Masdar: The World’s First Zero-Carbon City

Keywords: Masdar, zero carbon city, UAE, United Arab Emirates, peak oil, climate change, global warming, electric cars

Masdar, the world’s first zero-carbon city, pokes a sustainable finger in the eye of the oil-addicted west. Masdar, created by the United Arab Emirates (UAE) government, is an ultra-sustainable city growing up in the desert outside of Abu Dhabi.

The irony of this:

  • The oil-addicted west consumes vast amounts of oil, funding the middle east’s oil-free sustainability initiatives.
  • As the US contines the love affair with gas guzzling SUVs, Masdar outlaws combustion-engine vehicles, replacing them with a network of electric cars.
  • As western powers bicker over global warming details, Masdar shades itself from the warming world with rooftop arrays of solar panels.
  • Partnering with MIT, Masdar’s Institute of Science and Technology offers programs in science and engineering with a focus on sustainability and renewable energy.

The Masdar development (detailed below) is designed by the British architect Norman Foster. In an interview with Time’s Bryan Walsh, you can feel Fosters frustration:

“It shows there is another side of this place that is totally unexpected. I think that as you read about some of this in Western newspapers, you’ll be shocked. Your immediate reaction would be, Why aren’t we doing this? We’re expanding London, and we’re just repeating the old model of sprawl. Why elsewhere is there not one experiment like this? Why not in the U.S., with its total dependence on oil? Why can’t this collective of European wisdom and power create a similar initiative? I have to ask myself, Why is this initiative, which in urban terms is the most progressive, radical thing happening anywhere, happening here?”

The oil-rich UAE isn’t doing this because they can – they are doing it because they must. Masdar is a model city for the hotter, less secure, walled-city future of a post-petroleum climate-changed world.

The UAE, with just 4.5 million people, but billions in oil money, has funded a rapidly expanding infrastructure. As a country matures, their social complexity increases, along with energy consumption. It takes vast energy to build and operate cities. And Dubai, at the heart of the UAE has become an icon of conspicuous consumption. They already consume more natural gas than they can produce, becoming a net importer to feed the need for electricity. Hence Masdar’s emphasis on solar power.

Using GapMinder’s Trendalyzer with energy consumption data from BP’s Statistical Review of World Energy 2010 and income data from the IMF, we can see some powerful trends unfolding in the UAE. (N.B. data presented for 1965 through 2008, 1 year steps, circle area proportional to population size, per capita energy use in tonnes of oil equivalent).

Note UAE’s (the green line) stunning near vertical increase in per capita energy consumption over the past 20 years.

uae energy consumption

With an eye to their future, as global oil production peaks (middle east oil experts predict 2014), the UAE is laying the foundation for a sustainable future.

Highlights of In Arabian Desert, a Sustainable City Rises

Architecture critic Nicolai Ourousoff reports on Masdar in the New York Times:

masdar city plan
click for larger image

Designed by Foster & Partners, a firm known for feats of technological wizardry, the city, called Masdar, would be a perfect square, nearly a mile on each side, raised on a 23-foot-high base to capture desert breezes. Beneath its labyrinth of pedestrian streets, a fleet of driverless electric cars would navigate silently through dimly lit tunnels.

Norman Foster, the firm’s principal partner, has blended high-tech design and ancient construction practices into an intriguing model for a sustainable community, in a country whose oil money allows it to build almost anything, even as pressure grows to prepare for the day the wells run dry. And he has worked in an alluring social vision, in which local tradition and the drive toward modernization are no longer in conflict — a vision that, at first glance, seems to brim with hope.

But his design also reflects the gated-community mentality that has been spreading like a cancer around the globe for decades. Its utopian purity, and its isolation from the life of the real city next door, are grounded in the belief — accepted by most people today, it seems — that the only way to create a truly harmonious community, green or otherwise, is to cut it off from the world at large.

He began with a meticulous study of old Arab settlements, including the ancient citadel of Aleppo in Syria and the mud-brick apartment towers of Shibam in Yemen, which date from the 16th century. “The point,” he said in an interview in New York, “was to go back and understand the fundamentals,” how these communities had been made livable in a region where the air can feel as hot as 150 degrees.Among the findings his office made was that settlements were often built on high ground, not only for defensive reasons but also to take advantage of the stronger winds. Some also used tall, hollow “wind towers” to funnel air down to street level. And the narrowness of the streets — which were almost always at an angle to the sun’s east-west trajectory, to maximize shade — accelerated airflow through the city.

With the help of environmental consultants, Mr. Foster’s team estimated that by combining such approaches, they could make Masdar feel as much as 70 degrees cooler. In so doing, they could more than halve the amount of electricity needed to run the city. Of the power that is used, 90 percent is expected to be solar, and the rest generated by incinerating waste (which produces far less carbon than piling it up in dumps). The city itself will be treated as a kind of continuing experiment, with researchers and engineers regularly analyzing its performance, fine-tuning as they go along.

masdar solar panels
Credit: Duncan Chard for The New York Times

But Mr. Foster’s most radical move was the way he dealt with one of the most vexing urban design challenges of the past century: what to do with the car. Not only did he close Masdar entirely to combustion-engine vehicles, he buried their replacement — his network of electric cars — underneath the city. Then, to further reinforce the purity of his vision, he located almost all of the heavy-duty service functions — a 54-acre photovoltaic field and incineration and water treatment plants — outside the city.

It’s only as people arrive at their destination that they will become aware of the degree to which everything has been engineered for high-function, low-consumption performance. The station’s elevators have been tucked discreetly out of sight to encourage use of a concrete staircase that corkscrews to the surface. And on reaching the streets — which were pretty breezy the day I visited — the only way to get around is on foot. (This is not only a matter of sustainability; Mr. Foster’s on-site partner, Austin Relton, told me that obesity has become a significant health issue in this part of the Arab world, largely because almost everyone drives to avoid the heat.)

The buildings that have gone up so far come in two contrasting styles. Laboratories devoted to developing new forms of sustainable energy and affiliated with the Massachusetts Institute of Technology are housed in big concrete structures that are clad in pillowlike panels of ethylene-tetrafluoroethylene, a super-strong translucent plastic that has become fashionable in contemporary architecture circles for its sleek look and durability. Inside, big open floor slabs are designed for maximum flexibility.

The residential buildings, which for now will mostly house professors, students and their families, use a more traditional architectural vocabulary.

What Masdar really represents, in fact, is the crystallization of another global phenomenon: the growing division of the world into refined, high-end enclaves and vast formless ghettos where issues like sustainability have little immediate relevance.

For more on Zero Carbon initiatives, see:

Top Business Leaders Deliver Clean Energy Plan

Top Business Leaders Deliver Clean Energy Plan

Keywords: clean energy, business leaders, climate change, american energy innovation council

What do Americans spend more money on – potato chips, or energy research and development? See video below for the answer.

Seven business leaders, founders of American Energy Innovation Council, delivered a Business Plan For America’s Energy Future. The leaders are:

  • Norm Augustine, former chairman and CEO of Lockheed Martin
  • Ursula Burns, CEO of Xerox
  • John Doerr, partner at Kleiner Perkins Caufield & Byers
  • Bill Gates, chairman and former CEO of Microsoft
  • Chad Holliday, chairman of Bank of America and former chairman and CEO of DuPont
  • Jeff Immelt, chairman and CEO of GE
  • Tim Solso, chairman and CEO of Cummins Inc.

The US is the largest consumer of energy in the world. The American Energy Innovation Council makes the case that there is a pressing need for energy innovation, and we need to invest in that innovation.
Energy R&D Spending as a Share of Sales

Though energy is a key strategic component of any countries wellbeing, US energy R&D spending has been in decline.

Energy R&D Spending

Though the US is the worlds largest energy consumer, it spends less on energy R&D than China, France, Japan and Korea.

Energy as a Share of GDP
The council’s recommendations:

  • Create an independent national energy strategy board
  • Invest $16 billion per year in clean energy innovation
  • Create Centers of Excellence with strong domain expertise
  • Fund ARPA-E at $1 billion per year
  • Establish and fund a New Energy Challenge Program to build large-scale pilot projects

The full report can be viewed here, and for more on Bill Gates call for Zero Carbon emissions, see Bill Gates on Climate Change and Renewable Energy.

German Military Study Warns of Potential Energy Crisis

Keywords: peak oil, Der Spiegel, German military study, energy crisis

Though governments have for decades pondered the looming peak in oil production, we rarely get a glimpse into their uncut analysis.

A study by a German military think tank has analyzed how “peak oil” might change the global economy. The internal draft document — leaked on the Internet — shows for the first time how carefully the German government has considered a potential energy crisis.

German newspaper Der Spiegel reports on the study. Highlights are below, along with a translation of the document by The Oil Drum.

Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. As oil supply declines, in the presence of rising global demand, price will rise rapidly. Estimates vary on when we hit peak. Some say we are at peak now, some studies suggest 2014, 2020 and beyond. More on this in a future post.

Though the global recession has slowed growth and taken the pressure off the rate of growth of oil consumption, as growth returns, so will increased consumption of oil. There is an opportunity – now – to invest in renewables, and flatten what was a rising demand for oil. And in so doing, reduce the amount of CO2 we emit, reduce our dependency on imported oil, and add jobs in the emerging cleantech renewables industries.

Peak Oil

Highlights of Der Spiegel article Military Study Warns of a Potentially Drastic Oil Crisis

The term “peak oil” is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis — and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it’s remarkable when an institution like the Bundeswehr, the German military, uses the term “peak oil” at all. But a military study currently circulating on the German blogosphere goes even further.

The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the “total collapse of the markets” and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.

The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil.

Parallels to activities in the UK

The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about an impending supply crisis than it cares to admit.

According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain’s so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process, telling the Guardian the enquiries were “routine” and had no political implications.

The Bundeswehr study may not have immediate political consequences, either, but it shows that the German government fears shortages could quickly arise.

A Litany of Market Failures

According to the German report, there is “some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later.” The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.

Market Failures and International Chain Reactions

The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points:

  • Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: “The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers.”
  • Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, “this could result in a more aggressive assertion of national interests on the part of the oil-producing nations.”
  • Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. “The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts,” the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. “Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore.”
  • Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. “Shortages in the supply of vital goods could arise” as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”
  • Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a “partial or complete failure of markets,” says the study. “A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis.”
  • Global chain reaction: “A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil,” says the study. “It is likely that a large number of states will not be in a position to make the necessary investments in time,” or with “sufficient magnitude.” If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it’s so tightly integrated into the global economy.
  • Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil “as a general systemic crisis.” This would create “room for ideological and extremist alternatives to existing forms of government.” Fragmentation of the affected population is likely and could “in extreme cases lead to open conflict.”

The scenarios outlined by the Bundeswehr Transformation Center are drastic. Even more explosive politically are recommendations to the government that the energy experts have put forward based on these scenarios. They argue that “states dependent on oil imports” will be forced to “show more pragmatism toward oil-producing states in their foreign policy.” Political priorities will have to be somewhat subordinated, they claim, to the overriding concern of securing energy supplies.

For example: Germany would have to be more flexible in relation toward Russia’s foreign policy objectives. It would also have to show more restraint in its foreign policy toward Israel, to avoid alienating Arab oil-producing nations. Unconditional support for Israel and its right to exist is currently a cornerstone of German foreign policy.

The relationship with Russia, in particular, is of fundamental importance for German access to oil and gas, the study says. “For Germany, this involves a balancing act between stable and privileged relations with Russia and the sensitivities of (Germany’s) eastern neighbors.” In other words, Germany, if it wants to guarantee its own energy security, should be accommodating in relation to Moscow’s foreign policy objectives, even if it means risking damage to its relations with Poland and other Eastern European states.

Peak oil would also have profound consequences for Berlin’s posture toward the Middle East, according to the study. “A readjustment of Germany’s Middle East policy … in favor of more intensive relations with producer countries such as Iran and Saudi Arabia, which have the largest conventional oil reserves in the region, might put a strain on German-Israeli relations, depending on the intensity of the policy change,” the authors write.

When contacted by SPIEGEL ONLINE, the Defense Ministry declined to comment on the study.

Oil Drum Translation of Leaked Document

Peak Oil

Implications Of Resource Scarcity On (National) Security

Center for German Army Transformation, Group for “Future Studies”

July 2010

1. Introduction

The focus of the document is on the topic of finite resources, using Peak Oil as an example. The report is part of a series of publications focused on the long term (30 years) with the intent to enable the Ministry of Defense to take action early.

In the past, resources have always triggered conflicts, mostly of regional nature. For the future, the authors expect this to become a global problem, as scarcity (mainly of crude oil) will affect everybody.

The authors confirm multiple views on Peak Oil timing and concede that there will be Peak Oil eventually. The study isn’t about positioning the problem on a timeline, but instead about the consequences of a peak. They expect major consequences with a delay of 15-30 years after the peak has hit.

The report refers to the uncertainty of reserve statements mainly in OPEC countries based on the quota allocation method within OPEC but also refers to the possibility of better extraction technologies.

They suggest that it has become urgent to understand those consequences of an eventual peak now in order to have enough time to adapt.

2. The Importance of Oil

2.1 Oil as a driver of globalization

95% of all industrial outputs is dependent on oil as a fuel and/or as a chemical base for polymer production etc. Oil has become a key driver of modern lifestyle and globalization.

Substantial oil price increases poses a systemic risk, not just for obvious things like transportation, but equally for other subsystems.

Thus, internationally, but equally nationally, there is a vital interest in securing access to oil, which is currently possible on world spot markets, with OPEC being cooperative due to a mutual dependency between key actors (and a massive presence of the U.S military in the Gulf region).

Yet, on the other hand, regional conflicts can always at least partially be attributed to resources, such as in the Caucasus region, the Middle East or in Nigeria. They may also fuel conflicts due to the wealth they create (such as in Africa).

The report sees – within a timeframe until the year 2040 – a changed international security layout based on new risks (including transport risks for fuels) and new roles of actors in a possible conflict around the distribution of increasingly scarce resources.

2.2 German energy security

The term is defined narrowly as “reliable energy supply”, and then extended to include environmental objectives, technology transformation of societies, planning for energy demand and the long-term planning of a national strategy, tied in with international organizations.

This expansion of the view is seen as required based on the globalization of energy markets. However, the report then narrows in scope again to the possible risk from a supply shock, focusing on the key suppliers of oil: Russia, Norway and the U.K. It is noted that both European partners are already past their peak and that Germany is increasingly dependent on Russia, which currently is reliable but not necessarily so in the long term. Given the expected decline in German energy consumption, the Russian share will likely be 40% by 2025, with the Middle East, Africa and sources around the Caspian Sea making up for the increasing gap from declining European production.

3. Possible Scenarios After Global Peak Oil

This chapter looks at gradual changes (3.1.) and the risk of disruptive changes (3.2) past a certain tipping point.

3.1 General interdependencies driven by Peak Oil

3.1.1 Oil as a deciding factor in international relationships

With increasing scarcity, producers are increasingly in an advantageous position, both from high revenues and access to cheaper oil when compared to spot market prices. This partly reverses the trend to free oil markets which took place after the ’70s shocks, and gives those countries more control over the supply chain, with a risk of monopolies and nationalizations, and of “political pricing.”

Further, oil producers use increasing amounts of their production internally at lower prices, which increases domestic consumption and inefficiencies, accelerating the problem. [The authors miss out on the fact that high oil prices also bring more wealth to the country which AGAIN increases resource consumption].

The report then looks at increasing “strategic” moves by key actors including the Chinese CNPC (China National Petroleum Corporation), which tries to grab the sources that are still available (particularly in Asia and Africa), but often at relatively unattractive conditions.

Overall, the authors expect a reduction of “free market” mechanisms in oil trade, and a rise in more protectionism, exchange deals, and political alliances between suppliers and customers, which could lead to significant geopolitical shifts. Equally, the authors expect this interdependency to shape foreign affairs of oil importers, making them more tolerant towards rogue behavior of suppliers out of sheer need.

Overall, higher volatility and loss of trust are seen as possible outcomes in a world where oil supplies are limited, increasing the need for “oil related diplomacy” and thus increasing the risk of moral hazard among all actors, which in turn decreases overall global supply security.

The report then refers to already existing actions of the German government to tie close economic relationships with energy suppliers, and to the tendency of consuming countries to reduce oil dependency, trying to steer clear of risks of future supply shocks.

The Middle East is identified as a very dangerous region with high external involvement from many players and thus a very unstable overall situation.

Overall, the report expects a reduction of the importance of “Western values” related to democracy, and human rights in the context of politically motivated alliances, which increasingly are driven by emerging economies such as China – likely leading to double standards. Emerging economies are equally expected to receive higher recognition in international organizations, particularly those with strength in resources (such as Russia).

3.1.2 New security risks based on additional/alternative energy resources

New conflicts are potentially arising from oil exploration in international or disputed ocean waters, where multiple issues arise, particularly around the Arctic Circle, with further geopolitical risks for conflict.

Also, the shift to natural gas is reviewed as an extension of the “oil age”, because it might be able to replace crude oil as a bridging source until new solutions are found. The risks for problems from transporting gas (pipelines) and the related issues (as seen between Russia and its neighbors during the past years) are highlighted.

Equally, nuclear power as a potential source is highlighted – emphasizing the risk for safety and the proliferation of nuclear technology. This would also require an increasing shift towards electricity.

Equally, the competition between biofuel and food production is highlighted, showing the limits of biofuel outputs to compensate for reductions in oil availability, and also showing risks for water supply and soil degradation from excessive use.

Overall, the authors see a trend to increase the energy autonomy of entire regions from external supplies, both in the ability to generate alternative fuels (from biofuels and coal), but particularly in electricity generation.

3.1.3 A shift in roles between private and public actors

Based on the increasing importance of oil, governments are becoming more relevant in securing the benefits of oil, both on the supply and on the demand side. This puts a higher emphasis on political negotiations and deals, and increases the risks for nationalizations of resources and key exploration activities.

Exploration licenses are seen as a key area where bidding wars (including non-financial commitments) might emerge. Equally, increasing pressure to renegotiate or revoke already existing licenses might emerge. Ultimately, each country will try to secure sufficient oil to maintain its standard of living.

On the other hand, private enterprises are seen on the rise in protecting infrastructure and ensuring production and transportation security in less developed regions, particularly if weaker countries become unable to keep their own services up.

The dependency on oil-related infrastructure (pipelines, refineries, harbors, key pathways on oceans) will increase, and thus the risk. Damaging infrastructure through hostile acts (sabotage, war) might become an attractive target for groups or countries with a tendency to use violence. The same is expected for electricity and natural gas-related infrastructure – they all might require higher protection.

Generally, the focus of risks is expected in the region which the authors consider the “strategic ellipse” (a term used for the region East of Europe reaching from Saudi Arabia in the South to Russia and former Soviet Union countries in the North), because a majority of oil reserves are located in this area.

3.1.4 Economic and political crises as a consequence of the transition to “post-fossil” societies

A number of risks of higher oil prices are seen for modern economies, particularly in transportation. Security risks are seen in resulting systemic crises.

A first direct consequence of higher oil prices and lower availability of fossil fuels is a possible reduction in transportation capacity, equally in individual transportation and in freight forwarding. This might lead to another “mobility crisis” for societies that heavily depend on cars and trucks.

Higher cost in commercial transportation markets might severely affect current supply chains, and no alternatives are in sight (electric trucks don’t exist yet). Food particularly might become a critical issue for countries that are a) highly dependent on imports and b) are susceptible to price-increases of food products, particularly affecting Africa, parts of Asia and Latin America, and the Middle East.

High oil prices would further affect almost all aspects of society, as it will also influence the cost of chemicals and all products derived from them, which might substantially alter the nature of value chains and make certain things uneconomical – ultimately leading to higher unemployment during a transformational phase away from an oil based economy. This might particularly affect the German car industry.

Limits in availability might also strengthen regulatory efforts, encourage the allocation of energy (oil) by rationing schemes and possible other actions limiting free markets.

Additionally, the changes and likely reduction in standard of living might render societies less stable and make them more attracted to extremist political positions and even trigger changes in government systems, as trust into key actors in politics will diminish. This might be a particular risk for the relatively young democratic countries in Eastern Europe.

3.1.5 More selective intervention – key actors overwhelmed

Overall, more expensive transportation and increasing problems “at home” might reduce the ability of larger countries to intervene internationally (politically and/or with military action), and also lower the readiness to provide help to poorer countries. The focus will be more on a country’s (energy) interest for itself and not so much on an ideal of transferring Western values. The gap will likely not be filled by NGOs, as they will be affected by similar limits.

Overall, international institutions will be weakened, as they will have less resources to provide help and support, and it becomes equally possible that help will be attached to direct (energy) needs of the donors.

3.2 Systemic risks after reaching a “tipping point”

In addition to the gradual risks, there might be risks of non-linear events, where a reduction of economic output based on Peak Oil might affect market-driven economies in a way that they stop functioning altogether, leaving the possibility of a relatively steady downward trajectory.

Such a scenario could develop through an initially slow decline of trade and economic activity, combined with higher stress on government budgets from lower tax income, higher social cost and growing investment into alternative technologies.

Investment will decline and debt service will be challenged, leading to a crash in financial markets, accompanied by a loss of trust in currencies and a break-up of value and supply chains – because trade is no longer possible. This would in turn lead to the collapse of economies, mass unemployment, government defaults and infrastructure breakdowns, ultimately followed by famines and total system collapse.

4. Challenges for Germany

4.1 Risk of new dependencies for Germany

Oil as a new factor of global power would create significant dependencies for Germany, and in order to avoid supply issues, strong ties with suppliers are a must, but equally a diversification of supply relationships, taking into account that a supplier might intentionally reduce capacity to accomplish political objectives.

Among the key supplier countries is Russia (supplying 35% of German oil imports), where reliability risks are prevalent, given past experience. Natural gas, as a possible temporary substitute, bears the same risk (37% comes from Russia). Thus, a diversification becomes essential.

4.2 Focus of politics on supply relationships

Germany needs strong and reliable ties to Russia and other Caspian Sea countries. This might create some challenges in international relations, particularly with smaller Eastern European countries [like Poland]. Thus, intensifying relationships to the Middle East might be equally relevant. However, all those relationships have an inherent risk of being instruments in conflicts, which puts a certain limit on treating all foreign partners the same.

4.3 More pragmatic foreign policy

The need to mitigate supply risks might require some compromises on foreign affairs topics (such as human rights). Equally, more active diplomatic efforts will be required with a focus of energy security in mind. This is more difficult given Germany’s reluctance to engage in political power play due to its history, but needs to be tackled in order to deal with the challenges ahead. The authors don’t want to encourage military solutions, but suggest a strong preventive development of political and diplomatic initiatives to tackle the problem.

4.4 Importance and freedom of industrial nations reduced

All industrial nations that depend on energy imports will become more dependent on new partners, both in emerging economies and supplier countries. This requires a new focus in foreign affairs, sometimes giving up standards in negotiations with countries that have different cultures and political systems.

4.5 Help in stabilizing supplier countries at risk

Some supplier countries (and surrounding regions) might be destabilized by the force of higher resource prices. This is an area where Germany needs to help by providing support for nation building and conflict resolution on the national and international level. This is in conflict with the lower economic power likely to result from Peak Oil, which might make interventions less likely and requires new approaches of “stabilization with lower effort.”

4.6 Growing conflict potential concerning the Arctic Circle

Germany might have to take positions in case of an upcoming conflict regarding resources in the Arctic Circle, where multiple countries (including Russia) have open claims for accessing oil and gas fields. This requires further research.

4.7 Nuclear technology proliferation

The risk for nuclear technology proliferation and thus more countries with the potential for nuclear weapons (and the risk for terrorists having access to nuclear material) is growing due to the proliferation of nuclear technology for energy generation. Equally, risks for terrorist attacks and accidents on German soil are rising. Both scenarios require more surveillance, intelligence and preventive action.

4.8 Higher conflict potential regarding critical infrastructure

Energy delivery infrastructure for all sources including electricity will have a higher importance in an oil constrained world, thus, securing its reliability, security and availability becomes mission-critical. International cooperation is needed to secure large international supply paths (pipelines, sea routes).

4.9 Larger “energy regions” change international alliances

The expectation of stronger connections between suppliers and consumers across continents creates different settings for current international alliances and security risks. DESERTEC (a large power production system in Northern Africa based on CSP) would require different settings even for military strategies.

4.10 Peak Oil for armed forces

Armed forces would also be significantly affected by fossil fuel limits, as they are very dependent on oil products. Significant investments in alternative energy procurement technologies (biofuels, coal-to-liquids – Fischer-Tropsch) and applications (electric and hybrid vehicles) would be required, with long transition times. Further, local energy-independence of stationary troop infrastructure (like military bases) using more renewable sources would be beneficial. The long term objective would be to fully convert Germany’s armed forces to only use renewable energy sources by 2100.

4.11 Crude Oil as a systemic risk

For scenarios which end with a complete destabilization of societies, Germany is at a significant risk given its strong participation in a globalized economy. Being still able to act requires a number of basic infrastructures to keep functioning, both for the country and its armed forces. Work is required to look into redundancy, high-resilience of infrastructure and local self-organization approaches.

5. Summary

The report sees significant risks arising from an unavoidable peak in oil production, which go beyond gradual shifts in energy systems and economies. This will likely lead to economic change and new geopolitical risks that affect much more than just what we can anticipate. The overall ability to describe exact outcomes is very limited, as many scenarios are possible, and further research is required.

Overall, more emphasis needs to be put on understanding and shaping international relationships with respect to energy security, anticipating and integrating the ongoing shift to different players in a resource-constrained world.

In any case, Germany has to identify and implement alternatives to the current transportation technologies that require oil, and put a similar emphasis on avoiding other dependencies, for example concerning rare earths.

For armed forces, Peak Oil creates significant risks, both from a mobility standpoint as well as from dependencies on other societal services. Understanding those risks requires further analysis and likely a very different approach in the future.

In general, more preparation is required for society and the army to make sure that problems are recognized and solutions are actively implemented.

Farming Wind Versus Farming Corn for Energy

keywords: wind power, wind turbines, corn ethanol, ERoEI

corn field with wind turbines
Farmers can plant crops right to the base of wind turbines (photo: Warren Gretzl, NREL)

If a farmer has 1,000 acres of land, and he/she planted it with corn for making ethanol and erected wind turbines for generating electricity, how much energy will the farmer produce and what are the economics?

Wind Power

A typical wind farm will have about 15 wind turbines per 1,00o acres. Each wind turbine will generate about 500 kW of power (assuming 33% capacity factor). Electricity retails at about 12¢ per kW hour. So 1,000 acres will produce 15 x 500 x .12 = $900 of electricity per hour, which equates to about $8,000,000 per year, representing about 224 trillion BTUs of energy.

Corn Ethanol Power

A typical 1,000 acre corn farm will produce about 7,500 pounds of corn, yielding about 340,000 gallons of ethanol. Ethanol retails at about $1.80 per gallon. So 1,000 acres will produce 340,000 x 1.8 = $612,000 per year, representing about 26 billion BTUs of energy.

Energy Returned on Energy Invested

It takes energy to produce energy. The Energy Returned on Energy Invested (ERoEI) for wind turbines is an impressive, state of the art wind turbines are providing ERoEI of over 50:1.

It takes a lot of energy to produce corn ethanol, which yields a far lower ERoEI of between .8 and 1.65 (see Ethanol’s Energy Return on Investment: A Survey of the Literature 1990-Present by Roel Hammerschlag).

ERoEI

Side-effects of Wind Power and Corn Ethanol Production

Wind turbines are often perceived as an eyesore, marring the land with imposing manmade structures. Flying creatures such as hawks and bats are often killed as they pass through the turbine blades. Wind turbines are noisy, and are best located in rural areas, or at sea. Wind power needs to be located near power transmission resources, it that infrastructure will need to be built.

Corn ethanol yields just a bit more energy than it takes to produce it. It takes about 1,700 gallons of water to produce each gallon of corn ethanol. Corn used for ethanol production is corn not used for food production. As food corn supply is reduced, corn-based food prices rise.

Summary

Given 1,000 acres of land, planted with corn and a typical density of wind turbines, the table below summarizes the annual economic and energy value of corn ethanol fuel and wind turbine electricity.

Wind Power Corn Ethanol
Retail Value $8,000,000 $612,000
Energy Yield 224 trillion BTUs 26 billion BTUs
ERoEI 50:1 1.5:1

Feebates

Keywords: Feebate, Art Rosenfeld, RMI, reducing automobile CO2 emissions, reducing oil addiction

Feebates offer a compelling approach to curbing automobile fuel consumption and CO2 emissions. The concept was pioneered in the 1970s by Jonathan Koomey and Art Rosenfeld (Lawrence Berkeley National Laboratory) and is finding renewed interest around the world.

Feebates are market-based policies for encouraging emissions reductions from new passenger vehicles by levying fees on relatively high-emitting vehicles, and using those collected fees to provide rebates to lower-emitting vehicles.

California is considering adopting a Feebate program. The UC Davis Institute of Transportation Studies recently published their analysis of a Feebate program – Potential Design, Implementation, and Benefits of a Feebate Program for New Passenger Vehicles in California. The report provides a detailed overview and analysis of Feebates and reviews Feebate programs already underway in other countries.

California Feebate UC Davis
(source: UC Davis Institute of Transportation Studies)

Rocky Mountain Institute has a good review of the Feebate approach to reducing oil consumption.

Highlights of RMI’s report Feebates: A Key to Breaking U.S. Oil Addiction

  • The scale of U.S. oil consumption (nearly 19 million barrels per day) combined with its virtual monopoly of transportation energy (97 percent oil-based), creates strategic weakness, economic insecurity, widespread health hazards, and environmental degradation.
  • Feebate is an innovative policy that greatly speeds the development and deployment of efficient vehicles.
  • The California Legislature actually approved a similar “Drive+” law by an astonishing seven-to-one margin in 1980, but Governor George Deukmejian pocket-vetoed it after a mixed initial reaction from automakers, and it’s been bottled up ever since.

The basic idea of a feebate is simple. Buyers of inefficient vehicles are levied a surcharge (the “fee”), while buyers of efficient vehicles are awarded a rebate (the “bate”). By affecting the purchase cost up front, feebates speed the production and adoption of more efficient vehicles, saving oil, insecurity, cost, and carbon.

Though efficient vehicles’ reduced operating costs make them a good buy over the years, consumers’ implicit real discount rates, up to 60-plus percent per year (and nearly infinite for low-income car-buyers), make miles per gallon a relatively weak economic signal: long-term fuel savings are so heavily discounted that buyers, in effect, count just the first year or two—as minor an economic choice as whether to buy floor mats.

In contrast, feebates capture the life-cycle value of efficiency (or the cost of inefficiency) and reflect it in the sticker price. By increasing the price spread between less and more efficient vehicles, feebates bridge the gap between consumers’ and society’s perceptions of the time value of money. This corrects the biggest single obstacle to making and buying efficient vehicles.

Feebates can shift purchasing patterns in the short run and spur automakers’ innovation in the medium and long run. But to do both, a feebate program, like any well intentioned policy, must be properly designed and implemented. As RMI Principal Nathan Glasgow notes, “With feebates, the devil is really in the details.”

Feebate Forum
In 2007, RMI organized and hosted the first Feebate Forum, pulling together 27 experts from the auto and insurance industries, NGOs, academia, and government to discuss feebate design and implementation schemes. Through open dialogue, the group developed a set of design recommendations, barriers, and next steps for feebates.

The participants agreed on the following design goals:

1. Metrics should be based on fuel efficiency or greenhouse gas emissions, and all types of transportation energy can be included—not just diverse fuels but also electricity.

2. The size of the fee or rebate shouldn’t depend on vehicle size. The feebate should reward buyers for choosing a more efficient model of the size they want, not for shifting size. A size-class-based feebate preserves the competitive position of each automaker regardless of its offerings, debunks the myth that consumers must choose between size and efficiency, and doesn’t restrict freedom of choice. Buyers can get the size they want; the efficiency of their choice within that size class determines whether they pay a fee or get a rebate, and how much.

3. Feebates should be implemented at the manufacturer level, so automakers, rather than a government agency, should pay the fees and collect the rebates. This lets manufacturers monitor results and adjust their vehicle mix accordingly, and it avoids any need for taxpayers to foot the bill for any costs. However, a good feebate program should be revenue-neutral, with “fees” paying for “bates” plus administrative costs—a potentially attractive feature. And since the “fees” are entirely avoidable by choice, they’re not a tax.

4. The “pivot point” between fees and rebates should be adjusted annually, so the program is trued up to stay revenue-neutral, and automakers have a predictable and continuous incentive to improve the efficiency of their offerings, spurring innovation.

5. Feebates should be designed for complete compatibility with efficiency or carbon-emissions standards, so automakers aren’t whipsawed between incompatible incentives or requirements. In practice, feebates may drive efficiency improvements much larger and faster than standards require, making the standards unimportant except to prevent recidivism.

France introduced the largest feebate program to date

  • Averaging 133 grams of carbon dioxide per kilometer for the 2009 new light-vehicle fleet, France’s vehicles now have the lowest carbon emissions in the European Union.
  • By comparison, the UK’s 2009 new vehicles emitted, and the EU average is, 146. Between 1995 and 2007 (when the French feebate was introduced at year-end), the emissions rate of new vehicles sold in France was falling at an average rate of 2.25 grams of carbon dioxide per kilometer per yearDuring the first two years of the feebate program, the annual emissions decrease more than tripled to 8 grams per kilometer. Overall, the efficient bonus vehicles’ market share nearly doubled, from 30 to 56 percent, while the inefficient malus vehicles’ share fell threefold, from 24 to 8 percent.

The French program was not size-neutral as RMI recommends for the U.S., and the data show it shifted new-car buyers toward smaller vehicles. The market share of the smallest (economy) cars grew from 44 percent in 2007 to 57 percent in 2009, much as we’d expect for such a fleetwide feebate structure: smaller vehicles tend to have higher efficiency and lower carbon emissions, so unless unusually inefficient, they’ll earn a rebate that’s attractive to many buyers. For the U.S., RMI recommends a size-neutral feebate design to shift the entire market toward lighter, more aerodynamic, and advanced-powertrain vehicles, not just smaller ones.

California is currently considering the introduction of a statewide feebate bill

  • A state program would probably do more to shift the in-state vehicle sales mix than to spur innovative design, since even a market as big as California represents only a fraction of the U.S. auto market. Nonetheless, RMI is following this program closely.
  • In 2008, California’s aggressiveness on fuel efficiency spurred higher national CAFE standards, and a number of other states follow California’s lead on Clean Air Act and related policies. States and regions can make fine laboratories for refining policy innovations that later guide uniform national policies.

Bill Gates on Climate Change and Renewable Energy

Keywords: Bill Gates, climate change, energy, renewable energy, TED, zero carbon emmissions

Many newspapers and blogs are reporting on the Technology Review interview with Bill Gates (highlights below). Though that interview contains some good information, Gates’ presentation at TED was the stake in the ground that set the stage for this Technology Review interview. At TED, Gates called for reducing carbon emissions to zero. The presentation is worth watching. Considering that Gates is one of the most public faces of big business, his statements at TED are noteworthy:

  • climate change is real
  • climate change is the most important challenge on the planet
  • carbon emissions need to be reduce to zero as soon as possible, his goal is by 2050
  • increased investment in energy R&D is essential, and can be done at reasonable levels
  • zero carbon energy production makes business sense

Highlights from Technology Review interview with Bill Gates

On US Investment in Energy

TR: You are a member of the American Energy Innovation Council, which calls for a national energy policy that would increase U.S. investment in energy research every year from $5 billion to $16 billion. I was stunned that the U.S. government invests so little.

BG: I was stunned myself. The National Institutes of Health invest a bit more than $30 billion.

On Carbon Tax

It’s ideal to have a carbon tax, not just a price on carbon, which is this fuzzy word that includes cap-and-trade. You’re using the tax to create a mode shift to a different form of energy generation. And then you just take all the carbon-emitting plants, you look at their lifetime, and you say on a certain date this one has to be shut down and when a new one is put in place, it has to be low-CO2-emitting.

That’s a regulatory approach, and it’s very clear. Innovators are designing things for the power-plant buyers 10 years from now, who are looking at the regulatory and tax environment for the next 40 years. If you said to a utility company executive, which is more likely to stay in place: a cap-and-trade thing, whose price will vary all over the map, that will have some international things that will be shown to be a waste of money? Or a tax and a regulatory framework for plant replacement over the next 50 years? We should have a carbon tax. What we owe the developing world is this: we’re willing to pay high prices for energy plants above coal and drive prices down the curve so by the time they need to buy them, they don’t have to pay the high price.

Which is more likely: a carbon tax with all sorts of markets and options and uncertainties about prices, and traders in the middle, and confusion about who initially gets the most advantage? Or a regulatory thing and a 2 percent tax to fund the R&D so that utilities know they can buy a plant that’s emitting hardly any CO2? Raising energy prices by 2 percent and sending it to R&D activities seems easier in a weak economy than raising them 20 percent. Now, 0 percent is the easiest option of them all, but unfortunately, that doesn’t get us the solution to this problem.

The CO2 problem is simple. Any amount you emit causes warming, because there’s about a 20 percent fraction that stays for over 10,000 years. So the problem is to get essentially to zero CO2 emissions. And that’s a very hard problem, because you have sources like agriculture, rice, cows, and small sources out with the poorest people. So you better get the big sources: you better get rich-world transportation, rich-world electricity, and so on to get anywhere near your goal. If X or Y or Z gets you a 20 percent reduction in CO2, then you’ve just got the planet, what, another three years? Congratulations! I mean, is that what we have in mind: to delay Armageddon for three years? Is that really it?

The U.S. uses, per person, over twice as much energy as most other rich countries. And so it’s easy to say we should cut energy use through better buildings and higher MPG and all sorts of things. But even in the most optimistic case, if the U.S. is cutting its energy intensity by a factor of two, to get to European or Japanese levels, the amount of increased energy needed by poor people during that time frame will mean that there’s never going to be a year where the world uses less energy. The only hope is less CO2 per unit of energy. And no: there is no existing technology that at anywhere near economic levels gives us electricity with zero CO2.

On Renewable Energy

Almost everything called renewable energy is intermittent. I have another term for it: “energy farming.” In fact, you need not just a storage miracle, you need a transmission miracle, because intermittent sources are not available in an efficient form in all locations. Now, energy factories, which are hydrocarbon and nuclear energy–those things are nice. You can put a roof on them if you get bad weather. But energy farming? Good luck to you! Unfortunately, conventional energy factories emit CO2 and that is a very tough problem to solve, and there’s a huge disincentive to do research on it.

I think Gates approach to energy storage and transmission is too brute force. We are early into innovating alternative energy, and already there are some good innovations showing up that provide solutions to wind and sun intermittence. See Using Water Heaters to Store Excess Wind Energy for a good example of innovations that use existing infrastructure for storage and transmission.