Obama administration still clueless on energy

After a year on the job, the Obama administration has learned little about energy. They still claim that “green” jobs will be created in the electrical generation sector if only we switch to more wind and solar energy projects.

Their claim that 5 million new jobs will be created in the energy sector over the next ten years is just not credible. Consider that, according to the Bureau of Labor Statistics, the entire electrical generation industry, from mining, manufacturing equipment, power generation, and transmission, currently employs just under one million people. Where is Obama going to put 5 million more people? Will he have platoons of people peddling bicycles hooked to small generators? And in the State of the Union speech, he pushed for job-killing climate legislation in spite of recent events showing that the data have been fudged. During the speech, Obama was laughed at after referring to the “overwhelming scientific evidence on climate change.” First the audience laughed, then Pelosi and Biden, and finally Obama himself smirked at the insanity of his remark. Maybe his speech writers should read the news.

So called “green” energy is more expensive than fossil-fuel generated electricity, so energy costs would necessarily increase. Our economy is very sensitive to energy costs, so rising costs would more likely result in job losses rather than more employment.

According to a Cato Institute study (Policy Analysis 280), wind generation costs are 6-7¢ per KWh vs. 3¢ for natural gas, 2.2¢ for coal, and 1.7¢ for nuclear. Solar power costs 38¢ to 53¢ per KWh. The Cato report also said that the materials required for thermal-solar projects were 1,000 times greater than for a similarly sized fossil-fuel facility, and therefore would create substantial incremental energy consumption and industrial pollution. A major environmental cost of photovoltaic solar energy is toxic chemical pollution (arsenic, gallium, and cadmium) and energy consumption associated with the large-scale manufacture of photovoltaic panels. The installation phase has distinct environmental consequences, given the large land masses required for solar farms–some 5 to 10 acres per MW of installed capacity.”

 The Administration touts “fast-tracking” solar development in the west, but has limited permits to 670,000 acres of more than 30 million suitable acres available.

Wind-generated electricity, especially, is intermittent and unreliable, so that it requires conventional backup generating capacity. Energy companies will have a hard time monitoring and switching between generation sources to meet demand and prevent blackouts or brownouts.

The Interior Department policy does not help wind-power. The Cape Wind Project in Nantucket was to be the first off-shore venture, but Interior will allow the area to be listed on the National Register of Historic Places, thus precluding development.

During the State of the Union speech, Obama gave lip service to off-shore petroleum exploration. During the Bush administration, Congress lifted a moratorium on off-shore exploration, but Obama’s Interior Department has imposed a de facto moratorium while they “study” a leasing program. In 2009, the administration leased less land for energy development than that of any other year on record, according to the American Energy Alliance. And government revenues from leasing in 2009 were just one-tenth that in 2008. Meanwhile China is buying up all the leases it can get, some close to American shores.

The Interior Department has withdrawn most of the offered leases for natural gas in Utah, delayed oil shale research and demonstration projects in Wyoming, Utah, and Colorado, and blocked uranium mining in Arizona. Obama proposed development of nuclear energy. But, last year, in a sop to Senator Harry Reid, the Yucca Mountain nuclear repository was closed, so nuclear waste will continue to be stored in barrels near the generating plants rather than safely underground.

Biofuels such as ethanol require heavy government subsidies. According to the Journal of Environmental Monitoring, ethanol subsidies amount to the equivalent of $1.95 per gallon on top of the gasoline retail price. At present, no automobile manufacturer will extend an engine or parts warranty for vehicles that use more than 10 percent of ethanol content in fuel, except for vehicles specifically designed to run on E- 85 fuel. This means that the majority of cars on the road today in the United States are not under warranty for anything other than gasoline containing 10 percent ethanol or less. Currently, ethanol displaces about 2% of gasoline and saves relatively little in petroleum imports. Ethanol is not as energy efficient as gasoline. A 2006 study by Consumer Reports found that an E-85 vehicle delivered 27% less mileage than a similar gasoline-powered vehicle. A study from Stanford University found that ethanol-powered E-85 vehicles significantly increased ozone, a prime ingredient of smog.

While the Obama administration is all starry-eyed over “green” energy, it is unlikely that solar, wind, and biofuels taken together would ever account for more that 2- to 3% of total energy use. For the next few decades, at least, fossils fuels with continue to provide about 85% of energy.

What the government should do is remove restrictions to exploration and development of our domestic resources. For instance, in 2007, the Department of the Interior inventoried 99 million acres of federal land which it estimated to contain 21 billion barrels of oil and 187 trillion cubic feet of natural gas. DOI found that due to restrictive regulations “just 3 percent of onshore Federal oil and 13 percent of onshore Federal gas are accessible under standard lease terms.”

The Department of Energy estimates that the Green River formation in NW Colorado, SE Utah, and SW Wyoming contains 1.8 trillion barrels of oil in shale that could be economically produced. That is more than three times the total reserves of all Mid-East oil fields.

Off-shore resources are also restricted. The Minerals Management Service (of DOI) estimated that there are about 86 billion barrels of undiscovered, recoverable oil and about 420 trillion cubic feet of undiscovered, recoverable natural gas in the Federal Outer Continental Shelf of the United States, but 85% of this resource is off limits due to federal and state restrictions.

The U.S. has vast coal supplies which could be turned into gasoline, diesel, and other fuels. Coal reserves in Illinois alone, for instance, have the energy equivalent of all the oil in Saudi Arabia and Kuwait combined. The process was invented by the Germans in 1920 and perfected more recently by Sasol in South Africa. According to Business Week, Sasol “churns out 160,000 barrels of gasoline, diesel fuel, and jet fuel a day, enough to cover 28% of South Africa’s needs, without using a single drop of crude oil, imported or otherwise.” Cost is equivalent to about $30- to $35 per barrel of oil. This source alone could end our dependence on Mid-East oil.

Investors Business Daily (IBD) points out that China is attempting to lock up oil reserves throughout the world, including “in America’s backyard, Argentina, Venezuela, and Canada, and in a country America presumably dominates, Iraq.” At the same time, American oil companies are being discouraged by government, from exploring and exploiting domestic reserves. IBD opines that “What the world is witnessing is the largest peaceful transfer of power in history. Energy means power, and while the U.S. is consumed by environmental ideologies and climate rhetoric, it is committing economic hara-kiri in the process. China, riding on energy acquisitions with little competition, will propel itself into the economic stratosphere.” Obama’s stated goal of reducing our dependence on foreign oil seems to be based on a green fantasy, blinded by ideology.

7 comments

  1. Oil and gas companies own, control, or have preferential leasing rights–already–to over 70,000 acres of some of the richest oil shale land there is, in Utah and Colorado, but have yet to produce any economically viable oil.

  2. Once we Cap and Trade, the costs of energy produced by conventional means will be more in line with alternative sources.

  3. The cost of oil, gas and nukes are heavily subsidized by our tax dollars. There is no way to calculate the true cost of non-renewable energy. Once you factor in major oil spills, nuclear accidents, terrorism and other kinds of contamination that cause cancers, and other diseases, and all the cleanup needed – you will begin to understand the real cost to society.  I think if you really look at the full cradle to cradle costs then renewable energy is a great deal. SO WHAT if they do not put 5 million people to work initially. The point is that a clean energy economy makes sense, and that funding the R&D required to make the changes will stimulate our economy like never before. Imagine power companies never paying for energy, only the energy capture devices – that is a game changing paradigm.
    -Daniel

  4. Mr. DuHamel,
    While you make a correct point about the green job justification being unsupportable this year in a rich country like the US which has extenstive energy systems already in place, the rest of the world, especially the Global South, and especially in the rural areas, is suffering from energy backwardness.  Compelled to deforestation and burn wood and charcoal for cooking, water safety, and light there is a burning need and ability right now  for billions of people in the worldto benefit from solar power.
    In fact, it is you who are deeply clueless about current renewable power pricing.
    You cite the Cato Policy Analysis 280, but that is from 1997!  I hope the readers of your article discount much of what you say after absorbing the fact of your obfuscation through citing a 13 year old study as if it were recent and relevant for a very fast changing industry.
    Current prices of wind and solar are dramatically lower in 2010 than in 1997. Wind in the US today only receives a 1.5c/kWh subsidy to bring it to parity with coal-fired electricity.  Solar panels are now being sold at the Average price of $2.25/W (some panels are sold at less than $1/W already), which over a 5 year depreciation at 5% interest rate amounts to ~10c/kWh, which is the average price of retail electricity in the US.
    Solar panel prices have dropped 3X every single decade since 1958, and are actually speeding up their pace of price decline.  It is widely expected that solar power will be at grid parity with natural gas-fired electricity by next year.  The German Environment Minister Norbert Roettgen announced this week that he expects solar power to be the same price as coal electricity by 2013.
    Both the greens and the defenders of the status quo are completely failing to understand the inevitable, exponential price reduction trajectory of Solar power.
    Solar power will be 1/3 the price of coal-fired electricity by 2020 and 1/10 the price of coal by 2030.
    Regarding material usage for producing solar panels, again your information is hopelessly outdated.  The latest analyses from EPIA and Greenpeace clearly demonstrate that there is a Energy Returned On Energy Invested (EROEI) of solar panels of 30. Furthermore, the amounts of toxic materials utilized and emitted during manufacture of solar panels is dramatically smaller than that emitted through the burning of coal or the extraction of shale.  And the toxic material amounts are constantly shrinking as solar panels become thinner and thinner and more and more efficient at capturing the sun.  The primary component of solar panels is silicon, which is 1/4 of the Earth’s crust.  Sand is silicon.  Glass and computer chips are made from sand.  In fact, it is the steady advances of manufacturing in the semiconductor and optoelectronic industries that feeds the exponential price reduction of solar power.
    Ultimately solar panels will be produced by solar-powered, automated factories, and the cost of the panels will head ever closer toward the price of glass and eventually down toward the price of sand.
    Solar power on a global scale will not permanently and directly employ that many people, but for the billions of people on the earth who suffer from energy poverty and backwardness, having solar panels will enable a radical expansion of the world economy, and through that will generate hundreds of millions of jobs more than the few million that will be eliminated in the coal, oil, natural gas and nuclear industries worldwide.
    BTW: the Fischer-Tropsch process of converting coal and shale to diesel, kerosene and gasoline was first perfected by the Nazis.  Auschwitz was a Fischer-Tropsch plant for converting coal to oil and rubber.  After they failed to capture Azerbaijan oil fields the Germans became increasingly desperate, and ultimately lost the war because they ran out of gas.  This all is laid out in, Daniel Yergin’s award winning book “The Prize.”
    – Joel

    1. EPIA and Greenpeace are hardly credible sources. The first is a trade organization which, on their website, promotes the carbon dioxide myth to promote their product. The second is a radical environmental organization which has been known to bend the facts to promote their agenda.
      You are right that solar and wind may be a useful option where there is no infrastructure and that in the future manufacturing costs my drop. But currently they are both uncompetitive without subsidy, and they both take up much land.
      I did read “The Prize” and am aware that the Nazis developed the process for coal, but the South Africans perfected the process so that it is economically competitive and provide the opportunity to use our abundant coal resources for transportation fuels.

  5. Planning ahead is pointless.  Instead, let’s not do anything.   Let’s use up all the fossil fuels and other energy sources we currently have, and make sure that only a few organizations will be in charge of distributing them.  Then, later, when those sources are almost totally diminished and our survival hangs in the balance, we can sit down and discuss/solve the problem rationally.  Let’s not do anything before we absolutely must.
    Howard Lauther

  6. Solar (and wind) prices have already dropped 3X every single decade since the first panels were put on Vanguard 1 in 1958, and today they have dropped to an average price of $2.25/Wp for solar panels.  Last year alone the price of solar panels fell by almost 50%.  Companies such as First Solar and Oerlikon expect to be producing thin film panels at $0.70/W later this year; and expect continued price reductions of 25% to 30% for the next several years.
    I purposefully cited a radical environmental organization about energy costs and toxic chemicals, because if anyone would be worried about hazardous chemical waste and CO2-based energy in manufacture, you would expect Greenpeace to be at the top of the list, yet their analysis which was based on several others done by various academic institutions are clear in their conclusion.   Solar panel EROEI = 30 (and continuously and acceleratedly dropping) and toxic chemical emissions are a tiny fraction compared to coal and shale (and also dropping as panels become thinner and more efficient).
    On financial cost, since you don’t trust EPIA, whose members are dependent upon subsidies and has every interest in proclaiming that solar would be too expensive and therefore needing more subsidies (yet shows the complete opposite), maybe you would find the recent cost analysis of solar performed by McKinsey to be credible enough for you?
    Don’t believe me?  Then do something empirical such as a google search on “solar panel prices.”  And that’s not even for buying in bulk.
    As far as the “too much land” story for solar, this is one of the most commonly repeated misinformation campaigns ever.  Real simple math here folks.  Multiply 9 Billion people (UN est pop in 2050) by US per capita electricity consumption (direct and indirect), then multiply that by 2 or even 3 to cover energy needs for electric transportation, heating, desalination, artificially lit greenhouses, and anything else you want to dream up.  Assume a generous achievement of energy savings of say 30% from LEDs, passive heating houses, etc.  Next assume that solar panels sold commercially will be no better than the current best in the laboratory and on spacecraft, which are ~40%.  Assume that they are placed around the world in solar conditions akin to Colorado or California.
    So that no one has to strain their brain or spreadsheet macros too hard, I’ve already done it for you.
    The entire world could be living the “American Dream” using no more land area than Utah.  And in fact, south-facing roofs of existing structures could accommodate approximately half of that surface area.
    Solar deniers, whether green worriers or status quo hydrocarbonistas, are basing their dogmatic views on woefully out of date information, inability to understand historic technological trajectories and capitalist overproduction crises, and lapsing into habitual thinking.
    My upcoming book will clarify this exciting sweep of history.
    On Fischer-Tropsch Gas to Liquids (GTL) implementation in the US, it is much more likely to be deriving its feed stock from natural gas rather than coal, now that the shale fracking technique has become widely adopted.  However, I doubt the fracking/GTL era will last too long beyond the early/mid 2020’s in the face of the  combined  onslaught of ever cheaper solar power generation with lithium air batteries and manganese/phosphorous/porphyrin-catalyzed electrolysis of hydrogen/oxygen from water and the exponential cost reduction of fuel cells.
    The semiconductor, optoelectronic and nanotechnology revolutions manifesting in solar power and storage are unstoppable and will reformat the world, the same way they have done so for information and telecommunications.
    Those who think otherwise are delusional.

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