Archive for the ‘Resources’ Category
Biodistillers nationwide now realize that their industry’s survival depends on the vagaries of world trade. Cheaper soy and palm oil from Asia, Africa and Latin America increasingly replace domestically grown soy oil. Environmentally conscious Europe takes most of the U.S.-produced fuel.
Globalization of the American biodiesel industry, though, wouldn’t be possible without lucrative assistance — a $1-per-gallon tax break — from Washington. Alterra and other biodiesel producers receive the excise tax credit for each gallon of alternative fuel that is mixed with regular diesel.
And, since most of the biodiesel is shipped overseas, Congress essentially subsidizes the price European drivers pay for fuel.
“And we’re not really lessening our dependence on foreign fuel supplies,” said Mark Ash, an economist with the U.S. Department of Agriculture.
The blame falls mainly on the skyrocketing price of soybean oil used in 80 percent of the nation’s biodiesel production. Soy oil cost 22 cents per pound when Johnson broke ground in Plains. Wednesday, a pound cost 56.4 cents.
It takes 7.7 pounds of soy oil — or $4.34 — to produce a gallon of biodiesel, according to the Food and Agricultural Policy Research Institute. Add overhead and other processing costs (about 70 cents per gallon), federal and state taxes (54 cents) and subtract the dollar tax credit and a gallon of biodiesel could sell for $4.58 at the pump.
Regular diesel sold for $3.86 a gallon Wednesday in Atlanta.
“How’re you going to sell it at that price?” asked Davis Cosey, who owns an idled biodiesel factory in Perry. “The industry’s horrible. It’s in the ditch.”
Farmers aren’t doing producers any favors. In 2006, more than 75 million acres of soybeans were planted in the United States. Last year, only 64 million acres were planted, according to the USDA. Congress’ ethanol mandate — 37 billion gallons annually by 2022 — fueled the switch from beans to corn. In addition, rapidly developing China and India boosted soybean demand, and prices.
Interesting article (“Only federal subsidies keep the industry afloat” – one for the small-government-ers), if including odd lines like
“The American public, with rare exception, is 100 percent price-sensitive,” Johnson said. “They will not pay a penny more to go green.”
I kind of follow the argument – but 100% price sensitive? Dude, we’re all 100% price sensitive. It’s how sensitive we are that defines our markets (and in this “Johnson” is mistaken – of course we will pay more to go green. We just aren’t stupid enough to call something as daft as crop-grown biofuels shipped half-way ’round the bloody world and back “green”).
So US biodiesel manufacturers are importing soy and palm oil (the latter a truly horrible product, vis, the environment) in order to make biodiesel that is shipped to Europe because the market here is too small – meanwhile only surviving thanks to subsidies (meaning your tax dollars are subsidising European motorists).
Stop me when you can’t take the stupidity any longer.
So this would be where the comment came from. Personally I don’t fancy their chances, however much I agree with their sentiment. For a start food BTUs aren’t at all close to being adequately priced – but, then, neither are things like biofuels, oil shale, etc. Maybe one day. One day when we stop IV-subsidies to wasteful industries and make agriculture compete like everyone else.
From today’s Guardian:
US researchers calculated that converting natural ecosystems to grow corn or sugarcane to produce ethanol, or palms or soybeans for biodiesel, could release between 17 and 420 times more carbon than the annual savings from replacing fossil fuels.
This is due to the carbon contained in the original plants and soils which is released as CO2 when the vegetation rots after it is cleared. The researchers said this carbon debt must be paid before biofuels produced on the land could count towards reducing greenhouse gas emissions.
In Indonesia the researchers found that converting land for palm oil production ran up the worst carbon debts, requiring 423 years to pay off. Producing soybeans in the Amazon would take 319 years of soy biodiesel to offset the carbon debt.
Honestly, I wouldn’t have thought people needed this explained to them. Carbon is emitted anyway – our problem is emitting it so bloody quickly, burning things. It’s still emitted as nature dies and breaks down. Burning out or otherwise clearing land for biofuels is most certainly going to convert living matter to dead matter – releasing all its stored carbon in the process.
Getting back to the article, we see that markets are at the heart of the problem – and the solution:
Stephen Polasky of the University of Minnesota, one of the authors of the study, published today in the journal Science, said: “We don’t have proper incentives in place because landowners are rewarded for producing palm oil and other products but not rewarded for carbon management. This creates incentives for excessive land clearing and can result in large increases in carbon emissions.”
So what happened? Basically, the pressure to establish a market to counteract the non-market externalities of energy-generation (including the use of oil, but we’ll lump all fossil fuels together – why not?) has given us a market that itself has non-market externalities. The solution? Austrian Economists, where are you when we need you? There are two arguments:
First, this would seem to indicate that the pressure to establish “solutions” is, potentially, doing more harm than good. Perhaps we need to back the hell up. Does a bull ever have good luck in a china shop? We need to ease off, sit down and realise that accuracy over speed will be what saves the planet in the long run.
We need to give more consideration to the sorts of market mechanisms we would like to use to overcome the tragedy of the commons (the depletion of fossil fuels: it is the intensity of this depletion that is both leading to things like Peal Oil as well as creating the condition for so-called Catastrophic Climate Change (I say “so-called” because it is a term of art, not because I dis-believe the sentiment)).
Second, or alternatively, we need to plow ahead, tacking markets onto markets onto markets. I’ve no doubt that throwing market incentives into this market to deal with the follow-on environmental costs will probably generate another set of unintended outcomes – it always does. This argument would base its urgency upon the urgency of the problem, and the absence of time to wait.
I favour the first, personally – or a variation thereof. When we make certain crops highly valued, that incentive will overcome most others – how do you think these problems arose in the first place? Farmers in middle-income countries don’t consider their contribution to the global problem (anymore than first-world agriculturalists): they respond to the enormous difference the market will make to their household income. Once those trees are gone, however, they’re gone – land cannot be un-burnt (trust me: I’m Australian). Reclaiming and de-pastorialising land takes a bloody long time.
Mostly, I take this as more evidence that biofuels are shit. We aren’t trying to ‘fix’ our energy problem: we’re trying to stay behind the wheels of our cars as long as possible. The reason I think we need to step back and reconsider is because the problem we’re trying to solve is such a narrow and self-interested one.
I first was exposed to the issue of golf course and (or, rather, versus) water conservation as a Masters student at the National Centre for Epidemiology and Population Health, via the complaints of a colleague. Her gripe was that (a) golf courses use a tonne of water, and (b) to the extent that golf courses even use recycled water, or less water than before, golf courses still use a tonne of water – for golf.
Bear in mind, this is population health. We’re sensitive to people washing their cars with potable fresh water, bought at cents per kilolitre. It’s a manner of global insanity, peculiar to the developed world.
So to the National Geographic’s recent article, Drying of the West.
The wet 20th century, the wettest of the past millennium, the century when Americans built an incredible civilization in the desert, is over. Trees in the West are adjusting to the change, and not just in the width of their annual rings: In the recent drought they have been dying off and burning in wildfires at an unprecedented rate. For most people in the region, the news hasn’t quite sunk in.
Between 2000 and 2006 the seven states of the Colorado basin added five million people, a 10 percent population increase. Subdivisions continue to sprout in the desert, farther and farther from the cities whose own water supply is uncertain. Water managers are facing up to hard times ahead.
“I look at the turn of the century as the defining moment when the New West began,” says Pat Mulroy, head of the Southern Nevada Water Authority. “It’s like the impact of global warming fell on us overnight.”
I was particularly struck by the attending photo gallery (click for larger images):
A fantastic complement to the argument that the mass depletion of fresh water, regionally, has yet to sink in (this is a recognisable complaint of mine, regarding Australia).
Example 1: During periods of drought as defined by water level in the Edwards Aquifer, water is not served in restaurants unless requested. During the summer months 4 million glasses of water would have to be refused in restaurants each day to save enough water to equal that used on one golf course. How many people are served in restaurants each day in this area?
There are roughly 1.3 million people in the Bexar, Kendall, Comal County area and about 56 golf courses.
Example 2: Conversion of old toilets to new water saving toilets is a great water saver. Each flush saves at best about 3.4 gallons depending on how much water the old toilet used.
Lets pretend there is only one toilet in the three county area and we convert it to a new water saving toilet.
In peak summer watering months that toilet would have to be used over 138,000 times to save the water put on one golf course each day.
That water saving toilet would have to be used over 6 times each day by each man, woman and child in the three county area to save the water put on all 56 golf courses each summer day.
There is a level, of course, of personal responsibility in this – what are our solutions to this market? Standard, one imagines:
- We can tax the market, both to restrict, further, the depletion of fresh water, while raising funds necessary to ameliorate the effects of depletion (recycling, etc. – there is certainly no way to create rain with money);
- We can encourage voluntary off-setting of the effects of the depletion;
- We can pursue cap-and-trade markets for water use (a distributional implication being should golf courses even start out with a water allocation at all? Who, ultimately, does the State give the property rights?).
Hell, we could form a mob, charge the golf courses and tear them up. Not exactly a market solution, per se – but how many markets will clear, anyway, when we run out of water?
Returning to the National Geographic and news sinking in, there is – again – that idea of personal responsibility. Those pictures were from Nevada; the table from San Antonio data. This is a suburb in Arizona:
In this world we cannot get people to drive their 4WDs (SUVs) with any sort of efficient multi-occupancy. Here, we see we cannot manage the same with swimming pools. City/public buses are wildly unpopular in most of this country; municipal amenities like swimming pools no doubt suffer the same ignomy. No solution (outside of legislation, i.e. command and control) is going to work in a nation of fence-builders.
From today’s Financial Times:
The hot ticket at Davos last year was the “dialogue in the dark” event, when delegates at the World Economic Forum were plunged into complete darkness to experience the loss of sight. This seems an apt metaphor for the blindness of the world’s elite to the fragility of the global financial system.
Unlike the Financial Times itself, of course, whose writers all saw this coming from miles away…
With the state of the financial world having seen a dramatic turnabout in the past year, WEF organisers have staged a series of high-profile debates on financial stability and banking risk, and there will be a flurry of senior bankers in attendance, ranging from JPMorgan’s Jamie Dimon to Goldman Sachs’ Lloyd Blankfein – as well as some of the newly appointed Wall Street chief executives such as John Thain at Merrill Lynch.
They will be joined by a clutch of senior European policymakers – such as Jean Claude Trichet of the European Central Bank and many European finance ministers – allowing a flurry of transatlantic behind-the-scenes debate about global policy responses to the credit crunch before next month’s crucial meeting of the Group of Seven finance ministers and the spring meetings of the International Monetary Fund and World Bank.
Another notable swathe of attendees – which marks a contrast with earlier years – comes from the sovereign wealth funds, and other manifestations of the cash that continues to swirl around Asia’s exporters and the oil-rich Gulf. Officials from the China Investment Corporation and Dubai International Capital, for example, will all be in attendance – and a planned debate on their investments could be a highlight of the meeting.
Indeed, sovereign wealth funds could overshadow one topic that was prominent at last year’s event: the role that private equity now plays in the global economy. For while the Harvard professor Josh Lerner is due to release a landmark report on the sector – which was commissioned at last year’s Davos event – the turn in the credit cycle means that buy-out funds are no longer generating so much fear.
It would appear, then, that the days of Davos meeting concerning themselves with what to do about the world’s poor and the world’s problems are over, for now. We have our own problems – the poor are on their own. I should be very surprised if these rooms of wealthy elite are brimming with debate over the Copenhagen Consensus.
This, specifically, was actually worrying (for me):
Another sign of the shift in sentiment is the inclusion of a new set of topics on this year’s agenda: competition for global commodity resources. For the first time Davos is staging a series of debates about food supplies – a topic that could generate lively debate given the recent sharp rise in many agricultural commodity prices, and the political challenges this is generating in emerging economies.
Yes, that’s the OECD core of economic power, getting together to trade notes on securing the world’s stockpiles of commodities. Meaning the developing world is probably about to fall about another century behind.
The last time this came up, Russia (Gazprom) was offering their help to Serbia. Today, it’s Bulgaria:
Bulgaria has agreed to a gas pipeline deal with Russia that is expected to strengthen Moscow’s grip over energy supplies to Europe.
The Bulgarian cabinet has agreed to allow the planned South Stream pipeline to pass through the country on its way from the Black Sea to southern Europe.
Interestingly enough, Bulgaria has a 20% stake in the Nabucco pipeline, too. One can see why they have an interest in the South Stream project, though (from the BBC):
Who wouldn’t want to have their hands on the fuel faucets of Europe?
Again. The latest on Sydney’s foolhardy moves to extract sufficient fresh water from the ocean (original cost: AUD750m):
The cost of the unpopular Kurnell desalination plant has been revised to $1.9 billion after an increase in the cost of the pipeline that will connect the plant to the city’s water main.
The pipeline cost has been finalised at $650 million, much higher than anticipated due to extremely poor ground conditions at the former Tempe tip site, along Alexandria Canal and also at Sydney Park, which have resulted in the line needing concrete supports to hold it in place even though it is to be laid underground.
“The soil is soft with a lot of water in it,” the head of Sydney Water, Kerry Schott, a former senior NSW Treasury official, said.
The irony of which is, apparently, lost on the government. The criminally-negligent stupidity of not checking up on such a thing, first, is also, apparently, lost on the government (but, then, what is a government for?).
This hit my interest, today, because California has decided that it’s similarities with my fair isles are not yet extensive enough.
Water-short California’s search to satisfy its thirst is beginning to focus on a controversial source — the Pacific Ocean.
In November, Connecticut-based Poseidon Resources Corp. won a key regulatory approval to build a $300 million water-desalination plant in Carlsbad, north of San Diego. The facility would be the largest in the Western Hemisphere, producing 50 million gallons of drinking water a day, enough to supply about 100,000 homes.
The project has attracted big financial partners. In May, General Electric Co. said it had invested in it and would provide filtration technology. In September, Citigroup Inc.’s sustainable-development-investments unit became the lead investor in closely held Poseidon, formed in 1995 by former GE executives and private-equity firm Warburg Pincus. Andrew de Pass, the Citigroup unit’s managing director, says the need for long-term water sources drove the investment. He declined to specify how much Citigroup invested.
Here’s a prediction: this will not be ready in time, it will cost way more than promised (including a lot more money from the pockets of tax-payers, particularly once the private water is being pumped into households at far higher prices per unit than originally promised), it will use far more energy than predicted – it will basically do everything worse than promised.
We make a big deal out of how desalination is used all over – particularly, though, in the Middle East. I.e., where things like cost is far less of a concern in the first place and, moreover, where there is usually only desert and ocean in the first place. It simply isn’t a technology that ought to be replicated on any sort of practicable scale, yet, on our shores.
First, a welcome to the very strange spike in people viewing this post (I believe all they’re interested in is the map of the Underground – go figure).
Second, Iraq: delivering oil. Finally.
Iraq’s oil exports shot up in the last quarter of 2007 and the ministry in charge of production forecast on Wednesday that it will reach 3 million barrels per day by the end of the year.
Ministry spokesman Assem Jihad said Iraq’s average production was 2.4 million barrels per day in November, nearly a half million more than the post-2003 average. Exports stood at around 1.9 million barrels per day, sold at an average price of $83.87 per barrel.
“The ministry’s ambition is to increase the production for more 3 million bpd by the end of 2008 and to pass the national oil law which will enable us to draw foreign investment to our oil resources,” Jihad told The Associated Press in a telephone interview.
Iraq’s political factions last February drafted the first version of a bill to regulate the country’s oil industry in an effort to share its revenues among Shiite, Sunni and Kurdish communities.
But the effort bogged down in parliament, mostly over delicate power sharing issues involving the central government in Iraq. The Kurds, for example, want a greater say in managing oil fields in their self-ruled area of the north.
Sunni Arabs fear that they will be left out of oil profits as the provinces where they are dominant have few proven reserves. Most of Iraq’s oil reserves are in the Kurdish north and the largely Shiite south
In August, Iraq’s semiautonomous regional government of Kurdistan passed its own oil law and signed more than a dozen production-sharing contracts with international oil companies. The Oil Ministry has said it considers these deals to be illegal and has threatened to blacklist the foreign companies that are involved.
I’m not so sure that a “semiautonomous regional government of Kurdistan” will along with the idea that the Oil Ministry gets to call its contracts illegal, while putting out those of its own.
Now, to those numbers: Of the 2.4m bpd being produced in Iraq, 80% is being exported. If they’re talking about exporting 3m pbd, that would mean a nearly-60% increase in production – while the government cannot seem to get adequate legislation in place to manage reserves or revenues.
Broadening our vision, somewhat: Iraqi oil is supposed to have been the dividend of invasion. Iraq itself is supposed (in the passive sense) to be one of the two potential sites of any remaining oil superfields (I believe Siberia is the other). If we can stabilise that sort of production, we’d be laughing (currently 3m bpd is less than 5% of total world production). In the meantime:
The 2005 oil peak remains thus (from The Oil Drum’s Oilwatch Monthly):
Unconventional production is going along, nicely. Nothing like the same level, though.
OPEC still pushes the trend, with non-OPEC production looking (a) random, and (b) like it might be declining in the last couple of years.
More locally of interest, gasoline stocks in the US are a lot like those elsewhere – low. Meaning that the idea that Iraqi oil may somehow keep prices down at the bowser simply should not form.
According to a the OPEC Review, in fact, demand may just not be met, next year (you can find the article, Theoretical limits of OPEC Members’ oil production, if your university has access).
So not much slack, possibly, for 2008. Petrol prices may just have to stay high (your food prices, too. Your real incomes and house prices? Not so much). If real demand crunches hit during likely-recession-heavy 2008, hell, Iraq’s production may not even register (or it may become hugely politically sensitive, domestically and internationally).
While my wife and her friend watch seriously weird-ass Russian Winnie-the-Pooh clips (their laptop is turned away from me. I read the books. Everything else was a crime against A. A. Milne). China Dialogue has a truly fascinating article up at the moment. Originally from FTChinese.com.
China really should consider moving the capital away from Beijing. Any nation, particularly a major power, should choose a location for its capital that allows growth and can respond to challenges. The historical advantages that led Beijing to become China’s capital no longer exist, and the location’s disadvantages are becoming ever more apparent.
Yes, the article is an argument that Beijing will not hold as China’s capital (like I said – fascinating). Why move?
First: the location is no longer strategic:
Modern communications and transportation mean there is no need for today’s “emperors” to stay within easy reach of the borders. Ever since the Opium Wars, China’s military threats have come from the east, not the north. The Mongols were pacified, the Soviet Union collapsed and we are on friendly terms with Russia. Keeping the capital in Beijing does not keep us closer to our allies.
Second: the location is not proximate to the clean water that a city of 20m people needs:
Quenching Beijing’s thirst has already meant tapping the Hai River and water from neighbouring provinces. Now the Han River is to be diverted for a huge project transferring water from the south to the north. The impact of this project on the lower reaches of the Han River should not be underestimated. It will not necessarily solve water problems in the north, but it may well destroy the environment in the south. Beijing may have moved the Shougang steel plant for the sake of its air quality, but it continues to develop water-intensive industry. Why not move the industry and resources where there is more water?
Third: Beijing cannot handle the growth:
The centre of power in any country will gather resources towards itself and that will attract people from elsewhere – at home and abroad – to come seek their fortunes. They have every right to do so, and this should not be restricted, but inevitably the pressures on the city are increased … Leaving Beijing as the capital may be the biggest possible mistake.
If China were to select a new capital, the ideal location would be a small- or medium-sized city, with undeveloped land for construction, around the lower and middle reaches of the Yangtze River. Such a geographic location would have high environmental capacity and land for government buildings – unlike an already developed city.
Now, to the issues not addressed. I ran through the urbanisation issues back during the Summer. Specifically, I discussed the wonderful book, Planet of Slums, by Mike Davis. In it, he uses (2003) UN HABITAT data to estimate urban slum populations. Guess who wins? China. With 193.8m people and a proportion (urban population that can be categorised as ‘slum’) of 37%. This isn’t the highest proportion (Ethiopa and Chad rode that in with – no kidding – 99.4%), but it is definitely the greatest number. Using the same data, Beijing had – then – a little over 10m people. So build that sort of population growth into the slums as well, and figure out that magnitude.
So to the issue not addressed. If Beijing packs up and moves, will it take those people with it? Some, sure. And many more will re-migrate – but many, many millions will not. Who will care, then, for the resource-poor, slum-laden, destitute Beijing that is no longer the capital of China?
The second issue is the resource use. This (a) will involve a fucking tonne of bad-for-the-environment trucking, shipping, cement, contstruction, steel – you name it; (b) the relocation itself will (i) be expensive, financially and environmentally, and (ii) subsume a lot of public money that will be lost to human, social and environmental capital investment.
Yes, I realise I sound like a (profane) misery-guts. I can’t help it. I just can’t help it. This argument, while – as I said – fascinating, strikes as the urban planning equivalent of loosening one’s belt a few notches, as the solution to obesity. China should, sustainably, channel the resources required into Beijing, constrain urban sprawl/density, deal with urban migration, etc. etc. Yeah – I’m glad it’s not my problem, don’t get me wrong. It’s a wicked problem and I’d be an old man fast if I had to worry about fixing it. What an interesting debate this could become, though.
Quite a neat article up, over at truthout.org.
December 21, 2007 | A truckdriver unloads his cargo of corn into a chute at the Lincolnway Energy plant that converts corn to ethanol fuel in Nevada, Iowa. The Federal Energy Bill, with its fivefold mandate to increase ethanol production, is headed for the president’s desk now that all requirements to support tax credits for solar and wind systems have been removed.
(Photo: Jason Reed / Reuters)
The Federal Energy Bill, with its fivefold mandate to increase ethanol production, is headed for the president’s desk without threat of veto, now that all requirements to support tax credits for solar and wind systems have been removed.
States such as water-rich Minnesota and Iowa complain that the ethanol industry is mining their groundwater, causing some plants to be closed because the groundwater supply has been depleted. In many places in California, especially in the San Joaquin Valley, the ground has already subsided many feet because of groundwater mining. Approximately 14 percent of the US corn crop is irrigated. This irrigated acreage consumes almost 18 million acre-feet per year of water – much of which is overdrafted from the Ogallala aquifer in the Great Plains. To put this water requirement in perspective, the average annual flow of the Colorado River at Lee’s Ferry is only about 14 million acre-feet per year.
Corn is also a lousy raw material for fuel. It takes 10 gallons of ethanol to produce the energy equivalent of about seven gallons of gasoline, and greenhouse gas reductions are minuscule.
A little activist but, then, nobody was ever the worse for that.
Sorry. I’ve been listening to Radiohead.
Two perspectives on the climate change ‘stuff’ of Bali: Politics-as-usual
Nobel laureate Al Gore accused the United States on Thursday of blocking progress at the U.N. climate conference, and European nations threatened to boycott U.S.-led climate talks next month unless Washington compromises on emissions reductions.
The United States, Japan and several other governments are refusing to accept language in a draft document suggesting that industrialized nations consider cutting emissions by 25 percent to 40 percent by 2020, saying specific targets would limit the scope of future talks.
European nations said they may boycott a U.S.-led climate meeting next month unless Washington compromises.
“No result in Bali means no Major Economies Meeting,” said Sigmar Gabriel, top EU environment official from Germany, referring to a series of separate climate talks initiated by President Bush in September. “This is the clear position of the EU. I do not know what we should talk about if there is no target.”
The second, fairly basic logic (I had seen this earlier in the Guardian, but not gotten around to mentioning it).
On a filthy day last week, as governments gathered in Bali to prevaricate about climate change, a group of us tried to put this policy into effect. We swarmed into the opencast coal mine being dug at Ffos-y-fran in South Wales and occupied the excavators, shutting down the works for the day. We were motivated by a fact which the wise heads in Bali have somehow missed: if fossil fuels are extracted, they will be used.
Most of the governments of the rich world now exhort their citizens to use less carbon. They encourage us to change our lightbulbs, insulate our lofts, turn our TVs off at the wall. In other words, they have a demand-side policy for tackling climate change. But as far as I can determine not one of them has a supply-side policy. None seeks to reduce the supply of fossil fuel. So the demand-side policy will fail. Every barrel of oil and tonne of coal that comes to the surface will be burnt.