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“Canadian business needs a fair, transparent, and proportional carbon tax to spur action towards a cleaner environment.”
Which is not the same statement as “Canada must punish Canadian industry so the country can meet it’s COP21 emissions targets.”
See the difference?
Unfortunately, in the rush to meet Canada’s global air quality commitments (admirable) the federal government may have leaned more towards ‘action’ on the carbon file rather than ‘smooth implementation’ of the carbon file (forgivable) and now has at least two provincial premiers questioning the mechanics of the federal carbon tax plan.
In the end, both methods would result in Canada’s emissions targets being met, but one way is complimentary while the other is confrontational.
Which of the two ways exampled above would cause you to want to work with the federal government to reach Canada’s international emissions obligations?
No Need to Reinvent the Wheel – Just Fix the Broken Parts and Carry On
Federal Carbon Taxes: Small business always suffer in these scenarios, while large corporations already have multi-million dollar environmental + energy budgets — which means all that’s required for them to meet upgraded emissions targets is a shift in their budget allocations to meet Canada’s new emissions regulations.
Therefore, for polluters emitting less than one megatonne of CO2 annually, such companies shouldn’t pay any carbon tax until they surpass that limit and thenceforth begin to pay a $40. per tonne carbon tax (for example) on any emissions beyond the one megatonne threshold.
Likewise, large companies shouldn’t be required to pay carbon tax until the point in the year is reached where they surpass the one megatonne limit and only then begin to pay $40. per tonne of CO2 (or CO2 equivalent, because not all airborne emissions are of the CO2 variety) on each additional megatonne for the rest of the calendar year.
In this way, Canada’s carbon tax model would be a breeze to implement, a carbon tax that would be small business-friendly, and one that provides an incentive to bigger companies to work toward reducing their emissions over the longer term.
Carbon Taxes Administered by Provinces and Cities
Provincial carbon taxes: Provincial and city carbon taxes should be ‘flow-through’ carbon taxes where 100% of each dollar collected at the transactional level (a point-of-sale tax like a provincial sales tax) is spent on poverty alleviation, or on energy conservation + investment in green energy projects + green energy bonds. As is already done in some Canadian provinces.
Provinces and cities that face serious air quality problems would be thereby empowered by federal legislation to address their unique air pollution issues and be better positioned to help Canada meet its international emissions targets while lowering their healthcare and environmental spending associated with air pollution.
Annual Step-up Carbon Tax
Start with a low carbon tax: If the ‘year one’ federal carbon tax is set at $40. per tonne, the next year could be set at $50. per tonne, and ‘year three’ $60. per tonne, etc., it would allow Canada to continue to meet its emissions goals and to lower environmental and healthcare spending in Canada where a significant proportion of healthcare budgets are devoted to treat respiratory ailments brought-on or worsened by the poor air quality in Canadian cities (and some high land use agricultural areas) and could actually save provincial budgets millions of dollars per year.
If there’s one thing that markets and big business like, it’s a long lead time for new regulations and a ‘carbon-tax-free-zone’ that they can shoot for which will help them lower costs by increasing efficiency (which is closely tied to productivity, ask any economist) and a step-up carbon tax gives them the opportunity to adjust their operations several years ahead of the time when it could begin to get very costly for them.
Hitting Canadian companies with a $220. per tonne carbon tax (which is what Stanford University says is the true environmental and healthcare cost of each tonne of carbon) would prevent companies from attracting the funding required to lower their emissions.
In a perfect world, legislators would slap a $220. per tonne carbon tax on every level of government, each corporation and on citizens and all of them could afford to pay it. Sadly, that isn’t possible. But starting out at $40. per tonne allows companies to begin the process of lowering their emissions without stressing corporate finances.
If you doubt how costly pollution is to the economy, see the landmark study from Harvard Medicine which estimates coal-burning alone costs the U.S. economy between $330 billion and $500 billion per year.
The Need to Address Carbon Pollution
It’s indisputable to any educated person that Canada and every other country needs to address carbon pollution — but ultimately, carbon taxes must be designed to mesh with the overall economy — not entangle it.
Visit The Solutions Project to see how renewable energy can work in your jurisdiction to help citizens live healthier lives, care for the environment, boost the economy and help Canada meet its international air pollution targets.
Images below are courtesy of The Solutions Project
Visit The Solutions Project main webpage here for more information.
Bonus Graphic courtesy of the Canadian Association of Petroleum Producers
by John Brian Shannon | May 8, 2016
For decades, easy access to crude oil powered the global economy and this is especially true in developed nations where the huge investment pool allowed governments and industry to capitalize on cheap energy costs. Cheap and easily available crude oil was a very necessary building block for the Western economies.
But the world is changing and although we aren’t yet at the end of the ‘Age of Oil’ we’re starting to see that day from afar.
We’ve come from $2 per barrel of crude oil (less than the cost of production at the time) to $125 per barrel and every price in between. On the supply side, we’ve seen the world’s largest oil consumer (the U.S.) increase domestic production from 10% of its demand to meet almost 100% of its demand — an unprecedented change in the global oil industry.
Due to that farsighted U.S. policy, the world became mired in its own crude oil glut and correspondingly, crude oil prices fell in recent months, only now rebounding after visiting the $26 per barrel netherworld. As of this writing, crude oil is hovering around the mid-$40 range and looks set to end 2016 in the low $50’s assuming the geopolitical paradigm remains stable.
How to Change the Oil Industry into a ‘Win-Win’ Proposition
Like many industries, the oil industry has evolved over decades of time and from humble beginnings. Had it been planned the oil industry wouldn’t have its present structure and there wouldn’t have been a need for a ‘crude oil price’ — as refining crude oil into finished products would’ve been the norm.
Evolution of the World’s Largest Oil Producer
For decades the Saudis pumped and sold oil to the Allied Powers for less than the cost of production as their contribution to the massive Western effort against Nazi Germany and later against the West’s Cold War competitor, the Soviet bloc nations.
Until the Arab Oil Embargo in 1974, the only money the Saudis made from oil was where they competed against every other oil speculator in the commodity market. They certainly didn’t make anything on the extraction of the black stuff.
The Speculators in a Supply/Demand World
From the time each supertanker left port in Saudi Arabia until the moment they tied up at an oil refinery in the United States, speculators made huge sums or lost huge sums of money playing the crude oil supply/demand equation as each supertanker made its way from a Saudi port to an American port.
After some initial horrendous errors, the Saudis learned how to play the markets as well as New York’s best oil speculators, and in that way many individual investors and Saudi Aramco (the largest oil company in the world by a significant margin) saw some amount of wealth created from their resource.
Prior to the Arab Oil Embargo the Saudis didn’t make anything on the extraction side, but made it on the margins (speculating) by making educated guesses about the daily oil supply/demand equation of the United States. That’s no way to run a railway!
The Rise of OPEC
By 1974 the Saudis and the other OPEC nations had had enough and via the Arab Oil Embargo were able to get a reasonable price for their crude oil and not be forced to rely on notoriously unreliable oil price speculation to finance 80% of their economy.
Since 1974, the Saudis (along with every other oil producer, including the United States) have been making money on (1) the extraction side, and (2) on speculation, and (3) on the refining side of the oil business.
Too many middlemen! You can plainly see that where there are three steps with each having its own profit, there should’ve only been one.
Had the oil business been planned-out from the beginning, we would’ve seen Vertical Integration — where one oil company owns its own oilfields and extracts its own oil, refines their own oil into useful products, and only then offers those value-added fuel products as commodities in the world marketplace.
What we have now is a paradigm where gross total demand sets the wellhead price on crude oil (which has a profit attached to it) and the speculating of oil-in-transit (which is where big profit gets attached) and then more profit is attached by an oil refinery — which are usually owned by a third party. No wonder they call it black gold!
In a suddenly very competitive oil world, how to cut ‘fat’ and add profit?
By creating vertically integrated oil companies where only one company extracts the crude oil, transports it to a refinery, refines it into useful products, and then sells those products as commodities, we cut out the middlemen while raising profits for oil companies and lowering costs for consumers. Perhaps by a significant margin.
How to ‘Win-Win’ in the 21st-century oil industry: Don’t ever sell crude oil!
Sell finished petroleum products exclusively
Saudi Aramco is transferring to a Vertically Integrated business model — buying-out it’s partner Royal Dutch Shell in a multi-billion dollar deal at it’s massive Port Arthur, Texas oil refinery (the largest in the U.S.) which can process 600,000 barrels per day.
Saudi Arabia is already the largest single oil producer in the world (presently pumping just under 11 million bpd, but with the ability to pump 12.5 million bpd) and have been in the crude oil business longer than any other country, and own more supertankers than any other organization, business, or country, and are now purchasing oil refineries to complete the vertical integration of their business model.
This will allow the Saudis to lower their concern about wellhead price, and the speculation factor, and concentrate on supporting their best player — which is the refining stage. That is where the entire oil industry is going, some faster than others.
By concentrating on end products, Aramco and others will create new thrust towards the Vertically Integrated business model where resource extraction and transport are geared towards supporting their star player, their own oil refineries — wherever they may be located in the world. Profit at each step of the way will no longer be necessary nor desirable, cutting costs throughout their supply chain and adding profit to their value chain.
In a perfect world the Vertically Integrated business model will sweep past the existing ‘multiple middleman’ business model over the next decade and leave it in the dustbin of history.
- Saudis to take control of largest U.S. refinery (CNN Money)
- Saudi Refining, Inc. and Shell sign letter of intent to separate Motiva assets (Motiva Enterprises press release)
Average annual OPEC crude oil price from 1960 to 2016 (in U.S. dollars per barrel)
by John Brian Shannon | November 9, 2015
Climate scientists say we must decide (at COP 21) to dramatically lower our CO2 emissions or we lose our last opportunity to stop global warming at a scale never before seen.
How many climate scientists?
Houston, we have a problem
The question, “Is there any doubt that global warming could threaten plant and animal life on the planet?” no longer seems relevant due to the astounding amount of quality research done in recent years which proves we do, in fact, have a problem.
One wonders about the other question, “Are our politicians up to the task?”
Don’t lose hope! There are some inspiring examples of environmental stewardship in the world
100% Now: Albania, Bhutan, Belize, Burundi, the Democratic Republic of the Congo, Ethiopia, Iceland, Lesotho, Mozambique, Nepal, Norway, Paraguay, Tokelau, and Zambia, are countries that produce virtually 100% of their primary energy generation (electricity) via renewable energy, while Samoa will hit that standard by 2017. (All of these countries produce a minimum of 95% of their electricity via renewable energy, and all of them have plans to meet their 100% target within a few years. As always, easy access to low-interest financing is one way to enable those targets to be met by 2020)
See: List of countries by electricity production from renewable sources (Wikipedia)
100% by 2021: Costa Rica will hit its renewable energy target by the end of 2021. At present the Costa Rican electricity grid is powered by 94% renewable energy, but many days of the year renewable energy production exceeds 100% of demand allowing the country to export surplus electricity.
100% by 2030: Denmark and Scotland and are well on their way to hit 100% clean electricity generation by 2030 — while the Cook Islands, Tuvalu, and Kiribati in the South Pacific expect to become 100% clean energy powered by 2050 including all transportation.
90% Now: Tajikistan, Kyrgyzstan, and Laos all produce more than 90% of their electricity via renewable energy and have ambitious plans to increase those targets. Limited funding is a factor.
80% Now: Canada produces over 80% of its primary generation from renewable energy (hydro-electric dams and nuclear power stations, with assorted minor solar power and wind power installations) but has, so far, has no plan to convert the remaining 20% of its electricity generation to clean energy.
80% by 2025: Nicaragua has an aggressive renewable energy program to replace its primarily fossil fueled primary energy (electricity) with renewable energy. The country is blessed with radiant sunshine, healthy wind resources and volcanoes (geothermal) all it lacks is the financing to accelerate its planned targets.
80% by 2050: Germany, an advanced country of 82 million people gets almost 40% of its annual electricity from wind, solar and biomass power and has an ambitious two-track programme underway called Energiewende that is simultaneously a) shutting down all of Germany’s nuclear power stations by 2022 (completely decommissioning them by 2045) and b) replacing that lost power generation with wind, solar, and biomass power.
By 2050 Germany expects to meet 80% of its electricity via renewable energy, and further plans to curtail energy use by 25% due to additional energy efficiency. The scale and speed of transition to clean energy in Germany is astonishing and enjoys broad support among the public.
See: German Renewable Energy Leaves Coal Behind (JBSNews)
20% by 2020: In the United States, primary energy (power plants that produce electricity or district heating, or both) are the single largest source of CO2 pollution.
Although a slow starter, the United States has made rapid advances toward a cleaner energy grid. Early legislation such as the Clean Air Act (1970, amended 1990) has now been joined by the EPA’s Clean Power Plan.
See: How the Clean Air Act Has Saved $22 Trillion in Health-Care Costs (The Atlantic)
It’s notable that the U.S. now spends more than any country in the world on its transition to clean energy and is quickly switching out of coal (good) to natural gas (better) and renewable energy (best).
China has the second-highest spend on renewable energy globally and breaks global solar and wind power installation records every year. By a wide margin.
And yet, all of it together isn’t nearly enough to lower our present carbon emissions to a safe level
Not even close, as the carbon bender we’ve been on since 1988 is mind-numbing.
“By the end of this year, more than half of all industrial emissions of carbon dioxide since the dawn of the Industrial Revolution will have been released since 1988 — the year it became widely known that these emissions are warming the climate.”
“The Global Carbon Project (GCP) estimates that in 2014, we will release a record 37 gigatons (GT) of carbon dioxide to the atmosphere from burning coal, oil, and natural gas, and manufacturing cement. That’s a 2.5 percent increase over emissions in 2013, itself a record year.”
“This brings the total industrial carbon dioxide emissions since 1751 to an estimated 1480 Gt by the end of this year. And, remarkably, more than half of these emissions, 743 Gt, or 50.2 percent, have released just since 1988.” — Peter Frumhoff, Director of science & policy, Union of Concerned Scientists
See: Global Warming Fact: More than Half of All Industrial CO2 Pollution Has Been Emitted Since 1988 (Union of Concerned Scientists)
Most people are. Some 80% of North Americans want stronger government and corporate action towards cleaner energy, more efficient buildings and electric vehicles. Which is great.
But in 2014, some $548 billion dollars of subsidies were paid to the world’s fossil fuel corporations. And they’re in no mood to give it up.
Why would they?
Ever since large-scale coal, oil and gas extraction began around 1920, fossil fuels have been getting massive subsidies relative to their imprint on the economy.
If the plan at COP 21 is to remove those subsidies from the fossil fuel companies, then there is no point in anybody showing up there. At all. Because as far as plans go, that must surely be voted; “Least likely plan to succeed since there were rocks.”
If the plan is to legislate ever stricter air quality standards (to the point where it has any real effect on total global emissions) get ready to pay even more subsidies — perhaps double.
Yet, if that’s the plan, we might be wise to support it as we don’t have a second Earth to fall back on.
A more effective plan would be to leave fossil fuel subsidies at their present level and begin to match renewable energy subsidies to the fossil fuel subsidy rate, based on the barrel of oil equivalent (BOe) standard and let the market work on a level-playing-field basis
In that way ‘fossil fuel companies’ would morph into ‘energy companies’ — instead of remaining coal-only, oil-only, or natural gas-only companies.
Stand back and watch the CO2 emissions fall through the floor if that ever happens!
Standardizing renewable energy subsidies to match coal, oil and natural gas subsidies, means that real and profound change would begin to take place throughout our energy sector.
It should be pointed out that a very good case could still be made for keeping natural gas alive and thriving (with no change to existing subsidies) to fuel the transportation sector.
See: Energy Darwinism – The Case for a Level Playing Field (JBS News)
Because of the (over-hyped) variability of renewable energy (the Sun doesn’t always shine and the wind doesn’t always blow) a massive shift towards natural gas (hundreds of times cleaner than coal, BTW) or battery storage will be needed to balance electrical demand. Perhaps both.
Natural gas (CNG) cars and trucks are affordable right now and can use the present distribution system as gasoline and diesel vehicles, while battery technology approaches the point of affordable battery systems for cars and trucks.
See: Clean Energy: Renewables & Natural Gas Powered Electricity Grids (JBS News)
Although there is reason for hope at COP 21 in December, the few examples above represent only a handful of nations acting on the scientific warnings about global warming
There are almost 200 nations that must become convinced of the need to act on climate change this December, and many of them will be negatively affected by sea level rise, desertification, drought/heat waves, premature deaths caused by air and water pollution (China 410,000 per year, the U.S. over 200,000 per year, and Europe over 400,000 per year).
See: Air Pollution Costs the West Almost $1 Trillion/yr (JBSNews)
Now that we have broad and deep consensus by climate scientists that global warming represents an existential threat to our planet, all that is required is the will to act.
Let’s hope our politicians are bigger than the looming environmental maelstrom our civilization faces.