Fossil Fuels Fight Back
The fossil fuel sectors are fighting back against a wave of popular sentiment that they say is ill-founded. The oil, gas and coal industries say that their products are abundant and reliable, allowing this nation to achieve its economic well-being.
Global energy demand is expected to rise by at least 30 percent over the next quarter century and oil, gas and coal will remain critical. Why? Because they are energy-dense and can be stored, making them reliable sources. Until greener forms of energy can reach economies of scale, fossil fuel advocates say that this country should allow easier access to them so that they become more affordable. The added wealth, in turn, promotes environmental progress.
“I believe the United States has an opportunity – in fact, a great responsibility– to create an energy policy with affordability at its core,” says Chevron Corp.’s Chief Executive John Watson in a speech. “We need a refreshed policy approach that recognizes the value of fossil fuels and allows a market-driven transition to affordable substitutes over time. And I would suggest that only an energy policy with affordability as its central goal has the potential to deliver long-term economic, energy and environmental security.”
Harmful air pollutants in the United States, he adds, have fallen by 70 percent in the last two decades. By contrast, in poorer nations that do not have universal access to electricity, air and water quality suffers. The riches that a thriving economy creates enable the development of the actual technologies it takes to reduce emissions, says Watson.
To that end, Watson is emphasizing that the United States needs to move away from policies that limit energy development and toward those that facilitate it. Even with “stubbornly high” gas prices, he says that oil and gas developers cannot get access to plush regions such as the eastern Gulf of Mexico.
None of this is to say that renewables will not be a valued part of Chevron’s portfolio, the executive says. Because of its geothermal holdings, the company is the largest producer of green energy in the oil sector. With that, Watson says that it remains committed to generating more renewables at scale and without subsidies.
“Getting to commercial scale remains a fundamental hurdle for most renewable energy,” says Watson. “Both wind and solar require enormous amounts of land to generate the same volume of energy as fossil fuels and they require backup power.”
Self-Serving Approaches
Their pitch is self-serving and meant to disrupt the emergence of alternative energies, say those who think the nation must wean itself from dirty fuels. Enabling cleantech will require subsidies as well as regulations that encourage the cleaner use of energy -- all things in which the fossil fuel sector has been skeptical.
But Watson responds that trying to replace those fossil fuels by mandating the production of and use of renewables before the technologies are ready will only increase costs. Nevertheless, he acknowledges that oil and coal companies are tempting targets for those who see them as fat cats and polluters. Chevron earned $19 billion last year -- but it is investing $26 billion around the world, including $7 billion here.
In the case of coal, if the rash of environmental regulations now pending is to go through without delays then estimates suggest that 20 percent of the current fleet would shut down. Much of those older and less efficient plants, however, would be replaced with those fired by cleaner natural gas.
Through a series of actions, the Environmental Protection Agency plans to reduce the level of pollutants -- including mercury, lead, sulfur dioxide, nitrogen dioxide and carbon dioxide. While utilities dependent on coal-fired power would like to sideline those policies, EPA has shown a willingness to adjust its timetables as well as its requirements.
“Nonetheless, we will continue to do what we can politically as well as in general dialogue with the EPA to try to put greater rationality in what it is that they are trying to accomplish,” says Michael Morris, chief executive of American Electric Power, in a conference call.
Globally, however, its a different story: 20 percent of the population has no access to reliable energy, making cheap and abundant coal an essential element to grow their economies. Therefore, the developed nations should seek to commercialize the technologies to reduce emissions and especially those can minimize carbon levels, says the International Energy Agency.
The fossil fuel sector has made a strong argument that it will remain vital for the foreseeable future. Its words, though, will fall on deaf ears if those in the oil, coal and natural gas industries downplay the fears of those who want stronger environmental standards and shared economic sacrifice.
EnergyBiz Insider has been been nominated in 2010 and 2011 for Best Online Column by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.
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energybizinsider@energycentral.com
Comments
Long-Run thinking
A sensible energy policy accounts for several facts. First, fossil fuels are the dominant energy source today. Second, renewables are getting less expensive while the cost of extracting, transporting and burning fossil fuels is increasing, especially if it is done in an environmentally responsible way. Third, no one really knows how much oil and gas are left in the ground - the best we can do is estimate the amounts that can be economically exploited at a given price point. Fourth, market prices don't really account for the long-run costs of finding and exploiting fossil fuels - they only reflect relatively short-run costs. Fifth, the economic, political and social cost of a sudden and sizable disruption in energy supplies would be far more catastrophic than the somewhat painful but manageable impacts of gradual but consistent increases in energy prices.
The economic rationale for developing renewable energy resources at a measured, sensible and consistent pace is to minimize the likelihood of a disruption, whether by war, natural disaster or simply seeing the tap run dry earlier than we anticipated. Estimating recoverable oil and gas reserves is an art, not a science. When supplies start to run out, as they inevitably will, our children and grandchildren will thank us for having the foresight to start early and make some sacrifices. We want to make sure they don't have to deal with the consequences of a faster-than-expected decline in production.
Jack Ellis, Tahoe City, CA
Fossil Fuels?
Fossil fuels are simply a dead end. We can't assume that carbon capture for coal will ever be affordable. If only we had invested the trillion dollars we've wasted defending our fossil fuel interests in the Mid East in Renewables. China has a ten year 760 billion commitment to Renewables, and we are arguing over a few billion? As a Solar installer, my products are all comimng from Germany, Taiwan and China.Products that were all engineered in the US. We are now installing solar at $4 a watt, cheaper than off shore wind, and cheaper over 25 years than grid power.(at $.12 per kW). The power curve for a solar module almost matches the demand curve of a city like New York, on the hotest day of the year (peak demand). Maybe finding the space for PV would be wise, including the advantage that decentralized power producers have on grid security. I haven't heard of any solar farms exploding and killing people,or spilling toxic goo into our oceans. Natural gas should be the transitional fuel. GE has anounced a NG plant that can ramp up and down in seconds to respond to wind or solar input. And if fossil fuel folks want the playing field to to level, then maybe they should pay the US tax payers back for the Bush Oil wars. Thanks / Ray Montana
From Controversy Comes Resolution – An Evolving Energy Policy
The USA lacks a coherent energy policy. We didn’t have one during the Arab Oil Embargo and now, forty years later, we still don’t. The issue of curtailing Global Warming through support of severe environmental regulations and renewable energy must withstand the criticism of job-losses and higher electric utility costs. Can a balance be achieved? Hopefully a rational dialogue would occur melding divergent view-points (i.e. fossil-fuel and nuclear vs. renewable) as this debate continues. Besides the policy-makers, the open market will be the final determining factor in what constitutes the mix of energy components. For example, the XL Pipeline and GE Solar Energy Manufacturing Plant both have a role in creating jobs and revenue.
Richard W. Goodwin West Palm Beach FL
Fossil Fuels Fight Back
John Watson, CEO Chevron, not only makes several self-serving claims, they are also false. Mr. Watson falsely implies if the oil, gas, and coal industries were only allowed to drill and mine everywhere unfettered by environmental regulations the cost of their products would come down. However, the main driver of cost is the increasingly more difficult to extract reserves of these resources that remain untapped. Oil is never going to be as cheap as it was when a well on land could be sunk a few hundred feet into the ground and gush oil for years into a much smaller market than today's. Another myth Mr. Watson repeats is the idea that renewables are not ready for prime time. Wind is currently competetive with coal generated power and solar is rapidly becoming competetive in several US markets. The cost of all renewables will continue to decline and the costs of fossil fuels will continue to increase. Mr. Watson wants to excuse all of the pollution, illness, and environmental degradation his industries have caused over centuries of exploitation by pointing to some recent reductions in pollution they have implemented, but this does not change the fact that renewable energy is, and always will be, much less polluting than fossil fuels. As for the 20% of the population that currently has no access to reliable energy, renewable energy is a far more viable resource for providing energy security because most of this population lives in areas beyond the reach of the power grid. These people will more affordably skip "wired" power technology and implement distributed renewable technology much as they have already skipped land phones for cell phones.
Not quite correct
Wind is not competitive with coal-fired power unless wind receives a production tax credit (or 30% cash grant-in-lieu) and/or coal-fired power gets saddled with carbon capture and sequestration. Also, to say this one has to ignore the costs of long distance transmission line construction and maintenance, turbine maintenance, and the cost of installing, operating, and maintaining back up power generation--typically fossil-fueled.
No one can argue that fossil fuels have environmental issues but so do wind and solar PV. For solar PV, the chemicals involved in manufacture are pretty hazardous and must be properly disposed of. Wind has environmental issues as well. Wind turbines require horrendous quantities of concrete, roughly 110 to 130 tons per MW nameplate capacity and about 44 tons of steel and other metals, including rare earth elements, per nameplate MW. Wind farms in mountainous regions typically mean felling large swaths of trees for access, constructing the turbine, and space for laying down equipment and locating cranes for maintenance. Then there are the hundreds of miles of rights-of-way to be cleared for construction of transmission lines. On the animal mortality side, wind farms kill numerous birds and bats of several species over the course of each year. The insects and pest animals these birds and bats feed on can then multiply into a problem until the natural order of things brings in alternative predators thereby altering the ecology of the area. There is still considerable discussion related to the effects of turbine noise and changing wind patterns downstream of the wind farm.
The last detrimental impact of subsidizing wind and solar energy is that by jacking with the power market, generation developers are reluctant to take the risks of building new plants to replace older ones that in many cases are less efficient and have less effective, if any, pollution mitigation. From what I have seen of typical electrical demand cycles, there is a low at night from about 10 or 11PM until about 5 to 6AM. Then there is a minor peak as people wake up and get ready for work which is followed by a slight valley and then an upswing starting just after noon and peaking at 5 to 6PM. Wind is typically at its highest output from 11PM to about 6 or 8AM, dropping rapidly after that until starting to rise again at about 10 or 11PM. Solar comes up gradually with the sun, peaking at noon to 1PM, then declining. Neither is significantly available at peak demand. With no new fossil-generation being built, the grids are having to call upon the old plants which should have been retired and replaced by newer, more efficient, less polluting facilities.
Ken here
Both comments below beautifully said ... why I so dearly appreciate 'moderating' all these discussions. Intelligence, civil discourse (for the most part.) Thanks to all.
Fossil fuels have brought a
Fossil fuels have brought a billion people unprecedented prosperity,
but now they are the equivalent of Jonestown kool-aid for human
civilization, due to Global Warming. They need to be phased out,
as they are doing in northern Europe.
"You can read the signs of [daily weather], but you can't read
the 'signs of the times.'" Jesus to Pharisees (Matt 16:1-4)
The Future of Fossil Fuels
Two Churchill quotes come to mind "Democracy is the worst possible system, except for all of the others" (change democracy to fossil fuels), and "You can always trust the Americans to do the right thing, after they have tried all of the alternatives". Yes fossil fuels have problems, but the current alternatives are not ready for 'prime time'. Yes we need to keep working at the alternatives including nuclear, but a responsible energy policy will understand the need for a bridge source, i.e. fossil fuels, for probably one or two decades.