Category: Fossil fuels

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.

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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

A Presidential Campaign Speech from 2052

(Note to my readers: please allow me this ‘indulgence’ as it allows me to discuss what I see coming in the energy field.)

My fellow Americans, I am pleased to announce today my candidacy for President of the United State. We have just turned the corner on the first half of the 21st century, a time of significant change for our country and many other countries. In 2052 it is time to consolidate and reaffirm those changes that are beneficial, and plan for the coming decades. The 21st century has been an American century, but not exclusively – other parts of the world have demonstrated global leadership both economically and politically in these past 50 years – and it is encumbent on a new set of U.S. leaders to continue the American century in peaceful and meaningful cooperation with our global partners. Before discussing my plans for the future I would like to review what I see as the history and the accomplishments of the century’s first fifty years.

The century began as an extension of the 20th century – multiple national conflicts, internal dissension in many countries, and heavy dependence on traditional fuels such as coal, oil and natural gas. Global population continued to increase – having grown from 1.8 billion to more than 6 billion in the past century – and is expected to reach as much as 10 billion sometime before the turn of the current century. That number in 2052 is just under eight billion.

Increasing electrification was an important characteristic of the 20th century and will continue to define the 21st century as well. It is allowing increasing numbers of people to enjoy the energy services that access to electricity and other forms of energy brings – lighting, heating, cooling, communication, transportation, and the ability to make things quickly and in quantity. Today, fewer than five percent of the world’s population lacks access to reliable electricity supplies, and this number should reach zero in the next two decades. Essentially all have access to wireless devices that allow widespread communication and access to the world’s store of information.

This access to energy, the closely related access to clean water, and wireless capability have significantly reduced global poverty and greatly enhanced opportunities for learning. The education revolution that has been made possible by universal access to the internet, for both women and men, and the individualized learning that the computer revolution has made possible, together with energy access, has finally allowed a slowdown in the rate of population growth so that a stabilized global population may be achievable in my lifetime.

This century has also seen other powerful changes. In 2008 our country elected its first black President, and then reelected him in 2012 as affirmation of their good judgement four years before. In 2016 the U.S., after a lengthy and often nasty presidential campaign, elected its first female president, who once and for all showed that women can serve effectively at the highest levels of our political life. Together with the military opening all its ranks to female participation in 2015, the so-called ‘glass ceiling’ was finally shattered, never to be restored. That election also saw the election of a Vice President of Hispanic ethnicity, who eventually went on to become the 47th President of the United States. Today I am trying to shatter still another political barrier by attempting to become the first Muslim American to receive the nomination for President of a major political party.

While much has changed in the past five decades, and I will discuss one of the most important changes in detail shortly, not everything has changed, unfortunately. We are still human beings, with all our many shortcomings, and religious and racial intolerance are still major sources of pain and conflict in the modern world. While the threat of Islamic jihadism that arose forcefully in the first few decades of the century has been reduced significantly through the actions of a global coalition of Muslim and non-Muslim governments, remnants are still with us and require careful attention. As our President I would commit all the resources needed, in cooperation with our allies, to keep this threat under control. A major factor in controlling this threat has been the willingness of Sunni and Shiite governments to put aside their religious differences In the name of their overriding commonality, Islam.

Among the other changes we have seen in our lifetime is the establishment of the first human colonies on the moon and on Mars. The moon colony was a joint U.S.-Chinese achievement in 2032, just twenty years ago, and the first Mars colony of four people was established just 8 years ago, in 2044. Both were extraordinary events at the time, and commanded global attention, but as is true of so many achievements in outer space the existence of the colonies is becoming part of the background. That is an OK result as we want space travel to become a routine part of the mainstream.

Other major steps forward have been in the field of medicine. With advances in DNA measurement and manipulation personalized treatment has become routine for many gene-related diseases. It is not unusual today to see people living into their second centuries and still functioning normally. Of course the social security and related safety-net systems in the U.S. have had to be adjusted for this new longevity, and as you might expect, only after long and difficult political battles.

Finally, let me talk in some detail about the most important revolution of the 21st century, one I have worked hard to support in my current position as a U.S. Senator. It is one that I am committed to support and advance if I am privileged to serve as your President. That is the energy revolution that started in the latter part of the 20th century, took flight during the early decades of the 21st, and is today reaching all parts of the globe. It is a transition point in human history.

The 1973-74 Oil Embargo, which took place almost a century ago, was a brutal wake up call for many nations, including our own. The history books tell many stories about how Americans, for the first time, began to look at energy issues in a different light. Prior to the Embargo energy costs were sufficiently low that it was not an area of public concern. Then, one day Americans awakened to the fact that much of their energy, especially for transportation, was imported from abroad, and that such supplies were subject to political uncertainties beyond our control. This was true in the countries of Western Europe as well. We responded by creating the International Energy Agency, a mechanism for sharing oil reserves among countries if another embargo threatened our energy supplies. We also started looking at energy alternatives, with particular emphasis on nuclear power. In fact the public mantra at that time by our political leaders was a doubling every decade of the number of nuclear power plants deployed in the U.S. A few others raised concerns about nuclear power and called for examination of enhanced energy efficiency and renewable energy alternatives. Until that time renewable energy had not been seriously considered except in the case of hydroelectricity. The suggestion related to enhanced energy efficiency was dismissed by economists and others who saw economic growth (GDP) tied one-to-one with energy consumption, and renewables were attacked as too expensive and incapable of meeting the demands of the U.S. economy. These arguments persisted for several decades until it was shown that GDP and energy consumption were not directly linked, climate change associated with combustion of fossil fuels became a major global issue, the costs of renewable energy systems began to decrease, and the ability of renewable energy in the form of electricity, biofuels, and heat were shown capable of supporting large economies. These new realities became the focus of policy debates in the first two decades of the century, and finally came to govern U.S. energy policy in the third decade when the majority of the private sector finally put its full support behind renewables and the battle to limit global warming. All Presidents since the Obama era have supported a move away from dependence on fossil fuels – it was 80% at the turn of the century – and Congress finally placed a steadily increasing cost on carbon emissions in 2020. This created the economic environment needed for investment in clean energy technologies and reduced use of fossil fuels. It allowed the U.S. to finally catch up with the many other countries that had seen the importance of these changes and implemented appropriate policies many years before.

These changes have led to today’s energy situation in the U.S. – 70% of electricity is generated by solar, wind, hydropower, and geothermal, natural gas from fracking peaked in 2040 and is steadily being replaced as an energy source in power plants as renewables take over, petroleum from fracking of oil shale peaked at about the same time and has been used to power aging and disappearing transportation fleets, electric vehicles dominate the automobile and light duty truck markets, all new aircraft and ships are designed to run on alternative biofuels, energy efficiency has been enshrined as the cornerstone of national energy policy, coal has been replaced as a domestic energy source except in a few industries, and nuclear power’s share of electricity generation has been steadily reduced to its current value of 5%. Total national energy demand has been stable even as the U.S. population has increased to 400 million, all new homes are routinely outfitted with solar energy rooftop systems and ground source heart pumps wherever feasible, the U.S. leads the world in wind turbine and wind energy production, we are second only to China in offshore wind energy deployment and production, and battery energy storage has become as ubiquitous as any other household appliance.

The world has turned a corner in these pat 50 years, undergoing an inevitable transition to dependence on energy from the sun and heat derived from radioactive decay in the core of the earth. These clean energy sources will last as long as people populate the earth, unlike fossil fuels which are depletable on any timescale relevant to humankind. We owe much to our fossil fuel resources, the product of millions of years of transformation of organic materials subject to high temperatures and extreme pressures deep in the earth, but the fossil fuel era is coming to an end and will eventually be only a blip on the timeline of history.

My promise to you as your President will be to continue and strengthen this transition in all ways possible so that our children, grandchildren, and their heirs, will live in a world free of global warming and the other harmful impacts of burning fossil fuels. Nuclear fission power had its day as well, but the issues associated with its use – cost, safety, long term storage of wastes, and weapons proliferation – have proved too difficult to accept now that renewable energy has been shown up to the task of meeting societal needs. Nuclear fusion, a much cleaner form of nuclear energy, remains as a long term possibility as well, but progress in taming the process that powers our sun and other stars has been slow and time will tell if controlled nuclear fusion has a future here on earth. I support continued cooperation with other countries in researching this technology that offers unlimited energy availability but so far has always been a few years away. Our investments largely must go into renewable technologies to ensure completion of the transition. This is our legacy to the future.

Revisiting the Keystone XL Pipeline Issue

President Obama’s recent decision to deny Trans Canada’s application for permission to build the national boundary-crossing Keystone XL pipeline raises several questions about my earlier recommendation to the President to approve the pipeline (see my July 6, 2013 blog post ‘Keystone XL Pipeline: A Memorandum to the President’). My first question to myself is what has changed since July 2013 to justify such a decision, at least in the President’s mind?

What I don’t believe has changed is the reality that a U.S. negative decision on the pipeline will not change Canadian intentions to develop and exploit its large tar sands resources, that development of these resources will not have a significant impact on global carbon emissions (the principal argument put forth by some environmental groups opposed to the pipeline), that U.S. dependence on Persian Gulf oil suppliers will decrease if oil is imported from Canada, or that Canada does not lack alternative transportation means to move bitumen to U.S. refineries. Canada will sell its oil resources to us and/or other global trading partners regardless, and will build other pipelines if necessary to export from its east or west coasts. It is true that mining the oil in tar sands will introduce additional carbon into the atmosphere, but this is the wrong battle to focus on – the amount is small in comparison to the much more important global warming issues that require our attention. And the battle against the pipeline, which would probably have been the most carefully regulated pipeline in history, ignores the reality that Trans Canada is already shipping bitumen to the U.S. via railway cars, a dangerous means of transportation with a bad track record, and one that Trans Canada will likely turn to even more now that the pipeline application has been denied.

What has changed is significant: the market price of oil is approximately half of what it was in 2013, Canada has a new federal government that is likely to be more environmentally oriented than the previous Conservative government, and President Obama has decided that an important part of his legacy will be global leadership on climate change issues. The sharp reduction in oil prices, which is likely to persist, has made oil exploration and development more problematic in economic terms, and the switch in Canada from Harper to Trudeau represents an important shift in governing philosophy and approach to environmental issues. Perhaps most important in explaining President Obama’s recent decision is the third factor, his legacy. There was an obvious shift in Obama’s willingness to speak out on climate issues after the 2014 midterm elections when he no longer had to worry about jeopardizing the electoral chances of Democratic House and Senate candidates. His behavior since has been one many of us have long been waiting for, and he has taken the lead in arguing for limits on carbon emissions both domestically and globally, a welcome and needed change. The Keystone decision is of a piece with this new behavior, especially with the Paris meeting on climate change coming up next month. This clearly political decision may be justified for some on the basis that if the U.S. won’t take even small symbolic steps to reduce carbon emissions and global warming, why should other countries striving to improve their economic welfare undertake such efforts?

If the environmental groups opposing the pipeline had made this latter argument in 2013 I could have better understood their opposition. But they didn’t – they incorrectly projected the pipeline issue as having a major global impact on carbon emissions, and completely avoided discussing the dangers associated with shipment of bitumen by railway car.

It was the wrong issue in my view to devote so many resources to, when environmental sensitivity is needed on more important issues such as the need to expedite the transition from a fossil-fuel dependent economy to one increasingly dependent on renewable energy. My views were captured by a Washington Post editorial on November 6th that stated:

“Yet world governments are smart enough to recognize what many activists apparently have not: The Keystone XL fight hardly matters in the grand scheme of the global climate. Perceptions of U.S. climate leadership depend on Environmental Protection Agency rules to reduce emissions from U.S. power plants and cars, not on a domestic political psychodrama.

Some smart environmentalists have excused jettisoning substance and siding with the anti-Keystone XL crowd by emphasizing the symbolic importance of the pipeline. Cultivating enthusiasm with a victory on Keystone XL might lead to meaningful progress in other areas of climate policy, the thinking goes. Not only does this view infantilize environmentalists, its illogic could justify all sorts of irrational, arbitrary decision-making.”

The Coal Conundrum

A long article in the October 16th Washington Post, ‘U.S. exports emissions – as coal’ by Joby Warrick, points out the conundrum posed by the U.S.’s abundant coal resources. These coal reserves provide a relatively low cost energy resource that can be burned to produce steam and electricity and improve human welfare in both the U.S. and other countries. However, its combustion produces large amounts of carbon dioxide that when added to the atmosphere causes global warming and associated global climate change. The conundrum arises from a clear conflict of values – the need to provide energy services to people around the world, in particular people in developing countries whose per capita consumption of electricity is well below that of developed countries, and the need to address climate change with its many adverse consequences, identified by many as the most serious problem facing the globe. No easy answer exists to satisfy those on both sides of this conundrum.

Several statements in Warrick’s well-researched article captured my attention, including: “Just a dozen nearby mines, scattered across a valley known as the Powder River Basin (Wyoming), contain enough coal to meet the country’s electricity needs for decades. But burning all of it would release more than 450 billion tons of carbon dioxide into the atmosphere – more than all greenhouse-gas emissions from all sources since 2000.” and “The Obama Administration is seeking to curb the United States’ appetite for the basin’s coal, which scientists say must remain mostly in the ground to prevent a disastrous warming of the planet. Yet each year, nearly half a billion tons of this U.S.-owned fuel are hauled from the region’s vast strip mines and millions of tons are shipped overseas for other countries to burn.”

Given the legitimate needs on both sides of this conundrum I can see only one path to follow to bring the benefits of electricity to as many people as possible while minimizing the risks associated with burning coal. This is to promote the use of energy efficiency technologies wherever feasible, to reduce the demand for coal-based electricity, and expedite the development and deployment of renewable electric technologies such as solar and wind as substitutes for coal. This is already happening to some extent as the world slowly begins to come to grips with the climate change problem, but the pace needs to and can be accelerated. The ability of renewables to meet most of the world’s electricity needs has been documented in several recent studies, e.g., the June 2012 NREL report entitled ‘Renewable Electricity Futures Study’, and what is now needed is a commitment on the part of national governments and international institutions to make it happen as quickly as possible. It is a matter not of technology but of political will and financial resources. Admittedly, such a switch from coal and other fossil fuels (natural gas, oil) that also produce carbon dioxide when combusted, to a renewables-based energy economy, will take time, lots af planning, and lots of money. However, when the full costs of using fossil fuels are taken into consideration, including not just market costs but also health and climate change-related costs (such as coastline flooding due to rising seas, changed precipition patterns that adversely impact water availability and agricultural production), and international tensions due to competition for fossil fuel resources, renewables become a much more attractive and even less expensive long-term option. Renewable resources are also insensitive to cost increases once initial capital investments are made, unlike fossil fuels that rely on a depletable resource that produces uncertain and often volatile costs.

Nuclear power advocates will make some of the same arguments since the process of releasing energy via nuclear fission does not produce greenhouse gases, but nuclear technology faces four serious problems: high cost, safety, the need for long-term radioactive waste storage, and proliferation of weapons capability. If these problems can be successfully addressed, then nuclear-powered electricity can be a viable option for the future. Nuclear power also offers the tantalizing option of nuclear fusion, a relatively safer and cleaner nuclear technology with enormous resource potential, but the problem of achieving controlled nuclear fusion on earth (it is the process that powers our sun) is proving to be the most difficult technological challenge the world has faced to date. It can legitimately be labeled ‘the technology that is always a few years away.’

In sum, the choice is ours – we can continue to use our coal resources without limit or we can move more quickly to a clean energy society that provides needed energy services and minimizes global warming and climate change effects. I vote for the latter.

What Will Historians Say About Recent U.S. Congresses?

American history is filled with ugly periods of political confrontation and no-nothingness and recent years are no exception.

Political dialogue between two of our founders, Jefferson and Adams, was vindictive and nasty. It was only as both approached their final years that comity began to appear in their relationship and they died as reconciled friends on the same day, July 4, 1826.

Andrew Jackson, seventh President of the United States, disregarded an order from the Supreme Court and forced thousands of Native Americans to move from Georgia to the Oklahoma territory, a lasting stain on U.S. history. The Native American Party, renamed in 1855 as American Party and commonly called the Know Nothing movement, was an American political party that operated on a national basis during the mid-1850s. It promised to purify American politics by limiting or ending the influence of Irish Catholics and other immigrants. Mainly active from 1854 to 1856, it met with little success. There have been several other periods of anti-immigrant fervor in American history, dating to the early days of the Republic, and even continuing today.

A number of politicians of both major political parties in the U.S. in the middle of the 19th century continued to support slavery, leading to the formation of the Republican Party in 1854 and the election of Abraham Lincoln as President in 1860. The post-WWII period saw the rise of McCarthyism in the U.S. and it took years for the public and policians to address the damage this ‘ism’ was doing to America. And today we have loud voices taking issue with some of the fundamental tenets of American democracy.

I state all this as my way of getting to what triggered this piece, my concern about the know-nothingness exhibited by people who deny the obvious, that the earth is warming, the oceans are gathering more heat, glaciers are melting, sea levels are rising, and weather patterns are changing as a result of the several greenhouse gases we are adding to the atmosphere, mainly carbon dioxide and methane. The following cartoon by Toles in the Washington Post of 27 September 2015 was the immediate trigger:

By image

It is my firm belief that when historians look back on this period in American history they will be unkind to those politicians and other leaders who disparaged or minimized the reality of global warming and subsequent climate change for their ignorance, short-sightedness, and failure to prepare for the future. My cynical self also believes that many of these ‘leaders’ do understand what science is so clearly saying – it is basic physics after all – but adopt their public positions for political or other self-serving reasons. Even the Pope has enriched this discussion by stating in his recent encyclical: “The warming caused by huge consumption on the part of some rich countries has repercussions on the poorest areas of the world, especially Africa, where a rise in temperature, together with drought, has proved devastating for farming.”

Whatever their reasons they are failing the American public and future generations by failing to act now in prudent ways to forestall greater difficulties and more expensive solutions in the future. A theme I always espouse is that a major responsibility of public officials is to look down the road, anticipate problems, and take steps to prevent problems from developing into crises. In my opinion the U.S. has failed to do this in recent years due to unusual (but not unique) polarization in the U.S. Congress and between the Congress and the President, with a high price attached. Not only is climate change a real, measurable phenomenon that we are still struggling to fully understand with all its consequences, but by failing to take the necessary steps now to move the U.S. more quickly to a clean energy society we are limiting the U.S.’s ability to compete as effectively as it could in future global energy markets. This future is coming, as more and more people around the world are recognizing and incorporating into their plans. Nevertheless, elements of the U.S. Congress still resist change, protect vested interests, and protect their political selves by attacking and denying well documented science. They should be held responsible for limiting the U.S. response to climate change and a changing energy world, and history will surely do so. Unfortunately, they will no longer be in office or responsible for corporate decisions and have to face up to their failure of vision and shortcomings.

The solutions are public education and the ballot box, which in democratic societies can be a slow process. But the understanding of climate change and its impacts on precipitation patterns, animal and plant diversity, storm intensity, public health, and coastline flooding is coming, as is the transition from a fossil-field based global economy to one increasingly dependent on renewable energy. It is Congress’ responsibility to set policies that advance this understanding and movement forward.