Wichita Cfr

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A lecture to the Wichita Council on Foreign Relations on the geopolitical realities of the energy issue

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Wichita Cfr

  1. 1. The New Energy Crisis: Climate, Stimulus and National Security Iain Murray Wichita Committee on Foreign Relations Wichita, KS May 21, 2009
  2. 2. The Energy Conundrum <ul><li>Global and Domestic energy demand is increasing </li></ul><ul><li>The West has erected barriers to domestic energy development </li></ul><ul><li>Demands to erect more barriers are increasing </li></ul><ul><li>‘Acceptable’ energy cannot meet demand </li></ul>
  3. 3. Domestic Energy Demand to 2030
  4. 4. Global Energy Demand to 2030
  5. 5. Drill Baby Drill Removed Barriers
  6. 6. Developing Oil & Gas as Stimulus <ul><li>OCS development would generate $1.3 trillion in royalties to federal, state and local governments </li></ul><ul><li>160,000 jobs generated, paying twice national average wage </li></ul><ul><li>OCS alone would provide 1 million bbls a day, offsetting 1/10 th of imports </li></ul>
  7. 7. But Delay Has Replaced Moratoria <ul><li>Interior Department extended comment period for the five year offshore oil and natural gas lease plan </li></ul><ul><li>Interior pushed back second round of oil shale R&D leases </li></ul><ul><li>VA governor delaying offshore lease sale scheduled for 2011 </li></ul>
  8. 8. Delay the New Watchword <ul><li>Nuclear permitting process takes 14 years (recent UK govt review suggests 4 years) </li></ul><ul><li>Coal power plant permits being delayed all over country unless CCS technology used (doesn’t exist) </li></ul><ul><li>LNG terminal permit in Long Island Sound blocked </li></ul><ul><li>Energy fine in principle, blocked in practice </li></ul><ul><li>Regulation of other areas increasing eg CAFE </li></ul>
  9. 9. Effect of CAFE Standards <ul><li>Aggressive targets of 5.8% improvement per year to 2016 </li></ul><ul><li>Proposal delivers zero net societal benefits </li></ul><ul><li>Cost -150,000 auto manufacturing jobs in five years </li></ul><ul><li>Cost unaccounted for – 800 extra road deaths </li></ul><ul><li>Effect on climate trivial to nonexistent (0.007 deg C temp, 0.6mm sea level) </li></ul><ul><li>Gives in to California and strengthens its hand </li></ul><ul><li>Puts EPA in charge of vehicle safety, not NHTSA </li></ul><ul><li>Clears way for regulation of GHGs from stationary sources </li></ul>
  10. 10. Western Europe Similar Story <ul><li>High gas prices mean electricity main energy issue </li></ul><ul><li>Nuclear plants being phased out (except in France) </li></ul><ul><li>Coal plants being phased out </li></ul><ul><li>Greater demand for NG </li></ul><ul><li>NG supply dominated by Russia </li></ul>
  11. 11. Putin’s Energy Plan <ul><li>Dec 2008 – ‘Era of cheap gas is coming to an end’ </li></ul><ul><li>Gas Exporting Countries Forum (GECF) founded in Moscow </li></ul><ul><li>GECF members: Algeria, Bolivia, Brunei, Egypt, Indonesia, Iran, Libya, Malaysia, Nigeria, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela </li></ul>
  12. 12. Environment Driving Western Policy <ul><li>Unifying factor behind US delay and European switch to gas is environmental alarmism </li></ul><ul><li>Climate alarmism rules out domestic production of fossil fuels </li></ul><ul><li>Environmental movement not budging on nuclear </li></ul>
  13. 13. Benefits of Affordable Energy <ul><li>“ Energy is an indispensable ingredient of material prosperity. . . . Where and when energy is in short supply or too expensive, people suffer from lack of direct energy services (such as cooking, heating, lighting, and transport) and from inflation, unemployment, and reduced economic output.” </li></ul><ul><li>- John Holdren, President Obama’s Science Adviser </li></ul>
  14. 14. So Are Renewables Affordable? 24.34 Solar 23.37 Wind 0.67 Hydroelectric 0.89 Biomass 1.59 Nuclear 0.25 Natural Gas 0.44 Coal Subsidy $ Fuel Source Source: Energy Information Administration Subsidies per Megawatt Hour
  15. 15. Cost to Replace Coal, Gas and Nuclear with Wind and Solar <ul><li>In 2007, the US generated 4000 billion kilowatthours of electricity </li></ul><ul><li>3659 bn kwh from coal, natural gas and nuclear ($3.6 billion in subsidies there) </li></ul><ul><li>Subsidies needed to replace that with wind and solar:$ 88 BILLION </li></ul><ul><li>Yet solar and wind still more expensive </li></ul>
  16. 16. Emissions Reduction <ul><li>Replacing high-emissions fuel sources with low-emissions fuel sources is expensive </li></ul><ul><li>High prices mean less energy used </li></ul><ul><li>Gas demand fell 3% thanks to $4 gas </li></ul><ul><li>Burden falls mostly on the poor </li></ul>
  17. 17. Waxman-Markey Cap-and-Trade <ul><li>Amounts to a massive energy tax </li></ul><ul><li>Real GDP losses = $9.6 trillion by 2035 </li></ul><ul><li>Average annual job losses over 1m </li></ul><ul><li>Peak year unemployment 2.5m </li></ul><ul><li>Real electricity rates rise 90% </li></ul><ul><li>Real gasoline prices rise 74% </li></ul><ul><li>Real natural gas prices rise 55% </li></ul><ul><li>Average family energy bill rises $1500 </li></ul><ul><li>Real federal debt rises 24% </li></ul>
  18. 18. Green Jobs?
  19. 19. Environmental Energy Goals Are Fantasy <ul><li>Massive global effort is required to cut emissions </li></ul><ul><li>‘Approved’ environmental fuels cannot meet energy demands </li></ul><ul><li>Developing world is not going to comply, even if we completely eliminate emissions </li></ul>
  20. 20. Massive Effort Needed to Meet Emissions Goals Source: Clarke, L. et al. 2006. Climate Change Mitigation: An Analysis of Advanced Technology Scenarios . Richland, WA: Pacific Northwest National Laboratory. Cumulative global emissions reductions ranging from about 1,100 to 3,700 gigatons of CO 2 equivalent would be need over the course of the century to meet a range of atmospheric concentration goals (450 to 750 ppm). 1st GtC Avoided CO 2 Emissions (GtCO 2 /yr) Cumulative Emissions Cumulative Avoided Emissions Unconstrained Emissions Scenario CO 2 Stabilization Scenario ≈ 1,100 to 3,700 gigatons of cumulative CO 2 emission reductions will be needed to meet a range of stabilization scenarios (≈750 ppm to 450 ppm). Time 0
  21. 21. How Big is One Gigaton* of CO 2 ? *Gigaton = 10 9 Metric Tons Install 1,000 sequestration sites like Norway’s Sleipner project (1 MtCO2/year)—Only 3 sequestration projects of this scale exist today. Geologic Sequestration Build 273 “zero-emission” 500 MW coal-fired power plants—Equivalent to about 7% of current global installed coal-fired generating capacity of 2 million MW. Coal-Fired Power Plants Convert a barren area of about 4,800,000 km 2 —Equivalent to about 2 times the size of the United Kingdom. Biomass Fuels from Plantations Install capacity to produce 273 times the current global solar PV generation instead of new coal-fired power plants without CCS. Solar Photovoltaics Actions that Provide One Gigaton CO 2 / Year of Mitigation or Offsets Technology Convert a barren area of about 900,000 km 2 —Equivalent to more that the size of Germany and France combined. CO 2 Storage in New Forest Install capacity to produce 14 times the current global wind generation capacity (about 74 GW) instead of new coal-fired power plants without CCS—Equivalent to more than 1 million 1 MW wind turbines. Wind Energy Deploy 273 million new cars at 40 miles per gallon (mpg) instead of 20 mpg (or at 14 km/L instead of 7 km/L). Efficiency Build 136 new nuclear power plants of 1 GW each instead of new coal-fired power plants without CCS—Equivalent to about one third of existing worldwide nuclear capacity of 375 GW. Nuclear
  22. 22. 2050 Reference Emissions Annex I Countries Non-Annex I Countries Annex I Emissions at 20% 2000 Emissions Annex I Emissions at 50% 2000 Emissions -100% -84% -59% -62% -71% -85% 1 Measured as MMTCO 2 per million people, excluding LULUCF. 2 50% of 2000 global CO 2 emissions equals 12.3 Gt. 3 Equals reduction from 2050 reference for that group ( i.e ., Annex I or Non-Annex I). Source: Climate Change Science Program . 2007. Scenarios of Greenhouse Gas Emissions and Atmospheric Concentrations (MINICAM Model results). Annex I Emissions at “0” To Achieve a 50% Reduction in Global CO 2 Emissions by 2050, Per Capita Emissions from Developing Countries Must Go Down Percent Reductions from 2050 Reference 3 2000 Annex I Reference Emissions/ Capita (12.7) 2000 Non-Annex I Reference Emissions/ Capita (4.4) 2050 Annex I Emissions/ Capita (0) 2050 Non-Annex I Emissions/ Capita (1.7) 2050 Annex I Emissions/ Capita (2.1) 2050 Non-Annex I Emissions/ Capita (1.3) 2050 Annex I Emissions/ Capita (5.2) 2050 Non-Annex I Emissions/ Capita (0.7) CO 2 , Emissions per Capita (MMTCO2 per million pop.) 2000 2000
  23. 23. Where Does This Leave Us? <ul><li>Can we meet energy demands with current energy policy? No </li></ul><ul><li>Can current energy policy help us out of recession? No </li></ul><ul><li>Will current energy policy lock us into recession? Probably </li></ul><ul><li>Has current energy policy strengthened dictators? Yes </li></ul><ul><li>Will current energy policy help developing nations? No </li></ul><ul><li>Can current energy policy stop global warming? Probably not </li></ul>
  24. 24. For More Information Competitive Enterprise Institute GlobalWarming.org Institute for Energy Research MasterResource Blog Planet Gore Blog on National Review Online
  25. 25. Extra Slides Follow
  26. 26. Scale of Changes in Transport Sector Source: International Energy Agency, Energy Technology Perspectives 2008, Scenarios and Strategies to 2050 .
  27. 27. Most of Our Oil is North American <ul><li>42% of oil produced domestically </li></ul><ul><li>Third of all imports is from Canada and Mexico </li></ul><ul><li>Value of imports currently $235bn </li></ul>
  28. 28. Environmental Disaster of Biofuels Land Use Scenario ≈ 550 ppmv Source: Global Energy Technology Strategy, Addressing Climate Change: Phase 2 Findings from an International Public-Private Sponsored Research Program , Battelle Memorial Institute, 2007. Land Use Scenario with 0.5% annual agricultural activity growth. By 2050, land use required for bioenergy crops may account for approximately 4 to 5% of total land use; by 2095 approximately 20%.

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