On Tuesday I had the pleasure of attending Redefining US Energy Security for the 21st Century as part of New York Energy Week. The panel was composed of self described “Energy Warriors” Vice Admiral Lee Gunn (US Navy, Ret.), Brigadier General Steven M. Anderson (US Army, Ret.), and Brigadier General Stephen A. Cheney (US Marine Corps, Ret.) and offered insight into the massive amount of energy required by the DOD as well as their goals to reduce energy demand without compromising operational efficiency. Here are some interesting facts:
The US military is the largest organizational user of petroleum in the world consuming around 120m barrels per year at a cost of about $17 billion.
Petroleum accounts for 71% of the DOD’s energy consumption by source; electricity ranks second at 11%, natural gas third at 8%.
Since 2005, DOD’s petroleum use has deceased 4% but spending on petroleum increased 381% in real terms.
After taking into account the hidden costs of personnel and assets required to move, store and protect fuel from the supplier to the point of use, one gallon of fuel can cost up to $50.
One project that used spray foam insulation on tents in Iraq reduced cooling costs by 75% and resulted in savings of $3.6 per day! The original contract for $95 million saves up to $1 billion dollars annually and keeps 11,000 fuel trucks off the road. Think about the reduced risk to our soldiers who would otherwise have to protect those convoys as the fuel makes its way from its origin to its final destination.
All this adds up to a massive energy bill and a lot of time and resources dedicated fueling the operation rather than the operation itself. The diversion of resources, vulnerability of supply chains and reduced mobility of combat forces make our military’s reliance on fossil fuels a national security issue as much as a financial one. Each and every branch of the military understands this fact and has taken steps to increase their energy efficiency and reduce their demand. However, the opportunities are endless.
As I stated in an earlier article, the DOD should leverage its purchasing power to drive cost reductions in advanced clean energy products. In addition to economies of scale, the DOD would also provide real world testing of new technologies so they can be measured and verified and eventually reach commercialization.
Furthermore, as energy efficiency contributes to organizational effectiveness, there should be a top down approach where commanders are held accountable for reaching their energy reduction goals.
It is well established that our addiction to fossil fuels poses a national security risk. It was especially motivating hearing the alarm being sounded by former members of the DOD.
I read a quick article in Bloomberg Businessweek last week that detailed an unlikely alliance between tar sands producers and environmentalists to put a pollution tax on the dirty, heavy crude coming out of Alberta. Yes, that is correct. Tar sands producers are actually lobbying for a carbon tax or cap-and-trade system that would help to clean up their operations. In British Columbia, a province that enacted a carbon tax, families are paying an average annual premium of $376 and have reduced their per capita emissions 10%. The producer’s biggest fears are to be viewed as “too polluting” by other nations, resulting in no market for their exports. America’s opposition to the Keystone XL pipeline highlights this fear. Unless the tar sands can change their appearance, it seems that the world would be okay without the product. An oil industry spokesman even said that “If your country looks at Canada and says your energy exports are too carbon intensive, then it becomes and economic competitiveness issue.”
Standing in the way of this unlikely alliance and subsequent carbon pricing is the Prime Minister Stephen Harper. Harper has traditionally emphasized business and job creation over environmental issues and is responsible for pulling Canada out of the Kyoto Protocol, the only nation to do so. Failure to embrace cleaner regulations on the tar sands may soon become an environmental and economic problem for The Great White North.
The winds of change are blowing, and nations are figuring out how to monetize carbon. If Canada can enact sensible regulation that appeases both oil producers and environmentalists, then it can be a leader in the carbon markets. If it fights the winds of change, then it risks being left behind by the rest of the world. The simple answer is to put a price on carbon and use the proceeds to invest in clean technology developments.
Years ago, when the US thought they would have to import LNG’s from abroad there was a massive build out of over 24 LNG plants for regassification. Thanks to horizontal drilling and hydrologic fracturing, the US will not have to worry about LNG imports for the next century at the earliest. Converting these regassification plants to be export terminals makes economic sense and environmental sense. With the exception of Sabine Pass in Louisiana who was just recently granted permission to export, all that equipment now sits idle along the gulf coast.
At the heart of the issue is the fact that American gas now sells for $3.40 per MBTU domestically but over $12 in Europe and up to $20 in Asia. Turning American nat gas to LNG cost about $5 per MBTU, so exports of LNG can be beneficial to the economy. Furthermore, the glut of natural gas has actually forced producers to stop producing until the supply dwindles or demand picks up. Tapping the international markets would allow this process to balance out. Of course, there is steady opposition to LNG exports from uncommon bedfellows of environmentalist and business proponents who respectively oppose fracking on environmental grounds and who want to maintain their access to cheap fuels.
I have gone back and forth on the subject of fracking several times now but generally agree with the economic arguments set forth in this article. While I am not a proponent of fracking, the following issues deserve mention:
Nat Gas is priced on a regional market as opposed to a global market. The lack of export infrastructure acts as a subsidy thereby keeping the price of gas artificially low and promoting inefficient use of the fuel. Increasing LNG exports will increase the price but will hopefully establish a free and transparent market. The revenues of the fuel trade should be used in clean technology research and developing next generation technologies.
With cheap nat gas prices in the USA, developing nations have been leaning towards coal to fuel their consumption. Access to natural gas will hopefully reduce the emissions in the developing world more than if the gas were kept in the US.
These two points rely on the assumption that fracking remains legal. As I write this, a moratorium on fracking (bill A.5424-A) was just passed by the Assembly and will go before the NY State Senate and then on to the Governor for signature.
Clean technology has never been more affordable or accessible to the masses. Policy makers are now realizing the national security and economic concerns of relying on fossil fuels. Clean, distributed sources of energy combined with sustainable development are our best options for a healthy, prosperous future.
If you have ever wondered how much energy is wasted in the United States, then look no further than this chart from the Lawrence Livermore National Laboratory. What your are looking at here shows how many Quads (Quadrillion BTU’s) of energy is produced from each source of energy . . . and how much is wasted through inefficient processes or simply lost as heat energy. In 2011 more than half (57%) of the energy produced was rejected. In terms of electricity generation, almost 2/3 of the potential energy is lost. Cogeneration plants achieve a much higher efficiency level than conventional coal or natural gas plants. In the transportation sector the efficiency ratio is even worse with only 25% of the energy produced actually being used. If there are any entrepreneurs out there, I see many opportunities for improvements here. In fact, I think this chart could show the next trillion dollar opportunity!
First, let me start off by saying Happy New Year to all the Greenbacker’s out there. I apologize for the wait in between posts but it has been a crazy couple of weeks. Anyway, a few months back BP published their annual BP Review of World Energy 2012. Below are some key charts created by Jeff Tollefson & Richard Monastersky and published in Nature.com.
This chart shows the largest energy users as well as the relative breakdown of their energy supply. Two spikes are clearly noticeable – the US and China. Notice that the US is reliant on coal, oil, and natural gas for a majority of its energy needs while China is heavily dependent on coal, with oil coming in second. The recent boom (no pun intended) of natural gas supply in the US has not only dropped the price of natural gas domestically, but also explains the price decrease of coal. Economics proves if the price of x falls, the price of a substitute of x will also fall in order to keep demand steady. In effect, the benefits of cleaner burning natural gas are offset by increased use of coal in other countries.
The above graph simply illustrates world energy use in million tons of oil equivalent. The final scenario shows what energy consumption would look like if we were to keep the 450ppm limit on carbon emissions.
This last graph shows several interesting figures – the most interesting in my opinion is that China alone accounts for 49% of global coal consumption. However, China’s rise these past three decades has been simply amazing. Already there are more than 170 cities in China with populations over a million. Fueling this rapid expansion will require significant increases in coal, oil, natural gas, and renewable energy. By leveraging the power of new technologies and global markets, renewable energy can compete with fossil fuels. Lets hope that renewable energy plays an even greater role in mankind’s future than current trends predict.
The ice sheets on Greenland and Antarctica are melting, sea levels are rising, and the rate of ice loss is increasing. These are the conclusions a new peer-reviewed report published in the journal Science came to. The study, authored by 47 experts from 26 institutes, used satellite images to show that the ice sheet melting has contributed to an 11 mm (0.4 in) rise in sea levels. The Greenland ice sheets contributed 2/3 to this rise while Antarctica contributed the remaining 1/3. Also startling were the comments on the Pine Island Glacier, an iceberg the size of New York City that is set to calve off in the upcoming months. While most of this information is probably not news to you, it does offer scientific proof that the planet is warming. We must act now. Please inform yourselves about solutions to climate change – whether through cap-and-trade or a carbon tax – and pressure your elected officials to enact policy measures. The only way to slow the rate of warming is to reduce our emissions through every means possible. Use less energy by making energy-efficient upgrades to your house. Write a letter to your representatives to end subsidies for fossil fuels so renewable technologies can compete on a level field. Or simply turn off electronics when they are not in use. Climate change is a problem that touches all areas of modern society – it is a national security issue, an economic issue, a development issue, and a humanitarian issue. And as this study proves it is getting worse. The paradox is that by the time we see changes that affect us, it may be too late to stop it.