gore Years (Part 2 of 3)​
Chapter 8: Clinton-Gore Years (Part 3 of 3)​
Chapter 9: Clean Energy at the 1996 Summer Olympic Games​ in Atlanta
Chapter 10: Cooperating With Other Countries on Renewable Energy Development
Chapter 11: George W. Bush-Dick Cheney Years​
Chapter 12: The Obama Administration​ – Final Years in Government
Chapter 13: Summarizing and Today’s Renewable Energy Situation​
Chapter 14: Looking Ahead​ to Our Energy Future
Chapter 15: The Importance of Energy Policy​ to the Energy Transition

I also include here the draft Preface to give you a better idea of what will be in the book:

Preface
Why another book on energy? It is not a book on the details of energ technologies – my contributions on that score have appeared in the many posts I have published on my blog web site http://www.lapsedphysicist.org. This book is motivated by the need to understand the global energy transition that is finally
getting underway. It will literally change the way the world operates, given energy͛s central role in society. This book will also fill a gap in public understanding of how this transition came about.
Important target audiences are the young people who will inherit the transition and shape its future. It is important to know where we came from as we decide where to go. Other target audiences are those in government who currently shape our public policies, and my family members, colleagues, and friends who lived through many of the times and events discussed in the book and who contributed in various ways to the transition.
The transition has been long in coming. It validates my long-held belief and that of many others that the world energy system must undergo an inevitable transition from heavy dependence on fossil fuels following the advent of the industrial revolution in the 1800s to an emerging energy system that will rely increasingly on renewable energy. The second decade of the 21st century has seen the beginnings of this transition, which is now unfolding at an accelerating, even
dizzying, pace. It did not come easily, especially in the United States where traditional energy industries argued that renewable energy was too expensive and unable to meet U.S. energy needs, and politicians dependent on energy industry contributions supported the status quo through legislative inaction. It was a shortsighted approach that has hurt the U.S. economy by allowing other countries to take the lead and reap the related job and economic growth benefits.
My contributions in this book will be to add to the history of the early years of this transition, help explain why the U.S. took the so long to start moving toward a clean energy economy, and reflect on the steps toward and importance of this
transition. These contributions reflect my having been a major participant in that transition from its earliest days in the 1970s through the first decade of the 21st century. To borrow a phrase I came across recently in a book review, the book will
offer “an intimate, novelistic sense of what it was like to be there͛. It will reflect my personal experiences and observations from when I first began to educate myself about energy efficiency and renewable energy starting in 1969, and then my move to Washington, DC in 1974 to learn about how our federal government was handling these issues. What started out as a one-year leave of absence from my academic position as a young physics professor, via a fellowship to work with Congress, turned out to be a life-changing event that turned me into that most dreaded of terms, a ͚bureaucrat͛. Hopefully, by the time you complete your reading of this book, you will see that not all bureaucrats are the usual caricatures presented by the press and bemoaned by so many of our Congressional
representatives and fellow citizens. In fact, after an active Washington, DC career of 38 years (I retired in 2012) in both branches of the federal government and
their offspring, the National Academies of Sciences, I can say with conviction that without the dedicated public servants I worked with and encountered throughout those 38 years our federal government would not work as well as it does. As in all
human activities there are always some who disappoint, but the vast majority of public servants in my opinion are dedicated to doing their jobs well and making a difference. You hear the horror stories about government in the press, but what you don͛t hear are the quiet stories of long hours spent trying to responsibly implement our laws, carry out complicated programs, and advance the national interest.
This book, a highly personal memoir, will describe how I first got interested in energy issues, my early experiences in New England as the national debate on nuclear power got underway, my moving to Washington in 1974 to work as a Congressional Fellow and Staff Scientist for the U.S. Senate Commerce
Committee, my move in 1978 to the newly formed Department of Energy (DOE) as a political appointee in the Carter Administration, my time in the 1980s at the
National Academies of Sciences, and my subsequent return in 1991 to the Executive Branch to serve in various senior positions at DOE. It͛’s been an exciting
ride that has left some important marks on energy policy and development along the way. It will also describe my late-career pioneering efforts to describe the critical linkage between energy and water issues which is today attracting
considerable attention. Hopefully, this book will offer some unique history and insights that will be of benefit to those who will come after me, and help explain how this transition, which will serve as a positive legacy to future generations,
came about.
This book is dedicated to my wife who has had to patiently listen to me talk about energy issues and the inevitable transition for more than thirty years, and to my
children and grandchildren and their peers who will inherit the energy systems we helped create.
…………………………

I will also be returning to blogging by analyzing the energy positions of the U.S. presidential candidates who are still competing for their political party’s nomination – Hillary Clinton and Bernie Sanders for the Democrats and Donald Trump, Ted Cruz, and John Kasich for the Republicans.

President Obama On Energy: State of the Union Adddress

I have waited a long time for a U.S. President to make a strong statement about the need to move away from dependence on fossil fuels and toward a clean energy system. That wait came to an end on January 12, 2016 when I listened to President Obama’s final State of the Union address. His energy-focused comments are reproduced below because I consider them extremely important. Energy issues are critical to our county’s efforts to reduce carbon emissions and to enhance future economic opportunities.

What is striking to me in the current primary election political debates in the U.S. is the lack of discussion of energy issues by candidates of either political party, Democrat or Republican. Admittedly energy issues are complicated and there are many interests at play. Nevertheless, we need energy to be an important issue in the upcoming U.S. presidential debates once the candidates have been nominated by their respective parties. Critical decisions have to be made about U.S. energy policy in the next few years if we are to successfully begin to address global warming and climate change issues and protect U.S. interests in the evolving global renewable energy markets. We need the American public to understand the issues as well as the proposed policies and their implications for our future energy system. The world is in the early stages of a history-changing transition from fossil fuels to renewable energy and the U.S. must assume its rightful place in that transition. This requires presidential leadership, Congressional action, and millions of individual and corporate decisions to participate in and support this transition. President Obama’s words are an important step in that direction.

President Obama’s 2016 State of the Union Address (energy comments)

“Medical research is critical. We need the same level of commitment when it comes to developing clean energy sources.
Look, if anybody still wants to dispute the science around climate change, have at it. You’ll be pretty lonely, because you’ll be debating our military, most of America’s business leaders, the majority of the American people, almost the entire scientific community, and 200 nations around the world who agree it’s a problem and intend to solve it.

But even if the planet wasn’t at stake; even if 2014 wasn’t the warmest year on record — until 2015 turned out even hotter — why would we want to pass up the chance for American businesses to produce and sell the energy of the future?
Seven years ago, we made the single biggest investment in clean energy in our history. Here are the results. In fields from Iowa to Texas, wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills, and employs more Americans than coal — in jobs that pay better than average. We’re taking steps to give homeowners the freedom to generate and store their own energy — something environmentalists and Tea Partiers have teamed up to support. Meanwhile, we’ve cut our imports of foreign oil by nearly sixty percent, and cut carbon pollution more than any other country on Earth.Gas under two bucks a gallon ain’t bad, either.
Now we’ve got to accelerate the transition away from dirty energy. Rather than subsidize the past, we should invest in the future — especially in communities that rely on fossil fuels. That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet. That way, we put money back into those communities and put tens of thousands of Americans to work building a 21st century transportation system.
None of this will happen overnight, and yes, there are plenty of entrenched interests who want to protect the status quo. But the jobs we’ll create, the money we’ll save, and the planet we’ll preserve — that’s the kind of future our kids and grandkids deserve.”

Peter Varadi Sees a Dim Future for the Oil Industry

The attached article by Peter Varadi presents a dim view of the ability of big oil companies to adapt to rapidly changing global conditions. It reflects his personal experiences as a solar energy pioneer and entrepreneur dealing with representatives of the oil industry, starting in the 1970s. The article was first published earlier this week in the e-journal Energy Post (www.energypost.eu.com) and is republished here as an important perspective on the future of an important part of the fossil fuel industry.

……………………………

Twilight of the Gods of Oil
by Peter F Varadi

For most of the past 40 years OPEC, the association of Big Oil exporters, and the Big International Oil Companies controlled our lives, but they have started on an inevitable decline, writes solar pioneer Peter F. Varadi. Competition from renewables and smaller players as well as tighter climate polices will make their business model obsolete. According to Varadi, their corporate culture makes it unlikely they will be able to adapt.

OPEC was initiated in 1960 by five countries and by the 1970s had 12 members who controlled the flow of oil and its price. Everybody remembers the 1973 oil crisis which ushered in a recession in the US and other countries. In the following years OPEC regularly made threats and on at least one occasion caused another crisis, in 1979. They forgot the age old saying that one should not make war with one’s customers. The customers will react somehow.

And they did – as is evident from the fact that today among the World’s top 10 oil producing countries only four are members of OPEC and the USA, which was the hardest hit by the 1973 “oil embargo”, now exceeds in oil production legendary oil producer Saudi Arabia by no less than 12.5% and the Russian Federation by 29%. Among the 20 oil producing countries with daily production over 1,000,000 bbl/day there are only 10 OPEC countries.

A case in point is Brazil, where crude oil production in 1980 was 182,000 bbl/day (barrels per day) and in 2014 catapulted to 2,950,000 bbl/day – more than is produced in the OPEC countries Kuwait, Venezuela and Nigeria.

The destructive effect of the “corporate culture” is to prohibit companies from moving into a new but related field

OPEC is at a point where it is falling apart. It consists now of a group of haves and have-nots. The have-nots want the largest, Saudi Arabia, to decrease production but they do not understand that we are not in the good old days anymore. There is now plenty of oil and the new exploration method, fracking, has turned the table around.

The conclusion is as, BP Chief Economist Spencer Dale said recently, “OPEC is simply powerless”. If this would be the script of a movie about OPEC, the next frame would have only two words “THE END”.

Corporate culture
The Big Oils, international oil companies ExxonMobil, Shell, Chevron, BP, Total and others have also gone past their zenith and started on their twilight journey. In the future they may either transform themselves (as some German utility companies are attempting to do) or become immaterial, as happened to companies such as Kodak, RCA, Xerox, Polaroid and many others – names the present generation does not even remember.

The similarity between these forgotten companies is that they all rode up to the top and then went down and became oblivious. The reason was not that people stopped making photographs or buying TV sets or making copies of their papers – the reason was that they started doing these things differently, and the companies’ “corporate culture” made it impossible for them to adapt.

Thus, for example, Kodak’s management and technical staff could not believe that digital imaging could even threaten the traditional film business. Their “corporate culture” did not let them do it and 124 years after it was founded it filed for bankruptcy in 2012.

There are many similar examples. The conclusion is that the destructive effect of the “corporate culture” is to prohibit companies from moving into a new but related field which ultimately could make their dominant business secondary or even obsolete. And that is happening now with the Big Oils.

Deeper and deeper
John D. Rockefeller’s oil empire was structured to control the oil refinery and distribution business. ExxonMobil, a descendant of Rockefeller’s Standard Oil, is still the largest refiner in the world. It is hard to pinpoint the time when oil companies started to concentrate on finding and producing more and more oil and gas. But by the 1960s they had developed expertise and money to carry out very large projects, which came to be the hallmark of the “corporate culture” of Big Oil.

The story of Shell’s “Polar Pioneer”, the oil rig used to start the exploitation of the very large oil resources in the Arctic, will be a famous milestone in the history of Big Oil

Drilling to find oil started 156 years ago in 1859 in Pennsylvania with the 69.5-foot (21.2 meter) deep “Drake well”. As demand increased the oil companies developed technology to find new oil and gas reservoirs. They had to go deeper and deeper to discover new oil formations, many of them offshore under deep sea water, and lately even in the Arctic. Today a great number of drilling rigs are being used which can operate in water deeper than one mile (1,600 meters) and can drill to a depth of 5 miles (9,000 meters) or below. In 2012 ExxonMobil completed the world’s deepest well on the Sakhalin shelf in the Russian Far East: 7.7 miles (12,376 meters) deep and 7.1 miles (11,426 meters) out under the ocean.

The cost of these deep and offshore drillings is unbelievably high. The daily rental cost of a deep water drilling rig used for example in the Gulf of Mexico is about $500,000 excluding other expenses. Because of their expertise and wealth, this type of drilling assured Big Oil a dominant position. The cost of drilling was immaterial because the upward elasticity of the price of oil seemed to be infinite.

The price of oil (per barrel) at the beginning of 2000 was $25. This lasted for 3 years when in 2003 it started to move higher. In 2005, it had doubled and 3 years later in 2008 doubled again and reached $100. From 2008 the price of oil fluctuated between $90 and $110. However, by the middle of 2014, the price started to decline sharply and by the beginning of 2015 it was $50 – half of what it was 6 months before. Since then it has been in the $35 to $50 range, which was the price of a barrel of oil 11 years ago (data: US Energy Information Administration).

Small club
The stability of the price of oil in the period of 2008 to mid 2014 prevailed in spite of increased usage in China and India and of interruptions from major suppliers such as Libya, Iran, Iraq, and Venezuela. These were counterbalanced by improved efficiency of products using oil, such as cars, switching from oil to natural gas in electric power stations and the beginning of the tightening of policies related to global warming. The high price of oil also encouraged more drilling and by now over 100 countries are producing more than 1,000 bbl/day.

But there was another reason why prices eventually came down, a new technology called “fracking” to extract oil and gas from shale, which started to be used on a large scale. Drilling for oil deeper and deeper at very challenging locations became extremely expensive in comparison. It required enormous amount of capital and therefore it was a small club which was able to do it. Fracking required little money and therefore lots of startups got in.

The question now is will Big Oil find new areas to grow?

Fracking experiments, the injection of fluid into shale beds at high pressure in order to free up petroleum resources (such as oil or natural gas) were started in the 1950s, but large scale utilization first occurred in 1968. It was then used mainly to improve the production of vertically drilled oil or gas wells. When it was realized that oil and gas inclusions in shale were in many cases horizontal and not vertical, horizontal “fracking” to create oil and gas wells was started in the 1980s but more generally used from 1991 on.

Nonetheless in 2010 still only a negligible amount of oil was produced in the US by fracking. Five years later, in the beginning of 2015, close to 50% of US production was from fracking. To appreciate how much oil is produced in the USA by “fracking” one should consider, that at the beginning of 2015 daily production was somewhat more than the production of two OPEC countries, Kuwait and Algeria, put together.

Polar Pioneer
Big Oil knew about this and could have easily branched into fracking when it was still in its infancy. But Big Oil’s “corporate culture” could not let them to believe that their well established and successful drilling technology could be affected by shale fracking. As Big Oil ignored it a number of small organizations were able to get started.

Shell, for example, ignored fracking for a long time. When they did get in, they were, as Karel Beckman writes in his recent article, “simply unable to survive in this kind of highly competitive market in which small, versatile players set the tone.” Please remember that Kodak also entered the digital camera business belatedly, but had to close it because similarly they could not compete with the many relatively small organizations which had entered that field.

It seems Mr. Tillerson was not informed that since 2000 over $500 billion was invested in solar PV alone

The story of Shell’s “Polar Pioneer”, the oil rig used to start the exploitation of the very large oil resources in the Arctic, will be a famous milestone in the history of Big Oil. Until the end of the summer of 2015, Shell’s management seemed to still believe in Big Oil’s motto: “Damn the cost of drilling and full steam ahead.” They towed the gigantic oil rig to the Chukchi Sea, offshore Alaska, and paid $620,000 per day during the summer drilling season, and $589,000 a day for the rest of the year, to lease the rig.

“Polar Pioneer” started drilling on July 30, 2015. But Shell obviously realized that under the new market circumstances the exploitation of Arctic oil will not be profitable and that this condition may last for a decade or more. On September 27 the company announced that it would pull back from oil exploration in Alaska and started to tow the Polar Pioneer back to Seattle. We can mark this date, September 27, 2015, as the day the twilight of Big Oil’s dominance started.

The question now is will Big Oil find new areas to grow?

At a loss
As Shell demonstrated the “corporate culture” of Big Oil makes it unlikely that it will be able to adapt to the world of “fracking”. Another problem is described in the recent book “The Price of Oil” by R.F. Aguilera and M.Radetzki. The world is headed for an era of oil “superabundance” in which the low price of oil will prevail and oil produced with oil rigs costing $500,000 per day can only be sold at a loss. This would mean not only loss of profit but also lower revenues.

The oil companies could reverse this trend and diversify into the field of renewable energy. But this will be difficult for them to do. I know this from my own experience. As I describe in my recent book, “Sun Above the Horizon”, around 1973 the oil companies got involved in the solar photovoltaic business. There were two reasons for this:

1. The fashionable doomsday reason: oil and gas will run out, solar energy is permanent. Oil companies should get in now (in the 1970s) to invest in the development of the continuation of their oil and gas business.
2. The other reason was that a few leaders of the oil industry correctly envisioned that PV, because of its decentralized nature, would become an independent parallel energy source to oil and gas.
The terrestrial PV industry was started in 1973 but by the end of 1983 the major PV manufacturers in the world were all owned by oil companies: AMOCO’s Solarex Corporation (USA); ARCO’s Arco Solar (USA); Exxon’s Solar Power Corporation (SPC) (USA); BP’s BP Solar International (UK).

The Paris climate agreement makes it clear that the world will not turn back on serious global warming policies

Ultimately all of them got out of the PV business. Why? The major reason is their “corporate culture”. To show the way they are thinking, this is what ExxonMobil CEO Rex Tillerson told investors on May 27, 2015, explaining why the company isn’t investing in renewable energy: “We choose not to lose money on purpose”.

It seems Mr. Tillerson was not informed that since 2000 over $500 billion was invested in solar (PV) alone, including by Warren Buffett’s MidAmerican Energy investment of $2.0 billion to buy the 579 megawatts Antelope Valley Solar Projects in California. Buffet is not known to lose money on purpose

As of losing money by investing in renewables, Mr. Tillerson was also a little bit misinformed. Solar PV manufacturer “First Solar Inc.” recorded sales in 2014 of $3,391,814,000 and made 8.5% profit which is a little more than the 8.1% ExxonMobil made in the same year.

So for Big Oil to get back now to PV is the same as getting into “fracking”.

Not many options
In the days when Big Oils calculated their odds in PV, their only risk was that they would lose their investment, which was not much more than the loss of a single dry hole. But even the minimum investment today for Big Oil is much bigger. Two big oil companies are now in the PV business but both are only minor participants.

Shell with Showa Shell Solar (Japan) was started in 2006, manufacturing the thin film CIGS solar cell/module. The company was renamed Solar Frontier in April 2010. Solar Frontier’s manufacturing capacity will reach over 1 GW in 2015, which is about 3% of today’s PV manufacturing. French Total invested 1.1% of their entire market capitalization to buy 60% of SunPower (a US PV manufacturer). Today, if Occidental Petroleum (OXY) were to buy 60% of SunPower (SPWR), Occidental would have to put up about 5.9% of its entire market capitalization. If OXY were to buy 60% of Solar City (SCTY), it would need to put up 7.2% of its market capitalization.

The Paris climate agreement makes it clear that the world will not turn back on serious global warming policies. There do not seem to be many options left for Big Oil. If they want to avoid the fate of Kodak, they could split up like German utilities Eon and RWE did, and shed their drilling business, in the same way telephone companies did with their land line business. After that in their twilight, they will have to compete in a brave new world.

Note:
Peter F. Varadi Peter F. Varadi is the co-founder in 1973 of SOLAREX Corporation, Rockville, MD (USA), which pioneered the utilization of solar cells (PV) for terrestrial applications. By 1978 it had become the largest PV Company in the world. He recently wrote a history of the early years of the solar industry, Sun Above the Horizon.
© Peter F. Varadi. All rights reserved