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Energy the nexus of everything: June 2009 Archives

This past week I had the pleasure of meeting with seven colleagues for a Water and Energy workshop in Brussels. The purpose of the gathering, organized by COST (Cooperation of Science and Technology) was to organize a set of case studies on the links between water and energy for a special journal issue and presentation at a side event during the United Nations Framework Convention on Climate Change conference in Copenhagen, Denmark this December (aka the Conference of Parties 15: COP 15).

The case studies span four continents and cover the breadth of interactions. I list here the topics and the colleagues (in attendance) working on the papers:

1. Food-Water-Energy in Spain (Anna Osann, Universidad de Castilla La Mancha)
2. How the carbon reduction policies in Australia will affect the Water-Energy Nexus (Debborah Marsh, Australian National University)
3. Water needed for bioenergy crops in Tuscany Region of Central Italy (Anna Della Marta, )
4. Energy-Water Nexus of Texas (Carey King, University of Texas at Austin)
5. Underground Thermal Energy Storage in The Netherlands (Adriana Hulsmann, Watercycle Research Institute)
6. Energy-Water Nexus - China Case Study (Xingshu Zhao, Chinese Academy of Science)
7. Opportunities for Greenhouse Gas reductions in water and wastewater supply, use, and treatment in England and Wales (Andy Howe, Environment Agency)
8. Conflicts and Synergies Between Climate Change policies and Sustainable Water Management (Jamie Pittock, Australian National University and WWF)

What has become more and more apparent as we study the ties between energy and water is that historically water has not proven as a constraint to energy development of supply and use. However, most of the world's fresh water resources are now already allocated to one purpose or another. So as people want water for new energy (e.g. mining, cooling for electricity generation, growth of bioenergy crops, etc.) it is now beginning to be supplied at the expense of other water needs. Many times integrated water resource management planning has already set limits on the use of water in a certain river basin or region.

When water is fully allocated or already scarce, and new energy needs arise, a showdown can ensue. The question becomes: Is the sustainable and ecological mentality of water resource management going to influence the energy sector, or is the energy sector's more exploitive and revenue-maximizing style going to overtake the water management priorities?

So far, it may still be unclear what position will win out as a couple of examples show. In Australia, an ongoing drought since the beginning of this century has caused power generating stations to ask for environmental flow restrictions to be lifted for certain rivers. The problem for them is that they needed the water for cooling, but are only allowed to extract the water when flows are sufficiently high. Because the flows were not high enough due to prolonged drought, and they successful in lobbying for the removal of certain river flow restrictions, they were forced to buy water from the rural water market in Australia. This was a major cause for electricity prices rising up to 270% last year for a certain period.

In Texas, a 200 mile interbasin water transfer project ("LCRA-SAWS") from the central coastal region of Texas to the San Antonio Water System was studied for over seven years before recently being cancelled by the water supplier, the Lower Colorado River Authority. General cost overruns were much of the issue, combined with energy costs for pumping and restrictions for freshwater inflow into the Texas bays. However, these kinds of issues are not much of a stumbling block for China trying to keep its northern, now rather dry, agricultural regions productive and growing cities healthy. The "South North Water Transfer Project" is expected to take 40 years to construct 3 main arteries, transfer 38-43 billion m3 of water per year and cost almost 500 billion yuan (~ 75 billion US dollars). Additionally, there are plans for 83 GW (almost 1/10 of the US electric capacity) of hydropower dams to be constructed from 2005 to 2020. Natural river flows are not really an issue in China. They need electricity (hydropower) and water to maintain economic growth and thus, political stability.

When we look to the biofuels push, this is where we may see water management lose out. Agriculture already withdraws and consumes the most water of any sector. Historically, this has been for food production, and using water to grow food crops has been a fundamental use of water since the dawn of civilization. Using water to grow crops that then get converted to liquid fuels, on the massive scale of billions of gallons per year, is a more recent trend. Should irrigation water be used for growing biofuel crops? Is there some target percentage of irrigation water that should be an upper limit, given that some parts of the world are still malnourished? I think this is where the debate should go. I don't believe that agricultural energy interests should be completely shut out from irrigation, but at the same time I don't believe we should allow full reign of aquifers and surface water for irrigating biofuels. A common argument for some 2nd generation biofuel crops such as grasses and other cellulosic material, is that they can be grown on marginal lands. Well, marginal lands are just that, so the yields will be higher with fertilizers and irrigation. If irrigated water is subsidized for these purposes, then there is no reason to believe that the drive for higher yields and more fuels will not lead to irrigating crops grown in areas where we are led to believe it will not be used.

Over three decades ago the US government, through the then-known and newly-established Solar Energy Research Institute (SERI), established a Biofuels Program that included the Aquatic Species Program (ASP) to explore the ability to develop biofuels from microalgae. Today, SERI is known as the National Renewable Energy Laboratory (NREL), and in 1998 they concluded the ASP as the progress had slowed and there was a belief that advances in biological control and genetic engineering of algae were required to create a valid algae-based biofuel industry. Aside from carbon sequestration, NREL reports that: "Algal biodiesel is one of the only avenues available for high-volume re-use of CO2 generated in power plants. It is a technology that marries the potential need for carbon disposal in the electric utility industry with the need for clean-burning alternatives to petroleum in the transportation sector." [Sheehan et al., 1998]

Furthermore, NREL states: "...we believe that biodiesel made from algal oils is a fuel which can make a major contribution to the reduction of CO2 generated by power plants and commercial diesel engines." [Sheehan et al., 1998]

Finally, the NREL closeout report reads: "When compared to the extreme measures proposed for disposing of power plant carbon emissions, algal recycling of carbon simply makes sense." [Sheehan et al., 1998]

If we combine these statements made in 1998 with proposed legislation in 2009 for greenhouse gas (GHG) reductions, we can pose the question regarding the viable size of an algal-based biofuel industry in the United States. The most popular climate bill in the current Congress is the American Clean Energy and Security Act of 2009 (ACES Act) by Henry Waxman and Edward Markey, and it discusses reducing GHG emissions by 83% of 2005 levels by 2050.

In 2005, the US carbon dioxide (CO2) emissions were 6,030 million metric tons (MtCO2). The electricity sector accounted for 2,510 MtCO2 and the transportation sector accounted for 1,980 MtCO2. In accordance with popularly discussed proposed legislation, 17% of 2005 US CO2 emissions are approximately 1,000 MtCO2. For simplicity of this analysis, we'll assume that total CO2 emissions, rather than more generally all GHG, will need to be reduced to the target 17% by 2050.

Algae production requires CO2. And because algae and grow in aquatic environments instead of on land, the surface area of the algae that are exposed to the air, which contains CO2, is more limited than terrestrial biomass. Therefore, to grow algae biomass on industrial scales (e.g. profitable scales) CO2 is pumped into the algae-bearing water at much higher concentrations than in the atmosphere. Estimates for the amount of CO2 that are required for making biodiesel from algae are approximately 0.02 +/- 0.004 tons of CO2 per gallon of biodiesel (tCO2/gal). For example, NREL reports an example that 60 billion gallons (Bgal) of biodiesel would require 900 - 1,400 MtCO2. This quantity of CO2 is 36%-56% of total US power plant emissions.

So to get a maximum limit of how much biodiesel could be produced per year under the carbon restriction of the ACES Act, we can assume that all CO2 emissions come from transportation only. The figure below plots a simplified trajectory of US CO2 emissions (left axis) under the ACES Act, along with emissions from the electricity and transportation sectors. On the right axis, I've plotted the amount of biodiesel from algae that can be produced assuming that 100% of power plant emissions are captured and used for growing algae to make biodiesel (clearly an over estimate). This inherently assumes that (1) there will be absolutely no net CO2 emissions from any other industrial process, industry, or combustion of any hydrocarbon aside from burning the biodiesel in vehicles and (2) that no technology will feasibly exist for re-capturing the CO2 from combustion of biodiesel in the vehicle itself.


The plot shows that in 2050 50 Bgal/yr of biodiesel from algae would be the maximum amount allowed. Compare this to the 2008 US consumption of approximately 138 Bgal of gasoline and 61 Bgal of diesel. About half of the diesel was for freight trucks. Therefore, in 40 years, for the US to meet the ACES Act carbon reductions, we could produce 50 Bgal of biodiesel from algae, with 1,000 MtCO2 coming from fossil fueled power plants (assumed) if and only if no other fuel or economic sector had a net emission of CO2. Thus, if the CO2 supplied for algae came from coal power plants, then we would essentially be producing electricity from coal with CO2 capture, but not geologic or other storage systems, in the quantity of approximately 1,000 TWh or 50% of today's coal powered generation. This does not mean that additional coal or natural gas power plants could not operate, but each would have to capture and sequester 100% of the CO2 emissions - a practical impossibility, but a sufficient assumption for this back-of-the-envelope analysis.

So what are some implications or conclusions from this quick analysis?

To drive as many miles as we do today (2.7 trillion/yr by cars and light trucks only) on 25%of current liquid fuels consumption, we need our transportation sector to be 400% more "liquid fuel" efficient in the range of 80 MPG of biodiesel to leave 16 Bgal for freight (about half the fuel for today's freight)

This is not entirely difficult to imagine for light duty vehicles that currently have a fleetwide average of approximately 21 MPG. By creating plug-in hybrids and making cars lighter, the capability of meeting this fuel economy has been demonstrated. Imagining the implications for freight trucks may be more difficult, as they would still have to get over twice as efficient as today, and increasing freight travel by rail could help get goods around the country with less fuel. There are other possibilities, but knowing what we have to work for in terms of a carbon balance can prevent a "algae to biodiesel" bubble while still moving us to a lower-carbon future.

As of last week, the United States government will own just nearly 72% of General Motors (GM) after going through a bankruptcy procedure. Additionally, new Corporate Average Fuel Economy (CAFE) standards will be targeting nearly 35.5 miles per gallon (MPG) of gasoline, or approximately 15 kilometers per liter. The 35.5 MPG by 2016 is broken down as 39 MPG for cars and 30 MPG for trucks. Taken together, free market capitalists are appalled at these actions early in President Obama's tenure. People discuss how political motives, mostly those pushing environmental agendas, are unduly forcing consumers to "buy cars that they don't want". They say the profit motive of a car company will best guide the decisions. Environmentalists say we are simply incorporating external costs, such as greenhouse gas emissions (global scale) or emissions of particulate matter and smog-forming gases (local scale).

First of all, GM had been losing money and market share for the last couple of years. The typical capitalist will tell you that private industry will make better decisions about making cars than the government, and I agree. Unfortunately in this case, GM made enough incorrect decisions over the last decade that they are now a failed company. GM was out-marketed and out-designed by Japanese and German automakers that focused broadly on the overall world market and were not over-committed to the US consumer who wanted to buy light trucks and sport utility vehicles. This is not to say that Toyota does not have top-selling full size pickups and SUVs that supported the sales of their flagship hybrid Prius.

Secondly, GM suffered from general short-sidedness of mainstream economics. There is a major disconnect between the time frames of interest in economics and the time frame of energy resource development. The lure of making large margins when selling more light trucks and SUVs in the short term (think of quarters to years) was just too great. When global forces significantly increased the operating cost of these vehicles - interpret that as high oil and gasoline prices - people "wanted" more fuel efficient cars. Then when US gasoline prices dropped from over $4/gallon in the summer of 2008 to near $2/gallon by the end of 2008 (a tremendously quick change) people were again considering relatively low fuel-efficient cars, and now one can buy a hybrid vehicle off a car lot instead of needing to pre-order a Prius months in advance.

I believe we are crossing into a new era of less prosperity governed by increasingly expensive energy resources, and most politicians and economists do not comprehend the situation. The prerequisite of available energy for economic growth is simply not universally understood well enough. For instance, the usual reason cited for the tremendously quick increase and drop of oil prices in 2008 was that "speculators" were pushing up the price. Well, speculators are part of the market system, so you can't say that the system was being "gamed" by part of the system itself. For the first time in the history of oil, the world market found out what price of oil was so high that consumers would legitimately begin to alter their lifestyles ... and that means a lower lifestyle in the form of lower purchasing power. Because this oil price increase (and subsequent crash) was not politically driven, as during the 1973 OPEC oil embargo, it is a much more important data point. What most people neglect to discuss is that world oil production was essentially level from 2005 to 2008 hovering in the range of 85 million barrels per day. This is after world oil production experienced an annual increase of 1-1.5 million barrels per day from 1990 to 2005. This literally means that the demand continued to increase, as evidenced by increases in consumption in China and the US, as oil production did not. The price of oil had to go up.

So we have a market system that can cause the price of oil to rise and fall over 300% within the span of 1 year. The oil resource and the technologies for extracting oil cannot possibly change that quickly and at that magnitude. It takes up to a decade for investments in the oil and most other energy industries to come to fruition. In making investments, or incentives for investments, in energy production and generation infrastructure or energy consumption infrastructure - such as automobiles and buildings - governments and businesses cannot judge success or failure based upon time frames of only a few years. It takes approximately a decade to see the benefits of changes in energy investment. This time frame is much longer than quarterly financial reports and election time scales. There is much evidence that suggests US presidents lost reelection (e.g. Carter) or lost much popularity (Nixon) made good energy policies for the long term, but that caused pain in the short term.

Elected officials in the United States, the European Union, and around the world, must focus energy policy on time scales longer than fiscal and election cycles because the market is not set up to perform this necessary function. Putting a price on greenhouse gas emissions, or carbon, is the major option to connect long time scales (centuries) of energy and the environment with short time scales (years) of economic markets. A price on carbon will be the most influential change to the economic system since banking began. It combines externalities of energy resources and environmental impacts to economics in a way that has never been done. Some detractors say it will destroy the economy to have such a "tax" on carbon, but what it really does is redefine what the economy is.

The economic influence of a price on carbon will be more of an artifact of the abundance and quality of current and future energy resources. In other words, the abundance of energy resources will dictate economic prosperity many times more than a tax/price on carbon. After all, if there were limitless fossil fuel supplies, we could (1) capture 90% of the CO2 emissions from all fossil fuel combustion at centralized power plants and (2) use the electricity to power industrial machinery and run homes and businesses as well as electrolyze water to create hydrogen as a stored fuel for transportation. In this case, the price on carbon wouldn't matter because we could use our limitless energy supply to take prevent the carbon from being emitted. Unfortunately, we know that do not have easily accessible and limitless supplies of fossil fuels.