Book Review: Crossing the Energy Divide: Moving from Fossil Fuel
Dependence to a Clean-Energy Future by Robert U. Ayres and Edward H. Ayres ( Wharton School
I found this to be an excellent book which cuts to the heart
of the matter of energy in sufficient detail. The approach is practical and
realistic with each energy source examined and some good ideas about increasing
energy efficiency and redesigning industries, utilities, houses, cars, power grids,
and cities for the future. The authors are two brothers, one a physicist and
economist, the other a journalist specializing in health and sustainability.
The first point they make is that energy is far more
important to economics than is generally acknowledged. The authors contend that
energy services are a major component of what drives the economy. The authors
also acknowledge that the transition to renewable energy is likely to take several
decades and is not currently as feasible economically or technologically as
advocates have depicted. The question is what to do in the meantime. The
authors suggest that we “radically reform our management of the existing,
fossil fuel-based system …” so we can dramatically increase the amount of
energy services we get per unit of energy. One method of doing this is
capturing waste heat. The authors note that in 2005 two steel companies began
doing this at two facilities. Their resulting generation of 190 MW from waste
heat that year was more than the entire output of the solar photovoltaic
industry.
The authors advocate an energy management strategy. They
estimate energy efficiency in the U.S.
at a mere 13% (compared to 20% for Japan
They mention three ‘disruptive phenomena’ that are
irreversible: 1) post-peak oil where production will cease to outpace
consumption (a point which we are near), 2) efficiency limits of old
technologies based on fossil fuels such as the internal combustion engine and
steam turbines, 3) escalation of climate catastrophes in the manner of storms,
floods, droughts, wildfires, and sea level rise. Reduction of greenhouse gases,
energy independence, and energy security are all stated U.S.
The authors talk about the difficulties in determining the
risks or hidden costs of climate change and how aggressive we should be in
mitigating its effects. Another issue they mention is the notion of ‘energy
independence’ which has been touted as possible by such measures as drilling in
the Arctic Wildlife Refuge or building more coal-fired power plants. They dismiss
those ideas but note: “The path to energy independence lies in the
institutional and legal structure of the U.S.
(Although since the very recent unconventional shale gas and
oil revolution, we are much closer to energy independence for the time being.)
The authors advocate energy recycling as a much more viable
means of producing carbon-free energy quickly with available technology than
renewables at present. In 2005 the nation’s recycled energy output was about 7
times its solar energy output. They say that current recycled energy is only
about 10% of what could be produced. Using fossil fuel more effectively through
‘cogeneration’ – waste-heat recycling, ie. combined heat and power (CHP) is
available to coking, smelting, refining, chemical processing, and carbon black producing industries. Natural
gas decompression can also be converted into energy. These are far cheaper than
solar PV technology and wind turbines at present. There are several ways to turn
waste-heat into electricity in the various industrties. In addition to
high-temperature heat and decompression in the above scenarios, there is also
low-temperature heat. Electric power plants often waste such heat that could be
used to heat houses.
Apparently electric power plants are very inefficient – avg.
of about 33%. This efficiency has not improved in decades. Much of the
inefficiency has to do with transporting energy over wires from centralized
plants. Small de-centralized CHP applications (DCHP) – in places like
universities, shopping districts, and apartment houses can be developed and can
be very efficient. Decentralization simply means that the loss of power from
transmission is eliminated. The problem is that such applications are often illegal
in the U.S.
“If power and heat could be cogenerated in individual
buildings in the United States while
retaining connections to the grid, virtually all new additional capacity
could be decentralized.”
The bottom line is that we could develop efficient
carbon-free energy with existing technologies and save hundreds of billions of
dollars. (The IEA acknowledges this). This would seem to be a no-brainer but
politics and corporate interests have powers not easily relinquished.
Large centralized power plants use steam-generation which is
old tech but newer small gas turbines and diesel engines have improved in
efficiency and are more portable for decentralized uses. An added benefit is
that waste-heat can be used locally where it is needed, as in individual
buildings for space-heating. Jeremy Rifkin and many others have promoted the
idea of lateral power and micro-power plants from renewables but the same can
be done with existing fossil fuel technologies with drastic improvements in
efficiency, and thus drastically lower emissions as well. Efficiency is about a
third (33%) when calculating the energy of a barrel of oil equivalent to
electricity at the meter. That is just the efficiency of generation and
delivery. There is also end-use efficiency – how efficient the consumer uses
the energy. An example given is that of an incandescent light bulb = 5%
efficiency compared to a compact fluorescent light bulb = 15 % efficiency. If
each is multiplied by the efficiency of generation/delivery (33%) the numbers
for total efficiency are just 1.66% and 5%!
“If you add up all the different kinds of energy use in the United States
Waste-energy recycling in the short-term offers a much
better economic and feasible opportunity to reduce carbon emissions than do all
renewables combined, even with new renewable capacity doubling every year.
Studies suggest that retirement of the most inefficient (and
polluting) of the nearly 4000 U.S.
Economic theory, indicators, and economic well-being are
discussed. The authors, like many modern economists, see the limitations and
misleading nature of something like GDP being a good indicator. Immediate
cost/benefits are typically favored over long term ones and not all economic
activity is good or beneficial. Social and environmental well-being also need
to be taken into account. Cooperation is required in these efforts.
The authors offer 8 “Main Girders of the Energy-Transition Bridge
1) Recycling waste-energy streams – only
about 10% of what can be done is being done, they estimate. This alone can
provide up to 10% of our electricity needs.
2) Utilizing combined heat and power (CHP) – most of this potential is untapped and politically blocked. Decentralizing would be required.
3) Increasing energy efficiency in industrial processes and buildings – many untapped “double-dividend” opportunities here, they say.
4) Increasing energy efficiency in consumer end uses – this has been well-publicized and partially tapped in the form of hybrid cars, energy efficient appliances, compact fluorescent bulbs, multipane windows, but more potential.
5) Kick-starting the micropower revolution, or “rooftop” revolution – utility monopolies on power distribution are the main obstacle.
6) Substituting energy services for products – we don’t really seek energy but the services that energy provides, so that should be the focus.
7) Redesigning buildings and cities for climate change – all new construction and transportation need to be designed for maximum efficiency. Cities under threat from climate-generated events need to prepare.
8) Reforming fresh-water management strategies – poor water management wastes vast amounts of energy and much could be improved with investment in better and more efficient strategies and infrastructure.
One analysis (ACEEE in 2008) concluded that of
energy-service consumption increases in the last 38 years energy-efficiency
improvements accounted for ¾ while new supplies of energy only accounted for ¼.
Efficiency improvements have been called the hidden energy boom. The bad news
is that the efficiency gains are likely lead to greater economic growth which
in turn lead to greater energy consumption. Population growth was also likely a
factor in increased consumption but was not mentioned here.
The term for energy doing useful work is ‘exergy’. This is
the correct way to define efficiency as some measures of energy efficiency can
be misleading. In exergy terms our energy economy runs at about 13% efficiency.
The authors give examples of several industrial energy-efficiency investments
that paid off extraordinarily well and relatively quickly. Of course, these
improvements also cut emissions. The authors think that many executives and
politicians are confused about the vast possibilities of investing in energy
efficiency – due to improper definitions of efficiency and possibly ideological
and business-cultural reasons as well. Growth has been favored far and above
efficiency but efficiency has arguably increased the economic viability of
companies just as well. Lack of attention to company energy use and cost
management may also be factors. Executive focus on market share and growth may
even reduce overall profitability but still rewards management. Focus on
mergers and acquisitions is an example – where evidence suggests that only a
small percentage has increased value for shareholders. They mention the idea of
‘industrial ecology and one of its fundamental principles:
“An operation that mimics nature by recycling its waste –
including its waste-energy streams – puts less waste into the environment.”
Oddly, many of these waste-reduction payoffs have been
induced by government – either by the carrot of incentive or the stick of
regulation.
The authors mention the Public Utilities Regulatory Policy
Act (PURPA) of 1978, revised in 1992. This allows industries to produce power
from their waste streams and sell it to utilities at prices determined by the
utilities. But they still cannot sell it to other, closer, consumers or
industries. Such price-fixing by utility companies has hurt things like
net-zero metering for solar and wind power where excess production can be sold
back to the grid at a utility-fixed price most often below their own energy
prices (though I think things have improved in some states in the last few
years). This also stifles the effectiveness of federally mandated increases of
renewable power. Another problem with PURPA is that many states have tended to
ignore it. The biggest hurdle is the restructuring of the power grid itself.
Local independent producers of power can add to the grid and save money by
having greater efficiency and less loss of energy meaning less carbon
emissions. The coming (presumably) micropower revolution would likely
drastically increase efficiency, increase reliability of power, and provide
better distribution during peak-load times. Coal lobbies and interests have
been a hurdle to local, distributed, decentralized micropower but that influence
is likely waning as coal loses its electricity market share to natural gas. The
advantages of decentralization are gradually becoming more apparent.
Low-temperature heat utilization is an advantage of decentralization. Local
power production has less T & D (transmission and distribution) costs and
less redundancy (back-up power) costs. Centralized power plant power runs at
33% efficiency while localized power that utilized waste-heat can run at 50-80
% efficiency. The authors estimate that CHP could cut ghg emissions by 15-20%
and that early IEA estimates of 4% were way low. Decentralization increases
energy security by not providing big targets for massive power interruption by
terrorists or natural disasters. Copper and metal theft would also be reduced.
Such theft is a continuing problem –there was such a theft here a few days ago
that resulted in power outages. The authors estimate 20-25 years for the full
transition to decentralized power and optimized CHP utilization with trillions
of dollars in savings over building more centralized power plants. Centralized
power monopolies are protected by federal and state laws against others selling
power, transmitting power, and government subsidization of this least efficient
power production. The authors also note that power decentralization is
practically inevitable as old centralized power plants depreciate and demand
for electric power increases due to more and more plug-in electric
vehicles.
Liquid fuels and the implications of a reduced-car future is
the next subject. Gasoline powered motor vehicles are very inefficient with
payload efficiencies as low as 1%. Hybrid and electric cars only increase it to
2-3%. Corn ethanol and bio diesel offer slightly less emissions but require
much fossil fuel to make and make corn and soy prices rise. The “ethanol scam”
has been extensively written about and various ‘energy return on investment’
(EROI) studies indicate that ethanol (and biodiesel) production use nearly as
much energy as they create. EROIs for ethanol range from less than 1 (loss of
overall energy) to the range of 1.29 to 1.65. Oil in contrast is 15 and in 1930
was about 100. There are other negatives to ethanol and biofuels as well:
pollution, pesticide use and runoff, massive water use, using up valuable
cropland, soil depletion, etc. Any gains would be marginal for corn or soy
based biofuels. Cellulosic ethanol from wastes may be slightly better but
technology is not yet mature. Bio-diesel offers a bit better scenario as diesel
engines have a better fuel-burn efficiency (50%) than gasoline engines (27%)
but they also put out more emissions, soot, and other particulates. Indeed,
traffic congestion and exhaust pollution are major problems in cities. Bicycles
have much potential as a mode of transportation in cities if the cities are
designed for it. E-bikes, equipped with a battery possibly partially solar
powered. China
Airplanes use about 10% of transportation fuels in the U.S.
Planning for climate change includes mitigation – reduction
of greenhouse gas emissions and adaptation – preparation for situations that
are likely already in motion such as storm surges, sea level rise, storm
intensity, droughts, floods, and wildfires. Vulnerable areas near coasts had
best have a plan. Superstorm Sandy
New construction of “low-energy” houses utilizing better
insulation and especially passive solar, have proven to save money. Such
projects in Germany China
Regarding the question of how to prepare and deal with
disaster, they give the case of the town of Valmeyer ,
Illinois , south of St. Louis Mississippi River floods of 1993 and they decided to
rebuild on a bluff 400 ft higher and 2 miles away. Good choice since the floods
of 2008 would have destroyed the old town again. They rebuilt with energy
efficiency, sustainability, and renewables. The authors give four goals for
such rebuilding (and retrofitting): 1) Space-conserving development – less
sprawl, less heat-absorbing pavement, and shorter travel-times; 2) Public
transportation oriented – buses, subways, car sharing, and plug-in electric
vehicle can be designed into the mix; 3) Living space oriented – less car
traffic means less paved areas and more room for greenspace, biking and hiking
paths, etc; 4) Low-energy, low-emissions buildings – new design offers better
opportunities for this than retrofitting.
The availability of fresh water is another issue worldwide,
though mainly in certain places where it is scarce. There is mention of “peak
water” like peak oil. Water access issues and conflicts abound around the
world. We depend on agriculture. Agriculture depends on fresh water. Energy
extraction, industry, and especially power plant cooling depend on fresh water.
One example is the Ogallala aquifer in the plains states. It is being depleted
rapidly, mainly by irrigation. Newer power plants use a closed circuit system
for water cooling which ties up more water. The older ones use a “once through”
system that when released back into the environment can do local ecological
damage, and it is also wasted heat. Pumping water, sometimes over mountains (as
is required in some parts of the American west). consumes large amounts of
electricity (6.9 % of electric use in California
is for water delivery – 3% for the nation as a whole – 19+% is used for water
and sewer in California
“The goal of water-management policy cannot realistically be
to increase the supply. It must be to reduce per-capita water use in parallel
with decreasing fossil fuel use.”
I might add that this is especially important in regions
with scarce water resources.
Waste-water recycling is a big issue and is beginning to
have a big impact. Power plants are increasingly using reclaimed water for
cooling. Oil and gas operations are recycling “frack” water and some are using
acid-mine drainage water in their ops which is a sort of double dividend. The
biggest potential for conserving water (and thus energy) is in its biggest use
– irrigation. Drip irrigation uses 30-70% less water. They note that in the U.S.
In discussing policy, the authors note the problems of
ideology and NIMBYism. One thing they advocate is a change in the incentive
system so that instead of selling commodities (oil, gas, coal) one sells final
service (heating/cooling). Profitability would then be less tied to selling the
most product, but more tied to selling the most service with the least
expenditure of energy. This would require a fundamental shift in corporate
business models. Indeed, it is the growth/productivism overly tied to company
profits and stock market high-grading that leads to waste and lack of incentive
to produce more with less since short-term growth is more profitable than
investing in mid and long-term efficiency measures.
Markets cannot exist for environmental services or
pollutants. No one really owns them and we all share in the benefits and costs.
Government regulations have sought to protect the beneficial and deter, abate, and
punish the malevolent. The authors advocate simplifying the often complex
regulatory frameworks. This should appeal to both liberals, who tend to favor
regulation, and conservatives, who tend to favor simplified government and
regs. Industry generally hates the idea of a carbon tax but might do better
with adhering to environmental and energy-performance standards. Some of the
recent most progressive industry consensus has been in agreeing on best
practices and adhering to goals beyond and ahead of regulatory requirements.
The authors note the widely acknowledged failure of the early European
“cap-and-trade” system. They suggest an emissions tax that would partially
replace payroll and personal income tax and thus reward energy efficiency and
emissions reduction.
Their policy priorities include encouraging all of their
eight girders of the energy bridge: 1) Encouraging waste-energy recycling
– if this can be done where excess energy can be sold at a fair price, that
would be an incentive, but it would also reduce (likely temporarily) utility
sales and profits. This would require changing outmoded laws (utility
monopolies). This is de-regulation and encourages a free-market which
theoretically should be attractive to conservatives. Utilities complain that
this will weaken the grid – their grid – but the authors counter that
reliability and uninterruptible power availability will keep the grid needed
and new usage, especially from electric cars will take up the slack. If massive
electric vehicle growth (esp. for lower power urban electric vehicles and
e-bikes) can be accommodated without building new power plants, that would take
a lot of carbon out of the environment. They also advocate rewriting PURPA for
what I was intended to be: an incentive for free market competition in power
production and distribution. A carbon tax or other incentives could favor
zero-emissions production, especially since it theoretically would reduce
climate change abatement costs in the future. This would incentivize power
production from waste-heat, pressure-drop, and renewables. 2) Ramping up CHP
– one policy suggestion is to mandate purchase of increasing amounts of DCHP as
well as renewables (many states do this for renewables) and eliminate or
drastically reduce “feed in tarrifs” charged by utilities – which would
incentivize decentralized power production. Instead – perhaps the decentralized
producers could finance and enable “smart-grids” tied into the main grid. 3) Ramping
up energy efficiency in buildings and industrial plants – better incentives
and ROI need to be found for efficiency. One possibility is charging more for
excess electrical usage. Creation of “Energy Service Companies” (ESCs) who
manage energy efficiency measures. The authors suggest a scenario where the company
pays the ESC the same amount that they pay the utility, the ESC pays for
efficiency upgrades and pays the utility bill(s) for a set amount of time and
keeps the rest. Such a scenario might require the ESCs the ability to borrow at
reduced rates (as a govt. incentive). After the set time period the savings
would revert to the consumer. Time periods can be worked out based on initial
upgrade costs and projected savings. They suggest making ESC investments tax
free as an incentive that might attract venture capital. Another policy
suggestion they mention is to establish a much simpler cap-and-trade system for
carbon emissions. Their scenario would not use “offsets” or “grandfathering”
but be an open market for producers of oil, gas, coal, ethanol, timber, and
biofuels. This would increase their costs and the cost of energy to consumers.
Downstream industries would not need permits. Benefits would come to individual
taxpayers in the form of sellable permits with expiration dates in a
fluctuating market. Thus the tax would be payable to people rather than
governments and conservation would be incentivized even more. 4) Continuing
efficiency gains in consumer end uses – strengthening CAFÉ standards to
include maximum achievable mpg for all vehicle and airplanes as well.
Incentivizing operating efficiency of products, maintenance, and
disposal/recycling (by the manufacturer) are also recommended. The use of
deposits for products encourages their return to the recycling stream. This can
be a hassle for dealers and manufacturers though. Abandoned vehicles,
appliances, and other equipment can be hazardous. Extended producer
responsibility (EPR) policies encourage efficiency, recycling (which is cheaper
than mining for metals), and durability. There is also incentive for the
producer to optimize recycling potential under such scenarios. EPR supports
“urban mining” as a profitable venture. 5) Decentralizing electricity
production – rewrite PURPA and retire old dirty coal power plants by
closing Clean Air Act loopholes. 6) Finding alternative ways to provide an
energy service – esp. ways that conserve energy. Examples are
telecommuting, internet shopping, biking or bussing instead of driving.
Incentivize minimizing urban car use. 7) Redesigning cities – prepare
for climate change contingencies, mandate energy-efficient new housing
construction, develop evacuation plans, cost insurance with risk (usually flood
risk) to encourage development on higher ground, and revise building codes in
vulnerable areas. 8) Linking water management to energy management –
goal is to reduce per capita water consumption. Water and energy consumption
tend to exacerbate one another. Reducing one reduces the other. Ramp up drip
irrigation. Utilize wastewater for power plant cooling.
The authors also give three recommendations for business
managers and investors: 1) Bring energy management to the highest level of
strategic planning – reducing waste simply saves money. It may not be the
core business but it helps it. 2) Recognize the business opportunities, and
risks, that will come with rising natural resource prices – reducing the
cost of energy service becomes more consequential as fuel prices rise. Price
rises seem to have been abated since the publication of this book with success
in shale gas and oil and the very gradual move to a natural gas-based
transportation economy. Oil and gas companies and utilities typically abound in
capital which is a potential source of funding for new tech ventures in
renewables and energy efficiency, even though energy efficiency was scorned in
the past as hurting profits. 3) Get ready wherever you are -Perhaps a
time of dual policies of producing energy and producing energy services is
ahead for some of these companies. Costs of energy services and carbon footprints
need to be part of business models. Timing is important as well. For example,
if plug-in electric vehicles (EV) ramp up too fast, they may lead to building
more coal plants, which would counter emissions reductions. Rapid buildup of
EVs could also provide some storage capacity on the grid for solar and wind.
Waste-energy recycling opportunities are estimated at 65-95
GW, or 7-10% of U.S. U.S.
power compared to over 50% in places like Denmark ,
though much of theirs is “district heating” which is mostly not applicable in
the spread-out U.S. CHP opportunities in the U.S.
The authors acknowledge that Al Gore’s 2008 suggestion that
renewables can replace coal in a decade is unrealistic. We are halfway there
and renewables have barely made a dent. It is clear that the ideas presented in
this book offer much more in the near-term than renewables – although the
authors agree that renewables should be more vigorously pursued.
This is certainly one of the best books about the future of
energy I have come across so far.
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