Big Oil Plays Games Online

TheVeryBigOilCo (VBOC) has put a simulation game online so you can supposedly see what it’s like to attempt to power a city of 3.5 million or so (about the population of the city—not the county—of Los Angeles).

You pick energy sources from an available list until you’ve fully powered the city. Your energy mix is rated along three axes, Economic, Environmental, and Security. You then, “watch what happens” over two time periods, the present to 2015 & 2015 to 2030, depending on your energy mix, “events,” and how aggressively you choose to pursue conservation and efficiency measures.

So how does this play out? Here’s what happened when I ran Solahville.

In the first stage, I assembled an energy mix that was 37.5% biomass, 25% solar, and 12.5% each for wind and hydro—maxing out all of those options and producing 88% of Solahville’s energy. At that point a “Petroleum Needed” flag came up and every energy button except petroleum became inoperative. Oh VBOC, say it ain’t so!

The city map showed four areas of deficit: Commercial Buildings had only 87.4% of the power they needed; Vehicles and Office Buildings both had 87.5%; Airplanes had 0%--my airport was shuttered. It was projected that I needed 17 Trillion BTUs for airplanes, some 3% of the city’s total energy needs.

It appears that, almost no matter what you do, you are limited in the number of alternative sources you can bring on line. No matter what set of choices I made, I could never power the city without getting to the “Petroleum Needed” level. You can argue limits make sense for biomass and hydro; there are clear supply issues for both. That’s less true for wind and solar.

I don’t know what assumptions the game makes about energy usage and efficiency; it’s a black box in that regard. But I am comfortable completely ignoring the matter of “underpowering” vehicles and buildings by ten to fifteen percent. Europe and Japan use about half the amount of energy the US uses, on a per capita basis with a comparable standard of living. We have plenty of room there to cut back with little or no pain.

The matter of jet fuel is a bit more difficult; we may need petroleum products there, as a bridge fuel, for some time. Still, we could significantly cut fuel use and ultimately change the fuel source: 1. How many passenger miles are consumed by pleasure trips? (for the record, I am in favor of pleasure but it’s not a noun I’ve lately associated much with air travel); 2. How many trips are of a duration that make them much better suited to high speed intercity rail? 3. How soon before we can scale up projects in which bacteria or algae excrete fuels for us in a carbon-virtuous cycle?

Moving into the future, with an aggressive efficiency and conservation plan in place, the first bump the program throws at me is “Smaller solar panels developed for widespread industrial use prove too costly over the long term, forcing factories to return to traditional sources of electricity.” I’m just going to snicker at that and move on.

The next bump is, “The growing use of ethanol and biodiesel results in higher food prices and shortages of corn, soy and sugar cane.” Can’t really argue with that; we’re mostly there already. If only I had listened to that nice Aaron Sorkin, when The West Wing broke the news that ethanol (corn ethanol anyway) was a scam.

In 2015, when it’s time to reconsider the mix, Solahville is suddenly down from 100% powered to 67% (economic growth?). I add more wind, more solar, more biomass, and (newly available) hydrogen to the mix. I’m fully powered but my “Economic Impact” meter goes into the red.

In 2019, “New technologies to extract oil expand the economically viable resource base.” Well that’s a relief! I was beginning to miss my hydrocarbon fix. And I’m sure those new technologies are completely environmentally friendly, cuz, y’know, they always are.

In 2024, “Dams become more environmentally friendly and powerful,” increasing power production from that source, while decreasing the environmental impact—fish ladders and bigger turbines for everyone! Dunno about this. Riverine ecologies don’t seem to be doing well on multiple fronts. A little skeptical about “low impact,” a little nervous about low flow—given the impact, present and future, of global climate change on snow melt, rain fall, and water usage.

My final score: 617,705,499. Maybe I didn’t look closely enough but I don’t know what that number measures. As a comparative, they provide a (higher is better) score of 622,960,192. Their mix to achieve that higher score was 11.2% petroleum, and included coal, natural gas, nuclear power, and shale oil. Hydrocarbons in aggregate made up 25.1% of the energy mix; nuclear provided 8%.

My mix was 8.3% petroleum (they would simply not allow me to “just say ‘no’ to hydrocarbons,”) with the rest divided between wind, solar, hydro, biomass, and hydrogen.

It’s an interesting, if somewhat opaque, game but my guess is that most people will come out with the same convictions they came in with: my conclusion, after twenty-two years as the energy czar of Solahville, is that we could build a carbon-neutral future; the conclusion of TheVeryBigOilCo remains, of course, Petroleum Needed.

Ecology & Economics Part II: True Cost Pricing

Enviro-Retrofitting gets a bad rap as too expensive, and that’s something we have to change. But, in broader terms, our markets are structured in such a way that we don’t do a very good job of assessing the real and complete costs for much of what we buy or produce.

True Cost Pricing takes a more comprehensive look at what a product or service costs, taking into account not just the Economic Capital gained or lost, but the impact on Natural Capital and Social Capital as well.

It can be argued, for example, that coal is a cheap and plentiful source of energy. As a purely economic matter, that’s true. But what is the impact of coal on Natural and Social Capital? When you remove a mountain top, sending toxic runoff into rivers and streams, for the sake of argument, let’s call that bad for the environment. Let’s stipulate as well that increased rates of kidney disease, lung disease, and high blood pressure associated with the mining and burning of coal are also bad.

Whatever moral weight we give these impacts, they have real economic costs. As the purchasers of “cheaper” electricity, however, we don’t see the downsides—or we see them but the connections are obscured.

We pay $1 for a lump of coal, which looks cheaper than paying $2 for a cup of sunshine. But the following year, for each lump, we pay another $1 in increased Medicare premiums; ten years later our children pay $1.50 for each faint spray of brackish bottled water they can find, cuz it don’t come from the stream no more, cuz there ain’t no stream.

This is standard business practice: privatize the profits and socialize the losses. Businesses turn potential losses into externalities, or “externalized costs.” This is ethically and morally problematic, and something I am apt to occasionally spit, sputter, and spew about—often inappropriately in social contexts (where should one spew? here, I guess)—but in the end business is business.

“I stung you because that’s my nature,” the scorpion says to the frog, midstream, as they both drown. And that’s the rationale for regulation and oversight. Businesses are going to do pretty much anything they can, and the market is often going to push them further and faster in the wrong direction.

The Collective We—that would be The Gummint, but keep this quiet or we’ll scare the Republicrats—need to get together and act as a counterweight. Not because we are anti-business or anti-progress or antediluvian, but because we have an interest in the future that BizCo often can’t afford to indulge unless forced—that’s right Boss, the future actually extends beyond the end of this fiscal quarter. . . yes, really.

Three quick automotive examples related to True Cost Pricing:

1. Hybrid cars (mine included) don’t always look good when you add up all of the energy costs. There’s wiggle room in the math, but some people argue that the energy and disposal costs of the batteries outweigh the gas mileage savings.

2. Autoblog Green notes that, “EU [European Union] Directive 2005/64/EC states that after December 2008 all vehicle manufacturers will have to provide evidence of recyclability when they apply for type-approval of new vehicles. The minimum that new vehicles under the directive must be reusable and/or recyclable is 85 percent and at least 95 percent by mass must be reusable and/or recoverable.” The end-of-life costs of European cars, rather than just the costs of manufacture, are embedded in the purchase price—and the manufacturer has an incentive to keep all of the costs as low as possible.

३. According to Green Car Congress, British automakers cut manufacturing energy use, waste, and CO2 emissions in half between 2001 and 2005. Good for them, good for us.

When I’m not spitting, sputtering, or spewing, I tend to be fretting. Tommy Rob Malthus is looking fashionable and prescient again (never mind Garrett Hardin) and my faith in tomorrow is always on the shaky side.

Still, we ought to structure our economy and our regulatory apparatus on the optimistic premise that we have a future.

Ecology & Economics Part I: The Benefits of Retrofitting

If every structure we built, from tomorrow on, were zero-carbon, that would be a good step in the direction of building a sustainable future. What is it reasonable to require as a matter of building codes? Personally, I’d like to see the end of roof shingles as we know them, replacing them all with photovoltaic tiles (every roof a clean, quiet generating station). I’d like to see every new building a zero-energy structure—something that might be facilitated by a credit trading regime. If you could only get to 85% of your building’s requirements and I was producing 115% (in a building of similar size), I could sell you what you needed. Lights to appliances to building materials and practices, Energy Star shouldn’t be the gold standard; it should just be the standard.

There is a “nanny state” issue here I know—although I think a credit trading system does something to add flexibility and address this objection—but the larger problem is the “installed base.” What we do “from now on” wouldn’t address the millions of homes, businesses, and industrial facilities already in use, decades (or centuries) old and inherently inefficient.

What Do We Mean by Cost?

There are logistical and aesthetic problems with retrofitting (re-plumbing, rewiring, or adding ductwork to an older building can be a nightmare), but the larger objection is often made on economic grounds: what we get in energy savings is said not to be worth what it costs in time and materials.

You can run an internal combustion engine (ICE) on hydrogen; a high school auto mechanics shop can do the conversion. (Daily Kos notes an HS student working on injecting hydrogen into an ICE as an energy booster.) You can change over an oil-fired, forced air heating system to work using a geothermal heat pump instead (you could also run such a system on recycled cooking oil). You can piggyback a solar hot water heater onto an existing system, either to pre-heat the water or do the whole job.

But you would do better to design and build efficient, sustainable, modern systems from the ground up: cars run on electricity from hydrogen fuel cells, HVAC systems that are “born green,” hot water (and gray water recycling) systems that link and make the most efficient use of a variety of a building’s resource inputs and outputs. That’s the cheaper way to go.

Part of the economic argument is indisputable. You can calculate the cost of a photovoltaic array against the average monthly electric bill, add the capital cost via a mortgage running anywhere from ten to thirty years and it would appear that you come out behind.

As always, those numbers are more than a little soft: there are federal, state, and local tax credit, rebate, and loan programs that can substantially reduce the out-of-pocket costs; we’ve seen the cost of gasoline in the US rise, in constant dollars, by a factor of four over the past ten years (sometimes feels more like, in the last few weeks); it’s also reasonable to assume that, as green tech scales up, the cost of renewables like solar and wind will come down substantially. Energy is going to cost more in the future (and the future is now); the technology is going to cost less.

You might also reasonably ask, What Price for the Greenland Ice Sheet? But let’s put all that aside for the moment.

Not New Math, Just Better Arithmetic

What economic ripple effects can we reasonably expect from retrofitting? Let’s stand trickle down economics on its head—or knock it on its ass—what happens if we support the bottom instead of the top, need instead of greed?

Given the almost complete abdication of leadership on the part of the Bush administration, state and local officials have stepped into the breach and started promoting green technologies as revenue and job creation vehicles for cities, counties, and states. For the most part, the focus has been on research and manufacturing, on the benefits that will accrue to the companies and the universities that develop new green technologies, on the regions that host these facilities, as well as the manufacturing plants that turn out the resultant products: white collar jobs become green collar jobs.

At the lower end, however, what about blue collar jobs, the building trades jobs that would be created if we looked to retrofit just about every building standing? How many more carpenters, plumbers, electricians, and roofers would we need? Would we not thereby be creating a wave of employment for working class high school grads (or non-grads) who have been hit hardest by job losses and wage compression over the past three decades (jobs that cannot be outsourced overseas)? Could we not reasonably anticipate a variety of positive knock-on economic effects from this: fewer people in need of government support and more people paying taxes at the top of the list?

We need to look at cost in a more nuanced way. It isn’t enough (it’s neither complete nor accurate) to simply ask, “How much will it cost me to retrofit my house?”

A better question set would be to ask several things, and to ask them as benefit (rather than cost) assessment questions:

“How much will I benefit economically by retrofitting my house?”

“How much would reducing my carbon footprint benefit the natural environment?”

“What are the economic benefits of retrofitting to the larger society?”

We are oriented toward thinking only about Economic Capital; we need to refocus to include Natural Capital, and Social Capital as well.

The Big Company that Cried, “Green!”

Recently ExxonMobil has taken over the centerfold of the A Section of the New York Times, space they’ve used to trumpet their awareness of and concern about the problem of where future energy supplies will come from and the environmental impact of our use of fossil fuels. Generally, these ads have a personal element, featuring photos of company employees, clean cut and concerned, who are on the case, valiantly working to preserve The American Way of Life.

Truth and Justice? Not so much. Continued consumption? Oh yes! Oh yes!

One ad spotlighted a young, thin, somewhat preppy looking African American man, alongside a slightly older white woman.

Barack? Hilary! What are you two doing here?!

This is of a piece with British Petroleum re-branding itself as Just-Plain-BP and telling us that this stands for “Beyond Petroleum,” with GM telling us that the Chevy Volt is The Answer to our personal transportation problems (and/or to the Toyota Prius), with the nuclear power industry pushing the idea that nukes are a zero (carbon) emission source of electricity.

Working backwards, I am more focused on the fact that: our friendly neighborhood nuke people have long assured us that nuclear power is perfectly safe, although they can’t bear the cost of these accidents that will never happen; and forty or fifty years in, we have no permanent disposal site for nuclear waste (Yucca Mountain? Yucca Mountain?) so we’ve just been keeping it in pools at a-nuke-near-you for decades.

The Chevy Volt (due out in 2010), based on a battery that doesn’t yet exist, is quite appealing, at least as a stopgap, unless one hangs up on (who killed) the EV1. Burn me once. . .

As for BP, I’m a little queasy about relying on the kindness and the credibility of a company whose history includes complicity in the toppling of a democratically elected, if inconvenient, government: In 1953, BP (then the Anglo-Iranian Oil Company) conspired with the CIA in Operation Ajax, helping to depose the government of Iran. This brought us the Shah. He brought us the ayatollahs. They brought us the Iranian Revolution. Among other dividends, this brought us Hezbollah.

So. . . like any card carrying cynic, I’ll plead reality here. The energy and transportation industries extant have every reason to plan for a post-carbon business landscape. At the moment, they have the capital—both human and financial—and the infrastructure to begin moving us toward more sustainable modes of energy generation and usage. They say that’s what they are doing. All we have to do is bear with them and keep those subsidies coming.

I don’t believe them.

They want us to clap for Tinkerbell. I keep seeing the Cowardly Lion, eyes closed, chanting to himself, “I do believe in hydrocarbons, I do believe in hydrocarbons. I do, I do, I do believe in hydrocarbons.”

“Meet the new boss. Same as the old boss.” “Don’t get fooled again.”

Republicans Want to Filibuster Energy & Climate Bills?

LET THEM!

A recent article in Rolling Stone Magazine suggested that Democrats in the Senate are suffering from Stockholm Syndrome—their time in the minority has left them even more timid than usual, and more prone (on almost any matter of any importance) to revert to “the Republicans won’t let this go through, and pushing it will just antagonize them. No point in trying really. . .”

And so sank a variety of energy and global climate change related bills that have risen and (quickly) fallen in the past week or so. Whaddaya gonna doo? If you don’t have sixty votes to shut down a filibuster, why bother? Lunch anyone?

In late 1995 and early 1996, Newt Gingrich spearheaded the shutting down of the federal government (14-19 November 1995; 16 December 1995-6 January 1996), a face-off that ended up hurting him and benefiting President Bill Clinton. The lesson some drew from this is that “obstructionism” is politically costly.

Personally, I’m more than ready for some obstructionism. Bizarre that this is a partisan issue (like one party being the Gravity Party and the other being the Anti-Gravity Party), but this is where we are.

The Republicans want to filibuster, among other things: 1. To protect the oil companies from the repeal of the billions of dollars of tax breaks they have long enjoyed; 2. To prevent the passage of an emissions reduction bill (likely through a market-based permitting and cap & trade regime) that would at least begin to address global climate change; 3. To protest the protection (link is to anti-protection, pro-drilling site) of the Arctic National Wildlife Refuge (ANWR) from oil drilling.

LET THEM!

The Democrats should show just an uncharacteristic smidge of vertebral integrity and let the Republicans “stand up for what they believe in.”

First and foremost, they should do this because it’s the right thing to do and this is the right fight to fight. But I find it hard to believe that they would not benefit from this politically as well.

Think of the shock value: “Democrats standing up for—!” Well just the “standing up” part would be new and newsworthy.

And the Republicans?

We have seven weeks or so (w/ time out for the 4^th of July) until the Congress breaks for August recess. If the Republicans are committed to gridlocking the Senate for that period in order to stand up for Big Oil and to stare down environmental protection in all its nefarious guises. . .

LET THEM!

Gas Guzzlers & Hybrid Hysteria

The Dawning of the Age of the Hybrid?

We just got a new (used) 2006 Honda Civic Hybrid. In part, this happened because:

@begin(vendetta)

At the end of last December, we left our 1996 non-hybrid Civic at Executive Valet Parking, near Bradley Airport in Connecticut. We had them change the oil while we were gone, which they contracted out to Travelube. A couple of weeks after we got home, the puddle of oil on our driveway clued me in to the fact that Travelube had generously put twice the appropriate amount of oil into our car. Turns out (shockingly!) that when you over-fill a small, hot, high pressure engine and then run it for a thousand miles Bad Things happen. . . end of car.

@end(vendetta)

Couple of interesting aspects to looking for and finding a new hybrid:

1. $4/gallon gas means that looking for a hybrid to buy is no longer a quirky, eco-smug thing to do. It’s more of a contact sport now, really.
2. When a dealer’s web site tells you that they have a hybrid on the lot, new or used, this is invariably untrue.
3. When a dealer tells you, over the phone, that they *still* have that used hybrid on the lot, that’s usually not the case by the time you get to the dealership (perhaps only hours later).

I’ve been driving smaller and smaller cars in the past few years, so my “baseline normal” may be a bit skewed. Same is true regarding price, age, and features; the 2006 Civic is the newest, lowest mileage car I’ve ever owned. So as to the Civic Hybrid, just a few days in: it feels LUXE and LARGE to me.

I don’t mind the luxe part as a philosophical matter, though, of course that impacts price—both up front and regarding the fancy features one may be called upon to repair in the future. The matter of size isn’t entirely subjective and it cuts two ways. I’ve owned Honda Accords that weren’t as big as this Civic. The benefit of the larger size (four doors; full trunk, which the Prius lacks) is that it is a full service car, a car you can take on vacation for example, which is not true for our Insight.

The downside is gas mileage. I don’t know yet what we will be getting. Have to figure out how to drive this car. It’s rated 49/51, City/Highway; but I think the (basically mechanically identical) 2008 model was “adjusted” to 40/45. Not bad for a full-use car. But getting 70+ in the Insight has sorta spoiled me. More info on hybrids (dedicated blog) here.

Still kinda cool that our “family fleet average” is 60+ mpg—just for purposes of teeth-gnashing egregious comparison, the US Energy Independence and Security Act which President Bush signed into law in 2007 mandates that we get to a corporate average fleet efficiency (CAFE) standard of 35 miles per gallon by the year 2020.

Sustainability. . . In (From!) the Desert

A wing of the Rockefeller clan—founding family of the Standard Oil Dynasty that became Esso, that became Exxon, that merged with Mobil—have been agitating to have ExxonMobil focus more attention on renewable energy and a sustainable future. They also recently sponsored a resolution to split the positions of Chairman and CEO, currently held by Rex W. Tillerson who has been stubbornly resisting any move to acknowledge the possibility of a post-fossil fuel economy—that resolution is detailed by its author, Robert A.G. Monks, in the Harvard Law School Corporate Governance Blog.

They failed. And Tillerson has reiterated his commitment to ride hydrocarbons into the rising tides of a warmer future—a fine example of American Can’t Do cantankerousness.

Damn the melting ice sheets, full speed ahead!

Meanwhile, what country has been working on one of the more radical attempts to build a sustainable, post-carbon city, from the ground up?

ABU DHABI!

One of the oil and cash soaked United Arab Emirates, Abu Dhabi, in collaboration with MIT, has recently laid the cornerstone to Masdar City, which they expect to be “the world’s first zero-carbon, zero-waste city” housing nearly 50,000 people by 2016. See David Roberts blog post on the subject.

I think it unlikely that The Emirates are on the cusp of becoming the hub of sustainable energy research. Neighboring Dubai is famous, among other things, for building one of the world’s largest, indoor, year-round skiing facilities in the desert and for building archipelagos of artificial islands—one in the shape of a map of the world and one in the shape of a palm tree—in the Persian Gulf.

Part of the Masdar Plan appears to be just as grandiose, a demonstration of economic and technological muscle. They will do this to show that they can do it, that they can do pretty much anything they want—and not merely in the realm of the previously possible but in the realm of watch us do what no one has ever done before.

That said, this is a pretty good direction in which to focus ego and self-promotion. It’s not a bad advertisement for the benefits of well-funded autocracies either. I am in favor of environmental impact studies, of careful planning and full consultation. But imagine if we tried to build our own Masdar in the Mojave Desert.

We want and need energy; more and more of us favor sustainable energy projects; but the ethic that prevails isn’t just NIMBY—Not in My Backyard!—anymore, it’s BANANA—Build Almost Nothing Anywhere Near Anyone. Treehugger has covered the topic of “how much desert it would take,” basically to fulfill the electricity needs of the entire planet; I don’t think the hurdles are technical as much as they are matters of regulation and. . . imagination.

Texas (and Texans like Tillerson) remains committed to oil; at least some Arabs in the Gulf are beginning to look toward, and plan for, the future.

Good for them; sad for us.

Ironic if they ended up forming OSEC—the Organization of Solar technology Exporting Countries—and we remained beholden to foreign energy sources.

Tillerson and the other fossil fuel fool execs seem to wake every morning and “smell the crude,” an intoxicating and bewitching scent.

They would do better to look up and see the sun.