Martin Wolf on energy security:
The best hope for energy security, by Martin Wolf, Financial Times:
...Thomas Malthus, the early 19th century forefather of environmental
doomsayers, ... remark[ed] that: “The power of population is so superior to the
power of the earth to produce subsistence for man, that premature death must in
some shape or other visit the human race.” Malthus was wrong: the world’s
population has risen six-fold since his day, while life expectancy has doubled.
So will contemporary Malthusians prove right about energy?
The answer is: no. Moreover, ... the future lies with oil, gas and, above
all, “old king coal”, the fuel with which the industrial revolution began. This
must concern another group of Malthusians – those concerned with global warming.
That, however, is a subject for next week. The theme of today is how humanity
might meet its demand for commercial energy. A recent survey from the
Organisation for Economic Co-operation and Development suggests that demand for
commercial energy might double by 2050. If anything, this is a conservative
Now consider whence – and at what prices – this additional energy might come.
... Taken together, fossil fuels now provide 86 per cent of the world’s
commercial energy. Is the world about to run out of these fuels? “No” is the
answer or at least not in the next half century and almost certainly far longer.
Published oil reserves do, it is true, cover only about 40 years of current
consumption. If consumption rises, as seems inevitable, that does not seem to
provide much of a cushion. Moreover, believers in the theory of “peak oil” argue
that the world has already reached peak production. ... Their analysis is based
on ... the pattern of discovery. Peakists argue that the world has used up about
half the available supply and global production is in irreversible decline.
Against this, most analysts argue that reserves tell one little about
available supplies, that higher prices and innovation generate greater
extraction from existing fields, that discovery of new (if smaller) fields is
continuing and, most important, that unconventional oil resources are still to
be exploited ... So even if production of conventional oil were to peak, the oil
era would not be over. The question is rather one of price. The potential at a
price of $70 a barrel seems huge. Many argue that the price needed to bring
forward additional supply is much lower.
Nor does the end of oil mean the end of fossil fuels. Gas and, above all,
coal are even more plentiful. Some would counter that petroleum is a unique
source of high quality energy for transportation... But it is possible to
convert coal and natural gas into “syngas” (synthesis gas) and then into liquid
fuels. The question is one of cost. The answer is that this would be more
expensive than conventional oil, but not prohibitively so.
What role then might be played by nuclear and renewables in such a “business
as usual” scenario? “Marginal” seems to be the answer. The big points are that
renewable energy is expensive, nuclear energy is controversial...
Renewables have problems of usability, scalability or cost. To generate half
of all current energy consumption we would need 100m windmills.... Use of large
proportions of the earth’s surface for bio-mass runs into the constraints
imposed by alternative uses (food production and natural habitat). In principle,
solar energy should be more than adequate: the quantity falling on the earth’s
surface is more than 6,000 times current commercial energy consumption. The
hurdle is the difficulty and cost of collecting solar energy...
Does this scenario – of a world in which fossil fuels generate the bulk of
commercial energy over the next half century – generate worrying security
problems? If one focuses on oil or gas alone, the answer might be yes. In both
these cases, the reserves are not located where most of the consumption takes
place. The gap is particularly large for conventional oil... But coal is widely
distributed, with much of it in the large consuming regions. The best solutions
then for governments concerned with security are diversity of sources and open
and flexible world markets. Attempts by any power to seize valuable resources
for exclusive use would create serious global insecurity and even war...
Remember that this argument ignores the question of climate change. It asks
whether the Malthusians who argue that the world will soon run out of fossil
fuels allow the Malthusians who worry about the damage to the atmosphere to
cheer up. The answer is an unambiguous no. It will be perfectly possible to run
a fossil fuel economy for many decades at prices that are likely to be
substantially lower than those of recent times. Even if they remain at current
levels, the world economy will almost certainly cope, as its recent performance
suggests. The world can afford quite expensive energy. The big question is,
instead, whether the environment on which our lives depend can cope with the
Update: This is from The New York Times, It examines the coversion of coal to either diesel or natural gas:
for New Oil Sources Leads to Processed Coal, by Matthew L. Wald, NY Times: The coal in the ground in Illinois alone has more energy than all the oil in
Saudi Arabia. The technology to turn that coal into fuel for cars, homes and
factories is proven. And at current prices, that process could be at the
vanguard of a big, new industry. ...
But there is a big catch. Producing fuels from coal generates far more carbon
dioxide, which contributes to global warming, than producing vehicle fuel from
oil or using ordinary natural gas. And the projects now moving forward have no
incentive to capture carbon dioxide beyond the limited amount that they can sell
for industrial use.
Here in East Dubuque, Rentech Inc., a research-and-development company ...
recently bought a plant that has been turning natural gas into fertilizer for
forty years. ... In an important test case for those in the industry, it will
take a plunge and revive a technology that exploits America's cheap, abundant
coal and converts it to expensive truck fuel. ...
There are drawbacks; the technology requires a large capital investment, and
a plant could be rendered useless by a collapse in oil prices. ... Lately ...
the price of diesel fuel, which determines the value of this coal-based fuel,
also called synfuel, has soared, as has the price of natural gas, which made
plants like the one at East Dubuque ripe for change.
Most of the interest is in making diesel using a technology known as Fischer-Tropsch,
for the German chemists who demonstrated it in the 1920's. ... The technology
was used during World War II in Germany and then during the 1980's by South
Africa when the world shunned the apartheid regime there. Now Rentech is
preparing to use an updated version. ...
Other projects are in various stages of planning in this country... But
people who think this technology will find wide use presume some kind of
environmental controls, which the Rentech plant, thus far, does not have. Some
environment and energy experts doubt that the method is compatible with a world
worried about global warming. Unless the factory captures the carbon dioxide
created during the process of turning coal into diesel fuel, the global warming
impact of driving a mile would double. ...
But the Energy Department sees potential. In March, the Energy Secretary,
Samuel K. Bodman, said ... that making diesel fuel or jet fuel from coal was
"one of the most exciting areas" of research and could be crucial to the
President's goal of cutting oil imports. He said that loan guarantees enacted in
last summer's energy bill might be used for Fischer-Tropsch diesel fuel.
In Des Plaines, Ill., near Chicago, a new company called GreatPoint Energy
has developed, on a laboratory scale, a vastly improved process for turning coal
into natural gas.
The promise and the pitfalls are similar for both GreatPoint and Rentech. ...
[T]urning coal into natural gas or diesel fuel means ... carbon emissions, which
causes concern to environmentalists. Carbon is released in converting coal into
an energy-rich gas made up of carbon monoxide and hydrogen, and then converting
the gas into something more useful. Rentech wants to turn it into liquid fuel.
GreatPoint wants to rearrange the molecules into natural gas. ...
Robert Williams, a senior research scientist at Princeton, said "it's a step
backward" to operate a plant like Rentech's without capturing the carbon. "It
almost doubles the emission rate," he said.
Mr. Ramsbottom also sees the carbon dioxide problem. "The worldwide
production of Fischer-Tropsch fuels is going to ramp up dramatically, and carbon
sequestration is on everybody's mind," he said. But the geology of this part of
Illinois is not suitable for sequestering the carbon dioxide from these plants.
Building a pipeline would be expensive and difficult to justify while carbon
emissions are not taxed, experts say.
GreatPoint has a different plan: move the plant where it can sell the carbon.
Andrew Perlman, the company's chief executive, thinks it has value. "Not only
is it capturable, one of biggest advantages of the system is, we can locate our
plant near a natural gas pipeline, in places where we can sell that carbon
dioxide for a profit, using existing technology," he said. Oil producers inject
carbon dioxide into old oil fields, to force oil to the surface.
Backers also hope that methanization, the process GreatPoint uses, will
succeed in part because it fits in with existing energy infrastructures, like
gas pipelines and coal mines. If it did, it could have a profound impact on the
balance of natural gas imports... Like Fischer-Tropsch diesel, methanization is
not a new idea; one plant in North Dakota does it now... But GreatPoint is going
about it in a new way, in which far less energy is lost in the transition. ...
Robert Williams, a senior research scientist at Princeton University, points
out that crop wastes and wood chips can also be gasified, producing carbon
monoxide and hydrogen. Normally, biomass is thought of as carbon-neutral,
because for each plant cut down for gasification, another grows and absorbs
carbon from the atmosphere. But if biomass is gasified and the carbon dioxide
sequestered by being pumped into the ground in the expectation that it will stay
there, then atmospheric carbon actually declines for every gallon produced.
From a greenhouse perspective, that is more attractive than what Rentech does
now with the carbon dioxide from its plant here. It is sold to soft-drink
bottlers. That keeps the gas sequestered until someone burps.