Competing for Energy Resources - Part 1

Posted on July 01, 2004
Posted By: F. Mack Shelor
Both electricity and liquid fuel supplies appear to be increasing in costs in the United States. The U.S. appetite for liquid fuels in the forms of gasoline and diesel fuels has very nearly reached the capacity maximum of the existing U.S. refineries. This demand for fuel continues to increase as more and more people convert to SUVs and larger automobiles. The trucking industry demand for fuel increases with improvements in the economy. OPEC has indicated that it believes an oil price between $25/bbl and$28/bbl is an appropriate guideline. Currently the market price is closer to $40/bbl and doesn’t appear to be softening. As the economies in Europe grow with the addition of 14 nations to the EU, and with the continued expansion of the economy in China, it would appear that the increased competition for oil and natural gas will not move their prices in a downward direction.

The U.S. independent power companies and Investor Owned Utilities have installed more than 200,000 MW of natural gas fired electricity generating facilities. While some of these facilities were designed for providing “peaking” power supplies, many of them were designed for continuous operation. Using premium fuels for short duration operations is generally considered necessary, but using premium fuels for continuous operation is simply adding to the nation’s energy problems. A recent piece in television indicated that the current demand for oil was around 77 million barrels/day or about 28 billion barrels/year. A good portion of this oil is consumed in the U.S. but other economies are beginning to compete for the supplies. As an example, this television piece pointed out, if China’s economy moved forward to a level that was approximately on par with Mexico’s current economy, the world demand for oil would increase to 142 million barrels/day or about 52 billion barrels/year. While these estimates concentrated on the potential for consumption in China, they represent only one of many economies in the world that are expanding very rapidly.

Unfortunately the world wide for natural gas mirrors the demand for oil. The oil companies want to build more refineries as a solution to the supply side of the equation. More refineries mean more imports and more imports mean an increasing trade deficit. The same oil companies want to build LNG ports to supplement the existing natural gas supplies. Again, this direction simply increases the balance of trade problems. Both of these actions will further increase the competition for fuels and place additional upward pressure on pricing. The nation is debating the issue of “outsourcing” U.S. jobs. In fact, the oil industry may be the largest exporter of U.S. jobs. The U.S. spends billions of dollars on fuel each year. More than 60% of our fuel is imported to the U.S. from various nations. All of these dollars are providing jobs in other countries and not in the U.S. The argument can clearly be made that the fuel imports are necessary to meet demands and that there are no viable alternatives. The question must be asked, is it possible to produce additional domestic natural gas and crude oil? Or, is it possible to find a viable substitute for imported oil and natural gas that can substitute domestic jobs and production for dollars that are being sent off-shore. Part of the solution may be created by the production of ethanol and bio-diesel, providing a direct substitution for imported oil. Part of the solution may involve development of more remote oil reserves such as those in Alaska, along the east and west coastal areas and in the Gulf of Mexico. These opportunities represent a possible way to reverse the “Outsourcing” of U.S. jobs through substitution for U.S. based employment. Finally, the Nation is within 5 years of the beginning retirement of the “Baby Boomer” generation. Social Security, Medicare and Medicaid are already under severe pressures and will become bankrupt in the next 30 years unless something is done to make them viable – an indirect relation to energy. There are only three ways to make these programs viable:

  1. Cut the benefits to a level that can be supported. This means that we will need to tell millions of retirees that they are not going to get what they were promised.
  2. Increase the taxes that support these programs. To support these programs will require a doubling of the Social Security/Medicare/Medicaid tax. This action would create total economic stagnation of the U.S. economy.
  3. Increase U.S. jobs sufficiently to support the programs. Exporting U.S. jobs for any purpose is problematic. If living up to the existing “social contract” is going to be possible, it will be necessary to create more than 400,000 jobs each month in the U.S. This will mean that the economy will need to grow at a fairly rapid rate and that immigration will need to also increase to fill the jobs that will need to be created.
All of the issues indicated above are not only connected, but they provide a basis for the expansion and improvement of the U.S. economy. This is not to insinuate that solving the Nation’s energy issues is a complete solution for economic growth, but it is certainly part of the solution and may provide the best short term fix that is available. Discussion:
  1. Supply and demand for petroleum:
    The nation’s capacity to refine oil has very nearly reached its capacity maximum. If demand for oil and gasoline continues to increase with increases in population, automobiles and trucks, along with an economic recovery in the U.S., a major shortage of liquid fuels may occur within the next two to three years. As this phenomenon occurs the price for liquid fuels will continue to rise. Refinery capacity is only one of the problems that may occur. Building new refineries or expanding existing refineries might provide some relief to a potential supply and demand imbalance, but it will also create an even greater negative trade imbalance and may not result in a readjustment in the price of these fuels. In the not very distant past, the U.S. was the world’s major consumer of liquid petroleum with many countries supplying to our ever increasing demand. One of the results of the collapse of the Soviet Union has been the expansion of the economies of many of the former Soviet States. Very recently the European Union expanded by 14 countries. This event will create a modernization and expansion of all of these economies along with an increased demand for liquid petroleum. The economies in the far-east including Japan, India, Pakistan and China continue to grow at a very rapid rate. As these economies expand their needs for liquid fuels continue to grow. The combined population of these Asian countries is much greater than all of the other “developed” countries. Therefore, as these economies expand the need for liquid fuels will expand at a much greater rate than most developed nations. Many of the economies in the western hemisphere are also expanding rapidly. Mexico and the Central American countries are experiencing rapid growth in their economies. With these expansions, the need for liquid fuels continues to grow. The result of the modernization of all of these nations will place almost unbearable pressure on the oil supplies in the world. Therefore, it is reasonable to conclude that over the long-term, expanding liquid fuel refining capacity in the U.S. and allowing consumption to increase without some form of tempering will only result in increasing prices for oil and gasoline. It is probably time for the oil companies to take a look at this situation and propose solutions that don’t require expansion of the refinery capacity or massive increases in demand for liquid fuels. Otherwise, the oil companies may, at some time in the future, be accused of “Killing the goose that laid the golden eggs.” Obviously, it is not only the U.S. economy that will be stopped when petroleum prices continue to rise, it will be the economies of many nations that will begin to suffer and slow down. OPEC has said publicly that they feel a price of between $25/bbl and $28/bbl is reasonable, but the price has risen above that level and does not appear to have any market pressure to soften. Building additional refineries in the U.S. certainly would not decrease demand for oil. OPEC would probably be happy if the price could be brought down since higher prices stimulate exploration and development of new oil supplies, many of which are not under the control of OPEC. These newer and more difficult supply sources need prices that are closer to $40/bbl to be economically developed. Therefore, OPEC tends to exert greater market power at somewhat lower prices. Unfortunately, increasing demand may make the higher prices a permanent condition for the world.
  2. Natural Gas supply and demand:
    Natural gas production in the U.S. and Canada has been declining. This is due in part to a reduction in drilling activities but it is, in large part, due to the exhaustion of the domestic supplies of currently produced natural gas. There are significant supplies of natural gas along both coasts and in the Gulf of Mexico. Many of these potential sites have been placed “Off-Limits” by both the Federal and State governments because of public pressure related to environmental impacts. As technologies improve the potential environmental impacts decline therefore, it is reasonable to re-visit the development of these resources periodically to determine if they can be economically and environmentally developed. When natural gas well-head prices were below $2.00/million btus, it was not economically feasible to develop many of the more remote natural gas supplies. But, with prices exceeding $5.00 at the well-head many of these development areas become economically viable. The choice between domestic development and construction of Liquefied Natural Gas (LNG) terminals is a devils bargain. Natural Gas industry leaders favor the development of LNG terminals. In fact a total of more than a dozen new terminals have been proposed. The first issue associated with these terminals is one of trade imbalance and the impact on the Nation’s trade deficit. Natural Gas has largely been a product supplied in the western hemisphere by western hemisphere suppliers. These supplies provide momentum for the western hemisphere economies and allow NAFTA trading partners to trade energy resources for U.S. goods and services. If LNG terminals are constructed it will begin a long-term drain on the U.S. economy that will benefit many countries that currently already have a poor trade balance with the U.S. A second issue, real or perceived, is the safety aspects related to LNG terminal facilities as terrorist targets. These proposed terminals contain massive amounts of energy that, if released by an event like the “World Trade Center” attack, could destroy everything within miles of the terminal. The only solution to this problem would be major “hardening” of the facilities. This additional construction could make these facilities very costly while still leaving them as potential targets. In 1978 when PURPA was passed it specifically excluded natural gas as a fuel for projects unless the projects met a certain efficiency standard. Over time the rules became more relaxed as it began to appear that natural gas was readily available at very low costs. Environmentalists saw natural gas as the “clean” fossil fuel and began to promote its use over other domestic fuels such as nuclear or coal for the production of electricity. The events at Three Mile Island provided the final straw that broke the camels back and the rapid expansion of base loaded natural gas plants began. These plants were less expensive to construct, natural gas was projected to remain at low prices, and the equipment efficiencies were improved to levels that were well above those of other fossil generation. Unfortunately, the original framers of the natural gas restrictions in PURPA have been proven correct. Their position was that natural gas should be considered a premium fuel that should only be used for electricity production when other fuels could not practically be used. An example of this would be using natural gas for highly variable electricity loads such as meeting daily demand swings. A reasonable case could also be made for using natural gas for meeting short-term electricity peaking needs as well. The genie was let out of the bottle, however, and now there are more than 200,000 MW of peaking and base load natural gas fired units in the power generation mix. Environmentalists still contend that natural gas fired units are the best way to produce electricity when compared to both coal and nuclear generation.

    With the increased price for natural gas the arguments against coal and nuclear are more difficult to sustain, with the exception for peaking generation requirements. Many environmental groups recognize that the price advantages to coal and nuclear are likely to move the market in that direction. Therefore, they rely heavily on the Not-In-My-Backyard (NIMBY) concept to prevent construction of these types of facilities. While it is true that many parts of the U.S. vehemently oppose construction of coal and nuclear plants, there are other areas that may be more receptive to their construction. Specifically, coal bearing areas might be very receptive to construction of mine mouth electricity generating stations that could provide large blocks of electricity to the grid. The environmental lobby understands this and therefore has taken a different direction in their opposition. In this case there is a strange bond between environmentalists, Investor Owned Utilities and the major railroads. These three groups, for completely different reasons create an opposition front to the development of mine mouth generation.

    The IOUs want to maintain their market monopoly positions in their local markets. Therefore bringing in inexpensive electricity by wire is not necessarily in their interest. Obviously, if the IOU is the producer of the electricity it will favor the project, but otherwise it will object since it creates competition in their marketplace. The railroads want to see coal plants developed, but they object to mine mouth generation as a way to avoid the rail transportation of the coal. The environmentalists simply object because of the environmental aspect of the coal fired energy production. The way these groups object to coal and nuclear development is by objecting to major improvements in the Transmission System across the U.S. If a major “Direct Current” transmission system was developed it would allow large blocks of electricity to be moved from coast to coast with reasonable line losses. This would improve the overall efficiency of the electricity system, but it would also provide an “Interstate Electricity Highway” that would allow coal producing areas to cost effectively construct new major facilities and would avoid the NIMBY areas of the U.S.

    What the environmentalists appear unwilling to recognize is that the development of a national “Interstate Electricity Highway” would also provide for the expansion of the Wind, Solar, Geothermal and Hydro-Electric industries.

    Geothermal, as an example is generally located only in the western U.S. If a major transmission system was developed, all areas of the U.S. would benefit from the development of geothermal energy, thereby reducing some of the need for fossil generation. Wind energy suffers from a lack of reliability. This factor could largely be eliminated through the construction of a major transmission system since wind project location diversity would provide an average amount of wind generated energy at all times. This article is the first of a two part series. Part two will be released tomorrow.

Authored By:
I am presently working on several renewable energy development projects as well as providing energy consulting servies to individual clients. Prior Positions Held:
  • Senior Vice President, Advanced Thermal Systems, Inc. (2001 – 2003)
  • Senior Vice President, Clean Fuels Technology, Inc. (2000 – 2001)
  • Director, Tech. Services & Marketing – Wartsila North America, (1995 – 2000)
  • Director, Project Development – CSX Transportation (1990 – 1995)
  • Branch

Other Posts by: F. Mack Shelor

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July, 01 2004

Len Gould says

Mack: Dead on. A DC super-grid to provide backup to all the local AC grids provides a host of benefits. In addition to those you raise, I would also mention:

a) The DC->AC converter stations can easily also provide VAR support to the local AC grids, often eliminating equivalent investments if e.g. FACTS technology.

b) Connected to some of the major hydro facilities (Quebec and Manitoba Hydro already have several tens of GW of hydro available on 735KVDC which would make a superb peaking resource if their local demand were met with a baseload nuke or coal plant), properly designed DC can provide reliable black-start for other generation in an outage.

c) Provides very simple means to isolate grid instabilities to local areas, eliminating potential for multi-state-wide blackout phenomena.

d) Properly designed at modern voltages, can easily span time zones to reduce peaking swings. (e.g. is trtivial to design a 1MVDC line on a single set of towers which could transport 20 Gw from Wyoming to New York with less loss than is typically accepted currently in AC grids)

E. J. Lerner has posted an important article on "The Industrial Physicist" website which should be required reading for all involved politicians.

Black and Veatch (Siemens US) have been trying for years to get anyone to listen to their TAGG proposal, though it now needs updating. (500KV is nonsense, even Manitoba Hydro uses 768KV now.)

Or see "Active Electrical Transmission System" at

July, 02 2004

a b says

great article. And dead on: create a transstate E-network able to transmit huge amounts of electricity, and abolish all subsidies to the fossil fuel producers. Let the market decide which electricity maker source is best. And in the meantime, start implementing a hydrogen infrastructure to wean us (the world) from oil&gas imports from troubled regions.

Posted on Thu, Jul. 01, 2004 MAILBAG: Stop subsidizing wind energy -- and fossil-fuel energy, too GRAND FORKS - Leroy Sletten objects to subsidizing wind energy. He has a point. Many subsidies are counterproductive and subvert the natural marketplace, none more so than one of the mothers of all subsidies: coal. In fact, if we eliminated the subsidies to both coal and wind, we'd all be enjoying clean, healthy wind energy as our primary energy source because coal couldn't possibly compete in the fair market. Coal would be used only to back up wind energy when necessary. Now that would be progress! The fact is we subsidize wind 1.9 cents per person per year. We subsidize coal, oil, gas and nuclear power over $125 per person a year. That's 6,500 times more, and for our efforts we get more asthma, heart attacks, cancer, global warming and toxic nuclear waste lasting more than 10,000 years. So how does coal stay in business? Enormous campaign contributions, of course. Our own Sen. Byron Dorgan, D-N.D., is one of the greatest recipients of campaign contributions from coal, mining and electricity. In 1999-2000, coal gave almost $4 million in campaign contributions to Washington politicians. In return, Congress gave coal $5.8 billion of our money under HR 4. That's over $1,500 of our money for every $1 from coal! That's a rate of return of over 153,000 percent. Our state government gave another $10 million to a new coal power plant, even though studies by both Xcel Energy and Great River concluded wind energy is the least costly new form of energy production in the area. That subsidy will directly result in our air getting dirtier, people getting sicker and our already world-class greenhouse gas emissions increasing. Blair Henry Henry, an attorney, is an adjunct professor of entrepreneurship at UND and a member of the U.S. National Assessment on the Consequences of Climate Change. Wind power can fight global warming EMERADO, N.D. - Some power companies don't want to use wind power, except as an understudy to lignite coal. Why? Because lignite is available and inexpensive. Being the broad-minded person that I am, I'd jump right on that lignite bandwagon, or as others have suggested, the nuclear bandwagon, except for a couple of things that disturb me. • First, lignite is a fossil fuel. All fossil fuels give off pollution when burned - and lignite is a leader in this area, a real polluter. A few coal-burning plants have reduced some of the gases, but none has a way to eliminate carbon dioxide. And carbon dioxide is believed by most scientific authorities to be causing or at least accelerating global warming. • Nuclear power plants bring to mind Three Mile Island and Chernobyl. Nuclear plants may be safe and effective, but for some reason I get nervous whenever they're brought up. (I admit it, I'm a little timid around gamma rays and beta particles. And of course there's nuclear waste: what do we do with it?) • As for wind power being available only 30 percent of the time, that's when you consider only one site. With very rare exceptions, the wind always is blowing somewhere on the Great Plains. With a little management, the power companies should be able to switch to those wind farms where the wind is blowing. If there's just not enough wind anywhere, maybe they could use biomass or hydrogen generators. Hydrogen, you say: But where do we get the hydrogen? From pure, clean, pollution-free electrolysis, using wind-powered generators. In the real world, fossil fuels will be used for years to come. But wind power no longer is "pie in the sky." There are wind farms operating efficiently right now. And if we care about our environment, we'd better use as much non-fossil-fueled energy as we can.

July, 02 2004

a b says

Air Products, Auto Makers Join for Fuel Initiative 10 June 2004 Author: Orenstein, Beth W Provider: Eastern Pennsylvania Business Journal Originally Published:20040524. Air Products and Chemicals Inc., headquartered in Trexlertown, has been picked to lead a team that will design and build hydrogen-based vehicles and the fueling stations to go with them in California. The U.S. Department of Energy (DOE) announced last month it had selected the team comprised of Air Products, four automakers, an energy company, two California universities, and a public agency to demonstrate and validate advancements in hydrogenbased transportation. The five-year program will be funded in part by a grant from DOE as part of its $350 million overall national Controlled Hydrogen Fleet and Infrastructure Demonstration and Validation Project. The team had requested about $35 million in funding from DOE for the project, which is estimated to cost $91 million. It's not yet clear how much money the project will receive. "The final details are still to be determined," says Art George, a spokesman for Air Products. The majority of difference between the DOE grant and the cost of the project will be covered by the automakers, which are developing the vehicles, George says. Air Products' role is in the fueling stations. The automakers on the Air Productsled team are Toyota Motor Sales USA, American Honda Motor Co. Inc., Nissan North America Inc. and BMW Also on the team are energy company ConocoPhillips, the National Fuel Cell Research Center at the University of California-Irvine, the University of California-Davis, and the California South Coast Air Quality Management District. Two dozen fueling stations The goal of the project is to establish up to 24 fueling station locations in the greater Los Angeles area and tip to 80 fuelcell vehicles. "By the end of five years, we hope cars can drive within cities in California and hopefully between cities," says Dave McCarthy, a commercial manager in future energy solutions at Air Products. The fueling stations will be located on a pipeline, placed at existing retail gas stations including ConocoPhillips sites and at municipal locations. The fueling stations will be supported by hydrogen produced from natural gas and renewable energy sources. Some of the stations will be capable of dispensing both gaseous and liquid hydrogen. Collectively, Toyota, Honda and Nissan plan to assign up to 65 fuel-cell vehicles to the project while BMW will assign up to 15 hydrogen-fueled internal combustion engine vehicles. McCarthy says one of the goals of the project is to make hydrogen an efficient and less costly alternative to gasoline. 180 miles per fillup Hydrogen is measured in kilograms. With current technology, a hydrogen, fueled car can go about 180 miles without having to refuel. "We'd like to get that up to more what we're used to, more like 300 miles," McCarthy says. "That's one of the big technological hurdles." Another goal is to reduce the cost of hydrogen fuel. Currently, hydrogen fuel costs about $3.50 for an equivalent amount of energy as a gallon of gasoline. "Our ultimate target is the equivalent of $1.50 a gallon," McCarthy says. McCarthy says the tank has to be designed in such a way that it does not take up too much room in the automobile or isn't too heavy. The hydrogen-fueled vehicles are to be driven by a broad range of drivers and interested parties including technical experts, policy makers, vehicle customers and fleet operators. No cost for vehicles The automakers are not seeking any money or reimbursement for providing their vehicles to the program. Vehicle production and maintenance is included in the cost-sharing portion of the award total. McCarthy says the project is a natural for Air Products - Air Products is a global leader in hydrogen production and distribution and an industry leader in hydrogen safety engineering. The company has been in the forefront of developing hydrogen fueling stations for clean transportation applications, and the technologies and systems for hydrogen purification, generation and handling. Air Products has taken a leading role as a participant in numerous hydrogen energy demonstration projects in the U.S. and Europe to bring low-cost distributed hydrogen production technologies to the marketplace, and to promote the development of hydrogen energy applications. In November 2002, Air Products and DOE dedicated the world's first hydrogen energy station featuring the coproduction of hydrogen fuel and electric power. The energy station generates hydrogen on-site, for both fueling vehicles and producing electricity. The project, located in Las Vegas, is a public-private partnership between DOE, the City of Las Vegas, Air Products and Plug Power Inc. and serves as a commercial demonstration of hydrogen as a clean and safe energy alternative, In December 2002, Air Products introduced a new hydro

July, 02 2004

a b says

Hydrogen from Electrolysis by Chip Schroeder RE Insider, June 21, 2004 ( - In today's industrial gas markets as well as tomorrow's hydrogen energy markets, the choices we make in how we generate hydrogen for use as fuel are critically important. From several practical perspectives, electrolysis - the production of hydrogen from water - offers a number of advantages over other methods of hydrogen production. In this RE Insider, we will focus on the economic benefits of electrolysis and present the first argument in a compelling case that identifies electrolysis as a practical answer to the question: where will the hydrogen for fuel cells and the hydrogen economy come from?

The math for translating electricity into hydrogen-based fuel cell transport is fairly straightforward. The theoretical efficiency of converting electricity into hydrogen via electrolysis is 39.4 kWh per Kg of hydrogen. Assuming we place a 75% efficient electrolyzer system at a typical gas station, the electricity requirement per Kg of hydrogen rises to 39.4 divided by .75, or 52.5 kWh per Kg.

Now let's put that hydrogen into a current-generation fuel cell demonstration vehicle that can travel 90 - 100 Kilometers (or 55 - 60 miles) on one Kilogram of hydrogen. Net result: a Kg of hydrogen "costs" 52.5 kWh to produce and provides better than 55 miles of driving, or just about 1 kWh of electricity to drive one mile. If the cost of electricity at the gas station is, say, 7 cents per kWh, this equates to 7 cents per mile as the fuel cost of driving a fuel cell vehicle. That cost is perfectly competitive with today's gasoline internal engine automobile. If gasoline costs $1.70 per gallon, then a 20-mile per gallon car costs 8.5 cents per mile.

Most analysts are quite surprised when they first work through the economics of hydrogen fuel from electrolysis. The presumption is that the net energy cost of making hydrogen from electricity is prohibitively high. How can the fuel value at the gas station possibly be greater than the fuel value that went into making electricity in the first place? The answer of course is that the cost of the BTUs used to make the electricity is much lower than the value of transport fuel. The variable (fuel and operations and maintenance) cost of electricity at a coal-fired generating plant is only about 1 cent per kWh (or about 15-20% of typical commercial electric prices).

Again, on a gasoline equivalent basis, the generating cost of base load electricity is perhaps one-eighth the value of the fuel that it can replace if electrolyzed and used in a fuel cell vehicle. It's as if we start with a gallon of water at the utility generator but when it gets to the gas station the water has turned into wine. Sure, we spilled some, but wine is worth enough more than water to overcome the shrinkage.

So the reality is that the variable cost of fueling a fuel cell vehicle with hydrogen from water is much more interesting than most people initially anticipate. Now take into account that electrolysis permits us to leverage existing electricity and water infrastructures. And because electrolysis technology is modular and scalable, it is clear why hydrogen from electrolysis is gaining credibility as perhaps the most logical way to achieve the introductory phase of the hydrogen fueling infrastructure.

Proton Exchange Membrane (PEM) electrolyzer technology has been used successfully for nearly three decades on submarines and in spacecraft to generate oxygen for human life support needs. Fuel cells use the same technology, converting hydrogen into electricity. To produce hydrogen instead of electricity as the end product, the fuel cell is literally run in reverse: taking in water and electricity and producing hydrogen and oxygen. PEM electrolyzers incorporate a solid polymer membrane that helps manage the electrolysis process in such a way that hydrogen ends up on one side of the membrane, while oxygen remains behind, suspended in the water that serves as the "feedstock" for the system. The result is a supply of pure hydrogen and, if needed, pure oxygen.

One might wonder where the practicality is in making a fuel cell that runs backward. After all, if the excitement surrounding fuel cells is that they can cleanly and efficiently convert hydrogen into electricity, what would be the sense in squandering that electricity by turning it back into hydrogen? From a "net energy" perspective, it would seem that it takes more BTUs of electricity than are contained in the hydrogen produced from electrolysis.

The answer begins with an acknowledgement that the amount of energy consumed in PEM electrolysis is indeed greater than the amount of energy in the resulting hydrogen. But this trade-off can make good economic sense in a variety of circumstances. For example, if the electricity used to make electrolytic hydrogen comes from low-priced coal or nuclear power sources, and if the hydrogen is then use

July, 02 2004

a b says for pictures of the project MSNBC News Services Updated: 10:40 a.m. ET April 28, 2004 OSLO, Norway - A windblown island off Norway is being used to test ways of overcoming a big drawback of alternative energy: How to store it. Such renewable energy sources as wind, waves and solar power provide a clean alternative to climate damaging fossil fuels and potentially dangerous nuclear power. But sometimes the wind dies, the sea calms, and the sun doesn’t shine, leaving those who depend on them for power facing a blackout unless they have a backup supply. Oslo-based Norsk Hydro ASA on Tuesday presented its project to test a combination of technologies, wind power and hydrogen fuel, to overcome that problem on the island of Utsira, off Norway’s western coast. “It is the first full scale project of this type in the world,” said project manager Paal Otto Eide, whose company is leading the $5.8 million effort. 'Real customers' using technology The company built two 600-kilowatt wind turbines to use with a hydrogen generator and a fuel cell in providing all the electricity for 10 homes on Utsira, Norway’s smallest municipality with just 240 residents. “It is real customers who are going to cook... and watch TV with this electricity this summer,” said Joergen Rostrup, Norsk's vice president for new energy. When it’s windy, which is usual in Utsira, about 11 miles from the mainland, the two wind turbines will produce much more electricity than needed by the 10 homes. The excess power will be used to produce hydrogen fuel so that at first a hydrogen combustion engine , to be replaced afterwards by a fuel cell make electricity at windless times. Some is also being sent to the mainland. “What is important is to store the excess energy,” said Eide. “Utsira is a demonstration of what we could imagine as a hydrogen community in the future.” Hydrogen, one of the most common elements on earth, is seen by many as a pollution-free fuel of the future, and is a key part of projects around the world, including tests of hydrogen powered cars. It can be derived from such sources as natural gas or methane, or can be made by electricity — in this case from the wind turbines, in a process known as electrolysis that splits water into hydrogen and oxygen. Export idea abroad? The wind turbines and the hydrogen engine are already producing electricity on Utsira, 200 miles west of Oslo. The full switch from the traditional power grid is set for July 1 for the test, which will last two or three years. Eide said many remote areas around the world depend on costly and polluting diesel generators for electricity, which could make an alternative, such as the wind and hydrogen supply, attractive. “We want to prove that this is possible, not economically viable, but technically possible,” said Eide. The Utsira trial follows energy and metals group Norsk Hydro’s earlier involvement in hydrogen projects for the transport sector, including a filling station on Iceland. Norsk Hydro is a major oil and natural gas producer, and like many energy companies is preparing to also meet demand for alternative fuels. The group was founded in 1905 to produce mineral fertilizers by using electricity from its hydroelectric plant, hence the Hydro part of its name. Norway, the world’s third largest oil exporter, produces virtually all its own electricity with hydroelectric plants. Wind power has made big strides, especially in Denmark and Germany, and is the fastest-growing part of the European power industry due to government measures to curb emissions of greenhouse gases widely blamed for global warming. Background on the project is online at The Associated Press and Reuters contributed to this report.

July, 02 2004

Len Gould says

a.b. Would appresiate you posting short links rather than full article text. it is polite to reserve text posts for your own compositions.

July, 06 2004

Rodney Adams says

a. b. Not only is it impolite to post full article text, but it also may be violating the copyrights held by the original publisher.

Please refrain from posting the same copied comments on multiple articles. It does not promote beneficial discussion to have to scroll through your extremely lengthy posts over and over again.

July, 06 2004

Rodney Adams says

Mack: It is interesting to me that many environmental group web sites seem to completely ignore the recent price behavior of natural gas and still recommend it as a "bridge" fuel to their renewable utopia. I sometime suspect that their real motive is to simply promote its use even when it is not the cleanest or most logical fuel supply. This behavior confused me when I still thought that mainstream environmental groups existed to help clean our air and water. My confusion on this matter ended when I discovered just how much money many environmental groups get from source that can be tied to the petroleum industry - which cannot be unhappy about their recent profits in the environment of high natural gas and oil prices. Rod Adams

July, 06 2004

George Fleming says

Mr. Gould and Mr. Adams, well said on the subject of posting comments.

Mr. Adams, I would like to learn how much money environmental groups receive from the petroleum industry.

I think we should be careful when speculating about motives. Most people want a clean environment and cheap energy. Many would like to make a living advocating or promoting ways to achieve these benefits. I doubt that the motives of the enviromentalists or renewable energy advocates are much different, in general, than those of the promoters of fossil or nuclear power.

The facts about energy are far more important than motives. For example, no reasonable person can dismiss the evidence that global warming is real, that it is caused mainly by the use of fossil fuels and other human activities, and that it is a danger to our civilization and life in general because it is happening so rapidly.

On the subject of global warming, I doubt that nuclear power can reduce CO2 emissions. A recent article on Energy Central says that nuclear plants can't be built fast enough:

However, this article accepts the claim that nuclear power does not emit CO2, or at least that it can reduce CO2 emissions. As some readers will know, this subject was recently discussed elsewhere on Energy Pulse (see " Renewable Fraud"). The only credible evidence I have seen to date does not support this claim. If we take the long view, it appears that nuclear power should be abandoned for that reason, and others.

It is obvious that we cannot continue to rely on fossil fuels. In fact, if we are going to save what is left of our environment, we must stop using them altogether.

Renewable energy is relatively safe and clean, but it would require an enormous investment to install enough capacity for our present needs, if that is even possible, let alone what is projected for the future. The only way to solve the energy problem is to reduce demand to a level that can be met by renewable energy.

But now I find that I am back to motives, in spite of myself. I believe that we will never solve our energy predicament in a pleasant way, because the profit motive is too strong, and short term self interest will always prevail. I also remember the saying, "Without population control, all causes are lost."

That doesn't mean I give up. You never know what might happen.

July, 06 2004

Rodney Adams says

George: I will try to answer briefly to individual comments in keeping with my own philosophies about constructive discussion.

First of all, I do not have and firm numbers on petroleum company investments in the environmental movement. My evidence is circumstantial and best provided by example. A visit to the web site of the Pew Charitable Trusts - a large funder of environmental causes - provides an interesting history of the trusts, which were founded by the four children of Joseph Pew. Joseph Pew was the founder of Sun Oil company and a strong believer in the idea that one can do good by doing well. The history is laced with references to the innovations that the company made in the oil industry and the way that those innovations helped to provide the resources that the trusts now spend in philanthropic ways. I could provide dozens of similar tales.

You made some specific comments that need clarification. You stated "Most people want a clean environment and cheap energy." While that statement is true, it does not necessarily apply to many environmental groups. It is a common thread in their publications that cheap energy is a problem; they logically state that if energy were more expensive then people would work harder to conserve it. They also state that if conventional energy sources are more expensive, then alternative energy sources would be more competitive. That is difficult to argue with, but expensive conventional energy also leads directly to increased profits for existing producers. Any business man can tell you that a sustainable price increase is great for the bottom line.

You also expressed doubt about the fact that nuclear power can reduce CO2 emissions. I can tell you from personal experience that you can operate a fission power plant inside a very small sealed space. There are NO emissions produced by fission. When people state that fuel production requires electricity and that requires emissions, I say bunk. If you produce the electricity with nuclear power - as is done in France - then enrichment and other fuel manufacturing does not produce any emissions either.

As to the idea that you cannot build nuclear plants fast enough to make a difference, remember that the 104 nuclear plants in the US that are currently providing 20 % of our electricity without any emissions were all built in a 20 year period and that period was full of externally imposed delays and a very steep learning curve. Remember, self sustaining fission itself was completely unknown until late 1942 and the commercial production of large power plants began just 20 years later.

Rod Adams

July, 07 2004

Joe Deely says


Rodney - great comments.

George - of course nuclear doesn't actually reduce CO2, however using nuclear in a new plant does prevent an addition of more CO2.

Also, many nuclear plants are still being built. Check out - for some comments on nuclear around the world today.

Joe Deely

July, 07 2004

George Fleming says

Mr. Adams, that is an interesting point about the Pew Charitable Trusts. It reminded me of what Kruschev said to the capitalists: "You'll sell us the rope we use to hang you!"

I liked your comments about environmentalists and cheap energy. Maybe they realize that we can't have both cheap energy and a clean environment, and they would rather save the environment. Or, as you seem to imply, they want expensive energy because it increases their income from investments in the petroleum industry. (Have I mistated that?) I suppose it could be a combination of the two.

Regarding nuclear power and CO2, and referring to the news article I referenced above, if the IAEA says that we can't build nuclear plants fast enough to stop global warming ,then I have to defer to them. As the article says about James Lovelock's call for a massive expansion in nuclear power, "His comments...have now been rebutted by the most authoritative organisation on the matter."

As I mentioned earlier, the news article assumes that nuclear power produces negligible CO2 emissions. You affirm this claim, but it still seems doubtful, notwithstanding the comments on the OPRIT study by J. W. Storm van Leeuwan and Phillip Smith, in the recent Energy Pulse article "Renewable Fraud". Shortly after that discussion came to an end, I contacted one of the authors of the OPRIT study. He replied: "I visited the site of EnergyPulse. Quite interesting to see how an old story from the 1950s is still alive, as if nothing happened during the past half century."

He explained this remark in some detail, but since it was a private communication I should not quote it here any further. The authors of the study can be reached through the website where the study is published. Please read their rebuttal to their critics. I am not qualified to determine the technical accuracy of this study, but it seems to make a lot more sense than any of the objections to it. The authors are continuing to update their work.

July, 07 2004

George Fleming says

Mr. Deely, I posted my last comment before I saw yours. I will have a look at your reference.

July, 07 2004

Len Gould says

Mr Flemimg: Can the authors or yourself provide even some general physics on how nuclear reactors fueled with uranium prepared in factories powered by nuclear energy can possibly produce ANY CO2? That's bunk. More JUNK AUTHORITY.

July, 07 2004

Joseph Somsel says

I was once publicly taken to task by an ardent environmentalist for the heavy metals releases from my nuclear power plant into the Pacific Ocean. The facts were that the releases were solely the result of run-off from the employee parking lot.

Certainly nuclear power plants cause the release of CO2 - most employees will have to drive to work in automobiles powered by hydrocarbons. I'm sure that environmentalists would prefer that we stay at home drawing unemployment checks.

Seriously, producing the steel and concrete required for nuclear construction does result in greenhouse gas emissions and we do have to test run our emergency diesel generators on a regular schedule but on a net-net basis it should be obvious that nuclear power is substantially free of CO2 emissions.

Assertions otherwise will have to be substantial documentation to be credited.

July, 07 2004

George Fleming says

For those who doubt the conclusions of the OPRIT study, I have two questions:

1. Have you read it?

2. Where are the mistakes?

I always enjoy your comments. Don't ask me why.

July, 08 2004

Len Gould says

Mr Fleming: Yes I've read it. Every word. Same conclusion. Liars can figure.

July, 08 2004

George Fleming says

Mr. Gould, where are the mistakes in the study?

July, 10 2004

Len Gould says

Mr. Fleming. Among the errors in the study is the fact it doesn't near coincide with the findings of the EU's ExternE project. Conclusions at:

This group has made a concerted effort to assign costs to every imaginable externality associated with every known method og generating bulk power. They've even gone so far as to calculate the estimated $value of a YOLL (year of life lost), then extrapolated that out (with intrest) for up to 100,000 years for the nuclear fuel cycle. Extraordinary, if doubtfully useful.

After all their contortions, they finally got the cost of wind power externalities to be barely lower than those of nuclear energy, though the only really useful conclusion is "we should definitely stop buring coal immediately".

A quote from them on the page where they discuss the nuclear results.

"Because of the long time horizon of the radiological effects, the discounted damage is much lower and dominated by the non-radiological impacts due to emissions of non-radioactive pollutants from the fuel cycle. When 3% discount rates are used, results range from 0.1 to 3.3 mECU/kWh, depending on the implementation.

In all cases, the external costs of accident risk are very small, " (Esp. NOTE) " even though an improvement of the methodology has been carried out to incorporate the effects of risk aversion. " (End Esp. NOTE) " However, much controversy still exists on how public perception of risk should be incorporated to the analysis. Due to the complexity of this fuel cycle, it seems that further research is still needed to estimate with a sufficient reliability the damages of the nuclear fuel cycle. "


My conclusion is I'd rather have 1000 reactors distributed about the continent at e.g. 250 sites than the equivalent 1,800,000 wind generators.

July, 10 2004

Len Gould says

Note that they couldn't get the energy cost of fuel processing to have any significant impact on the externalities costs even though they calculated separately for "most countries" (mostly fossil energy inputs to the fuel processing cycle) v.s. France (78% nuclear inputs to the fuel processing cycle). Really makes no difference, and they were really hoping it would.

July, 12 2004

John K. Sutherland says

George Flemming and Rodney Adams, and others: A most useful source of information concerning sources of funds for many activist groups is on the following site:

John K. Sutherland.

July, 12 2004

James Hopf says

Concerning CO2 emissions from nuclear:

George asks why one would not choose to believe the OPRIT study results.

First of all, isn't this the study I responded to (at great length) in another thread? Are the CO2 emissions you're referring to related to the energy required to use much lower grade uranium ores? If so, I responded to that in my other submission. We will have (and discover) enough high grade ore to use as much nulcear power as we want over the next century (even using once-through). And of course, we can always breed.

The basic reason why I would choose not to believe the OPRIT study results is that most studies (of which there are several) reach the oppposite conclusion. If I have several studies saying one thing, and only one study saying another, and on top of this, the conclusions of the one study are EXTREMELY counter-intuitive, I will choose to believe the several other studies.

It's pretty counter-intuitive that simply the concrete and steel used in nuclear plants (above and beyond that used in an equivalent fossil plant) involves CO2 emissions that are any significant fraction of the total CO2 emissions produced by a coal or gas plant over decades of operation. It is also intuitive that renewable sources, with their low energy density and (therefore) extensive required land coverage, involve total material quantities that are, if anything, higher than those of a nuclear plant. Thus, the net CO2 emissions from renewable sources should be higher than those of nuclear, which indeed most studies suggest.

I also addressed energy use from enrichment in my other post. Current reprocessing plants are powered by ~500-1,000 MW of coal plant. Thus, the ongoing CO2 emissions from a nuclear plant, due to fuel processing, are ~1% those of coal, since there is 100 GW of nuclear capacity. And this does not even account for the fact that in the near future we will be switching over to more modern, gas-centrifuge enrichment plants that use only 5% of the power used by the old plants!! Thus, this issue will go away completely, with net CO2 emissions from fuel enrichment dropping to 0.05% that of a coal plant.

And, of course, as others have pointed out, all such issues are moot because if we used non-fossil energy as our source of power (e.g., nuclear), than no CO2 would be emitted in these indirect processes. Instead of referring to net CO2 emissions, one should refer to NET power production, ALL of which is CO2-free. This is the more correct way of looking at it.

One final reason why I don't trust counter-intuitive sources like the OPRIT study is that economics (the free market) should be able to handle all this. If nuclear plants involved burning more fossil fuels than simply burning these fuels in a fossil plant, in addition to all the other costs, they would simply not be economical, period. Nobody would be considering them, as they are now. Also, it is absolutely clear that most of the (current) high costs of nuclear have nothing to do with fossil fuel use, fuel enrichment, or steel and concrete costs. Before TMI, nuclear plants were built with total power costs that were cheaper than any fossil source. If they burned more fossil fuel than a fossil plant would, how would this be possible? Not only is it clear that overall fossil fuel use is lower than that of using the fossil fuel directly in a fossil plant, it is completely obvious that the net use of fossil fuel is NEGLIGIBLE in comparison. The laws of economics ensure this. And no, nuclear has not received any subsidies at all for decades now.

I'd like to end by pointing out, again, that we actually agree on policy more than we do about all these technical issues, and our prognostications about which sources will win in the future, etc.... I support a CO2 tax, or cap-and-trade system. I'm sure George does as well. George, I'm reaching out my hand here. Let's shake hands and agree on this policy. Then we will wait and see what happens. If what you are saying is true (i.e., that nuclear has significant net CO2 emissions) than nuclear's costs would go way up under such a policy, and few, if any, new plants will be built. I obviously don't agree, and am willing to stake everthing on this belief (it would be hard to support nuclear if it were true).

What do you have to worry about? If what you are saying is true, we're not going to see any more nukes. We also agree on policy. Lets just pass CO2 limitations and see what happens. I'm sure all here will agree (me, George, Rod, Len).

July, 13 2004

Len Gould says

"They circulated petitions. They wrote letters to newspaper editors. They pored over the county code, looking for tools to block the project. They did everything short of hurling themselves into the paths of bulldozers and earth movers. " {local residents} "My strategy was to beat the heck out of their hands with my face." {Calpine executive}. "along with other Weld commissioners and planners scrutinized Calpine's permit applications over the course of four years" {town planner}

This to get a zero-emissions CCGT plant built? The country's gone nuts. The process should be "Ok, a gen is needed about here. Where's nearest serviced vacant site? Who's got a better idea?" 2 weeks tops.

James: I agree with your CO2 tax proposal, BUT it doesn't go far enough. Needed is a mechanism to incorporate ALL externalities into a single levy scientifically established IN ADVANCE and which can only be modified on PROVEN SCIENTIFIC grounds. The process to modify the levy is FAR longer than the site licensing process, or even the life of the gen stations. It then becomes illegal to obstruct the permiting and licensing process

IMHO anyway.

July, 14 2004

James Hopf says

The IAEA just produced this (very neutral!) article on nuclear, and its future:

Included in this article is a reference to analysis (presumably from official sources) concerning net CO2 emissions from nuclear, as compared to other sources:

"Nuclear power emits virtually no greenhouse gases. The complete nuclear power chain, from uranium mining to waste disposal, and including reactor and facility construction, emits only 2-6 grams of carbon per kilowatt-hour. This is about the same as wind and solar power, and two orders of magnitude below coal, oil and even natural gas."

Nuff said.

July, 15 2004

George Fleming says

Thanks to all who have commented on nuclear power and CO2 emissions. As I have done with earlier comments, I will forward them to the authors of the OPRIT study. They are revising it now. I look forward to reading the studies cited above. They cannot be ignored, but the only way to demolish a study is to identify the mistakes in it, line by line.

Mr. Hopf, I like your proposed tax on CO2, as modified by Mr. Gould.

I would like to take the time to respond in more detail, but will be leaving for several weeks and need to get ready for the trip. I hope that everything will be settled by the time I get back.

June, 08 2005

Barbara Hainsworth says

Immigration is not necessary to fill the jobs called for (and I agree that it would be a wonderful thing to generate that many and pump up our economy). All that is necessary is to end age discrimination and stop pushing workers out before they are ready or willing:,15114,1056189,00.html

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