Block’s Indicator of Sustainable Growth

by Ray Block 

Shai Agassi, who resigned in 2007 as No2 of SAP, the world’s second largest software company in the world, and now founder and chief executive of Better Place of Alto Palo Ca has a burning ambition. The ambition is to build networks of electric car battery exchange stations and charging spots as the infrastructure necessary to grow the electric car market, and end the domination of the Middle East oil sheiks. If this could be achieved, it would be a big step forward in the march to a low carbon economy.

 

Renault and its affiliate Nissan, which are in alliance with Better Place is designing a plug in electric car, the eMegane, with a range of 160 km (100 miles) on one charge, with a top power of 91 horsepower. The batteries of lithium ion will initially be American probably coming from A123 Systems of Waverton Ma, and Automotive Energy Supply Corp, a joint venture of Renault and the electronic company NEC.

 

The compact battery exchange stations like the charging spots will be fully automated.The depleted battery is replaced with a fully charged one. All this is done within three minutes, at which stage the driver can be back on the road.

 

The charging spots will be about the size of a parking meter, and will be conveniently located, including at parking stations. An electric car parked next to a charging spot is automatically linked up to allow the battery to be recharged. The aim is that the battery exchange stations will be powered with renewable energy.

 

The business case of the venture is that the electric cars will be privately bought, but the batteries including the re-charged and replacements ones will be available only on a lease basis. Better Place will own and operate the automated batter exchange stations, and also install the charging spots. Israel is the first country chosen by Better Place, and Denmark will be the second. The third country chosen is the many times larger Australia, which is about the size of continental USA, but with only about 7 per cent of the population.

 

Better Place initially secured US$200 million venture capital from Israel. In the case of Australia, the plan is to have a network of battery exchange stations and numerous charging spots through the country’s three largest cities. Starting in Melbourne in the south, and passing through Sydney, and then on to Brisbane in the north, the network will cover a distance of 1362 km (851 miles). Debt capital of US$636,000 is to be supplied by the Macquarie Bank group.

 

No time has been set for Better Place’s Australian venture. But I assume it will be more like 2011 or 2012, when times are likely to be more buoyant. It obviously can’t start before the infrastructure is put into place.

 

 

Posted under Carbon Abatement Scheme, Climate Change, Global Warming, Low Carbon Economy, Renewable Energies

by Ray Block

Alberta oil sands in the far northern area of the Canadian province is spread over three deposits beneath 140,200 sq km, an area larger than the US state of Florida. Oil sands is a biitumen molasses like viscous oil, which won’t  flow unless heated or diltuted with lighter hydrocarbons.

                                                                                                                                                              

Once produced, it is either upgraded into synthetic crude oil, or shipped out without upgrading. Upgraders chemically alter the bitumen by adding hydrogen, subtracting carbon, or both. The collective size of the deposits in Northern Alberta is huge. Recoverable reserves of 175 billion barrels, with a proven reserve life of 480 years, and another 130 billion barrels of potential reserves. Alberta’s reserves are second only to Saudi Arabia’s 262 billion barrels.

 

The oil sands industry is not only of pivotal importance to oil security for Canada and United States, but with increasing production from an immense resource, it is a major growth sector of the Canadian economy.

 

In 2007, 44 per cent of Canadian oil production was from oil sands. Expansion of oil sands production over recent years has exceeded declines in Alberta conventional crude. Canada is now the largest supplier of oil and refined products to the US, ahead of Saudi Arabia and Mexico.

 

The downside is that with a near three fold increase in greenhouse gas from tar sands production, compared to conventional oil, it demonstrates only too starkly the greenhouse dilemma. If progress in Canadian renewable energy development was only much further advanced, you could possibly match the growth in GHG from oil sands against the renewable savings. Oil sands production is also a very considerable user of water and energy.

 

Oil sands production is expected to increase 2.4 times by 2017. After spending over $C14 billion investment by 2006, over $100 billion more is to be spent on developing the oil fields over the next decade. This includes US$31 billion on a pipeline and refinery projects.  The oil majors are all there- Shell, Chevron, Exxon Mobil with its local affiliate Imperial, Total, Occidental, and other oil companies have also invested, along with CNOOC of China.

 

Current mining production is 1.32 million barrels/day of heavy crude saturated with bitumen, and Alberta’s Energy Resources Conservation Board (ERCB) expects it to increase to 3.2 million billion barrels/day by 2017. With only 2 per cent of the initial established resource produced to date, you can understand the enthusiasm of the miners. You can also begin to understand the frustration of the environmentalists, who witness daily the slow death of the once pristine wilderness.

 

In a report “How the Oil Sands Got to the Great Lakes Basin” (October 8 2008) by the University of Toronto’s Munk Centre’s program on water issues, it says that with the  pipeline to deliver Alberta oil sands crude to the large scale expansion in the refineries around the Great Lakes, bordering Canada and the US amounts to a “pollution delivery system.” As many as 17 major refinery expansions around the lakes are being considered for turning the synthetic crude into gasoline and other petroleum products. All but one are on the US side of the border.

 

Among the report’s recommendations is a call for refineries to offset all of the additional CO2 emissions, because of the difficulty of processing the crude. These emissions are estimated to be 2.3 million metric tons. Another recommendation is to require all refinery expansions to meet California’s strict air pollution standards, the toughest in North America.

 

A more extreme environmental view by Environmental Defence in a report Canada’s Toxic Tar Sands February 2008 says that it is the “most destructive project on earth.” Canada, says the group “has become the world’s dirty superpower.”

 

John Vidal, environment editor of the Guardian UK (July 12 2008) reports that the Canadian and Alberta provincial governments in late June 2008 joined the Canadian oil industry to play down the impact of the oil sands on the environment. “Canada only produces 2 per cent of the world’s greenhouse gas emissions, and the oil sands are only 8 per cent of the 2 per cent,” says the Canadian association of petroleum producers.

 

A number of the oil sands producers are installing carbon capture technology. Another reports: “we recognise that mining, extracting and upgrading bitumen has a significant footprint. Large areas must be cleared and excavated, while large volumes of water and natural gas are used to mine, process and upgrade it. Each project undergoes strict environmental assessments.”

 

The Alberta government says that stringent legislation and on the ground measures are in place to protect the air, land and water during oil sands development. Alberta in 2007 became the first in North America to legislate mandatory greenhouse reductions for large industrial facilities, which were required to reduce their emission intensity by 12 per cent, as of the end of 2007.

 

“Results for the first year show that companies made 2.6 million tonnes of actual reductions through operational changes and practices- including better use and re-use of energy – and investing in offsets created by other Alberta projects. Companies also chose to pay approximately $40 million into the Climate Change and Emissions Management Fund, which will invest in projects and technology to reduce GHG emissions.”

 

Alberta’s reclamation standards require the land be able to support a range of activities similar to its previous use before oil sands development.“To date, 530 square km of land has been disturbed by oil sands mining activity, which is less than one third the area of metro Los Angeles. As at March 2008, approximately 65 square km are in the process of being reclaimed. Industry must submit reclamation plans for approval to the Alberta government, which then issues a final certificate once work is significantly completed.”

 

You see the environmental dilemma. The answer is similar to the problem confronting all primary and processing industries to ensure world’s best practice in GHG emission control. Easy to say, a lot more difficult to deliver.

 

 

 

Posted under Carbon Abatement Scheme, Climate Change, Fuel & Gas, Global Warming, Low Carbon Economy, Renewable Energies

by Ray Block

In 1990, General Motors was accused by people who love conspiracy theories of killing the electric car at the behest of the oil industry. GM was then intending to market the EV1 electric car, which was to be marketed in Southern California on a lease basis. At least, that’s the opinion of the 2006 documentary “Who killed the electric car.”

 GM wasn’t the only guilty party in the conspiracy according to the documentary. Others were the California Air Resources Board, which initially gave a mandate to the company for the car’s release and then later reversed its stand, the Bush Administration, the oil industry, and even consumers for not being more enthusiastic.

 

Conspiracies aside, these days with governments subsidising the development of the green car, greenhouse gas now realised as a danger to the planet, developing the green car with zero emissions is attracting a great deal of attention.. The fact that oil prices is likely to rise again to record levels, when the world recession now engulfing the US, UK, Europe and Japan ends around 2010, is another reason for taking quick action..

 

Another piece of the puzzle, oil will soon reach its peak supply, at least for regular oil, excluding Canadian tar sands which is going to be very expensive, and digging up the Arctic to find more oil, which is going to be devastating for planet survival.

 

Auto makers in Europe in 1998 promised to cut emissions from their cars over 10 years from 190 grams of carbon dioxide per kilometre to 140. But by the end of 2007, emissions were still at 158g/km across Europe. The situation in America is a bit better, with California’s zero emission vehicle standard  (ZEV), which is to be adopted by 10 other US states from 2012.  So the goal of zero emissions is necessary, and cars which can do without gasoline would be a very positive step forward.           

 

The Bush Administration sneakily secured a US$25 bailout loan to the US auto companies in an omnibus bill, which with the tax credits to the renewable energy sector  were passed by Congress, with the $700 billion bank bailout. The loans are to be made available at a concession interest rate. Some of these funds are earmarked for green cars. There is also the $1.2 billion Hydrogen Fuel initiative in 2003, with emphasis on fuel cells.                                                                                                                       

 

But what kind of electric car? There are two candidates- the plug-in electric and the hydrogen fuel cell, with the latter another form of electric car. A number of auto companies are releasing concept cars of both plug-in electric and hydrogen.fuel cells. For example, GM is pinning hopes on the $40,000 Chevy Colt, to be released in two years, which is an electric plug-in Equinox 100, which is being loaned out to selected drivers getting everyday use in New York, Washington and California.

 

Honda is keen on its FCX Clarity hydrogen fuel-cell car with zero emissions, which has a back-up lithium-ion battery for supplemental power.  As reported by Associated Press (June 15 2008), the fuel cell draws on energy synthesized through an electro-chemical reaction between hydrogen gas in the fuel tank and oxygen in the air. The gas passes through membranes in the fuel cell, generating electricity to run the motor and produces water vapour as exhaust.  

 

The car has a range of about 450 km (270 miles) per tank. Only about 25 units will be released this year and about 200 within three years. It will be available only on a three year lease, with a price tag of $600 a month, which includes maintenance and collision coverage. The test car’s fuel efficiency is 3.11/100 km, which is outstanding. Tank holds 4.1 kg (8.8 lbs) hydrogen gas in pressurized tanks.

 

As the Green Chemistry blog points out, although hydrogen can be explosive under some conditions, it is considered safe in hydrogen cars, because a leak in the system would simply cause the hydrogen to become diluted by air, reaching concentrations that aren’t flammable.

 

Honda says the FCX Clarity is two times more energy efficient than a gas electric hybrid, and three times that of a standard gasoline powered car. The customer base is expected mainly in Los Angeles, and is already particularly popular with movie stars, some of whom have already ordered. There were 50,000 web based requests for leases, but the marketing program is to limit customers to those within areas where hydrogen filling stations are located. 

 

The US has only 61 hydrogen filling stations, of which about half are in California. The need for a network of filling stations until resolved will be a major impediment to their growing popularity. So far only California has more than 100 fuel cell hydrogen cars, light trucks and buses.

 

One item of good news is that American scientists have discovered a cheap source of producing hydrogen. The blog Hydrogen Cars and Vehicles, which had previously reported that Toronto researchers created hydrogen from biowaste at sewage treatment plants, by introducing dried sludge pellets. But the researchers at Oregon State University (OSU) have achieved a 75 per cent more efficient method of producing hydrogen than the traditional electrolysis of water.

 

“All of this was achieved through fundamental research on ‘microbial electrolysis cells,’ or MECs, that use a new ‘membrane free’ approach that costs less and is significantly more efficient than existing approaches.” Many types of biowaste could be used in this process, including food processing factory waste, woody waste and manure from farm animals. Biowaste is fed into this device and the output is clean water, electricity and hydrogen.

 

By comparison, all the hope had been on the plug-in electric car, provided there was a leap forward in battery design. While the battery in Toyota’s Prius hybrid is a nickel metal hybride, it was agreed by the industry that the battery of choice would be lithium-ion. Sounds fine, but this battery has a potential for instability. As Popular Mechanics’s Jennifer Bogo pointed out in the September 28 2008 issue: “as the lithium-ion battery ages, its negative electrode chemically reacts with the electrolyte, potentially touching off  a heat-generating thermal runaway event that could send the car up in flames.”

 

Even apart from the issue of instability, Toyota’s Prius hybrid plug-in electric to go sale in 2010 is limited to an EV-only range of about 16 km (10 miles). The car will be tested on North American fleets in about a year. The car’s range before recharging is very disappointing, and more research is needed to solve the battery’s problems. Popular Mechanics October 2 2008 issue interviewed Toyota’s Bill Reinert, national manager of the Advanced Technology Group.

 

“Current lithium-ion batteries still can’t tolerate large swings in the electric charge cycle. So before the gas in modern hybrids kicks in, and as drivers expect their plug-in cars to operate at higher speeds and longer distances in electric-only mode, battery life will be strained significantly. As a result, the li-ion packs grows larger, which adds expense and makes them hard to package in a small car. For example, at 6-ft 5-in long and 300 pounds, the battery in the Chevy Volt is downright huge”.

 

The eureka moment hasn’t come. The aim is to produce a $20,000 commuter or family car, which reduces demand for gasoline and has zero emissions. Neither the plug-in or hydrogen fuel-cell car can yet compete at the popular selling range. Both the plug-in and hydrogen.fuel-cell cars will appeal to some business leaders, entrepreneurs, along with the niche buyer and the entertainment crowd, who always must have the latest model.

 

But the race is on for the battery of choice, and it is one which will be won. There is too much investment at stake to lose out.

 

 

 

 

 

 

y Ray Block

Posted under Economies, Global Warming, Low Carbon Economy, Renewable Energies, World Inflation

by Ray Block

“My very strong belief is that we need to reorient our investments toward this transition to a clean energy economy. It will be the engine of growth for getting us out of the doldrums that we’ve gotten in right now.”

This was the start of a Reuters story October 9 2008) quoting Cathy Zoi, CEO of Al Gore’sAlliance for Climate Protection.

Zoi’s comments received prominent mention in the environmental media (www.enn.com)

The global financial crisis is so dire as to whether the financial system can be saved avoiding a meltdown, that energy solutions are being put on the backburner. But there is some hard reality in the environmental case.

As some prominent American enterprises have rightly foreseen that large scale renewable energies will become probably the largest single source of industrial growth in future years, now is the time to secure a prominent role, in what will become highly profitable industries.

Another way of looking at environmental costs can be gained from a report released this year. The economics of ecosystems and biodiversity (TEEB) is an interim report from a European Union commissioned study headed by Pavan Sukhdev, a senior executive of Deuthsche Bank, which was released on May 29 2008. Further reports will be released in 2009 and 2010. The study attempts to measure the economic costs of the loss in biodiversity and ecosystems. The interim report seeks to measure the loss of ecosystems in forest services.

“In the first years of the period 2000 to 2050, it is estimated that in the early years, we are losing forest ecosystem services with a value equivalent to around 28 billion euros each year, and the value increases over the period to 2050. Losses of the natural capital stock are felt not only in the year of the loss, as the reduction in the service flow continues over time.

“Taking these future losses into account, the net present value of services from forests ecosystems that we lose each year is estimated at between 1.3 trillion and 3.1 trillion euros, applying discount rates of respectively 4 per cent and 1 per cent. As indicated above, this is a conservative estimate: it is partial, excluding some ecosystem services, some negative feedback effects of these losses on GDP are not fully accounted for, and the values do not account for non-linearities and threshold effects in ecosystem functioning.”

So the international banking crisis is not the only game in town. There will be many more crises in the years to come. But the environmental loss cannot be disregarded. Our future life and that of our children is at stake.

Posted under World Inflation

By Ray Block

 

There is a strong relationship between government incentives, including mandating renewable energy targets, and ultimate success in renewable energy developments. The more farsighted governments are in terms of incentives, the greater a country’s achievements, not only in reducing greenhouse gas, but in developing large scale new industries.

 

Having taken advantage of its neighbour Denmark’s success with wind energy, Germany became the trendsetter in renewable energy, and effectively carried the European Union along with it. Energy policies such as the 1990 Electricity Feed Law and 2000 Renewable Energy Law played major roles in advancing the deployment of renewable energy technologies. These laws mandated the purchase of renewable generated electricity by electric utilities, and also offered large subsidies and government loans to renewable power producers.

 

At the European Union level, the 1997 Directive on Renewable Energy Sources aimed to boost the renewable energy share of total energy has been a catalyst for major change. Signing of the Kyoto Protocol in 2001 was another step forward in directing attention to the direct cutting of greenhouse gas emissions.

 

In a similar way, Japan has been the trendsetter in solar energy. In 1994, Japan introduced incentives for solar energy. Over the years, this has resulted in a 72 per cent reduction in the average cost of solar energy systems, and in return Japan has become global leader in solar photovoltaics. As solar becomes competitive in Japan, the government is reducing the size of the incentives.

 

Now it is Germany, which is following the lead of Japan in introducing incentives to encourage the use and popularity of solar. The only disadvantage of being too successful in product leadership is that the current rate of accelerated deployment in renewable energy technologies can lead too quickly to a point of countries reducing their commitment to new research and development.

 

While this won’t interfere with the current momentum for renewable energy, it may come at the expense of future generations of energy technologies.

 

In the US, the hot and cold attitude of the Bush Administration and Congress in inconsistent and half hearted support for renewal energies, has seen the year by year renewal of the production tax credit (PTC) on wind technology frequently in peril of not being renewed. This has led to peaks and troughs in the rate of new investment. For example, between 1999 and 2004, the PTC was allowed to expire.

 

Until last week, it looked as if the PTC wouldn’t be renewed. But that has finally been remedied. As the Wall Street Journal’s blog Environmental Capital pointed out on October 6 2008, last Friday was a good day in Washington for renewable energies.

 

The passage by Congress of the US$700 million Wall Street Bailout allowed the Senate not only to sneak into the omnibus bill, the annual production tax credits for wind power, but an eight year extension to the solar investment credits, including tax incentives for home owners to install solar panels. Because, the House of Representatives had initially failed to pass the bailout, the second time around they had to swallow their pride and pass the bill, with the clean energy tax credits intact.  

 

 

 

 

 

 

 

 

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Posted under Carbon Abatement Scheme, Climate Change, Economies, Global Warming, Renewable Energies