Archive for Carbon Dioxide Emissions

Trees and Carbon Offsets

There’s an article in the Christian Science Monitor by  Moises Velasquez-Manoff discussing attempts to standardize the quality of carbon offsets.  Carbon offsets are a big concern to me, especially when a lot of the offsetting is in the future, as is the case with planting trees.  From the box at the end of the article:

And unless a forest is permanent (and who can guarantee that?), trees only temporarily sequester atmospheric carbon. When they burn or decompose, the carbon they contain is released back into the atmosphere. In tropical countries, where trees are most effective as a cooling agent, they’re often up against poverty and political instability. “Does some guy wake up and say, ‘Now I’m the dictator of the country. I want a golf course?’ ” says Michael Dorsey, a professor of environmental studies at Dartmouth College in Hanover, N.H. “There’s the big issue.”

Another issue is that trees may e like the old saw about the insurers: someone who lends you an umbrella, but takes it away when it starts to rain.   In the Western US and Canada (as well as many other parts of hte world,) our forests are rapidly dying due to a bark beetle infestation brought on by persistent drought and not enough frost… which makes the ultimate cause of the dieback Global Warming.

My worry is this: you plant a bunch of trees, that are supposed to suck up CO2 and thus slow global warming.  But not enough people are planting trees, etc., so Global Warming continues and the trees die and catch fire due to temperature rises and persistent drought caused by global warming, realeasing any CO2 they have absorbed back into the atmostphere, and compounding the problem.  By counting on trees, we are unintentionally creating a positive feedback loop that could end up accellerating climate change rather than stopping it.

This is why, rather than buying carbon offsets, I prefer to give away CFLs, and I only count the energy saved in real time as offsetting my own carbon emissions… I may have already given away enough CFLs to reduce future electricity consumption over the next decade or two by 72 GWh, but the number I focus on (and I encourage others to focus on as well) is how many kWhs or tons of carbon emissions you have prevented today not how much you may be responsible in the future.  I can’t just give away a 25W CFL with a rated life of 12,000 hours and say I’ve reduced total electricity used emissions by 900 kWh.  If the person I give it to uses the bulb for only 15 minutes a day, it’s going to take 134 years for that bulb to prevent the use of that much electricity… and long before then, we should be operating on electricity that’s mostly renewable based anyway.   Not to mention that within 10-20 years, I expect that the incandescent lightbulb will be only available in antique shops, so if the bulb I give away is still in use 20 years from now, it’s probably just replacing another CFL, for no net energy savings.

In short, carbon credits are a good thing, but an offset that pervents carbon from entering the atmosphere is better than one that takes it out and stores it for some unknown period of time, and it’s much better to prevent carbon today than a year from now.  All in all, buying offsets is a good thing, but we shouldn’t be fooled that it’s nearly as good as reducing our own carbon emissions today.

Further reading:

Green Wombat: Buyer Beware

Celias: Carbon Offset Certification

AutoBlogGreen: REEEP reduces uncertainty

IREA Voices on IREA’s green tag program

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My Thoughts on Analysts: Doug Casey

I first encountered Doug Casey at the 2004 World Gold, PGM, & Diamond Conference in Vancouver.  Around a year before, I became convinced that we were in the early stages of a Gold bull market, partly based on the arguments of Richard Russell, and partly based on my own conviction that people would come to see the world as an increasingly uncertain place in the years to come (a process which, in my opinion, has much farther to go.)  I was dissatisfied with Russell’s picks (his top pick for a gold mining company was Newmont, based on the fact that it was the largest gold company at the time.  NEM has risen about 20% in the three and a half years since Russell first brought it to my attention, which is an uninspiring performance, considering that gold has risen about 70% over the same period.  As I’ve said before, Russell isn’t much of a stock picker… he just has an incredible feel for market and sector moves.) 

I also have some serious reservations about Gold mining, because of its serious environmental impacts.  This was before it was possible to buy precious metals in the form of ETFs such as IAU, GLD, or SLV, and so I was looking for an analyst who understood mining companies, and might also be able to point me towards companies that mine precious metals relatively responsibly.  No one at the conference was talking about environmental responsibility, but two of the analysts whose talks I attended stood out as having an understanding of how mining companies and the precious metals industry work.  Those two were Paul van Eeden and Doug Casey.  

Casey in particular caught my attention because he was a big proponent of a type of company he refers to as “Land Banks:” these are companies which do not have any actual mining operations, but rather buy up mineral rights that have already proven.  They hold these mineral rights, doing only exploratory drilling to further prove out their reserves as a speculation on rising prices.  While the intent is always that they will eventually sell the mineral rights to other mining companies, since they are not engaging in current mining operations, they are less harmful to the environment than companies that actually dig the stuff out of the ground.  Silver Standard, SSRI was the company that invented this model buy buying up cheap rights to silver deposits when the metal was cheap in the late 1980s and 1990s, while Vista Gold, VGZ is following in SSRI’s footsteps by investing in gold deposits.  Robert Quartermain, the president of Silver Standard serves on Vista’s board.  (Note: I and some of my clients hold substantial positions in both stocks.)

Casey is not interested in the land banks because his is an environmentalist (quite the opposite, see below), but because he recognizes that, if you believe that gold (and silver) are “Going to the moon” as he says, then the built in leverage of owning metal in the ground can make more sense than digging the metal up and selling it while the price is still rising.

After the conference, I bought a 2 year subscription to Casey’sInternational Speculator newsletter (for $299… I note that the price has since risen along with gold.)   Here are a few of my conclusions:

  • He knows the world of junior mining companies backwards and forwards.   Small start up companies are always the most fertile ground for a company analyst, because less is known about them, and because few investors are paying attention, it is much easier to find information or come to conclusions about a company that are not widely recognized by the investing public.  His picks among the large and medium cap companies don’t seem any better than anyone else’s, but his picks among the small and medium cap miners have been excellent.
  • His 7 P’s framework for evaluating resource stocks is an excellent framework for organizing the relevant information about a company.  I have adopted a modified version which I use to evaluate renewable energy and energy efficiency companies.
  • He takes libertarianism to an extreme.  “Wacko” is a word that comes to mind.  But being crazy and being intelligent are not mutually exclusive; in fact, they often seem to go hand in hand.  In my opinion, that’s the case with Casey. 
  • Enough people follow his newsletter that it often was not a good idea to buy a stock right after he recommended it.  I had my best results by waiting a while and buying them a month or two later, if they had not just kept on rising.  For big spenders who want to seriously speculate in resource stocks, the Casey Investment Alert would likely be worth the money, given that they had a few hundred thousand dollars with which to speculate.  For myself, I’m very tight with my money, and I was more interested in understanding his methods than following his advice.  Of the stocks I did buy on pullbacks after he had recommended them, about half have more than doubled, another third are roughly flat, and the rest are down… which works out to be excellent average returns.
  • The only stock of his (other than Vista and Silver Standard) that I made a large investment in was Nevada Geothermal (which I still own… I even bought some more recently, and have recommended it to clients.)  It’s only up slightly since I first bought it, but since it is a renewable energy company, I’m happy to hold it for the long haul.  I’ve also heard some good things about it from other sources.

I did not renew my Speculator subscription when it lapsed last summer, mainly because I feel that while the precious metals bull market is likely to continue, the risks are much greater than they were when I first started allocating money to the sector.  I am currently slowly reducing my exposure to precious metals, although I still recommend small investments in precious metals (via the GLD, SLV, VGZ, and SSRI) to my less conservative clients.  I also like Rio Tinto for a general exposure to metals, because, in my opinion, RTP the most environmentally responsible miner out there.   I note that the main page of their website says “Rio Tinto supports the main conclusions of the UK’s Stern Review on the economics of climate change.”  (Again, some clients and I have positions in RTP.)

Back to Casey, after my International Speculator subscription lapsed, I signed up for his free newsletter What We Now Know (WWNK).  Naturally, there aren’t stock tips in WWNK, but I wanted to keep an eye on what Casey thought about the markets and world events in general.  WWNK is a lot more of a political tract than the Speculator (although he often had some rather scathing things to say about the US government, and I could not help but be amused at the way he refers to US citizens as Boobus Americanus.) 

Casey does not write much of WWNK, but I’m confident that the people who do are on the same wavelength.  The underlying message is that any sort of regulation is evil, an attitude which is unsurprising in an investor in mining companies.  As Jared Diamond outlines in his excellent book Collapse, gold mining companies usually leave environmental problems behind them that are much more costly to clean up than all the profits they ever make from selling their product.  Since Casey primarily analyzes and invests in mining companies, it’s no real surprise that he’s hostile to regulation, since real regulation would bankrupt most of his babies.

Unlike my previous entries in this series, I was prompted to write this entry in response to an article in WWNKDoug Hornig wrote a diatribe in an attempt to contradict the arguments for global warming.  It’s the usual stuff… “temperatures have not gone up that much”  “there have been previous periods of warming” “evidence for past temperatures is all indirect”… all attempts to muddy the waters, and no mention at all of the massive increase in the main driver of global warming: atmospheric CO2.  I’m not going to bother to deal with all his points… it’s not really a serious fact-based argument, rather a litany of the reasons (some real, some imagined) why there is some doubt about the reality or consequences of global warming, and, as such, just an exercise in obfuscation. 

It’s unfortunate, but people who want to believe that global warming isn’t happening gravitate towards arguments like these.  It’s not really a logical argument, but rather just people seeking to justify belief in what they want to believe.  I think it’s better perhaps to just make a meta-argument: if global warming is just a figment of liberal’s imaginations, why aren’t there a lot of wackos out there trying to muddy the waters by casting doubt on “the scientific theory of global temperature stability or cooling.”   No one is trying to cast doubt on the theory of “global temperature stability” because there is no such theory… and no evidence that our climate is stable.  It’s getting hotter, and it’s likely to get a lot hotter unless we get serious and do something (actually a lot of somethings) about it. 

In conclusion, Doug is a great analyst of resource companies, and if you’re interested in investing in those companies, you will do well by giving him a read.  But he also has a political agenda, and his belief that government is always bad is, simply put, wrong.  I wish he and his buddies would stick to their knitting.

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Conversation with a wind skeptic

I’ve been having a long conversation with a wind skeptic who responded to my Gust Ceiling entry.    While the rest of us are thinking about ways to overcome the intermittentcy problem with wind, this Rucio is dismissing it out of hand because of that problem. 

 See the comments for our conversation.  We RE enthusiasts need people like this Rucio/Eric Rosenbloom to make sure that we’re not the ones in la-la land.  To paraphrase Paul Newman, if you look around and can’t tell who the lunatic fringe is, you’re it.

I’d like to point out that I jumped to a couple of conclusions myself, which he points out… I left these comments in, even though they do not make me look great.  They are there because I want people who are trying to make up their mind to know that I have not just invented myself a straw man in order to look good.

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Clean Coal?

Coal powered utilities have a “solution” to global warming caused by carbon dioxide, and they call it “Clean Coal” and “Carbon Sequestration.”  To many environmentalists, clean coal is simply an oxymoron.

 Also known by its technical name, Integrated Gasification Combined Cycle or IGCC, this new type of electric generator heats coal in the presence of oxygen, producing carbon dioxide and hydrogen gas, and leaving a bunch of the nasty stuff found in coal (mercury, sulfur, etc.) which would be released into the air in ordinary coal combustion plants stays (mostly) put.  The hydrogen is separated off by absorbing the carbon dioxide with an amine solution (other methods are in the works, but this is the only one in use now), and the hydrogen is burnt in a modified turbine to produce electricity.

Compared to conventional pulverized coal plants, this is an elegant solution.  There is much less of a problem with the traditional pollutants associated with coal (mercury, particulates, etc.), the whole process is slightly more efficient than pulverized coal, producing slightly more electricity per ton of coal burned (and carbon dioxide produced), and there is the theoretical possibility of capturing the carbon dioxide and putting it somewhere where it won’t enter the atmosphere and heat our planet (i.e. “sequester” it.)

On the downside, in the three IGCC plants currently in existence, there has been no attempt to capture CO2, for the simple reason that we don’t have any place good to put it, and any attempt to do so would require a significant portion of the energy output of the plant (I’ve heard numbers ranging from 10% to 30%), meaning that a lot more coal would have to be burnt just to deal with the carbon dioxide emissions.

FutureGen proposed design renderingXcel Energy, is with grants from the federal govenrment and other partners, is planning a 300 to 350 MW IGCC plant in Colorado, which will be the first in  the United States, as well as the first anywhere in the world to attempt carbon sequestration (most likely by taking some of the carbon dioxide and injecting it down old oil wells, a practicepioneered at the Wyburn oil field in Canada.  Some other methods of sequestering carbon dioxide, such as injecting it in brine formations, have shown the potential to form acid, leading to worries that the acid will breach the geologic formation, leading the carbon dioxide to escape.

In addition, according to an interesting article Can Coal be Clean? in the Nov 30 Economist, IGCC plants are also much higher maintenance than the old pulverized coal plants.  So is it any surprise that among the 150 new coal plants now being planned, only one or two are IGCC, and of those, only FutureGen is actually planning to test all the technologies that the utilities are holding up as the “solution” to carbon dioxide emissions, while the rest are just more business as usual.

Should we hold out much hope for IGCC with carbon sequestration?  Maybe in 30 years, after all the kinks have been worked out.  Carbon sequestration today is at a similar level of technological maturity as wind was in 1980.  Now that wind and solar have been generating electricity for 30 years, and are proven to work well, that’s where we should be focusing our efforts. 

I applaud FutureGen as a research project, but if we’re looking for a carbon neutral place to get our electricity today, IGCC with sequestration is a distraction.  However, if it can be made to work, I hope to be around when we have IGCC with carbon sequestration, fuelled by biomass, for a net carbon-negative power source.

Some numbers:

According to this testimony before the US house of Represnetatives, cost of electricity from IGCC without sequestration is $46 to $49 per MWh, and cost to sequester CO2 is estimated at $3-$10 a ton, depending on method an geology.  At treehugger, I found an article which implied that IGCC produces about 1 ton of CO2 per 5 MWh, which would make the cost of sequestration between $.60 and $2.00 per MWh, or .6 to 2 cents per kWh.   We do need to consider the fact that some of that $3-$10 per ton cost comes in the form of cost of electricity, so the calculation of cost of energy becomes depends on the source of electricity for sequestration, and how much of that carbon is sequestered.  None of this includes the cost of carbon capture, which would likely be low if only a fraction of the CO2 were captured, but become more expensive as the 90% or so theoretical limit is approached.  60% capture seems to be a number that the people who study this think would not be onerous in terms of cost.

 There is an incredible pile of information to sort through at Gasification.org.

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Wal-Mart pushes CFLs

A few months ago I blogged about Wal-Mart‘s energy efficiency push.  I predicted that Wal-Mart would be one of the first mass distributors of E85 ethanol, and I have since noted that compact fluorescent lightbulbs (CFLs) have been given increasingly prominent displays in their stores, and that they have an excellent selection of styles.  (When I moved into an new office a couple months ago, one of the first things I did was tell my landlord about how much money he could save by switching to CFLs (about $25 a month for a $70 investment in this case.)  He later asked me where he could find the candelabra bulbs (the ones with the tiny bases shaped like a flame,) and I immediately told him: Wal-Mart.  He’s an employment lawyer, and does not shop at Wal-Mart as a matter of principle… He still has not replaced the candelabra bulbs, so I’m going to give him a pack for Christmas (bought somewhere else.)

 Since I wrote the blog, Wal-Mart has announced that they’re exploring selling E85 (admittedly not the greenest renewable fuel, when made from corn, but rolling out distribution for E85 will make cellulosic ethanol easier to introduce.)

Now they’ve annouced that they are going to try to sell 100 Million CFLs in 2007.  Considering that replacing wasteful incandescent lightbulbs with CFLs is the best financial investment I know (the money saved on electricity pays for the bulbs many (as much as 25) times over), as well as being the most effective way most people can reduce pollution and greenhouse gas emissions (#2 is using energy efficient transport), I sincerely hope they beat their goal.

I’m particularly pleased by the fact that they will be introducing interactive displays and educating employees about how to choose.  The number of types and wattages (as well as color temperatures) of CFLs can be baffling to the unitiated, and people should be guided towards buying Energy Star bulbs for their greater reliability (If you have ever had anyone tell you that they tried CFLs but then switched them out because they stopped working, you can be almost certain that they weren’t using Energy Star bulbs.)

So it sounds like great news.  How great?  It’s hard to know because they’re not saying how many CFLs they were selling before.

 Thanks to Phil van Hake for sending me this article.

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Vision of a sustainable energy future

I’ve been meaning to write an article outlining a vision of a sustainable energy future, where biomass is converted into fuel and electricity through pyrolysis and the waste product, carbon is used as a fertilizer a-la terra preta to produce more biomass.  The good news is I don’t have to.  The Engineer Poet did, and it’s just part of a much broader vision you’ll find here.   He also goes into a great discussion of transportation technologies and efficiency which would never have made it into the article I’d write.  I like it when other people crunch numbers, so I don’t have to.

Give yourself a half hour to read the whole article.  It’s worth it.

( Terra Preta: I got a comment from Erich J Knight on terra preta here that went into a lot of depth, but I deleted it by mistake.  Forturnately, he says pretty much the same thing in his blog.  I first heard about terra preta from Ron Larson, chair of the American Solar Energy Society, who is very active in the local (Denver) renewable energy scene.  If you haven’t heard about terra preta, and are concerned about globabl warming or soil fertility without fertilizers from fossil fuels, it’s worth looking into.)

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Five minutes with Xcel’s Dick Kelley

Richard C. Kelly

Dick Kelley, the President, CEO, and Chairman of the Board of Xcel Energy spoke to the board and invited guests of Western Resource Advocates last Friday.  I was invited as a supporter of WRA.

 

His speech was widely reported in the press because he called for national regulation of greenhouse gas emissions.  The AP story emphasized Kelly’s shift from being an environmental skeptic to calling for national Carbon emissions regulation.  This is a big shift, and a giant step for a utility, but Kelly is not so much of an environmental advocate as he might sound.

 

I had a short conversation with him before dinner.  After we introduced ourselves, I told him I’d been making his life harder recently at the Colorado PUC.  Like anyone who’s been successful in business, he didn’t miss a beat, and told me that it was great, and the more people’s input we had, the better.

 

He said that Xcel had been opposed to Amendment 37 because of the cost of the solar set-aside, a position I’m actually sympathetic with.   After all, is it better to have 1 MW of solar photovoltaics on people’s roofs, or 20 MW of Wind?  When you look at the subsidies needed to get people to install PV (which is an Amendment 37 requirement), we could probably get 20x as much wind energy onto the grid for the same cost.   It’s not that wind cost 1/20 as much as solar, but since the price of electricity from wind is comparable to the price of coal, it does not take much to get a lot of wind, while solar needs to be heavily subsidized.

 

What I really would have liked in A37 was an allocation for Demand Side Management (DSM) and energy efficiency.  If the same incentives could have gotten us 20 MW of wind or 1 MW of solar, it could also have gotten us 40 MW of DSM and energy efficiency.  (none of these numbers are precise… it’s hard to tell what an incentive will accomplish until it is implemented, but we do know that DSM is cheaper than wind is cheaper than solar.)  But energy efficiency was not on the table when A37 was being written… polling data said that adding “energy efficiency” to the bill dropped popular support by so much that we couldn’t have gotten it passed.

 

Dick Kelley also told me that Comanche 3 (a new 750 MW coal plant) would be the last conventional coal plant that Xcel would build.  I told him Comanche 3 would be fine with me, if they’d just shut down Comanche 1 and 2 (a couple old, less efficient plants at the same site.)  That was an option that’s clearly off the table, but he did say Xcel needed to find a way to clean up the emissions of those plants.  I suggested wood chips, like Aquila is doing at their  Clark Generating Station in Canon City.  By co-firing wood and pine needles from necessary forest thinning, Aquila is able to reduce net CO2 emissions, as wel as NOx, SOx, and Mercury.

I mentioned the option of hybridizing concentrating solar thermal power (CSP) with existing coal plants.  He didn’t really understand the concept, and thought I was talking about photovoltaics.  I’m not sure I was able to explain myself well.  Put simply, when heat is available from the sun, it can be used to displace heat from coal (or natural gas) in an existing generator.

Kelly also said he’d like to raise wind to 20-25% of generation, but after that they’d have to see what the effect on reliability of the grid would be.  I brought up the idea of Pumped hydro or CAES.  He didn’t seem familiar with the fact that Colorado’s Big Thompson Project could be adapted for pumped hydro fairly easily.  As he said, new big hydro is not going to happen.  Which is all the more reason for adapting out existing reservoirs for energy storage with pumped hydro.

I was encouraged that he has recognized that Carbon Emissions are a massive problem, and that the utilites, who are the biggest emitters of carbon, are going to have a big part in the solution, but discouraged that he knew so little about several pieces of the solution that have great potential to be quickly viable.

Xcel likes wind, but is not looking at new ways to increase how much they can put on their system… they’ll just go to 20-25% and see what happens.  They’re pursuing IGCC (Internal Gasification Combined Cycle a.ka. “Clean Coal”) with carbon sequestration in a pilot plant, which many environmentalists feel is just a distraction from renewable energy, pointing out that no one has ever done any sort of sequestration on a large scale.  To me, that is an argument for IGCC with Carbon Sequestration, on a small scale: let’s give it a try and see if we can make it work or not.

IGCC is a lot better than one of the other ideas that Kelly brought up in his speech: he thinks that part of the solution will be nuclear power.  Nuclear power is indeed carbon neutral, but it requires diminishing uranium supplies, or the use of breeder reactors which make plutonium, an element which is not only extrememly toxic, but also an excellent material for making nuclear bombs.  We still haven’t figured out what we’re going to do with the waste from our existing reactors… until we do that, I think it’s crazy to look into building more.  And considering the real threat of terrorism, a nuclear reactor or wastepile makes a much better target than a solar array or wind farm.

When it comes to Kelly’s call for national regulation of carbon emissions, it’s a great step in the right direction, but it was a far cry from calling for a carbon tax (which economists think would be the most effective method of carbon regulation.)  Kelly knows global warming is real, and he knows that our politicians are going to do something about it.  By calling for national mandatory regualtion (but not a tax) he’s trying to shape the debate to come out in a way that Xcel will find easier to deal with. 

With a little more education about alternatives such as CSP, and ways to make the grid able to accept more intermentent resources (Time of use pricing, DSM, and energy storage), he may come to realize that Xcel has lots of ways to live in a carbon taxed or carbon limited world.  And he seems willing to listen; so if you get his ear for five minutes, try to make the most of it.

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