The dilemmas of US energy supply.

image: Canadian oil sands; Canada plays lacky to the US

IHT/Reuters: article one / article two

Stymied in their plans to build new coal-burning power plants, American utilities are turning to natural gas to meet expected growth in demand, risking a new spiral in the price of that fuel.

Utility executives say they have little choice. With opposition to coal plants rising across the United States, they see plants fired by natural gas as the only kind that can be constructed quickly and can supply reliable power day and night.

Summary

1. Coal is out of favour because of station construction costs and fear of future carbon emission tax

2. Gas is in favour but electricity prices will rise.

3. Renewables, particularly wind are surging ahead but can’t be relied upon to meet increasing energy demand.

4. Canada’s oil sands are being relied upon as well with their emissions negating considerable savings made with renewables.

Coal and gas

Three big investment banks announced that in deciding whether to make loans for new coal plants, they would calculate the projects’ financial viability, taking into account potential future charges for carbon dioxide emissions.

Citigroup, JPMorgan Chase and Morgan Stanley said they had negotiated this policy with seven major utility companies, most of them major coal burners, and two advocacy groups, the Natural Resources Defense Council and Environmental Defense.

Companies that have canceled coal plants have two immediate options other than building gas plants. They can work to hold down customer demand, though most would have to do so on a far more ambitious scale than before. Or they can wait to see what happens. Experts say electricity shortages are a distinct possibility in coming years.

“There’s going to be a lot of white knuckles, frankly, as building does not go forward aggressively on any kind of plant, and demand keeps going up,” said Ernest Moniz, a physics professor at the Massachusetts Institute of Technology and a former under secretary of the Department of Energy.

Barry Worthington, executive director of the United States Energy Association, a trade group in Washington, said that some coal plants may have been canceled because of fear of carbon dioxide emissions or fear of future carbon taxes, but another factor was a rapid rise in construction costs for power plants.

“The cost of everything has just skyrocketed,” he said. Natural gas plants have less steel and concrete than coal plants and require less labor to build.

The Canadian oil sands

Renewable energy is effectively in a race with other unconventional sources, like liquefied coal, Canadian oil sands and oil shale, which emit higher amounts of carbon dioxide than conventional hydrocarbons. While several major oil companies have joined smaller firms in investing in wind, geothermal and solar energy sources, they are investing far more money at the moment in oil sands.

Environmentalists at the Natural Resources Defense Council and the Pembina Institute have estimated that at least 20 percent of the pollution reductions coming from the new vehicle fuel economy standards law, which the U.S. Congress passed in 2007, would be negated by the additional production and refining of oil sands in Canada by 2020.

As this company proudly claims utilizing the oil sands frees the U.S. from rising foreign oil prices. Canada is effectively failing to meet it’s own climate change targets because it is playing the lacky to US energy & foreign policy ambitions.

Renewables

In a report scheduled for release Tuesday, Cambridge Energy Research Associates concludes that multiple factors will continue pushing the world toward greater use of alternative energy sources like sun and wind power, regardless of what happens to oil prices.

“The focus today on clean energy is not a bubble or passing phenomenon,” the report says. “Unconventional clean energy is now poised to cross the divide and move from the fringes of the energy sector to the mainstream.”

Development of renewable energy sources has taken significant leaps. The American wind industry, for example, expanded its generating capacity 45 percent last year, generating enough power for 1.5 million households. Accounting for 30 percent of the new American power-production capacity last year, wind reached 1 percent of the country’s electricity supply, according to data from the American Wind Energy Association.

The report notes that renewable fuels will remain small compared with conventional fuels for many years, and their rate of adoption will be determined by the intersection of government policies, economic growth rates and technological breakthroughs.

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4 Responses to The dilemmas of US energy supply.

  1. the Grit says:

    Hi Matt,

    Excellent post! It’s going to be most interesting, and probably most painful, watching the demands of six billion people clash with the political goals of the environmental movement. Of course, in the end the people will get their way and coal, or whatever else will burn, will go into the power plants as fast as possible, seeing as how renewable power sources are never going to be able to meet the demand. Seriously, no amount of propaganda can change the laws of physics, and our global energy needs are not going to be fulfilled by any combination of the current alternative energy sources, particularly when looked at in the light of our growing world population, and its rising level of prosperity. If I remember correctly, Sir Elton John said, “until I saw your city lights, honey, I was blind,” and I see no reason to believe that billions of people are not going to agree with him.

    Thus, it’s more rational to think that, in the next few years, the question won’t be “how can we supply clean energy?,” but will be, “how can we supply enough energy regardless of the source?” Fortunately, the supply of coal and whatever will hold out longer than the food supply, so it won’t really matter.

    the Grit

  2. matt says:

    Yes, didn’t really talk about nuclear but that is also back as a serious option.

  3. the Grit says:

    Hi Matt,

    Well, for the US at least, that depends on the results of the upcoming election. Either of the Democrats in the Presidential race will owe enough to fanatical environmentalist supporters that opening any new nuclear plants of our own probably won’t cut the mustard. On the other hand, we’ll probably be most happy to build them for others at a reasonable price and a hundred thousand megawatt warranty 😉

    the Grit

  4. holtz says:

    Are there any ways to use the oil sands for energy production with a smaller environmental footprint, e.g. by exploiting the microorganisms present?

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