Energy Mosaics

October 27, 2017December 5, 2018

Latest Manufactured Scandal: the Uranium One Deal

The Clintons certainly have a knack for attracting right wing ire over non-events. So it seems is the case with the latest manufactured scandal, Uranium One (U1) and the Clinton Foundation. Amid the calls for investigations from the right, certain elements of the media have grossly mischaracterized aspects of the deal, implying that it poses a threat to national security by selling 20% of all US uranium to Russia. And since the principal party on the Russian side make large contributions to the Clinton Foundation while the deal was going through approvals, national security was sacrificed to the greed of the corrupt Clintons.

I’ll leave it to others to opine on whether the Clintons should have seen this coming and perhaps not accepted the donations, particularly since they do, indeed, appear to have been made to grease the skids. The bottom line here will be that nothing was done illegally, however it will nonetheless leave a bad taste in a lot of people’s mouths.

But let’s take a look at the reality of this deal and all that the right-wing media seems to be implying.

They allowed a US company to be bought by the Russians!

U1 was never a US company. It was a Canadian company headquartered in Toronto with some US assets.

They’re sending 20% of our uranium to Russia!

First, U1 does not hold 20% of US uranium. U1 is the owner of the Willow Creek mine in Wyoming. Theoretically, U1 controls 20% of production capacity, not reserves. In 2014 it only produced 11% of US total production. By 2016 the percentage of U1 production fell to 1.1% of total US production because its costs are not economic relative to world market prices.

But that’s only a piece of the puzzle. Most people don’t realize that the US nuclear power industry mostly runs on foreign, imported uranium. The chart below shows the annual consumption and percentage of that consumption that is foreign. For the last 20 years US uranium purchases averaged 85% foreign origin. Why? Because US uranium deposits have never been cheap to mine; foreign sources, including Canada, are a lot cheaper. In 2016 about half of foreign uranium bought in the US came from Canada and Kazakhstan.

U3O8

Second, under current law and the license from the US Nuclear Regulatory Commission, U1 is prohibited from exporting this uranium. They would have to apply for an export license which, as you might gather, would be difficult to obtain. Bottom line- it all stays in country.

Where’s the beef?

Under any other circumstances this deal would be considered just one of many global transactions that happen to involve the US subsidiary of a foreign country, a transaction that ultimately had zero impact on US security of uranium supply, the industry as a whole and especially national security. Unfortunately, we now have the perfect storm of a) Hillary Clinton and the Clinton Foundation name involvement; b) a low information audience; c) the need on the right for any handy topic to divert attention from more serious matters; and d) “journalists” manufacturing another “outrage” of little substance.

Sources:

US Nuclear Regulatory Commission Materials License SUA-1341

Uranium Marketing Annual Reports (2000, 2001, 2008, 2016), US Energy Information Agency

“Does Russia Really Own 20% of The US’ Uranium Reserves?” Oilprice.com https://oilprice.com/Alternative-Energy/Nuclear-Power/Does-Russia-Really-Own-20-Of-The-US-Uranium-Reserves.html retrieved 10/27/2017

October 5, 2016October 15, 2016

Is Biomass Carbon Neutral? Depends On How Much Time You Have

It is almost axiomatic within the renewables community that the combustion of biomass is carbon neutral. That is to say that virtually all carbon released by burning will ultimately be offset by the absorption of carbon by new growth, provided the agricultural scheme deployed is renewable and sustainable. This assumption regarding the carbon neutrality of wood combustion is even being pushed in current Congressional legislation. While burning some biomass feedstocks might be carbon neutral, real questions arise when the fuel is wood, especially in the form of wood pellets. A growing body of evidence concludes that the use of wood pellets can be highly detrimental to the environment and, in actual fact, emits as much or more carbon than fossil fuel.

It is true that the carbon released by combustion sooner or later is reabsorbed by sustainable forests. The problem is timing. The Paris accords had as its objective the promotion of measures that would keep global temperature rise to 1.5^o C by 2030. Realistically 2.5^o C is probably the best achievable. But either way, what is most crucial is reducing carbon over the next 15 or 20 years. A recent report by the National Resources Defense Council (NRDC) takes an in-depth look at this issue and. [1]

Burning wood pellets emits about 1.5 times the carbon per unit of energy than coal and 3 to 4 times the carbon per unit energy of natural gas. And it does so all at once. This creates what’s called a carbon debt that gets repaid be reabsorption over time. That time frame is quite long depending on the proportion of whole trees used to make the pellets. The NRDC study cited above showed the following results.

Source: NRDC

nrdc2

Source: NRDC

The higher the portion of whole trees used (Figure 1) increases the time frame of paying off the carbon debt. In the case of 70% trees burned today, the debt does not start to be paid off until 2065. If only 20% trees are used (Figure 3), where the source is primarily wood waste and forest debris, the carbon emissions are less, but the payoff times are the same. (The NRDC study looked at bottom land hardwood forests in the southeastern US for this data.)

“Premium” wood pellets tend to be solely from whole trees, both soft and hardwood.

These “payoff” times are well beyond the critical period when carbon reductions are necessary. So while it is fair to say that wood pellet combustion is theoretically carbon neutral, the question is how long you are willing to wait for the carbon debt generated with combustion is “repaid” through subsequent sequestration.

During this critical time frame of the next 15 to 20 years, wood pellets from a high proportion of whole trees emit more carbon than any fossil fuel. In lesser proportions, wood pellets are no better than coal or natural gas. Simply not using whole trees is an option, however other studies have noted that available forest residuals alone cannot meet current biomass demand.

As you might expect, this is a matter of considerable controversy and has become a hot political topic in 2016. The current Senate energy bill (S. 2012) includes a provision that directs the Environmental Protection Agency (EPA) to classify woody biomass as a carbon neutral. Doing so would allow biomass to be an allowable alternative to coal under the administration’s Clean Power Plan. Pending House and Senate Interior Appropriations bills include similar direction to the EPA. Frankly it appears that, once again, business interests are attempting to ignore or override the scientific evidence. The Obama Administration, in a July Statement of Administration Policy regarding one of the House Appropriations bills (H.R. 5538), offered the following statement:

“Classification of Forest Biomass Fuels as Carbon-Neutral. ….The Administration strongly objects to language under the heading “Administrative Provisions—Environmental Protection Agency” in the bill, which would compel EPA to disregard the scientific recommendations of its own Science Advisory Board and other technical studies.”

There are ancillary effects to classifying biomass as an acceptable fossil alternative. If biomass were not allowed as part of the solution, a greater amount of truly clean sources would be required to meet the Clean Power Plan goals. Using woody biomass for electricity generation suppresses the use of these sources.

Given the substantial financial and lobbying resources of the industries involved in this sector it seems unlikely that science will prevail.

But that’s the story for woody biomass sourced from trees. Biomass from other sources can certainly be renewable, sustainable and be carbon neutral within reasonable time frames.

[1] NRDC Issue Brief “Think Wood Pellets are Green? Think Again.” May 2015 https://www.nrdc.org/sites/default/files/bioenergy-modelling-IB.pdf

January 3, 2016

Risk Based Planning and Global Insurers Key to a Global Transition to a Low-Carbon Economy

The following article was written to answer the question “In your view, what are the policies that governments should take to encourage public-private partnership and enable the private sector to develop the goods and services necessary for a global transition to a low-carbon economy by 2030?” as a submission to the 2016 Masdar Engage Blogging Contest.

NASA space program public–private partnerships are frequently recommended as a model to achieve aggressive carbon mitigation goals. A far more sophisticated approach than used by NASA will be required, involving a much broader array of participants including government; research and development organizations; energy and energy efficiency businesses; and the global insurance industry. These groups must be coordinated and managed using a dynamic strategic planning process.

Dynamic, Risk Based Strategic Planning

Risk based strategic planning (RBSP) begins with a defined set of end states – in this case the specific milestones for emission reductions – and the construction of several technology development scenarios to achieve them. An inventory of current technologies that could address these goals which are available or in development is taken and the risks associated with each are assessed, including the likelihood of commercialization, energy and market economics, access to financial resources, potential regulatory barriers and environmental impact. Using risk thresholds, the portfolio is culled to optimize achievement of scenario goals. The process is continuous with assessments conducted on a regular basis to pare and shape the portfolio. Such an approach would allow for a systematic optimization of carbon mitigation through technology development.

Stakeholder Roles

R&D organizations and the private sector involved with energy generation and energy efficiency will contribute to the process by providing input to its development and management as well as implementing the technology development defined in the RBSP process. Their traditional roles will continue, albeit managed somewhat differently. The roles of government and the insurance industry, however, are unique to this plan.

Government

In addition to the traditional policy direction, government needs to be directly involved in the creation and management of the RBSP process. This cannot be done using the traditional “ivory tower” approach. Government must articulate directional policies and provide the foundation for the creation and management of the RBSP in close cooperation with all of the stakeholders. Given its risk based approach and the assessment techniques necessary, the insurance industry’s involvement will be key. In addition, government can provide financial resources to and incentives to mitigate the financial risks associated with each technology’s development and commercialization.

Government has another important role as it relates to loosening exclusionary intellectual property as well as anti-trust regulation. IP protection, at least as it is currently being conducted, is a barrier to rapid and collaborative technology development. One need only consider the beneficial impact of limiting IP exclusivity on the U.S. aviation industry between the world wars or the integrated circuit industry in the 50’s and 60’s. All parties need to be willing to share IP and have the ability to collaborate in ways that would be illegal under current anti-trust regulation.

Global Insurance

The Insurance industry routinely influences public and private decisions in many areas of our economy, some less apparent than others. Global reinsurance companies are well aware of the long term liabilities inherent in increasingly extreme weather and the rise in global temperatures. Quietly this industry has been modifying policies for insureds that reward efforts to reduce carbon and increase energy efficiency for the past 20 years. Global insurance would play a vital role by applying its core competencies of sophisticated risk assessment and mitigation to the RBSP process as well as aligning its own products with the goals of the process.

Fundamental changes in the roles of government and industry, as well as inviting the global insurance industry to play a very significant role, will be necessary to achieve the COP21 goal of limiting the rise in global temperature to 2 degrees C by 2030.

November 4, 2015January 21, 2020

Guest Post: Ontario Adaption to New Energy Economy

Guest post is from Emma White, as freelance blogger on energy issues.

How Ontario is getting ready to join the new energy economy in Canada

Canada is not that far behind the U.S. and Europe when it comes to implementing the new energy economy. The city of Ontario is looking forward to have a clean, ground-breaking and profitable energy economy due to the weakening of the oil sector in Canada. If Ontario can make this happen, then Canada will be leading the pack of countries when it comes to a clean and profitable energy sector. It will also be a new element that is added to the already present renewable energy assets. It has been discovered that with the new energy economy, more jobs will be available for people in Ontario and elsewhere in Canada. It has also been discovered that air pollution-related deaths will be decreased drastically due to the implementation of renewable energy sources. More and more places around the world have begun to realise the importance of renewable energy sources and Ontario is no different.

Renewable Energy Sector for Electricity

Ontario has already invested in a huge renewable energy sector that consists of wind and solar generation, which is an addition to its hydro stations. The only problem is sometimes it produces more electricity than what the city of Ontario needs. There have been ideas and solutions given, such as selling the excess electricity to the neighbouring countries, but even that is a problem when these neighbouring countries are looking for solutions too for their excess electricity. The only solution left in this situation is to give neighbouring places the excess electricity for free or even pay them to absorb the excess electricity. This is why Ontario is has created a program when it comes to energy storage solutions that will secure a storage capacity that is able to withhold 50 megawatts of energy.

More Ideas for New Energy Economy Storage Solutions

By using wind, solar, hydroelectricity and bioenergy as renewable energy sources, Ontario is not the only city in Canada riding on the new energy economy train, other cities in Canada are working hard with their new inventions for a new energy economy. In Toronto at the MaRs centre, Hydrogenics Corp. is converting electricity into hydrogen, which will be used as an addition to natural gas. Renewable Energy Systems Canada Inc. is also busy creating newer, better and more efficient batteries. Hydrostor is occupied storing compressed air, which can be used to generate electricity whenever required, from the water pressure of Lake Ontario off Toronto Island. More ways are being given to help expand renewable energy generation. More ideas are being produced to encourage energy conservation. More planning is being put to promote the conception of clean energy jobs.

Promoting New Energy Economy in Ontario

The government of Ontario has been promoting the new energy economy to its people and how they can help through the little things. Steps, such as buying food and goods that are made in Ontario are being highlighted to its people. Ontario is also promoting clean travel by urging its people to travel more on bikes and public transport, which will make for lesser cars on the road. Residents are also being requested to start drinking water directly from the tap instead of using water bottles. Aside from these promotions, the government of Ontario is also asking its people what they want to see as part of the new energy economy.

Slow Steps towards New Energy Economy

Canada wants a clean-energy economy and the country wants it fast, but not at all costs. This is why all the cities in Canada are taking steps towards a new energy economy. The reasons why Canada wants all of its cities to move towards a new energy economy are for its economic and social well-being as well as for the health of its people, especially children. It is a well-known fact that the current oilsands mining situation comes with bad health impacts, which is why this country wants a clean-energy economy. More jobs are becoming available for sectors that work under the new energy economy, as more and more solar panels and wind turbines are being built. In Ontario, wind energy is growing significantly, which makes more domestic and foreign companies wanting to invest in this city.

May 9, 2015May 11, 2015

German Electricity Rates Projected To Return to 2015 Levels by 2035

In 2015 Germany enacted a law whose short title is the Renewable Energy Sources Act of 2014 (Erneuerbare-Energien-Gesetz, or EEG 2014). EEG 2014 formalizes the fundamental shift in energy policy in Germany, the Energiewende, from a coal and nuclear system to one which requires the mix of electricity generation in Germany to reach 40% – 45% renewable sources by 2025 and 55%- 60% renewable sources by 2035. This is to be encouraged by feed in tariffs that guarantee prices for new renewable entrants while requiring grid operators to receive and purchase electricity from these sources. As expected, EEG 2014 met with some criticism, primarily a claim that it would be too expensive. Agora Energiewende, an energy policy group, commissioned the Oeko Institute e.V. to model the effects of EEG 2014 specifically on its likely impact on consumer electricity rates. The report* concluded that:

The cost of electricity to consumers increases through to 2023 by between one and two cents per kwh, but then declines at a rate of between two and four cents/kwh until 2035. In 2035 rates are forecasted to be the same as 2015 – 8 to 10 cents/kwh.
By 2035 60 percent of German electricity will come from renewable energy sources, from about 28% today.
As the real costs for renewable generation decline, the primary drivers to the incremental costs of the German Energy Plan become the actual demand levels and the extent to which energy intensive industries are subsidized.
Investments in renewable energy increase through 2023 and then decline, however renewable energy’s share of the generation mix continues to rise.

The assumed generation mix that was used in the reference case for this study is presented in the figure below:

Source: Oeko Institut 2015, EEG Model

This translates to the following projected share of the overall electricity source mix for renewables:

Source: Oeko Institut 2015, EEG Model

EEG 2014 provides for the following feed in tariffs, cents/kWh:

	2015	2025	2035
Onshore Wind	8.9	7.2	5.3
Offshore Wind	19.4	14.3	10.9
Solar	11.0	10.3	8.4
Biomass	17.7	16.0	14.5
Geothermal	25.2	19.6	15.2
Hydro	11.7	11.2	10.6
Average Mix	14.8	10.6	8.1

Source: Angora Energiewende

Note that the system average feed in tariff declines over time. Nonetheless, these tariffs are significantly higher than wholesale power costs from conventional sources. Under EEG 2014, transmission system operators (TSOs) are permitted to charge electric utilities an “EEG Levy” to compensate them for paying these feed in tariffs and the utilities pass these charges on to consumers.

The EEG Levy assumed in this analysis, along with the base cost of electricity, is shown in the following graphic.

Source: Oeko Institut 2015, EEG Model

Based on the assumptions inherent in this analysis, the overall cost of electricity to the consumer rises a few cents in the early 2020’s and then declines to rates comparable to rates experienced in 2010.

The Big Loophole

Not all consumers are subject to the EEG Levy, however. Many electricity intensive industrial and commercial end users have received exemptions from the EEG Levy, a point of considerable controversy in the country. 58 TWh are totally exempted and 110 Twh are partially exempted. Most notably residential customers pay full freight. Were there less exemptions, the EEG Levy would be much lower, as shown in the figure below. No exemptions for any customer basically cuts the levy in half.

Source: Oeko Institut 2015, EEG Model

The EEG Levy cannot be viewed in isolation, however. No doubt applying the levy to all industries would have some concomitant effect on the economy and some exempting is necessary. That said, however, even with loopholes, maintaining a relatively flat trajectory on consumer rates while radically increasing the renewable energy mix in electricity generation to over 60% will be quite an achievement.

*Agora Energiewende “Die Entwicklung der EEG-Kosten bis 2035” May 2015: http://www.agora-energiewende.org/fileadmin/downloads/publikationen/Studien/EEG_2035/Agora_EEG_Kosten_2035_web_060515.pdf

April 10, 2015April 11, 2015

The Recent “Mind Bogglingly Stupid”* Arguments Against Fuel Cell Vehicles

During a press conference at the Automotive News World Congress in February Elon Musk was famously quoted saying hydrogen fuel cells are “extremely silly,” and that fuel cell electric vehicles (FCEVs) are “incredibly dumb.” He made two arguments to support this view – that electrolysis to generate hydrogen is way less efficient than using solar to charge vehicle batteries and that hydrogen was an unsafe fuel. So this is pretty transparent: it’s just the old slam-your-competition marketing ploy. Musk’s Tesla must feel pretty threatened by the spate of fuel cell electric vehicles coming on the market, especially in Japan and California. But then a month later we get Climate Progress publishing an article by Joe Romm seconding Musk’s view and supporting his opinion with actual charts. Romm’s analysis, with all its credentials, is no better than Musk’s uninformed off the cuff commentary.

Romm essentially recycles an article he published in Scientific American in 2006 where his primary criticism, as I interpret it, follows this equation:

REI=> (CHG) or (EWMFC) => EMP

Where:

REI=Renewable power in

CHG= Charge battery

EWMFC=Electrolyze water for hydrogen, make fuel cell

MP=Energy expended motive power

In the case of a FCEV fueled with hydrogen from renewably generated electrolysis, only 20% to 25% of REI ends up as EMP. An electric vehicle (EV) charged with renewably generated electricity gets 75% to 80% of REI.

That’s it. The sum total of the argument. Note the complete absence of any economics. Eliminating cost (and the discussion of other paths for zero emission FCEVs) relegates this whole argument to the realm of fierce debates over how many angels dance on the head of a pin. Perhaps intellectually challenging, but irrelevant to the market or to policy decisions. Think about it: install a solar array at a particular cost. Use its output to operate an electrolysis unit for hydrogen or use it to charge batteries. Is one more efficient in the use of solar power? Sure. But does it matter? No. Either way you have a true zero emission vehicle. And as long as the cost per mile is competitive, it makes sense in the market place. Might the battery vehicle be a little cheaper in cost per mile? Perhaps, but what if the end user is willing to value range, where the FCEV wins hands down?

The reality, however, is that we are on the cusp of a new market of lower emission vehicles. The zero emission world is still a good distance away because economics are a real factor. That means we need EVs and FCEVs, and it also means that they are not completely “green” but rather olive drab. EVs in most places will not be charged with renewable electricity but from whatever the local grid supplies, and that can be pretty dirty. Most FCEVs will get their hydrogen from natural gas – its use in a fuel cell is an improvement over direct combustion but still results in carbon emissions.

The bottom line here is that simplistic assertions are no more than that, and while soundbites in headlines attract, they are not analysis and should not be taken seriously.

** Headline in EV World, July 7, 2014 “Musk: Fuel Cells ‘Mind Bogglingly Stupid'”

April 9, 2015April 9, 2015

Is That Fuel Cell Economic? Forget cents/kWh or GGE

It’s very easy to find graphics that compare the cost of several forms of emerging energy technologies. In the case of fuel cells, since they make electricity to perform a task, the metric used is the cost of a unit of electricity: (pick your currency) per kilowatt-hour or cents/kWh. In vehicular applications, an attempt is made to equate hydrogen fuel with gasoline, generating the absurdly fictitious “gallon of gasoline (or liter of petrol) equivalent” or GGE. If you see these metrics used, you are witnessing one of the greatest failures of the fuel cell industry: its inability to articulate its worth.

Allow me to demonstrate how daft and self-defeating these comparisons can be. We all use batteries in our daily lives. Batteries generate electricity, which we put to good use. The going rate for AA batteries is broad, but to pick a number, a 4 pack of Energizer batteries is $4.01, or about $1/battery.

Each battery provides a little less than 3 watt hours of electricity. That means that if you compared AA batteries with other forms of generation, its output would be about $330/kWh. Now let’s take that value and do the conventional comparison with other generation forms, shown below. Note that this uses a logarithmic scale.

Clearly it looks horribly expensive. But here’s the thing- we don’t value the AA battery for its costs of electricity, we value it for its convenience and size. Relative to other kinds of electricity generation, it costs a fortune, but only because we are using the wrong metric. A friend and mentor reminds me frequently that what is being sold is the product of the product, not the product itself. And so it goes with fuel cells.

This is readily apparent in three applications where fuel cells are deemed commercial and where sales are happening every day: remote telecommunications backup power; uninterrupted storage and as replacement drives for battery systems in materials handling equipment. In each case, what make the fuel cell commercially viable is its context in an economic system that values the attributes of its output, not the actual output itself. Consider any of the following factors:

Avoided costs of equipment to achieve desired level of enhanced:
- Reliability
- Power Quality
Avoided costs of battery maintenance and disposal
Value of quiet operation
Avoided fees and penalties for emissions for certain industries
Longer operational periods in EPA non-attainment areas
Much longer operation in battery replacement applications
Portability

Each one can be valued and monetized in the overall economic equation.

Total Cost of Ownership (TCO)

A far better metric and methodology for evaluating the commercial viability of fuel cells is total cost of ownership (TCO), a form of life cycle cost analysis. Investopedia defines TCO as “The purchase price of an asset plus the costs of operation. When choosing among alternatives in a purchasing decision, buyers should look not just at an item’s short-term price, which is its purchase price, but also at its long-term price, which is its total cost of ownership. The item with the lower total cost of ownership will be the better value in the long run.”

Materials Handling Equipment

Use of TCO is best illustrated by the business case for fuel cell replacements in electric drive systems for materials handling equipment. Virtually all indoor forklift trucks are battery powered electric units. A recent DOE report provides a detailed analysis, summarized below.[i]

The relevant costs of ownership include the following items:

Cost of the bare forklift
Cost of the required battery or fuel cell systems
Cost of battery changing and charging or hydrogen fueling infrastructure
Labor costs of battery changing or hydrogen fueling
Cost of energy required by the forklifts
Cost of facility space for infrastructure (indoor and outdoor)
Cost of lift truck maintenance
Cost of battery or fuel cell system maintenance.

When each of these cost elements are evaluated, the following table results for a hypothetical Class I or Class II forklift:

Total Annual Cost of Ownership
Cost Element	Battery Drive Forklift	Fuel Cell Drive Forklift
Amortized cost of truck	$2,800	$2,800
Amortized cost of Battery or Fuel Cell Unit	$2,300	$2,600
Per Truck Cost of Charging Battery/ Fuel Cell Hydrogen Fueling Infrastructure	$1,400	$3,700
Labor Cost for Charging or Refueling	$4,400	$800
Cost of Electricity/Hydrogen	$500	$2,400
Infrastructure Warehouse Space	$1,900	$500
Forklift Maintenance	$2,800	$2,800
Battery/ Fuel Cell Maintenance	$3.600	$2,200
Total Cost of Annual Ownership	$19,700	$17,800

If one only looked at the total costs of the forklift plus drive unit, the fuel cell unit is more expensive. Add in the cost of charging batteries, the cost of hydrogen and the charging/fueling infrastructure, the fuel cell looks that much worse. Now factor in the productivity costs or gains: the labor cost for refueling a fuel cell is far less than that of a battery unit; the warehouse costs are far less, as is the maintenance costs of the drive units. At this level of analysis, the fuel cell drive is the clear winner, although it represents a discrete set of values. An analysis which looks at the sensitivity of each of these parameters underscores the clear choice of the fuel cell drive unit.

Source: NREL

There are other increases to productivity for the fuel cell that these analyses do not capture. Over a normal shift, the battery loses capacity such that near the end of a shift it cannot lift the same amount of material to the same heights. Fuel cell units retain their power as long as they have fuel available. In some cases, more electric drives need to be purchased to compensate for long battery recharge times and the diminished capacity of units over shifts. Finally, while the costs of battery maintenance are included above, the environmental cost of battery disposal are not. Fuel cell units do not have that problem.

A similar analysis can be performed for remote telecom site backup. In this case, the fuel could either be a liquid (operating a methanol fuel cell), or compressed hydrogen. Diesel generators or battery units require maintenance, with very high labor costs attributed to simply getting to the site and returning. A fuel cell unit, once installed and made ready for operation, eliminates a considerable amount of potential labor costs. In addition, it does its work without emissions and without noise.

Gallon of Gas Equivalent

The GGE metric, when applied to hydrogen fuel cells, is one of the most inappropriate attempts to compare one type of fuel system with another. Clearly it was created on the assumption that it would be easy for the general public to understand. All it does is obfuscate reality. GGE works as a comparison basis when we are talking about fuel use in an internal combustion engine which resides in a vehicle that was designed with an internal combustion engine. Period. The only time GGE would apply to a hydrogen fueled vehicle would be if hydrogen was being combusted in a conventional engine. Further, GGE by definition relies on petroleum economics to set price and petroleum market dynamics have nothing to do with the cost of hydrogen. A fuel cell vehicle is designed to accommodate a fuel cell and make best use of its attributes. It is far more efficient than combustion engines and makes best use of the available electricity to incorporate features not found in today’s vehicles.

The introduction of fuel cell vehicles offers the opportunity for end users to think about their transportation quite differently from what is on the road today. Instead we persist in talking about these new vehicles in terms that do not fit. Most egregious is the continued use of GGE as a filter to determine where R&D funding should go for hydrogen vehicles and refueling infrastructure. For several years, if someone guessed that a particular project or concept could not beat $3.50 GGE it was rejected. Achieving lowest cost is certainly a goal but using the wrong yardstick is just plain stupid.

A far more appropriate metric for comparing new and emerging vehicles (and the R&D associated with them) is cost per distance. This metric would apply to fuel cells and to electric vehicles.

Emerging Energy Metrics

As new forms of energy emerge in this new energy economy as much care needs to be taken in their evaluation to assure that we take fully into account the change in perspective that comes with them. The risk in using old methods to consider new concepts is that we miss altogether their potential.

[i] Ramsden, Ted USDOE “An Evaluation of the Total Cost of Ownership of Fuel Cell-Powered Material Handling Equipment” NREL/TP-5600-56408. April 2013

March 2, 2015

Contrarian Approach to Fuel Cell Powered Forklifts and Scooters in Taiwan 燃料电池发展的逆向操作：台湾叉车及摩托车

The worldwide population of motor scooters is approaching 130 million. China alone produced over 40 million gasoline powered motor scooters in 2011. Many of these engines emit 8 to 30 times the hydrocarbons and particulates emitted by automobiles. Several companies are developing fuel cell powered scooters to reduce these enormous emissions. Fuel cells are devices that make electricity from hydrogen and oxygen, emitting water vapor as the exhaust. When hydrogen is produced from renewable sources, or even from natural gas the emissions are far less than those resulting from oil refining and combustion. Fuel cell powered scooters run on that electricity.

全球目前使用小型摩托车人口已达1.3亿。在2011年仅中国就生产了超过四千万的燃油驱动摩托车，这些摩托车引擎比汽车所排放的碳氢化合物及微粒多出了8至30倍。现有数家公司研发燃料电池摩托车，以减少巨大的碳排放量。燃料电池利用氢和氧发电，唯一的副产品是水。当我们使用可再生能源，或甚至是天然气来制造氢气，都能使废气量远比炼油和火力发电来的更少。燃料电池也能作为摩托车运行的动力。

Two years ago I wrote about a very forward thinking fuel cell technology company in Taiwan (https://worthingtonsawtelle.com/fuel-cells-and-7-eleven/), Asia Pacific Fuel Cell Technologies, Ltd. (APFCT). The company had just rolled out its first major demonstration of fuel cell powered scooters.

两年前我在台湾为一家非常具有前瞻性的燃料电池公司 – 亚太燃料电池科技公司写了一篇文章（ https://worthingtonsawtelle.com/fuel-cells-and-7-eleven/）。该公司当时刚举行其首次大型燃料电池摩拖车的示范运行。

What was unique about the company and its scooters was the approach APFCT took to fueling. APFCT designed their system with simplicity and consumer convenience in mind. Instead of taking the path of nearly all fuel cell transportation devices that require the refilling of an onboard cylinder with highly compressed hydrogen, the APFCT units use small canisters that store hydrogen in metal hydride powder. Instead of driving the vehicle to a fueling station and waiting for a cylinder to be filled the user simply takes their empty canisters to a vendor who exchanges them for filled canisters (with about the same internal pressure as a racing bike tire).

亚太燃料电池公司的独特之处是在充氢方式。其设计概念是系统简单性和对消费者便利性，所以设计团队并未采用现在大多数燃料电池车所使用的高压氢气瓶，而是运用低压的小型储氢罐，内装金属氢化物粉末，氢气罐的内部压力约同于竞速自行车的胎压。驾驶不需至加氢站，而只需把空罐子给供货商并同时换取新的氢气罐。

In its first demonstration APFCT put 80 scooters on the road at a beach resort in southern Taiwan. Tourists were permitted to use the scooters for free. When they ran out of hydrogen all they needed to do was to take the empty canisters to any 7–Eleven convenience store, repair shop or police station for exchange. Why 7-Eleven? Taiwan has the fifth largest number of 7-Eleven stores in the world, behind the U.S., Japan, Thailand and South Korea. There is a 7-Eleven within walking distance of almost any place in Taiwan.

亚太首次大型燃料电池摩托车示范运行是在台湾南部的海滨度假胜地垦丁。游客可免费自行骑乘亚太所提供的80辆燃料电池摩托车。当游客发现氢气耗尽时，他们只需将空罐子带到任何一间7-Eleven便利商店，维修店或派出所进行储氢罐交换。你可能好奇为什么是7-Eleven呢？因为台湾7-Eleven营业据点数量排名全球第五，仅次于美国，日本，泰国和韩国。台湾几乎任何地方都可步行至附近的7-Eleven。

APFCT has continued to build upon this hydride storage fueling model over the last two years. It has tested a number of different vehicles, all of which use identical canisters. Those with larger hydrogen demands simply require more canisters for operation.

亚太燃料电池在过去的两年持续建立低压储氢的商业模式。目前使用相同的储气罐在数个不同类型的车辆上进行测试，如车辆运作需使用大量的电力，只需要增加储氢罐的数量。

Scooters 2.0

燃料电池托摩车

Last November, APFCT began a second scooter demonstration in Taiwan with the city government of Taipei. In this demonstration 20 scooters have been deployed for use in environmental auditing site inspections and surveying by city officials.

去年十一月，亚太燃料电池在台北市政府展开第二次示范运行。在此示范当中，台北市政府使用亚太二十辆摩托车作为公务车，在官员环境审计及现场检查时使用。

APFCT’s current scooter model has a range of approximately 80 km.

亚太最新一代摩托车续航力约80公里

Fueling costs can be very economic – in the Taipei demonstration, the local cost of electricity to generate the hydrogen results in a canisters exchange cost of NTD 30 (about USD 1).

充氢成本可以是经济实惠的 – 在台湾示范运行中储氢罐交换价格为新台币30元 (约一块美金)，此价格包括当地产氢所使用的电力及物流费。

APFCT says this current model would sell for about NTD 90,000, about USD 3,000. That’s not quite a commercial price, but getting close. Assuming a successful demonstration, orders from city governments and the public could generate sufficient volume to get the price down, which would make APFCT fuel cell scooter be competitive with gasoline powered scooters.

根据亚太表示，最新燃料电池摩托车售价约新台币九万元，约三千美金。这并非商业化的价格，但已经愈来愈接近了。如未来有一个成功的示范运行，让亚太能从政府和民众取得大量的订单，将有望大规模经济生产并降低价格，并使亚太燃料电池摩托车车与传统燃油驱动摩托车相抗衡。

Fork Lifts

燃料电池叉车

APFCT has migrated its consumer friendly fueling system to a forklift application. They recently completed a demonstration of 5 forklifts in a distribution center in Taiwan operated by the RC Mart chain.

亚太燃料也将便利的充氢系统运用在叉车上，并在近期在台湾连锁量贩店爱买的配送中心完成五辆叉车车队的示范运行。

Forklifts are an area of significant growth for fuel cells and one of the few applications that are commercially economic. Globally, there are at least 5,000 forklifts in operation at large distribution centers. These forklifts were all originally electric drive battery units. Their electric drives were all replaced with a fuel cell power system. The fuel cell systems themselves are somewhat expensive, however when one compares their total cost of ownership of the swapped out system with that of an electric drive, fuel cell systems are cheaper to operate and increase worker productivity.

燃料电池叉车近期有显着的销售成长，也是少数目前具有经济效益的燃料电池应用之一。在全球至少有五千辆叉车在大型配送中心运作。这些叉车原本都是电动叉车，现在被替换成燃料电池动力系统。燃料电池系统本身较电池昂贵，但若以总体拥有成本来衡量，燃料电池系统则相对便宜，并且能提高员工的工作效率。

The following chart provides a quick cost comparison between the two systems. In this case, a Class III forklift is used, which is a smaller unit where the operator rides on the truck.

下面的图表显示电动和燃料电池二个系统之间成本比较。此表当中我们使用较小型的搬运车来进行比较。

Source: APFCT, Worthington Sawtelle LLC, National Renewable Energy Laboratory

图片来源: APFCT, Worthington Sawtelle LLC, National Renewable Energy Laboratory

The bottom line here is that even though their fueling infrastructure and electricity costs are less, the battery driven units require significant labor for charging and refueling. What the chart does not show is that more battery units are required for a three shift day than fuel cell units; one battery unit must always be charging.

最重要的是，即使电动搬运车所需的基础设施和电力成本较低，但是使用电动搬运车需要大量劳力为其进行充电和加油。虽然此图表并未显示，但实际上若运用于一天三班制的工作环境下，电动搬运车需要大量的备用电池以供替换。

Virtually all fuel cell options for forklifts use high pressure hydrogen storage linked to a fuel cell with high internal pressures. Notice that in the high pressure bar above, all but the cost of hydrogen are likely to be relatively constant. The economics of the system depend almost entirely on the cost of hydrogen fuel. All systems currently in operation get their hydrogen delivered to a dispensing station in the distribution center from tube truck deliveries. The cost of that hydrogen increases with distance from the hydrogen production facility. Because of these high costs, a few operators are considering the installation of small natural gas reformers to generate hydrogen on-site from natural gas, which is relatively inexpensive in today’s market.

绝大部份燃料电池叉车都使用高压储氢罐。值得注意的是在上述高压系统，其中氢的成本很可能无法稳定。该系统的经济性几乎完全依赖氢燃料的成本。所有目前运作中的系统使用的氢气都从卡车运输至其配送中心的充氢站。在这样的情况下，氢气的成本会随着与制氢中心的距离而增加。由于这些高昂的成本，一些运营商正在考虑在厂内设置小型天然气重组器来制造氢气，这是在目前市场上比较经济的制氢方式。

APFCT, characteristically, has developed a much different solution to this application, one which enhances its already winning cost analysis. The APFCT unit is shown as the third bar in the chart above, labeled “Low Pressure Fuel Cell.” This forklift design uses four fuel canisters that are identical to the ones used in the scooter. But unlike most other fuel cell forklifts, the APFCT unit uses a low internal pressure fuel cell. Lower internal pressures are less susceptible to membrane failure and have less moving parts. In the picture below the cabinets by this unit are the refuelers. Fuel canisters are placed in a rack in the unit and refilled with hydrogen being released from water through electrolysis.

亚太燃料电池一如既往地为叉车发展出与众不同的解决方案，图表成本分析中也显示了此解决方案的优势。亚太的叉车系统列在图表中的第三条，标有“低压燃料电池” 。该叉车设计采用四个储氢罐，与燃料电池摩托车所使用的储氢罐是相同的。和大多数燃料电池叉车不同的是，亚太使用了低内压的燃料电池。较低的内部压力使质子交换膜较不易损坏且运动部件较少。在图中位于叉车旁边的柜子内置有充氢机。充氢机可透过电解水制氢将氢气充填至氢气罐。

Next Steps

未来展望

The best technology does not always make it in the marketplace, however. APFCT’s fueling approach offers a number of clear advantages over what is now regarded as conventional. Nonetheless, a number of alternative methods to store and dispense hydrogen in transportation applications have been attempted and then largely abandoned – usually due to the fact that such commercialization decisions are heavily influenced by the automobile manufacturers. It remains to be seen if APFCT can overcome the momentum already gained by others who are thoroughly invested in the high pressure cylinder on-board hydrogen storage model.

有时最好的技术并不容易商业化，亚太的低压储氢方式提供了许多明显的优势。尽管如此，目前已有部份储氢和配氢的替代方法都已经尝试过后并放弃 – 通常是由于此类替代方案的商业化主要是由汽车制造商所决策。让我们拭目以待，看亚太是否能克服多数使用高压储氢罐的主流，让低压金属储氢成为通往氢经济的快捷方式。

February 11, 2015April 10, 2015

Energy subsidies | Levelling the Subsidy Playing Field (Guest Post)

Originally published at JBS News by John Brian Shannon

By now, we’re all aware of the threat to the well-being of life on this planet posed by our massive and continued use of fossil fuels and the various ways we might attempt to reduce the rate of CO2 increase in our atmosphere.

Divestment in the fossil fuel industry is one popular method under discussion to lower our massive carbon additions to our atmosphere

The case for divestment generally flows along these lines;
By making investment in fossil fuels seem unethical, investors will gradually move away from fossil fuels into other investments, leaving behind a smaller but hardcore cohort of fossil fuel investors.

Resulting (in theory) in a gradual decline in the total global investment in fossil fuels, thereby lowering consumption and CO2 additions to the atmosphere. So the thinking goes.

It worked well in the case of tobacco, a few decades back. Over time, fewer people wanted their names or fund associated with the tobacco industry — so much so, that the tobacco industry is now a mere shadow of its former self.

Interestingly, Solaris (a hybridized tobacco plant) is being grown and processed into biofuel to power South African Airways (SAA) jets. They expect all flights to be fully powered by tobacco biofuel within a few years, cutting their CO2 emissions in half. Read more about that here.

Another way to curtail carbon emissions is to remove the massive fossil fuel subsidies

In 2014, the total global fossil fuel subsidy amounted to $548 billion dollars according to the IISD (International Institute for Sustainable Development) although it was projected to hit $600 billion before the oil price crash began in September. The global fossil fuel subsidy amount totalled $550 billion dollars in 2013. For 2012, it totalled $525 billion dollars. (These aren’t secret numbers, they’re easily viewed at the IEA and major news sites such as Reuters and Bloomberg)

Yes, removing those subsidies would do much to lower our carbon emissions as many oil and gas wells, pipelines, refineries and port facilities would suddenly become hugely uneconomic.

We don’t recognize them for the white elephants they are, because they are obscured by mountains of cash.

And there are powerful lobby groups dedicated to keeping those massive subsidies in place.

Ergo, those subsidies likely aren’t going away, anytime soon.

Reducing our CO2 footprint via a carbon tax scheme

But for all of the talk… not much has happened.

The fossil fuel industry will spin this for decades, trying to get the world to come to contretemps on the *exact dollar amount* of fossil fuel damage to the environment.

Long before any agreement is reached we will be as lobsters in a pot due to global warming.

And know that there are powerful lobby groups dedicated to keeping a carbon tax from ever seeing the light of day.

The Third Option: Levelling the Subsidy Playing Field

Continue fossil fuel subsidies at the same level and not institute a carbon tax.
Quickly ramp-up renewable energy subsidies to match existing fossil fuel subsidies.

Both divestment in fossil fuels and reducing fossil fuel subsidies attempt to lower our total CO2 emissions by (1) reducing fossil fuel industry revenues while (2) a carbon tax attempts to lower our total CO2 use/emissions by increasing spending for the fossil fuel industry

I prefer (3) a revenue-neutral and spending-neutral solution (from the oil company’s perspective)to lower our CO2 use/emissions.

So far, there are no (known) powerful fossil fuel lobby groups dedicated to preventing renewable energy from receiving the same annual subsidy levels as the fossil fuel industry.

Imagine how hypocritical the fossil fuel industry would look if it attempted to block renewable energy subsidies set to the same level as fossil fuel subsidies.

Renewable energy received 1/4 of the total global subsidy amount enjoyed by fossil fuel (2014)

20150205054705 — Global Energy Subsidies 2014. (billions USD). Image courtesy of IISD.

Were governments to decide that renewable energy could receive the same global, annual subsidy as the fossil fuel industry, a number of things would begin to happen;

Say goodbye to high unemployment.
Say goodbye to the dirtiest fossil projects.
Immediate lowering of CO2 emissions.
Less imported foreign oil.
Cleaner air in cities.
Sharp decline in healthcare costs.
Democratization of energy through all socio-economic groups.

Summary

Even discounting the global externality cost of fossil fuel (which some commentators have placed at up to $2 trillion per year) the global, annual $548 billion fossil fuel subsidy promotes an unfair marketplace advantage.

But instead of punishing the fossil fuel industry for supplying us with reliable energy for decades (by taking away ‘their’ subsidies) or by placing on them the burden of a huge carbon tax (one that reflects the true cost of the fossil fuel externality) I suggest that we simply match the renewable energy subsidy to the fossil subsidy… and let both compete on a level playing field in the international marketplace.

Assuming a level playing field; May the best competitor win!

By matching renewable energy subsidies to fossil fuel subsidies, ‘Energy Darwinism’ will reward the better energy solution

My opinion is that renewable energy will win hands down and that we will exceed our clean air goals over time — and stop global warming in its tracks.

Not only that, but we will create hundreds of thousands of clean energy jobs and accrue other benefits during the transition to renewable energy. We will also lower healthcare spending, agricultural damage, and lower damage to steel and concrete infrastructure from acid rain.

In the best-case future: ‘Oil & Gas companies’ will simply become known as ‘Energy companies’

Investors will simply migrate from fossil fuel energy stock, to renewable energy stock, within the same energy company or group of energy companies.

At the advent of scheduled airline transportation nearly a century ago, the smart railway companies bought existing airlines (or created their own airlines) and kept their traditional investors and gained new ones.

Likewise, smart oil and gas companies, should now buy existing renewable energy companies (or create their own renewable energy companies) and keep their traditional investors and gain new ones.

Related Articles:

The Responsible Investor’s Guide to Climate Change (Project Syndicate)
Full Cost of Coal $500 Billion/Year in U.S., Harvard Study Finds (CleanTechnica)
The Social Cost of Carbon Six Times Higher Than Estimated – Stanford Study (CleanTechnica)
Duke Energy Takes Equity Stake in REC Solar, Embraces Distributed Generation (Renewable Energy World)

The post Energy subsidies | Levelling the Subsidy Playing Field appeared first on kleef&co.

January 10, 2015

Keystone XL: Run the Numbers, It’s a Bad Business Decision

Only a portion of current inventories of Canadian tar sands oil might make economic sense to pipe through Keystone XL; there is a high probability that new extraction projects or upgrades to existing projects will have delivered cost well in excess of what the market will bear. An investor in the Keystone XL pipeline is making a very risky bet without a potentially large return. While the environmental concerns against Keystone certainly have merit, it makes no sense to construct simply on the basis of economics. Just run the numbers.

There are a number of key metrics that, when looked at in the aggregate, lead to this damning conclusion:

Tar sands equivalent world market price
Longer term oil price forecast

Cost of Extraction Relative to Market Price

In November 2014, Scotiabank projected the breakeven costs for Saskatchewan Bitumen and Oil Sands projects using a 9% after tax return, as shown in the chart below.

Source: Scotiabank Economics

Bitumen and tar sands sourced oil trade at a lower price than with crude oil. The discount varies depending on the source of the oil. Tar sands oil prices must be converted to their conventional oil equivalent price. Typically, Canadian tar sands are compared with West Texas Intermediate (WTI) crude pricing. The table below presents the Canadian Energy Research Institute (CERI) WTI Equivalent supply costs in 2011.

	Supply Cost at Field (CND/bbl)	WTI Equivalent (CND/bbl)
Primary	30.22	56.61
Saskatchewan Bitumen	47.57	77.85
Integrated Mining & Upgraded Projects	99.02	99.4

Source: CERI

These are weighted averages. The actual differential between extraction costs and WTI Equivalent is much broader than the differentials shown above, depending on the individual project. A fair assumption for the amount to be added to the tar sands supply cost to get to WTI Equivalent, according to CERI, is $15 per barrel. That number, however, excludes transportation costs to get the oil from upper Canada to Gulf port refineries. An approximate cost using Keystone from Hardisty, Saskatchewan, to the Gulf Coast was estimated by the Canadian Association of Petroleum Producers at $7.95 per barrel. Shipping by rail is about $7/bbl more.

Amazingly, this is the entire rationale for Keystone XL – a $7/bbl savings!

But lets assume Keystone does get built. The market viability of a tar sands oil produced in Canada can be easily determined:

Tar Sands Oil Breakeven Price for Market Comparison =

Cost of Extraction + $15/bbl discount + $7.95/bbl transport costs

Using this equation we can take the three approximate production cost estimates shown in the first figure and develop the breakeven world market equivalent prices.

	World price needed to break even, $/bbl
Saskatchewan Bitumen	87.95
Legacy Oil Sands Projects	75.95
New Projects and Upgrades	110.95

World Oil Prices

The chart below plots each project type’s breakeven world market price relative to West Texas Intermediate. Over the last 28 years, new tar sands projects and upgrades to existing projects would never have been economic.

Source: Energy Information Administration

Saskatchewan Bitumen and Legacy projects only became consistently economic in 2010 but neither are economic at current market price.

The Bet

Keystone only works over the long term when WTI and global prices sustainably exceed $110/bbl. That’s the bet.

In the short term, futures traders seem willing to bet on a case where prices never exceed $70/bbl through December 2023. Today’s settlement prices are shown below.

Source: CME Group

Only tar sands oil from legacy projects have any probability of being economic at their cost of production, FOB Gulf Coast. That’s the simplistic approach.

Other analysts, notably Gail Tverberg, see feedback loops that auger for continued lower prices for oil. Her chart below compares price, supply and major economic events. The price rise began at the same time as Quantitative Easing (QE1 on the chart); the price decline occurred as QE was tapered down (turning around artificially low interest rates) and when Chinese debt controls began (reducing the volume of Chinese debt). These events had the effect of slowing global growth, reducing demand for energy commodities and causing their costs to decline. Slower growth means less demand for oil and therefore lower oil prices. Tverberg sees increased debt defaults (especially in oil extraction); rising interest rates, rising unemployment and increased recession. These and other effects make a strong case for oil prices to remain low.

Source: OurInfiniteWorld.com

The market seems to be coming to the same conclusion. A number of large oil companies have cancelled or postponed tar sands extraction projects in the last several months, in part due to an increased perception of project risk, including Statoil, Shell, SunCor Energy and Total.

The Takeaway

This brief look at the problem of Keystone only considered one narrow issue – the economics of the delivered oil. The breakeven prices for tar sands oil projects are known: how they might fair in the volatile world oil market is not. History has clearly shown us that long term oil price forecasts are always wrong. What is possible, however, is developing the probability of a trend. Absent a major disruption in oil supply or a miraculous turn around in the world’s economies resulting in sustained growth, the most likely trend is a continuation of low oil prices. If the oil cannot be sold at an economic price, why pipe it south? Indeed, if is not economic to begin with, is there not a high risk the pipeline ultimately sits idle and unused? An investment in the Keystone XL Pipeline looks to be a really bad bet. Just run the numbers!