Foreword: This piece is late for its purpose. I began
writing it in late August and had a first draft in the space of a few
days, then I set it down for a 3-week hiatus. When I came back to
it I had great difficulty getting to the next stage of refinement, and
it barely changed through the end of September and the whole month of
Ideally this piece should have been done no later than
mid-October. Energy issues are crucially important to the USA, and
anything which might have injected some reality-based 1 discussion
into the pre-election politics could not have done anything but
good. That opportunity is now gone, but I'm hoping it can still be
got a problem. A BIG problem. It's a problem as big as the
biggest monster SUV, and as old as the Model T. It's our
dependence on oil. Not only are the costs of oil depressing our
, the money we're paying is feeding a movement which is inimical to the
United States and western civilization in general. Even without
that, we have still not fully dealt with the air pollution produced when
the oil is consumed.
It's obvious to a great many people that we are already involved in
a war. Why not take the war beyond the spheres of military action
and financial interdiction and attack the problem at its source, and
(since You Cannot Do Just One Thing) a few others besides?
Specifying the problems and goals
Suppose that the US decided to take the following as national security
- Dependence on foreign (particularly middle-east) oil and
vulnerability to price shocks.
- Decreasing availability of N. American natural gas and price
- Air pollution and its consequent health effects.
- Increasing atmospheric CO2 concentrations.
The goals: Reduce the need for oil and gas to moderate prices and
cut the influence of their price on our economy, reduce pollution and
cut atmospheric CO2 contributions. (Whether or not the last is
necessary or even desirable is the subject of much debate, but the
scientists are the most reliable guides we have and they don't seem to
have changed their recommendations yet.)
Further suppose that the US went on a war footing with regard to
these issues, devoting about $100 billion per year initially. What
would it buy, and how fast could we see change?
What have we got to work with?
Any attempt to re-power a large part of the economy has to begin by
identifying the source of energy that will do it. An expansion in
energy supply from a given source can be obtained either by taking more
raw energy from that source or greatly increasing the efficiency with
which it's used. Any source which can neither be expanded by a
large amount nor made much more efficient is of no further
interest. Hydropower falls into this category.
It would be helpful at this point to list the various energy sources
we use, their quantities and efficiencies. US energy consumption
for the calendar year 2003 was bit over 98
(henceforth "quads"). It was divided roughly as
|| Output, TBTU/day
|| Output, GW
|| 62.2 tot / 54.7 elec
|| 0.33 (elec)
|| 18.2 (elec)
| Nuclear electric
| Renewable (total)
Within the categories of petroleum and natural gas, the usage breaks
down roughly as follows:
|| End use
|| TBTU/day (est)
|| Electric power
| Natural gas
|| 1012 ft3/yr
|| 1012 ft3/yr
|| Electric power
|| 1012 ft3/yr
|| 1012 ft3/yr
|| 1012 ft3/yr
|| 1012 ft3/yr
Some facts about oil and gas bear thinking about:
- US oil production in the lower 48 states peaked in 1971 and has
been in constant decline since; it is now about half of peak levels. 5
- Alaskan oil production peaked in 1988 and is down more than 50%. 6
- US natural gas production peaked in 1973 and has not declined as
steeply 7 ,
but consumption has rebounded since. 8
It appears very unwise to rely on either oil or natural gas for any
growth in our energy supply. Even current levels of use mean
increasing dependence on imports from unstable parts of the globe,
higher prices and consequent drag on the US economy. Addressing
this will require less-conventional energy supplies combined with more
efficient use of the oil and gas which remains.
Step 1: Find the will and the money.
The first and by far the biggest battle would be fiscal and
political. It steps on established toes and requires sacrifices
which would make some people scream, so it will have heavy
opposition. The first step toward overcoming it is to have the
courage to call it a war. It would be impossible to sell to the
public otherwise; attempting to conduct business as usual would come
across as hypocrisy and be self-defeating.
The infrastructure would have to be financed, and the monetary
incentives would have to back up the program rather than undermine
it. (This contrasts it to corporate average fuel economy
standards, which combined with relatively cheap fuel to spur a huge
increase in vehicle miles travelled and defeat the express purpose of
the program.) The biggest use of oil (66%) is for transporation,
and taxes on motor fuel are one of the few changes which would not give
foreign manufacturers and suppliers an inherent advantage over domestic
industry. (The reluctance of Detroit to make economical vehicles
is a different matter.) Let's assume the $100 billion/year for
infrastructure and incentive programs is financed from motor fuel taxes.
If the US consumes ~170 billion gallons of motor fuel (gasoline and
diesel) per year, a tax of about $0.60/gallon would provide the
revenue. One purpose of the tax is to spur cuts in fuel
consumption; so long as the the same level of investment was required,
the tax would have to rise as fuel consumption fell. If fuel
consumption fell to 60 billion gallons annually, a tax of about $1.70
would continue to supply $100 billion in annual revenue.
Attacking dependence on imported oil and gas means decreasing the
need for those fuels or substituting other sources of energy. The
second battle would be technical:
- Increasing overall efficiency;
- Replacing energy derived from oil (and gas) with other sources,
- Coming up with those sources.
Replacing the energy is not difficult. The total energy
consumption in the form of oil is large, but our use is inefficient; the
power which actually makes it to the wheels of US vehicles averages
less than 200 GW
. There are also ways to leverage the
consumption of natural gas to take much better advantage of it.
Step 2: Support other fuels, but only the right ones.
There is already some support in the US vehicle fleet for "alternative
fuels". There is not a car built these days which cannot handle
some fraction of alcohol, and some cars can handle M-85 (85% methanol),
E-85 (85% ethanol), straight gasoline or any mixture. Alcohol
(particularly methanol) can be made from a variety of resources (some
under-used), including coal and scrub timber. This isn't bad,
because it will help fuel the existing vehicle fleet before it gets
There are also things we should not do, such as ethanol from
corn. This fuel should be strongly discouraged; it requires 1 BTU
of fossil inputs to produce only 1.2 BTU of alcohol. 10% ethanol
mixes qualify for forgiveness of the $.19/gallon Federal gasoline tax,
amounting to a subsidy of roughly $11.40 per gallon of non-fossil
energy. This ill-conceived farm subsidy program and others like it
should be terminated immediately and the money rolled into programs
which actually work. If we need to pay subsidies to farmers, it
should go for programs like leases for wind turbine sites.
Step 3: Use non-chemical energy.
The real impact will come from technologies not yet on sale.
Honda, Toyota and Ford are already selling hybrid vehicles, but it would
be a relatively small change (bigger batteries, a charger not much
bigger than a computer power supply) to turn these vehicles into plug-in hybrids
plug-in hybrid can eliminate a large fraction of fuel consumption for
many drivers (as much as 100% for people whose driving is exclusively
short trips) while retaining hybrid efficiency for other driving.
If we assume that there are 200 million personal vehicles in the USA
and they are replaced at the rate of 10% per year (which would probably
be accelerated if fuel prices doubled), that is 20 million vehicles per
year. Current hybrids cost about $3500 more than conventional
vehicles; if the plug-in option added $500 in batteries and other
hardware, this is $4000 per new vehicle. If half of this is paid
by subsidies from the fuel tax, it would cost $40 billion per year.
Step 4: Get the energy, cleanly.
Guesstimating the power output of gasoline-fuelled vehicles at 110 GW
average and a grid-to-wheels efficiency of ~60%, the electricity
required to feed a national fleet of plug-in hybrids would be
approximately 180 GW; adding trucks to this would raise this figure to
290 GW. 9
. If electric transport is phased in at 10% per year, average
electrical demand would grow at a rate of 29 GW/year. This demand
would have to be met without adding to demand for other fuels in short
supply, such as natural gas. Nuclear takes far too long to site,
approve and construct, so the remaining candidates for the energy are
coal, wind and cogeneration.
No fuel like an old fuel: king coal
The US has immense reserves of coal, but getting more energy from it
requires finesse. Coal combustion is a major source of air
pollution in North America, and adding to the total would be
unacceptable to much of the public. Fortunately there are cleaner
coal-burning technologies which are also more efficient, and they also
have potential for improvement. Integrated Gasfication Combined
Cycle (IGCC) powerplants first convert coal to a combustible gas, clean
the gas of pollutants such as sulfur, and then burn the gas in a gas
turbine to generate electricity. The gas turbine exhaust heat then
feeds a steam generator, which generates yet more electricity. The
efficiency of an IGCC plant can reach 40%, roughly 20% greater than a
standard steam-cycle plant.
Old coal-fired steam plants can be repowered with IGCC systems ahead
of the existing steam turbine and condensers; the changeover raises the
output of the plant by about 190% (the Wabash River IGCC repowering
raised plant output from 90 MW to 262 MW). Emissions of sulfur and
particulates are nearly eliminated, NOx
is greatly reduced,
and it appears likely that activated-carbon scrubbing of the fuel gas
could achieve mercury emission cuts at least as good as are possible
with conventional powerplants. Last, the absorber step which
removes hydrogen sulfide from the fuel gas also captures most of the
carbon dioxide produced in the gasifier; this stream is ready for
sequestration should that be desired.
Suppose that old steam plants can be repowered with IGCC for
$1100/KW. If output increases by 190% in the process, each GW of
old capacity creates another 1.9 GW after repowering. Powering
America's cars means adding 18 GW of net capacity per year; this would
require repowering about 10 GW of old plants at a cost of $32
billion/year. This leaves $28 billion per year out of the $100
billion in fuel tax revenue.
The conversion of coal to medium-BTU syngas composed of H2
and CO (approximately 300 BTU/ft3
) creates many possibilities
that do not exist today. Hydrogen could be tapped from the syngas
for synthesis of ammonia; a hydrogen-enriched gas stream could be fed to
a reactor to make methanol for motor fuel; the gas could be piped to
nearby customers as a cheaper substitute for natural gas, and burned in
cogenerators to replace the electricity it would otherwise generate (the
could be substantial
); the syngas could be used to run solid-oxide
or molten-carbonate fuel cells to further increase the efficiency of the
system. However, such steps are beyond this simple analysis.
The future of gas
North American gas supplies are shrinking, leading to steeply rising
prices. The trend is not helped by policies which encourage
electrical generation to use gas-fired turbines. Prices have
already forced much of the ammonia industry (precursor to nitrate
fertilizers) to other continents, and home heating is much more
expensive than it was a year ago. To control costs, it is highly
desirable to increase the efficiency with which we use gas.
Unlike coal, gas has the advantage that it can be used in a variety
of ways without processing. According to the EIA 10
heat accounted for 68% of all residential consumption of natural
gas. In the year 2001 11
, residential space and water heating
accounted for 4.47 quads of gas consumption; commercial space and water
heating used another 3.05 12
quads. This consumption
(low-grade heat) is ideally suited for conversion to cogeneration *
furnaces and water heaters were converted to use small gas-fired engines
instead of open flames, this 7.5 quads of natural gas could produce 1.5
quads of electricity, or an average of 50 GW (the diverted energy could
be made up using insulation, solar heat, or syngas from coal-fired IGCC
plants). Usage and generation would peak during the heating
season, so the actual requirement might be closer to 3 times the
average, or 150 GW. If the cogenerators cost $500 per kilowatt,
adding 15 GW per year would cost $7.5 billion. This could easily
be rolled into the normal installation and replacement cycle of furnaces
and water heaters.
Industry uses a considerable amount of process heat, which is
another place where cogeneration could skim off some electricity.
Roughly 5.6 quads of gas was used for industrial boiler fuel and "direct
uses" in 2002 (see figure 22
I do not have enough information on the actual end uses to be able to
guess at the possible contribution of industrial cogeneration, so I will
postulate no new generation from this sector.
So far the hypothetical program has added 29 GW of electrical demand
per year, and has found ways to add 23 GW of average capacity each year
with nothing more than improved efficiency. Another 6 GW is needed
every year, and $20.5 billion per year remains in the budget. What
can we get for it?
Step 5: Use renewables where possible.
The last step is replacement of some fossil energy with
renewables. It is projected that mass-produced wind turbines could
cut the cost from their current figure down to as low as $300 per peak
watt. If wind farms can be sited where such turbines achieve a
capacity factor of 20% and the installed cost is $500/KWpeak
$20 billion per year will buy 40 GWpeak
of capacity, or 8 GW
average. This is 133% of the remaining increase in generation
capacity required to supply vehicular demand, which means that
generation can be decreased elsewhere (such as gas-fired
turbines). This would take a huge load off N. American natural gas
demand; combined with the displacement of other natural gas uses by coal
syngas, it could eliminate the current short- and medium-term gas
Where would this leave us after 10 years?
- 200 million vehicles on the road powered mostly by electricity.
- Petroleum usage down by perhaps 60%, approximately equal to US
imports at current rates of production and consumption.
- Foreign-exchange savings of ~$150 billion/year at $35/bbl (enough
to pay to continue the program with $50 billion/year left over).
- Roughly 1/3 of all sulfur, NOx and mercury emissions
from coal-fired plants eliminated, over and above other control measures.
- Roughly 700 billion KWH of wind energy generated per year, enough
to replace more than 1/4 of 2003
fossil-fired electricity production or 18% of total production.
- Reduced natural gas demand and thus natural gas prices.
- Quieter, cleaner and healthier cities.
- Near-independence of the US from foreign oil, allowing us to deal
with threats from oil-producing nations without worrying about our
To sum it all up:
| Energy source or use
|| Annual consumption
| Annual output
or equiv.), GW
| Tax revenue
| Net revenue,
| Coal, electric
| Coal, syngas
| Hybrid subsidy
I'm not a proponent of violence for its own sake, but this is one
war I could get behind without reservations.
Appendix A: Cogeneration
It's a Zen truism that you cannot do just one
thing. Engines burn fuel to make power, but every bit of fuel
burned leaves some residue of unusable heat. This waste heat must
be dumped to a heat sink, otherwise the engine cannot operate.
Common engines must reject 50% or more of the energy value of their
fuel; today's automobiles average about 17% efficiency, rejecting 83% of
the energy in their fuel as heat through the radiator, exhaust and
There are a great many things which just
require heat. Living space requires heat in the winter, boilers
require heat to boil water, bakeries require heat for their ovens.
Often the heat required for these purposes is at a temperature lower
than the heat which is rejected from heat engines. This creates a
possibility: instead of burning fuel for heat at point A, and then
burning more fuel to make power at point B and throwing the waste heat
into the air, why not make power at point A and use the engine's
rejected heat for the heat you needed anyway? Since you can't do
just one thing, why not make both of them count? That's
How does it work? Suppose that you need
.95 KWH of heat and 0.33 KWH of electricity. You have the choice
of 3 devices to turn fuel into the energy you need:
- A furnace which burns fuel with 95% efficiency and loses 5%.
- A generator which burns fuel with 33% efficiency and dumps the
remaining 67% of the energy as waste heat.
- A cogenerator which converts fuel to electricity with 25%
efficiency and captures 70% of the total energy as heat, for an overall
efficiency of 95%.
How does the combination of the furnace and generator stack up to
the cogenerator? Not very well:
|| Fuel input
|| Heat output
|| Electric output
||. 95 KWH
|| 25% electric |
As you can see, the cogenerator can produce about the same useful
output as the furnace/generator combination with approximately 1/3 less
fuel; further, the cogenerator does not have to be as efficient as the
stand-alone generator to yield savings, because the heat is going to a
useful purpose. Cogeneration can save a great deal of energy by
making use of heat which would otherwise be discarded; alternately, it
can create much more useful energy from the same amount of fuel. Back
1 "Reality-based" as used here
means it comes with verifiable facts and figures, rather than as an
antonym to "faith-based" or in the sense of realpolitik. Back
2 In this context, "We"
refers to the USA. No slight is intended to other nationalities,
alliances, ethnic groups or chess clubs. Back
3 At the time of this
writing, world prices for light sweet crude have been flickering back
and forth around the value of USD 50/bbl and have peaked over USD
55. These prices, while not by themselves able to throw the
economy back into recession, are projected to cost a substantial
fraction of a percent of GNP growth per year. Back
4 The efficiencies and net
use entries for natural gas and petroleum are unspecified in this
table. This is because it is not possible to state meaningful
numbers spanning the diverse end uses of these fuels. Back
5 http://www.eia.doe.gov/emeu/aer/txt/ptb0501.html Back
6 Ibid. Back
7 http://www.eia.doe.gov/emeu/aer/txt/ptb0602.html Back
8 http://www.eia.doe.gov/emeu/aer/txt/ptb0605.html Back
9 US motor gasoline
consumption in 2003 was 16.6 quads
or 556 GW thermal; at an efficiency of 20% the average power delivered
is 111 GW. The corresponding figure for diesel (distillate fuel
oil) is 5.42
or 181 GW thermal; if the average efficiency is 35% it
delivers 63.4 GW average to the wheels. Back
11 Ibid. Back
12 1999 figures from
Postscript: On Saturday 11/20 the New York Times published an article on the resurgence of coal
on the front page of the business section. The question is not whether we will use more coal, but how it will be used and what else will happen as a consequence. As long as we are re-thinking our energy sources for electricity, why stop with electricity?
This piece is also posted at The Speculist